REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALLSTATE LIFE INSURANCE COMPANY
(Exact Name of Registrant)
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ILLINOIS
(State or Other Jurisdiction of
Incorporation or Organization)
36-2554642
(I.R.S. Employer Identification Number)
C/O ALLSTATE LIFE INSURANCE COMPANY
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3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
(847)402-5000
(Address and Phone Number of Principal Executive Office)
C T CORPORATION
208 South LaSalle Street
Suite 814
Chicago, IL 60604
(312) 345-4320
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
JOCELYN LIU, ESQ.
ALLSTATE LIFE INSURANCE COMPANY
3100 SANDERS ROAD, SUITE J5B
NORTHBROOK, ILLINOIS 60062
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box: [ ]
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. [ ]
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] (Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
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Proposed maximum
Amount to be Proposed maximum aggregate offering Amount of
Title of securities to be registered registered offering price per unit(1) price registration fee
------------------------------------ ---------------- - ---------------------- ------------------ ----------------
Market Value Adjusted Annuity Contracts $3,862,776 $1.00 $3,862,776 $0
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(1)
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Interests in the market value adjustment account are sold on a dollar basis, not on the basis of a price per share or unit.
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This filing is being made under the Securities Act of 1933 to register $3,862,776 of interests in market value adjusted annuity contracts. The interests being registered herein are carried over, as unsold securities, from an existing Form S-3 registration statement of the same issuer (333-157334) filed on February 13, 2009. Because a filing fee of $215.54 previously was paid with respect to those securities, there is no filing fee under this registration statement. In accordance with Rule 415 (a)(6), the offering of securities on the earlier registration statement will be deemed terminated as of the effective date of this registration statement.
Risk Factors are discussed in the sections of the prospectus included in Part 1 of this Form concerning the Market Value Adjustment option.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus included in this registration statement. Any representation to the contrary is a criminal offense.
The principal underwriter for these securities, Allstate Distributors, L.L.C., is not required to sell any specific number or dollar amount of securities, but will use its best efforts to sell the securities offered. The offering under this registration statement will conclude three years from the effective date of this registration statement, unless terminated earlier by the Registrant. See the prospectus included in Part 1 hereof for the date of the prospectus.
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 which 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 may determine.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
LINCOLN BENEFIT LIFE COMPANY
Supplement, dated October 18, 2010, to the
following Prospectuses, as supplemented:
Allstate Provider, dated May 1, 2002
Premier Planner, dated May 1, 2004
This supplement amends the above-referenced prospectuses for certain Variable Annuity contracts issued by Allstate Life Insurance Company or Allstate Life Insurance Company of New York or Lincoln Benefit Life Company, as applicable.
Effective as of November 19, 2010 (the Closure Date), the following variable sub-account available in the Allstate Provider and Premier Planner Variable Annuities will be closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the Closure Date:
Contract owners who have contract value invested in this variable sub-account as of the Closure Date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the Closure Date. Contract owners who do not have contract value invested in the variable sub-account as of the Closure Date will not be permitted to invest in this variable sub-account thereafter.
Dollar cost averaging and/or auto-rebalancing, if elected by a contract owner, will not be affected by the closure.
If you have any questions, please contact your financial representative or our Variable Annuity Service Center at (800) 457-7617. Our representatives are available to assist you from 7:30 a.m. to 5 p.m. Central time.
Please read the prospectus supplement carefully and then file it with your important papers. No other action is required of you.
to the Prospectus for your Variable Annuity
Issued by
ALLSTATE LIFE INSURANCE COMPANY
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
LINCOLN BENEFIT LIFE COMPANY
This supplement amends the prospectus for your Variable Annuity contract issued by Allstate Life Insurance Company or Allstate Life Insurance Company of New York or Lincoln Benefit Life Company, as applicable.
Effective as of November 19, 2010 (the Closure Date), the following variable sub-accounts available in the above-referenced Variable Annuities will be closed to all contract owners except those contract owners who have contract value invested in the variable sub-accounts as of the Closure Date:
Invesco V.I. Capital Appreciation Fund—Series I
Invesco V.I. Capital Appreciation Fund—Series II
Contract owners who have contract value invested in these variable sub-accounts as of the Closure Date may continue to submit additional investments into the variable sub-accounts thereafter, although they will not be permitted to invest in the variable sub-accounts if they withdraw or otherwise transfer their entire contract value from the variable sub-accounts following the Closure Date. Contract owners who do not have contract value invested in the variable sub-accounts as of the Closure Date will not be permitted to invest in these variable sub-accounts thereafter.
Dollar cost averaging and/or auto-rebalancing, if elected by a contract owner, will not be affected by the closure.
If you have any questions, please contact your financial representative or our Variable Annuity Service Center at (800) 457-7617. Our representatives are available to assist you from 7:30 a.m. to 5 p.m. Central time.
Please read the prospectus supplement carefully and then file it with your important papers. No other action is required of you.
ALLSTATE LIFE INSURANCE COMPANY
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
Supplement Dated July 23, 2010
To the following Prospectuses, as supplemented
Allstate Provider Prospectus, dated May 1, 2002
Allstate Provider Prospectus, dated May 1, 2004
Custom Portfolio Prospectus, dated April 30, 2005
STI Classic Prospectus, dated May 1, 2003
SelectDirections Prospectus, dated May 1, 2003
SelectDirections Prospectus, dated April 30, 2005
This supplement amends certain disclosure contained in the above-referenced prospectuses for certain variable annuity contracts issued by Allstate Life Insurance Company or Allstate Life Insurance Company of New York, as applicable.
Effective as of August 30, 2010 (the Closure Date), the following variable sub-accounts available, as applicable, in the above-referenced Variable Annuities will be closed to all contract owners except those contract owners who have contract value invested in either of these variable sub-accounts as of the Closure Date:
Oppenheimer High Income Fund/VA (Initial Class)
Oppenheimer Small- & Mid-Cap Growth Fund/VA (Initial Class)*
Contract owners who have contract value invested in either of these variable sub-accounts as of the Closure Date may continue to submit additional investments into the respective variable sub-account thereafter, although they will not be permitted to invest in the respective variable sub-account if they withdraw or otherwise transfer their entire contract value from the respective variable sub-account following the Closure Date. Contract owners who do not have contract value invested in the respective variable sub-account as of the Closure Date will not be permitted to invest in these variable sub-accounts thereafter.
Dollar cost averaging and/or auto-rebalancing, if elected by a contract owner, will not be affected by the closures.
If you have any questions, please contact your financial representative or our Annuities Service Center at (800) 457-7617. Our representatives are available to assist you from 7:30 a.m. to 5 p.m. Central time.
Please read the prospectus supplement carefully and then file it with your important papers. No other action is required of you
* Note: Oppenheimer Small- & Mid-Cap Growth Fund/VA was formerly known as Oppenheimer MidCap Fund/VA.
To the Prospectus for Your Variable Annuity
Issued By
Allstate Life Insurance Company
Allstate Life Insurance Company of New York
Lincoln Benefit Life Company
This supplement amends the prospectus for your variable annuity contract issued by Allstate Life Insurance Company, Allstate Life
Insurance Company of New York, or Lincoln Benefit Life Company.
The following provision is added to your prospectus:
WRITTEN REQUESTS AND FORMS IN GOOD ORDER. Written requests must include sufficient information and/or
documentation, and be sufficiently clear, to enable us to complete your request without the need to exercise
discretion on our part to carry it out. You may contact our Customer Service Center to learn what information we
require for your particular request to be in "good order." Additionally, we may require that you submit your
request on our form. We reserve the right to determine whether any particular request is in good order, and to
change or waive any good order requirements at any time.
If you have any questions, please contact your financial representative or call our Customer Service Center at 1-800-457-7617. If
you own a Putnam contract, please call 1-800-390-1277.
For future reference, please keep this supplement together with your prospectus.
Allstate Provider
Supplement, dated February 13, 2009
This supplement amends certain disclosure contained in the prospectus for certain annuity contracts issued by Allstate Life Insurance Company.
Under the "More Information" section, the subsection entitled "Legal Matters" is deleted and replaced with the following:
LEGAL MATTERS
Certain matters of state law pertaining to the Contracts, including the validity of the Contracts and Allstate Life's right to issue such Contracts under applicable state insurance law, have been passed upon by Susan L. Lees, General Counsel of Allstate Life.
The "Annual Reports and Other Documents" section is deleted and replaced with the following:
ANNUAL REPORTS AND OTHER DOCUMENTS
Allstate Life Insurance Company ("Allstate Life") incorporates by reference into the prospectus its latest annual report on Form 10-K filed pursuant to Section 13(a) or Section 15(d) of the Exchange Act and all other reports filed with the SEC under the Exchange Act since the end of the fiscal year covered by its latest annual report, including filings made on Form 10-Q and Form 8-K. In addition, all documents subsequently filed by Allstate Life pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act also are incorporated into the prospectus by reference. Allstate Life will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference into the prospectus but not delivered with the prospectus. Such information will be provided upon written or oral request at no cost to the requester by writing to Allstate Life, P.O. Box 758566, Topeka, KS 66675-8566 or by calling 1-800- 457-7617. Allstate Life files periodic reports as required under the Securities Exchange Act of 1934. The public may read and copy any materials that Allstate Life files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC (see http://www.sec.gov).
Allstate Life Insurance Company
Allstate Financial Advisors Separate Account I
Supplement, dated February 26, 2007 to
The Allstate(R) Provider Variable Annuity Prospectus
dated May 1, 2002
This supplement amends certain disclosure contained in the above-referenced prospectus for certain variable annuity contracts ("Contracts") issued by Allstate Life Insurance Company.
We have received notice that the Board of Trustees ("Board") of the STI Classic Variable Trust has approved the liquidation, on or about May 1, 2007, of the following Fund portfolios:
STI Classic International Equity Fund Portfolio
STI Classic Investment Bond Fund Portfolio
(collectively the "STI Classic Portfolios")
Due to the liquidation of the STI Classic Portfolios, we will no longer accept new premiums for investment in, nor will we permit transfers to, the STI Classic International Equity Fund Sub-Account or the STI Classic Investment Grade Bond Fund Sub-Account ("STI Classic Sub-Accounts") on or after April 27, 2007.
As the STI Classic Sub-Accounts will no longer be offered as an investment alternative, you may wish to transfer, prior to April 27, 2007 some or all of your Contract Value in the STI Classic Sub-Accounts to the other investment alternatives currently offered by your Contract. These transfers are not subject to a transfer fee. Any value remaining in the STI Classic Sub-Accounts will be transferred automatically, as of April 27, 2007, to the Federated Prime Money Fund II Sub-Account, an investment alternative already available under your Contract.
If you currently allocate Contract Value to the STI Classic Sub-Accounts through automatic additions, automatic portfolio rebalancing, dollar cost averaging or systematic withdrawal programs, your allocations in these programs will also need to be changed. If you do not change these allocations to other investment alternatives currently available under your Contract, any allocations to the STI Classic Sub-Accounts will be automatically allocated, as of April 27, 2007, to the Federated Prime Money Fund II Sub-Account.
We will send you a confirmation that shows the amount that is transferred to the Federated Prime Money Fund II Sub-Account or to the investment alternative that you chose and the date of the transaction. For additional information on how to transfer to another investment alternative, or how to make a change to your current allocation(s), please contact your financial representative or call our Customer Service Center at 1-800-203-0068.
If your Contract Value in the STI Classic Sub-Accounts is transferred automatically to the Federated Prime Money Fund II Sub-Account, for 60 days following the automatic transfer, you may transfer your Contract Value in the Federated Prime Money Fund II Sub-Account to any other investment alternative(s) available under your Contract. Such transfer is not subject to a transfer fee.
Attached, as Appendix A is a list of the Portfolios and Fixed Account Investment Alternatives currently available under your Contract.
Please keep this supplement for future reference together with your prospectus.
Appendix A
The Allstate(R) Provider Variable Annuity contracts offer a variety of Investment Alternatives that encompass investment choices ranging from aggressive to conservative. Below is a listing of the Portfolios and Fixed Account Investment Alternatives currently available. Also included is the investment objective for each Portfolio.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the relevant prospectus for the Portfolio.
Portfolios
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Portfolio Investment Objective
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AIM V.I. Basic Balanced Fund - Series I Seeks long-term growth of capital.
AIM V.I. Capital Appreciation Fund - Series I Seeks growth of capital.
AIM V.I. Core Equity Fund - Series I Seeks growth of capital.
AIM V.I. High Yield Fund - Series I Seeks high level of current income.
Federated Prime Money Fund II Seeks current income consistent with stability of principal and liquidity.
Fidelity VIP Contrafund (R) Portfolio - Initial Class Seeks long-term capital appreciation.
Fidelity VIP Equity-Income Portfolio - Initial Class Seeks reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the fund will also consider the
potential for capital appreciation. The fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the S&P 500.
Fidelity VIP Growth Portfolio - Initial Class Seeks to achieve capital appreciation.
Fidelity VIP High Income Portfolio - Initial Class Seeks high level of current income, while also considering growth of
capital.
Fidelity VIP Index 500 Portfolio - Initial Class Seeks investment results that correspond to the total return of common
stocks publicly traded in the United States, as represented by the Standard
& Poor's 500 (SM) Index (S&P 500 (R) ).
Fidelity VIP Overseas Portfolio - Initial Class Seeks long-term growth of capital.
FTVIP Templeton Global Income Securities Fund Seeks high current income, consistent with preservation of capital, with
- Class 2 capital appreciation as a secondary consideration.
FTVIP Templeton Growth Securities Fund - Class 2 Seeks long-term capital growth.
MFS Emerging Growth Series - Initial Class Seeks long-term growth of capital.
MFS Investors Trust Series - Initial Class Seeks to provide long-term growth of capital and secondarily to provide
reasonable current income.
MFS New Discovery Series - Initial Class Seeks capital appreciation.
MFS Research Series - Initial Class Seeks long-term growth of capital and future income.
MFS Utilities Series - Initial Class Seeks capital growth and current income.
Oppenheimer MidCap Fund/VA Seeks capital appreciation by investing in "growth type" companies.
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Oppenheimer Balanced Fund/VA Seeks a high total investment return, which includes current income and
capital appreciation in the value of its shares.
Oppenheimer Capital Appreciation Fund/VA Seeks capital appreciation by investing in securities of well-known,
established companies.
Oppenheimer Global Securities Fund/VA Seeks long-term capital appreciation by investing a substantial portion of
assets in securities of foreign issuers, growth-type companies, cyclical
industries and special situations that are considered to have appreciation
possibilities.
Oppenheimer Main Street Fund (R) /VA Seeks high total return (which includes growth in the value of its shares as
well as current income) from equity and debt securities.
Oppenheimer Strategic Bond Fund/VA Seeks a high level of current income principally derived from interest on
debt securities.
Putnam VT Discovery Growth Fund - Class IB Seeks long-term growth of capital.
Putnam VT Diversified Income Fund - Class IB Seeks as high a level of current income as Putnam Management believes is
consistent with preservation of capital.
Putnam VT Growth and Income Fund - Class IB Seeks capital growth and current income.
Putnam VT Growth Opportunities Fund - Class IB Seeks capital appreciation.
Putnam VT Health Sciences Fund - Class IB Seeks capital appreciation.
Putnam VT New Value Fund - Class IB Seeks long-term capital appreciation.
STI Classic Capital Appreciation Fund Seeks capital appreciation.
STI Classic Large Cap Relative Value Fund Seeks long-term capital appreciation with the secondary goal of current
income.
STI Classic Mid-Cap Equity Fund Seeks capital appreciation.
STI Classic Small Cap Value Equity Fund Seeks capital appreciation with the secondary goal of current income.
STI Classic Large Cap Value Equity Fund Seeks capital appreciation with the secondary goal of current income.
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Fixed Account Options*
Dollar Cost Averaging Fixed Account Option
Market Value Adjusted Fixed Account Option
* Some fixed account options are not available in all states.
Allstate Life Insurance Company
Allstate Financial Advisors Separate Account I
Supplement, dated February 26, 2007,
to
The Allstate(R) Provider Variable Annuity Prospectus
dated May 1, 2002
This supplement amends certain disclosure contained in the above-referenced prospectus for certain variable annuity contracts ("Contracts") issued by Allstate Life Insurance Company.
We have received notice that the Board of Trustees ("Board") of the Dreyfus Variable Investment Fund has approved the liquidation, on or about April 30, 2007 (the "Closing Date"), of the Dreyfus VIF Small Company Stock Portfolio (the "Portfolio"). The liquidation is subject to a shareholder vote, scheduled to take place on April 16, 2007.
If the liquidation of the Portfolio is approved, we will no longer accept new premiums for investment in, nor will we permit transfers to, the Dreyfus VIF Small Company Stock Sub-Account (the "Dreyfus Sub-Account") on or after April 30, 2007. If the Dreyfus Sub-Account will no longer be offered as an investment alternative as of the Closing Date, you may wish to transfer, prior to April 30, 2007, some or all of your Contract Value in the Dreyfus Sub-Account to the other investment alternatives currently offered by your Contract.
If the Portfolio is liquidated, any value remaining in the Dreyfus Sub-Account will be transferred automatically, as of the Closing Date, to the Dreyfus VIF Money Market Sub-Account, an investment alternative already available under your Contract.
Prior to the Closing Date, you may transfer some or all of your Contract Value that is presently allocated to the Dreyfus Sub-Account to other investment alternatives currently offered under your Contract. These transfers are not subject to a transfer fee and will not count towards the 12 transfers you can make per Contract Year.
If you currently allocate Contract Value to the Dreyfus Sub-Account through automatic additions, automatic portfolio rebalancing, dollar cost averaging or systematic withdrawal programs, your allocations in these programs will also need to be changed, if the liquidation is approved. If you do not change these allocations to other investment alternatives currently available under your Contract, any allocations to the Dreyfus Sub-Account will be automatically allocated, as of the Closing Date, to the Dreyfus VIF Money Market Sub-Account.
We will send you a confirmation that shows the amount that is transferred to the Dreyfus VIF Money Market Sub-Account or to the investment alternative that you chose and the date of the transaction. For additional information on how to transfer to another investment alternative, or how to make a change to your current allocation(s), please contact your financial representative or call our Customer Service Center at 1-800-203-0068.
Attached, as Appendix A, is a list of the Portfolios and Fixed Account Investment Alternatives currently available under your Contract.
Please keep this supplement for future reference together with your prospectus.
Appendix A
The Allstate(R) Provider Variable Annuity offers a variety of Investment Alternatives that encompass investment choices ranging from aggressive to conservative. Below is a listing of the Portfolios and Fixed Account Investment Alternatives currently available. Also included is the investment objective for each Portfolio.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the relevant prospectus for the Portfolio.
Portfolios
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Portfolio Investment Objective
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AIM V.I. Basic Balanced Fund - Series I Long-term growth of capital
AIM V.I. Capital Appreciation Fund - Series I Growth of capital
AIM V.I. Core Equity Fund - Series I Growth of capital
AIM V.I. Diversified Income Fund - Series I High level of current income
AIM V.I. Government Securities Fund - Series I High level of current income consistent with reasonable concern for safety
of principal
AIM V.I. High Yield Fund - Series I High level of current income
AIM V.I. International Growth Fund - Series I Long-term growth of capital
AIM V.I. Utilities Fund - Series I Capital growth and current income
The Dreyfus Socially Responsible Growth Fund, Inc.:
Initial Shares Capital growth and, secondarily, current income
Dreyfus Stock Index Fund, Inc.: Initial Shares To match the total return of the Standard & Poor's 500 Composite Stock Price
Index
Dreyfus VIF - Growth and Income Portfolio:
Initial Shares Long-term capital growth, current income and growth of income, consistent
with reasonable investment risk
Dreyfus VIF - Money Market Portfolio A high level of current income as is consistent with the preservation of
capital and the maintenance of liquidity
Fidelity VIP Contrafund(R) Portfolio - Initial Class Long-term capital appreciation.
Fidelity VIP Equity-Income Portfolio - Initial Class Reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the fund will also consider the
potential for capital appreciation. The fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the S&P 500.
Fidelity VIP Growth Portfolio - Initial Class To achieve capital appreciation.
Fidelity VIP High Income Portfolio - Initial Class High level of current income, while also considering growth of capital.
Goldman Sachs VIT Capital Growth Fund Long-term growth of capital
Goldman Sachs VIT Structured Small Cap Equity Fund Long-term growth of capital
Goldman Sachs VIT Structured U.S. Equity Fund Long-term growth of capital and dividend income
Goldman Sachs VIT Growth and Income Fund Long-term growth of capital and growth of income
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Goldman Sachs VIT International Equity Fund Long-term capital appreciation
MFS Emerging Growth Series - Initial Class Long-term growth of capital
MFS Investors Trust Series - Initial Class To provide long-term growth of capital and secondarily to provide reasonable
current income
MFS New Discovery Series - Initial Class Capital appreciation.
Neuberger Berman AMT Guardian Portfolio - Class I Long-term growth of capital; current income is a secondary goal
Neuberger Berman AMT Mid-Cap Growth Portfolio -
Class I Growth of capital
Neuberger Berman AMT Partners Portfolio - Class I Growth of capital
Van Kampen UIF Core Plus Fixed Income Portfolio,
Class I Above-average total return over a market cycle of three to five years
Van Kampen UIF Equity Growth Portfolio, Class I Long-term capital appreciation by investing primarily in growth-oriented
equity securities of U.S. and foreign companies
Van Kampen UIF Global Value Equity Portfolio, Class I Long-term capital appreciation
Van Kampen UIF International Magnum Portfolio,
Class I Long-term capital appreciation by investing primarily in equity securities
in EAFE countries.
Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I Above-average total return over a market cycle of three to five years by
investing in common stocks and other equity securities
Van Kampen UIF U.S. Real Estate Portfolio, Class I Above average current income and long-term capital appreciation by investing
primarily in equity securities of companies in the U.S. real estate
industry, including real estate investment trusts
Van Kampen UIF Value Portfolio, Class I Above-average total return over a market cycle of three to five years
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Fixed Account Options*
Dollar Cost Averaging Fixed Account Options
Guaranteed Maturity Fixed Account Option
* Some fixed account options are not available in all states.
Allstate Life Insurance Company
Allstate Financial Advisors Separate Account I
Supplement, dated February 26, 2007,
to
The Allstate(R) Provider Variable Annuity Prospectus
dated May 1, 2002
This supplement amends certain disclosure contained in the above-referenced prospectus for certain variable annuity contracts ("Contracts") issued by Allstate Life Insurance Company.
We have received notice that the Board of Trustees ("Board") of the Dreyfus Variable Investment Fund has approved the liquidation, on or about April 30, 2007 (the "Closing Date"), of the Dreyfus VIF Small Company Stock Portfolio (the "Portfolio"). The liquidation is subject to a shareholder vote, scheduled to take place on April 16, 2007.
If the liquidation of the Portfolio is approved, we will no longer accept new premiums for investment in, nor will we permit transfers to, the Dreyfus VIF Small Company Stock Sub-Account (the "Dreyfus Sub-Account") on or after April 30, 2007. If the Dreyfus Sub-Account will no longer be offered as an investment alternative as of the Closing Date, you may wish to transfer, prior to April 30, 2007, some or all of your Contract Value in the Dreyfus Sub-Account to the other investment alternatives currently offered by your Contract.
If the Portfolio is liquidated, any value remaining in the Dreyfus Sub-Account will be transferred automatically, as of the Closing Date, to the Dreyfus VIF Money Market Sub-Account, an investment alternative already available under your Contract.
Prior to the Closing Date, you may transfer some or all of your Contract Value that is presently allocated to the Dreyfus Sub-Account to other investment alternatives currently offered under your Contract. These transfers are not subject to a transfer fee and will not count towards the 12 transfers you can make per Contract Year.
If you currently allocate Contract Value to the Dreyfus Sub-Account through automatic additions, automatic portfolio rebalancing, dollar cost averaging or systematic withdrawal programs, your allocations in these programs will also need to be changed. If you do not change these allocations to other investment alternatives currently available under your Contract, any allocations to the Dreyfus Sub-Account will be automatically allocated, as of the Closing
Date, to the Dreyfus VIF Money Market Sub-Account.
We will send you a confirmation that shows the amount that is transferred to the Dreyfus VIF Money Market Sub-Account or to the investment alternative that you chose and the date of the transaction. For additional information on how to transfer to another investment alternative, or how to make a change to your current allocation(s), please contact your financial representative or call our Customer Service Center at 1-800-203-0068.
Attached, as Appendix A, is a list of the Portfolios and Fixed Account Investment Alternatives currently available under your Contract.
Please keep this supplement for future reference together with your prospectus.
Appendix A
The Allstate(R) Provider Variable Annuity offers a variety of Investment Alternatives that encompass investment choices ranging from aggressive to conservative. Below is a listing of the Portfolios and Fixed Account Investment Alternatives currently available. Also included is the investment objective for each Portfolio.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the relevant prospectus for the Portfolio.
Portfolios
|
Portfolio Investment Objective
----------------------------------------------------- ----------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund - Series I Growth of capital
AIM V.I. Core Equity Fund - Series I Growth of capital
AIM V.I. Diversified Income Fund - Series I High level of current income
AIM V.I. Government Securities Fund - Series I High level of current income consistent with reasonable concern for safety
of principal
AIM V.I. International Growth Fund - Series I Long-term growth of capital
AIM V.I. Utilities Fund - Series I Capital growth and current income
American Century VP Balanced Fund - Class I Long-term capital growth and current income
American Century VP International Fund - Class I Capital growth
The Dreyfus Socially Responsible Growth Fund, Inc.:
Initial Shares Capital growth and, secondarily, current income
Dreyfus Stock Index Fund, Inc.: Initial Shares To match the total return of the Standard & Poor's 500 Composite Stock Price
Index
Dreyfus VIF - Growth and Income Portfolio:
Initial Shares Long-term capital growth, current income and growth of income, consistent
with reasonable investment risk
Dreyfus VIF - Money Market Portfolio A high level of current income as is consistent with the preservation of
capital and the maintenance of liquidity
Fidelity VIP Contrafund(R) Portfolio - Initial Class Long-term capital appreciation.
Fidelity VIP Equity-Income Portfolio - Initial Class Reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the fund will also consider the
potential for capital appreciation. The fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the S&P 500.
Fidelity VIP Growth Portfolio - Initial Class To achieve capital appreciation.
Fidelity VIP High Income Portfolio - Initial Class High level of current income, while also considering growth of capital.
MFS Emerging Growth Series - Initial Class Long-term growth of capital
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Fixed Account Options*
Dollar Cost Averaging Fixed Account Option
Guaranteed Maturity Fixed Account Option
* Some fixed account options are not available in all states.
Allstate Life Insurance Company Allstate Financial Advisors Separate Account I
Supplement dated January 3, 2005 to the The Allstate(R) Provider Variable Annuity Prospectuses dated May 1, 2002
This supplement amends certain information contained in the prospectuses for the Allstate(R) Provider Variable Annuity contracts ("Contracts"), formerly issued by Glenbrook Life and Annuity Company ("Glenbrook"). Please read this supplement carefully and retain it for future reference together with your prospectus. All capitalized terms have the same meaning as those included in the prospectuses.
Merger of Glenbrook with Allstate Life
Effective January 1, 2005, Glenbrook merged with and into its parent company, Allstate Life Insurance Company ("Allstate Life"). The merger of Glenbrook and Allstate Life (the "Merger") was approved by the boards of directors of Allstate Life and Glenbrook. The Merger also received regulatory approval from the Departments of Insurance of the States of Arizona and Illinois, the states of domicile of Glenbrook and Allstate Life, respectively.
On the date of the Merger, Allstate Life acquired from Glenbrook all of Glenbrook's assets and became directly liable for Glenbrook's liabilities and obligations with respect to all Contracts issued by Glenbrook.
The Merger did not affect the terms of, or the rights and obligations under your Contract, other than to reflect the change to the company that guarantees your Contract benefits from Glenbrook to Allstate Life. You will receive certificate endorsements from Allstate Life that reflect the change from Glenbrook to Allstate Life. The Merger also did not result in any adverse tax consequences for any Contract Owners.
Separate Account Consolidation
Effective January 1, 2005, and in connection with the Merger, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with and into the Allstate Financial Advisors Separate Account I ("Allstate Separate Account I"), and consolidated duplicative Variable Sub-Accounts that invest in the same Fund (the "Consolidation"). The accumulation unit values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation.
As a result of the Merger and Consolidation, your prospectus is amended as follows:
Replace all references to "Glenbrook Life" with "Allstate Life." Replace all references to "Glenbrook Life and Annuity Company Separate Account A" with "Allstate Financial Advisors Separate Account I." All references to "We," "Us," or "our" shall mean "Allstate Life." All references to "the Variable Account" shall mean "Allstate Financial Advisors Separate Account I."
"Financial Information" section: Replace the last sentence of the first paragraph with:
The financial statements of Allstate Life and Allstate Financial Advisors Separate Account I, which includes financial information giving effect to the Consolidation on a pro forma basis, also appear in the Statement of Additional Information. For a free copy of the Statement of Additional Information, please write or call us at 1-800-755-5275.
Under the heading Market Timing and Excessive Trading, at the end of the second paragraph insert the following sentence:
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under "Trading Limitations." Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, not all market timing or excessive trading is identifiable or preventable. Imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it first occurs. To the extent that such trading activity occurs prior to detection and the imposition of trading restrictions, the portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, or to refuse any transfer request, if:
. we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
. we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
. the total dollar amount being transferred, both in the aggregate and in the transfer request;
. the number of transfers you make over a period of time and/or the period of time between transfers (note: one set of transfers to and from a sub-account in a short period of time can constitute market timing);
. whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Sub-account underlying portfolios that we have identified as being susceptible to market timing activities;
. whether the manager of the underlying portfolio has indicated that the transfers interfere with portfolio management or otherwise adversely impact the portfolio; and
. the investment objectives and/or size of the Sub-account underlying portfolio.
If we determine that a contract owner has engaged in market timing or excessive trading activity, we will restrict that contract owner from making future additions or transfers into the impacted Sub-account(s). If we determine that a contract owner has engaged in a pattern of market timing or excessive trading activity involving multiple Sub-accounts, we will also require that all future transfer requests be submitted through regular U.S. mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. Any Sub-account or transfer restrictions will be uniformly applied.
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
"More Information" section: Replace the subsections entitled "Glenbrook Life" and "The Variable Account" with the following:
ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957 is a stock life insurance company under the laws of the state of Illinois. Prior to January 1, 2005, Glenbrook Life and Annuity Company ("Glenbrook Life") issued the Contract. Effective January 1, 2005, Glenbrook Life merged with Allstate Life ("Merger"). On the date of the Merger, Allstate Life acquired from Glenbrook Life all of Glenbrook Life's assets and became directly liable for Glenbrook Life's liabilities and obligations with respect to all contracts issued by Glenbrook Life. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company organized under the laws of the state of Illinois. All of the capital stock issued and outstanding of Allstate Insurance Company is owned by The Allstate Corporation.
Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all jurisdictions except the state of New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois 60062.
The Variable Account
Allstate Life established the Allstate Financial Advisors Separate Account I in 1999. The Contracts were previously issued through the Glenbrook Life Multi-Manager Variable Account. Effective January 1, 2005, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with Allstate Financial Advisors Separate Account I and consolidated duplicative Variable Sub-Accounts that invest in the same Portfolio (the "Consolidation"). The Accumulation Unit Values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Allstate Life.
We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois law. That means we account for the Variable Account's income, gains, and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Allstate Life.
The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Funds. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
"Annual Reports and Other Documents" section: Replace the CIK identifying number in the first sentence of the fourth paragraph with "CIK No. 0000352736."
THE ALLSTATE(R) PROVIDER VARIABLE ANNUITY
(formerly referred to as "The Glenbrook Provider Variable Annuity")
ALLSTATE LIFE INSURANCE COMPANY
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 MAILING ADDRESS:
P.O. BOX 80469, LINCOLN, NE 68501-0469 TELEPHONE NUMBER: 1-800-755-5275 PROSPECTUS DATED JANUARY 3, 2005
Allstate Life Insurance Company ("Allstate Life") is offering the Allstate(R) Provider Variable Annuity, an individual and group flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference.
The Contract currently offers 22 investment alternatives ("INVESTMENT ALTERNATIVES"). The investment alternatives include 2 fixed account options
("FIXED ACCOUNT OPTIONS") and 20 variable sub-accounts ("VARIABLE SUB-ACCOUNTS")
of the Allstate Financial Advisors Separate Account I ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of the following mutual funds ("FUNDS"):
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AIM VARIABLE INSURANCE FUNDS DREYFUS STOCK INDEX FUND
AMERICAN CENTURY VARIABLE PORTFOLIOS DREYFUS VARIABLE INVESTMENT FUND (VIF)
THE DREYFUS SOCIALLY RESPONSIBLE FIDELITY/(R)/ VARIABLE INSURANCE
GROWTH FUND, INC. PRODUCTS
MFS/(R)/ VARIABLE INSURANCE TRUST(SM)
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Each Fund has multiple investment portfolios ("PORTFOLIOS"). Not all of the Funds and/or Portfolios, however, may be available with your Contract. You should check with your sales representative for further information on the availability of Funds and/or Portfolios. Your annuity application will list all available Portfolios.
WE (Allstate Life) have filed a Statement of Additional Information, dated January 1, 2005, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means it is legally a part of this prospectus. Its table of contents appears on page 45 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http:// www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SEC's Web site.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR HAS
IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE
WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS THAT
NOTICES HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS
OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY SUCH INSTITUTIONS
OR ANY FEDERAL REGULATORY AGENCY. INVESTMENT IN THE CONTRACTS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
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THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
PAGE
OVERVIEW
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Important Terms 3
The Contract at a Glance 4
How the Contract Works 6
Expense Table 7
Financial Information 9
CONTRACT FEATURES
The Contract 10
Purchases 11
Contract Value 12
Investment Alternatives
The Variable Sub-Accounts 13
The Fixed Account Options 14
Transfers 16
Expenses 18
Access To Your Money 20
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PAGE
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Income Payments 21
Death Benefits 24
OTHER INFORMATION
More Information:
Allstate Life 26
The Variable Account 26
The Portfolios 27
The Contract 27
Non-Qualified Annuities Held Within a Qualified Plan 28
Legal Matters 28
Taxes 29
Annual Reports and Other Documents 34
APPENDIX A-ACCUMULATION UNIT VALUES 35
APPENDIX B- MARKET VALUE ADJUSTMENT EXAMPLE 43
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 45
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2 PROSPECTUS
IMPORTANT TERMS
This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE
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Accumulation Phase 6
Accumulation Unit 12
Accumulation Unit Value 12
Annuitant 11
Automatic Additions Program 11
Automatic Portfolio Rebalancing Program 18
Beneficiary 10
Cancellation Period 12
Contract* 27
Contract Anniversary 5
Contract Owner ("You") 10
Contract Value 12
Contract Year 4
Death Benefit Anniversary 26
Death Proceeds 25
Dollar Cost Averaging Program 18
Due Proof of Death 25
Enhanced Death Benefit Rider 26
Fixed Account Options 14
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PAGE
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Free Withdrawal Amount 19
Allstate Life ("We" or "Us") 1
Guarantee Periods 14
Income Plan 21
Investment Alternatives 4
Issue Date 6
Market Value Adjustment 16
Payout Phase 6
Payout Start Date 21
Portfolios 27
Qualified Contracts 32
SEC 1
Settlement Value 26
Systematic Withdrawal Program 21
Valuation Date 11
Variable Account 26
Variable Sub-Account 13
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* In certain states the Contract is available only as a group Contract. If you purchase a group Contract, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates, unless the context requires otherwise.
3 PROSPECTUS
THE CONTRACT AT A GLANCE
The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information.
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FLEXIBLE PAYMENTS You can purchase a Contract with as
little as $3,000 ($2,000 for "QUALIFIED
CONTRACTS," which are Contracts issued with
QUALIFIED PLANS). You can add to your Contract
as often and as much as you like, but each
payment must be at least $50.
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RIGHT TO CANCEL You may cancel your Contract within
20 days of receipt or any longer period as your
state may require ("CANCELLATION PERIOD"). Upon
cancellation, we will return your purchase
payments adjusted, to the extent federal or
state law permits, to reflect the investment
experience of any amounts allocated to the
Variable Account.
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EXPENSES You will bear the following expenses:
. Total Variable Account annual fees equal
to 1.35% of average daily net assets
(1.45% if you select the ENHANCED DEATH
BENEFIT RIDER)
. Annual contract maintenance charge of $35
(with certain exceptions)
. Withdrawal charges ranging from 0% to 6%
of purchase payment withdrawn (with
certain exceptions)
. Transfer fee of $10 after 12th transfer in
any CONTRACT YEAR (fee currently waived)
. State premium tax (if your state imposes
one)
In addition, each Portfolio pays expenses that
you will bear indirectly if you invest in a
Variable Sub-Account.
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INVESTMENT The Contract offers 22 investment alternatives
ALTERNATIVES including:
. 2 Fixed Account Options (which credit
interest at rates we guarantee)
. 20 Variable Sub-Accounts investing in
Portfolios offering professional money
management by these investment advisers:
. A I M Advisors, Inc.
. American Century Investment Management,
Inc.
. The Dreyfus Corporation
. Fidelity Management & Research Company
. MFS(TM) Investment Management
To find out current rates being paid on the
Fixed Account Options or how the Variable
Sub-Accounts have performed, call us at
1-800-755-5275.
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SPECIAL SERVICES For your convenience, we offer these special
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services:
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. AUTOMATIC ADDITIONS PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
4 PROSPECTUS
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INCOME PAYMENTS You can choose fixed income payments, variable
income payments, or a combination of the two.
You can receive your income payments in one of
the following ways:
. life income with guaranteed payments
. a "joint and survivor" life income with
guaranteed payments
. guaranteed payments for a specified period
(5 to 30 years)
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DEATH BENEFITS If you or the ANNUITANT (if the Contract is
owned by a non-natural person) die before the
PAYOUT START DATE, we will pay the death
benefit described in the Contract. We offer an
Enhanced Death Benefit Rider.
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TRANSFERS Before the Payout Start Date, you may transfer
your Contract value ("CONTRACT VALUE") among
the investment alternatives, with certain
restrictions. Transfers to a Guarantee Period
of the Fixed Account must be at least $50.
We do not currently impose a fee upon
transfers. However, we reserve the right to
charge $10 per transfer after the 12th transfer
in each "Contract Year," which we measure from
the date we issue your Contract or a Contract
anniversary ("CONTRACT ANNIVERSARY").
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WITHDRAWALS You may withdraw some or all of your Contract
Value at any time prior to the Payout Start
Date. In general, you must withdraw at least
$50 at a time. Full or partial withdrawals are
available under limited circumstances on or
after the Payout Start Date. Withdrawals taken
prior to annuitization (referred to in this
prospectus as the Payout Phase) are generally
considered to come from the earnings in the
Contract first. If the Contract is
tax-qualified, generally all withdrawals are
treated as distributions of earnings.
Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may
be subject to an additional 10% federal tax
penalty. A withdrawal charge and MARKET VALUE
ADJUSTMENT also may apply.
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5 PROSPECTUS
HOW THE CONTRACT WORKS
The Contract basically works in two ways. First, the Contract can help you (we assume you are the CONTRACT OWNER) save for retirement because you can invest in up to 22 investment alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/ or Fixed Account Options. If you invest in any of the 2 Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the 20 Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/ or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page 21. You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
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Issue Payout Start
Date Accumulation Phase Date Payout Phase
---------------------------------------------------------------------------------------------------->
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
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As the Contract Owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract Owner or, if none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. See "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract Owner, or if there is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any question about how the Contract works.
6 PROSPECTUS
EXPENSE TABLE
The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
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Number of Complete Years Since We Received the Purchase
Payment Being Withdrawn 0 1 2 3 4 5 6+
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Applicable Charge 6% 6% 5% 5% 4% 3% 0%
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Annual Contract Maintenance Charge $35.00**
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Transfer Fee $10.00***
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* Each Contract Year, you may withdraw up to 15% of your aggregate purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
*** Applies solely to the thirteenth and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee.
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VARIABLE ACCOUNT ANNUAL EXPENSES Policy with Enhanced
(AS A PERCENTAGE OF DAILY NET ASSET VALUE Death Benefit Rider
DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT) Base Policy
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Mortality and Expense Risk Charge 1.25% 1.35%
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Administrative Expense Charge 0.10% 0.10%
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Total Variable Account Annual Expense 1.35% 1.45%
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PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF PORTFOLIO AVERAGE DAILY NET ASSETS)/1/
The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. Advisers and/or other service providers of certain Portfolios may have agreed to waive their fees and/or reimburse Portfolio expenses in order to keep the Portfolios' expenses below specified limits. The range of expenses shown in this table does not show the effect of any such fee waiver or expense reimbursement. More detail concerning each Portfolio's fees and expenses appears in the prospectus for each Portfolio.
ANNUAL PORTFOLIO EXPENSES
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Minimum Maximum
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Total Annual Portfolio Operating Expenses/(1)/
(expenses that are deducted from Portfolio
assets, which may include management fees,
distribution and/or
services (12b-1) fees,
and other expenses) 0.27% 1.34%
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(1) Expenses are shown as a percentage of Portfolio average daily net assets (before any waiver or reimbursement) as of December 31, 2003.
7 PROSPECTUS
EXAMPLE 1
This example is intended to help you compare the cost of investing in the Contracts with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Variable Account annual expenses, and Portfolio fees and expenses.
The example shows the dollar amount of expenses that you would bear directly or indirectly if you:
. invested $10,000 in a Variable Sub-Account,
. earned a 5% annual return on your investment,
. surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, and
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
The first line of the example assumes that the maximum fees and expenses of any of the Portfolios are charged. The second line of the example assumes that the minimum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below
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1 Year 3 Years 5 Years 10 Years
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Costs Based on Maximum Annual Portfolio Expenses $80 $130 $175 $315
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Costs Based on Minimum Annual Portfolio Expenses $69 $ 97 $120 $204
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EXAMPLE 2
THIS EXAMPLE USES THE SAME ASSUMPTIONS AS EXAMPLE 1 ABOVE, EXCEPT THAT IT ASSUMES YOU DECIDED NOT TO SURRENDER YOUR CONTRACT, OR YOU BEGAN RECEIVING INCOME PAYMENTS FOR A SPECIFIED PERIOD OF AT LEAST 120 MONTHS, AT THE END OF EACH TIME PERIOD.
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1 Year 3 Years 5 Years 10 Years
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Costs Based on Maximum Annual Portfolio Expenses $29 $88 $149 $315
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Costs Based on Minimum Annual Portfolio Expenses $18 $55 $ 94 $204
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PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%, WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF THE ENHANCED DEATH BENEFIT RIDER WITH A MORTALITY AND EXPENSE RISK CHARGE OF 1.35%, AN ADMINISTRATIVE EXPENSE CHARGE OF 0.10%, AND AN ANNUAL CONTRACT MAINTENANCE CHARGE OF $35. IF THAT RIDER WERE NOT ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. THE ABOVE EXAMPLES ALSO ASSUME TOTAL ANNUAL PORTFOLIO EXPENSES LISTED IN THE EXPENSE TABLE WILL CONTINUE THROUGHOUT THE PERIODS SHOWN.
8 PROSPECTUS
FINANCIAL INFORMATION
To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT." Each Variable Sub-Account has a separate value for its Accumulation Units we call "ACCUMULATION UNIT VALUE." Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since the date the Contracts were first offered. To obtain a fuller picture of each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Allstate Life and Allstate Financial Advisors Separate Account I, which include financial information giving effect to the Consolidation on a pro forma basis, also appear in the Statement of Additional Information. For a free copy of the Statement of Additional Information, please write or call us at 1-800-755-5275.
9 PROSPECTUS
THE CONTRACT
CONTRACT OWNER
The Allstate Provider Variable Annuity is a contract between you, the Contract Owner, and Allstate Life, a life insurance company. As the Contract Owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted):
. the investment alternatives during the Accumulation and Payout Phases,
. the amount and timing of your purchase payments and withdrawals,
. the programs you want to use to invest or withdraw money,
. the income payment plan you want to use to receive retirement income,
. the Annuitant (either yourself or someone else) on whose life the income payments will be based,
. the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract Owner dies, and
. any other rights that the Contract provides.
If you die, any surviving Contract Owner, or, if none, the Beneficiary may exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living person. If the Contract Owner is a grantor trust, the Contract Owner will be considered a non-living person for purposes of the Death of Owner and Death of Annuitant provisions of your Contract. The maximum age of the oldest Contract Owner or Annuitant cannot exceed 90 as of the date we receive the completed application. You may change the Contract Owner at any time. We will provide a change of ownership form to be signed by you and filed with us. After we accept the form, the change of ownership will be effective as of the date you signed the form. Until we receive your written notice to change the Contract Owner, we are entitled to rely on the most recent ownership information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change the Contract Owner, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
Changing ownership of this Contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner.
BENEFICIARY
The Beneficiary is the person who may elect to receive the Death Proceeds or become the new Contract Owner, subject to the "Death of Owner" section below, if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract Owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue.
You may name one or more primary and contingent Beneficiaries when you apply for a Contract. The primary Beneficiary is the person who is first entitled to receive benefits under the Contract upon the death of the sole surviving Contract Owner. A contingent Beneficiary is the person selected by the Contract Owner who will become the Beneficiary if all named primary Beneficiaries die before the death of the sole surviving Contract Owner.
You may restrict income payments to Beneficiaries by providing us a written request. Once we accept the written request, the change or restriction will take effect as of the date you signed the request. Any change is subject to any payment we make or other action we take before we accept the change.
You may change or add Beneficiaries at any time, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed by you and filed with us. After we accept the form, the change of Beneficiary will be effective as of the date you signed the form. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
If you did not name a Beneficiary or, unless otherwise provided in the Beneficiary designation, if a named Beneficiary is no longer living and there are no other surviving primary or contingent Beneficiaries, the new Beneficiary will be:
. your spouse or, if he or she is no longer alive,
. your surviving children equally, or if you have no surviving children,
. your estate.
If one or more Beneficiaries survives you, we will divide the Death Proceeds among the surviving Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the Death Proceeds in equal amounts to the surviving Beneficiaries.
If more than one Beneficiary shares in the Death Proceeds, each Beneficiary will be treated as a separate and independent owner of his or her respective share. Each Beneficiary will exercise all rights related to his or
10 PROSPECTUS
her share including the sole right to select a payout option, subject to any restrictions previously placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the payout option chosen by the original Beneficiary.
MODIFICATION OF THE CONTRACT
Only an Allstate Life officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). You initially designate an Annuitant in your application. You may change the Annuitant at any time prior to the Payout Start Date (only if the Contract Owner is a living person). Once we accept a change, it takes effect as of the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it.
You may designate a joint Annuitant, who is a second person on whose life income payments depend at the time you select an Income Plan. We permit joint Annuitants only on or after the Payout Start Date. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified Contract). All subsequent purchase payments must be $50 or more. You may make purchase payments at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money from your bank account. Consult your sales representative for more detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by notifying us in writing. We reserve the right to limit the availability of the investment alternatives.
We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order.
We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our headquarters. We are open for business each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." Our business day closes when the New York Stock Exchange closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date.
11 PROSPECTUS
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation Period, which is the 20 day period after you receive the Contract, or a longer period should your state require it. You may return your Contract by delivering it or mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account. We also will return your purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount.
In states where we are required to refund purchase payments, we reserve the right during the Cancellation Period to invest any purchase payments you allocated to a Variable Sub-Account to the money market Variable Sub-Account available under the Contract. We will notify you if we do so. At the end of the Cancellation Period, you may then allocate your money to other Variable Sub-Accounts.
If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments or the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to credit to your Contract, we divide (i) the amount of the purchase payment Accumulation Units you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Variable Sub-Account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect:
. changes in the share price of the Portfolio in which the Variable Sub-Account invests, and
. the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values reflecting the cost of the Enhanced Death Benefit Rider described on page 26.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
12 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS
You may allocate your purchase payments to up to 20 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Portfolios. You should carefully review the Portfolios' prospectuses before allocating amounts to the Variable Sub-Accounts.
PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISOR:
AIM VARIABLE INSURANCE FUNDS*
|
AIM V.I. Capital Growth of capital
Appreciation Fund
-Series I
-------------------------------------------------------------------------------
AIM V.I. Core Equity Fund Growth of capital
-Series I
-------------------------------------------------------------------------------
AIM V.I. Diversified A high level of current A I M
Income Fund -Series I income ADVISORS, INC.
-------------------------------------------------------------------------------
AIM V.I. Government A high level of current
Securities Fund -Series income consistent with a
I reasonable concern for
safety of principal
-------------------------------------------------------------------------------
AIM V.I. Growth Fund Growth of capital
-Series I
-------------------------------------------------------------------------------
AIM V.I. International Long-term growth of
Growth Fund -Series I capital
-------------------------------------------------------------------------------
AIM V.I. Premier Equity Long-term growth of
Fund -Series I capital and income as a
secondary objective
-------------------------------------------------------------------------------
AIM V.I. Utilities Fund Seeks capital growth and
-Series I** current income
-------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS
-------------------------------------------------------------------------------
American Century VP Long-term capital growth AMERICAN CENTURY
Balanced Fund - Class I and current income INVESTMENT MANAGEMENT,
INC.
-------------------------------------------------------------------------------
American Century VP Long-term capital growth
International Fund -
Class I
-------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.; THE DREYFUS STOCK INDEX
FUND; AND THE DREYFUS VARIABLE INVESTMENT FUND (VIF) (COLLECTIVELY, THE
DREYFUS FUNDS)
-------------------------------------------------------------------------------
The Dreyfus Socially Capital growth and,
Responsible Growth Fund, secondarily, current
Inc.:Initial Shares income
-------------------------------------------------------------------------------
Dreyfus Stock Index Fund: To match the total return
Initial Shares of the Standard &
Poor's(R) 500 Composite
Stock Price Index
-------------------------------------------------------------------------------
Dreyfus VIF Growth & Long-term capital growth,
Income Portfolio: current income and growth
Initial Shares of income, consistent THE DREYFUS
with reasonable CORPORATION
investment risk
-------------------------------------------------------------------------------
Dreyfus VIF Money Market A high level of current
Portfolio: Initial income as is consistent
Shares with the preservation of
capital and the
maintenance of liquidity
-------------------------------------------------------------------------------
Dreyfus VIF Small Company Investment returns
Stock Portfolio: Initial (consisting of capital
Shares appreciation and income)
that are greater
than the total
return performance
of stocks
represented by the
Russell 2500(SM)
Stock Index
("Russell 2500")
-------------------------------------------------------------------------------
FIDELITY/(R)/ VARIABLE INSURANCE PRODUCTS
-------------------------------------------------------------------------------
Fidelity VIP Long-term capital
Contrafund/(R)/ appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP Reasonable income FIDELITY MANAGEMENT
Equity-Income Portfolio &
- Initial Class RESEARCH COMPANY
-------------------------------------------------------------------------------
Fidelity VIP Growth Capital appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP High Income High level of current
Portfolio - Initial income while also
Class considering growth of
capital
-------------------------------------------------------------------------------
|
13 PROSPECTUS
MFS/(R)/ VARIABLE INSURANCE TRUST(SM)
|
MFS Emerging Growth Long-term growth of MFS(TM)
Series - Initial Class capital INVESTMENT
MANAGEMENT
-------------------------------------------------------------------------------
|
* A Portfolio's investment objective may be changed by the Fund's Board of Trustees without shareholder approval.
** Effective April 30, 2004, the AIM V.I. Global Utilities Fund - Series I merged into INVESCO VIF - Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund-Series I changed its name to AIM V.I. Utilities Fund-Series I.
AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
VARIABLE INSURANCE PORTFOLIOS MAY NOT BE MANAGED BY THE SAME PORTFOLIO MANAGERS WHO MANAGE RETAIL MUTUAL FUNDS WITH SIMILAR NAMES. THESE PORTFOLIOS ARE LIKELY TO DIFFER FROM SIMILARLY NAMED RETAIL FUNDS IN ASSETS, CASH FLOW, AND TAX MATTERS. ACCORDINGLY, THE HOLDINGS AND INVESTMENT RESULTS OF A VARIABLE INSURANCE PORTFOLIO CAN BE EXPECTED TO BE GREATER OR LESS THAN THE INVESTMENT RESULTS OF SIMILARLY NAMED RETAIL MUTUAL FUNDS.
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
You may allocate all or a portion of your purchase payments to the Fixed Account. You may choose from among 2 Fixed Account Options: a dollar cost averaging option, and the option to invest in one or more Guarantee Periods included in the Guaranteed Maturity Fixed Account. The Fixed Account Options may not be available in all states. Please consult with your sales representative for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
Purchase payments that you allocate to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option") will earn interest for a one year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each payment or transfer.
For each purchase payment, the first transfer from the DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Sub-Account in equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 18. You must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 36 months of payment. At the end of 36 months, any nominal amounts remaining in the DCA Fixed Account will be allocated to the money market Variable Sub-Account. No transfers are permitted into the DCA Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account Option. That is because we guarantee the current and renewal interest rates we credit to the amounts you allocate to this Option, which will never be less than the minimum guaranteed rate in the Contract. Currently, we determine, in our sole discretion, the amount of interest credited in excess of the guaranteed rate. We may declare more than one interest rate for different monies based upon the date of allocation to the DCA Fixed Account Option. For current interest rate information, please contact your sales representative or Allstate Life customer service at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. Guarantee Periods may range from 1 to 10 years. We are currently offering Guarantee Periods of 1, 3, 5, 7, and ten years in length. In the future, we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not select a Guarantee Period, we will assign the same period(s) you selected for your most recent purchase payment. Each payment or transfer allocated to a Guarantee Period must be at least $50. We
14 PROSPECTUS
reserve the right to limit the number of additional purchase payments that you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times.
We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors.
WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate information, please contact your sales representative or Allstate Life at 1-800-755-5275.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated to a Guarantee Period at a rate that compounds to the annual interest rate that we declared at the beginning of the applicable Guarantee Period.
THE FOLLOWING EXAMPLE ILLUSTRATES HOW A PURCHASE PAYMENT ALLOCATED TO A GUARANTEED PERIOD WOULD GROW, GIVEN AN ASSUMED GUARANTEE PERIOD AND ANNUAL INTEREST RATE:
|
Purchase Payment.................................................... $10,000
Guarantee Period.................................................... 5 years
Annual Interest Rate................................................ 4.50%
|
|
END OF CONTRACT YEAR
----------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ----------
Beginning Contract
Value $10,000.00
X (1 + Annual
Interest Rate) X 1.045
$10,450.00
Contract Value at end
of Contract Year $10,450.00
X (1 + Annual
Interest Rate) X 1.045
$10,920.25
Contract Value at end
of Contract Year $10,920.25
X (1 + Annual
Interest Rate) X 1.045
$11,411.66
Contract Value at end
of Contract Year $11,411.66
X (1 + Annual
Interest Rate) X 1.045
$11,925.19
Contract Value at end
of Contract Year $11,925.19
X (1 + Annual
Interest Rate) X 1.045
$12,461.82
|
TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5-year Guarantee Period. If you were to make a withdrawal, you may be required to pay a withdrawal charge. In addition, the amount withdrawn may be increased or decreased by a Market Value Adjustment that reflects changes in interest rates since the time you invested the amount withdrawn. The hypothetical interest rate is for illustrative purposes only and is not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given Guarantee Period may be more or less than shown above.
RENEWALS. Prior to the end of each Guarantee Period, we will mail you a notice asking you what to do with your money, including the accrued interest. During the 30-day period after the end of the Guarantee Period, you may:
1) Take no action. We will automatically apply your money to a new Guarantee Period of the same length as the expiring Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for a Guarantee Period of that length; or
2) Instruct us to apply your money to one or more new Guarantee Periods of your choice. The new Guarantee Period(s) will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for those Guarantee Periods; or
3) Instruct us to transfer all or a portion of your money to one or more Variable Sub-Accounts of the Variable
15 PROSPECTUS
Account. We will effect the transfer on the day we receive your instructions. We will not adjust the amount transferred to include a Market Value Adjustment; we will pay interest from the day the Guarantee Period expired until the date of the transfer. The interest will be the rate for the shortest Guarantee Period then being offered; or
4) Withdraw all or a portion of your money. You may be required to pay a withdrawal charge, but we will not adjust the amount withdrawn to include a Market Value Adjustment. You may also be required to pay premium taxes and withholding, if applicable. We will pay interest from the day the Guarantee Period expired until the date of withdrawal. The interest will be the rate for the shortest Guarantee Period then being offered. Amounts not withdrawn will be applied to a new Guarantee Period of the same length as the previous Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period, other than those taken during the 30 day period after such Guarantee Period expires, are subject to a Market Value Adjustment. A Market Value Adjustment also will apply when you apply amounts currently invested in a Guarantee Period to an Income Plan (unless applied during the 30 day period after such Guarantee Period expires). A Market Value Adjustment may apply in the calculation of the Settlement Value described below in the "Death Benefit Amount" section below. We will not apply a Market Value Adjustment to a withdrawal you make within the Free Withdrawal Amount as described on page 19.
We apply the Market Value Adjustment to reflect changes in interest rates from the time you first allocate money to a Guarantee Period to the time you remove it from that Guarantee Period. We calculate the Market Value Adjustment by comparing the Treasury Rate for a period equal to the Guarantee Period at its inception to the Treasury Rate for a period equal to the Guarantee Period when you remove your money. "TREASURY RATE" means the U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve Board Statistical Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in interest rates. As such, you bear the investment risk associated with changes in interest rates. If interest rates increase significantly, the Market Value Adjustment and any withdrawal charge, premium taxes, and income tax withholding (if applicable) could reduce the amount you receive upon full withdrawal from a Guaranteed Period to an amount that is less than the purchase payment applied to that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a Guarantee Period is higher than the applicable current Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a higher amount payable to you, transferred or applied to an Income Plan. Conversely, if the Treasury Rate at the time you allocate money to a Guarantee Period is lower than the applicable Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a lower amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial Guarantee Period of 5 years and the 5-year Treasury Rate for that duration is 4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at that later time, the current 5-year Treasury Rate is 4.20%, then the Market Value Adjustment will be positive, which will result in an increase in the amount payable to you. Conversely, if the current 5-year Treasury Rate is 4.80%, then the Market Value Adjustment will be negative, which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B to this prospectus, which also contains additional examples of the application of the Market Value Adjustment.
INVESTMENT ALTERNATIVES: TRANSFERS
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may request transfers in writing on a form that we provide or by telephone according to the procedure described below. The minimum amount that you may transfer into a Guarantee Period is $50. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. We treat transfers to or from more than one Portfolio on the same day as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account for up to six months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer.
16 PROSPECTUS
If you transfer an amount from a Guarantee Period other than during the 30 day period after such Guarantee Period expires, we will increase or decrease the amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. If you choose an Income Plan that depends on any person's life, you may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275. The cut-off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege, as well as any other electronic or automated means we previously approved, at any time without notice.
We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under "Trading Limitations." Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, not all market timing or excessive trading is identifiable or preventable. Imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it first occurs. To the extent that such trading activity occurs prior to detection and the imposition of trading restrictions, the portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, or to refuse any transfer request, if:
. we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
. we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
. the total dollar amount being transferred, both in the aggregate and in the transfer request;
. the number of transfers you make over a period of time and/or the period of time between transfers
17 PROSPECTUS
(note: one set of transfers to and from a sub-account in a short period of time can constitute market timing);
. whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Sub-account underlying portfolios that we have identified as being susceptible to market timing activities;
. whether the manager of the underlying portfolio has indicated that the transfers interfere with portfolio management or otherwise adversely impact the portfolio; and
. the investment objectives and/or size of the Sub-account underlying portfolio.
If we determine that a contract owner has engaged in market timing or excessive trading activity, we will restrict that contract owner from making future additions or transfers into the impacted Sub-account(s). If we determine that a contract owner has engaged in a pattern of market timing or excessive trading activity involving multiple Sub-accounts, we will also require that all future transfer requests be submitted through regular U.S. mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. Any Sub-account or transfer restrictions will be uniformly applied.
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a fixed dollar amount every month during the Accumulation Phase from the DCA Fixed Account to any Variable Sub-Account. You may not use the Dollar Cost Averaging Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor will such transfer count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the performance of each Variable Sub-Account may cause a shift in the percentage you allocated to each Variable Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among two Variable Sub-Accounts. You want 40% to be in the AIM V.I. Value Variable Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the AIM V.I. Value Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the AIM V.I. Value Variable Sub-Account and use the money to buy more units in the AIM V.I. Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments.
EXPENSES
As a Contract Owner, you will bear, directly or indirectly, the charges and expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value invested in each Variable Sub-Account in proportion to the amount
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invested. If you surrender your Contract, we will deduct the contract maintenance charge pro rated for the part of the Contract Year elapsed, unless your Contract qualifies for a waiver, described below.
The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract Owners and regulatory agencies. We cannot increase the charge. However, we will waive this charge if, as of the Contract Anniversary or upon full surrender:
. total purchase payments equal $50,000 or more, or
. all money is allocated to the Fixed Account.
In addition, we will waive the contract maintenance charge if total purchase payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.25% of the average daily net assets you have invested in the Variable Sub-Accounts (1.35% if you select the Enhanced Death Benefit Rider). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Enhanced Death Benefit Rider to compensate us for the additional risk that we accept by providing these options. We guarantee that we will not raise the mortality and expense risk charge. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will NOT charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. The charge declines to 0% over a 6 year period that begins on the day we receive your payment. Beginning on January 1, 2004, if you make a withdrawal before the Payout Start Date, we will apply the withdrawal charge percentage in effect on the date of the withdrawal, or the withdrawal charge percentage in effect on the following day, whichever is lower. A schedule showing how the charge declines is shown on page 7. During each Contract Year, you can withdraw up to 15% of the aggregate amount of your purchase payments without paying the charge. Unused portions of this "FREE WITHDRAWAL AMOUNT" are NOT carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of calculating the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations:
. on the Payout Start Date (a withdrawal charge may apply if you terminate income payments to be received for a specified period);
. on the death of the Contract Owner (or the Annuitant, if the Contract Owner is not a natural person), unless the Settlement Value is used to determine the Death Proceeds;
. withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or
. withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken before age 59 1/2, may be subject to an additional 10% federal tax penalty. Withdrawals may also be subject to a Market Value Adjustment. You should consult your own tax counsel or other tax advisers regarding any withdrawals.
CONFINEMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if the following conditions are satisfied:
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1. you or the Annuitant (if the Contract Owner is not a natural person) are confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must enter the long term care facility or hospital at least 30 days after the Issue Date;
2. you request the withdrawal and provide written proof of the stay no later than 90 days following the end of your or the Annuitant's stay at the long term care facility or hospital; and
3. a physician must have prescribed the stay and the stay must be medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the Annuitant's immediate family, is the physician prescribing your or the Annuitant's stay in a long term care facility.
TERMINAL ILLNESS WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if:
1. you or the Annuitant (if the Contract Owner is not a natural person) are first diagnosed with a terminal illness at least 30 days after the Issue Date; and
2. you claim this benefit and deliver adequate proof of diagnosis to us.
Please refer to your Contract for more detailed information about the terms and conditions of these waivers. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not need to pay our withdrawal charge or a Market Value Adjustment because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax adviser to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs, including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state.
At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently making a provision for such taxes. In the future, however, we may make a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" section beginning on page 29.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Portfolios. For a summary of current estimates of those charges and expenses, see page 7. We may receive compensation from the investment advisers or administrators of the Portfolios in connection with the administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. The amount payable upon withdrawal is the Contract Value (or a portion thereof) next computed after we receive the request for a withdrawal at our home office, adjusted by any Market Value Adjustment, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You can withdraw money from the Variable Account or the Fixed Account Options. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. You must name the investment alternative from which you are taking the withdrawal. If none is specified, we will deduct your withdrawal pro rata from the investment alternatives according to the value of your investments therein. In general, you must withdraw at least $50 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub- Account. If you request a total withdrawal, we may require you to return your Contract to us. Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally
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considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months (or shorter period if required by law). If we delay payment for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $50. At our discretion, systematic withdrawals may not be offered in conjunction with the Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At our discretion, we may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal will reduce your Contract Value to less than $2,000, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been previously reduced by withdrawals to less than $2,000, we will inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's Value to the contractual minimum of $2,000. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and taxes.
INCOME PAYMENTS
PAYOUT START DATE
You select the Payout Start Date in your application. The "PAYOUT START DATE" is the day that we apply your money to an Income Plan. The Payout Start Date must be:
. at least 30 days after the Issue Date; and
. no later than the day the Annuitant reaches age 90, or the 10th Contract Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years.
Three Income Plans are available under the Contract. Each is available to provide:
. fixed income payments;
. variable income payments; or
. a combination of the two.
A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the Contract, which is also called the "basis". Once the investment in the Contract is depleted, all remaining payments will be fully taxable. If the Contract is tax-qualified, generally, all payments will be fully taxable. Taxable payments taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint Annuitant die before we have made all of the guaranteed income payments, we will
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continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEARS TO 30 YEARS). Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. You may elect to receive guaranteed payments for periods ranging from 5 to 30 years. We will deduct the mortality and expense risk charge from the Variable Sub-Account assets that support variable income payments even though we may not bear any mortality risk.
The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant are alive before we make each payment.
Please note that under such Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. We also deduct applicable premium taxes from the Contract Value at the Payout Start Date. We may make other Income Plans available. You must apply at least the Contract Value in the Fixed Account on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account to fixed income payments. We will apply your Contract Value, adjusted by any Market Value Adjustment, less applicable taxes to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may:
. terminate the Contract and pay you the Contract Value, adjusted by any applicable Market Value Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen; or
. reduce the frequency of your payments so that each payment will be at least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) the Annuitant could live longer or shorter than we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate.
Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
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3. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by applicable law. In certain employment related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate.
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DEATH BENEFITS
DEATH OF OWNER
If you die before the Payout Start Date, any surviving joint Contract Owner or, if none, the Beneficiary will be designated the new Contract Owner and will be entitled to the options described below. If the new Contract Owner previously was the Beneficiary, however, the new Contract Owner's options will be subject to any restrictions previously placed upon the Beneficiary.
The claim for death benefits must be submitted to us within 180 days of the relevant death in order to claim the standard or enhanced death benefit. If a complete claim is not submitted within 180 days of the relevant death, the claimant will receive the greater of Contract Value or the Settlement Value. (See "Death Proceeds" below).
1. If your spouse is the sole surviving Contract Owner or, in the absence of any surviving Contract Owner, is the sole Beneficiary:
(a) Your spouse may elect to receive the Death Proceeds in a lump sum; or
(b) Your spouse may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income payments must be payable:
(i) over the life of your spouse; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of your spouse; or
(iii) over the life of your spouse with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of your spouse.
(c) If your spouse does not elect one of these options, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the following conditions apply:
The Contract Value of the continued Contract will be the Death Proceeds. Unless otherwise instructed by the continuing spouse, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the Sub-Accounts of the Variable Account. The excess will be allocated in proportion to your Contract Value in those Sub-Accounts as of the end of the Valuation Period during which we receive the complete request for settlement of the Death Proceeds, except that any portion of this excess attributable to the Fixed Account Options will be allocated to the money market Variable Sub-Account. Within 30 days of the date the Contract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee:
(i) transfer all or a portion of the excess among the Variable Sub-accounts;
(ii) transfer all or a portion of the excess into the Guaranteed Maturity Fixed Account and begin a new Guarantee Period; or
(iii) transfer all or a portion of the excess into a combination of Variable Sub-accounts and the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in the Contract.
The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a Withdrawal Charge or Market Value Adjustment.
Prior to the Payout Start Date, the Death Benefit of the continued Contract will be as defined in the Death Benefit provision.
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) The new Contract Owner may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income Payments must be payable:
(i) over the life of the new Contract Owner; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of the new Contract Owner; or
(iii) over the life of the new Contract Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner.
(c) If the new Contract Owner does not elect one of the options above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds the Contract Value will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
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The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived for any withdrawals made during this 5 year period.
We reserve the right to offer additional options upon the death of the Contract Owner.
If the new Contract Owner dies prior to the complete liquidation of the Contract Value, then the new Contract Owner's named Beneficiary(ies) will receive the greater of the Settlement Value or the remaining Contract Value. This amount must be liquidated as a lump sum within 5 years of the date of the original Contract Owner's death.
3. If the new Contract Owner is a corporation or other type of non-living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the new Contract Owner does not elect the option above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the new Contract Owner upon the death of the Contract Owner.
If any new Contract Owner is a non-living person, all new Contract Owners will be considered to be non-living persons for purposes of these provisions
Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the new Contract Owner from the date of your death to the date on which the Death Proceeds are paid.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout Start Date, the following apply:
1. If the Contract Owner is a living person, then the Contract will continue with a new Annuitant, who will be:
(a) the youngest Contract Owner; otherwise
(b) the youngest Beneficiary.
You may change the Annuitant before the Payout Start Date.
2. If the Contract Owner is a non-living person:
(a) The Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the Contract Owner does not elect the option above, then the Contract Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the Contract Owner upon the death of the Annuitant.
Under any of these options, all ownership rights are available to the non-living Contract Owner from the date of the Annuitant's death to the date on which the Death Proceeds are paid.
DUE PROOF OF DEATH
A claim for a distribution on death must include Due Proof of Death. We will accept the following documentation as "Due Proof of Death":
. a certified copy of a death certificate,
. a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or
. any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
DEATH PROCEEDS
If we receive a complete request for settlement of the Death Proceeds within 180 days of the date of your death, the Death Proceeds are equal to the applicable death benefit described below. Otherwise, the Death Proceeds are equal to the greater of the Contract Value or the Settlement Value.
We reserve the right to extend, on a non-discriminatory basis, the 180-day period in which the Death Proceeds will equal the applicable death benefit as described above.
This right applies only for the purposes of determining the amount payable as Death Proceeds and in no way restricts when a claim may be filed.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
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1. the Contract Value as of the date we determine the value of the death benefit, or
2. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of Contract Value) on the date we determine the value of the death benefit, or
3. the Contract Value on each DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, increased by purchase payments made since that Death Benefit Anniversary and reduced by an adjustment for any partial withdrawals since that Death Benefit Anniversary.
In calculating the Settlement Value, the amount in each individual Guarantee Period may be subject to a Market Value Adjustment. A Market Value Adjustment will apply to amounts in a Guarantee Period, unless we calculate the Settlement Value during the 30-day period after the expiration of the Guarantee Period. Also, the Settlement Value will reflect the deduction of any applicable withdrawal charges, contract maintenance charges, and premium taxes. Contract maintenance charges will be pro rated for the part of the Contract Year elapsed as of the date we determine the Settlement Value, unless your Contract qualifies for a waiver of such charges described in the "Contract Maintenance Charge" section above.
A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning with the Issue Date. For example, the Issue Date, 7th and 14th Contract Anniversaries are the first 3 Death Benefit Anniversaries. The partial withdrawal adjustment is equal to (a) divided by (b), with the result multiplied by (c), where:
(a) = is the withdrawal amount;
(b) = is the Contract Value immediately prior to the withdrawal; and
(c) = is the Contract Value on the Death Benefit Anniversary adjusted by any prior purchase payments or withdrawals made since that Anniversary.
We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date.
ENHANCED DEATH BENEFIT RIDER
For Contracts with the Enhanced Death Benefit Rider, the death benefit will be the greatest of (1) through (3) above, or (4) the value of the Enhanced Death Benefit Rider, which is the greatest of the ANNIVERSARY VALUES as of the date we determine the death benefit. The "Anniversary Value" is equal to the Contract Value on a Contract Anniversary, increased by purchase payments made since that Anniversary and reduced by an adjustment for any partial withdrawals since that Anniversary.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) is the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the Contract Value on that Contract Anniversary adjusted by any prior purchase payments and withdrawals since that Contract Anniversary.
We will calculate Anniversary Values for each Contract Anniversary prior to the oldest Contract Owner's or the Annuitant's, if the Contract Owner is not a natural person, 80th birthday. The Enhanced Death Benefit Rider will never be greater than the maximum death benefit allowed by any state non-forfeiture laws that govern the Contract.
MORE INFORMATION
ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957 as a stock life insurance company under the laws of the state of Illinois. Prior to January 1, 2005, Glenbrook Life and Annuity Company ("Glenbrook Life") issued the Contract. Effective January 1, 2005, Glenbrook Life merged with Allstate Life ("Merger"). On the date of the Merger, Allstate Life acquired from Glenbrook Life all of Glenbrook Life's assets and became directly liable for Glenbrook Life's liabilities and obligations with respect to all contracts issued by Glenbrook Life. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company organized under the laws of the state of Illinois. All of the capital stock issued and outstanding of Allstate Insurance Company is owned by The Allstate Corporation.
Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all jurisdictions except the state of New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062.
THE VARIABLE ACCOUNT
Allstate Life established the Allstate Financial Advisors Separate Account I in 1999. The Contracts were previously issued through the Glenbrook Life Multi-Manager Variable Account. Effective January 1, 2005, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with Allstate Financial Advisors Separate Account I and consolidated duplicative Variable Sub-Accounts that invest in the same Portfolio (the
26 PROSPECTUS
"Consolidation"). The Accumulation Unit Values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Allstate Life.
We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois law. That means we account for the Variable Account's income, gains and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Allstate Life.
The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolios at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract Owners entitled to give such instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserve for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio. The votes decrease as income payments are made and as the reserves for the Contract decrease.
We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro-rata basis to reduce the votes eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment Portfolio. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional underlying funds. We will notify you in advance of any change.
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The board of directors/trustees of these Portfolios monitors for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Portfolio's board of directors/trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. ALFS, Inc., ("ALFS") located at 3100 Sanders Road, Northbrook, IL 60062-7154, serves as principal underwriter and distributor of the Contracts. ALFS is a wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a registered broker dealer under the Securities and Exchange Act of 1934, as amended ("EXCHANGE ACT"), and is a member of the NASD.
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We will pay commissions to broker-dealers who sell the contracts. Commissions paid may vary, but we estimate that the total commissions paid on all Contract sales will not exceed 8% of all purchase payments. These commissions are intended to cover distribution expenses. Sometimes, we also pay the broker-dealer a persistency bonus in addition to the standard commissions. A persistency bonus is not expected to exceed 0.25%, on an annual basis, of the Contract Values considered in connection with the bonus. In some states, Contracts may be sold by representatives or employees of banks which may be acting as broker-dealers without separate registration under the Exchange Act pursuant to legal and regulatory exceptions.
Allstate Life does not pay ALFS a commission for distribution of the Contracts. The underwriting agreement with ALFS provides that we will reimburse ALFS for any liability to Contract Owners arising out of services rendered or Contracts issued.
ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account.
We provide the following administrative services, among others:
. issuance of the Contracts;
. maintenance of Contract Owner records;
. Contract Owner services;
. calculation of unit values;
. maintenance of the Variable Account; and
. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least annually. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we reserve the right to make the adjustment as of the date that we receive notice of the potential error.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. Allstate Life no longer issues deferred annuities to employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of state insurance law pertaining to the Contracts, including the validity of the Contracts and Allstate Life's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Allstate Life.
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TAXES
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life is taxed as a life insurance company under Part I of Subchapter L of the Code. Since the Variable Account is not an entity separate from Allstate Life, and its operations form a part of Allstate Life, it will not be taxed separately. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Allstate Life believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contract. Accordingly, Allstate Life does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Allstate Life does not intend to make provisions for any such taxes. If Allstate Life is taxed on investment income or capital gains of the Variable Account, then Allstate Life may impose a charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where:
. the Contract Owner is a natural person,
. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and
. Allstate Life is considered the owner of the Variable Account assets for federal income tax purposes.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living Owners in this prospectus. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-Qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain qualified plans; (4) certain contracts used in connection with structured settlement agreements; and (5) immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered owned by a non-natural owner. Grantor trust owned contracts receive tax deferral as described in the Exceptions to the Non-Natural Owner Rule section. In accordance with the Code, upon the death of the annuitant, the death benefit must be paid. According to your Contract, the Death Benefit is paid to the surviving Contract Owner. Since the trust will be the surviving Contract Owner in all cases, the Death Benefit will be payable to the trust notwithstanding any beneficiary designation on the annuity contract. A trust, including a grantor trust, has two options for receiving any death benefits: 1) a lump sum payment; or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "adequately diversified" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract owner during the taxable year. Although Allstate Life does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of
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the separate account investments may cause a Contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in private and published rulings in which it found that Contract owners were not owners of separate account assets. For example, if your contract offers more than twenty (20) investment alternatives you have the choice to allocate premiums and contract values among a broader selection of investment alternatives than described in such rulings. You may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Allstate Life does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a Non-Qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a Non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a Non-Qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. If any variable payment is less than the excludable amount you should contact a competent tax advisor to determine how to report any unrecovered investment. The federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide:
. if any Contract Owner dies on or after the Payout Start Date but before the entire interest in the Contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the Contract Owner's death;
. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that is payable to (or for the benefit of) a designated Beneficiary is distributed over the life of such Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary) and the distributions begin within 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner.
. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract Owner for purposes of applying the distribution at death rules. In addition, a change in the Annuitant on a Contract owned by a non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows:
. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or
. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution
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made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or becoming totally disabled,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made under an immediate annuity, or
. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract into a non-Qualified annuity contract. The contract owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges of annuity contracts. Under this ruling, if you take a withdrawal from a receiving or relinquishing annuity contract within 24 months of the partial exchange, then special aggregation rules apply for purposes of determining the taxable amount of a distribution. The IRS has issued limited guidance on how to aggregate and report these distributions. The IRS is expected to provide further guidance; as a result, it is possible that the amount we calculate and report to the IRS as taxable could be different.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified deferred annuity contracts issued by Allstate Life (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory.
Allstate Life is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
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TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity as a TSA or IRA. Tax Qualified Contracts are contracts purchased as investments as:
. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
. Roth IRAs under Section 408A of the Code;
. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p) of the Code; and
. Tax Sheltered Annuities under Section 403(b) of the Code.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the retirement plans listed above or to modify the Contract to conform with tax requirements.
The tax rules applicable to participants with tax qualified annuities vary according to the type of contract and the terms and conditions of the endorsement. Adverse tax consequences may result from certain transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. Allstate Life can issue an individual retirement annuity on a rollover or transfer of proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under which the decedent's surviving spouse is the beneficiary. Allstate Life does not offer an individual retirement annuity that can accept a transfer of funds for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer sponsored retirement plan.
In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If you make a partial withdrawal under a Tax Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Tax Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are:
. made on or after the date the Contract Owner attains age 59 1/2,
. made to a beneficiary after the Contract Owner's death,
. attributable to the Contract Owner being disabled, or
. made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, IRAs (excluding Roth IRAs) and TSAs require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or the Contract Value. We believe that the Death Benefits offered by your Contract do not constitute life insurance under these regulations.
It is also possible that certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Tax Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
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. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or total disability,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made after separation from service after age 55 (does not apply to IRAs),
. made pursuant to an IRS levy,
. made for certain medical expenses,
. made to pay for health insurance premiums while unemployed (applies only for IRAs),
. made for qualified higher education expenses (applies only for IRAs), and
. made for a first time home purchase (up to a $10,000 lifetime limit and applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect to Tax Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "eligible rollover distributions." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Allstate Life is required to withhold federal income tax at a rate of 20% on all "eligible rollover distributions" unless you elect to make a "direct rollover" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from employer sponsored retirement plans, including TSAs but excluding IRAs, with the exception of:
. required minimum distributions, or,
. a series of substantially equal periodic payments made over a period of at least 10 years, or,
. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or,
. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding requirement, Allstate Life is required to withhold federal income tax using the wage withholding rates. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified plans may be "rolled over" on a tax-deferred basis into an Individual Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity.
33 PROSPECTUS
Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS Code Section 408 permits a custodian or trustee of an Individual Retirement Account to purchase an annuity as an investment of the Account. If an annuity is purchased inside of an Individual Retirement Account, then the annuitant must be the same person as the beneficial owner of the Individual Retirement Account. The death benefit of an annuity held in an Individual Retirement Account must be paid upon the death of the annuitant.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. These employers may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the Code allow eligible employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees using individual retirement annuities. In general, a SIMPLE IRA consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to purchase the Contract as a SIMPLE IRA should seek competent tax and legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee:
. attains age 59 1/2,
. severs employment,
. dies,
. becomes disabled, or
. incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate Life is directed to transfer some or all of the Contract Value to another 403(b) plan. Generally, we do not accept Employee Retirement Income Security Act of 1974 (ERISA) funds in 403(b) contracts.
34 PROSPECTUS
ANNUAL REPORTS AND OTHER DOCUMENTS
Allstate Life's annual report on Form 10-K for the year ended December 31, 2003 and its Form 10-Q reports for the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 are incorporated herein by reference which means that they are legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Exchange Act are also incorporated herein by reference, which means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC and that legally become a part of this prospectus, may change or supersede statements in other documents that are legally part of this prospectus. Accordingly, only the statement that is changed or replaced will legally be a part of this prospectus.
We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR" system using the identifying number CIK No. 0000352736. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http:/ /www.sec.gov. You also can view these materials at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. For more information on the operations of SEC's Public Reference Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of any document incorporated herein by reference (other than exhibits not specifically incorporated by reference into the text of such documents), please write or call us at 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 (telephone:
1-800-755-5275).
35 PROSPECTUS
APPENDIX A
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
BASIC POLICY
|
For the Years Beginning January 1 and Ending December 31,** 1998 1999 2000 2001 2002
---------------------------------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $30.700 $17.628 $15.496 $11.728
Accumulation Unit Value, End of Period $30.700 $17.628 $15.496 $11.728 $ 8.752
Number of Units Outstanding, End of Period 6,547 7,877 8,541 7,986 6,534
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $12.897 $17.081 $14.400 $10.962
Accumulation Unit Value, End of Period $12.897 $17.081 $14.400 $10.962 $ 9.130
Number of Units Outstanding, End of Period 52,358 21,097 24,225 12,309 8,055
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.131 $ 9.802 $ 9.739 $ 9.953
Accumulation Unit Value, End of Period $10.131 $ 9.802 $ 9.739 $ 9.953 $10.045
Number of Units Outstanding, End of Period 9,663 13,500 9,544 2,903 2,413
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $10.000 $11.444 $15.079 $14.539 $10.337
Accumulation Unit Value, End of Period $11.444 $15.079 $14.539 $10.337 $ 7.594
Number of Units Outstanding, End of Period 0 0 1,656 1,657 1,657
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.868 $10.290 $11.181 $11.738
Accumulation Unit Value, End of Period $10.868 $10.290 $11.181 $11.738 $12.692
Number of Units Outstanding, End of Period 692 719 15,350 478 1,372
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $13.490 $17.988 $14.120 $ 9.209
Accumulation Unit Value, End of Period $13.490 $17.988 $14.120 $ 9.209 $ 6.272
Number of Units Outstanding, End of Period 15,902 14,265 13,585 14,671 6,205
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $11.445 $17.507 $12.713 $ 9,590
Accumulation Unit Value, End of Period $11.445 $17.507 $12.713 $ 9.590 $ 7.798
Number of Units Outstanding, End of Period 1,491 1,207 1,206 1,206 1,205
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $13.299 $17.043 $14.353 $12.380
Accumulation Unit Value, End of Period $13.299 $17.043 $14.353 $12.380 $ 8.519
Number of Units Outstanding, End of Period 34,858 34,854 32,778 22,769 17,392
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- -- -- --
Accumulation Unit Value, End of Period -- -- -- -- --
Number of Units Outstanding, End of Period -- -- -- -- --
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.618 $12.116 $13.142 $12.611 $11.988
Accumulation Unit Value, End of Period $12.116 $13.142 $12.611 $11.988 $10.746
Number of Units Outstanding, End of Period 9,621 10,484 10,810 9,085 2,195
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.025 $11.752 $19.020 $15.609 $10.906
Accumulation Unit Value, End of Period $11.734 $19.020 $15.609 $10.906 $ 8.568
Number of Units Outstanding, End of Period 344 371 370 379 386
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.813 $13.265 $17.649 $15.472 $11.859
Accumulation Unit Value, End of Period $13.265 $17.649 $ 15472 $11.859 $ 8.313
Number of Units Outstanding, End of Period 4726 3,528 6,596 4,051 3,554
|
36 PROSPECTUS
|
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $12.819 $15.237 $13.626 $11.839
Accumulation Unit Value, End of Period $12.819 $15.237 $13.626 $11.839 $ 9.068
Number of Units Outstanding, End of Period 39,205 80,779 77,360 28,373 26,929
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $11.656 $13.601 $12.900 $12.025
Accumulation Unit Value, End of Period $11.656 $13.601 $12.900 $12.025 $ 8.858
Number of Units Outstanding, End of Period 15,709 18,597 16,850 2,648 1,949
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.566 $10.909 $11.402 $11.723
Accumulation Unit Value, End of Period $10.566 $10.909 $11.402 $11.732 $11.745
Number of Units Outstanding, End of Period 750 40,342 2,062 9,333 4,588
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.343 $11.275 $12.061 $11.757
Accumulation Unit Value, End of Period $10.343 $11.275 $12.061 $11.757 $ 9.314
Number of Units Outstanding, End of Period 710 5,754 2,477 613 529
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $14.184 $17.370 $15.987 $13.889
Accumulation Unit Value, End of Period $14.184 $17.370 $15.987 $13.889 $12.422
Number of Units Outstanding, End of Period 9350 14,873 17,120 7,894 7,891
FIDELITY VIP EQUITY - INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $11.259 $11.799 $12.610 $11.858
Accumulation Unit Value, End of Period $11.259 $11.799 $12.610 $11.858 $ 9.716
Number of Units Outstanding, End of Period 40,266 70,192 67,206 16,719 14,198
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $14.691 $19.899 $17.461 $17.461
Accumulation Unit Value, End of Period $14.691 $19.899 $17.461 $14.235 $ 9.816
Number of Units Outstanding, End of Period 6361 11,241 14,641 5,421 5,382
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.164 $10.834 $ 8.280 $ 7.235
Accumulation Unit Value, End of Period $10.164 $10.834 $ 8.280 $ 7.235 $ 7.384
Number of Units Outstanding, End of Period 5,530 27,471 18,857 1,096 410
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $14.544 $25.331 $20.073 $13.217
Accumulation Unit Value, End of Period $14.544 $25.331 $20.073 $13.217 $ 8.638
Number of Units Outstanding, End of Period 4,972 10,929 14,285 6,297 6,255
MFS LIMITED MATURITY SUB-ACCOUNT/(//2//)/
Accumulation Unit Value, Beginning of Period $10.000 $10.273 $10.753 -- --
Accumulation Unit Value, End of Period $10.273 $10.753 $11.237 -- --
Number of Units Outstanding, End of Period 1,014 5,857 4,938 -- --
|
|
For the Years Beginning January 1 and Ending December 31,** 2003 2004
--------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.752 $11.184
Accumulation Unit Value, End of Period $11.184 $10.728
Number of Units Outstanding, End of Period 6,285 3,532
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.130 $11.207
Accumulation Unit Value, End of Period $11.207 $11.248
Number of Units Outstanding, End of Period 7,492 3,541
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.045 $10.826
Accumulation Unit Value, End of Period $10.826 $11.118
Number of Units Outstanding, End of Period 1,280 500
|
37 PROSPECTUS
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
|
Accumulation Unit Value, Beginning of Period $ 7.594 $ 8.919
Accumulation Unit Value, End of Period $ 8.919 $ 8.959
Number of Units Outstanding, End of Period 1,657 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $12.692 $12.655
Accumulation Unit Value, End of Period $12.655 $12.774
Number of Units Outstanding, End of Period 1,322 143
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.272 $ 8.121
Accumulation Unit Value, End of Period $ 8.121 $ 7.866
Number of Units Outstanding, End of Period 6,415 4,345
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.798 $10.159
Accumulation Unit Value, End of Period $10.159 $10.834
Number of Units Outstanding, End of Period 1,374 1,373
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.519 $10.512
Accumulation Unit Value, End of Period $10.512 10.144
Number of Units Outstanding, End of Period 16,239 10,726
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $10.000
Accumulation Unit Value, End of Period -- 10.887
Number of Units Outstanding, End of Period -- 1,483
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.746 $12.665
Accumulation Unit Value, End of Period $12.665 $12.931
Number of Units Outstanding, End of Period 2,193 2,191
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.568 $10.525
Accumulation Unit Value, End of Period $10.525 $10.507
Number of Units Outstanding, End of Period 335 95
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.313 $10.355
Accumulation Unit Value, End of Period $10.355 $ 9.982
Number of Units Outstanding, End of Period 3,554 3,554
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.068 $11.484
Accumulation Unit Value, End of Period $11.484 $11.482
Number of Units Outstanding, End of Period 24,898 18,678
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.858 $11.062
Accumulation Unit Value, End of Period $11.062 $10.729
Number of Units Outstanding, End of Period 2,317 2,051
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.745 $11.668
Accumulation Unit Value, End of Period $11.668 $11.607
Number of Units Outstanding, End of Period 3,838 3,428
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.314 $13.134
Accumulation Unit Value, End of Period $13.134 $13.852
Number of Units Outstanding, End of Period 515 514
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $12.422 $15.744
Accumulation Unit Value, End of Period $15.744 $16.483
Number of Units Outstanding, End of Period 7,766 10,224
|
38 PROSPECTUS
FIDELITY VIP EQUITY - INCOME SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 9.716 $12.494
Accumulation Unit Value, End of Period $12.494 $12.625
Number of Units Outstanding, End of Period 13,119 14,212
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.816 $12.866
Accumulation Unit Value, End of Period $12.866 $12.138
Number of Units Outstanding, End of Period 4,434 2,845
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.384 $ 9.271
Accumulation Unit Value, End of Period $ 9.271 $ 9.613
Number of Units Outstanding, End of Period 236 235
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.638 $11.098
Accumulation Unit Value, End of Period $11.098 $10.866
Number of Units Outstanding, End of Period 6,100 4,359
MFS LIMITED MATURITY SUB-ACCOUNT/(//2//)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
|
* The AIM Variable Sub-Accounts, as well as the Fidelity Equity Income and Dreyfus Stock Index Variable Sub-Accounts, commenced operations on January 26, 1998. The other Variable Sub-Accounts commenced operation on June 17, 1997, but had no material operations for the year ended December 31, 1997. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.25% and an administrative expense charge of 0.10%.
** The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Effective April 30, 2004, AIM VI. Global Utilities Fund - Series I was merged into INVESCO VIF-Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund - Series I changed its name to AIM V.I. Utilities Fund - Series I. We have made a corresponding change in the name of the Variable Sub-Account that invests in that Portfolio.
(2) No longer available under the Contracts.
39 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
BASIC POLICY PLUS ENHANCED DEATH BENEFIT RIDER
|
For the Years Beginning January 1 and Ending December 31,** 1998 1999 2000 2001 2002
---------------------------------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $12.344 $17.594 $15.450 $11.682
Accumulation Unit Value, End of Period $12.344 $17.594 $15.450 $11.682 $ 8.709
Number of Units Outstanding, End of Period 5,197 13,896 14,129 10,572 9,006
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $12.897 $17.081 $14.400 $ 9.173
Accumulation Unit Value, End of Period $12.897 $17.081 $14.400 $ 9.173 $ 9.085
Number of Units Outstanding, End of Period 0 21,097 24,225 14,671 33,045
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.121 $ 9.784 $ 9.711 $ 9.913
Accumulation Unit Value, End of Period $10.121 $ 9.784 $ 9.711 $ 9.913 $ 9.996
Number of Units Outstanding, End of Period 8,931 7,601 8,074 7,232 3,654
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $10.000 $11.433 $15.050 $13.620 $ 9.750
Accumulation Unit Value, End of Period $11.433 $15.050 $13.620 $ 9.750 $ 7.557
Number of Units Outstanding, End of Period 0 1,584 327 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.858 $10.270 $11.149 $11.691
Accumulation Unit Value, End of Period $10.858 $10.270 $11.149 $11.691 $12.629
Number of Units Outstanding, End of Period 7,546 39,816 47,013 16,757 5,139
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $13.477 $17.964 $14.079 $ 9.173
Accumulation Unit Value, End of Period $13.477 $17.964 $14.079 $ 9.173 $ 6.241
Number of Units Outstanding, End of Period 15,252 14,638 17,565 14,671 12,974
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $11.434 $17.474 $12.676 $ 9.590
Accumulation Unit Value, End of Period $11.434 $17.474 $12.676 $ 9.590 $ 7.939
Number of Units Outstanding, End of Period 5,403 4,967 977 1,206 1,066
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $13.287 $17.011 $14.311 $12.332
Accumulation Unit Value, End of Period $13.287 $17.011 $14.311 $12.332 $ 8.477
Number of Units Outstanding, End of Period 5,2510 64,070 65,919 57,074 40,856
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- -- -- --
Accumulation Unit Value, End of Period -- -- -- -- --
Number of Units Outstanding, End of Period -- -- -- -- --
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.618 $12.116 $13.142 $12.611 $11.988
Accumulation Unit Value, End of Period $12.116 $13.142 $12.611 $11.988 $10.686
Number of Units Outstanding, End of Period 7,716 10,484 10,810 9,085 8,427
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.025 $11.734 $18.972 $15.544 $10.856
Accumulation Unit Value, End of Period $11.734 $18.972 $15.554 $10.856 $ 8.520
Number of Units Outstanding, End of Period 5,196 5,546 11,548 11,365 8,232
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.813 $13.265 $17.649 $15.472 $11.805
Accumulation Unit Value, End of Period $13.265 $17.643 $15.472 $11.805 $ 8.267
Number of Units Outstanding, End of Period 4,373 3,528 6,596 6,031 5,603
|
40 PROSPECTUS
|
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $12.819 $15.237 $13.626 $11.792
Accumulation Unit Value, End of Period $12.819 $15.237 $13.626 $11.792 $ 9.024
Number of Units Outstanding, End of Period 86,935 80,779 77,360 66,841 43,298
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.602 $11.656 $13.601 $12.900 $11.970
Accumulation Unit Value, End of Period $11.656 $13.601 $12.900 $11.970 $ 8.809
Number of Units Outstanding, End of Period 18,031 18,597 16,850 13,932 11,640
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.198 $10.566 $10.909 $11.402 $11.679
Accumulation Unit Value, End of Period $10.566 $10.909 $11.402 $11.679 $11.680
Number of Units Outstanding, End of Period 13,027 40,342 2,062 3,684 47,945
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.161 $10.343 $11.275 $12.061 $11.704
Accumulation Unit Value, End of Period $10.343 $11.275 $12.061 $11.704 $ 9.262
Number of Units Outstanding, End of Period 5,753 5,754 2,477 2,227 2,227
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.071 $14.184 $17.370 $15.987 $13.826
Accumulation Unit Value, End of Period $14.184 $17.370 $15.987 $13.826 $12.353
Number of Units Outstanding, End of Period 11,838 14,873 17,120 13,544 11,445
FIDELITY VIP EQUITY - INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $11.259 $11.799 $12.610 $11.811
Accumulation Unit Value, End of Period $11.259 $11.799 $12.610 $11.811 $ 9.669
Number of Units Outstanding, End of Period 76,050 70,192 67,206 57,665 40,187
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.685 $14.691 $19.899 $17.461 $14.170
Accumulation Unit Value, End of Period $14.691 $19.899 $17.461 $14.170 $ 9.762
Number of Units Outstanding, End of Period 8,947 11,241 14,641 12,263 11,143
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.779 $10.164 $10.834 $ 8.280 $ 7.202
Accumulation Unit Value, End of Period $10.164 $10.834 $ 8.280 $ 7.202 $ 7.343
Number of Units Outstanding, End of Period 28,509 27,471 18,857 14,048 8,990
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.999 $14.544 $25.331 $20.073 $13.157
Accumulation Unit Value, End of Period $14.544 $25.331 $20.073 $13.157 $ 8.590
Number of Units Outstanding, End of Period 6,085 10,929 14,285 10,328 9,308
MFS LIMITED MATURITY SUB-ACCOUNT/(//2//)/
Accumulation Unit Value, Beginning of Period $10.269 $10.273 $10.753 -- --
Accumulation Unit Value, End of Period $10.273 $10.753 $11.237 -- --
Number of Units Outstanding, End of Period 3,996 5,857 4,938 -- --
|
|
For the Years Beginning January 1 and Ending December 31,** 2003 2004
--------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.709 $11.118
Accumulation Unit Value, End of Period $11.118 $10.657
Number of Units Outstanding, End of Period 4,854 3,677
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.095 $11.141
Accumulation Unit Value, End of Period $11.141 $11.173
Number of Units Outstanding, End of Period 27,360 10,942
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.996 $10.762
Accumulation Unit Value, End of Period $10.762 $11.044
Number of Units Outstanding, End of Period 2,992 0
|
41 PROSPECTUS
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
|
Accumulation Unit Value, Beginning of Period $ 7.557 $ 8.866
Accumulation Unit Value, End of Period $ 8.866 $ 8.903
Number of Units Outstanding, End of Period 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $12.629 $12.581
Accumulation Unit Value, End of Period $12.581 $12.689
Number of Units Outstanding, End of Period 3,458 661
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.241 $ 8.073
Accumulation Unit Value, End of Period $ 8.073 $ 7.813
Number of Units Outstanding, End of Period 8,745 4,038
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.939 $10.099
Accumulation Unit Value, End of Period $10.099 $10.762
Number of Units Outstanding, End of Period 1,825 1,759
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.477 $10.450
Accumulation Unit Value, End of Period $10.450 $10.077
Number of Units Outstanding, End of Period 37,577 23,576
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $10.000
Accumulation Unit Value, End of Period -- $10.883
Number of Units Outstanding, End of Period -- 0
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.686 $12.582
Accumulation Unit Value, End of Period $12.582 $12.582
Number of Units Outstanding, End of Period 4,520 3,813
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.520 $10.456
Accumulation Unit Value, End of Period $10.456 $10.431
Number of Units Outstanding, End of Period 8,232 5,202
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.267 $10.267
Accumulation Unit Value, End of Period $10.267 $ 9.910
Number of Units Outstanding, End of Period 5,112 3,007
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.024 $11.416
Accumulation Unit Value, End of Period $11.416 $11.406
Number of Units Outstanding, End of Period 33,712 15,998
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.809 $10.990
Accumulation Unit Value, End of Period $10.990 $10.651
Number of Units Outstanding, End of Period 9,230 7,144
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.680 $11.592
Accumulation Unit Value, End of Period $11.592 $11.523
Number of Units Outstanding, End of Period 5,479 1,474
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.262 $13.049
Accumulation Unit Value, End of Period $13.049 $13.752
Number of Units Outstanding, End of Period 2,894 2,843
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $12.353 $15.641
Accumulation Unit Value, End of Period $15.641 $16.364
Number of Units Outstanding, End of Period 12,104 8,777
|
42 PROSPECTUS
FIDELITY VIP EQUITY - INCOME SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 9.669 $12.420
Accumulation Unit Value, End of Period $12.420 $12.541
Number of Units Outstanding, End of Period 36,380 20,151
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.762 $12.782
Accumulation Unit Value, End of Period $12.782 $12.050
Number of Units Outstanding, End of Period 10,840 2,795
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.343 $ 9.211
Accumulation Unit Value, End of Period $ 9.211 v9.543
Number of Units Outstanding, End of Period 7.262 1,215
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.590 $11.026
Accumulation Unit Value, End of Period $11.026 $10.787
Number of Units Outstanding, End of Period 5,167 3,181
MFS LIMITED MATURITY SUB-ACCOUNT/(//2//)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
|
* The AIM Variable Sub-Accounts, as well as the Fidelity Equity Income and Dreyfus Stock Index Variable Sub-Accounts, commenced operations on January 26, 1998. The other Variable Sub-Accounts commenced operation on June 17, 1997, but had no material operations for the year ended December 31, 1997. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.35% and an administrative expense charge of 0.10%.
** The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Effective April 30, 2004, AIM VI. Global Utilities Fund - Series I was merged into INVESCO VIF-Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund - Series I changed its name to AIM V.I. Utilities Fund - Series I. We have made a corresponding change in the name of the Variable Sub-Account that invests in that Portfolio.
(2) No longer available under the Contracts.
43 PROSPECTUS
APPENDIX B
MARKET VALUE ADJUSTMENT EXAMPLE
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the withdrawal, transfer, or death benefit request, or from the Payout Start Date to the end of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the receipt of the withdrawal, transfer, death benefit, or income payment request. If a Note with a maturity of the original Guarantee Period is not available, we determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported in Federal Reserve Bulletin Release H.15.
* If a U.S. Treasury Note ("Note") with a maturity of the Guarantee Period is not available, we will determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
The Market Value Adjustment factor is determined from the following formula:
.9 X [I-(J + .0025)] X N
To determine the Market Value Adjustment, we will multiply the Market Value Adjustment factor by the amount transferred, withdrawn (in excess of the Free Withdrawal Amount), paid as a death benefit, or applied to an Income Plan from a Guarantee Period at any time other than during the 30 day period after such Guarantee Period expires.
44 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
|
Step 1. Calculate Contract Value
at End of Contract Year 3: $10,000.00 X (1.045)/3/ = $11,411.66
Step 2. Calculate the Free
Withdrawal Amount: .15 X ($10,000.00) = $1,500.00
Step 3. Calculate the Withdrawal I = 4.5%
Charge: J = 4.2%
730 days
Step 4. Calculate the Market N = -------- = 2
Value Adjustment: 365 days
Market Value Adjustment Factor: .9 X [I - (J
+ .0025)] X N = .9 X [.045 - (.042 + .0025)]
X 2 = .0009
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= .0009 X ($11,411.66 - $1,500.00) = $8.92
Step 5. Calculate the amount
received by a Contract Owner as
a result of full withdrawal at $11,411.66 + $8.92 = $11,420.58
|
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
|
Step 1. Calculate Contract Value
at End of Contract Year 3: $10,000.00 X (1.045)/3/ = $11,411.66
Step 2. Calculate the Free
Withdrawal Amount: .15 X ($10,000.00) = $1,500.00
Step 3. Calculate the Withdrawal I = 4.5%
Charge: J = 4.8%
730 days
Step 4. Calculate the Market N = -------- = 2
Value Adjustment: 365 days
Market Value Adjustment Factor: .9 X [I - (J
+ .0025)] X N = .9 X [.045 - (.048 + .0025)]
X 2 = - .0099
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= - .0099 X ($11,411.66 - $1,500.00) = -
$98.13
Step 5. Calculate the amount
received by a Contract Owner as
a result of full withdrawal at $11,411.66 - $98.13 = $11,313.53
|
the end of Contract Year 3:
45 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
THE CONTRACT
Purchase of Contracts
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
CALCULATION OF ACCUMULATION UNIT VALUES
NET INVESTMENT FACTOR
CALCULATION OF VARIABLE INCOME PAYMENTS
CALCULATION OF ANNUITY UNIT VALUES
GENERAL MATTERS
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
EXPERTS
FINANCIAL STATEMENTS
APPENDIX A: ACCUMULATION UNIT VALUES
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
46 PROSPECTUS
THE ALLSTATE(R) PROVIDER VARIABLE ANNUITY
(formerly referred to as "The Glenbrook Provider Variable Annuity")
ALLSTATE LIFE INSURANCE COMPANY
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 MAILING ADDRESS:
P.O. BOX 80469, LINCOLN, NE 68501-0469 TELEPHONE NUMBER: 1-800-755-5275 PROSPECTUS DATED JANUARY 3, 2005
Allstate Life Insurance Company ("Allstate Life") is offering the Allstate(R) Provider Variable Annuity, an individual flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference.
The Contract currently offers 40 "INVESTMENT ALTERNATIVES". The investment alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and 37 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Allstate Financial Advisors Separate Account I ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of one of the portfolios ("PORTFOLIOS") of the following mutual funds ("FUNDS"):
|
AIM VARIABLE INSURANCE FUNDS FIDELITY/(R)/ VARIABLE INSURANCE PRODUCTS
THE DREYFUS SOCIALLY RESPONSIBLE GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
GROWTH FUND, INC. MFS/(R)/ VARIABLE INSURANCE TRUST(SM)
DREYFUS STOCK INDEX FUND NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
DREYFUS VARIABLE INVESTMENT FUND THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
(VIF)
|
Not all of the Funds and/or Portfolios, however, may be available with your Contract. You should check with your representative for further information on the availability of Funds and/or Portfolios. Your annuity application will list all available Portfolios.
WE (Allstate Life) have filed a Statement of Additional Information, dated January 3, 2005, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means it is legally a part of this prospectus. Its table of contents appears on page 54 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http:// www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SEC's Web site.
|
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR HAS
IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE
WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS THAT
NOTICES HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS
OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY SUCH INSTITUTIONS
OR ANY FEDERAL REGULATORY AGENCY. INVESTMENT IN THE CONTRACTS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
|
THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
PAGE
OVERVIEW
|
Important Terms 3
The Contract at a Glance 4
How the Contract Works 6
Expense Table 7
Financial Information 9
CONTRACT FEATURES
The Contract 10
Purchases 11
Contract Value 12
Investment Alternatives 13
The Variable Sub-Accounts 13
The Fixed Account Options 15
Transfers 18
Expenses 20
Access To Your Money 22
|
PAGE
|
Income Payments 23
Death Benefits 24
OTHER INFORMATION
More Information: 28
Allstate Life 28
The Variable Account 28
The Portfolios 28
The Contract 29
Non-Qualified Annuities Held Within a Qualified Plan 29
Legal Matters 30
Taxes 31
Annual Reports and Other Documents 37
APPENDIX A-ACCUMULATION UNIT VALUES 38
APPENDIX B-MARKET VALUE ADJUSTMENT EXAMPLE 52
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 54
|
2 PROSPECTUS
IMPORTANT TERMS
This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE
|
Accumulation Phase 6
Accumulation Unit 12
Accumulation Unit Value 12
Anniversary Values 27
Annuitant 10
Automatic Additions Plan 11
Automatic Portfolio Rebalancing Program 19
Beneficiary 10
Cancellation Period 12
Contract* 10
Contract Anniversary 5
Contract Owner (You) 10
Contract Value 12
Contract Year 4
Death Benefit Anniversary 26
Death Proceeds 26
Dollar Cost Averaging Program 19
Due Proof of Death 26
Enhanced Death Benefit Rider 27
Enhanced Death and Income Benefit Combination Rider 27
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PAGE
|
Fixed Account Options 15
Free Withdrawal Amount 20
Funds 1
Allstate Life ("We" or "Us") 28
Guarantee Periods 16
Income Plan 23
Investment Alternatives 13
Issue Date 6
Market Value Adjustment 17
Payout Phase 6
Payout Start Date 23
Portfolios 28
Qualified Contracts 34
SEC 1
Settlement Value 26
Systematic Withdrawal Program 22
Valuation Date 11
Variable Account 28
Variable Sub-Account 13
|
* In certain states the Contract is available only as a group Contract. If you purchase a group Contract, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates, unless the context requires otherwise.
3 PROSPECTUS
THE CONTRACT AT A GLANCE
The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information.
|
FLEXIBLE PAYMENTS You can purchase a Contract with as little as
$3,000 ($2,000 for "QUALIFIED CONTRACTS", which
are Contracts issued within QUALIFIED PLANS).
You can add to your Contract as often and as
much as you like, but each payment must be at
least $50.
-------------------------------------------------------------------------------
RIGHT TO CANCEL You may cancel your Contract within 20 days of
receipt or any longer period as your state may
require ("CANCELLATION PERIOD"). Upon
cancellation, we will return your purchase
payments adjusted, to the extent federal or
state law permits, to reflect the investment
experience of any amounts allocated to the
Variable Account.
-------------------------------------------------------------------------------
EXPENSES You will bear the following expenses:
. Total Variable Account annual fees equal
to 1.15% of average daily net assets
(1.37% if you select the ENHANCED DEATH
BENEFIT RIDER and 1.59% if you select the
ENHANCED DEATH AND INCOME BENEFIT
COMBINATION RIDER)
. Annual contract maintenance charge of $35
(with certain exceptions)
. Withdrawal charges ranging from 0% to 6%
of purchase payment withdrawn (with
certain exceptions)
. Transfer fee of $10 after 12th transfer in
any CONTRACT YEAR (fee currently waived)
. State premium tax (if your state imposes
one)
In addition, each Portfolio pays expenses that
you will bear indirectly if you invest in a
Variable Sub-Account.
-------------------------------------------------------------------------------
INVESTMENT The Contract offers 40 investment alternatives
ALTERNATIVES including:
. 3 Fixed Account Options (which credit
interest at rates we guarantee)
. 37 Variable Sub-Accounts investing in
Portfolios offering professional money
|
management by these investment advisors:
. A I M Advisors, Inc.
. The Dreyfus Corporation
. Fidelity Management & Research Company
. Goldman Sachs Asset Management, L.P.
. MFS(TM) Investment Management
. Neuberger Berman Management, Inc.
. Van Kampen/(1)/
To find out current rates being paid on the Fixed Account options, or to find out how the Variable Sub-Accounts have performed, please call us at 1-800-755-5275.
/(1)// /Morgan Stanley Investment Management Inc., the adviser to the UIF Portfolios, does business in certain instances as Van Kampen.
4 PROSPECTUS
SPECIAL SERVICES For your convenience, we offer these special services:
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. AUTOMATIC ADDITIONS PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
|
INCOME PAYMENTS You can choose fixed income payments, variable
income payments, or a combination of the two.
You can receive your income payments in one of
the following ways:
. life income with guaranteed payments
. a "joint and survivor" life income with
guaranteed payments
. guaranteed payments for a specified period
(5 to 30 years)
-------------------------------------------------------------------------------
DEATH BENEFITS If you or the ANNUITANT (if the Contract is
owned by a non-natural person) die before the
PAYOUT START DATE, we will pay the death
benefit described in the Contract. We offer an
Enhanced Death Benefit Rider and an Enhanced
Death and Income Benefit Combination Rider.
-------------------------------------------------------------------------------
TRANSFERS Before the Payout Start Date, you may transfer
your Contract Value ("CONTRACT VALUE") among
the investment alternatives, with certain
restrictions. Transfers to a Guarantee Period
of the Fixed Account must be at least $50.
We do not currently impose a fee upon
transfers. However, we reserve the right to
charge $10 per transfer after the 12th transfer
in each "Contract Year," which we measure from
the date we issue your Contract or a Contract
Anniversary ("CONTRACT ANNIVERSARY").
-------------------------------------------------------------------------------
WITHDRAWALS You may withdraw some or all of your Contract
Value at any time prior to the Payout Start
Date. In general, you must withdraw at least
$50 at a time. Full or partial withdrawals are
available under limited circumstances on or
after the Payout Start Date. Withdrawals taken
prior to annuitization (referred to in this
prospectus as the Payout Phase) are generally
considered to come from the earnings in the
Contract first. If the Contract is
tax-qualified, generally all withdrawals are
treated as distributions of earnings.
Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may
be subject to an additional 10% federal tax
penalty. A withdrawal charge and MARKET VALUE
ADJUSTMENT also may apply.
-------------------------------------------------------------------------------
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5 PROSPECTUS
HOW THE CONTRACT WORKS
The Contract basically works in two ways. First, the Contract can help you (we assume you are the CONTRACT OWNER) save for retirement because you can invest in up to 40 investment alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/ or Fixed Account Options. If you invest in any of the 3 Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the 38 Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/ or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page 23. You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
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Issue Payout Start
Date Accumulation Phase Date Payout Phase
---------------------------------------------------------------------------------------------------
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
|
As the Contract Owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract Owner or, if none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. See "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract Owner, or if there is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any questions about how the Contract works.
6 PROSPECTUS
EXPENSE TABLE
The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
|
Number of Complete Years Since We Received the Purchase
Payment Being Withdrawn 0 1 2 3 4 5 6+
--------------------------------------------------------------------------------------------
Applicable Charge 6% 6% 5% 5% 4% 3% 0%
--------------------------------------------------------------------------------------------
Annual Contract Maintenance Charge $35.00**
--------------------------------------------------------------------------------------------
Transfer Fee $10.00***
--------------------------------------------------------------------------------------------
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* Each Contract Year, you may withdraw up to 15% of your aggregate purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
*** Applies solely to the thirteenth and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee.
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Policy with
Policy with Enhanced Death
Variable Account Annual Expenses (as a percentage of daily net asset Enhanced Death Benefit and Income Benefit
value deducted from each VARIABLE SUB-ACCOUNT) Base Policy Rider Combo
-------------------------------------------------------------------------------------------------------------------------------
Mortality and Expense Risk Charge 1.05% 1.27% 1.49%
-------------------------------------------------------------------------------------------------------------------------------
Administrative Expense Charge 0.10% 0.10% 0.10%
-------------------------------------------------------------------------------------------------------------------------------
Total Variable Account Annual Expenses 1.15% 1.37% 1.59%
-------------------------------------------------------------------------------------------------------------------------------
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PORTFOLIO ANNUAL EXPENSES (as a percentage of Portfolio average daily net assets)(1) The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. Advisers and/or other service providers of certain Portfolios may have agreed to waive their fees and/or reimburse Portfolio expenses in order to keep the Portfolios' expenses below specified limits. The range of expenses shown in this table does not show the effect of any such fee waiver or expense reimbursement. More detail concerning each Portfolio's fees and expenses appears in the prospectus for each Portfolio.
ANNUAL PORTFOLIO EXPENSES
|
Minimum Maximum
--------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio
assets, which may include management fees,
distribution fees, and other expenses) 0.27% 2.60%
--------------------------------------------------------------------------------
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(1) Expenses are shown as a percentage of Portfolio average daily net assets (before any waiver or reimbursement) as of December 31, 2003.
7 PROSPECTUS
EXAMPLE 1
This example is intended to help you compare the cost of investing in the Contracts with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, Contract fees, Variable Account annual expenses, and Portfolio fees and expenses. The example below shows the dollar amount of expenses that you would bear directly or indirectly if you:
. invested $10,000 in a Variable Sub-Account,
. earned a 5% annual return on your investment,
. surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, and
. elected the Enhanced Death and Income Benefit Combination Rider.
The first line of the example assumes that the maximum fees and expenses of any of the Portfolios are charged. The second line of the example assumes that the minimum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below.
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
|
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $95 $174 $246 $448
--------------------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses $71 $103 $130 $226
--------------------------------------------------------------------------------
|
EXAMPLE 2
This example uses the same assumptions as Example 1 above, except that it assumes you decided not to surrender your Contract, or you began receiving income payments for a specified period of at least 120 months, at the end of each time period.
|
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $44 $131 $221 $448
--------------------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses $20 $ 61 $105 $226
--------------------------------------------------------------------------------
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PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%, WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF THE ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER, WITH A MORTALITY AND EXPENSE RISK CHARGE OF 1.49%, AN ADMINISTRATIVE EXPENSE CHARGE OF 0.10%, AND AN ANNUAL CONTRACT MAINTENANCE CHARGE OF $35. IF NO RIDER WERE ELECTED, OR IF THE ENHANCED DEATH BENEFIT RIDER WERE ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. THE ABOVE EXAMPLES ALSO ASSUME TOTAL ANNUAL PORTFOLIO EXPENSES LISTED IN THE EXPENSE TABLE WILL CONTINUE THROUGHOUT THE PERIODS SHOWN.
8 PROSPECTUS
FINANCIAL INFORMATION
To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT". Each Variable Sub-Account has a separate value for its Accumulation Units we call "ACCUMULATION UNIT VALUE". Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since the date the Contracts were first offered. To obtain a fuller picture of each Variable Sub-Account's finances, please refer to the Variable Account's financial statement contained in the Statement of Additional Information. The financial statements of Allstate Life and Allstate Financial Advisors Separate Account I, which include financial information giving effect to the Consolidation on a pro forma basis, also appear in the Statement of Additional Information. For a free copy of the Statement of Additional Information, please write or call us at 1-800-755-5275.
9 PROSPECTUS
THE CONTRACT
CONTRACT OWNER
The Allstate Provider Variable Annuity is a Contract between you, the Contract Owner, and Allstate Life, a life insurance company. As the Contract Owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted):
. the investment alternatives during the Accumulation and Payout Phases,
. the amount and timing of your purchase payments and withdrawals,
. the programs you want to use to invest or withdraw money,
. the income payment plan you want to use to receive retirement income,
. the Annuitant (either yourself or someone else) on whose life the income payments will be based,
. the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving contract Owner dies, and
. any other rights that the Contract provides.
If you die, any surviving Contract Owner, or, if none, the Beneficiary may exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living person. If the Contract Owner is a grantor trust, the Contract Owner will be considered a non-living person for the purposes of the Death of Owner and Death of Annuitant provisions of your Contract. The maximum age of the oldest Contract Owner or Annuitant cannot exceed 90 as of the date we received the completed application. You may change the Contract Owner at any time. We will provide a change of ownership form to be signed by you and filed with us. After we accept the form, the change of ownership will be effective as of the date you signed the form. Until we receive your written notice to change the Contract Owner, we are entitled to rely on the most recent ownership information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change the Contract Owner, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
Changing ownership of this Contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). You initially designate an Annuitant in your application. You may change the Annuitant at any time prior to the Payout Start Date (only if the Contract Owner is a living person). Once we accept a change, it takes effect as of the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it.
You may designate a joint Annuitant, who is a second person on whose life income payments depend. We permit joint Annuitants only on or after the Payout Start Date. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the Death Proceeds or become the new Contract Owner, subject to the "Death of Owner" section below, if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract Owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue.
You may name one or more primary and contingent Beneficiaries when you apply for a Contract. The primary Beneficiary is the person who is the first entitled to receive benefits under the Contract upon the death of the sole surviving Contract Owner. A contingent Beneficiary is the person selected by the Contract Owner who will become the Beneficiary if all named primary Beneficiaries die before the death of the sole surviving Contract Owner.
You may restrict income payments to Beneficiaries by providing us a written request. Once we accept the written request, the change or restriction will take effect as of the date you signed the request. Any change is subject to any payment we make or other action we take before we accept the change.
You may change or add Beneficiaries at any time, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed by you and filed with us. After we accept the form, the change of Beneficiary will be effective as of the date you signed the form. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
10 PROSPECTUS
If you did not name a Beneficiary or, unless otherwise provided in the Beneficiary designation, if a named Beneficiary is no longer living and there are no other surviving primary or contingent Beneficiaries, the new Beneficiary will be:
. your spouse or, if he or she is no longer alive,
. your surviving children equally, or if you have no surviving children,
. your estate.
If one or more Beneficiaries survive you, we will divide the Death Proceeds among the surviving Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the Death Proceeds in equal amounts to the surviving Beneficiaries.
If more than one Beneficiary shares in the Death Proceeds, each Beneficiary will be treated as a separate and independent owner of his or her respective share. Each Beneficiary will exercise all rights related to his or her share, including the sole right to select a payout option, subject to any restrictions previously placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the payout option chosen by the original Beneficiary.
MODIFICATION OF THE CONTRACT
Only an Allstate Life officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law.
ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified Contract). All subsequent purchase payments must be $50 or more. You may make purchase payments at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money from your bank account. Consult your representative for more detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by notifying us in writing. We reserve the right to limit the the availability of the investment alternatives.
We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order.
We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our home office. We are open for business each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." Our business day closes when the New York Stock Exchange closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date.
11 PROSPECTUS
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation Period, which is the 20 day period after you receive the Contract, or a longer period should your state require it. You may return your Contract by delivering it or mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account. We also will return your purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you.
In states where we are required to refund purchase payments, we reserve the right during the Cancellation Period to invest any purchase payments you allocated to a Variable Sub-Account to the money market Variable Sub-Account available under the Contract. We will notify you if we do so. At the end of the Cancellation Period, you may then allocate your money to other Variable Sub-Accounts.
If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments of the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to credit to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Variable Sub-Account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect:
. changes in the share price of the Portfolio in which the Variable Sub-Account invests, and
. the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value.
We determine Contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values reflecting the cost of the Enhanced Death Benefit Rider and the Enhanced Death and Income Benefit Combination Rider described on page 27.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
12 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS
You may allocate your purchase payments to up to 37 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Portfolios. You should carefully review the Portfolio prospectuses before allocating amounts to the Variable Sub-Accounts.
PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISOR:
AIM VARIABLE INSURANCE FUNDS*
|
AIM V.I. Balanced Fund - As high a total return as
Series I possible, consistent with
preservation of capital
-------------------------------------------------------------------------------
AIM V.I. Capital Growth of capital
Appreciation Fund -
Series I
-------------------------------------------------------------------------------
AIM V.I. Core Equity Fund Growth of capital
- Series I
-------------------------------------------------------------------------------
AIM V.I. Diversified A high level of current A I M ADVISORS,
Income Fund - Series I income INC.
-------------------------------------------------------------------------------
AIM V.I. Government A high level of current
Securities Fund - Series income consistent with a
I reasonable concern for
safety of principal
-------------------------------------------------------------------------------
AIM V.I. Growth Fund - Growth of capital
Series I
-------------------------------------------------------------------------------
AIM V.I. High Yield Fund A high level of current
- Series I income
-------------------------------------------------------------------------------
AIM V.I. International Long-term growth of
Growth Fund - Series I capital
-------------------------------------------------------------------------------
AIM V.I. Premier Equity Long-term growth of
Fund - Series I capital and income as a
secondary objective
-------------------------------------------------------------------------------
AIM V.I. Utilities Fund Seeks capital growth and
-Series I/(1)/ current income
-------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.; THE DREYFUS STOCK INDEX
FUND; AND THE DREYFUS VARIABLE INVESTMENT FUND (VIF) (COLLECTIVELY, THE
DREYFUS FUNDS)
-------------------------------------------------------------------------------
The Dreyfus Socially Capital growth and,
Responsible Growth Fund, secondarily, current
Inc.: income
Initial Shares
-------------------------------------------------------------------------------
Dreyfus Stock Index Fund, To match the total return
Inc.:Initial Shares of the Standard &
Poor's(R) 500 Composite
Stock Price Index
-------------------------------------------------------------------------------
Dreyfus VIF Growth & Long-term capital growth,
Income Portfolio:Initial current income and growth
Shares of income, consistent THE DREYFUS
with reasonable CORPORATION
investment risk
-------------------------------------------------------------------------------
Dreyfus VIF Money Market A high level of current
Portfolio:Initial Shares income as is consistent
with the preservation of
capital and the
maintenance of liquidity
-------------------------------------------------------------------------------
Dreyfus VIF Small Company Investment returns
Stock Portfolio:Initial (consisting of capital
Shares appreciation and income)
that are greater
than the total
return performance
of stocks
represented by the
Russell 2500(SM)
Stock Index
("Russell 2500")
-------------------------------------------------------------------------------
FIDELITY/(R)/ VARIABLE INSURANCE PRODUCTS
-------------------------------------------------------------------------------
Fidelity VIP Long-term capital
ContrafunD/(R)/ appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP Reasonable income
Equity-Income Portfolio
- Initial Class
-------------------------------------------------------------------------------
Fidelity VIP Growth Capital appreciation FIDELITY MANAGEMENT
Portfolio - Initial &
Class RESEARCH COMPANY
-------------------------------------------------------------------------------
Fidelity VIP High Income High level of current
Portfolio - Initial income while also
Class considering growth of
capital
-------------------------------------------------------------------------------
|
13 PROSPECTUS
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
Goldman Sachs VIT Capital Long-term growth of Growth Fund capital
------------------------------------------------------- GOLDMAN SACHS
|
Goldman Sachs VIT Long-term growth of ASSET
CORE(SM)Small Cap Equity capital MANAGEMENT,
Fund L.P.
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term growth of
CORE(SM) U.S. Equity capital and dividend
Fund income
-------------------------------------------------------------------------------
Goldman Sachs VIT Growth Long-term growth of
and Income Fund capital and growth of
income
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term capital
International Equity appreciation
Fund
-------------------------------------------------------------------------------
MFS/(R)/ VARIABLE INSURANCE TRUST(SM)
-------------------------------------------------------------------------------
MFS Emerging Growth Long-term growth of
Series - Initial Class capital
MFS(TM)
------------------------------------------------------- INVESTMENT
MFS Investors Trust Long-term growth of MANAGEMENT
Series - Initial Class capital with a secondary
objective to seek
reasonable current income
-------------------------------------------------------------------------------
MFS New Discovery Series Capital appreciation
- Initial Class
-------------------------------------------------------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
-------------------------------------------------------------------------------
Neuberger Berman AMT Long-term growth of
Guardian Portfolio - capital; current income
Class I is a secondary goal
-------------------------------------------------------------------------------
Neuberger Berman AMT Growth of capital NEUBERGER BERMAN
Mid-Cap Growth MANAGEMENT INC
Portfolio - Class I
-------------------------------------------------------------------------------
Neuberger Berman AMT Growth of capital
Partners Portfolio -
Class I
-------------------------------------------------------------------------------
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
-------------------------------------------------------------------------------
Van Kampen UIF Core Plus
Fixed Income Portfolio -
Class I/(2)(3)/
-------------------------------------------------------------------------------
Van Kampen UIF Equity Long-term capital
Growth Portfolio - appreciation
Class I/(2)/
-------------------------------------------------------------------------------
Van Kampen UIF Global Long-term capital
Value Equity Portfolio - appreciation
Class I/(2)(4)/ VAN KAMPEN/(2)/
-------------------------------------------------------------------------------
Van Kampen UIF Long-term capital
International Magnum appreciation
Portfolio -
Class I/(2)/
-------------------------------------------------------------------------------
Van Kampen UIF U.S. Mid Above-average total return
Cap Value Portfolio - over a market cycle of
Class I/(2)(5)/ three to five years
-------------------------------------------------------------------------------
Van Kampen UIF U.S. Real Above-average current
Estate Portfolio - income and long-term
Class I/(2)/ capital appreciation
-------------------------------------------------------------------------------
Van Kampen UIF Value Above-average total return
Portfolio - Class I/(2)/ over a market cycle of
three to five years
-------------------------------------------------------------------------------
|
* A Portfolio's investment objective may be changed by the Portfolio's Board of Trustees without shareholder approval.
(1) Effective April 30, 2004, AIM VI. Global Utilities Fund - Series I was merged into INVESCO VIF-Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund - Series I changed its name to AIM V.I. Utilities Fund - Series I. The investment objective for this Portfolio has not changed.
(2) Morgan Stanley Investment Management, Inc., the adviser to the UIF Portfolios, does business in certain instances using the name Van Kampen. Effective May 1, 2004, the Morgan Stanley UIF Portfolios were rebranded the Van Kampen UIF Portfolios.
(3) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. The investment objective for this Portfolio has not changed.
(4) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. The investment objective for this Portfolio has not changed.
14 PROSPECTUS
(5) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
VARIABLE INSURANCE PORTFOLIOS MAY NOT BE MANAGED BY THE SAME PORTFOLIO MANAGERS WHO MANAGE RETAIL MUTUAL FUNDS WITH SIMILAR NAMES. THESE PORTFOLIOS ARE LIKELY TO DIFFER FROM SIMILARLY NAMED RETAIL FUNDS IN ASSETS, CASH FLOW, AND TAX MATTERS. ACCORDINGLY, THE HOLDINGS AND INVESTMENT RESULTS OF A VARIABLE INSURANCE PORTFOLIO CAN BE EXPECTED TO BE GREATER OR LESS THAN THE INVESTMENT RESULTS OF SIMILARLY NAMED RETAIL MUTUAL FUNDS.
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
You may allocate all or a portion of your purchase payments to the Fixed Account. You may choose from among 3 Fixed Account Options: 2 dollar cost averaging options, and the option to invest in one or more Guarantee Periods included in the Guaranteed Maturity Fixed Account. The Fixed Account Options may not be available in all states. Please consult with your representative for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. Purchase payments that you allocate to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option") will earn interest for a one year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each payment or transfer.
For each purchase payment, the first transfer from the DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Variable Sub-Account in equal monthly installments. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 19. You must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 36 months of payment. At the end of 36 months, any nominal amounts remaining in the DCA Fixed Account will be allocated to the money market Variable Sub-Account. No transfers are permitted into the DCA Fixed Account.
SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may establish a Short Term Dollar Cost Averaging Program by allocating purchase payments to the Short Term Dollar Cost Averaging Fixed Account Option ("Short Term DCA Fixed Account Option"). We will credit interest to purchase payments you allocate to this Option for up to one year at the current rate in effect at the time of allocation.
For each purchase payment, the first transfer from the Short Term DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Variable Sub-Account in equal monthly installments. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 19.
We will follow your instructions in transferring amounts monthly from the Short Term DCA Fixed Account Option. However, you may not choose less than 3 or more than 12 monthly installments. Further, you must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 12 months. At the end of the transfer period, any nominal amounts remaining in the Short Term DCA Fixed Account will be allocated to the money market Variable Sub-Account.
If you discontinue the Short term Dollar Cost Averaging Program before the end of the transfer period, we will transfer the remaining balance in this Option to the money market Variable Sub-Account unless you request a different investment alternative. No transfers are permitted into the Short Term DCA Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. That is because we
15 PROSPECTUS
guarantee the current and renewal interest rates we credit to the amounts you allocate to either of these Options, which will never be less than the minimum guaranteed rate in the Contract. Currently, we determine, in our sole discretion, the amount of interest credited in excess of the guaranteed rate. We may declare more than one interest rate for different monies based upon the date of allocation to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. For current interest rate information, please contact your representative or Allstate Life customer service at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. Guarantee Periods may range from 1 to 10 years. We are currently offering Guarantee Periods of 1, 3, 5, 7, and 10 years in length. In the future we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not select a Guarantee Period, we will assign the same period(s) you selected for your most recent purchase payment(s). Each payment or transfer allocated to a Guarantee Period must be at least $50. We reserve the right to limit the number of additional purchase payments that you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times.
We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors.
WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate information, please contact your representative or Allstate Life at 1-800-755-5275.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated to a Guarantee Period at a rate that compounds to the annual interest rate that we declared at the beginning of the applicable Guarantee Period.
THE FOLLOWING EXAMPLE ILLUSTRATES HOW A PURCHASE PAYMENT ALLOCATED TO A GUARANTEED PERIOD WOULD GROW, GIVEN AN ASSUMED GUARANTEE PERIOD AND ANNUAL INTEREST RATE:
|
Purchase Payment ...................................................... $10,000
Guarantee Period .......................................................5 years
Annual Interest Rate ....................................................4.50%
|
|
END OF CONTRACT YEAR
------------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value................ $10,000.00
X (1 + Annual
Interest Rate) x1.045
----------
$10,450.00
Contract Value at end
of Contract Year..... $10,450.00
X (1 + Annual
Interest) x1.045
----------
$10,920.25
Contract Value at end
of Contract Year..... $10,920.25
X (1 + Annual
Interest Rate) x1.045
----------
$11,411.66
Contract Value at end
of Contract Year..... $11,411.66
X (1 + Annual
Interest Rate) x1.045
----------
$11,925.19
Contract Value at end
of Contract Year..... $11,925.19
X (1 + Annual
Interest Rate) x1.045
-----------
$12,461.82
|
TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5-year Guarantee Period. If you were to make a withdrawal, you may be required to pay a withdrawal charge. In addition, the amount withdrawn may be increased or decreased by a Market Value Adjustment that reflects changes in interest rates since the time you invested the amount withdrawn. The hypothetical interest rate is for illustrative purposes only and is not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given Guarantee Period may be more or less than shown above.
16 PROSPECTUS
RENEWALS. Prior to the end of each Guarantee Period, we will mail you a notice asking you what to do with your money, including the accrued interest. During the 30-day period after the end of the Guarantee Period, you may:
1) Take no action. We will automatically apply your money to a new Guarantee Period of the same length as the expiring Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for a Guarantee Period of that length; or
2) Instruct us to apply your money to one or more new Guarantee Periods of your choice. The new Guarantee Period(s) will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for those Guarantee Periods; or
3) Instruct us to transfer all or a portion of your money to one or more Variable Sub-Accounts of the Variable Account. We will effect the transfer on the day we receive your instructions. We will not adjust the amount transferred to include a Market Value Adjustment; we will pay interest from the day the Guarantee Period expired until the date of the transfer. The interest will be the rate for the shortest Guarantee Period then being offered; or
4) Withdraw all or a portion of your money. You may be required to pay a withdrawal charge, but we will not adjust the amount withdrawn to include a Market Value Adjustment. You may also be required to pay premium taxes and income tax withholding, if applicable. We will pay interest from the day the Guarantee Period expired until the date of withdrawal. The interest will be the rate for the shortest Guarantee Period then being offered. Amounts not withdrawn will be applied to a new Guarantee Period of the same length as the previous Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period, other than those taken during the 30 day period after such Guarantee Period expires, are subject to a Market Value Adjustment. A Market Value Adjustment also will apply when you apply amounts currently invested in a Guarantee Period to an Income Plan (unless applied during the 30 day period after such Guarantee Period expires). A Market Value Adjustment may apply in the calculation of the Settlement Value described in the "Death Benefit Amount" section below.
We will not apply a Market Value Adjustment to a withdrawal you make:
. within the Free Withdrawal Amount as described on page 20,
. that qualify for one of the waivers as described on page 21,
. to satisfy the IRS minimum distribution rules for the Contract, or
. a single withdrawal made by a surviving spouse made within one year after continuing the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from the time you first allocate money to a Guarantee Period to the time you remove it from that Guarantee Period. We calculate the Market Value Adjustment by comparing the Treasury Rate for a period equal to the Guarantee Period at its inception to the Treasury Rate for a period equal to the Guarantee Period when you remove your money. "TREASURY RATE" means the U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve Board Statistical Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in interest rates. As such, you bear the investment risk associated with changes in interest rates. If interest rates increase significantly, the Market Value Adjustment and any withdrawal charge, premium taxes, and income tax withholding (if applicable) could reduce the amount you receive upon full withdrawal from a Guaranteed Period to an amount that is less than the purchase payment applied to that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a Guarantee Period is higher than the applicable current Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a higher amount payable to you, transferred or applied to an Income Plan. Conversely, if the Treasury Rate at the time you allocate money to a Guarantee Period is lower than the applicable Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a lower amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial Guarantee Period of 5 years and the 5-year Treasury Rate for that duration is 4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at that later time, the current 5-year Treasury Rate is 4.20%, then the Market Value Adjustment will be positive, which will result in an increase in the amount payable to you. Conversely, if the current 5-year Treasury Rate is 4.80%, then the Market Value Adjustment will be negative, which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B to this prospectus, which also contains additional examples of the application of the Market Value Adjustment.
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INVESTMENT ALTERNATIVES: TRANSFERS
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may not transfer Contract Value to either the Short-Term Dollar Cost Averaging Fixed Account or the Dollar Cost Averaging Fixed Account Options. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below. The minimum amount that you may transfer into a Guarantee Period is $50. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. All transfers to or from more than one Portfolio on any given day counts as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account for up to six months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day period after such Guarantee Period expires, we will increase or decrease the amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. If you choose an Income Plan that depends on any person's life, you may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275. The cut-off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege at any time without notice.
We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under "Trading Limitations." Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, not all market timing or excessive trading is identifiable or preventable. Imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it first occurs. To the extent that such trading activity occurs prior to detection and the imposition of 18 PROSPECTUS
trading restrictions, the portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, or to refuse any transfer request, if:
. we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
. we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
. the total dollar amount being transferred, both in the aggregate and in the transfer request;
. the number of transfers you make over a period of time and/or the period of time between transfers (note: one set of transfers to and from a sub-account in a short period of time can constitute market timing);
. whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Sub-account underlying portfolios that we have identified as being susceptible to market timing activities;
. whether the manager of the underlying portfolio has indicated that the transfers interfere with portfolio management or otherwise adversely impact the portfolio; and
. the investment objectives and/or size of the Sub-account underlying portfolio.
If we determine that a contract owner has engaged in market timing or excessive trading activity, we will restrict that contract owner from making future additions or transfers into the impacted Sub-account(s). If we determine that a contract owner has engaged in a pattern of market timing or excessive trading activity involving multiple Sub-accounts, we will also require that all future transfer requests be submitted through regular U.S. mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. Any Sub-account or transfer restrictions will be uniformly applied.
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a fixed dollar amount every month during the Accumulation Phase from the Short Term DCA Fixed Account or the DCA Fixed Account, to any Variable Sub-Account. You may not use the Dollar Cost Averaging Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor will such transfers count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the performance of each Variable Sub-Account may cause a shift in the percentage you allocated to each Variable Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request. Example:
Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the Fidelity VIP High Income Variable Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the Fidelity VIP High Income Variable Sub-Account now represents 50% of your holdings because of its
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increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the Fidelity VIP High Income Variable Sub-Account and use the money to buy more units in the AIM V.I. Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments.
EXPENSES
As a Contract Owner, you will bear, directly or indirectly, the charges and expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value invested in each Variable Sub-Account in proportion to the amount invested. If you surrender your Contract, we will deduct the contract maintenance charge pro rated for the part of the Contract Year elapsed, unless your Contract qualifies for a waiver, described below.
The charge is to compensate us for the cost of administering the Contracts and the Variable Account.
Maintenance costs include expenses we incur collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract Owners and regulatory agencies. We cannot increase the charge. However, we will waive this charge if, as of the Contract Anniversary or upon full surrender:
. total purchase payments equal $50,000 or more, or
. all money is allocated to the Fixed Account.
In addition, we will waive the Contract Maintenance Charge if total purchase payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.05% of the average daily net assets you have invested in the Variable Sub-Accounts (1.27% if you select the Enhanced Death Benefit Rider, and 1.49% if you select the Enhanced Death and Income Benefit Combination Rider). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Enhanced Death Benefit Rider and the Enhanced Death and Income Benefit Combination Rider to compensate us for the additional risk that we accept by providing these options. We guarantee that we will not raise the mortality and expense risk charge. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. The charge declines to 0% over a 6 year period that begins on the day we receive your payment. If you make a withdrawal before the Payout Start Date, we will apply the withdrawal charge percentage in effect on the date of the withdrawal, or the withdrawal charge percentage in effect on the following day, whichever is lower. A schedule showing how the charge declines is shown on page
7. During each Contract Year, you can withdraw up to 15% of the aggregate amount of your purchase payments without paying the charge. Unused portions of this "FREE WITHDRAWAL AMOUNT" are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of calculating the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, please note that withdrawals are considered to have come
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first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations:
. on the Payout Start Date (a withdrawal charge may apply if you terminate income payments to be received for a specified period);
. on the death of the Contract Owner, or the Annuitant, if the Contract Owner is not a natural person (unless the Settlement Value is used to determine the death benefit);
. withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or
. withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty and a Market Value Adjustment. You should consult your own tax counsel or other tax advisors regarding any withdrawals.
CONFINEMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if the following conditions are satisfied:
1. You or the Annuitant, if the Contract Owner is not a natural person, are confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must enter the long term care facility or hospital at least 30 days after the Issue Date;
2. You request the withdrawal and provide written proof of the stay no later than 90 days following the end of your or the Annuitant's stay at the long term care facility or hospital; and
3. A physician must have prescribed the stay and the stay must be medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the Annuitant's immediate family, is the physician prescribing your or the Annuitant's stay in a long term care facility.
TERMINAL ILLNESS WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if:
1. you or the Annuitant (if the Contract Owner is not a natural person) are first diagnosed with a terminal illness at least 30 days after the Issue Date; and
2. you claim this benefit and deliver adequate proof of diagnosis to us.
UNEMPLOYMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on one partial or a full withdrawal taken prior to the Payout Start Date under your Contract, if you meet the following requirements:
1. you or the Annuitant, if the Contract Owner is not a natural person, become unemployed at least one year after the Issue Date;
2. you or the Annuitant, if the Contract Owner is not a natural person, receive unemployment compensation as defined in the Contract for at least 30 days as a result of that unemployment; and
3. you or the Annuitant, if the Contract Owner is not a natural person, claim this benefit within 180 days of your or the Annuitant's initial receipt of unemployment compensation.
Please refer to your Contract for more detailed information about the terms and conditions of these waivers. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not need to pay our withdrawal charge or a Market Value Adjustment because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax advisor to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs, including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state.
At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for such taxes. In the future, however, we may establish a provision for taxes if we determine, in our sole discretion, that we will
21 PROSPECTUS
incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" section beginning on page 34.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Portfolios. For a summary of current estimates of those charges and expenses, see page 31. We may receive compensation from the investment advisers or administrators of the Portfolios in connection with the administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our home office, adjusted by any Market Value Adjustment, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You can withdraw money from the Variable Account or the Fixed Account Options. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. You must name the investment alternative from which you are taking the withdrawal. If none is specified, we will deduct your withdrawal pro rata from the investment alternatives according to the value of your investments therein. In general, you must withdraw at least $50 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. If you request a total withdrawal, we may require you to return your Contract to us. Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months (or shorter period if required by law). If we delay payment for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $50. At our discretion, systematic withdrawals may not be offered in conjunction with the Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At our discretion, we may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to less than $2,000, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been previously reduced by withdrawals to less than $2,000, we will inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's Value to the contractual minimum of $2,000. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and applicable taxes.
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INCOME PAYMENTS
PAYOUT START DATE
You select the Payout Start Date in your application. The "PAYOUT START DATE" is the day that we apply your money to an Income Plan. The Payout Start Date must be:
. at least 30 days after the Issue Date; and
. no later than the day the Annuitant reaches age 90, or the 10th Contract Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years. Three Income Plans are available under the Contract. Each is available to provide:
. fixed income payments;
. variable income payments; or
. a combination of the two.
A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the Contract, which is also called the "basis". Once the investment in the Contract is depleted, all remaining payments will be fully taxable. If the Contract is tax-qualified, generally, all payments will be fully taxable. Taxable payments taken prior to age 591/2 may be subject to an additional 10% federal tax penalty.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint Annuitant die before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEARS TO 30 YEARS). Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. You may elect to receive guaranteed payments for periods ranging from 5 to 30 years. Income payments for less than 120 months may be subject to a withdrawal charge. We will deduct the mortality and expense risk charge from the Variable Sub-Account assets that support variable income payments even though we may not bear any mortality risk.
The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant are alive before we make each payment.
Please note that under such Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the commuted balance of the remaining variable payments associated with the amount withdrawn. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. We deduct applicable premium taxes from the Contract Value at the Payout Start Date.
We may make other Income Plans available.
If you elected the Enhanced Death and Income Benefit Combination Option, you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date. If
23 PROSPECTUS
you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account to fixed income payments. We will apply your Contract Value, adjusted by any applicable Market Value Adjustment, less applicable taxes to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may:
. terminate the Contract and pay you the Contract Value, adjusted by any applicable Market Value Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen; or
. reduce the frequency of your payments so that each payment will be at least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) the Annuitant could live longer or shorter than we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate.
Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
3. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by applicable law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate.
DEATH BENEFITS
DEATH OF OWNER
If you die before the Payout Start Date, any surviving joint Contract Owner or, if none, the Beneficiary will be designated the new Contract Owner and will be entitled to the options described below. If the new Contract Owner previously was the Beneficiary, however, the new Contract Owner's options will be subject to any restrictions previously placed upon the Beneficiary.
The claim for death benefits must be submitted to us within 180 days of the relevant death in order to claim the standard or enhanced death benefit. If a complete claim is not submitted within 180 days of the relevant death, the claimant will receive the greater of Contract Value or the Settlement Value. (See "Death Proceeds" below).
1. If your spouse is the sole surviving Contract Owner or, in the absence of any surviving Contract Owner, is the sole Beneficiary:
(a) Your spouse may elect to receive the Death Proceeds in a lump sum; or
(b) Your spouse may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
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The Payout Start Date must be within one year of your date of death. Income payments must be payable:
(i) over the life of your spouse; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of your spouse; or
(iii) over the life of your spouse with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of your spouse.
(c) If your spouse does not elect one of these options, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the following conditions apply:
The Contract Value of the continued Contract will be the Death Proceeds. Unless otherwise instructed by the continuing spouse, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the Sub-accounts of the Variable Account. The excess will be allocated in proportion to your Contract Value in those Sub-accounts as of the end of the Valuation Period during which we receive the complete request for settlement of the Death Proceeds, except that any portion of this excess attributable to the Fixed Account Options will be allocated to the money market Variable Sub-account. Within 30 days of the date the Contract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee:
(i) transfer all or a portion of the excess among the Variable Sub-accounts;
(ii) transfer all or a portion of the excess into the Guaranteed Maturity Fixed Account and begin a new Guarantee Period; or
(iii) transfer all or a portion of the excess into a combination of Variable Sub-accounts and the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in the Contract.
The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a Withdrawal Charge or Market Value Adjustment.
Prior to the Payout Start Date, the Death Benefit of the continued Contract will be as defined in the Death Benefit provision.
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) The new Contract Owner may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income Payments must be payable:
(i) over the life of the new Contract Owner; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of the new Contract Owner; or
(iii) over the life of the new Contract Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner.
(c) If the new Contract Owner does not elect one of the options above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived for any withdrawals made during this 5 year period.
We reserve the right to offer additional options upon the death of the Contract Owner.
If the new Contract Owner dies prior to the complete liquidation of the Contract Value, then the new Contract Owner's named Beneficiary(ies) will receive the greater of the Settlement Value or the remaining Contract Value. This amount must be liquidated as a lump sum within 5 years of the date of the original Contract Owner's death.
3. If the new Contract Owner is a corporation or other type of non-living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the new Contract Owner does not elect the option above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
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The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the new Contract Owner upon the death of the Contract Owner.
If any new Contract Owner is a non-living person, all new Contract Owners will be considered to be non-living persons for purposes of these provisions.
Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the new Contract Owner from the date of your death to the date on which the Death Proceeds are paid.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout Start Date, the following apply:
1. If the Contract Owner is a living person, then the Contract will continue with a new Annuitant, who will be:
(a) the youngest Contract Owner; otherwise
(b) the youngest Beneficiary.
You may change the Annuitant before the Payout Start Date.
2. If the Contract Owner is a non-living person:
(a) The Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the Contract Owner does not elect the option above, then the Contract Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the Contract Owner upon the death of the Annuitant.
Under any of these options, all ownership rights are available to the non-living Contract Owner from the date of the Annuitant's death to the date on which the Death Proceeds are paid.
DUE PROOF OF DEATH
A claim for a distribution on death must include Due Proof of Death. We will accept the following documentation as "Due Proof of Death":
. a certified copy of a death certificate,
. a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or
. any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
DEATH PROCEEDS. If we receive a complete request for settlement of the Death Proceeds within 180 days of the date of your death, the Death Proceeds are equal to the applicable death benefit described below. Otherwise, the Death Proceeds are equal to the greater of the Contract Value or the Settlement Value.
We reserve the right to extend, on a non-discriminatory basis, the 180-day period in which the Death Proceeds will equal the applicable death benefit as described above.
This right applies only for the purposes of determining the amount payable as Death Proceeds and in no way restricts when a claim may be filed.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1. the Contract Value as of the date we determine the value of the death benefit, or
2. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of Contract Value) on the date we determine the value of the death benefit, or
3. the Contract Value on each DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, increased by purchase payments made since that Death Benefit Anniversary and reduced by an adjustment for any partial withdrawals since that Death Benefit Anniversary.
In calculating the Settlement Value, the amount in each individual Guarantee Period may be subject to a Market Value Adjustment. A Market Value Adjustment will apply to amounts in a Guarantee Period, unless we calculate the Settlement Value during the 30-day period after the expiration of the Guarantee Period. Also, the Settlement Value will reflect the deduction of any applicable withdrawal charges, contract maintenance charges, and premium taxes. Contract maintenance charges will be pro rated for the part of the Contract Year elapsed as of the date we determine the Settlement Value, unless your Contract qualifies for a waiver of such charges described in the "Contract Maintenance Charge" section above.
A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning with the Issue Date. For example, the Issue Date, 7th and 14th Contract Anniversaries are the first 3 Death Benefit Anniversaries. The partial
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withdrawal adjustment is equal to (a) divided by (b), with the result multiplied by (c), where:
(a) = the withdrawal amount;
(b) = the Contract Value immediately prior to the withdrawal; and
(c) = the Contract Value on the Death Benefit Anniversary adjusted by any prior purchase payments or withdrawals made since that Anniversary.
We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date.
OPTIONAL RIDERS
We offer two optional riders: an Enhanced Death Benefit Rider and an Enhanced Death and Income Benefit Combination Rider. You may elect to add either or no Riders to your Contract; you may not add both. If you elect an optional Rider, we will charge you a higher mortality and expense risk charge. We may discontinue offering either or both of these Riders at any time. The benefits under these Riders are described below.
ENHANCED DEATH BENEFIT RIDER
If the Contract Owner is a living individual, the enhanced death benefit applies only upon the death of the Contract Owner. If the Contract Owner is not a living individual, the enhanced death benefit applies only upon the death of the Annuitant. For Contracts with the Enhanced Death Benefit Rider, the death benefit will be the greatest of (1) through (3) above, or (4) the enhanced death benefit. The enhanced death benefit is equal to the greater of the Enhanced Death Benefit A or Enhanced Death Benefit B. Enhanced Death Benefit B may not be available in all states. The enhanced death benefit will never be greater than the maximum death benefit allowed by any state nonforfeiture laws that govern the Contract.
ENHANCED DEATH BENEFIT A. At issue, Enhanced Death Benefit A is equal to the initial purchase payment. After issue, Enhanced Death Benefit A is the greatest of the ANNIVERSARY VALUES as of the date we determine the death benefit. The "Anniversary Value" is equal to the Contract Value on a Contract Anniversary, increased by purchase payments made since that Anniversary and reduced by an adjustment for any partial withdrawals since that Anniversary.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) = the withdrawal amount,
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the Contract Value on that Contract Anniversary adjusted by any prior purchase payments and withdrawals since that Contract Anniversary.
We will calculate Anniversary Values for each Contract Anniversary prior to the oldest Contract Owner's or the Annuitant's, if the Contract Owner is not a natural person, 85th birthday. After age 85, we will recalculate Enhanced Death Benefit A only for purchase payments and withdrawals.
ENHANCED DEATH BENEFIT B. The Enhanced Death Benefit B is equal to total purchase payments made reduced by a withdrawal adjustment, as defined below. Each purchase payment and each withdrawal adjustment will accumulate daily at a rate equivalent to 5% per year until the earlier of:
. the date we determine the death benefit, or
. the first day of the month following the oldest Contract Owner's or, if the Contract Owner is not a natural person, the Annuitant's, 85th birthday.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) = the withdrawal amount,
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the most recently calculated enhanced death benefit.
ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER
Instead of the Enhanced Death Benefit Rider, you may instead choose the Enhanced Death and Income Benefit Combination Rider.
The enhanced death benefit portion of the Enhanced Death and Income Benefit Combination Rider is as described above under "Enhanced Death Benefit Rider."
The enhanced income benefit guarantees that the amount of income payments you receive will not be less than those determined by applying the value of the enhanced death benefit on the Payout Start Date to the minimum guaranteed rate (rather than to any current rates we may be offering) for the Income Plan you select.
The enhanced income benefit will apply if the Contract Owner elects a Payout Start Date that:
. is on or after the tenth Contract Anniversary, and
. is prior to the Annuitant's 90th Birthday.
On the Payout Start Date, you may apply the greater of the Contract Value or the enhanced income benefit to the Payout Phase of the Contract. No Market Value Adjustment will be applied to the enhanced income benefit amount. The enhanced income benefit will only apply if the Income Plan selected provides payments guaranteed for either a single or joint lives with a period certain of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or
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. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied.
If, however, you apply the Contract Value and not the enhanced income benefit to the Income Plan, then you may select any Income Plan we offer at that time.
The enhanced income benefit only applies to the determination of income payments under Income Plans in the circumstances described above. This is not a guarantee of Contract Value on investment performance. This benefit does not enhance the amounts you receive in partial withdrawals or surrenders. If you surrender your Contract, you will not receive any benefit under this Rider.
MORE INFORMATION
ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957 as a stock life insurance company under the laws of the state of Illinois. Prior to January 1, 2005, Glenbrook Life and Annuity Company ("Glenbrook Life") issued the Contract. Effective January 1, 2005, Glenbrook Life merged with Allstate Life ("Merger"). On the date of the Merger, Allstate Life acquired from Glenbrook Life all of Glenbrook Life's assets and became directly liable for Glenbrook Life's liabilities and obligations with respect to all contracts issued by Glenbrook Life. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company organized under the laws of the state of Illinois. All of the capital stock issued and outstanding of Allstate Insurance Company is owned by The Allstate Corporation.
Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all jurisdictions except the state of New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062.
THE VARIABLE ACCOUNT
Allstate Life established the Allstate Financial Advisors Separate Account I in 1999. The Contracts were previously issued through the Glenbrook Life Multi-Manager Variable Account. Effective January 1, 2005, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with Allstate Financial Advisors Separate Account I and consolidated duplicative Variable Sub-Accounts that invest in the same Portfolio (the "Consolidation"). The Accumulation Unit Values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Allstate Life.
We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois law. That means we account for the Variable Account's income, gains and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Allstate Life.
The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolios at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract Owners entitled to give such instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserve for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio. The votes
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decrease as income payments are made and as the reserves for the Contract decrease.
We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro-rata basis to reduce the votes eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment portfolio. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional underlying funds. We will notify you in advance of any change.
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio.
The board of directors/trustees of these Portfolios monitors for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Portfolio's board of directors/trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062-7154, serves as principal underwriter of the Contracts. ALFS is a wholly owned subsidiary of Allstate Life. ALFS is a registered broker dealer under the Securities and Exchange Act of 1934, as amended ("EXCHANGE ACT"), and is a member of the NASD.
We will pay commissions to broker-dealers who sell the contracts. Commissions paid may vary, but we estimate that the total commissions paid on all Contract sales will not exceed 8% of all purchase payments. These commissions are intended to cover distribution expenses. Sometimes, we also pay the broker-dealer a persistency bonus in addition to the standard commissions. A persistency bonus is not expected to exceed 0.25%, on an annual basis, of the Contract Values considered in connection with the bonus. In some states, Contracts may be sold by representatives or employees of banks which may be acting as broker-dealers without separate registration under the Exchange Act, pursuant to legal and regulatory exceptions.
Allstate Life does not pay ALFS a commission for distribution of the Contracts. The underwriting agreement with ALFS provides that we will reimburse ALFS for any liability to Contract Owners arising out of services rendered or Contracts issued.
ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account.
We provide the following administrative services, among others:
. issuance of the Contracts;
. maintenance of Contract Owner records;
. Contract Owner services;
. calculation of unit values;
. maintenance of the Variable Account; and
. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least annually. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we reserve the right to make the adjustment as of the date that we receive notice of the potential error.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. Allstate Life no longer issues deferred annuities to employer sponsored qualified retirement plans.
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LEGAL MATTERS
All matters of state insurance law pertaining to the Contracts, including the validity of the Contracts and Allstate Life's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Allstate Life.
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TAXES
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life is taxed as a life insurance company under Part I of Subchapter L of the Code. Since the Variable Account is not an entity separate from Allstate Life, and its operations form a part of Allstate Life, it will not be taxed separately. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Allstate Life believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contract. Accordingly, Allstate Life does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Allstate Life does not intend to make provisions for any such taxes. If Allstate Life is taxed on investment income or capital gains of the Variable Account, then Allstate Life may impose a charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where:
. the Contract Owner is a natural person,
. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and
. Allstate Life is considered the owner of the Variable Account assets for federal income tax purposes.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living Owners in this prospectus. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-Qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain qualified plans; (4) certain contracts used in connection with structured settlement agreements; and (5) immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered owned by a non-natural owner. Grantor trust owned contracts receive tax deferral as described in the Exceptions to the Non-Natural Owner Rule section. In accordance with the Code, upon the death of the annuitant, the death benefit must be paid. According to your Contract, the Death Benefit is paid to the surviving Contract Owner. Since the trust will be the surviving Contract Owner in all cases, the Death Benefit will be payable to the trust notwithstanding any beneficiary designation on the annuity contract. A trust, including a grantor trust, has two options for receiving any death benefits: 1) a lump sum payment; or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "adequately diversified" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract owner during the taxable year. Although Allstate Life does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of
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the separate account investments may cause a Contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in private and published rulings in which it found that Contract owners were not owners of separate account assets. For example, if your contract offers more than twenty (20) investment alternatives you have the choice to allocate premiums and contract values among a broader selection of investment alternatives than described in such rulings. You may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Allstate Life does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a Non-Qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a Non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a Non-Qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. If any variable payment is less than the excludable amount you should contact a competent tax advisor to determine how to report any unrecovered investment. The federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide:
. if any Contract Owner dies on or after the Payout Start Date but before the entire interest in the Contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the Contract Owner's death;
. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that is payable to (or for the benefit of) a designated Beneficiary is distributed over the life of such Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary) and the distributions begin within 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner.
. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract Owner for purposes of applying the distribution at death rules. In addition, a change in the Annuitant on a Contract owned by a non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows:
. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or
. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred
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on distributions:
. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or becoming totally disabled,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made under an immediate annuity, or
. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract into a non-Qualified annuity contract. The contract owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges of annuity contracts. Under this ruling, if you take a withdrawal from a receiving or relinquishing annuity contract within 24 months of the partial exchange, then special aggregation rules apply for purposes of determining the taxable amount of a distribution. The IRS has issued limited guidance on how to aggregate and report these distributions. The IRS is expected to provide further guidance; as a result, it is possible that the amount we calculate and report to the IRS as taxable could be different.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified deferred annuity contracts issued by Allstate Life (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory.
Allstate Life is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
33 PROSPECTUS
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity as a TSA or IRA. Tax Qualified Contracts are contracts purchased as investments as:
. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
. Roth IRAs under Section 408A of the Code;
. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p) of the Code; and
. Tax Sheltered Annuities under Section 403(b) of the Code.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the retirement plans listed above or to modify the Contract to conform with tax requirements.
The tax rules applicable to participants with tax qualified annuities vary according to the type of contract and the terms and conditions of the endorsement. Adverse tax consequences may result from certain transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. Allstate Life can issue an individual retirement annuity on a rollover or transfer of proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under which the decedent's surviving spouse is the beneficiary. Allstate Life does not offer an individual retirement annuity that can accept a transfer of funds for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer sponsored retirement plan.
In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If you make a partial withdrawal under a Tax Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Tax Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are:
. made on or after the date the Contract Owner attains age 59 1/2,
. made to a beneficiary after the Contract Owner's death,
. attributable to the Contract Owner being disabled, or
. made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, IRAs (excluding Roth IRAs) and TSAs require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or the Contract Value. We believe that the Death Benefits offered by your Contract do not constitute life insurance under these regulations.
It is also possible that certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Tax Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
34 PROSPECTUS
. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or total disability,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made after separation from service after age 55 (does not apply to IRAs),
. made pursuant to an IRS levy,
. made for certain medical expenses,
. made to pay for health insurance premiums while unemployed (applies only for IRAs),
. made for qualified higher education expenses (applies only for IRAs), and
. made for a first time home purchase (up to a $10,000 lifetime limit and applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect to Tax Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "eligible rollover distributions." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Allstate Life is required to withhold federal income tax at a rate of 20% on all "eligible rollover distributions" unless you elect to make a "direct rollover" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from employer sponsored retirement plans, including TSAs but excluding IRAs, with the exception of:
. required minimum distributions, or,
. a series of substantially equal periodic payments made over a period of at least 10 years, or,
. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or,
. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding requirement, Allstate Life is required to withhold federal income tax using the wage withholding rates. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified plans may be "rolled over" on a tax-deferred basis into an Individual Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity.
35 PROSPECTUS
Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS). Internal Revenue Code Section 408 permits a custodian or trustee of an Individual Retirement Account to purchase an annuity as an investment of the Individual Retirement Account. If an annuity is purchased inside of an Individual Retirement Account, then the Annuitant must be the same person as the beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement Account must be paid upon the death of the Annuitant. However, in most states, the Contract permits the custodian or trustee of the Individual Retirement Account to continue the Contract in the accumulation phase, with the Annuitant's surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of the annuity and has the right to the death proceeds otherwise payable under the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement Account;
3) We receive a complete request for settlement for the death of the Annuitant; and
4) The custodian or trustee of the Individual Retirement Account provides us with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has continued the Individual Retirement Account pursuant to the surviving spouse's election.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. These employers may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the Code allow eligible employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees using individual retirement annuities. In general, a SIMPLE IRA consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to purchase the Contract as a SIMPLE IRA should seek competent tax and legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee:
. attains age 59 1/2,
. severs employment,
. dies,
. becomes disabled, or
. incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate Life is directed to transfer some or all of the Contract Value to another 403(b) plan. Generally, we do not accept Employee Retirement Income Security Act of 1974 (ERISA) funds in 403(b) contracts.
36 PROSPECTUS
ANNUAL REPORTS AND OTHER DOCUMENTS
Allstate Life's annual report on Form 10-K for the year ended December 31, 2003 and its Form 10-Q reports for the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 are incorporated herein by reference which means that they are legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Exchange Act are also incorporated herein by reference, which means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC and that legally become a part of this prospectus, may change or supersede statements in other documents that are legally part of this prospectus. Accordingly, only the statement that is changed or replaced will legally be a part of this prospectus.
We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR" system using the identifying number CIK No. 0000352736. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. You also can view these materials at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. For more information on the operations of SEC's Public Reference Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of any document incorporated herein by reference (other than exhibits not specifically incorporated by reference into the text of such documents), please write or call us at 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 (telephone:
1-800-755-5275).
37 PROSPECTUS
APPENDIX A
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
BASIC POLICY
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For the Years Beginning January 1 and Ending December 31,* 1998 1999 2000 2001 2002
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AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.66 $ 11.99 $ 10.50
Accumulation Unit Value, End of Period $10.73 $ 12.66 $ 11.99 $ 10.50 $ 8.605
Number of Units Outstanding, End of Period 0 7,487 52,646 90,025 79,599
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.39 $ 16.29 $ 14.35 $ 10.88
Accumulation Unit Value, End of Period $10.73 $ 16.29 $ 14.35 $ 10.88 $ 8.138
Number of Units Outstanding, End of Period 0 8,743 73,347 76,217 62,506
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.09 $ 12.74 $ 9.72
Accumulation Unit Value, End of Period $11.36 $ 15.09 $ 12.74 $ 9.72 $ 8.112
Number of Units Outstanding, End of Period 0 12,180 53,747 73,192 55,166
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.22 $ 9.91 $ 9.87 $ 10.11
Accumulation Unit Value, End of Period $10.22 $ 9.91 $ 9.87 $ 10.11 $ 10.219
Number of Units Outstanding, End of Period 0 721 721 721 80,837
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 14.16 $ 13.68 $ 11.04
Accumulation Unit Value, End of Period $10.73 $ 14.16 $ 13.68 $ 11.04 $ 7.178
Number of Units Outstanding, End of Period 0 0 0 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.38 $ 9.85 $ 10.73 $ 11.29
Accumulation Unit Value, End of Period $10.38 $ 9.85 $ 10.73 $ 11.29 $ 12.228
Number of Units Outstanding, End of Period 0 0 2,954 17,908 18,116
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.83 $ 15.82 $ 12.43 $ 8.13
Accumulation Unit Value, End of Period $11.83 $ 15.82 $ 12.43 $ 8.13 $ 5.545
Number of Units Outstanding, End of Period 0 13,275 69,688 57,165 41,008
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.31 $ 11.27 $ 9.03 $ 8.48
Accumulation Unit Value, End of Period $10.31 $ 11.27 $ 9.03 $ 8.48 $ 7.891
Number of Units Outstanding, End of Period 0 7,387 9,651 16,857 9,136
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.68 $ 16.38 $ 11.92 $ 9.00
Accumulation Unit Value, End of Period $10.68 $ 16.38 $ 11.92 $ 9.00 $ 7.510
Number of Units Outstanding, End of Period 0 0 4,196 4,353 3,644
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.52 $ 14.80 $ 12.49 $ 12.49
Accumulation Unit Value, End of Period $11.52 $ 14.80 $ 12.49 $ 10.79 $ 7.442
Number of Units Outstanding, End of Period 0 42,074 115,418 133,037 99,724
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- -- -- --
Accumulation Unit Value, End of Period -- -- -- -- --
Number of Units Outstanding, End of Period -- -- -- -- --
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.79 $ 14.40 $ 12.66 $ 9.69
Accumulation Unit Value, End of Period $10.79 $ 14.40 $ 12.66 $ 9.69 $ 6.808
Number of Units Outstanding, End of Period 0 3,130 5,459 2,854 2,119
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38 PROSPECTUS
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DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.87 $ 12.97 $ 11.63 $ 10.10
Accumulation Unit Value, End of Period $10.87 $ 12.97 $ 11.63 $ 10.10 $ 7.750
Number of Units Outstanding, End of Period 0 9,930 23,030 17,916 18,764
DREYFUS VIF GROWTH & INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.65 $ 12.47 $ 11.86 $ 11.86
Accumulation Unit Value, End of Period $10.65 $ 12.47 $ 11.86 $ 11.078 $ 8.148
Number of Units Outstanding, End of Period 0 2,680 3,326 13,021 12,290
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.05 $ 10.40 $ 10.91 $ 11.211
Accumulation Unit Value, End of Period $10.05 $ 10.40 $ 10.91 $ 11.211 $ 11.245
Number of Units Outstanding, End of Period 0 0 0 33,552 21,895
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.65 $ 11.66 $ 12.51 $ 12.178
Accumulation Unit Value, End of Period $10.65 $ 11.66 $ 12.51 $ 12.178 $ 9.665
Number of Units Outstanding, End of Period 0 236 429 428 314
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.66 $ 14.33 $ 13.23 $ 11.473
Accumulation Unit Value, End of Period $11.66 $ 14.33 $ 13.23 $ 11.473 $ 10.281
Number of Units Outstanding, End of Period 0 18,963 101,434 128,908 109,080
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.48 $ 11.02 $ 11.81 $ 11.096
Accumulation Unit Value, End of Period $10.48 $ 11.02 $ 11.81 $ 11.096 $ 9.110
Number of Units Outstanding, End of Period 0 30,264 100,008 169,933 151,301
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.20 $ 15.22 $ 13.40 $ 10.906
Accumulation Unit Value, End of Period $11.20 $ 15.22 $ 13.40 $ 10.906 $ 7.536
Number of Units Outstanding, End of Period 0 25,821 168,574 193,055 156,368
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.16 $ 8.55 $ 7.462
Accumulation Unit Value, End of Period $10.43 $ 11.16 $ 8.55 $ 7.462 $ 7.637
Number of Units Outstanding, End of Period 0 3,837 45,009 69,939 76,485
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.10 $ 13.99 $ 8.55 $ 10.763
Accumulation Unit Value, End of Period $11.10 $ 11.16 $ 8.55 $ 10.763 $ 8.051
Number of Units Outstanding, End of Period 0 0 573 573 573
GOLDMAN SACHS CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.60 $ 12.36 $ 12.44 $ 12.851
Accumulation Unit Value, End of Period $10.60 $ 12.36 $ 12.44 $ 12.851 $ 10.803
Number of Units Outstanding, End of Period 0 86 717 716 785
GOLDMAN SACHS VIT CORE(SM) U.S. EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.89 $ 13.46 $ 12.02 $ 10.466
Accumulation Unit Value, End of Period $10.89 $ 13.46 $ 12.02 $ 10.466 $ 8.081
Number of Units Outstanding, End of Period 0 317 0 159 158
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $10.00 $ 9.67 $ 9.92 $ 10.70 --
Accumulation Unit Value, End of Period $ 9.67 $ 9.92 $ 10.70 $ 11.089 --
Number of Units Outstanding, End of Period 0 0 724 895 --
GOLDMAN SACHS VIT GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 9.94 $ 10.46 $ 9.86 $ 8.712
Accumulation Unit Value, End of Period $ 9.94 $ 10.46 $ 9.86 $ 8.712 $ 7.742
Number of Units Outstanding, End of Period 0 637 636 1386 0
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.84 $ 14.25 $ 12.24 $ 9.402
Accumulation Unit Value, End of Period $10.84 $ 14.25 $ 12.24 $ 9.402 $ 7.590
Number of Units Outstanding, End of Period 0 0 168 167 166
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39 PROSPECTUS
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MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.95 $ 20.88 $ 16.60 $ 10.91
Accumulation Unit Value, End of Period $11.95 $ 20.88 $ 16.60 $ 10.91 $ 7.146
Number of Units Outstanding, End of Period 0 1,059 58,025 104,779 94,106
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.41 $ 11.26 $ 9.36
Accumulation Unit Value, End of Period $10.81 $ 11.41 $ 11.26 $ 9.36 $ 7.311
Number of Units Outstanding, End of Period 0 6,295 15,337 45,121 32,328
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.38 $ 19.52 $ 18.92 $ 17.76
Accumulation Unit Value, End of Period $11.38 $ 19.52 $ 18.92 $ 17.76 $ 12.002
Number of Units Outstanding, End of Period 0 183 3,148 6,802 6,778
NEUBERGER BERMAN AMT GUARDIAN SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 12.28 $ 10.31 $ 12.058
Accumulation Unit Value, End of Period $10.81 $ 12.28 $ 10.31 $ 12.058 $ 8.694
Number of Units Outstanding, End of Period 0 0 28,736 0 0
NEUBERGER BERMAN AMT MID-CAP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 12.13 $ 18.45 $ 16.88 $ 12.575
Accumulation Unit Value, End of Period $12.13 $ 18.45 $ 16.88 $ 12.575 $ 8.784
Number of Units Outstanding, End of Period 0 296 696 695 316
NEUBERGER BERMAN AMT PARTNERS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.31 $ 10.00 $ 10.90 $ 10.465
Accumulation Unit Value, End of Period $10.31 $ 10.94 $ 10.90 $ 10.465 $ 7.848
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(3)(4)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.15 $ 9.87 $ 10.85 $ 11.723
Accumulation Unit Value, End of Period $10.15 $ 9.87 $ 10.85 $ 11.723 $ 12.439
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.94 $ 15.09 $ 13.17 $ 11.049
Accumulation Unit Value, End of Period $10.94 $ 15.09 $ 13.17 11.049 $ 7.879
Number of Units Outstanding, End of Period 0 0 162 0 2,459
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(3)(5)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 10.73 $ 11.83 $ 10.873
Accumulation Unit Value, End of Period $10.43 $ 10.73 $ 11.83 $ 10.873 $ 8.937
Number of Units Outstanding, End of Period 0 0 959 0 1,077
VAN KAMPEN UIF INTERNATIONAL MAGNUM SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.39 $ 12.85 $ 11.13 $ 8.881
Accumulation Unit Value, End of Period $10.39 $ 12.85 $ 11.13 $ 8.881 $ 7.304
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(3)(6)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.96 $ 10.00 $ 14.32 $ 13.705
Accumulation Unit Value, End of Period $10.96 $ 13.07 $ 14.32 $ 13.705 $ 9.752
Number of Units Outstanding, End of Period 0 0 5,400 0 9,054
VAN KAMPEN UIF U.S. REAL ESTATE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.18 $ 10.00 $ 12.67 $ 13.759
Accumulation Unit Value, End of Period $10.18 $ 9.91 $ 12.67 $ 13.759 $ 13.403
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF VALUE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 9.95 $ 10.00 $ 11.93 $ 12.058
Accumulation Unit Value, End of Period $ 9.95 $ 9.65 $ 11.93 $ 12.058 $ 9.279
Number of Units Outstanding, End of Period 0 0 233 0 753
|
40 PROSPECTUS
|
For the Years Beginning January 1 and Ending December 31,* 2003 2004
--------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.605 $ 9.899
Accumulation Unit Value, End of Period $ 9.899 $ 9.863
Number of Units Outstanding, End of Period 77,339 76,112
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.138 $ 10.420
Accumulation Unit Value, End of Period $ 10.420 $ 10.011
Number of Units Outstanding, End of Period 51,334 45,919
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.112 $ 9.978
Accumulation Unit Value, End of Period $ 9.978 $ 10.030
Number of Units Outstanding, End of Period 52,185 49,973
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.219 $ 11.035
Accumulation Unit Value, End of Period $ 11.035 $ 11.350
Number of Units Outstanding, End of Period 80,837 80,837
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.178 $ 8.446
Accumulation Unit Value, End of Period $ 8.446 $ 8.490
Number of Units Outstanding, End of Period 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 12.228 $ 12.217
Accumulation Unit Value, End of Period $ 12.217 $ 12.350
Number of Units Outstanding, End of Period 25,026 23,535
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.545 $ 7.195
Accumulation Unit Value, End of Period $ 7.195 $ 6.979
Number of Units Outstanding, End of Period 29,457 27,704
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.891 $ 9.988
Accumulation Unit Value, End of Period $ 9.988 v10.516
Number of Units Outstanding, End of Period 9,047 8.957
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.510 $ 9.582
Accumulation Unit Value, End of Period $ 9.582 $ 10.234
Number of Units Outstanding, End of Period 3,304 3,578
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.442 $ 9.202
Accumulation Unit Value, End of Period $ 9.202 $ 8.893
Number of Units Outstanding, End of Period 89,645 80,195
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.000
Accumulation Unit Value, End of Period -- $ 10.897
Number of Units Outstanding, End of Period -- 0
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.808 $ 8.480
Accumulation Unit Value, End of Period $ 8.480 $ 8.203
Number of Units Outstanding, End of Period 1,323 1,514
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.750 $ 9.834
Accumulation Unit Value, End of Period $ 9.834 $ 9.847
Number of Units Outstanding, End of Period 13,107 13,597
DREYFUS VIF GROWTH & INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.148 $ 10.195
Accumulation Unit Value, End of Period $ 10.195 $ 9.903
Number of Units Outstanding, End of Period 11,244 11.237
|
41 PROSPECTUS
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 11.245 $ 11.194
Accumulation Unit Value, End of Period $ 11.194 $ 11.152
Number of Units Outstanding, End of Period 7,225 9,183
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.665 $ 13.658
Accumulation Unit Value, End of Period $ 13.658 $ 14.426
Number of Units Outstanding, End of Period 0 227
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.281 $ 13.057
Accumulation Unit Value, End of Period $ 13.057 $ 13.691
Number of Units Outstanding, End of Period 105,900 102,482
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.110 $ 11.738
Accumulation Unit Value, End of Period $ 11.738 $ 11.879
Number of Units Outstanding, End of Period 139,986 138,095
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.536 $ 9.896
Accumulation Unit Value, End of Period $ 9.896 $ 9.351
Number of Units Outstanding, End of Period 144,374 135,616
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.637 $ 9.600
Accumulation Unit Value, End of Period $ 9.600 $ 9.969
Number of Units Outstanding, End of Period 97,563 96,011
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.051 $ 9.848
Accumulation Unit Value, End of Period $ 9.848 $ 9.713
Number of Units Outstanding, End of Period 573 573
GOLDMAN SACHS CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.803 $ 15.592
Accumulation Unit Value, End of Period $ 15.592 $ 16.113
Number of Units Outstanding, End of Period 714 714
GOLDMAN SACHS VIT CORE(SM) U.S. EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.081 $ 10.343
Accumulation Unit Value, End of Period $ 10.343 $ 10.781
Number of Units Outstanding, End of Period 158 158
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.742 $ 9.518
Accumulation Unit Value, End of Period $ 9.518 $ 10.248
Number of Units Outstanding, End of Period 0 0
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.590 $ 10.167
Accumulation Unit Value, End of Period $ 10.167 $ 9.952
Number of Units Outstanding, End of Period 0 820
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.146 $ 9.200
Accumulation Unit Value, End of Period $ 9.200 $ 9.021
Number of Units Outstanding, End of Period 83,943 72,029
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.311 $ 8.828
Accumulation Unit Value, End of Period $ 8.828 $ 8.809
Number of Units Outstanding, End of Period 30,413 28,480
|
42 PROSPECTUS
MFS NEW DISCOVERY SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 12.002 $ 15.866
Accumulation Unit Value, End of Period $ 15.866 $ 14.659
Number of Units Outstanding, End of Period 6,419 6,644
NEUBERGER BERMAN AMT GUARDIAN SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.694 $ 11.325
Accumulation Unit Value, End of Period $ 11.325 $ 11.734
Number of Units Outstanding, End of Period 0 0
NEUBERGER BERMAN AMT MID-CAP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.784 $ 11.121
Accumulation Unit Value, End of Period $ 11.121 $ 11.357
Number of Units Outstanding, End of Period 315 315
NEUBERGER BERMAN AMT PARTNERS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.848 $ 10.481
Accumulation Unit Value, End of Period $ 10.481 $ 10.998
Number of Units Outstanding, End of Period 0 0
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(3)(4)/
Accumulation Unit Value, Beginning of Period $ 12.439 $ 12.867
Accumulation Unit Value, End of Period $ 12.867 $ 13.164
Number of Units Outstanding, End of Period 3,413 3,412
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.879 $ 9.731
Accumulation Unit Value, End of Period $ 9.731 $ 9.445
Number of Units Outstanding, End of Period 2,298 2,402
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(3)(5)/
Accumulation Unit Value, Beginning of Period $ 8.937 $ 11.393
Accumulation Unit Value, End of Period $ 11.393 $ 11.516
Number of Units Outstanding, End of Period 115 115
VAN KAMPEN UIF INTERNATIONAL MAGNUM SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.304 $ 9.200
Accumulation Unit Value, End of Period $ 9.200 9.332
Number of Units Outstanding, End of Period 0 0
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(3)(6)/
Accumulation Unit Value, Beginning of Period $ 9.752 $ 13.642
Accumulation Unit Value, End of Period $ 13.642 $ 13.939
Number of Units Outstanding, End of Period 7,762 7,683
VAN KAMPEN UIF U.S. REAL ESTATE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 13.403 $ 18.346
Accumulation Unit Value, End of Period $ 18.346 $ 21.186
Number of Units Outstanding, End of Period 0 188
VAN KAMPEN UIF VALUE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 9.279 $ 12.300
Accumulation Unit Value, End of Period $ 12.300 $ 13.085
Number of Units Outstanding, End of Period 1,016 1,117
|
* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.05% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Effective April 30, 2004, AIM VI. Global Utilities Fund - Series I was merged into INVESCO VIF-Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund - Series I changed its name to AIM V.I. Utilities Fund - Series I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(2) Effective May 1, 2002, the Goldman Sachs VIT Global Income Sub-Account closed to new investors.
(3) Effective May 1, 2004, the Morgan Stanley UIF Portfolios were rebranded the Van Kampen UIF Portfolios.
(4) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. The investment objective for this Portfolio has not changed. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
43 PROSPECTUS
(6) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
44 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
WITH ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER
|
For the Years Beginning January 1 and Ending December 31,* 1998 1999 2000 2001 2002
---------------------------------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.60 $ 11.88 $ 10.36
Accumulation Unit Value, End of Period $10.73 $ 12.60 $ 11.88 $ 10.36 $ 8.450
Number of Units Outstanding, End of Period 0 43121 101,781 94,585 89,074
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.39 $ 16.21 $ 14.22 $ 10.73
Accumulation Unit Value, End of Period $11.39 $ 16.21 $ 14.22 $ 10.73 $ 7.991
Number of Units Outstanding, End of Period 0 16,046 122,768 129,783 103,573
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.01 $ 12.63 $ 9.59
Accumulation Unit Value, End of Period $11.36 $ 15.01 $ 12.63 $ 9.59 $ 7.966
Number of Units Outstanding, End of Period 0 11,459 66,400 69,341 55,288
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.21 $ 9.86 $ 9.78 $ 9.97
Accumulation Unit Value, End of Period $10.21 $ 9.86 $ 9.78 $ 9.97 $ 10.034
Number of Units Outstanding, End of Period 0 1,484 1,484 1,484 1,484
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.72 $ 14.09 $ 14.09 $ 10.90
Accumulation Unit Value, End of Period $10.72 $ 14.09 $ 13.59 $ 10.90 $ 7.048
Number of Units Outstanding, End of Period 0 0 0 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.38 $ 9.80 $ 10.63 $ 10.99
Accumulation Unit Value, End of Period $10.38 $ 9.80 $ 10.63 $ 10.99 $ 12.007
Number of Units Outstanding, End of Period 0 0 0 0 0
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.82 $ 15.74 $ 12.32 $ 8.02
Accumulation Unit Value, End of Period $11.82 $ 15.74 $ 12.32 $ 8.02 $ 5.445
Number of Units Outstanding, End of Period 0 21,246 108,292 112,689 104,501
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.31 $ 11.22 $ 8.94 $ 8.36
Accumulation Unit Value, End of Period $10.31 $ 11.22 $ 8.94 $ 8.36 $ 7.748
Number of Units Outstanding, End of Period 0 185 10,889 11,220 12,011
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.68 $ 16.30 $ 11.81 $ 8.89
Accumulation Unit Value, End of Period $10.68 $ 16.30 $ 11.81 $ 8.89 $ 7.374
Number of Units Outstanding, End of Period 0 2,943 3,483 3,178 2,927
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.51 $ 14.73 $ 12.37 $ 10.65
Accumulation Unit Value, End of Period $11.51 $ 14.73 $ 12.37 $ 10.65 $ 7.307
Number of Units Outstanding, End of Period 0 34,288 159,570 160,343 126,176
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- -- -- --
Accumulation Unit Value, End of Period -- -- -- -- --
Number of Units Outstanding, End of Period -- -- -- -- --
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.77 $ 14.33 $ 12.55 $ 9.56
Accumulation Unit Value, End of Period $10.77 $ 14.33 $ 12.55 $ 9.56 $ 6.685
Number of Units Outstanding, End of Period 0 5,493 7,121 6,350 5,661
|
45 PROSPECTUS
|
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.87 $ 12.90 $ 11.52 $ 9.96
Accumulation Unit Value, End of Period $10.87 $ 12.90 $ 11.52 $ 9.96 $ 7.610
Number of Units Outstanding, End of Period 0 19,955 21,326 19,024 16,309
DREYFUS VIF GROWTH & INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.64 $ 12.40 $ 11.75 $ 10.89
Accumulation Unit Value, End of Period $10.64 $ 12.40 $ 11.75 $ 10.89 $ 8.000
Number of Units Outstanding, End of Period 0 3,983 3,676 3,568 2,993
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.04 $ 10.36 $ 10.81 $ 11.06
Accumulation Unit Value, End of Period $10.04 $ 10.36 $ 10.81 $ 11.06 $ 11.042
Number of Units Outstanding, End of Period 0 577 489 16,157 14,874
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.65 $ 11.60 $ 12.39 $ 12.01
Accumulation Unit Value, End of Period $10.65 $ 11.60 $ 12.39 $ 12.01 $ 9.491
Number of Units Outstanding, End of Period 0 2,542 2,538 2,047 1,716
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.65 $ 14.26 $ 13.10 $ 11.32
Accumulation Unit Value, End of Period $11.65 $ 14.26 $ 13.10 $ 11.32 $ 10.096
Number of Units Outstanding, End of Period 0 32,161 13,1791 134,375 114,720
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.47 $ 10.96 $ 11.70 $ 10.94
Accumulation Unit Value, End of Period $10.47 $ 10.96 $ 11.70 $ 10.94 $ 8.946
Number of Units Outstanding, End of Period 0 11,621 45,849 55,016 54,937
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.19 $ 15.15 $ 13.27 $ 10.76
Accumulation Unit Value, End of Period $11.19 $ 15.15 $ 13.27 $ 10.76 $ 7.399
Number of Units Outstanding, End of Period 0 22,088 151,189 149,935 123,919
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.10 $ 8.47 $ 7.36
Accumulation Unit Value, End of Period $10.43 $ 11.10 $ 8.47 $ 7.36 $ 7.493
Number of Units Outstanding, End of Period 0 3,667 31,190 24,128 17,717
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.09 $ 13.92 $ 12.61 $ 10.62
Accumulation Unit Value, End of Period $11.09 $ 13.92 $ 12.61 $ 10.62 $ 7.906
Number of Units Outstanding, End of Period 0 2,449 4,173 2,958 3,144
GOLDMAN SACHS CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.59 $ 12.30 $ 12.32 $ 12.67
Accumulation Unit Value, End of Period $10.59 $ 12.30 $ 12.32 $ 12.67 $ 10.607
Number of Units Outstanding, End of Period 0 17,918 18,069 17,077 13,981
GOLDMAN SACHS VIT CORE(SM) U.S. EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.89 $ 13.39 $ 11.91 $ 10.32
Accumulation Unit Value, End of Period $10.89 $ 13.39 $ 11.91 $ 10.32 $ 7.935
Number of Units Outstanding, End of Period 0 20,515 23,250 20,215 16,365
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $10.00 $ 9.66 $ 9.87 $ 10.60 --
Accumulation Unit Value, End of Period $ 9.66 $ 9.87 $ 10.60 $ 10.94 --
Number of Units Outstanding, End of Period 0 0 0 0 0
GOLDMAN SACHS VIT GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 9.93 $ 10.41 $ 9.76 $ 8.71
Accumulation Unit Value, End of Period $ 9.93 $ 10.41 $ 9.76 $ 8.71 $ 7.603
Number of Units Outstanding, End of Period 0 2,081 2,047 1,386 820
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.84 $ 14.18 $ 12.12 $ 9.27
Accumulation Unit Value, End of Period $10.84 $ 14.18 $ 12.12 $ 9.27 $ 7.453
Number of Units Outstanding, End of Period 0 0 1,812 1,812 1,812
|
46 PROSPECTUS
|
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.94 $ 20.78 $ 16.44 $ 10.76
Accumulation Unit Value, End of Period $11.94 $ 20.78 $ 16.44 $ 10.76 $ 7.017
Number of Units Outstanding, End of Period 0 19,189 64,075 65,183 58,274
MFS INVESTORS TRUST SERIES
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.35 $ 11.16 $ 9.23
Accumulation Unit Value, End of Period $10.81 $ 11.35 $ 11.16 $ 9.23 $ 7.179
Number of Units Outstanding, End of Period 0 4,808 11,160 9,277 7,991
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.38 $ 19.42 $ 18.74 $ 17.51
Accumulation Unit Value, End of Period $11.38 $ 19.42 $ 18.74 $ 17.51 $ 11.785
Number of Units Outstanding, End of Period 0 707 1,509 913 1,214
NEUBERGER BERMAN AMT GUARDIAN SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.80 $ 12.22 $ 12.17 $ 11.79
Accumulation Unit Value, End of Period $10.80 $ 12.22 $ 12.17 $ 11.79 $ 8.537
Number of Units Outstanding, End of Period 0 1,924 1,415 1,315 756
NEUBERGER BERMAN AMT MID CAP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 12.12 $ 18.36 $ 16.72 $ 12.40
Accumulation Unit Value, End of Period $12.12 $ 18.36 $ 16.72 $ 12.40 $ 8.625
Number of Units Outstanding, End of Period 0 64 1,853 1,852 1,850
NEUBERGER BERMAN AMT PARTNERS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.30 $ 10.89 $ 10.79 $ 10.32
Accumulation Unit Value, End of Period $10.30 $ 10.89 $ 10.79 $ 10.32 $ 7.706
Number of Units Outstanding, End of Period 0 17,996 16,330 16,031 12,781
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(3)(4)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.15 $ 9.82 $ 10.75 $ 11.40
Accumulation Unit Value, End of Period $10.15 $ 9.82 $ 10.75 $ 11.40 $ 12.214
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.94 $ 15.02 $ 13.04 $ 10.90
Accumulation Unit Value, End of Period $10.94 $ 15.02 $ 13.04 $ 10.90 $ 7.737
Number of Units Outstanding, End of Period 0 7,464 11,011 9,643 8,976
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(3)(5)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.42 $ 10.69 $ 11.72 $ 10.72
Accumulation Unit Value, End of Period $10.42 $ 10.69 $ 11.72 $ 10.72 $ 8.775
Number of Units Outstanding, End of Period 0 245 363 244 243
VAN KAMPEN UIF INTERNATIONAL MAGNUM SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.38 $ 12.79 $ 11.03 $ 9.43
Accumulation Unit Value, End of Period $10.38 $ 12.79 $ 11.03 $ 9.43 $ 7.172
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(3)(6)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.96 $ 13.01 $ 14.18 $ 13.52
Accumulation Unit Value, End of Period $10.96 $ 13.01 $ 14.18 $ 13.52 $ 9.576
Number of Units Outstanding, End of Period 0 1,788 4,089 2,772 3,137
VAN KAMPEN UIF U.S. REAL ESTATE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.17 $ 9.86 $ 12.55 $ 14.00
Accumulation Unit Value, End of Period $10.17 $ 9.86 $ 12.55 $ 14.00 $ 13.161
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF VALUE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 9.95 $ 9.61 $ 11.82 $ 11.89
Accumulation Unit Value, End of Period $ 9.95 $ 9.61 $ 11.82 $ 11.89 $ 9.112
Number of Units Outstanding, End of Period 0 17,465 16,697 15,426 12,180
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47 PROSPECTUS
|
For the Years Beginning January 1 and Ending December 31,* 2003 2004
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AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.450 $ 9.677
Accumulation Unit Value, End of Period $ 9.677 $ 9.611
Number of Units Outstanding, End of Period 79,043 63,895
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.991 $ 10.187
Accumulation Unit Value, End of Period $ 10.187 $ 9.754
Number of Units Outstanding, End of Period 93,396 82,252
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.966 $ 9.755
Accumulation Unit Value, End of Period $ 9.755 $ 9.773
Number of Units Outstanding, End of Period 49,921 50,120
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.034 $ 10.789
Accumulation Unit Value, End of Period $ 10.789 $ 11.060
Number of Units Outstanding, End of Period 134 0
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.048 $ 8.257
Accumulation Unit Value, End of Period $ 8.257 $ 8.288
Number of Units Outstanding, End of Period 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 12.007 $ 11.944
Accumulation Unit Value, End of Period $ 11.944 $ 12.034
Number of Units Outstanding, End of Period 0 0
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.445 $ 7.034
Accumulation Unit Value, End of Period $ 7.034 $ 6.800
Number of Units Outstanding, End of Period 105,887 101,131
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.748 $ 9.765
Accumulation Unit Value, End of Period $ 9.765 10.247
Number of Units Outstanding, End of Period 11,842 11,271
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.374 $ 9.368
Accumulation Unit Value, End of Period $ 9.368 $ 9.972
Number of Units Outstanding, End of Period 2,660 530
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.307 $ 8.996
Accumulation Unit Value, End of Period $ 8.996 $ 8.665
Number of Units Outstanding, End of Period 117,821 102,217
AIM V.I. UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.000
Accumulation Unit Value, End of Period -- $ 10.876
Number of Units Outstanding, End of Period -- 0
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.685 $ 8.290
Accumulation Unit Value, End of Period $ 8.290 $ 7.993
Number of Units Outstanding, End of Period 7,252 5,120
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.610 $ 9.614
Accumulation Unit Value, End of Period $ 9.614 $ 9.595
Number of Units Outstanding, End of Period 13,791 17,721
DREYFUS VIF GROWTH & INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.000 $ 9.967
Accumulation Unit Value, End of Period $ 9.967 $ 9.649
Number of Units Outstanding, End of Period 1,614 1,674
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48 PROSPECTUS
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 11.042 $ 10.944
Accumulation Unit Value, End of Period $ 10.944 $ 10.867
Number of Units Outstanding, End of Period 7,405 1,510
DREYFUS VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.491 $ 13.352
Accumulation Unit Value, End of Period $ 13.352 $ 14.057
Number of Units Outstanding, End of Period 1,714 1,713
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.096 $ 12.765
Accumulation Unit Value, End of Period $ 12.765 $ 13.340
Number of Units Outstanding, End of Period 105,800 98,026
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.946 $ 11.475
Accumulation Unit Value, End of Period $ 11.475 $ 11.575
Number of Units Outstanding, End of Period 59,907 58,079
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.399 $ 9.675
Accumulation Unit Value, End of Period $ 9.675 $ 9.112
Number of Units Outstanding, End of Period 111,514 99,339
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.493 $ 9.385
Accumulation Unit Value, End of Period $ 9.385 $ 9.714
Number of Units Outstanding, End of Period 16,572 15,444
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.906 $ 9.628
Accumulation Unit Value, End of Period $ 9.628 $ 9.464
Number of Units Outstanding, End of Period 3,053 3,013
GOLDMAN SACHS CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.607 $ 15.243
Accumulation Unit Value, End of Period $ 15.243 $ 15.701
Number of Units Outstanding, End of Period 12,774 12,650
GOLDMAN SACHS VIT CORE(SM) U.S. EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.935 $ 10.112
Accumulation Unit Value, End of Period $ 10.112 $ 10.505
Number of Units Outstanding, End of Period 15,131 14,610
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.603 $ 9.305
Accumulation Unit Value, End of Period $ 9.305 $ 9.986
Number of Units Outstanding, End of Period 819 818
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.453 $ 9.939
Accumulation Unit Value, End of Period $ 9.939 $ 9.697
Number of Units Outstanding, End of Period 1,812 1,812
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.017 $ 8.994
Accumulation Unit Value, End of Period $ 8.994 $ 8.790
Number of Units Outstanding, End of Period 53,387 46,204
MFS INVESTORS TRUST SERIES
Accumulation Unit Value, Beginning of Period $ 7.179 $ 8.631
Accumulation Unit Value, End of Period $ 8.631 $ 8.583
Number of Units Outstanding, End of Period 6,780 6,887
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49 PROSPECTUS
MFS NEW DISCOVERY SUB-ACCOUNT
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Accumulation Unit Value, Beginning of Period $ 11.785 $ 15.511
Accumulation Unit Value, End of Period $ 15.511 $ 14.284
Number of Units Outstanding, End of Period 2,605 2,604
NEUBERGER BERMAN AMT GUARDIAN SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.537 $ 11.072
Accumulation Unit Value, End of Period $ 11.072 $ 11.434
Number of Units Outstanding, End of Period 629 779
NEUBERGER BERMAN AMT MID CAP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.625 $ 10.872
Accumulation Unit Value, End of Period $ 10.872 $ 11.066
Number of Units Outstanding, End of Period 1,848 1,847
NEUBERGER BERMAN AMT PARTNERS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.706 $ 10.246
Accumulation Unit Value, End of Period $ 10.246 $ 10.717
Number of Units Outstanding, End of Period 11,778 11,662
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(3)(4)/
Accumulation Unit Value, Beginning of Period $ 12.214 $ 12.579
Accumulation Unit Value, End of Period $ 12.579 $ 12.827
Number of Units Outstanding, End of Period 1,130 1,997
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.737 $ 9.513
Accumulation Unit Value, End of Period $ 9.513 $ 9.203
Number of Units Outstanding, End of Period 8,598 8,461
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(3)(5)/
Accumulation Unit Value, Beginning of Period $ 8.775 $ 11.138
Accumulation Unit Value, End of Period $ 11.138 $ 11.221
Number of Units Outstanding, End of Period 243 243
VAN KAMPEN UIF INTERNATIONAL MAGNUM SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.172 $ 8.994
Accumulation Unit Value, End of Period $ 8.994 $ 9.093
Number of Units Outstanding, End of Period 0 0
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(3)(6)/
Accumulation Unit Value, Beginning of Period $ 9.576 $ 13.337
Accumulation Unit Value, End of Period $ 13.337 $ 13.582
Number of Units Outstanding, End of Period 4,792 4,746
VAN KAMPEN UIF U.S. REAL ESTATE SUB-ACCOUNT /(3)/
Accumulation Unit Value, Beginning of Period $ 13.161 $ 17.935
Accumulation Unit Value, End of Period $ 17.935 $ 20.644
Number of Units Outstanding, End of Period 0 0
VAN KAMPEN UIF VALUE SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 9.112 $ 12.025
Accumulation Unit Value, End of Period $ 12.025 $ 12.750
Number of Units Outstanding, End of Period 12,203 12,370
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* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Effective April 30, 2004, AIM VI. Global Utilities Fund - Series I was merged into INVESCO VIF-Utilities Fund - Series I. Effective October 15, 2004, INVESCO VIF-Utilities Fund - Series I changed its name to AIM V.I. Utilities Fund - Series I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(2) Effective May 1, 2002, the Goldman Sachs VIT Global Income Sub-Account closed to new investors.
(3) Effective May 1, 2004, the Morgan Stanley UIF Portfolios were rebranded the Van Kampen UIF Portfolios.
(4) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. The investment objective for this Portfolio has not changed. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
50 PROSPECTUS
(6) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
51 PROSPECTUS
APPENDIX B
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the withdrawal, transfer, or death benefit request, or from the Payout Start Date to the end of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the receipt of the withdrawal, transfer, death benefit, or income payment request. If a Note with a maturity of the original Guarantee Period is not available, we determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported in Federal Reserve Bulletin Release H.15.
* If a U.S. Treasury Note ("Note") with a maturity of the Guarantee Period is not available, we will determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
The Market Value Adjustment factor is determined from the following formula:
.9 X [I-(J + .0025)] X N
To determine the Market Value Adjustment, we will multiply the Market Value Adjustment factor by the amount transferred, withdrawn (in excess of the Free Withdrawal Amount), paid as a death benefit, or applied to an Income Plan from a Guarantee Period at any time other than during the 30 day period after such Guarantee Period expires.
52 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
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Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
I = 4.5%
Step 3. Calculate the Withdrawal J = 4.2%
Charge: 730 days
N = -------- = 2
365 days
Step 4. Calculate the Market
Value Adjustment: Market Value Adjustment Factor: .9 X [I - (J
+ .0025)] X N = .9 X [.045 - (.042 + .0025)]
X 2 = .0009
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= .0009 X ($11,411.66 - $1,500.00) = $8.92
Step 5. Calculate the amount $11,411.66 + $8.92 = $11,420.58
received by a Contract Owner as
a result of full withdrawal at
|
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
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Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
I = 4.5%
Step 3. Calculate the Withdrawal J = 4.8%
Charge: 730 days
N = -------- = 2
Step 4. Calculate the Market 365 days
Value Adjustment: Market Value Adjustment Factor: .9 X [I - (J
+ .0025)] X N = .9 X [.045 - (.048 + .0025)]
X 2 = -.0099
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= -.0099 X ($11,411.66 - $1,500.00) = -$98.13
Step 5. Calculate the amount $11,411.66 - $98.13 = $11,313.53
received by a Contract Owner as
a result of full withdrawal at
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the end of Contract Year 3:
53 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
THE CONTRACT
Purchase of Contracts
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
CALCULATION OF ACCUMULATION UNIT VALUES
NET INVESTMENT FACTOR
CALCULATION OF VARIABLE INCOME PAYMENTS
CALCULATION OF ANNUITY UNIT VALUES
GENERAL MATTERS
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
Tax Reserves
EXPERTS
FINANCIAL STATEMENTS
APPENDIX A: ACCUMULATION UNIT VALUES
54 PROSPECTUS
THE ALLSTATE(R) PROVIDER VARIABLE ANNUITY
(formerly referred to as "The Glenbrook Provider Variable Annuity")
ALLSTATE LIFE INSURANCE COMPANY
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 MAILING ADDRESS:
P.O. BOX 80469, LINCOLN, NE 68501-0469 TELEPHONE NUMBER: 1-800-755-5275 PROSPECTUS DATED JANUARY 3, 2005
Allstate Life Insurance Company ("Allstate Life") is offering the Allstate(R) Provider Variable Annuity, an individual flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference.
The Contract currently offers 42 "INVESTMENT ALTERNATIVEs". The investment alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and 39 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Allstate Financial Advisors Separate Account I ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of one of the portfolios ("PORTFOLIOS") of the following mutual funds ("FUNDS"):
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AIM VARIABLE INSURANCE FUNDS MFS/(R)/ VARIABLE INSURANCE TRUST(SM)
FEDERATED INSURANCE SERIES OPPENHEIMER VARIABLE ACCOUNT FUNDS
FIDELITY/(R)/ VARIABLE INSURANCE PUTNAM VARIABLE TRUST
PRODUCTS STI CLASSIC VARIABLE TRUST
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
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Not all of the Funds and/or Portfolios, however, may be available with your Contract. You should check with your representative for further information on the availability of Funds and/or Portfolios. Your annuity application will list all available Portfolios.
WE (Allstate Life) have filed a Statement of Additional Information, dated January 3, 2005, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means it is legally a part of this prospectus. Its table of contents appears on page 59 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http:// www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SEC's Web site.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THE SECURITIES DESCRIBED IN THIS
PROSPECTUS, NOR HAS IT PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS
NOTICES THAT HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL
INSTITUTIONS OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE
CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY SUCH INSTITUTIONS OR ANY FEDERAL REGULATORY
AGENCY. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
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THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
PAGE
OVERVIEW
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Important Terms 3
The Contract at a Glance 4
How the Contract Works 6
Expense Table 7
Financial Information 10
CONTRACT FEATURES
The Contract 11
Purchases 12
Contract Value 13
Investment Alternatives 14
The Variable Sub-Accounts 14
The Fixed Account Options 16
Transfers 18
Expenses 21
Access To Your Money 23
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PAGE
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Income Payments 23
Death Benefits 25
OTHER INFORMATION
More Information: 29
Allstate Life 29
The Variable Account 29
The Portfolios 29
The Contract 30
Non-Qualified Annuities Held Within a Qualified Plan 30
Legal Matters 30
Taxes 32
Annual Reports and Other Documents 38
APPENDIX A-ACCUMULATION UNIT VALUES 39
APPENDIX B-MARKET VALUE ADJUSTMENT EXAMPLE 57
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 59
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2 PROSPECTUS
IMPORTANT TERMS
This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE
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Accumulation Phase 6
Accumulation Unit 10
Accumulation Unit Value 10
Anniversary Values 28
Annuitant 11
Automatic Additions Plan 12
Automatic Portfolio Rebalancing Program 20
Beneficiary 11
Cancellation Period 12
Contract* 11
Contract Anniversary 5
Contract Owner (You) 11
Contract Value 13
Contract Year 4
Death Benefit Anniversary 27
Death Proceeds 27
Dollar Cost Averaging Program 20
Due Proof of Death 27
Enhanced Death Benefit Rider 27
Enhanced Death and Income Benefit Combination Rider 28
Enhanced Death and Income Benefit Combination Rider II 28
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PAGE
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Fixed Account Options 16
Free Withdrawal Amount 21
Funds 1
Allstate Life ("We" or "Us") 29
Guarantee Periods 17
Income Plan 23
Investment Alternatives 18
Issue Date 6
Market Value Adjustment 18
Payout Phase 6
Payout Start Date 23
Portfolios 29
Qualified Contracts 34
SEC 1
Settlement Value 27
Systematic Withdrawal Program 23
Valuation Date 12
Variable Account 1
Variable Sub-Account 1
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* In certain states the Contract is available only as a group Contract. If you purchase a group Contract, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates, unless the context requires otherwise.
3 PROSPECTUS
THE CONTRACT AT A GLANCE
The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information.
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FLEXIBLE PAYMENTS You can purchase a Contract with as little as
$3,000 ($2,000 for "QUALIFIED CONTRACTS", which are
Contracts issued within QUALIFIED PLANS). You can add to
your Contract as often and as much as you like, but each
payment must be at least $50.
-------------------------------------------------------------------------------
RIGHT TO CANCEL You may cancel your Contract within 20 days of
receipt or any longer period as your state may require
("CANCELLATION PERIOD"). Upon cancellation, we will
return your purchase payments adjusted, to the extent
federal or state law permits, to reflect the investment
experience of any amounts allocated to the Variable
Account.
-------------------------------------------------------------------------------
EXPENSES You will bear the following expenses:
. Total Variable Account annual fees equal to 1.15% of
average daily net assets (1.37% if you select the
ENHANCED DEATH BENEFIT RIDER; 1.59% if you selected
the ENHANCED DEATH AND INCOME BENEFIT COMBINATION
RIDER (for Contracts issued before September 22,
2000); and 1.65% if you select the ENHANCED DEATH
AND INCOME BENEFIT COMBINATION RIDER II (for
Contracts issued on or after September 22, 2000)
. Annual contract maintenance charge of $35 (with
certain exceptions)
. Withdrawal charges ranging from 0% to 6% of purchase
payment withdrawn (with certain exceptions)
. Transfer fee of $10 after 12th transfer in any
CONTRACT YEAR (fee currently waived)
. State premium tax (if your state imposes one)
In addition, each Portfolio pays expenses that you will
bear indirectly if you invest in a Variable Sub-Account.
-------------------------------------------------------------------------------
INVESTMENT The Contract offers 42 investment alternatives
ALTERNATIVES including:
. 3 Fixed Account Options (which credit interest at
rates we guarantee)
. 39 Variable Sub-Accounts investing in Portfolios
offering professional money management by these
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investment advisers:
. A I M Advisors, Inc.
. Federated Investment Management Company
. Fidelity Management & Research Company
. Franklin Advisers, Inc.
. MFS(TM) Investment Management
. OppenheimerFunds, Inc.
. Putnam Investment Management, LLC
. Trusco Capital Management, Inc.
To find out current rates being paid on the Fixed Account options, or to find out how the Variable Sub-Accounts have performed, please call us at 1-800-755-5275.
4 PROSPECTUS
SPECIAL SERVICES For your convenience, we offer these special services:
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. AUTOMATIC ADDITIONS PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
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INCOME PAYMENTS You can choose fixed income payments, variable
income payments, or a combination of the two. You can
receive your income payments in one of the following
|
ways:
. life income with guaranteed payments
. a "joint and survivor" life income with guaranteed payments
|
years)
-------------------------------------------------------------------------------
DEATH BENEFITS If you or the ANNUITANT (if the Contract is owned by a
non-natural person) die before the PAYOUT START DATE, we
will pay the death benefit described in the Contract. We
offer an Enhanced Death Benefit Rider and an Enhanced
Death and Income Benefit Combination Rider II.
-------------------------------------------------------------------------------
TRANSFERS Before the Payout Start Date, you may transfer your
Contract value ("CONTRACT VALUE") among the investment
alternatives, with certain restrictions. Transfers to a
GUARANTEE PERIOD of the Fixed Account must be at least
$50.
We do not currently impose a fee upon transfers. However,
we reserve the right to charge $10 per transfer after the
12th transfer in each "Contract Year," which we measure
from the date we issue your Contract or a Contract
anniversary ("CONTRACT ANNIVERSARY").
-------------------------------------------------------------------------------
WITHDRAWALS You may withdraw some or all of your Contract Value at
any time prior to the Payout Start Date.
In general, you must withdraw at least $50 at a time.
Full or partial withdrawals are available under limited
circumstances on or after the Payout Start Date.
Withdrawals taken prior to annuitization (referred to in
this prospectus as the Payout Phase) are generally
considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all
withdrawals are treated as distributions of earnings.
Withdrawals of earnings are taxed as ordinary income and,
if taken prior to age 59 1/2, may be subject to an
additional 10% federal tax penalty. A withdrawal charge
and MARKET VALUE ADJUSTMENT also may apply.
-------------------------------------------------------------------------------
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5 PROSPECTUS
HOW THE CONTRACT WORKS
The Contract basically works in two ways. First, the Contract can help you (we assume you are the CONTRACT OWNER) save for retirement because you can invest in up to 42 investment alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/ or Fixed Account Options. If you invest in any of the 3 Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the 39 Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/ or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page 23. You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
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Issue Payout Start
Date Accumulation Phase Date Payout Phase
--------------------------------------------------------------------------------------------------->
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
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As the Contract Owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract Owner or, if none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. See "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract Owner, or if there is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any questions about how the Contract works.
6 PROSPECTUS
EXPENSE TABLE
The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
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Number of Complete Years Since We Received the Purchase
Payment Being Withdrawn 0 1 2 3 4 5 6+
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Applicable Charge 6% 6% 5% 5% 4% 3% 0%
--------------------------------------------------------------------------------------------
Annual Contract Maintenance Charge $35.00**
--------------------------------------------------------------------------------------------
Transfer Fee $10.00***
--------------------------------------------------------------------------------------------
|
* Each Contract Year, you may withdraw up to 15% of your aggregate purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
*** Applies solely to the thirteenth and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee.
VARIABLE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE
DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT)
WITHOUT THE ENHANCED DEATH BENEFIT RIDER, ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER, OR ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II
|
Mortality and Expense Risk Charge 1.05%
--------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
--------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.15%
--------------------------------------------------------------------------------
WITH THE ENHANCED DEATH BENEFIT RIDER
Mortality and Expense Risk Charge 1.27%
--------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
--------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.37%
--------------------------------------------------------------------------------
WITH THE ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER (FOR CONTRACTS
ISSUED BEFORE SEPTEMBER 22, 2000)
Mortality and Expense Risk Charge 1.49%
--------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
--------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.59%
--------------------------------------------------------------------------------
|
WITH THE ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II (FOR CONTRACTS ISSUED ON OR AFTER SEPTEMBER 22, 2000.
|
Mortality and Expense Risk Charge 1.55%
--------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
--------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.65%
--------------------------------------------------------------------------------
7 PROSPECTUS
|
|
PORTFOLIO ANNUAL EXPENSES (AS A PERCENTAGE OF PORTFOLIO AVERAGE DAILY NET
ASSETS) (1)
|
The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. Advisers and/or other service providers of certain Portfolios may have agreed to waive their fees and/or reimburse Portfolio expenses in order to keep the Portfolios' expenses below specified limits. The range of expenses shown in this table does not show the effect of any such fee waiver or expense reimbursement. More detail concerning each Portfolio's fees and expenses appears in the prospectus for each Portfolio.
ANNUAL PORTFOLIO EXPENSES
|
Minimum Maximum
--------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio
assets, which may include management fees,
distribution and/or services (12b-1) fees,
and other expenses) 0.34% 3.91%
--------------------------------------------------------------------------------
|
(1) Expenses are shown as a percentage of Portfolio average daily net assets (before any waiver or reimbursement) as of December 31, 2003.
EXAMPLE 1
This example is intended to help you compare the cost of investing in the Contracts with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, Contract fees, Variable Account annual expenses, and Portfolio fees and expenses. The example below shows the dollar amount of expenses that you would bear directly or indirectly if you:
. invested $10,000 in a Variable Sub-Account,
. earned a 5% annual return on your investment,
. surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, and
. elected the Enhanced Death and Income Benefit Combination Rider II.
The first line of the example assumes that the maximum fees and expenses of any of the Portfolios are charged. The second line of the example assumes that the minimum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below.
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
|
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $108 $212 $306 $552
--------------------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses $ 71 $106 $134 $233
--------------------------------------------------------------------------------
|
EXAMPLE 2
This example uses the same assumptions as Example 1 above, except that it assumes you decided not to surrender your Contract, or you began receiving income payments for a specified period of at least 120 months, at the end of each time period.
|
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $57 $170 $281 $552
--------------------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses
Expenses $20 $ 63 $108 $233
--------------------------------------------------------------------------------
|
PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%, WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF THE ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II, WITH A
8 PROSPECTUS
MORTALITY AND EXPENSE RISK CHARGE OF 1.55%, AN ADMINISTRATIVE EXPENSE CHARGE OF 0.10%, AND AN ANNUAL CONTRACT MAINTENANCE CHARGE OF $35. IF NO RIDER WERE ELECTED, OR IF THE ENHANCED DEATH BENEFIT RIDER OR ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER WERE ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. THE ABOVE EXAMPLES ALSO ASSUME TOTAL ANNUAL PORTFOLIO EXPENSES LISTED IN THE EXPENSE TABLE WILL CONTINUE THROUGHOUT THE PERIODS SHOWN.
9 PROSPECTUS
FINANCIAL INFORMATION
To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT." Each Variable Sub-Account has a separate value for its Accumulation Units we call "ACCUMULATION UNIT VALUE". Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since the date the Contracts were first offered. To obtain a fuller picture of each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Allstate Life and Allstate Financial Advisors Separate Account I, which include financial information giving effect to the Consolidation on a pro forma basis, also appear in the Statement of Additional Information. For a free copy of the Statement of Additional Information, please write or call us at 1-800-755-5275.
10 PROSPECTUS
THE CONTRACT
CONTRACT OWNER
The Allstate Provider Variable Annuity is a contract between you, the Contract Owner, and Allstate Life, a life insurance company. As the Contract Owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted):
. the investment alternatives during the Accumulation and Payout Phases,
. the amount and timing of your purchase payments and withdrawals,
. the programs you want to use to invest or withdraw money,
. the income payment plan you want to use to receive retirement income,
. the Annuitant (either yourself or someone else) on whose life the income payments will be based,
. the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract Owner dies, and
. any other rights that the Contract provides.
If you die, any surviving Contract Owner, or, if none, the Beneficiary may exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living person. If the Contract Owner is a grantor trust, the Contract Owner will be considered a non-living person for purposes of the Death of Owner and Death of Annuitant provisions of your Contract.
The maximum age of the oldest Contract Owner and Annuitant cannot exceed 90 as of the date we receive the completed application. You may change the Contract Owner at any time. We will provide a change of ownership form to be signed by you and filed with us. After we accept the form, the change of ownership will be effective as of the date you signed the form. Until we receive your written notice to change the Contract Owner, we are entitled to rely on the most recent ownership information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change the Contract Owner, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
Changing ownership of this Contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). You initially designate an Annuitant in your application. You may change the Annuitant at any time prior to the Payout Start Date (only if the Contract Owner is a living person). Once we accept a change, it takes effect as of the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it.
You may designate a joint Annuitant, who is a second person on whose life income payments depend. We permit joint Annuitants only on or after the Payout Start Date. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the Death Proceeds or become the new Contract Owner, subject to the "Death of Owner" section below, if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract Owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue.
You may name one or more primary and contingent Beneficiaries when you apply for a Contract. The primary Beneficiary is the person who is first entitled to receive benefits under the Contract upon death of the sole surviving Contract Owner. A contingent Beneficiary is the person selected by the Contract Owner who will become the Beneficiary if all named primary Beneficiaries die before the death of the sole surviving Contract Owner.
You may restrict income payments to Beneficiaries by providing us a written request. Once we accept the written request, the change or restriction will take effect as of the date you signed the request. Any change is subject to any payment we make or other action we take before we accept the change.
You may change or add Beneficiaries at any time, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed by you and filed with us. After we accept the form, the change of Beneficiary will be effective as of the date you signed the form. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. Each change is subject to any payment
11 PROSPECTUS
made by us or any other action we take before we accept the change.
If you did not name a Beneficiary or, unless otherwise provided in the Beneficiary designation, if a named Beneficiary is no longer living and there are no other surviving primary or contingent Beneficiaries, the new Beneficiary will be:
. your spouse or, if he or she is no longer alive,
. your surviving children equally, or if you have no surviving children,
. your estate.
If one or more Beneficiaries survive you, we will divide the Death Proceeds among the surviving Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the Death Proceeds in equal amounts to the surviving Beneficiaries.
If more than one Beneficiary shares in the Death Proceeds, each Beneficiary will be treated as a separate and independent owner of his or her respective share. Each Beneficiary will exercise all rights related to his or her share, including the sole right to select a payout option, subject to any restrictions previously placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the payout option chosen by the original Beneficiary.
MODIFICATION OF THE CONTRACT
Only an Allstate Life officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law.
ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified Contract). All subsequent purchase payments must be $50 or more. You may make purchase payments at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept. We reserve the right to reject any application in our sole discretion.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money from your bank account. Consult your representative for more detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by notifying us in writing. We reserve the right to limit the availability of the investment alternatives.
We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order.
We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our home office. We are open for business each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." Our business day closes when the New York Stock Exchange closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 4 p.m. Eastern Time (3 p.m. Central Time)
12 PROSPECTUS
on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation Period, which is the 20 day period after you receive the Contract, or a longer period should your state require it. You may return your contract by delivering it or mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account. We also will return your purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you.
In states where we are required to refund purchase payments, we reserve the right during the Cancellation Period to invest any purchase payments you allocated to a Variable Sub-Account to the money market Variable Sub-Account available under the Contract. We will notify you if we do so. At the end of the Cancellation Period, you may then allocate your money to other Variable Sub-Accounts.
If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments or the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to credit to your Contract, we divide (i) the amount of the purchase or transfer payment you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for theVariable Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Variable Sub-Account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect:
. changes in the share price of the Portfolio in which the Variable Sub-Account invests, and
. the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values reflecting the cost of the Enhanced Death Benefit Rider, the Enhanced Death and Income Benefit Combination Rider and the Enhanced Death and Income Benefit Combination Rider II described on pages 27-29.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
13 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS
You may allocate your purchase payments to up to 39 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Portfolios. You should carefully review the Portfolio prospectuses before allocating amounts to the Variable Sub-Accounts.
PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISOR:
AIM VARIABLE INSURANCE FUNDS*
|
AIM V.I. Balanced Fund - As high a total return as
Series I possible, consistent with
preservation of capital
-------------------------------------------------------------------------------
AIM V.I. Capital Growth of capital
Appreciation Fund -
Series I A I M ADVISORS,
------------------------------------------------------- INC.
AIM V.I. Core Equity Growth of capital
Fund - Series I
-------------------------------------------------------------------------------
AIM V.I. Growth Fund - Growth of capital
Series I
-------------------------------------------------------------------------------
AIM V.I. High Yield Fund A high level of current
- Series I income
-------------------------------------------------------------------------------
AIM V.I. Premier Equity Long-term growth of
Fund capital; Income is
Secondary objective
--------------------------------------------------------------------------------
FEDERATED INSURANCE SERIES
--------------------------------------------------------------------------------
Federated Prime Money Current income consistent FEDERATED
Fund II with the stability of INVESTMENT
principal and Federated MANAGEMENT COMPANY
Investment liquidity
Management Company
-------------------------------------------------------------------------------
FIDELITY/(R)/ VARIABLE INSURANCE PRODUCTS
-------------------------------------------------------------------------------
Fidelity VIP Long-term capital
Contrafund/(R)/ appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP Reasonable income
Equity-Income Portfolio
- Initial Class
-------------------------------------------------------------------------------
Fidelity VIP Growth Capital appreciation
Portfolio - Initial FIDELITY MANAGEMENT
Class &
------------------------------------------------------- RESEARCH COMPANY
Fidelity VIP High Income High level of
Portfolio - Initial current income while also
Class considering growth of
capital
-------------------------------------------------------------------------------
Fidelity VIP Index 500 Investment results that
Portfolio - Initial correspond to the total
Class return of common stocks
publicly traded in the
United States, as
represented by the
Standard & Poor's 500(SM)
Index (S&P 500(R))
-------------------------------------------------------------------------------
Fidelity VIP Overseas Long-term growth of capital
Portfolio - Initial
Class
-------------------------------------------------------------------------------
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
-------------------------------------------------------------------------------
FTVIP Templeton Global High current income
Income Securities Fund consistent with
- Class 2 preservation of capital. FRANKLIN
Capital appreciation is a ADVISERS, INC.
secondary consideration.
-------------------------------------------------------------------------------
FTVIP Templeton Growth Long-term capital growth
Securities Fund -
Class 2
-------------------------------------------------------------------------------
|
MFS/(R)/VARIABLE INSURANCE TRUST(SM)
14 PROSPECTUS
|
MFS Emerging Growth Long-term growth of capital
Series - Initial Class
-------------------------------------------------------------------------------
MFS Investors Trust Long-term growth of capital MFS(TM)
Series - Initial Class with a Secondary objective INVESTMENT
to seek reasonable current MANAGEMENT
income
-------------------------------------------------------------------------------
MFS New Discovery - Capital Appreciation
Initial Class
-------------------------------------------------------------------------------
MFS Research Series - Long-term growth of capital
Initial Class and future income
-------------------------------------------------------------------------------
MFS Utilities - Initial Capital growth and current
Class income
-------------------------------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS
-------------------------------------------------------------------------------
Oppenheimer Aggressive Capital appreciation
Growth Fund/VA
-------------------------------------------------------------------------------
Oppenheimer Balanced A high total investment
Fund/VA/(1)/ return which
includes current
income and capital
appreciation in the
value of its
shares.
-------------------------------------------------------------------------------
Oppenheimer Capital Seeks capital appreciation OPPENHEIMERFUNDS,
Appreciation Fund/VA by investing in securities INC.
of well-known, established
companies.
-------------------------------------------------------------------------------
Oppenheimer Global Long-term capital
Securities Fund/VA appreciation
-------------------------------------------------------------------------------
Oppenheimer Main Street High total return, which
Fund/VA/(2)/ includes growth in the
value of its shares as
well as current income,
from equity and debt
securities
-------------------------------------------------------------------------------
Oppenheimer Strategic High level of current
Bond Fund/VA income
-------------------------------------------------------------------------------
PUTNAM VARIABLE TRUST
-------------------------------------------------------------------------------
Putnam VT Discovery Long-term growth of capital
Growth - Class IB/(3)/
-------------------------------------------------------------------------------
Putnam VT Diversified High current income
Income Fund Management, consistent with capital
Inc. - Class IB preservation
------------------------------------------------------- PUTNAM INVESTMENT
Putnam VT Growth and Capital growth and current MANAGEMENT, LLC
Income Fund - Class IB income
-------------------------------------------------------------------------------
Putnam VT Growth Capital appreciation
Opportunities - Class
IB
-------------------------------------------------------------------------------
Putnam VT Health Capital appreciation
Sciences Fund - Class
IB
-------------------------------------------------------------------------------
Putnam VT New Value Fund Long-term capital
- Class IB appreciation
-------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
-------------------------------------------------------------------------------
STI Capital Appreciation Capital Appreciation
Fund
-------------------------------------------------------------------------------
STI Growth and Income Long-term capital
Fund appreciation with the
secondary goal of current
income
-------------------------------------------------------------------------------
STI International Equity Long-term capital TRUSCO CAPITAL
Fund appreciation MANAGEMENT, INC.
-------------------------------------------------------------------------------
STI Investment Grade High total return through
Bond Fund current income and capital
appreciation, while
preserving the principal
amount invested
-------------------------------------------------------------------------------
STI Mid-Cap Equity Fund Capital appreciation
-------------------------------------------------------------------------------
STI Small Cap Value Capital appreciation with
Equity Fund the secondary goal of
current income
-------------------------------------------------------------------------------
STI Value Income Stock Current income with the
Fund secondary goal of capital
appreciation
-------------------------------------------------------------------------------
|
* A Portfolio's investment objective may be changed by the Portfolio's Board of Trustees without shareholder approval.
(1) Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA changed its name to Oppenheimer Balanced Fund/VA. The investment objective of this Portfolio did not change.
(2) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. The investment objective for this Portfolio did not change.
(3) Effective May 1, 2003, Putnam VT Voyager Fund II changed its name to Putnam VT Discovery Growth Fund. The investment objective for this Portfolio did not change.
AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF
15 PROSPECTUS
THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
VARIABLE INSURANCE PORTFOLIOS MAY NOT BE MANAGED BY THE SAME PORTFOLIO MANAGERS WHO MANAGE RETAIL MUTUAL FUNDS WITH SIMILAR NAMES. THESE PORTFOLIOS ARE LIKELY TO DIFFER FROM SIMILARLY NAMED RETAIL FUNDS IN ASSETS, CASH FLOW, AND TAX MATTERS. ACCORDINGLY, THE HOLDINGS AND INVESTMENT RESULTS OF A VARIABLE INSURANCE PORTFOLIO CAN BE EXPECTED TO BE GREATER OR LESS THAN THE INVESTMENT RESULTS OF SIMILARLY NAMED RETAIL MUTUAL FUNDS.
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
You may allocate all or a portion of your purchase payments to the Fixed Account. You may choose from among 3 Fixed Account Options: 2 dollar cost averaging options, and the option to invest in one or more Guarantee Periods included in the Guaranteed Maturity Fixed Account. The Fixed Account Options may not be available in all states. Please consult with your representative for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. Purchase payments that you allocate to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option") will earn interest for a one year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each payment or transfer.
For each purchase payment, the first transfer from the DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Variable Sub-Account in equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 20.
We will follow your instructions in transferring amounts monthly from the DCA Fixed Account. However, you may not choose less than 3 or more than 36 monthly installments. Further, you must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 36 months of payment. At the end of 36 months, any nominal amounts remaining will be allocated to the money market Variable Sub-Account. No transfers are permitted into the DCA Fixed Account.
SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may establish a Short Term Dollar Cost Averaging Program by allocating purchase payments to the Short Term Dollar Cost Averaging Fixed Account Option ("Short Term DCA Fixed Account Option"). We will credit interest to purchase payments you allocate to this Option for up to one year at the current rate in effect at the time of allocation.
For each purchase payment, the first transfer from the Short Term DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Variable Sub-Account in equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 20.
You must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 12 months. At the end of the transfer period, any nominal amounts remaining in the Short Term DCA Fixed Account will be allocated to the money market Variable Sub-Account.
If you discontinue the Short Term DCA Fixed Account Option before the end of the transfer period, we will transfer the remaining balance in Short Term DCA Fixed Account to the money market Variable Sub-Account unless you request a different investment alternative. No transfers are permitted into the Short Term DCA Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. That is because we guarantee the current and renewal interest rates we credit to the amounts you allocate to either of these Options, which will never be less than the minimum guaranteed rate in the Contract. Currently, we determine, in our sole discretion, the amount of interest credited in excess
16 PROSPECTUS
of the guaranteed rate. We may declare more than one interest rate for different monies based upon the date of allocation to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. For current interest rate information, please contact your representative or Allstate Life customer service at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. Guarantee Periods may range from 1 to 10 years. We are currently offering Guarantee Periods of 1, 3, 5, 7, and 10 years in length. In the future we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not select a Guarantee Period, we will assign the same period(s) you selected for your most recent purchase payment(s). Each payment or transfer allocated to a Guarantee Period must be at least $50. We reserve the right to limit the number of additional purchase payments that you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times.
We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors.
WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate information, please contact your representative or Allstate Life at 1-800-755-5275.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated to a Guarantee Period at a rate that compounds to the annual interest rate that we declared at the beginning of the applicable Guarantee Period.
THE FOLLOWING EXAMPLE ILLUSTRATES HOW A PURCHASE PAYMENT ALLOCATED TO A GUARANTEED PERIOD WOULD GROW, GIVEN AN ASSUMED GUARANTEE PERIOD AND ANNUAL INTEREST RATE:
|
Purchase Payment ......................................................$10,000
Guarantee Period ......................................................5 years
Annual Interest Rate ......................................................4.50%
|
|
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value................ $10,000.00
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$10,450.00
Contract Value at end
of Contract Year..... $10,450.00
^ (1 ^ Annual
Interest) X 1.045
----------
$10,920.25
Contract Value at end
of Contract Year..... $10,920.25
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$11,411.66
Contract Value at end
of Contract Year..... $11,411.66
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$11,925.19
Contract Value at end
of Contract Year..... $11,925.19
^ (1 ^ Annual
Interest Rate) X 1.045
-----------
$12,461.82
|
TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5-year Guarantee Period. If you were to make a withdrawal, you may be required to pay a withdrawal charge. In addition, the amount withdrawn may be increased or decreased by a Market Value Adjustment that reflects changes in interest rates since the time you invested the amount withdrawn. The hypothetical interest rate is for illustrative purposes only and is not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given Guarantee Period may be more or less than shown above.
RENEWALS. Prior to the end of each Guarantee Period, we will mail you a notice asking you what to do with your money, including the accrued interest. During the 30-day period after the end of the Guarantee Period, you may:
17 PROSPECTUS
1) Take no action. We will automatically apply your money to a new Guarantee Period of the same length as the expiring Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. The new interest rate will be our current declared rate for a Guarantee Period of that length; or
2) Instruct us to apply your money to one or more new Guarantee Periods of your choice. The new Guarantee Period(s) will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for those Guarantee Periods; or
3) Instruct us to transfer all or a portion of your money to one or more Variable Sub-Accounts of the Variable Account. We will effect the transfer on the day we receive your instructions. We will not adjust the amount transferred to include a Market Value Adjustment; we will pay interest from the day the Guarantee Period expired until the date of the transfer. The interest will be the rate for the shortest Guarantee Period then being offered; or
4) Withdraw all or a portion of your money. You may be required to pay a withdrawal charge, but we will not adjust the amount withdrawn to include a Market Value Adjustment. You may also be required to pay premium taxes and income tax withholding, if applicable. We will pay interest from the day the Guarantee Period expired until the date of withdrawal. The interest will be the rate for the shortest Guarantee Period then being offered. Amounts not withdrawn will be applied to a new Guarantee Period of the same length as the previous Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. Withdrawals of earnings are treated as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period, other than those taken during the 30 day period after such Guarantee Period expires, are subject to a Market Value Adjustment. A Market Value Adjustment also will apply when you apply amounts currently invested in a Guarantee Period to an Income Plan (unless applied during the 30 day period after such Guarantee Period expires). A Market Value Adjustment may apply in the calculation of the Settlement Value described in the "Death Benefit Amount" section below. We will not apply a Market Value Adjustment to a withdrawal you make:
. within the Free Withdrawal Amount as described on page 21,
. that qualify for one of the waivers as described on page 22,
. to satisfy the IRS minimum distribution rules for the Contract, or
. a single withdrawal made by a surviving spouse made within one year after continuing the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from the time you first allocate money to a Guarantee Period to the time you remove it from that Guarantee Period. We calculate the Market Value Adjustment by comparing the Treasury Rate for a period equal to the Guarantee Period at its inception to the Treasury Rate for a period equal to the Guarantee Period when you remove your money. "TREASURY RATE" means the U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve Board Statistical Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in interest rates. As such, you bear the investment risk associated with changes in interest rates. If interest rates increase significantly, the Market Value Adjustment and any withdrawal charge, premium taxes, and income tax withholding (if applicable) could reduce the amount you receive upon full withdrawal from a Guaranteed Period to an amount that is less than the purchase payment applied to that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a Guarantee Period is higher than the applicable current Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a higher amount payable to you, transferred or applied to an Income Plan. Conversely, if the Treasury Rate at the time you allocate money to a Guarantee Period is lower than the applicable Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a lower amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial Guarantee Period of 5 years and the 5-year Treasury Rate for that duration is 4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at that later time, the current 5-year Treasury Rate is 4.20%, then the Market Value Adjustment will be positive, which will result in an increase in the amount payable to you. Conversely, if the current 5-year Treasury Rate is 4.80%, then the Market Value Adjustment will be negative, which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B to this prospectus, which also contains additional examples of the application of the Market Value Adjustment.
18 PROSPECTUS
INVESTMENT ALTERNATIVES: TRANSFERS
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may not transfer Contract Value to the Short-Term Dollar Cost Averaging Fixed Account Option or the Dollar Cost Averaging Fixed Account Option. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below. The minimum amount that you may transfer into a Guarantee Period is $50. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. All transfers to or from more than one Portfolio on any given day counts as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account for up to six months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day period after such Guarantee Period expires, we will increase or decrease the amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. If you choose an Income Plan that depends on any person's life, you may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275. The cut-off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege, as well as any other electronic or automated means we previously approved, at any time without notice.
We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under "Trading Limitations." Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, not all market timing or excessive trading is identifiable or preventable.
19 PROSPECTUS
Imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it first occurs. To the extent that such trading activity occurs prior to detection and the imposition of trading restrictions, the portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, or to refuse any transfer request, if:
. we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
. we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
. the total dollar amount being transferred, both in the aggregate and in the transfer request;
. the number of transfers you make over a period of time and/or the period of time between transfers (note: one set of transfers to and from a sub-account in a short period of time can constitute market timing);
. whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Sub-account underlying portfolios that we have identified as being susceptible to market timing activities;
. whether the manager of the underlying portfolio has indicated that the transfers interfere with portfolio management or otherwise adversely impact the portfolio; and
. the investment objectives and/or size of the Sub-account underlying portfolio.
If we determine that a contract owner has engaged in market timing or excessive trading activity, we will restrict that contract owner from making future additions or transfers into the impacted Sub-account(s). If we determine that a contract owner has engaged in a pattern of market timing or excessive trading activity involving multiple Sub-accounts, we will also require that all future transfer requests be submitted through regular U.S. mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. Any Sub-account or transfer restrictions will be uniformly applied.
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a fixed dollar amount every month during the Accumulation Phase from the Short Term DCA Fixed Account or the DCA Fixed Account, to any Variable Sub-Account. You may not use the Dollar Cost Averaging Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor will such transfer count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the performance of each Variable Sub-Account may cause a shift in the percentage you allocated to each Variable Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the Fidelity VIP High Income Variable Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the Fidelity VIP High Income Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the Fidelity VIP High Income Variable Sub-Account and use the money to buy more units in the AIM V.I. Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments.
20 PROSPECTUS
EXPENSES
As a Contract Owner, you will bear, directly or indirectly, the charges and expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value invested in each Variable Sub-Account in proportion to the amount invested. If you surrender your Contract, we will deduct the contract maintenance charge pro rated for the part of the Contract Year elapsed, unless your Contract qualifies for a waiver, described below.
The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract Owners and regulatory agencies. We cannot increase the charge. However, we will waive this charge if, as of the Contract Anniversary or upon full surrender:
. total purchase payments equal $50,000 or more, or
. all money is allocated to the Fixed Account.
In addition, we will waive the Contract Maintenance Charge if total purchase payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.05% of the average daily net assets you have invested in the Variable Sub-Accounts (1.27% if you select the Enhanced Death Benefit Rider, 1.49% if you selected the Enhanced Death and Income Combination Benefit Rider, and 1.55% if you select the Enhanced Death and Income Benefit Combination Rider II). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Enhanced Death Benefit Rider, the Enhanced Death and Income Benefit Combination Rider and the Enhanced Death and Income Benefit Combination Rider II, to compensate us for the additional risk that we accept by providing these options. We guarantee that we will not raise the mortality and expense risk charge. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. The charge declines to 0% on the last day of each contract year over a 6 year period that begins on the day we receive your payment. Beginning on January 1, 2004, if you make a withdrawal before the Payout Start Date, we will apply the withdrawal charge percentage in effect on the date of the withdrawal, or the withdrawal charge percentage in effect on the following day, whichever is lower. A schedule showing how the charge declines is shown on page 7. During each Contract Year, you can withdraw up to 15% of the aggregate amount of your purchase payments without paying the charge. Unused portions of this "FREE WITHDRAWAL AMOUNT" are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of calculating the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations:
. on the Payout Start Date (a withdrawal charge may apply if you terminate income payments to be received for a specified period;
. on the death of the Contract Owner, or the Annuitant if the Contract Owner is not a natural person (unless the Settlement Value is used to determine the death benefit);
. withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or
21 PROSPECTUS
. withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty and a Market Value Adjustment. You should consult your own tax counsel or other tax advisers regarding any withdrawals.
CONFINEMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if the following conditions are satisfied:
1. You or the Annuitant, if the Contract Owner is not a natural person, are confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must enter the long term care facility or hospital at least 30 days after the Issue Date;
2. You request the withdrawal and provide written proof of the stay no later than 90 days following the end of your or the Annuitant's stay at the long term care facility or hospital; and
3. A physician must have prescribed the stay and the stay must be medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the Annuitant's immediate family, is the physician prescribing your or the Annuitant's stay in a long term care facility.
TERMINAL ILLNESS WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if:
1. you or the Annuitant (if the Contract Owner is not a natural person) are first diagnosed with a terminal illness at least 30 days after the Issue Date; and
2. you claim this benefit and deliver adequate proof of diagnosis to us.
UNEMPLOYMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on one partial or a full withdrawal taken prior to the Payout Start Date under your Contract, if you meet the following requirements:
1. you or the Annuitant, if the Contract Owner is not a natural person, become unemployed at least one year after the Issue Date;
2. you or the Annuitant, if the Contract Owner is not a natural person, receive unemployment compensation as defined in the Contract for at least 30 days as a result of that unemployment; and
3. you or the Annuitant, if the Contract Owner is not a natural person, claim this benefit within 180 days of your or the Annuitant's initial receipt of unemployment compensation.
Please refer to your Contract for more detailed information about the terms and conditions of these waivers. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not need to pay our withdrawal charge or a Market Value Adjustment because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax adviser to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs, including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state.
At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for such taxes. In the future, however, we may establish a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" Section beginning on page 32.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the
22 PROSPECTUS
Portfolios. For a summary of current estimates of maximum and minimum amounts for those charges and expenses, see page 8. We may receive compensation from the investment advisers or administrators of the Portfolios in connection with the administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our home office, adjusted by any Market Value Adjustment, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account Options. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. Ifou have the opportunity to name the investment alternatives) from which you are taking the withdrawal. If none is specified, we will deduct your withdrawal pro rata from the investment alternatives according to the value of your investments therein.
In general, you must withdraw at least $50 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. If you request a total withdrawal, we may require you to return your Contract to us.
Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months (or shorter period if required by law). If we delay payment for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $50. At our discretion, systematic withdrawals may not be offered in conjunction with the Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Please consult your tax advisor before taking any withdrawal. We will make systematic withdrawal payments to you or your designated payee. At our discretion, we may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to less than $2,000, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been previously reduced by withdrawals to less than $2,000, we will inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's Value to the contractual minimum of $2,000. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and applicable taxes.
INCOME PAYMENTS
PAYOUT START DATE
You select the Payout Start Date in your application. The "PAYOUT START DATE" is the day that we apply your money to an Income Plan. The Payout Start Date must be:
. at least 30 days after the Issue Date; and
. no later than the day the Annuitant reaches age 90, or the 10th Contract Anniversary, if later.
23 PROSPECTUS
You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years. Three Income Plans are available under the Contract. Each is available to provide:
. fixed income payments;
. variable income payments; or
. a combination of the two.
A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the Contract, which is also called the "basis". Once the investment in the Contract is depleted, all remaining payments will be fully taxable. If the Contract is tax-qualified, generally, all payments will be fully taxable. Taxable payments taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint Annuitant die before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEARS TO 30 YEARS). Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. You may elect to receive guaranteed payments for periods ranging from 5 to 30 years. Income payments for less than 120 months may be subject to a withdrawal charge. We will deduct the mortality and expense risk charge from the Variable Sub-Account assets that support variable income payments even though we may not bear any mortality risk.
The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant are alive before we make each payment.
Please note that under such Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. We deduct applicable premium taxes from the Contract Value at the Payout Start Date.
We may make other Income Plans available.
If you elected the Enhanced Death and Income Benefit Combination Rider or the Enhanced Death and Income Benefit Combination Rider II, you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account to fixed income payments. We will apply your Contract Value, adjusted by any applicable Market Value Adjustment, less applicable taxes to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may:
. terminate the Contract and pay you the Contract Value, adjusted by any applicable Market Value
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Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen; or
. reduce the frequency of your payments so that each payment will be at least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) the Annuitant could live longer or shorter than we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate.
Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
3. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by applicable law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate.
DEATH BENEFITS
DEATH OF OWNER
If you die before the Payout Start Date, any surviving joint Contract Owner or, if none, the Beneficiary will be designated the new Contract Owner and will be entitled to the options described below. If the new Contract Owner previously was the Beneficiary, however, the new Contract Owner's options will be subject to any restrictions previously placed upon the Beneficiary.
The claim for death benefits must be submitted to us within 180 days of the relevant death in order to claim the standard or enhanced death benefit. If a complete claim is not submitted within 180 days of the relevant death, the claimant will receive the greater of Contract Value or the Settlement Value. (See "Death Proceeds" below).
1. If your spouse is the sole surviving Contract Owner or, in the absence of any surviving Contract Owner, is the sole Beneficiary:
(a) Your spouse may elect to receive the Death Proceeds in a lump sum; or
(b) Your spouse may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income payments must be payable:
(i) over the life of your spouse; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of your spouse; or
(iii) over the life of your spouse with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of your spouse.
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(c) If your spouse does not elect one of these options, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the following conditions apply:
The Contract Value of the continued Contract will be the Death Proceeds. Unless otherwise instructed by the continuing spouse, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the Sub-accounts of the Variable Account. The excess will be allocated in proportion to your Contract Value in those Sub-accounts as of the end of the Valuation Period during which we receive the complete request for settlement of the Death Proceeds, except that any portion of this excess attributable to the Fixed Account Options will be allocated to the money market Variable Sub-account. Within 30 days of the date the Contract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee:
(i) transfer all or a portion of the excess among the Variable Sub-accounts;
(ii) transfer all or a portion of the excess into the Guaranteed Maturity Fixed Account and begin a new Guarantee Period; or
(iii) transfer all or a portion of the excess into a combination of Variable Sub-accounts and the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in the Contract.
The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a Withdrawal Charge or Market Value Adjustment.
Prior to the Payout Start Date, the Death Benefit of the continued Contract will be as defined in the Death Benefit provision.
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) The new Contract Owner may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income Payments must be payable:
(i) over the life of the new Contract Owner; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of the new Contract Owner; or
(iii) over the life of the new Contract Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner.
(c) If the new Contract Owner does not elect one of the options above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived for any withdrawals made during this 5 year period.
We reserve the right to offer additional options upon the death of the Contract Owner.
If the new Contract Owner dies prior to the complete liquidation of the Contract Value, then the new Contract Owner's named Beneficiary(ies) will receive the greater of the Settlement Value or the remaining Contract Value. This amount must be liquidated as a lump sum within 5 years of the date of the original Contract Owner's death.
3. If the new Contract Owner is a corporation or other type of non-living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the new Contract Owner does not elect the option above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the new Contract Owner upon the death of the Contract Owner.
If any new Contract Owner is a non-living person, all new Contract Owners will be considered to be non-living persons for purposes of these provisions.
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Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the new Contract Owner from the date of your death to the date on which the Death Proceeds are paid.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout Start Date, the following apply:
1. If the Contract Owner is a living person, then the Contract will continue with a new Annuitant, who will be:
(a) the youngest Contract Owner; otherwise
(b) the youngest Beneficiary.
You may change the Annuitant before the Payout Start Date.
2. If the Contract Owner is a non-living person:
(a) The Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the Contract Owner does not elect the option above, then the Contract Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the Contract Owner upon the death of the Annuitant.
Under any of these options, all ownership rights are available to the non-living Contract Owner from the date of the Annuitant's death to the date on which the Death Proceeds are paid.
DUE PROOF OF DEATH
A claim for a distribution on death must include Due Proof of Death. We will accept the following documentation as "Due Proof of Death":
. a certified copy of a death certificate,
. a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or
. any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
DEATH PROCEEDS. If we receive a complete request for settlement of the Death Proceeds within 180 days of the date of your death, the Death Proceeds are equal to the applicable death benefit described below. Otherwise, the Death Proceeds are equal to the greater of the Contract value or the Settlement Value.
We reserve the right to extend, on a non-discriminatory basis, the 180-day period in which the Death Proceeds will equal the applicable death benefit as described above.
This right applies only for the purposes of determining the amount payable as Death Proceeds and in no way restricts when a claim may be filed.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1. the Contract Value as of the date we determine the value of the death benefit, or
2. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of Contract Value) on the date we determine the value of the death benefit, or
3. the Contract Value on each DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, increased by purchase payments made since that Death Benefit Anniversary and reduced by an adjustment for any partial withdrawals since that Death Benefit Anniversary.
In calculating the Settlement Value, the amount in each individual Guarantee Period may be subject to a Market Value Adjustment. A Market Value Adjustment will apply to amounts in a Guarantee Period, unless we calculate the Settlement Value during the 30-day period after the expiration of the Guarantee Period. Also, the Settlement Value will reflect the deduction of any applicable withdrawal charges, contract maintenance charges, and premium taxes. Contract maintenance charges will be pro rated for the part of the Contract Year elapsed as of the date we determine the Settlement Value, unless your Contract qualifies for a waiver of such charges described in the "Contract Maintenance Charge" section above.
A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning with the Issue Date. For example, the Issue Date, 7th and 14th Contract Anniversaries are the first 3 Death Benefit Anniversaries.
The withdrawal adjustment is equal to (a) divided by (b), with the result multiplied by (c), where:
(a) = is the withdrawal amount;
(b) = is the Contract Value immediately prior to the withdrawal; and
(c) = is the Contract Value on the Death Benefit Anniversary adjusted by any prior purchase payments or withdrawals made since that Anniversary.
We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date,
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we will process the request as of the following Valuation Date.
OPTIONAL RIDERS
We offer two optional riders: an Enhanced Death Benefit Rider and an Enhanced Death and Income Benefit Combination Rider II. You may elect to add either or no Rider to your Contract; you may not add both. If you elect an optional Rider, we will charge you a higher mortality and expense risk charge. We may discontinue offering either or both of these Riders at any time. The benefits under these Riders are described below.
Before September 22, 2000, we offered the Enhanced Death and Income Benefit Combination Rider. We no longer offer it with this Contract. However, it also is described below for the convenience of Contract Owners who purchased it when it was available.
ENHANCED DEATH BENEFIT RIDER
You may elect the enhanced Death Benefit Rider if the oldest Contract Owner and Annuitant are no older than age 80 as of the date we receive the completed application, or a written request to add the Rider.
If the Contract Owner is a living individual, the enhanced death benefit applies only upon the death of the Contract Owner. If the Contract Owner is not a living individual, the enhanced death benefit applies only upon the death of the Annuitant. For Contracts with the Enhanced Death Benefit Rider, the death benefit will be the greatest of (1) through (3) above, or (4) the enhanced death benefit. The enhanced death benefit is equal to the greater of the Enhanced Death Benefit A or Enhanced Death Benefit B. Enhanced Death Benefit B may not be available in all states.
The enhanced death benefit will never be greater than the maximum death benefit allowed by any state nonforfeiture laws that govern the Contract.
ENHANCED DEATH BENEFIT A.
At issue, Enhanced Death Benefit A is equal to the initial purchase payment. After issue, Enhanced Death Benefit A is the greatest of the Anniversary Values as of the date we determine the death benefit. The "Anniversary Value" is equal to the Contract Value on a Contract Anniversary, increased by purchase payments made since that Anniversary and reduced by an adjustment for any partial withdrawals since that Anniversary. The adjustment is equal to (a) divided by
(b), and the result multiplied by (c) where:
(a) = the withdrawal amount,
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the most recently calculated Enhanced Death Benefit A.
We will calculate Anniversary Values for each Contract Anniversary prior to the oldest Contract Owner's or the Annuitant's, if the Contract Owner is not a natural person, 85th birthday. After age 85, we will recalculate Enhanced Death Benefit A only for purchase payments and withdrawals.
ENHANCED DEATH BENEFIT B.
The Enhanced Death Benefit B is equal to total purchase payments made reduced by a withdrawal adjustment, as defined below. Each purchase payment and each withdrawal adjustment will accumulate daily at a rate equivalent to 5% per year until the earlier of:
. the date we determine the death benefit, or
. the first day of the month following the oldest Contract Owner's or, if the Contract Owner is not a natural person, the Annuitant's 85th birthday.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) = the withdrawal amount,
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the most recently calculated Enhanced Death Benefit B.
ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER. (for Contracts issued
before September 22, 2000)
The enhanced death benefit portion of the Enhanced Death and Income Benefit Combination Rider is as described above under "Enhanced Death Benefit Rider."
The enhanced income benefit guarantees that the amount of income payments you receive will not be less than those determined by applying the value of the enhanced death benefit on the Payout Start Date to the minimum guaranteed rate (rather than to any current rates we may be offering) for the Income Plan you select.
The enhanced income benefit will apply if the Contract owner elects a Payout Start Date that:
. is on or after the tenth Contract Anniversary, and
. is prior to the Annuitant's 90th Birthday.
On the Payout Start Date, you may apply the greater of the Contract Value or the enhanced income benefit to the Payout Phase of the Contract. No Market Value Adjustment will be applied to the enhanced income benefit amount. The enhanced income benefit will only apply if the Income Plan selected provides payments guaranteed for either a single or joint lives with a period certain of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or
. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied.
If, however, you apply the Contract Value and not the enhanced income benefit to the Income Plan, then you may select any Income Plan we offer at that time.
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ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II. (for Contracts issued on or after September 22, 2000). Instead of the Enhanced Death Benefit Rider, you may choose the Enhanced Death and Income Benefit Combination Rider II. The Enhanced Death and Income Benefit Combination Rider II may not be available in all states.
The enhanced death benefit portion of the Enhanced Death and Income Benefit Combination Rider II is as described above under "Enhanced Death Benefit Rider."
The enhanced income benefit guarantees that the amount of income payments you receive will not be less than those determined by applying the value of the enhanced death benefit on the Payout Start Date to the minimum guaranteed rate (rather than to any current rates we may be offering) for the Income Plan you select.
The guaranteed income benefit amount is determined by applying the enhanced income benefit amount less any applicable taxes to the guaranteed rates for the Income Plan you elect. The Income Plan you elect must satisfy the conditions described below.
The enhanced income benefit will apply if the Contract Owner elects a Payout Start Date that:
. is on or after the tenth Contract Anniversary, and
. occurs during the 30 day period following a Contract Anniversary.
On the Payout Start Date, you may apply the greater of the Contract Value or the enhanced income benefit to the Payout Phase of the Contract. No Market Value Adjustment will be applied to the enhanced income benefit amount. The enhanced income benefit will only apply if the Income Plan selected provides payments guaranteed for either a single or joint lives with a period certain of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or
. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied.
You must elect to receive fixed income payments, which will be calculated using the appropriate guaranteed income payment table provided in your Contract.
If, however, you apply the Contract Value and not the enhanced income benefit to the Income Plan, then you may select any Income Plan we offer at that time. If you expect to apply your Contract Value to variable income payment options or to current annuity payment rates then in effect, electing the enhanced income benefit may not be appropriate.
The enhanced income benefit only applies to the determination of income payments under Income Plans in the circumstances described above. This is not a guarantee of Contract Value or investment performance. This benefit does not enhance the amounts you receive in partial withdrawal or surrenders. If you surrender you Contract, you will not receive any benefit under this Rider.
MORE INFORMATION
ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957 as a stock life insurance company under the laws of the state of Illinois. Prior to January 1, 2005, Glenbrook Life and Annuity Company ("Glenbrook Life") issued the Contract. Effective January 1, 2005, Glenbrook Life merged with Allstate Life ("Merger"). On the date of the Merger, Allstate Life acquired from Glenbrook Life all of Glenbrook Life's assets and became directly liable for Glenbrook Life's liabilities and obligations with respect to all contracts issued by Glenbrook Life. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company organized under the laws of the state of Illinois. All of the capital stock issued and outstanding of Allstate Insurance Company is owned by The Allstate Corporation.
Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all jurisdictions except the state of New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062.
THE VARIABLE ACCOUNT
Allstate Life established the Allstate Financial Advisors Separate Account I in 1999. The Contracts were previously issued through the Glenbrook Life Multi-Manager Variable Account. Effective January 1, 2005, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with Allstate Financial Advisors Separate Account I and consolidated duplicative Variable Sub-Accounts that invest in the same Portfolio (the "Consolidation"). The Accumulation Unit Values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Allstate Life.
We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois law. That means we account for the Variable Account's income, gains and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Allstate Life.
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The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolios at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract Owners entitled to give such instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserve for such Contract allocated to the applicable Sub-Account by the net asset value per share of the corresponding Portfolio. The votes decrease as income payments are made and as the reserves for the Contract decrease.
We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro-rata basis to reduce the votes eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment Portfolio. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional underlying funds. We will notify you in advance of any change.
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The board of directors/trustees of these Portfolios monitors for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Portfolio's board of directors/trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062-7154, serves as principal underwriter of the Contracts. ALFS is a wholly owned subsidiary of Allstate Life. ALFS is a registered broker dealer under the Securities and Exchange Act of 1934, as amended ("EXCHANGE ACT"), and is a member of the NASD.
We will pay commissions to broker-dealers who sell the contracts. Commissions paid may vary, but we estimate that the total commissions paid on all Contract sales will not exceed 8% of all purchase payments. These commissions are intended to cover distribution expenses. Sometimes, we also pay the broker-dealer a persistency bonus in addition to the standard commissions. A persistency bonus is not expected to exceed 0.25%, on an annual basis, of the Contract Values considered in connection with the bonus. In some states, Contracts may be sold by representatives or employees of banks which may be acting as broker-dealers without separate registration under the Exchange Act, pursuant to legal and regulatory exceptions.
Allstate Life does not pay ALFS a commission for distribution of the Contracts. The underwriting agreement with ALFS provides that we will reimburse ALFS for any liability to Contract Owners arising out of services rendered or Contracts issued.
ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account.
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We provide the following administrative services, among others:
. issuance of the Contracts;
. maintenance of Contract Owner records;
. Contract Owner services;
. calculation of unit values;
. maintenance of the Variable Account; and
. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least annually. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we reserve the right to make the adjustment as of the date that we receive notice of the potential error.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. Allstate Life no longer issues deferred annuities to employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of state insurance law pertaining to the Contracts, including the validity of the Contracts and Allstate Life's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Allstate Life.
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TAXES
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life is taxed as a life insurance company under Part I of Subchapter L of the Code. Since the Variable Account is not an entity separate from Allstate Life, and its operations form a part of Allstate Life, it will not be taxed separately. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Allstate Life believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contract. Accordingly, Allstate Life does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Allstate Life does not intend to make provisions for any such taxes. If Allstate Life is taxed on investment income or capital gains of the Variable Account, then Allstate Life may impose a charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where:
. the Contract Owner is a natural person,
. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and
. Allstate Life is considered the owner of the Variable Account assets for federal income tax purposes.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living Owners in this prospectus. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-Qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain qualified plans; (4) certain contracts used in connection with structured settlement agreements; and (5) immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered owned by a non-natural owner. Grantor trust owned contracts receive tax deferral as described in the Exceptions to the Non-Natural Owner Rule section. In accordance with the Code, upon the death of the annuitant, the death benefit must be paid. According to your Contract, the Death Benefit is paid to the surviving Contract Owner. Since the trust will be the surviving Contract Owner in all cases, the Death Benefit will be payable to the trust notwithstanding any beneficiary designation on the annuity contract. A trust, including a grantor trust, has two options for receiving any death benefits: 1) a lump sum payment; or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "adequately diversified" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract owner during the taxable year. Although Allstate Life does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance
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concerning circumstances in which investor control of the separate account investments may cause a Contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in private and published rulings in which it found that Contract owners were not owners of separate account assets. For example, if your contract offers more than twenty (20) investment alternatives you have the choice to allocate premiums and contract values among a broader selection of investment alternatives than described in such rulings. You may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Allstate Life does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a Non-Qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a Non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a Non-Qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. If any variable payment is less than the excludable amount you should contact a competent tax advisor to determine how to report any unrecovered investment. The federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide:
. if any Contract Owner dies on or after the Payout Start Date but before the entire interest in the Contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the Contract Owner's death;
. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that is payable to (or for the benefit of) a designated Beneficiary is distributed over the life of such Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary) and the distributions begin within 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner.
. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract Owner for purposes of applying the distribution at death rules. In addition, a change in the Annuitant on a Contract owned by a non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows:
. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or
. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract.
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The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or becoming totally disabled,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made under an immediate annuity, or
. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract into a non-Qualified annuity contract. The contract owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges of annuity contracts. Under this ruling, if you take a withdrawal from a receiving or relinquishing annuity contract within 24 months of the partial exchange, then special aggregation rules apply for purposes of determining the taxable amount of a distribution. The IRS has issued limited guidance on how to aggregate and report these distributions. The IRS is expected to provide further guidance; as a result, it is possible that the amount we calculate and report to the IRS as taxable could be different.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified deferred annuity contracts issued by Allstate Life (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory.
Allstate Life is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
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TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity as a TSA or IRA. Tax Qualified Contracts are contracts purchased as investments as:
. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
. Roth IRAs under Section 408A of the Code;
. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p) of the Code; and
. Tax Sheltered Annuities under Section 403(b) of the Code.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the retirement plans listed above or to modify the Contract to conform with tax requirements.
The tax rules applicable to participants with tax qualified annuities vary according to the type of contract and the terms and conditions of the endorsement. Adverse tax consequences may result from certain transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. Allstate Life can issue an individual retirement annuity on a rollover or transfer of proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under which the decedent's surviving spouse is the beneficiary. Allstate Life does not offer an individual retirement annuity that can accept a transfer of funds for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer sponsored retirement plan.
In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If you make a partial withdrawal under a Tax Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Tax Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are:
. made on or after the date the Contract Owner attains age 59 1/2,
. made to a beneficiary after the Contract Owner's death,
. attributable to the Contract Owner being disabled, or
. made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, IRAs (excluding Roth IRAs) and TSAs require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or the Contract Value. We believe that the Death Benefits offered by your Contract do not constitute life insurance under these regulations.
It is also possible that certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Tax Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
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. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or total disability,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made after separation from service after age 55 (does not apply to IRAs),
. made pursuant to an IRS levy,
. made for certain medical expenses,
. made to pay for health insurance premiums while unemployed (applies only for IRAs),
. made for qualified higher education expenses (applies only for IRAs), and
. made for a first time home purchase (up to a $10,000 lifetime limit and applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect to Tax Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "eligible rollover distributions." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Allstate Life is required to withhold federal income tax at a rate of 20% on all "eligible rollover distributions" unless you elect to make a "direct rollover" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from employer sponsored retirement plans, including TSAs but excluding IRAs, with the exception of:
. required minimum distributions, or,
. a series of substantially equal periodic payments made over a period of at least 10 years, or,
. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or,
. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding requirement, Allstate Life is required to withhold federal income tax using the wage withholding rates. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified plans may be "rolled over" on a tax-deferred basis into an Individual Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity.
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Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL IRAS). Internal Revenue Code Section 408 permits a custodian or trustee of an Individual Retirement Account to purchase an annuity as an investment of the Individual Retirement Account. If an annuity is purchased inside of an Individual Retirement Account, then the Annuitant must be the same person as the beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement Account must be paid upon the death of the Annuitant. However, in most states, the Contract permits the custodian or trustee of the Individual Retirement Account to continue the Contract in the accumulation phase, with the Annuitant's surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of the annuity and has the right to the death proceeds otherwise payable under the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement Account;
3) We receive a complete request for settlement for the death of the Annuitant; and
4) The custodian or trustee of the Individual Retirement Account provides us with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has continued the Individual Retirement Account pursuant to the surviving spouse's election.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. These employers may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the Code allow eligible employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees using individual retirement annuities. In general, a SIMPLE IRA consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to purchase the Contract as a SIMPLE IRA should seek competent tax and legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee:
. attains age 59 1/2,
. severs employment,
. dies,
. becomes disabled, or
. incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate Life is directed to transfer some or all of the Contract Value to another 403(b) plan. Generally, we do not accept Employee Retirement Income Security Act of 1974 (ERISA) funds in 403(b) contracts.
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ANNUAL REPORTS AND OTHER DOCUMENTS
Allstate Life's annual report on Form 10-K for the year ended December 31, 2003 and its Form 10-Q reports for the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 are incorporated herein by reference which means that they are legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Exchange Act are also incorporated herein by reference, which means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC and that legally become a part of this prospectus, may change or supersede statements in other documents that are legally part of this prospectus. Accordingly, only the statement that is changed or replaced will legally be a part of this prospectus.
We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR" system using the identifying number CIK No. 0000352736. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. You also can view these materials at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. For more information on the operations of SEC's Public Reference Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of any document incorporated herein by reference (other than exhibits not specifically incorporated by reference into the text of such documents), please write or call us at 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 (telephone:
1-800-755-5275).
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APPENDIX A ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
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BASIC POLICY
For the Years Beginning January 1 and Ending December 31,* 1998 1999 2000 2001 2002
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AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.66 $ 11.99 $ 10.501
Accumulation Unit Value, End of Period $10.73 $ 12.66 $ 11.99 $ 10.501 $ 8.605
Number of Units Outstanding, End of Period 0 7,487 52,646 90,025 79,599
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.39 $ 16.29 $ 14.35 $ 10.883
Accumulation Unit Value, End of Period $11.39 $ 16.29 $ 14.35 $ 10.883 $ 8.138
Number of Units Outstanding, End of Period 0 8,743 73,347 76,217 62,506
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.09 $ 12.74 $ 9.721
Accumulation Unit Value, End of Period $11.36 $ 15.09 $ 12.74 $ 9.721 $ 8.112
Number of Units Outstanding, End of Period 0 12,180 53,747 73,192 55,166
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.83 $ 15.82 $ 12.43 $ 8.127
Accumulation Unit Value, End of Period $11.83 $ 15.82 $ 12.43 $ 8.127 $ 5.545
Number of Units Outstanding, End of Period 0 13,275 69,688 57,165 41,008
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.31 $ 11.27 $ 9.03 $ 8.477
Accumulation Unit Value, End of Period $10.31 $ 11.27 $ 9.03 $ 8.477 $ 7.891
Number of Units Outstanding, End of Period 0 7,387 9,651 16,857 9,136
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.52 $ 14.80 $ 12.49 $ 10.794
Accumulation Unit Value, End of Period $11.52 $ 14.80 $ 12.49 $ 10.794 $ 7.442
Number of Units Outstanding, End of Period 0 42,074 115,418 13,3037 99,724
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.06 $ 10.55 $ 10.819
Accumulation Unit Value, End of Period -- $ 10.06 $ 10.55 $ 10.819 $ 10.845
Number of Units Outstanding, End of Period -- 7,985 11,541 46,149 140,320
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.66 $ 14.33 $ 13.23 $ 11.473
Accumulation Unit Value, End of Period $11.66 $ 14.33 $ 13.23 $ 11.473 $ 10.281
Number of Units Outstanding, End of Period 0 18,963 101,434 128,908 109,080
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.48 $ 11.02 $ 11.81 $ 11.096
Accumulation Unit Value, End of Period $10.48 $ 11.02 $ 11.81 $ 11.096 $ 9.110
Number of Units Outstanding, End of Period 0 30,264 100,008 169,933 151,301
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.20 $ 15.22 $ 13.40 $ 10.906
Accumulation Unit Value, End of Period $11.20 $ 15.22 $ 13.40 $ 10.906 $ 7.536
Number of Units Outstanding, End of Period 0 25,821 168,574 193,055 156,368
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.16 $ 8.55 $ 7.462
Accumulation Unit Value, End of Period $10.43 $ 11.16 $ 8.55 $ 7.462 $ 7.631
Number of Units Outstanding, End of Period 0 3,837 45,083 69,939 76,485
FIDELITY VIP INDEX 500 SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.14 $ 7.944
Accumulation Unit Value, End of Period -- -- $ 9.14 $ 7.944 $ 6.106
Number of Units Outstanding, End of Period -- -- 106,077 178,134 136,928
|
39 PROSPECTUS
|
FIDELITY VIP OVERSEAS SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 8.38 $ 6.529
Accumulation Unit Value, End of Period -- -- $ 8.38 $ 6.529 $ 5.145
Number of Units Outstanding, End of Period -- -- 30,679 32,911 27,325
FTVIP TEMPLETON GLOBAL INCOME SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.74 $ 11.39 $ 11.513
Accumulation Unit Value, End of Period -- -- $ 11.39 $ 11.513 $ 13.788
Number of Units Outstanding, End of Period -- -- 438 2,410 5,084
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 12.89 $ 13.59 $ 13.262
Accumulation Unit Value, End of Period -- -- $ 13.59 $ 13.262 $ 10.686
Number of Units Outstanding, End of Period -- -- 11,237 10,586 12,533
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- $ 11.37 -- --
Accumulation Unit Value, End of Period -- -- 11.42 -- --
Number of Units Outstanding, End of Period -- -- 0 -- --
FTVIP TEMPLETON BOND (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 -- --
Accumulation Unit Value, End of Period -- -- $ 9.87 -- --
Number of Units Outstanding, End of Period -- -- 0 -- --
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.95 $ 20.88 $ 16.60 $ 10.913
Accumulation Unit Value, End of Period $11.95 $ 20.88 $ 16.60 $ 10.913 $ 7.146
Number of Units Outstanding, End of Period 0 1,059 58,101 104,779 94,106
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.41 $ 11.26 $ 9.358
Accumulation Unit Value, End of Period $10.81 $ 11.41 $ 11.26 $ 9.358 $ 7.311
Number of Units Outstanding, End of Period 0 6,295 1,547 45,121 32,328
MFS NEW DISCOVERY SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 17.758
Accumulation Unit Value, End of Period -- -- -- $ 17.758 $ 7.190
Number of Units Outstanding, End of Period -- -- -- 6,802 194
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.53 $ 10.85 $ 8.445
Accumulation Unit Value, End of Period -- $ 11.53 $ 10.85 $ 8.445 $ 6.300
Number of Units Outstanding, End of Period -- 0 15,852 60,264 49,885
MFS UTILITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.123
Accumulation Unit Value, End of Period -- -- -- $ 9.123 $ 6.959
Number of Units Outstanding, End of Period -- -- -- 0 0
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.73 $ 12.05 $ 8.187
Accumulation Unit Value, End of Period -- $ 13.73 $ 12.05 $ 8.187 $ 5.844
Number of Units Outstanding, End of Period -- 0 24,923 55,945 46,064
OPPENHEIMER BALANCED SUB-ACCOUNT/(2)(5)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.16 $ 10.49 $ 10.603
Accumulation Unit Value, End of Period -- -- $ 10.49 $ 10.603 $ 9.391
Number of Units Outstanding, End of Period -- -- 20,686 116,284 113,735
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.11 $ 11.95 $ 10.329
Accumulation Unit Value, End of Period -- $ 12.00 $ 11.95 $ 10.329 $ 7.469
Number of Units Outstanding, End of Period -- 0 53,406 146,217 168,706
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.11 $ 13.62 $ 11.846
Accumulation Unit Value, End of Period -- $ 13.11 $ 13.62 $ 11.846 $ 9.118
Number of Units Outstanding, End of Period -- 0 60,419 91,989 91,945
|
40 PROSPECTUS
|
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(6)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.78 $ 9.72 $ 8.636
Accumulation Unit Value, End of Period -- $ 10.78 $ 9.72 $ 8.636 $ 6.932
Number of Units Outstanding, End of Period -- 0 121,955 283,935 281,180
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.16 $ 10.31 $ 10.690
Accumulation Unit Value, End of Period -- $ 10.16 $ 10.31 $ 10.690 $ 11.354
Number of Units Outstanding, End of Period -- 0 28,737 56,563 74,026
PUTNAM VT DISCOVERY GROWTH/(4)(7)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.142
Accumulation Unit Value, End of Period -- -- -- $ 10.142 $ 7.053
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT DIVERSIFIED INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.867
Accumulation Unit Value, End of Period -- -- -- $ 9.867 $ 10.321
Number of Units Outstanding, End of Period -- -- -- 0 478
PUTNAM VT GROWTH AND INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.907
Accumulation Unit Value, End of Period -- -- -- $ 9.907 $ 7.926
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT GROWTH OPPORTUNITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.150
Accumulation Unit Value, End of Period -- -- -- $ 10.150 $ 7.068
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT HEALTH SCIENCES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.798
Accumulation Unit Value, End of Period -- -- -- $ 9.798 $ 7.708
Number of Units Outstanding, End of Period -- -- -- 0 2,310
PUTNAM VT NEW VALUE SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.124
Accumulation Unit Value, End of Period -- -- -- $ 10.124 $ 8.438
Number of Units Outstanding, End of Period -- -- -- 0 1,067
STI CLASSIC CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.60 $ 10.80 $ 10.107
Accumulation Unit Value, End of Period -- $ 10.60 $ 10.80 $ 10.107 $ 7.805
Number of Units Outstanding, End of Period -- 10,425 0 54,725 75,373
STI CLASSIC GROWTH AND INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.79 $ 10.075
Accumulation Unit Value, End of Period -- -- $ 10.79 $ 10.075 $ 7.909
Number of Units Outstanding, End of Period -- -- 16,189 88,166 88,530
STI CLASSIC INTERNATIONAL EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.72 $ 7.937
Accumulation Unit Value, End of Period -- -- $ 9.72 $ 7.937 $ 6.388
Number of Units Outstanding, End of Period -- -- 2,615 7,445 16,897
STI CLASSIC INVESTMENT GRADE BOND SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.61 $ 11.452
Accumulation Unit Value, End of Period -- -- $ 10.61 $ 11.452 $ 12.158
Number of Units Outstanding, End of Period -- -- 11649 30994 50,127
STI CLASSIC MID-CAP EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.21 $ 9.350
Accumulation Unit Value, End of Period -- $ 9.21 $ 9.350 $ 6.613
Number of Units Outstanding, End of Period -- 5778 16934 33,444
STI CLASSIC QUALITY GROWTH STOCK SUB-ACCOUNT/(2)(8)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.58 $ 7.703
Accumulation Unit Value, End of Period -- -- $ 9.58 $ 7.703 $ 6.168
Number of Units Outstanding, End of Period -- -- 9,606 11,789 0
|
41 PROSPECTUS
|
STI CLASSIC SMALL CAP VALUE EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 11.85 $ 14.234
Accumulation Unit Value, End of Period -- -- $ 11.85 $ 14.234 $ 13.903
Number of Units Outstanding, End of Period -- -- 3,572 0 43,462
STI CLASSIC VALUE INCOME STOCK SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.46 $ 10.33 $ 10.097
Accumulation Unit Value, End of Period -- $ 9.46 $ 10.33 $ 10.097 $ 8.286
Number of Units Outstanding, End of Period -- 5,699 13,619 32,108 37,215
|
|
For the Years Beginning January 1 and Ending December 31,* 2003 2004
------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.605 $ 9.899
Accumulation Unit Value, End of Period $ 9.899 $ 9.863
Number of Units Outstanding, End of Period 77,339 76,112
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.138 $ 10.420
Accumulation Unit Value, End of Period $ 10.420 $ 10.011
Number of Units Outstanding, End of Period 51,334 45,919
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.112 $ 9.978
Accumulation Unit Value, End of Period $ 9.978 $ 10.030
Number of Units Outstanding, End of Period 52,185 49,973
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.545 $ 7.195
Accumulation Unit Value, End of Period $ 7.195 $ 6.979
Number of Units Outstanding, End of Period 29,457 27,704
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.891 $ 9.988
Accumulation Unit Value, End of Period $ 9.988 $ 10.516
Number of Units Outstanding, End of Period 9,047 8,957
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.442 $ 9.202
Accumulation Unit Value, End of Period $ 9.202 $ 8.893
Number of Units Outstanding, End of Period 89,645 80,195
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 10.845 $ 10.794
Accumulation Unit Value, End of Period $ 10.794 $ 10.752
Number of Units Outstanding, End of Period 129,547 121,989
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.281 $ 13.057
Accumulation Unit Value, End of Period $ 13.057 $ 13.691
Number of Units Outstanding, End of Period 105,900 102,482
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.110 $ 11.738
Accumulation Unit Value, End of Period $ 11.738 $ 11.879
Number of Units Outstanding, End of Period 139,986 138,095
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.536 $ 9.896
Accumulation Unit Value, End of Period $ 9.896 $ 9.351
Number of Units Outstanding, End of Period 144,374 135,616
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.631 $ 9.600
Accumulation Unit Value, End of Period $ 9.600 $ 9.969
Number of Units Outstanding, End of Period 97,563 96,011
|
42 PROSPECTUS
FIDELITY VIP INDEX 500 SUB-ACCOUNT/(2)/
|
Accumulation Unit Value, Beginning of Period $ 6.106 $ 7.751
Accumulation Unit Value, End of Period $ 7.751 $ 7.787
Number of Units Outstanding, End of Period 116,961 105,243
FIDELITY VIP OVERSEAS SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 5.145 $ 7.292
Accumulation Unit Value, End of Period $ 7.292 $ 7.188
Number of Units Outstanding, End of Period 24,325 23,467
FTVIP TEMPLETON GLOBAL INCOME SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 13.788 $ 16.689
Accumulation Unit Value, End of Period $ 16.689 $ 17.224
Number of Units Outstanding, End of Period 2,474 2,704
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 10.686 $ 13.959
Accumulation Unit Value, End of Period $ 13.959 $ 14.431
Number of Units Outstanding, End of Period 12,455 13,020
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP TEMPLETON BOND (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- ---
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.146 $ 9.200
Accumulation Unit Value, End of Period $ 9.200 $ 9.021
Number of Units Outstanding, End of Period 83,943 72,029
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.311 $ 8.828
Accumulation Unit Value, End of Period $ 8.828 $ 8.809
Number of Units Outstanding, End of Period 30,413 28,480
MFS NEW DISCOVERY SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.190 $ 9.494
Accumulation Unit Value, End of Period $ 9.494 $ 8.766
Number of Units Outstanding, End of Period 1,319 1,842
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 6.300 $ 7.766
Accumulation Unit Value, End of Period $ 7.766 $ 7.900
Number of Units Outstanding, End of Period 48,032 32,001
MFS UTILITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 6.959 $ 9.340
Accumulation Unit Value, End of Period $ 9.340 $ 10.433
Number of Units Outstanding, End of Period 0 0
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 5.844 $ 7.255
Accumulation Unit Value, End of Period $ 7.255 $ 7.660
Number of Units Outstanding, End of Period 36,584 34,219
OPPENHEIMER BALANCED SUB-ACCOUNT/(2)(5)/
Accumulation Unit Value, Beginning of Period $ 9.391 $ 11.601
Accumulation Unit Value, End of Period $ 11.601 $ 11.744
Number of Units Outstanding, End of Period 110,979 139,578
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.469 $ 9.668
Accumulation Unit Value, End of Period $ 9.668 $ 9.438
Number of Units Outstanding, End of Period 170,101 171,408
|
43 PROSPECTUS
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
|
Accumulation Unit Value, Beginning of Period $ 9.118 $ 12.892
Accumulation Unit Value, End of Period $ 12.892 $ 13.099
Number of Units Outstanding, End of Period 68,704 65,900
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(6)/
Accumulation Unit Value, Beginning of Period $ 6.932 $ 8.684
Accumulation Unit Value, End of Period $ 8.684 $ 8.660
Number of Units Outstanding, End of Period 272,277 267,039
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 11.354 $ 13.253
Accumulation Unit Value, End of Period $ 13.253 $ 13.621
Number of Units Outstanding, End of Period 69,493 68,750
PUTNAM VT DISCOVERY GROWTH/(4)/(7)
Accumulation Unit Value, Beginning of Period $ 7.053 $ 9.194
Accumulation Unit Value, End of Period $ 9.194 $ 8.675
Number of Units Outstanding, End of Period 0 0
PUTNAM VT DIVERSIFIED INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 10.321 $ 12.236
Accumulation Unit Value, End of Period $ 12.236 $ 12.761
Number of Units Outstanding, End of Period 478 0
PUTNAM VT GROWTH AND INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.926 $ 9.971
Accumulation Unit Value, End of Period $ 9.971 $ 10.087
Number of Units Outstanding, End of Period 0 0
PUTNAM VT GROWTH OPPORTUNITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.068 $ 8.589
Accumulation Unit Value, End of Period $ 8.589 $ 8.027
Number of Units Outstanding, End of Period 0 0
PUTNAM VT HEALTH SCIENCES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.708 $ 9.013
Accumulation Unit Value, End of Period $ 9.013 $ 8.831
Number of Units Outstanding, End of Period 2,310 2,661
PUTNAM VT NEW VALUE SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 8.438 $ 11.040
Accumulation Unit Value, End of Period $ 11.040 $ 11.465
Number of Units Outstanding, End of Period 1,949 1,949
STI CLASSIC CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.805 $ 9.139
Accumulation Unit Value, End of Period $ 9.139 $ 8.955
Number of Units Outstanding, End of Period 68,655 63,103
STI CLASSIC GROWTH AND INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.909 $ 9.889
Accumulation Unit Value, End of Period $ 9.889 $ 10.192
Number of Units Outstanding, End of Period 86,209 82,658
STI CLASSIC INTERNATIONAL EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 6.388 $ 8.671
Accumulation Unit Value, End of Period $ 8.671 $ 8.971
Number of Units Outstanding, End of Period 13,000 11,663
STI CLASSIC INVESTMENT GRADE BOND SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 12.158 $ 12.442
Accumulation Unit Value, End of Period $ 12.442 $ 12.697
Number of Units Outstanding, End of Period 52,719 49,600
STI CLASSIC MID-CAP EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 6.613 $ 8.481
Accumulation Unit Value, End of Period $ 8.481 $ 8.707
Number of Units Outstanding, End of Period 30,536 29,802
|
44 PROSPECTUS
STI CLASSIC QUALITY GROWTH STOCK SUB-ACCOUNT/(2)/(8)
|
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
STI CLASSIC SMALL CAP VALUE EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 13.903 $ 19.027
Accumulation Unit Value, End of Period $ 19.027 $ 20.645
Number of Units Outstanding, End of Period 41,432 40,715
STI CLASSIC VALUE INCOME STOCK SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 8.286 $ 10.085
Accumulation Unit Value, End of Period $ 10.085 $ 10.611
Number of Units Outstanding, End of Period 35,933 34,971
|
* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.05% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998, except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Variable Sub-Accounts that commenced operations on November 1, 1999.
(2) Variable Sub-Accounts that commenced operations on January 24, 2000.
(3) Variable Sub-Accounts that commenced operations on May 1, 2000.
(4) Variable Sub-Accounts that commenced operations on August 30, 2001.
(5) Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA changed its name to Oppenheimer Balanced Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(6) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(7) Effective May 1, 2003, Putnam VT Voyager Fund II changed its name to Putnam VT Discovery Growth Fund. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(8) STI Classic Quality Growth Stock Sub-Account is not available to new investors as of September 6, 2002.
45 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
WITH ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II (FOR CONTRACTS
ISSUED BEFORE 9/22/00)
|
For the Years Beginning January 1 and Ending December 31,* 1998 1999 2000 2001 2002
-------------------------------------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.60 $ 11.88 $ 10.356
Accumulation Unit Value, End of Period $10.73 $ 12.60 $ 11.88 $ 10.356 $ 8.450
Number of Units Outstanding, End of Period 405 43,121 101,781 94,585 89,074
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.39 $ 16.21 $ 14.22 $ 10.734
Accumulation Unit Value, End of Period $11.39 $ 16.21 $ 14.22 $ 10.734 $ 7.991
Number of Units Outstanding, End of Period 398 16,046 122,768 129,783 103,573
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.01 $ 15.01 $ 9.588
Accumulation Unit Value, End of Period $11.36 $ 15.01 $ 12.63 $ 9.588 $ 7.966
Number of Units Outstanding, End of Period 386 1,159 66,400 69,341 55,288
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.82 $ 15.74 $ 12.32 $ 8.015
Accumulation Unit Value, End of Period $11.82 $ 15.74 $ 12.32 $ 8.015 $ 5.445
Number of Units Outstanding, End of Period 386 21,246 108,292 112,689 104,501
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.31 $ 11.22 $ 8.94 $ 8.361
Accumulation Unit Value, End of Period 10.31 $ 11.22 $ 8.94 $ 8.361 $ 7.748
Number of Units Outstanding, End of Period 185 10,889 1,120 12,011
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.51 $ 14.73 $ 12.37 $ 10.646
Accumulation Unit Value, End of Period $11.51 $ 14.73 $ 12.37 $ 10.646 $ 7.307
Number of Units Outstanding, End of Period 34,288 159,570 160,343 126,176
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.06 $ 10.49 $ 10.716
Accumulation Unit Value, End of Period -- $ 10.06 $ 10.49 $ 10.716 $ 10.695
Number of Units Outstanding, End of Period -- 5,291 40,906 127,260 140,899
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.65 $ 14.26 $ 13.10 $ 11.315
Accumulation Unit Value, End of Period $11.65 $ 14.26 $ 13.10 $ 11.315 $ 10.096
Number of Units Outstanding, End of Period 387 32,161 131,791 134,375 114,720
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.47 $ 10.96 $ 11.70 $ 10.944
Accumulation Unit Value, End of Period $10.47 $ 10.96 $ 11.70 $ 10.944 $ 8.946
Number of Units Outstanding, End of Period 0 1,1621 45,849 55,016 54,937
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.19 $ 15.15 $ 13.27 $ 10.756
Accumulation Unit Value, End of Period $11.19 $ 15.15 $ 13.27 $ 10.756 $ 7.399
Number of Units Outstanding, End of Period 0 22,088 151,189 149,935 123,919
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.10 $ 8.47 $ 7.359
Accumulation Unit Value, End of Period $10.43 $ 11.10 $ 8.47 $ 7.359 $ 7.493
Number of Units Outstanding, End of Period 0 3,667 3,1190 24,128 17,717
FIDELITY VIP INDEX 500 SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.11 $ 7.876
Accumulation Unit Value, End of Period -- -- $ 9.11 $ 7.876 $ 6.027
Number of Units Outstanding, End of Period -- -- 91,596 113,232 91,466
|
46 PROSPECTUS
|
FIDELITY VIP OVERSEAS SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 8.34 $ 6.473
Accumulation Unit Value, End of Period -- -- $ 8.34 $ 6.473 $ 5.079
Number of Units Outstanding, End of Period -- -- 30,230 29,449 26,477
FTVIP TEMPLETON GLOBAL INCOME SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 11.36 $ 11.428
Accumulation Unit Value, End of Period -- -- $ 11.36 $ 11.428 $ 13.627
Number of Units Outstanding, End of Period -- -- 11,685 13,624 14,475
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 13.55 $ 13.165
Accumulation Unit Value, End of Period -- -- $ 13.55 $ 13.165 $ 10.561
Number of Units Outstanding, End of Period -- -- 9457 10,221 10,224
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.00 -- --
Accumulation Unit Value, End of Period -- $ 10.00 $ 11.40 -- --
Number of Units Outstanding, End of Period -- 0 0 -- --
FTVIP TEMPLETON BOND (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.00 -- --
Accumulation Unit Value, End of Period -- $ 10.00 $ 9.86 -- --
Number of Units Outstanding, End of Period -- 0 0 -- --
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.94 $ 20.78 $ 16.44 $ 10.763
Accumulation Unit Value, End of Period $11.94 $ 20.78 $ 16.44 $ 10.763 $ 7.017
Number of Units Outstanding, End of Period 0 19,189 63,991 65,183 58,274
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.35 $ 11.16 $ 9.229
Accumulation Unit Value, End of Period $10.81 $ 11.35 $ 11.16 $ 9.229 $ 7.179
Number of Units Outstanding, End of Period 0 4,808 11,160 9,277 7,991
MFS NEW DISCOVERY SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 17.636
Accumulation Unit Value, End of Period -- -- -- $ 17.636 $ 7.147
Number of Units Outstanding, End of Period -- -- -- 0 3,061
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.52 $ 10.79 $ 8.365
Accumulation Unit Value, End of Period -- $ 11.52 $ 10.79 $ 8.365 $ 6.231
Number of Units Outstanding, End of Period -- 0 60,709 73,568 69,858
MFS UTILITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.116
Accumulation Unit Value, End of Period -- -- -- $ 9.116 $ 6.918
Number of Units Outstanding, End of Period -- -- -- 0 860
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.72 $ 11.99 $ 8.109
Accumulation Unit Value, End of Period -- $ 13.72 $ 11.99 $ 8.109 $ 5.763
Number of Units Outstanding, End of Period -- 0 38,398 42,643 36,265
OPPENHEIMER BALANCED SUB-ACCOUNT/(2)(5)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.45 $ 10.513
Accumulation Unit Value, End of Period -- -- $ 10.45 $ 10.513 $ 9.271
Number of Units Outstanding, End of Period -- -- 20,592 28,807 27,874
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.10 $ 11.89 $ 10.232
Accumulation Unit Value, End of Period -- $ 12.10 $ 11.89 $ 10.232 $ 7.365
Number of Units Outstanding, End of Period -- 0 38,398 43,914 42,764
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.10 $ 13.55 $ 11.734
Accumulation Unit Value, End of Period -- $ 13.10 $ 13.55 $ 11.734 $ 8.992
Number of Units Outstanding, End of Period -- 0 33,241 33,299 34,078
|
47 PROSPECTUS
|
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(6)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.77 $ 9.67 $ 8.55
Accumulation Unit Value, End of Period -- $ 10.77 $ 9.67 $ 8.55 $ 6.836
Number of Units Outstanding, End of Period -- 0 130,587 144,668 119,766
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.15 $ 10.26 $ 10.589
Accumulation Unit Value, End of Period -- $ 10.15 $ 10.26 $ 10.589 $ 11.197
Number of Units Outstanding, End of Period -- 0 19,624 26,549 31,069
PUTNAM VT DISCOVERY GROWTH/(4)(7)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.134
Accumulation Unit Value, End of Period -- -- -- $ 10.134 $ 7.012
Number of Units Outstanding, End of Period -- -- -- 0 670
PUTNAM VT DIVERSIFIED INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.860
Accumulation Unit Value, End of Period -- -- -- $ 9.860 $ 10.260
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT GROWTH AND INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.899
Accumulation Unit Value, End of Period -- -- -- $ 9.899 $ 7.880
Number of Units Outstanding, End of Period -- -- -- 0 586
PUTNAM VT GROWTH OPPORTUNITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.142
Accumulation Unit Value, End of Period -- -- -- $ 10.142 $ 7.026
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT HEALTH SCIENCES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 9.791
Accumulation Unit Value, End of Period -- -- -- $ 9.791 $ 7.663
Number of Units Outstanding, End of Period -- -- -- 0 0
PUTNAM VT NEW VALUE SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period -- -- -- $ 10.00 $ 10.116
Accumulation Unit Value, End of Period -- -- -- $ 10.116 $ 8.388
Number of Units Outstanding, End of Period -- -- -- 0 2,393
STI CLASSIC CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.75 $ 10.012
Accumulation Unit Value, End of Period -- -- $ 10.75 $ 10.012 $ 7.697
Number of Units Outstanding, End of Period -- -- 44,314 41,591 84,538
STI CLASSIC GROWTH AND INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.75 $ 9.989
Accumulation Unit Value, End of Period -- -- $ 10.75 $ 9.989 $ 7.807
Number of Units Outstanding, End of Period -- -- 47,617 54,798 47,399
STI CLASSIC INTERNATIONAL EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.68 $ 7.869
Accumulation Unit Value, End of Period -- -- $ 9.68 $ 7.869 $ 6.306
Number of Units Outstanding, End of Period -- -- 9,071 10,251 7,860
STI CLASSIC INVESTMENT GRADE BOND SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 10.57 $ 11.354
Accumulation Unit Value, End of Period -- -- $ 10.57 $ 11.354 12.002
Number of Units Outstanding, End of Period -- -- 15,973 27,766 57,375
STI CLASSIC MID-CAP EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.17 $ 9.271
Accumulation Unit Value, End of Period -- -- $ 9.17 $ 9.271 $ 6.528
Number of Units Outstanding, End of Period -- -- 14,742 15,970 16,956
STI CLASSIC QUALITY GROWTH STOCK SUB-ACCOUNT/(2)(8)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 9.54 $ 7.637
Accumulation Unit Value, End of Period -- -- $ 9.54 $ 7.637 $ 6.097
Number of Units Outstanding, End of Period -- -- 62,796 75,646 0
|
48 PROSPECTUS
|
STI CLASSIC SMALL CAP VALUE EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 11.81 $ 14.173
Accumulation Unit Value, End of Period -- -- $ 11.81 $ 14.173 $ 13.724
Number of Units Outstanding, End of Period -- -- 6098 0 14,058
STI CLASSIC VALUE INCOME STOCK SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.46 $ 10.28 $ 10.001
Accumulation Unit Value, End of Period -- $ 9.46 $ 10.28 $ 10.001 $ 8.171
Number of Units Outstanding, End of Period -- 11,848 11,462 15,344 13,491
|
|
For the Years Beginning January 1 and Ending December 31,* 2003 2004
--------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.450 $ 9.677
Accumulation Unit Value, End of Period $ 9.677 $ 9.611
Number of Units Outstanding, End of Period 79,043 63,895
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.991 $ 10.187
Accumulation Unit Value, End of Period $ 10.187 $ 9.754
Number of Units Outstanding, End of Period 93,396 82,252
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.966 $ 9.755
Accumulation Unit Value, End of Period $ 9.755 $ 9.773
Number of Units Outstanding, End of Period 49,921 50,120
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.445 $ 7.034
Accumulation Unit Value, End of Period $ 7.034 $ 6.800
Number of Units Outstanding, End of Period 105,887 101,131
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.748 $ 9.765
Accumulation Unit Value, End of Period $ 9.765 $ 10.247
Number of Units Outstanding, End of Period 11,842 11,271
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.307 $ 8.996
Accumulation Unit Value, End of Period $ 8.996 $ 8.665
Number of Units Outstanding, End of Period 117,821 102,217
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 10.695 $ 10.598
Accumulation Unit Value, End of Period $ 10.598 $ 10.522
Number of Units Outstanding, End of Period 128,683 92,927
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.096 $ 12.765
Accumulation Unit Value, End of Period $ 12.765 $ 13.340
Number of Units Outstanding, End of Period 105,800 98,026
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.946 $ 11.475
Accumulation Unit Value, End of Period $ 11.475 $ 11.575
Number of Units Outstanding, End of Period 59,907 58,079
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.399 $ 9.675
Accumulation Unit Value, End of Period $ 9.675 $ 9.112
Number of Units Outstanding, End of Period 111,514 99,339
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.493 $ 9.385
Accumulation Unit Value, End of Period $ 9.385 $ 9.714
Number of Units Outstanding, End of Period 16,572 15,444
|
49 PROSPECTUS
FIDELITY VIP INDEX 500 SUB-ACCOUNT/(2)/
|
Accumulation Unit Value, Beginning of Period $ 6.027 $ 7.618
Accumulation Unit Value, End of Period $ 7.618 $ 7.628
Number of Units Outstanding, End of Period 85,001 78,979
FIDELITY VIP OVERSEAS SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 5.079 $ 7.167
Accumulation Unit Value, End of Period $ 7.167 $ 7.041
Number of Units Outstanding, End of Period 35,399 23,742
FTVIP TEMPLETON GLOBAL INCOME SECURITIES
SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 13.627 $ 16.421
Accumulation Unit Value, End of Period $ 16.421 $ 16.892
Number of Units Outstanding, End of Period 15,767 14,789
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 10.561 $ 13.735
Accumulation Unit Value, End of Period $ 13.735 $ 14.152
Number of Units Outstanding, End of Period 13,430 13,370
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP TEMPLETON BOND (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.017 $ 8.994
Accumulation Unit Value, End of Period $ 8.994 $ 8.790
Number of Units Outstanding, End of Period 53,387 46,204
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.179 $ 8.631
Accumulation Unit Value, End of Period $ 8.631 $ 8.583
Number of Units Outstanding, End of Period 6,780 6,887
MFS NEW DISCOVERY SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.147 $ 9.397
Accumulation Unit Value, End of Period $ 9.397 $ 8.647
Number of Units Outstanding, End of Period 6,911 6,857
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 6.231 $ 7.625
Accumulation Unit Value, End of Period $ 7.625 $ 7.731
Number of Units Outstanding, End of Period 66,528 64,762
MFS UTILITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 6.918 $ 9.244
Accumulation Unit Value, End of Period $ 9.244 $ 10.292
Number of Units Outstanding, End of Period 860 860
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 5.763 $ 7.124
Accumulation Unit Value, End of Period $ 7.124 $ 7.496
Number of Units Outstanding, End of Period 33,266 29,258
OPPENHEIMER BALANCED SUB-ACCOUNT/(2)(5)/
Accumulation Unit Value, Beginning of Period $ 9.271 $ 11.402
Accumulation Unit Value, End of Period $ 11.402 $ 11.504
Number of Units Outstanding, End of Period 26,578 21,896
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.365 $ 9.492
Accumulation Unit Value, End of Period $ 9.492 $ 9.236
Number of Units Outstanding, End of Period 36,722 31,520
|
50 PROSPECTUS
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
|
Accumulation Unit Value, Beginning of Period $ 8.992 $ 12.658
Accumulation Unit Value, End of Period $ 12.658 $ 12.819
Number of Units Outstanding, End of Period 31,907 23,290
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(6)/
Accumulation Unit Value, Beginning of Period $ 6.836 $ 8.526
Accumulation Unit Value, End of Period $ 8.526 $ 8.475
Number of Units Outstanding, End of Period 114,351 108,999
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 11.197 $ 13.012
Accumulation Unit Value, End of Period $ 13.012 $ 13.330
Number of Units Outstanding, End of Period 37,883 39,319
PUTNAM VT DISCOVERY GROWTH/(4)(7)/
Accumulation Unit Value, Beginning of Period $ 7.012 $ 9.100
Accumulation Unit Value, End of Period $ 9.100 $ 8.558
Number of Units Outstanding, End of Period 669 669
PUTNAM VT DIVERSIFIED INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 10.260 $ 12.111
Accumulation Unit Value, End of Period $ 12.111 $ 12.589
Number of Units Outstanding, End of Period 0 0
PUTNAM VT GROWTH AND INCOME SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.880 $ 9.869
Accumulation Unit Value, End of Period $ 9.869 $ 9.951
Number of Units Outstanding, End of Period 585 585
PUTNAM VT GROWTH OPPORTUNITIES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.026 $ 8.501
Accumulation Unit Value, End of Period $ 8.501 $ 7.919
Number of Units Outstanding, End of Period 1,920 1,920
PUTNAM VT HEALTH SCIENCES SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 7.663 $ 8.920
Accumulation Unit Value, End of Period $ 8.920 $ 8.712
Number of Units Outstanding, End of Period 0 0
PUTNAM VT NEW VALUE SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 8.338 $ 10.927
Accumulation Unit Value, End of Period $ 10.927 $ 11.310
Number of Units Outstanding, End of Period 2,393 2,569
STI CLASSIC CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.687 $ 8.973
Accumulation Unit Value, End of Period $ 8.973 $ 8.763
Number of Units Outstanding, End of Period 79,424 71,340
STI CLASSIC GROWTH AND INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 7.807 $ 9.719
Accumulation Unit Value, End of Period $ 9.719 $ 9.983
Number of Units Outstanding, End of Period 44,496 37,227
STI CLASSIC INTERNATIONAL EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 6.306 $ 8.522
Accumulation Unit Value, End of Period $ 8.522 $ 8.787
Number of Units Outstanding, End of Period 7,387 6,880
STI CLASSIC INVESTMENT GRADE BOND SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 12.002 $ 12.228
Accumulation Unit Value, End of Period $ 12.228 $ 12.438
Number of Units Outstanding, End of Period 55,497 52,272
STI CLASSIC MID-CAP EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 6.528 $ 8.335
Accumulation Unit Value, End of Period $ 8.335 $ 8.529
Number of Units Outstanding, End of Period 15,117 14,889
|
51 PROSPECTUS
STI CLASSIC QUALITY GROWTH STOCK
SUB-ACCOUNT/(2)(8)/
|
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
STI CLASSIC SMALL CAP VALUE EQUITY SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 13.724 $ 18.700
Accumulation Unit Value, End of Period $ 18.700 $ 20.224
Number of Units Outstanding, End of Period 14,539 13,803
STI CLASSIC VALUE INCOME STOCK SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 8.171 $ 9.902
Accumulation Unit Value, End of Period $ 9.902 $ 10.384
Number of Units Outstanding, End of Period 12,822 11,765
|
* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998, except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Variable Sub-Accounts that commenced operations on November 1, 1999.
(2) Variable Sub-Accounts that commenced operations on January 24, 2000.
(3) Variable Sub-Accounts that commenced operations on May 1, 2000.
(4) Variable Sub-Accounts that commenced operations on August 30, 2001.
(5) Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA changed its name to Oppenheimer Balanced Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(6) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(7) Effective May 1, 2003, Putnam VT Voyager Fund II changed its name to Putnam VT Discovery Growth Fund. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(8) STI Classic Quality Growth Stock Sub-Account is not available to new investors as of September 6, 2002.
52 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
WITH ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II (FOR CONRTACTS
|
ISSUED ON OR AFTER 9/22/00)
For the Years Beginning January 1 and Ending December 31,* 2000 2001 2002 2003 2004
------------------------------------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.21 $ 8.024 $ 6.543 $ 7.489
Accumulation Unit Value, End of Period $ 9.21 $ 8.024 $ 6.543 $ 7.489 $ 7.434
Number of Units Outstanding, End of Period 4,515 61,468 57,002 58,920 62,743
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 7.80 $ 5.888 $ 4.381 $ 5.582
Accumulation Unit Value, End of Period $ 7.80 $ 5.888 $ 4.381 $ 5.582 $ 5.342
Number of Units Outstanding, End of Period 34,530 99,227 87,825 91,701 85,357
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.06 $ 6.117 $ 5.080 $ 6.217
Accumulation Unit Value, End of Period $ 8.06 $ 6.117 $ 5.080 $ 6.217 $ 6.225
Number of Units Outstanding, End of Period 20,079 104,459 86,197 83,406 78,041
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 7.52 $ 4.90 $ 3.320 $ 4.286
Accumulation Unit Value, End of Period $ 7.52 $ 4.90 $ 3.320 $ 4.286 $ 4.142
Number of Units Outstanding, End of Period 32,771 133,470 115,932 110,527 94,083
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.37 $ 7.825 $ 7.247 $ 9.128
Accumulation Unit Value, End of Period $ 8.37 $ 7.825 $ 7.247 $ 9.128 $ 9.575
Number of Units Outstanding, End of Period 81 8,589 8,876 9,419 10,101
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.54 $ 7.345 $ 5.039 $ 6.199
Accumulation Unit Value, End of Period $ 8.54 $ 7.345 $ 5.039 $ 6.199 $ 5.969
Number of Units Outstanding, End of Period 22,904 96,014 89,919 84,214 75,997
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.17 $ 10.375 $ 10.351 $ 10.251
Accumulation Unit Value, End of Period $ 10.17 $ 10.375 $ 10.351 $ 10.251 $ 10.173
Number of Units Outstanding, End of Period 5,731 72,350 63,012 58,520 63,242
FIDELITY VIP CONTRAFUND/(R)/ SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.23 $ 7.970 $ 7.107 $ 8.980
Accumulation Unit Value, End of Period $ 9.23 $ 7.970 $ 7.107 $ 8.980 $ 9.381
Number of Units Outstanding, End of Period 14,991 80,328 71,359 74,699 72,513
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.42 $ 9.740 $ 7.958 $ 10.202
Accumulation Unit Value, End of Period $ 10.42 $ 9.740 $ 7.958 $ 10.202 $ 10.286
Number of Units Outstanding, End of Period 17,198 42,652 45,833 43,248 32,641
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.37 $ 6.783 $ 4.663 $ 6.094
Accumulation Unit Value, End of Period $ 8.37 $ 6.783 $ 4.633 $ 6.094 $ 5.736
Number of Units Outstanding, End of Period 21,583 76,935 76,809 72,242 67,032
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.30 $ 7.209 $ 7.335 $ 9.183
Accumulation Unit Value, End of Period $ 8.30 $ 7.209 $ 7.335 $ 9.183 $ 9.500
Number of Units Outstanding, End of Period 102 4,442 7,089 8,863 8,688
FIDELITY VIP INDEX 500 SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.83 $ 7.634 $ 5.839 $ 7.375
Accumulation Unit Value, End of Period $ 8.83 $ 7.634 $ 5.839 $ 7.375 $ 7.382
Number of Units Outstanding, End of Period 8,780 52,114 65,296 70,399 69,593
|
53 PROSPECTUS
|
FIDELITY VIP OVERSEAS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.68 $ 6.732 $ 5.279 $ 7.445
Accumulation Unit Value, End of Period $ 8.68 $ 6.732 $ 5.279 $ 7.445 $ 7.312
Number of Units Outstanding, End of Period 4,854 11,548 15,773 10,081 9,755
FTVIP TEMPLETON GLOBAL INCOME SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 11.36 $ 10.516 $ 12.531 $ 15.092
Accumulation Unit Value, End of Period $ 11.36 $ 10.516 $ 12.531 $ 15.092 $ 15.518
Number of Units Outstanding, End of Period 11,685 533 846 1,890 2,756
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.00 $ 9.703 $ 7.780 $ 10.112
Accumulation Unit Value, End of Period $ 10.00 $ 9.703 $ 7.780 $ 10.112 $ 10.414
Number of Units Outstanding, End of Period 2,289 2,050 7,098 4,154 9,771
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period -- -- -- --
Accumulation Unit Value, End of Period -- -- -- --
Number of Units Outstanding, End of Period -- -- -- --
FTVIP TEMPLETON BOND (CLASS 2) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period -- -- -- --
Accumulation Unit Value, End of Period -- -- -- --
Number of Units Outstanding, End of Period -- -- -- --
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.08 $ 5.287 $ 3.444 $ 4.412
Accumulation Unit Value, End of Period $ 8.08 $ 5.287 $ 3.444 $ 4.412 $ 4.310
Number of Units Outstanding, End of Period 11,866 61,761 75,018 71,114 66,448
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.64 $ 7.965 $ 6.192 $ 7.440
Accumulation Unit Value, End of Period $ 9.64 $ 7.965 $ 6.192 $ 7.440 $ 7.396
Number of Units Outstanding, End of Period 11,698 70,874 22,272 23,237 23,178
MFS NEW DISCOVERY SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 8.923 $ 6.001 $ 7.893
Accumulation Unit Value, End of Period -- $ 8.923 $ 6.001 $ 7.893 $ 7.265
Number of Units Outstanding, End of Period -- 4,370 3,755 3,914 3,845
MFS RESEARCH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.61 $ 6.666 $ 4.948 $ 6.069
Accumulation Unit Value, End of Period $ 8.61 $ 6.666 $ 4.948 $ 6.069 $ 6.150
Number of Units Outstanding, End of Period 11,698 70,874 70,703 65,726 59,409
MFS UTILITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.107 $ 6.913 $ 9.231
Accumulation Unit Value, End of Period -- $ 9.107 $ 6.913 $ 9.231 $ 10.273
Number of Units Outstanding, End of Period -- 0 0 0 0
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 6.94 $ 4.694 $ 3.334 $ 4.119
Accumulation Unit Value, End of Period $ 6.94 $ 4.694 $ 3.334 $ 4.119 $ 4.332
Number of Units Outstanding, End of Period 570 54,096 76,844 68,188 69,130
OPPENHEIMER BALANCED SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.68 $ 9.727 $ 8.573 $ 10.537
Accumulation Unit Value, End of Period $ 9.68 $ 9.727 $ 8.573 $ 10.537 $ 10.627
Number of Units Outstanding, End of Period 3,475 24,335 51,314 67,941 67,416
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.92 $ 7.667 $ 5.516 $ 7.105
Accumulation Unit Value, End of Period $ 8.92 $ 7.667 $ 5.516 $ 7.105 $ 6.910
Number of Units Outstanding, End of Period 18,937 81,840 79,225 76,584 74,628
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.41 $ 8.142 $ 6.236 $ 8.773
Accumulation Unit Value, End of Period $ 9.41 $ 8.142 $ 6.236 $ 8.773 $ 8.880
Number of Units Outstanding, End of Period 2457 16,539 19,248 19,288 17,680
|
54 PROSPECTUS
|
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.72 $ 7.702 $ 6.152 $ 7.668
Accumulation Unit Value, End of Period $ 8.72 $ 7.702 $ 6.152 $ 7.668 $ 7.618
Number of Units Outstanding, End of Period 33,469 146,919 127,294 125,761 115,872
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.88 $ 10.184 $ 10.762 $ 12.500
Accumulation Unit Value, End of Period $ 9.88 $ 10.184 $ 10.762 $ 12.500 $ 12.799
Number of Units Outstanding, End of Period 4,378 33,868 32,383 32,808 32,710
PUTNAM VT DISCOVERY GROWTH/(1)(4)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.124 $ 7.006 $ 9.088
Accumulation Unit Value, End of Period -- $ 10.124 $ 7.006 $ 9.088 $ 8.542
Number of Units Outstanding, End of Period -- 0 852 1,070 1,069
PUTNAM VT DIVERSIFIED INCOME SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.851 $ 10.252 $ 12.094
Accumulation Unit Value, End of Period -- $ 9.851 $ 10.252 $ 12.094 $ 12.566
Number of Units Outstanding, End of Period -- 0 7,033 7,856 7,726
PUTNAM VT GROWTH AND INCOME SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.890 $ 7.873 $ 9.855
Accumulation Unit Value, End of Period -- $ 9.890 $ 7.873 $ 9.855 $ 9.933
Number of Units Outstanding, End of Period -- 0 388 388 388
PUTNAM VT GROWTH OPPORTUNITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.132 $ 7.020 $ 8.489
Accumulation Unit Value, End of Period -- $ 10.132 $ 7.020 $ 8.489 $ 7.904
Number of Units Outstanding, End of Period -- 0 0 0 0
PUTNAM VT HEALTH SCIENCES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 9.782 $ 7.657 $ 8.908
Accumulation Unit Value, End of Period -- $ 9.782 $ 7.657 $ 8.908 $ 8.696
Number of Units Outstanding, End of Period -- 0 0 0 0
PUTNAM VT NEW VALUE SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.106 $ 8.382 $ 10.911
Accumulation Unit Value, End of Period -- $ 10.106 $ 8.382 $ 10.911 $ 11.289
Number of Units Outstanding, End of Period -- 0 0 0 0
STI CLASSIC CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.28 $ 8.640 $ 6.638 $ 7.734
Accumulation Unit Value, End of Period $ 9.28 $ 8.640 $ 6.638 $ 7.734 $ 7.550
Number of Units Outstanding, End of Period 214 12,066 64,693 64,388 65,004
STI CLASSIC GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.78 $ 9.088 $ 7.098 $ 8.832
Accumulation Unit Value, End of Period $ 9.78 $ 9.088 $ 7.098 $ 8.832 $ 9.067
Number of Units Outstanding, End of Period 4,178 35,434 37,752 35,833 35,555
STI CLASSIC INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.54 $ 7.749 $ 6.204 $ 8.379
Accumulation Unit Value, End of Period $ 9.54 $ 7.749 $ 6.204 $ 8.379 $ 8.636
Number of Units Outstanding, End of Period 358 5,355 9,083 8,411 8,631
STI CLASSIC INVESTMENT GRADE BOND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.39 $ 11.154 $ 11.784 $ 11.999
Accumulation Unit Value, End of Period $ 10.39 $ 11.154 $ 11.784 $ 11.999 $ 12.199
Number of Units Outstanding, End of Period 2,172 31,355 62,512 48,287 43,068
STI CLASSIC MID-CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.68 $ 8.766 $ 6.169 $ 7.872
Accumulation Unit Value, End of Period $ 8.68 $ 8.766 $ 6.169 $ 7.872 $ 8.051
Number of Units Outstanding, End of Period 5,995 1205 21,951 25,818 25,551
STI CLASSIC QUALITY GROWTH STOCK SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.76 $ 7.007 -- --
Accumulation Unit Value, End of Period $ 8.76 $ 7.007 $ 5.593 -- --
Number of Units Outstanding, End of Period 4,378 33,868 0 -- --
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55 PROSPECTUS
|
STI CLASSIC SMALL CAP VALUE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.59 $ 12.650 $ 12.295 $ 16.742
Accumulation Unit Value, End of Period $ 10.59 $ 12.650 $ 12.295 $ 16.742 $ 18.098
Number of Units Outstanding, End of Period 570 14,135 33,998 37,371 35,880
STI CLASSIC VALUE INCOME STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.92 $ 10.620 $ 8.672 $ 10.502
Accumulation Unit Value, End of Period $ 10.92 $ 10.620 $ 8.672 $ 10.502 $ 11.009
Number of Units Outstanding, End of Period 123 7,368 13,558 12,473 12,120
|
* The Contracts with the Enhanced Death and Income Benefit Combination Rider II were first offered on September 22, 2000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.55% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before September 22, 2000, except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Variable Sub-Accounts that commenced operations on August 30, 2001.
(2) Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA changed its name to Oppenheimer Balanced Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(3) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(4) Effective May 1, 2003, Putnam VT Voyager Fund II changed its name to Putnam VT Discovery Growth Fund. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) STI Classic Quality Growth Stock Sub-Account is not available to new investors as of September 6, 2002.
56 PROSPECTUS
APPENDIX B MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the withdrawal, transfer, or death benefit request, or from the Payout Start Date to the end of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the receipt of the withdrawal, transfer, death benefit, or income payment request.*
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported in Federal Reserve Bulletin Release H.15.
* If a U.S. Treasury Note ("Note") with a maturity of the Guarantee Period is not available, we will determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
The Market Value Adjustment factor is determined from the following formula:
.9 X [I-J] X N
To determine the Market Value Adjustment, we will multiply the Market Value Adjustment factor by the amount transferred, withdrawn (in excess of the Free Withdrawal Amount), paid as a death benefit, or applied to an Income Plan from a Guarantee Period at any time other than during the 30 day period after such Guarantee Period expires.
57 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
EXAMPLE 1 (ASSUMES DECLINING INTEREST RATES)
|
Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
Step 3. Calculate the Withdrawal I = 4.5%
Charge: J = 4.2%
730 days
Step 4. Calculate the Market N = -------- = 2
Value Adjustment: 365 days
Market Value Adjustment Factor:.9 X [I - J]
X N =.9 X [.045 - .042] X 2 =.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
=.0054 X ($11,411.66 - $1,500.00) = $53.52
Step 5. Calculate the amount $11,411.66 + $53.52 = $11,465.18
received by a Contract Owner as
a result of full withdrawal at
|
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
|
Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
Step 3. Calculate the Withdrawal I = 4.5%
Charge: J = 4.8%
Step 4. Calculate the Market 730 days
Value Adjustment: N = -------- = 2
365 days
Market Value Adjustment Factor:.9 X [I - J]
X N =.9 X [.045 - .048] X 2 = -.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= -.0054 X ($11,411.66 - $1,500.00) = -$53.52
Step 5. Calculate the amount $11,411.66 - $53.52 = $11,358.14
received by a Contract Owner as
a result of full withdrawal at
|
the end of Contract Year 3:
58 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
THE CONTRACT
Purchase of Contracts
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
CALCULATION OF ACCUMULATION UNIT VALUES
NET INVESTMENT FACTOR
CALCULATION OF VARIABLE INCOME PAYMENTS
CALCULATION OF ANNUITY UNIT VALUES
GENERAL MATTERS
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
Tax Reserves
EXPERTS
FINANCIAL STATEMENTS
APPENDIX A: ACCUMULATION UNIT VALUES
59 PROSPECTUS
THE ALLSTATE(R) PROVIDER VARIABLE ANNUITY
(formerly referred to as "The Glenbrook Provider Variable Annuity")
ALLSTATE LIFE INSURANCE COMPANY
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 MAILING ADDRESS:
P.O. BOX 80469, LINCOLN, NE 68501-0469 TELEPHONE NUMBER: 1-800-755-5275 PROSPECTUS DATED JANUARY 3, 2005
Allstate Life Insurance Company ("ALLSTATE LIFE") is offering the Allstate(R) Provider Variable Annuity, an individual flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference.
The Contract currently offers 41 "INVESTMENT ALTERNATIVES". The investment alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and 38 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Allstate Financial Advisors Separate Account I ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of the portfolios ("PORTFOLIOS") of the following
|
mutual funds ("FUNDS")
AIM VARIABLE INSURANCE FUNDS FRANKLIN TEMPLETON VARIABLE INSURANCE
THE DREYFUS SOCIALLY RESPONSIBLE PRODUCTS TRUST
GROWTH FUND, INC. GOLDMAN SACHS VARIABLE INSURANCE TRUST
DREYFUS STOCK INDEX FUND (VIT)
DREYFUS VARIABLE INVESTMENT FUND MFS(R) VARIABLE INSURANCE TRUST(SM)
(VIF) OPPENHEIMER VARIABLE ACCOUNT FUNDS THE UNIVERSAL INSTITUTIONAL FUNDS,
FIDELITY(R) VARIABLE INSURANCE INC.
PRODUCTS
|
Each Fund has multiple investment Portfolios. Not all of the Funds and/or Portfolios, however, may be available with your Contract. You should check with your representative for further information on the availability of Funds and/or Portfolios. Your annuity application will list all available Portfolios.
WE (Allstate Life) have filed a Statement of Additional Information, dated January 3, 2005, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means it is legally a part of this prospectus. Its table of contents appears on page 59 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http:// www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SEC's Web site.
|
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THE SECURITIES DESCRIBED IN THIS
PROSPECTUS, NOR HAS IT PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT NOTICES THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS
THAT HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL
INSTITUTIONS OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE
CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY SUCH INSTITUTIONS OR ANY FEDERAL REGULATORY
AGENCY. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
|
THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
PAGE
OVERVIEW
|
Important Terms 3
The Contract at a Glance 4
How the Contract Works 6
Expense Table 7
Financial Information 9
CONTRACT FEATURES
The Contract 10
Purchases 11
Contract Value 12
Investment Alternatives
The Variable Sub-Accounts 13
The Fixed Account Option 16
Transfers 18
Expenses 20
Access To Your Money 22
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PAGE
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Income Payments 24
Death Benefits 25
OTHER INFORMATION
More Information: 29
Allstate Life 29
The Variable Account 29
The Portfolios 30
The Contract 30
Non-Qualified Annuities Held Within a Qualified Plan 32
Legal Matters 32
Taxes 33
Annual Reports and Other Documents 38
APPENDIX A-ACCUMULATION UNIT VALUES 39
APPENDIX B-MARKET VALUE ADJUSTMENT EXAMPLE 57
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 59
2 PROSPECTUS
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IMPORTANT TERMS
This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE
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Accumulation Phase 6
Accumulation Unit 9
Accumulation Unit Value 9
Anniversary Values 28
Annuitant 10
Automatic Portfolio Rebalancing Program 20
Beneficiary 10
Cancellation Period 4
Contract* 10
Contract Anniversary 5
Contract Owner ("You") 6
Contract Value 12
Contract Year 4
Death Benefit Anniversary 27
Death Proceeds 27
Dollar Cost Averaging Program 20
Due Proof of Death 27
Enhanced Death Benefit Rider 28
Enhanced Death and Income Benefit Combination Rider 28
Enhanced Death and Income Benefit Combination Rider II 28
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PAGE
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Fixed Account Options 16
Free Withdrawal Amount 21
Funds 1
Allstate Life ("We" or "Us") 1
Guarantee Periods 16
Income Plan 24
Investment Alternatives 1
Issue Date 6
Market Value Adjustment 18
Payout Phase 6
Payout Start Date 24
Portfolios 1
Qualified Contracts 4
SEC 1
Settlement Value 27
Systematic Withdrawal Program 23
Valuation Date 11
Variable Account 1
Variable Sub-Account 1
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* In certain states the Contract is available only as a group Contract. If you purchase a group Contract, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates, unless the context requires otherwise.
3 PROSPECTUS
THE CONTRACT AT A GLANCE
The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information.
FLEXIBLE
|
PAYMENTS You can purchase a Contract with as
little as $3,000 ($2,000 for "QUALIFIED
CONTRACTS", which are Contracts issued within
QUALIFIED PLANS). You can add to your Contract
as often and as much as you like, but each
payment must be at least $50.
--------------------------------------------------------------------------------
RIGHT TO CANCEL You may cancel your Contract within 20 days of
receipt or any longer period as your state may
require ("CANCELLATION PERIOD"). Upon
cancellation, we will return your purchase
payments adjusted, to the extent federal or
state law permits, to reflect the investment
experience of any amounts allocated to the
Variable Account.
--------------------------------------------------------------------------------
EXPENSES You will bear the following expenses:
. Total Variable Account annual fees equal
to 1.15% of average daily net assets
(1.37% if you select the ENHANCED DEATH
BENEFIT RIDER; 1.59% if you selected the
ENHANCED DEATH AND INCOME BENEFIT
COMBINATION RIDER (for Contracts issued
before September 22, 2000); and 1.65% if
you select the ENHANCED DEATH AND INCOME
BENEFIT COMBINATION RIDER II (for
Contracts issued on or after September 22,
2000).
. Annual contract maintenance charge of $35
(with certain exceptions)
. Withdrawal charges ranging from 0% to 6%
of purchase payment withdrawn (with
certain exceptions)
. Transfer fee of $10 after 12th transfer in
any CONTRACT YEAR (fee currently waived)
. State premium tax (if your state imposes
one).
In addition, each Portfolio pays expenses that
you will bear indirectly if you invest in a
Variable Sub-Account.
--------------------------------------------------------------------------------
INVESTMENT ALTERNATIVES The Contract offers 41 investment alternatives
including:
. 3 Fixed Account Options (which credit
interest at rates we guarantee)
. 38 Variable Sub-Accounts investing in
Portfolios offering professional money
|
management by these investment advisers:
. A I M Advisors, Inc.
. The Dreyfus Corporation
. Fidelity Management & Research Company
. Franklin Advisers, Inc.
. Franklin Mutual Advisers, LLC
. Goldman Sachs Asset Management, L.P.
. MFS/TM/Investment Management
. OppenheimerFunds, Inc.
. Templeton Asset Management Ltd.
. Templeton Investment Counsel, Inc.
. Van Kampen/(1)/
To find out current rates being paid on the Fixed Account, or to find out how the Variable Sub-Accounts have performed, please call us at 1-800-755-5275.
/(1)/Morgan Stanley Investment Management Inc., the adviser to the UIF Portfolios, does business in certain instances as Van Kampen.
4 PROSPECTUS
SPECIAL SERVICES For your convenience, we offer these special services:
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. AUTOMATIC ADDITIONS PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
|
INCOME PAYMENTS . You can choose fixed income payments,
variable income payments, or a combination
of the two. You can receive your income
payments in one of the following ways:
. life income with guaranteed payments
. a "joint and survivor" life income with
guaranteed payments
. guaranteed payments for a specified period
(5 to 30 years)
--------------------------------------------------------------------------------
DEATH BENEFITS If you or the ANNUITANT (if the Contract is
owned by a non-natural person) die before the
PAYOUT START DATE, we will pay the death
benefit described in the Contract. We offer an
Enhanced Death Benefit Rider and an Enhanced
Death and Income Benefit Combination Rider II.
--------------------------------------------------------------------------------
TRANSFERS Before the Payout Start Date, you may transfer
your Contract Value ("CONTRACT VALUE") among
the investment alternatives, with certain
restrictions. Transfers to a GUARANTEE PERIOD
of the Fixed Account must be at least $50.
We do not currently impose a fee upon
transfers. However, we reserve the right to
charge $10 per transfer after the 12th transfer
in each "Contract Year," which we measure from
the date we issue your Contract or a Contract
Anniversary ("CONTRACT ANNIVERSARY").
--------------------------------------------------------------------------------
WITHDRAWALS
You may withdraw some or all of your Contract
Value at any time prior to the Payout Start
Date.
In general, you must withdraw at least $50 at a
time. Full or partial withdrawals are available
under limited circumstances on or after the
Payout Start Date. Withdrawals taken prior to
annuitization (referred to in this prospectus
as the Payout Phase) are generally considered
to come from the earnings in the Contract
first. If the Contract is tax-qualified,
generally all withdrawals are treated as
distributions of earnings. Withdrawals of
earnings are taxed as ordinary income and, if
taken prior to age 59 1/2, may be subject to an
additional 10% federal tax penalty. A
withdrawal charge and MARKET VALUE ADJUSTMENT
also may apply.
--------------------------------------------------------------------------------
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5 PROSPECTUS
HOW THE CONTRACT WORKS
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the CONTRACT OWNER) save for retirement because you can invest in up to 41 investment alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or Fixed Account Options. If you invest in any of the three Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/ or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page 24. You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
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Issue Payout Start
Date Accumulation Phase Date Payout Phase
-------------------------------------------------------------------------------------------------->
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
|
As the Contract Owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract Owner or, if none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. See "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract Owner, or if there is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any questions about how the Contract works.
6 PROSPECTUS
EXPENSE TABLE
The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
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Number of Complete Years Since We Received the Purchase
Payment Being Withdrawn 0 1 2 3 4 5 6+
--------------------------------------------------------------------------------------------
Applicable Charge 6% 6% 5% 5% 4% 3% 0%
--------------------------------------------------------------------------------------------
Annual Contract Maintenance Charge $35.00**
--------------------------------------------------------------------------------------------
Transfer Fee $10.00***
--------------------------------------------------------------------------------------------
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* Each Contract Year, you may withdraw up to 15% of your aggregate purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
*** Applies solely to the thirteenth and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee.
VARIABLE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE DEDUCTED FROM EACH VARIABLE
SUB-ACCOUNT)
Without the Enhanced Death Benefit Rider, Enhanced Death and Income Benefit Combination Rider, or Enhanced Death and Income Benefit Combination Rider II
|
Mortality and Expense Risk Charge 1.05%
-------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
-------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.15%
-------------------------------------------------------------------------------
With the Enhanced Death Benefit Rider
Mortality and Expense Risk Charge 1.27%
-------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
-------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.37%
-------------------------------------------------------------------------------
With the Enhanced Death and Income Benefit Combination Rider (for Contracts
issued before September 22, 2000)
Mortality and Expense Risk Charge 1.49%
-------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
-------------------------------------------------------------------------------
Total Variable Account Annual Expense 1.59%
-------------------------------------------------------------------------------
7 PROSPECTUS
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With the Enhanced Death and Income Benefit Combination Rider II (for
Contracts issued on or after September 22, 2000)
Mortality and Expense Risk Charge 1.55%
-------------------------------------------------------------------------------
Administrative Expense Charge 0.10%
-------------------------------------------------------------------------------
Total Variable Account Annual Expenses 1.65%
-------------------------------------------------------------------------------
PORTFOLIO ANNUAL EXPENSES (as a percentage of Portfolio average daily net
assets)/1/
|
The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. Advisers and/or other service providers of certain Portfolios may have agreed to waive their fees and/or reimburse Portfolio expenses in order to keep the Portfolios' expenses below specified limits. The range of expenses shown in this table does not show the effect of any such fee waiver or expense reimbursement. More detail concerning each Portfolio's fees and expenses appears in the prospectus for each Portfolio.
ANNUAL PORTFOLIO EXPENSES
|
Minimum Maximum
--------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio
assets, which may include management fees,
distribution and/or
services (12b-1) fees,
and other expenses) 0.27% 2.60%
--------------------------------------------------------------------------------
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(1) Expenses are shown as a percentage of Portfolio average daily net assets (before any waiver or reimbursement) as of December 31, 2003.
EXAMPLE 1
This example is intended to help you compare the cost of investing in the Contracts with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, Contract fees, Variable Account annual expenses, and Portfolio fees and expenses. The example below shows the dollar amount of expenses that you would bear directly or indirectly if you:
. invested $10,000 in a Variable Sub-Account,
. earned a 5% annual return on your investment,
. surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, and
. elected the Enhanced Death and Income Benefit Combination Rider II.
The first line of the example assumes that the maximum fees and expenses of any of the Portfolios are charged. The second line of the example assumes that the minimum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below.
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
|
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $95 $174 $246 $448
---------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses $71 $103 $130 $226
---------------------------------------------------------------------
|
EXAMPLE 2
This example uses the same assumptions as Example 1 above, except that it assumes you decided not to surrender your Contract, or you began receiving income payments for a specified period of at least 120 months, at the end of each time period.
8 PROSPECTUS
|
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
Costs Based on Maximum Annual
Portfolio Expenses $44 $131 $221 $448
---------------------------------------------------------------------
Costs Based on Minimum Annual
Portfolio Expenses $20 $ 61 $105 $226
---------------------------------------------------------------------
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PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%, WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF THE ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II, WITH A MORTALITY AND EXPENSE RISK CHARGE OF 1.55%, AN ADMINISTRATIVE EXPENSE CHARGE OF 0.10%, AND AN ANNUAL CONTRACT MAINTENANCE CHARGE OF $35. IF NO RIDER WERE ELECTED, OR IF THE ENHANCED DEATH BENEFIT RIDER WERE ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. THE ABOVE EXAMPLES ALSO ASSUME TOTAL ANNUAL PORTFOLIO EXPENSES LISTED IN THE EXPENSE TABLE WILL CONTINUE THROUGHOUT THE PERIODS SHOWN.
FINANCIAL INFORMATION
To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT". Each Variable Sub-Account has a separate value for its Accumulation Units we call "ACCUMULATION UNIT VALUE." Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since the date the Contracts were first offered. To obtain a fuller picture of each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Allstate Life and Allstate Financial Advisors Separate Account I, which include financial information giving effect to the Consolidation on a pro forma basis, also appear in the Statement of Additional Information. For a free copy of the Statement of Additional Information, please write or call us at 1-800-755-5275.
9 PROSPECTUS
THE CONTRACT
CONTRACT OWNER
The Allstate Provider Variable Annuity is a contract between you, the Contract Owner, and Allstate Life, a life insurance company. As the Contract Owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted):
. the investment alternatives during the Accumulation and Payout Phases,
. the amount and timing of your purchase payments and withdrawals,
. the programs you want to use to invest or withdraw money,
. the income payment plan you want to use to receive retirement income,
. the Annuitant (either yourself or someone else) on whose life the income payments will be based,
. the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract Owner dies, and
. any other rights that the Contract provides.
If you die, any surviving Contract Owner, or, if none, the Beneficiary may exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living person. If the Contract Owner is a grantor trust, the Contract Owner will be considered a non-living person for the purposes of the Death of Owner and Death of Annuitant provisions of your contract.
The maximum age of the oldest Contract Owner and Annuitant cannot exceed 90 as of the date we receive the completed application. You may change the Contract Owner at any time. We will provide a change of ownership form to be signed by you and filed with us. After we accept the form, the change of ownership will be effective as of the date you signed the form. Until we receive your written notice to change the Contract Owner, we are entitled to rely on the most recent ownership information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change the Contract Owner, you should deliver your written notice to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
Changing of ownership of this Contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). You initially designate an Annuitant in your application. You may change the Annuitant at any time prior to the Payout Start Date (only if the Contract Owner is a living person). Once we accept a change, it takes effect as of the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it.
You may designate a joint Annuitant, who is a second person on whose life income payments depend at the time you select an Income Plan. We permit joint Annuitants only on or after the Payout Start Date. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the Death Proceeds or become the new Contract Owner, subject to the "Death of Owner" section below, if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract Owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue.
You may name one or more primary and contingent Beneficiaries when you apply for a Contract. The primary Beneficiary is the person who is first entitled to receive benefits under the Contract upon the death of the sole surviving Contract Owner. A contingent Beneficiary is the person selected by the Contract Owner who will become the Beneficiary if all named primary Beneficiaries die before the death of the sole surviving Contract Owner.
You may restrict income payments to Beneficiaries by providing us a written request. Once we accept the written request, the change or restriction will take effect as of the date you signed the request. Any change is subject to any payment we make or other action we take before we accept the change.
You may change or add Beneficiaries at any time, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed by you and filed with us. After we accept the form, the change of Beneficiary will be effective as of the date you signed the form. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice
10 PROSPECTUS
to us promptly. Each change is subject to any payment made by us or any other action we take before we accept the change.
If you did not name a Beneficiary or, unless otherwise provided in the Beneficiary designation, if a named Beneficiary is no longer living and there are no other surviving primary or contingent Beneficiaries, the new Beneficiary will be:
. your spouse or, if he or she is no longer alive,
. your surviving children equally, or if you have no surviving children,
. your estate.
If one or more Beneficiaries survive you, we will divide the Death Proceeds among the surviving Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the Death Proceeds in equal amounts to the surviving Beneficiaries.
If more than one Beneficiary shares in the Death Proceeds, each Beneficiary will be treated as a separate and independent owner of his or her respective share. Each Beneficiary will exercise all rights related to his or her share, including the sole right to select a payout option, subject to any restrictions previously placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the payout option chosen by the original Beneficiary.
MODIFICATION OF THE CONTRACT
Only an Allstate Life officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law.
ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified Contract). All subsequent purchase payments must be $50 or more. You may make purchase payments at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept. We reserve the right to reject any application in our sole discretion.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money from your bank account. Consult your representative for more detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by notifying us in writing. We reserve the right to limit the availability of the investment alternatives.
We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order.
We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our home office. We are open for business each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." Our business day closes when the New York Stock Exchange closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 3 p.m. Central Time on any Valuation
11 PROSPECTUS
Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation Period, which is the 20 day period after you receive the Contract, or a longer period should your state require it. You may return your Contract by delivering it or mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account. We also will return your purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you.
In states where we are required to refund purchase payments, we reserve the right during the Cancellation Period to invest any purchase payments you allocated to a Variable Sub-Account to the money market Variable Sub-Account available under the Contract. We will notify you if we do so. At the end of the Cancellation Period, you may then allocate your money to other Variable Sub-Accounts.
If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments or the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to credit to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Variable Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Variable Sub-Account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect:
. changes in the share price of the Portfolio in which the Variable Sub-Account invests, and
. the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values reflecting the cost of the Enhanced Death Benefit Rider, the Enhanced Death and Income Benefit Combination Rider, and the Enhanced Death and Income Benefit Rider II described on pages 31.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
12 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS
You may allocate your purchase payments to up to 38 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below.
For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Portfolios. You should carefully review the Portfolio prospectuses before allocating amounts to the Variable Sub-Accounts.
PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISOR:
AIM VARIABLE INSURANCE FUNDS*
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AIM V.I. Balanced Fund - As high a total return as
Series I possible, consistent with
preservation of capital
-------------------------------------------------------------------------------
AIM V.I. Core Equity Growth of capital
Fund - Series I
-------------------------------------------------------------------------------
AIM V.I. Diversified A high level of current A I M ADVISORS,
Income Fund - Series I income INC.
-------------------------------------------------------------------------------
AIM V.I. Government A high level of current
Securities Fund - income consistent with a
Series I reasonable concern for
safety of principal
-------------------------------------------------------------------------------
AIM V.I. Growth Fund - Growth of capital
Series I
-------------------------------------------------------------------------------
AIM V.I. International Long-term growth of capital
Growth Fund - Series I
-------------------------------------------------------------------------------
AIM V.I. Premier Equity Long-term growth of capital
Fund - Series I and income as a secondary
objective
-------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.; THE DREYFUS STOCK INDEX
FUND; AND THE DREYFUS VARIABLE INVESTMENT FUND (VIF) (COLLECTIVELY, THE
DREYFUS FUNDS)
-------------------------------------------------------------------------------
The Dreyfus Socially Capital growth and,
Responsible Growth secondarily, current
Fund, Inc.: income
Initial Shares
-------------------------------------------------------------------------------
Dreyfus Stock Index To match the total return
Fund: Initial Shares of the Standard &
Poor's(R) 500 Composite THE DREYFUS
Stock Price Index CORPORATION
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Dreyfus VIF Growth & Long-term capital growth,
Income Portfolio: current income and growth
Initial Shares of income, consistent with
reasonable investment risk
-------------------------------------------------------------------------------
Dreyfus VIF Money Market A high level of current
Portfolio income as is consistent
with the preservation of
capital and the
maintenance of liquidity
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FIDELITY(R) VARIABLE INSURANCE PRODUCTS
-------------------------------------------------------------------------------
Fidelity VIP Long-term capital
Contrafund(R) appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP Reasonable income
Equity-Income Portfolio FIDELITY MANAGEMENT &
- Initial Class RESEARCH COMPANY
-------------------------------------------------------------------------------
Fidelity VIP Growth Capital appreciation
Portfolio - Initial
Class
-------------------------------------------------------------------------------
Fidelity VIP High Income High level of current
Portfolio - Initial income while also
Class considering growth of
capital
-------------------------------------------------------------------------------
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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FTVIP Franklin Small Cap Long-term capital growth FRANKLIN ADVISERS, Fund - Class 2 INC.
|
FTVIP Mutual Shares Capital appreciation. FRANKLIN MUTUAL
Securities Fund - Class Secondary goal is income ADVISERS, LLC.
2
-------------------------------------------------------------------------------
FTVIP Templeton Long-term capital TEMPLETON ASSET
Developing Markets appreciation MANAGEMENT LTD.
Securities Fund - Class
2
-------------------------------------------------------------------------------
FTVIP Templeton Foreign Long-term capital growth TEMPLETON INVESTMENT
Securities Fund - Class COUNSEL, LLC
2
-------------------------------------------------------------------------------
13 PROSPECTUS
|
|
FTVIP Templeton Growth Long-term capital growth FRANKLIN ADVISERS, INC.
Securities Fund - Class
2
-------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term growth of capital GOLDMAN SACHS ASSET
Capital Growth Fund MANAGEMENT,
L.P.
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term growth of capital
CORE(SM) Small Cap
Equity Fund
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term growth of capital
CORE(SM) U.S. Equity and dividend income
Fund
-------------------------------------------------------------------------------
Goldman Sachs VIT Long-term capital
International Equity appreciation
Fund
-------------------------------------------------------------------------------
MFS(R) VARIABLE INSURANCE TRUST(SM)
-------------------------------------------------------------------------------
MFS Emerging Growth Long-term growth of capital MFS/TM/
Series - Initial Class INVESTMENT
MANAGEMENT
-------------------------------------------------------------------------------
MFS Investors Trust Long-term growth of capital
Series - Initial Class with a secondary objective
to seek reasonable current
income
-------------------------------------------------------------------------------
MFS New Discovery Series Capital appreciation
- Initial Class
-------------------------------------------------------------------------------
MFS Research Series - Long-term growth of capital
Initial Class and future income
-------------------------------------------------------------------------------
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OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Aggressive Capital appreciation
|
Growth Fund/VA
-------------------------------------------------------------------------------
Oppenheimer Capital Seeks capital appreciation OPPENHEIMERFUNDS,
Appreciation Fund/VA by investing in securities INC.
of well-known, established
companies.
-------------------------------------------------------------------------------
Oppenheimer Global Long-term capital
Securities Fund/VA appreciation
-------------------------------------------------------------------------------
Oppenheimer Main Street High total return, which
Fund/VA/(1)/ includes growth in the
value of its shares as
well as current income,
from equity and debt
securities
-------------------------------------------------------------------------------
Oppenheimer Strategic High level of current
Bond Fund/VA income
-------------------------------------------------------------------------------
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
-------------------------------------------------------------------------------
Van Kampen UIF Core Plus Above-average total return
Fixed Income Portfolio, over a market cycle of
Class I/(2)/ three to five years
-------------------------------------------------------------------------------
Van Kampen UIF Equity Long-term capital VAN KAMPEN**
Growth Portfolio, Class appreciation
I
-------------------------------------------------------------------------------
Van Kampen UIF Global Long-term capital
Value Equity Portfolio, appreciation
Class I/(3)/
-------------------------------------------------------------------------------
Van Kampen UIF U.S. Mid Above-average total return
Cap Value Portfolio, over a market cycle of
Class I/(4)/ three to five years
-------------------------------------------------------------------------------
Van Kampen UIF Value Above-average total return
Portfolio, Class I over a market cycle of
three to five years
-------------------------------------------------------------------------------
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* A Portfolio's investment objective may be changed by the Portfolio's Board of Trustees without shareholders approval.
** Morgan Stanley Investment Management Inc., the adviser to the UIF Portfolios, does business in certain instances as Van Kampen.
(1) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. The investment objective for this Portfolio has not changed.
(2) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. The investment objective for this Portfolio has not changed.
(3) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. The investment objective for this Portfolio has not changed.
(4) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS
14 PROSPECTUS
INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
VARIABLE INSURANCE PORTFOLIOS MAY NOT BE MANAGED BY THE SAME PORTFOLIO MANAGERS WHO MANAGE RETAIL MUTUAL FUNDS WITH SIMILAR NAMES. THESE PORTFOLIOS ARE LIKELY TO DIFFER FROM SIMILARLY NAMED RETAIL FUNDS IN ASSETS, CASH FLOW AND TAX MATTERS. ACCORDINGLY, THE HOLDINGS AND INVESTMENT RESULTS OF A VARIABLE INSURANCE PORTFOLIO CAN BE EXPECTED TO BE GREATER OR LESS THAN THE INVESTMENT RESULTS OF SIMILARLY NAMED RETAIL MUTUAL FUNDS.
15 PROSPECTUS
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
You may allocate all or a portion of your purchase payments to the Fixed Account. You may choose from among 3 Fixed Account Options: 2 dollar cost averaging options, and the option to invest in one or more Guarantee Periods included in the Guaranteed Maturity Fixed Account. The Fixed Account Options may not be available in all states. Please consult with your representative for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. Purchase payments that you allocate to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option") will earn interest for a one year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each payment or transfer.
For each purchase payment, the first transfer from the DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Sub-Account in equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 20.
We will follow your instructions in transferring amounts monthly from the DCA Fixed Account. However, you may not choose less than 3 or more than 36 monthly installments. Further, you must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 36 months of payment. At the end of 36 months, any nominal amounts remaining in this option will be allocated to the money market Variable Sub-Account. No transfers are permitted into the DCA Fixed Account.
SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may establish a Short Term Dollar Cost Averaging Program by allocating purchase payments to the Short Term Dollar Cost Averaging Fixed Account Option ("Short Term DCA Fixed Account Option"). We will credit interest to purchase payments you allocate to this Option for up to one year at the current rate in effect at the time of allocation.
For each purchase payment, the first transfer from the Short Term DCA Fixed Account must occur within one month of the date of payment. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the money market Sub-Account in equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. Transferring Account Value to the money market Variable Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 20.
You must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within 12 months. At the end of the transfer period, any nominal amounts remaining in the Short Term DCA Fixed Account will be allocated to the money market Variable Sub-Account. If you discontinue the Short Term DCA Fixed Account Option before the end of the transfer period, we will transfer the remaining balance in the Short Term DCA Fixed Account to the money market Variable Sub-Account unless you request a different investment alternative. No transfers are permitted into the Short Term DCA Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. That is because we guarantee the current and renewal interest rates we credit to the amounts you allocate to either of these Options, which will never be less than the minimum guaranteed rate in the Contract. Currently, we determine, in our sole discretion, the amount of interest credited in excess of the guaranteed rate. We may declare more than one interest rate for different monies based upon the date of allocation to the DCA Fixed Account Option and the Short Term DCA Fixed Account Option. For current interest rate information, please contact your representative or Allstate Life customer service at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. Guarantee Periods may range from 1 to 10 years. We are currently offering Guarantee Periods of 1, 3, 5, 7, and 10 years in length. In the future we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not select a Guarantee Period, we will assign the same period(s) you selected for your most recent purchase payment(s). Each payment or transfer
16 PROSPECTUS
allocated to a Guarantee Period must be at least $50. We reserve the right to limit the number of additional purchase payments that you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times.
We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors.
WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate information, please contact your representative or Allstate Life at 1-800-755-5275.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated to a Guarantee Period at a rate that compounds to the annual interest rate that we declared at the beginning of the applicable Guarantee Period.
THE FOLLOWING EXAMPLE ILLUSTRATES HOW A PURCHASE PAYMENT ALLOCATED TO A GUARANTEED PERIOD WOULD GROW, GIVEN AN ASSUMED GUARANTEE PERIOD AND ANNUAL INTEREST RATE:
|
Purchase Payment.................................................... $10,000
Guarantee Period.................................................... 5 years
Annual Interest Rate................................................ 4.50%
|
|
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value................ $10,000.00
x (1 + Annual
Interest Rate) x 1.045
----------
$10,450.00
Contract Value at end
of Contract Year..... $10,450.00
x (1 + Annual
Interest Rate) x 1.045
----------
$10,920.25
Contract Value at end
of Contract Year..... $10,920.25
x (1 + Annual
Interest Rate) x 1.045
----------
$11,411.66
Contract Value at end
of Contract Year..... $11,411.66
x (1 + Annual
Interest Rate) x 1.045
----------
$11,925.19
Contract Value at end
of Contract Year..... $11,925.19
x (1 + Annual
Interest Rate) x 1.045
----------
$12,461.82
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TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5-year Guarantee Period. If you were to make a withdrawal, you may be required to pay a withdrawal charge. In addition, the amount withdrawn may be increased or decreased by a Market Value Adjustment that reflects changes in interest rates since the time you invested the amount withdrawn. The hypothetical interest rate is for illustrative purposes only and is not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given Guarantee Period may be more or less than shown above.
RENEWALS. Prior to the end of each Guarantee Period, we will mail you a notice asking you what to do with your money, including the accrued interest. During the 30-day period after the end of the Guarantee Period, you may:
1) Take no action. We will automatically apply your money to a new Guarantee Period of the same length as the expiring Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. The new interest rate will be our current declared rate for a Guarantee Period of that length; or
2) Instruct us to apply your money to one or more new Guarantee Periods of your choice. The new Guarantee Period(s) will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for those Guarantee Periods;
3) Instruct us to transfer all or a portion of your money to one or more Variable Sub-Accounts of the Variable Account. We will effect the transfer on the day we receive your instructions. We will not adjust the amount transferred to include a Market Value
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Adjustment; we will pay interest from the day the Guarantee Period expired until the date of the transfer. The interest will be the rate for the shortest Guarantee Period then being offered; or
4) Withdraw all or a portion of your money. You may be required to pay a withdrawal charge, but we will not adjust the amount withdrawn to include a Market Value Adjustment. You may also be required to pay premium taxes and income tax withholding, if applicable. We will pay interest from the day the Guarantee Period expired until the date of withdrawal. The interest will be the rate for the shortest Guarantee Period then being offered. Amounts not withdrawn will be applied to a new Guarantee Period of the same length as the previous Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period, other than those taken during the 30 day period after such Guarantee Period expires, are subject to a Market Value Adjustment. A Market Value Adjustment also will apply when you apply amounts currently invested in a Guarantee Period to an Income Plan (unless applied during the 30 day period after such Guarantee Period expires). A Market Value Adjustment may apply in the calculation of the Settlement Value described in the "Death Benefit Amount" section below. We also will not apply a Market Value Adjustment to a withdrawal you make:
. within the Free Withdrawal Amount as described on page 21.
. that qualify for one of the waivers as described on page 21.
. to satisfy the IRS minimum distribution rules for the Contract, or
. a single withdrawal made by a surviving spouse made within one year after continuing the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from the time you first allocate money to a Guarantee Period to the time you remove it from that Guarantee Period. We calculate the Market Value Adjustment by comparing the Treasury Rate for a period equal to the Guarantee Period at its inception to the Treasury Rate for a period equal to the Guarantee Period when you remove your money. "TREASURY RATE" means the U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve Board Statistical Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in interest rates. As such, you bear the investment risk associated with changes in interest rates. If interest rates increase significantly, the Market Value Adjustment and any withdrawal charge, premium taxes, and income tax withholding (if applicable) could reduce the amount you receive upon full withdrawal from a Guaranteed Period to an amount that is less than the purchase payment applied to that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a Guarantee Period is higher than the applicable current Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a higher amount payable to you, transferred or applied to an Income Plan. Conversely, if the Treasury Rate at the time you allocate money to a Guarantee Period is lower than the applicable Treasury Rate for a period equal to the Guarantee Period, then the Market Value Adjustment will result in a lower amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial Guarantee Period of 5 years and the 5-year Treasury Rate for that duration is 4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at that later time, the current 5-year Treasury Rate is 4.20%, then the Market Value Adjustment will be positive, which will result in an increase in the amount payable to you. Conversely, if the current 5-year Treasury Rate is 4.80%, then the Market Value Adjustment will be negative, which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B to this prospectus, which also contains additional examples of the application of the Market Value Adjustment.
INVESTMENT ALTERNATIVES: TRANSFERS
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may not transfer Contract Value to either the Short-Term Dollar Cost Averaging Fixed Account or the Dollar Cost Averaging Fixed Account Options. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below. The minimum amount that you may transfer into a Guarantee Period is $50. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. All transfers to or from more than one Portfolio on any given day counts as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the
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Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account for up to six months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day period after such Guarantee Period expires, we will increase or decrease the amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. If you choose an Income Plan that depends on any person's life, you may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275. The cut-off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege, as well as any other electronic or automated means we previously approved, at any time without notice.
We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under "Trading Limitations." Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, not all market timing or excessive trading is identifiable or preventable. Imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it first occurs. To the extent that such trading activity occurs prior to detection and the imposition of trading restrictions, the portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, or to refuse any transfer request, if:
. we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
. we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or
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redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
. the total dollar amount being transferred, both in the aggregate and in the transfer request;
. the number of transfers you make over a period of time and/or the period of time between transfers (note: one set of transfers to and from a sub-account in a short period of time can constitute market timing);
. whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Sub-account underlying portfolios that we have identified as being susceptible to market timing activities;
. whether the manager of the underlying portfolio has indicated that the transfers interfere with portfolio management or otherwise adversely impact the portfolio; and
. the investment objectives and/or size of the Sub-account underlying portfolio.
If we determine that a contract owner has engaged in market timing or excessive trading activity, we will restrict that contract owner from making future additions or transfers into the impacted Sub-account(s). If we determine that a contract owner has engaged in a pattern of market timing or excessive trading activity involving multiple Sub-accounts, we will also require that all future transfer requests be submitted through regular U.S. mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. Any Sub-account or transfer restrictions will be uniformly applied.
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a fixed dollar amount every month during the Accumulation Phase from the Short Term DCA Fixed Account or the DCA Fixed Account, to any Variable Sub-Account. You may not use the Dollar Cost Averaging Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor will such transfer count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the performance of each Variable Sub-Account may cause a shift in the percentage you allocated to each Variable Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the Fidelity VIP High Income Variable Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the Fidelity VIP High Income Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the Fidelity VIP High Income Variable Sub-Account and use the money to buy more units in the AIM V.I. Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing
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segments.
EXPENSES
As a Contract Owner, you will bear, directly or indirectly, the charges and expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value invested in each Variable Sub-Account in proportion to the amount invested. If you surrender your Contract, we will deduct the contract maintenance charge pro rated for the part of the Contract Year elapsed, unless your Contract qualifies for a waiver, described below.
The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract Owners and regulatory agencies. We cannot increase the charge. However, we will waive this charge if, as of the Contract Anniversary or upon full surrender:
. total purchase payments equal $50,000 or more, or
. all money is allocated to the Fixed Account.
In addition, we will waive the Contract Maintenance Charge if total purchase payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.05% of the average daily net assets you have invested in the Variable Sub-Accounts (1.27% if you select the Enhanced Death Benefit Rider, 1.49% if you selected the Enhanced Death and Income Combination Rider, and 1.55% if you select the Enhanced Death and Income Benefit Combination Rider II). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Enhanced Death Benefit Rider, the Enhanced Death and Income Benefit Combination Rider and the Enhanced Death and Income Benefit Combination Rider II to compensate us for the additional risk that we accept by providing these options. We guarantee that we will not raise the mortality and expense risk charge. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. The charge declines to 0% over a 6 year period that begins on the day we receive your payment. Beginning on January 1, 2004, if you make a withdrawal before the Payout Start Date, we will apply the withdrawal charge percentage in effect on the date of the withdrawal, or the withdrawal charge percentage in effect on the following day, whichever is lower. A schedule showing how the charge declines is shown on page 7. During each Contract Year, you can withdraw up to 15% of the aggregate amount of your purchase payments without paying the charge. Unused portions of this "FREE WITHDRAWAL AMOUNT" are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of calculating the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations:
. on the Payout Start Date (a withdrawal charge may apply if you terminate income payments to be received for a specified period;
. on the death of the Contract Owner, or the Annuitant, if the Contract Owner is not a natural person (unless the Settlement Value is used to determine the death benefit);
. withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or
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. withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 591/2 may be subject to an additional 10% federal tax penalty and a Market Value Adjustment. You should consult your own tax counsel or other tax advisers regarding any withdrawals.
CONFINEMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if the following conditions are satisfied:
1. You or the Annuitant, if the Contract Owner is not a natural person, are confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must enter the long term care facility or hospital at least 30 days after the Issue Date;
2. You request the withdrawal and provide written proof of the stay no later than 90 days following the end of your or the Annuitant's stay at the long term care facility or hospital; and
3. A physician must have prescribed the stay and the stay must be medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the Annuitant's immediate family, is the physician prescribing your or the Annuitant's stay in a long term care facility.
TERMINAL ILLNESS WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on all withdrawals taken prior to the Payout Start Date under your Contract if:
1. you or the Annuitant (if the Contract Owner is not a natural person) are first diagnosed with a terminal illness at least 30 days after the Issue Date; and
2. you claim this benefit and deliver adequate proof of diagnosis to us.
UNEMPLOYMENT WAIVER. We will waive the withdrawal charge and any Market Value Adjustment on one partial or a full withdrawal taken prior to the Payout Start Date under your Contract, if you meet the following requirements:
1. you or the Annuitant, if the Contract Owner is not a natural person, become unemployed at least one year after the Issue Date;
2. you or the Annuitant, if the Contract Owner is not a natural person, receive unemployment compensation as defined in the Contract for at least 30 days as a result of that unemployment; and
3. you or the Annuitant, if the Contract Owner is not a natural person, claim this benefit within 180 days of your or the Annuitant's initial receipt of unemployment compensation.
Please refer to your Contract for more detailed information about the terms and conditions of these waivers. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not need to pay our withdrawal charge or a Market Value Adjustment because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax adviser to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs, including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state.
At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract Value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for such taxes. In the future, however, we may establish a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" Section beginning on page 33.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the
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Portfolios. For a summary of current estimates of maximum and minimum amounts for those charges and expenses, see page 7. We may receive compensation from the investment advisers or administrators of the Portfolios in connection with the administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our home office, adjusted by any Market Value Adjustment, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account Options. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. You have the opportunity to name the investment alternative(s) from which you are taking the withdrawal. If none is specified, we will deduct your withdrawal pro rata from the investment alternatives according to the value of your investments therein.
In general, you must withdraw at least $50 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. If you request a total withdrawal, we may require you to return your Contract to us. Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months (or shorter period if required by law). If we delay payment for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $50. At our discretion, systematic withdrawals may not be offered in conjunction with the Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program.
Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At our discretion, we may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to less than $2,000, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been previously reduced by withdrawals to less than $2,000, we will inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's value to the contractual minimum of $2,000. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and applicable taxes.
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INCOME PAYMENTS
PAYOUT START DATE
You select the Payout Start Date in your application. The "PAYOUT START DATE" is the day that we apply your money to an Income Plan. The Payout Start Date must be:
. at least 30 days after the Issue Date; and
. no later than the day the Annuitant reaches age 90, or the 10th Contract Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years. Three Income Plans are available under the Contract. Each is available to provide:
. fixed income payments;
. variable income payments; or
. a combination of the two.
A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the Contract, which is also called the "basis". Once the investment in the Contract is depleted, all remaining payments will be fully taxable. If the Contract is tax-qualified, generally, all payments will be fully taxable. Taxable payments taken prior to age 591/2 may be subject to an additional 10% federal tax penalty.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint Annuitant die before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEARS TO 30 YEARS). Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. You may elect to receive guaranteed payments for periods ranging from 5 to 30 years. Income payments for less than 120 months may be subject to a withdrawal charge. We will deduct the mortality and expense risk charge from the Variable Sub-Account assets that support variable income payments even though we may not bear any mortality risk.
The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant are alive before we make each payment.
Please note that under such Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. We deduct applicable premium taxes from the Contract Value at the Payout Start Date.
We may make other Income Plans available.
If you elected the Enhanced Death and Income Benefit Combination Rider or the Enhanced Death and Income Benefit Combination Rider II, you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout
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Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account to fixed income payments. We will apply your Contract Value, adjusted by any applicable Market Value Adjustment, less applicable taxes to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may:
. terminate the Contract and pay you the Contract Value, adjusted by any applicable Market Value Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen; or
. reduce the frequency of your payments so that each payment will be at least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) the Annuitant could live longer or shorter than we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate.
Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
3. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by applicable law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate.
DEATH BENEFITS
DEATH OF OWNER
If you die before the Payout Start Date, any surviving joint Contract Owner or, if none, the Beneficiary will be designated the new Contract Owner and will be entitled to the options described below. If the new Contract Owner previously was the Beneficiary, however, the new Contract Owner's options will be subject to any restrictions previously placed upon the Beneficiary.
The claim for death benefits must be submitted to us within 180 days of the relevant death in order to claim the standard or enhanced death benefit. If a complete claim is not submitted within 180 days of the relevant death, the claimant will receive the greater of Contract Value or the Settlement Value. (See "Death Proceeds" below).
1. If your spouse is the sole surviving Contract Owner or, in the absence of any surviving Contract Owner, is the sole Beneficiary:
(a) Your spouse may elect to receive the Death Proceeds in a lump sum; or
(b) Your spouse may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
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The Payout Start Date must be within one year of your date of death. Income payments must be payable:
(i) over the life of your spouse; or
(ii) for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of your spouse; or
(iii) over the life of your spouse with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of your spouse.
(c) If your spouse does not elect one of these options, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the following conditions apply:
The Contract Value of the continued Contract will be the Death Proceeds. Unless otherwise instructed by the continuing spouse, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the Sub-accounts of the Variable Account. The excess will be allocated in proportion to your Contract Value in those Sub-accounts as of the end of the Valuation Period during which we receive the complete request for settlement of the Death Proceeds, except that any portion of this excess attributable to the Fixed Account Options will be allocated to the money market Variable Sub-account. Within 30 days of the date the Contract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee:
(i) transfer all or a portion of the excess among the Variable Sub-accounts;
(ii) transfer all or a portion of the excess into the Guaranteed Maturity Fixed Account and begin a new Guarantee Period; or
(iii) transfer all or a portion of the excess into a combination of Variable Sub-accounts and the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in the Contract.
The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a Withdrawal Charge or Market Value Adjustment.
Prior to the Payout Start Date, the Death Benefit of the continued Contract will be as defined in the Death Benefit provision.
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) The new Contract Owner may elect to receive the Death Proceeds paid out under one of the Income Plans (described in "Income Payments" above) subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income Payments must be payable:
(i) over the life of the new Contract Owner; or
(ii) . for a guaranteed number of payments from 5 to 50 years but not to exceed the life expectancy of the new Contract Owner; or
(iii) over the life of the new Contract Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner.
(c) If the new Contract Owner does not elect one of the options above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived for any withdrawals made during this 5 year period.
We reserve the right to offer additional options upon the death of the Contract Owner.
If the new Contract Owner dies prior to the complete liquidation of the Contract Value, then the new Contract Owner's named Beneficiary(ies) will receive the greater of the Settlement Value or the remaining Contract Value. This amount must be liquidated as a lump sum within 5 years of the date of the original Contract Owner's death.
3. If the new Contract Owner is a corporation or other type of non-living person:
(a) The new Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the new Contract Owner does not elect the option above, then the new Contract Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for settlement of the Death Proceeds, the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the new Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
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The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the new Contract Owner upon the death of the Contract Owner.
If any new Contract Owner is a non-living person, all new Contract Owners will be considered to be non-living persons for purposes of these provisions.
Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the new Contract Owner from the date of your death to the date on which the Death Proceeds are paid.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout Start Date, the following apply:
1. If the Contract Owner is a living person, then the Contract will continue with a new Annuitant, who will be:
(a) the youngest Contract Owner; otherwise
(b) the youngest Beneficiary.
You may change the Annuitant before the Payout Start Date.
2. If the Contract Owner is a non-living person:
(a) The Contract Owner may elect to receive the Death Proceeds in a lump sum; or
(b) If the Contract Owner does not elect the option above, then the Contract Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. On the date we receive the complete request for settlement of the Death Proceeds the Contract Value under this option will be the Death Proceeds. Unless otherwise instructed by the Contract Owner, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the money market Variable Sub-Account. Henceforth, the Contract Owner may make transfers (as described in "Transfers During the Payout Phase" above) during this 5 year period.
The new Contract Owner may not make additional purchase payments to the Contract under this election. Withdrawal Charges will be waived during this 5 year period.
We reserve the right to make additional options available to the Contract Owner upon the death of the Annuitant.
Under any of these options, all ownership rights are available to the non-living Contract Owner from the date of the Annuitant's death to the date on which the Death Proceeds are paid.
DUE PROOF OF DEATH
A claim for a distribution on death must include Due Proof of Death. We will accept the following documentation as "Due Proof of Death":
. a certified copy of a death certificate,
. a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or
. any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
DEATH PROCEEDS
If we receive a complete request for settlement of the Death Proceeds within 180 days of the date of your death, the Death Proceeds are equal to the applicable death benefit described below. Otherwise, the Death Proceeds are equal to the greater of the Contract value or the Settlement Value.
We reserve the right to extend, on a non-discriminatory basis, the 180-day period in which the Death Proceeds will equal the applicable death benefit as described above.
This right applies only for the purposes of determining the amount payable as Death Proceeds and in no way restricts when a claim may be filed.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1. the Contract Value as of the date we determine the value of the death benefit, or
2. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of Contract Value) on the date we determine the value of the death benefit, or
3. the Contract Value on each DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, increased by purchase payments made since that Death Benefit Anniversary and reduced by an adjustment for any partial withdrawals since that Death Benefit Anniversary.
In calculating the Settlement Value, the amount in each individual Guarantee Period may be subject to a Market Value Adjustment. A Market Value Adjustment will apply to amounts in a Guarantee Period, unless we calculate the Settlement Value during the 30-day period after the expiration of the Guarantee Period. Also, the Settlement Value will reflect the deduction of any applicable withdrawal charges, contract maintenance charges, and premium taxes. Contract maintenance charges will be pro rated for the part of the Contract Year elapsed as of the date we determine the Settlement Value, unless your Contract qualifies for a waiver of such charges described in the "Contract Maintenance Charge" section above.
A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning with the Issue Date. For example,
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the Issue Date, 7th and 14th Contract Anniversaries are the first 3 Death Benefit Anniversaries.
The withdrawal adjustment is equal to (a) divided by (b), with the result multiplied by (c), where:
(a) = is the withdrawal amount;
(b) = is the Contract Value immediately prior to the withdrawal; and
(c) = is the Contract Value on the Death Benefit Anniversary adjusted by any prior purchase payments (or withdrawals) made since that Anniversary.
We will determine the value of the death benefits as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date.
OPTIONAL RIDERS
We offer two optional riders: an Enhanced Death Benefit Rider and an Enhanced Death and Income Benefit Combination Rider II. You may elect to add either or no Rider to your Contract; you may not add both. If you elect an optional Rider, we will charge you a higher mortality and expense risk charge. We may discontinue offering either or both of these Riders at any time. The benefits under these Riders are described below.
Before September 22, 2000, we offered the Enhanced Death and Income Benefit Combination Rider. We no longer offer it with this Contract. However, it also is described below for the convenience of Contract Owners who purchased it when it was available.
ENHANCED DEATH BENEFIT RIDER
You may elect the Enhanced Death Benefit Rider if the oldest Contract Owner and Annuitant are no older than age 80 as of the date we receive the completed application or written request to add the Rider.
If the Contract Owner is a living individual, the enhanced death benefit applies only upon the death of the Contract Owner. If the Contract Owner is not a living individual, the enhanced death benefit applies only upon the death of the Annuitant. For Contracts with the Enhanced Death Benefit Rider, the death benefit will be the greatest of (1) through (3) above, or (4) the enhanced death benefit. The enhanced death benefit is equal to the greater of the Enhanced Death Benefit A or Enhanced Death Benefit B. Enhanced Death Benefit B may not be available in all states. The enhanced death benefit will never be greater than the maximum death benefit allowed by any state non forfeiture laws that govern the Contract.
ENHANCED DEATH BENEFIT A. At issue, Enhanced Death Benefit A is equal to the initial purchase payment. After issue, Enhanced Death Benefit A is the greatest of the ANNIVERSARY VALUES as of the date we determine the death benefit. The "Anniversary Value" is equal to the Contract Value on a Contract Anniversary, increased by purchase payments made since that Anniversary and reduced by an adjustment for any partial withdrawals since that Anniversary.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) = is the withdrawal amount,
(b) = is the Contract Value immediately prior to the withdrawal, and
(c) = is the most recently calculated Enhanced Death Benefit A.
We will calculate Anniversary Values for each Contract Anniversary prior to the oldest Contract Owner's or the Annuitant's, if the Contract Owner is not a natural person, 85th birthday. After age 85, we will recalculate Enhanced Death Benefit A for purchase payments and withdrawals.
ENHANCED DEATH BENEFIT B. The Enhanced Death Benefit B is equal to total purchase payments made reduced by a withdrawal adjustment, as defined below. Each purchase payment and each withdrawal adjustment will accumulate daily at a rate equivalent to 5% per year until the earlier of:
. the date we determine the death benefit, or
. the first day of the month following the oldest Contract Owner's or, if the Contract Owner is not a natural person, the Annuitant's, 85th birthday.
The adjustment is equal to (a) divided by (b), and the result multiplied by (c) where:
(a) = the withdrawal amount,
(b) = is the Contract Value immediately prior to the withdrawal, and
(c) = is the most recently calculated Enhanced Death Benefit B.
ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER. (FOR CONTRACTS ISSUED BEFORE SEPTEMBER 22, 2000) The enhanced death benefit portion of the Enhanced Death and Income Benefit Combination Rider is as described above under "Enhanced Death Benefit Rider."
The enhanced income benefit guarantees that the amount of income payments you receive will not be less than those determined by applying the value of the enhanced death benefit on the Payout Start Date to the minimum guaranteed rate (rather than to any current rates we may be offering) for the Income Plan you select.
The enhanced income benefit will apply if the Contract owner elects a Payout Start Date that:
. is on or after the tenth Contract Anniversary, and
. is prior to the Annuitant's 90th Birthday.
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On the Payout Start Date, you may apply the greater of the Contract Value or the enhanced income benefit to the Payout Phase of the Contract. No Market Value Adjustment will be applied to the enhanced income benefit amount. The enhanced income benefit will only apply if the Income Plan selected provides payments guaranteed for either a single or joint lives with a period certain of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or
. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied.
If, however, you apply the Contract Value and not the enhanced income benefit to the Income Plan, then you may select any Income Plan we offer at that time.
ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II (FOR CONTRACTS ISSUED ON OR AFTER SEPTEMBER 22, 2000). Instead of the Enhanced Death Benefit Rider, you may choose the Enhanced Death and Income Benefit Combination Rider II. The Enhanced Death and Income Benefit Combination Rider II may not be available in all states.
The enhanced death benefit portion of the Enhanced Death and Income Benefit Combination Rider II is as described above under "Enhanced Death Benefit Rider."
The enhanced income benefit guarantees that the amount of income payments you receive will not be less than those determined by applying the value of the enhanced death benefit on the Payout Start Date to the minimum guaranteed rate (rather than to any current rates we may be offering) for the Income Plan you select.
The guaranteed income benefit amount is determined by applying the enhanced income benefit amount less any applicable taxes to the guaranteed rates for the Income Plan you elect. The Income Plan you elect must satisfy the conditions described below.
The enhanced income benefit will apply if the Contract Owner elects a Payout Start Date that:
. is on or after the tenth Contract Anniversary, and
. occurs during the 30 day period following a Contract Anniversary.
On the Payout Start Date, you may apply the greater of the Contract Value or the enhanced income benefit to the Payout Phase of the Contract. No Market Value Adjustment will be applied to the enhanced income benefit amount. The enhanced income benefit will only apply if the Income Plan selected provides payments guaranteed for either a single or joint lives with a period certain of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or
. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied.
You must elect to receive fixed income payments, which will be calculated using the appropriate Guaranteed Income Payment table provided in your Contract.
If, however, you apply the Contract Value and not the enhanced income benefit to the Income Plan, then you may select any Income Plan we offer at that time. If you expect to apply your Contract Value to variable income payment options or to current annuity payment rates then in effect, electing the enhanced income benefit may not be appropriate.
The enhanced income benefit only applies to the determination of income payments under Income Plans in the circumstances described above. This benefit does not guarantee Contract Value or investment performance. This benefit does not enhance the amounts you receive in partial withdrawal or surrenders. If you surrender your Contract, you will not receive any benefit under this Rider.
MORE INFORMATION
ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957 as a stock life insurance company under the laws of the state of Illinois. Prior to January 1, 2005, Glenbrook Life and Annuity Company ("Glenbrook Life") issued the Contract. Effective January 1, 2005, Glenbrook Life merged with Allstate Life ("Merger"). On the date of the Merger, Allstate Life acquired from Glenbrook Life all of Glenbrook Life's assets and became directly liable for Glenbrook Life's liabilities and obligations with respect to all contracts issued by Glenbrook Life. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company organized under the laws of the state of Illinois. All of the capital stock issued and outstanding of Allstate Insurance Company is owned by The Allstate Corporation.
Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all jurisdictions except the state of New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062.
THE VARIABLE ACCOUNT
Allstate Life established the Allstate Financial Advisors Separate Account I in 1999. The Contracts were previously issued through the Glenbrook Life Multi-
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Manager Variable Account. Effective January 1, 2005, Glenbrook Life Multi-Manager Variable Account and Glenbrook Life and Annuity Company Separate Account A combined with Allstate Financial Advisors Separate Account I and consolidated duplicative Variable Sub-Accounts that invest in the same Portfolio (the "Consolidation"). The Accumulation Unit Values for the Variable Sub-Accounts in which you invest did not change as a result of the Consolidation, and your Contract Value immediately after the Consolidation was the same as the value immediately before the Consolidation.We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Allstate Life.
We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois law. That means we account for the Variable Account's income, gains and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Allstate Life.
The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolios at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract Owners entitled to give such instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserve for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio. The votes decrease as income payments are made and as the reserves for the Contract decrease.
We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro-rata basis to reduce the votes eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment Portfolio. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional underlying funds. We will notify you in advance of any change.
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The board of directors/trustees of these Portfolios monitors for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Portfolio's board of directors/trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062-7154, serves as principal underwriter of the Contracts. ALFS is a wholly owned subsidiary of Allstate Life. ALFS is a registered broker dealer under
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the Securities and Exchange Act of 1934, as amended ("EXCHANGE ACT"), and is a member of the NASD.
We will pay commissions to broker-dealers who sell the contracts. Commissions paid may vary, but we estimate that the total commissions paid on all Contract sales will not exceed 8% of all purchase payments. These commissions are intended to cover distribution expenses. Sometimes, we also pay the broker-dealer a persistency bonus in addition to the standard commissions. A persistency bonus is not expected to exceed 0.25%, on an annual basis, of the Contract Values considered in connection with the bonus. In some states, Contracts may be sold by representatives or employees of banks which may be acting as broker-dealers without separate registration under the Exchange Act, pursuant to legal and regulatory exceptions.
Allstate Life does not pay ALFS a commission for distribution of the Contracts. The underwriting agreement with ALFS provides that we will reimburse ALFS for any liability to Contract Owners arising out of services rendered or Contracts issued.
ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others:
. issuance of the Contracts;
. maintenance of Contract Owner records;
. Contract Owner services;
. calculation of unit values;
. maintenance of the Variable Account; and
. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least annually. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we reserve the right to make the adjustment as of the date that we receive notice of the potential error.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
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NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. Allstate Life no longer issues deferred annuities to employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of state insurance law pertaining to the Contracts, including the validity of the Contracts and Allstate Life's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Allstate Life.
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TAXES
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life is taxed as a life insurance company under Part I of Subchapter L of the Code. Since the Variable Account is not an entity separate from Allstate Life, and its operations form a part of Allstate Life, it will not be taxed separately. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Allstate Life believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contract. Accordingly, Allstate Life does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Allstate Life does not intend to make provisions for any such taxes. If Allstate Life is taxed on investment income or capital gains of the Variable Account, then Allstate Life may impose a charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where:
. the Contract Owner is a natural person,
. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and
. Allstate Life is considered the owner of the Variable Account assets for federal income tax purposes.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living Owners in this prospectus. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-Qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain qualified plans; (4) certain contracts used in connection with structured settlement agreements; and (5) immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered owned by a non-natural owner. Grantor trust owned contracts receive tax deferral as described in the Exceptions to the Non-Natural Owner Rule section. In accordance with the Code, upon the death of the annuitant, the death benefit must be paid. According to your Contract, the Death Benefit is paid to the surviving Contract Owner. Since the trust will be the surviving Contract Owner in all cases, the Death Benefit will be payable to the trust notwithstanding any beneficiary designation on the annuity contract. A trust, including a grantor trust, has two options for receiving any death benefits: 1) a lump sum payment; or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "adequately diversified" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract owner during the taxable year. Although Allstate Life does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance
33 PROSPECTUS
concerning circumstances in which investor control of the separate account investments may cause a Contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in private and published rulings in which it found that Contract owners were not owners of separate account assets. For example, if your contract offers more than twenty (20) investment alternatives you have the choice to allocate premiums and contract values among a broader selection of investment alternatives than described in such rulings. You may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Allstate Life does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a Non-Qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a Non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a Non-Qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. If any variable payment is less than the excludable amount you should contact a competent tax advisor to determine how to report any unrecovered investment. The federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide:
. if any Contract Owner dies on or after the Payout Start Date but before the entire interest in the Contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the Contract Owner's death;
. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that is payable to (or for the benefit of) a designated Beneficiary is distributed over the life of such Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary) and the distributions begin within 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner.
. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract Owner for purposes of applying the distribution at death rules. In addition, a change in the Annuitant on a Contract owned by a non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows:
. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or
. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract.
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The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or becoming totally disabled,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made under an immediate annuity, or
. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract into a non-Qualified annuity contract. The contract owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges of annuity contracts. Under this ruling, if you take a withdrawal from a receiving or relinquishing annuity contract within 24 months of the partial exchange, then special aggregation rules apply for purposes of determining the taxable amount of a distribution. The IRS has issued limited guidance on how to aggregate and report these distributions. The IRS is expected to provide further guidance; as a result, it is possible that the amount we calculate and report to the IRS as taxable could be different.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified deferred annuity contracts issued by Allstate Life (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory.
Allstate Life is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
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TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity as a TSA or IRA. Tax Qualified Contracts are contracts purchased as investments as:
. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
. Roth IRAs under Section 408A of the Code;
. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p) of the Code; and
. Tax Sheltered Annuities under Section 403(b) of the Code.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the retirement plans listed above or to modify the Contract to conform with tax requirements.
The tax rules applicable to participants with tax qualified annuities vary according to the type of contract and the terms and conditions of the endorsement. Adverse tax consequences may result from certain transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. Allstate Life can issue an individual retirement annuity on a rollover or transfer of proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under which the decedent's surviving spouse is the beneficiary. Allstate Life does not offer an individual retirement annuity that can accept a transfer of funds for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer sponsored retirement plan.
In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If you make a partial withdrawal under a Tax Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Tax Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are:
. made on or after the date the Contract Owner attains age 59 1/2,
. made to a beneficiary after the Contract Owner's death,
. attributable to the Contract Owner being disabled, or
. made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, IRAs (excluding Roth IRAs) and TSAs require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or the Contract Value. We believe that the Death Benefits offered by your Contract do not constitute life insurance under these regulations.
It is also possible that certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan.
Allstate Life reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Tax Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
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. made on or after the date the Contract Owner attains age 59 1/2,
. made as a result of the Contract Owner's death or total disability,
. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
. made after separation from service after age 55 (does not apply to IRAs),
. made pursuant to an IRS levy,
. made for certain medical expenses,
. made to pay for health insurance premiums while unemployed (applies only for IRAs),
. made for qualified higher education expenses (applies only for IRAs), and
. made for a first time home purchase (up to a $10,000 lifetime limit and applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect to Tax Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate Life is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "eligible rollover distributions." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Allstate Life is required to withhold federal income tax at a rate of 20% on all "eligible rollover distributions" unless you elect to make a "direct rollover" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from employer sponsored retirement plans, including TSAs but excluding IRAs, with the exception of:
. required minimum distributions, or,
. a series of substantially equal periodic payments made over a period of at least 10 years, or,
. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or,
. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding requirement, Allstate Life is required to withhold federal income tax using the wage withholding rates. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate Life as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident alien's country of residence if the payee provides a U.S. taxpayer identification number on a completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified plans may be "rolled over" on a tax-deferred basis into an Individual Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity.
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Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS). Internal Revenue Code Section 408 permits a custodian or trustee of an Individual Retirement Account to purchase an annuity as an investment of the Individual Retirement Account. If an annuity is purchased inside of an Individual Retirement Account, then the Annuitant must be the same person as the beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement Account must be paid upon the death of the Annuitant. However, in most states, the Contract permits the custodian or trustee of the Individual Retirement Account to continue the Contract in the accumulation phase, with the Annuitant's surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of the annuity and has the right to the death proceeds otherwise payable under the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement Account;
3) We receive a complete request for settlement for the death of the Annuitant; and
4) The custodian or trustee of the Individual Retirement Account provides us with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has continued the Individual Retirement Account pursuant to the surviving spouse's election.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. These employers may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the Code allow eligible employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees using individual retirement annuities. In general, a SIMPLE IRA consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to purchase the Contract as a SIMPLE IRA should seek competent tax and legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee:
. attains age 59 1/2,
. severs employment,
. dies,
. becomes disabled, or
. incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate Life is directed to transfer some or all of the Contract Value to another 403(b) plan. Generally, we do not accept Employee Retirement Income Security Act of 1974 (ERISA) funds in 403(b) contracts.
ANNUAL REPORTS AND OTHER DOCUMENTS
Allstate Life's annual report on Form 10-K for the year ended December 31, 2003 and its Form 10-Q reports for the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 are incorporated herein by reference which means that they are legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Exchange Act are also incorporated herein by reference,
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which means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC and that legally become a part of this prospectus, may change or supersede statements in other documents that are legally part of this prospectus. Accordingly, only the statement that is changed or replaced will legally be a part of this prospectus.
We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR" system using the identifying number CIK No. 0000352736. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. You also can view these materials at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. For more information on the operations of SEC's Public Reference Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of any document incorporated herein by reference (other than exhibits not specifically incorporated by reference into the text of such documents), please write or call us at 2940 S. 84TH STREET, LINCOLN, NE 68506-4142 (telephone:
1-800-755-5275).
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APPENDIX A
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
BASIC POLICY
|
For the Years Beginning January 1
and Ending December 31,* 1998 1999 2000 2001 2002
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AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.66 $ 11.99 $ 10.50
Accumulation Unit Value, End of Period $10.73 $ 12.66 $ 11.99 $ 10.50 $ 8.605
Number of Units Outstanding, End of Period 0 7,487 52,646 90,025 79,599
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.09 $ 12.74 $ 9.72
Accumulation Unit Value, End of Period $11.36 $ 15.09 $ 12.74 $ 9.72 $ 8.112
Number of Units Outstanding, End of Period 0 12,180 53,747 73,192 55,166
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.22 $ 9.91 $ 9.87 $ 10.10
Accumulation Unit Value, End of Period $10.22 $ 9.91 $ 9.87 $ 10.10 $ 10.219
Number of Units Outstanding, End of Period 0 721 721 721 80,837
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.38 $ 9.85 $ 10.73 $ 11.28
Accumulation Unit Value, End of Period $10.38 $ 9.85 $ 10.73 $ 11.28 $ 12.228
Number of Units Outstanding, End of Period 0 0 2,954 12,908 18,116
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.83 $ 15.82 $ 12.43 $ 8.12
Accumulation Unit Value, End of Period $11.83 $ 15.82 $ 12.43 $ 8.12 $ 5.545
Number of Units Outstanding, End of Period 0 13,275 69,688 57,165 41,008
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.68 $ 16.38 $ 11.92 $ 9.00
Accumulation Unit Value, End of Period $10.68 $ 16.38 $ 11.92 $ 9.00 $ 7.510
Number of Units Outstanding, End of Period 0 0 4,196 4,353 3,644
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.52 $ 14.80 $ 12.49 $ 10.79
Accumulation Unit Value, End of Period $11.52 $ 14.80 $ 12.49 $ 10.79 $ 7.442
Number of Units Outstanding, End of Period 0 42,074 115,418 133,037 99,724
DREYFUS SOCIALLY RESPONSIBLE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.79 $ 14.40 $ 12.66 $ 9.692
Accumulation Unit Value, End of Period $10.79 $ 14.40 $ 12.66 $ 9.692 $ 6.808
Number of Units Outstanding, End of Period 0 3,130 5,459 2,854 2,119
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.87 $ 12.97 $ 11.63 $ 10.098
Accumulation Unit Value, End of Period $10.87 $ 12.97 $ 11.63 $ 10.098 $ 7.750
Number of Units Outstanding, End of Period 0 9,930 23,030 17,916 18,764
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.65 $ 12.47 $ 11.86 $ 11.078
Accumulation Unit Value, End of Period $10.65 $ 12.47 $ 11.86 $ 11.078 $ 8.148
Number of Units Outstanding, End of Period 0 2,680 3,326 13,021 12,290
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.05 $ 10.40 $ 10.91 $ 11.211
Accumulation Unit Value, End of Period $10.05 $ 10.40 $ 10.91 $ 11.211 $ 11.245
Number of Units Outstanding, End of Period 0 0 0 33,552 21,895
FIDELITY VIP CONTRAFUND(R) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.66 $ 14.33 $ 13.23 $ 11.473
Accumulation Unit Value, End of Period $11.66 $ 14.33 $ 13.23 $ 11.473 $ 10.281
Number of Units Outstanding, End of Period 0 18,963 101,434 128,908 109,080
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|
FIDELITY VIP EQUITY INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.48 $ 11.02 $ 11.81 $ 11.096
Accumulation Unit Value, End of Period $10.48 $ 11.02 $ 11.81 $ 11.096 $ 9.110
Number of Units Outstanding, End of Period 0 30,264 100,008 169,933 151,301
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.20 $ 15.22 $ 13.40 $ 10.906
Accumulation Unit Value, End of Period $11.20 $ 15.22 $ 13.40 $ 10.906 $ 7.536
Number of Units Outstanding, End of Period 0 25,821 168,574 193,055 156,368
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.16 $ 8.55 $ 7.461
Accumulation Unit Value, End of Period $10.43 $ 11.16 $ 8.55 $ 7.461 $ 7.631
Number of Units Outstanding, End of Period 0 3,837 45,009 69,939 76,485
FTVIP FRANKLIN SMALL CAP INVESTMENTS (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.70 -- --
Accumulation Unit Value, End of Period -- $ 12.70 $ 20.98 -- --
Number of Units Outstanding, End of Period -- 0 579 -- --
FTVIP FRANKLIN SMALL CAP (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 12.17 $ 17.574
Accumulation Unit Value, End of Period -- -- $ 12.17 $ 17.574 $ 12.390
Number of Units Outstanding, End of Period -- -- 0 1,478 1,458
FTVIP MUTUAL SHARE SECURITIES (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 20.98 $ 14.930
Accumulation Unit Value, End of Period -- -- $ 20.98 $ 14.930 $ 13.017
Number of Units Outstanding, End of Period -- -- 579 6,817 7,621
FTVIP MUTUAL SHARES INVESTMENTS (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.31 -- --
Accumulation Unit Value, End of Period -- $ 10.31 $ 10.19 -- --
Number of Units Outstanding, End of Period -- 0 4,984 -- --
FTVIP TEMPLETON DEVELOPING MARKETS SECURITIES (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.16 $ 8.17 $ 7.426
Accumulation Unit Value, End of Period -- $ 12.16 $ 8.17 $ 7.426 $ 7.331
Number of Units Outstanding, End of Period -- 0 0 0 0
FTVIP TEMPLETON FOREIGN SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.26 $ 11.39 $ 9.027
Accumulation Unit Value, End of Period -- $ 11.26 $ 10.87 $ 9.027 $ 7.267
Number of Units Outstanding, End of Period -- 0 438 2,780 2,775
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 13.59 $ 13.262
Accumulation Unit Value, End of Period -- -- $ 13.59 $ 13.262 $ 10.686
Number of Units Outstanding, End of Period -- -- 11,237 10,586 12,533
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.37 -- --
Accumulation Unit Value, End of Period -- $ 11.37 $ 11.42 -- --
Number of Units Outstanding, End of Period -- 0 0 -- --
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.10 $ 13.99 $ 12.73 $ 10.763
Accumulation Unit Value, End of Period $11.10 $ 13.99 $ 12.73 $ 10.763 $ 8.051
Number of Units Outstanding, End of Period 0 0 573 573 573
GOLDMAN SACHS VIT CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.60 $ 12.36 $ 12.36 $ 12.851
Accumulation Unit Value, End of Period $10.60 $ 12.36 $ 12.44 $ 12.851 $ 10.803
Number of Units Outstanding, End of Period 0 86 717 716 785
GOLDMAN SACHS VIT CORE(SM) US EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.90 $ 13.46 $ 12.02 $ 10.466
Accumulation Unit Value, End of Period $10.90 $ 13.46 $ 12.02 $ 10.466 $ 8.081
Number of Units Outstanding, End of Period 0 0 317 159 158
|
41 PROSPECTUS
|
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT(3)
Accumulation Unit Value, Beginning of Period $10.00 $ 9.67 $ 9.92 $ 10.70 $ 11.090
Accumulation Unit Value, End of Period $ 9.67 $ 9.92 $ 10.70 $ 11.090 --
Number of Units Outstanding, End of Period 0 0 724 895 --
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.84 $ 14.25 $ 12.24 $ 9.402
Accumulation Unit Value, End of Period $10.84 $ 14.25 $ 12.24 $ 9.402 $ 7.590
Number of Units Outstanding, End of Period 0 0 168 167 166
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.95 $ 20.88 $ 16.60 $ 10.91
Accumulation Unit Value, End of Period $11.95 $ 20.88 $ 16.60 $ 10.91 $ 7.146
Number of Units Outstanding, End of Period 0 1,059 58,025 104,779 94,106
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.41 $ 11.26 $ 9.35
Accumulation Unit Value, End of Period $10.81 $ 11.41 $ 11.26 $ 9.35 $ 7.311
Number of Units Outstanding, End of Period 0 6,295 15,337 0 32,328
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.38 $ 19.52 $ 19.92 $ 17.76
Accumulation Unit Value, End of Period $11.38 $ 19.52 $ 18.92 $ 17.76 $ 12.002
Number of Units Outstanding, End of Period 0 183 3,146 6,802 6,778
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.53 $ 10.85 $ 8.45
Accumulation Unit Value, End of Period -- $ 11.53 $ 10.85 $ 8.45 $ 6.300
Number of Units Outstanding, End of Period -- 0 15,842 60,264 49,885
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.73 $ 12.05 $ 8.19
Accumulation Unit Value, End of Period -- $ 13.73 $ 12.05 $ 8.19 $ 5.844
Number of Units Outstanding, End of Period -- 0 24,920 55,945 46,064
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.11 $ 11.95 $ 10.329
Accumulation Unit Value, End of Period -- $ 12.11 $ 11.95 $ 10.329 $ 7.469
Number of Units Outstanding, End of Period -- 0 53,426 146,217 168,706
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.11 $ 13.62 $ 11.846
Accumulation Unit Value, End of Period -- $ 13.11 $ 13.62 $ 11.846 $ 9.118
Number of Units Outstanding, End of Period -- 0 60,421 91,989 91,945
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(4)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.78 $ 9.72 $ 8.64
Accumulation Unit Value, End of Period -- $ 10.78 $ 9.729 $ 8.64 $ 6.932
Number of Units Outstanding, End of Period -- 0 121,955 283,935 281,180
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.16 $ 10.31 $ 10.69
Accumulation Unit Value, End of Period -- $ 10.16 $ 10.31 $ 10.69 $ 11.354
Number of Units Outstanding, End of Period -- 0 28,736 56,563 74,026
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.15 $ 9.87 $ 10.49 $ 11.723
Accumulation Unit Value, End of Period $10.15 $ 9.87 $ 10.49 $ 11.723 $ 12.439
Number of Units Outstanding, End of Period -- 0 0 0 0
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.94 $ 15.09 $ 13.17 $ 11.049
Accumulation Unit Value, End of Period $10.94 $ 15.09 $ 13.17 $ 11.049 $ 7.879
Number of Units Outstanding, End of Period 0 0 162 0 2,459
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(6)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 10.73 $ 11.83 $ 10.874
Accumulation Unit Value, End of Period $10.43 $ 10.73 $ 11.83 $ 10.874 $ 8.937
Number of Units Outstanding, End of Period 0 0 959 0 1,077
|
42 PROSPECTUS
|
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(7)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.96 $ 13.07 $ 14.32 $ 13.705
Accumulation Unit Value, End of Period $10.96 $ 13.07 $ 14.32 $ 13.705 $ 9.752
Number of Units Outstanding, End of Period 0 0 5,400 0 9,054
VAN KAMPEN UIF VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 9.95 $ 9.65 $ 11.93 $ 12.058
Accumulation Unit Value, End of Period $ 9.95 $ 9.65 $ 11.93 $ 12.058 $ 9.279
Number of Units Outstanding, End of Period 0 0 233 0 753
|
|
For the Years Beginning January 1
and Ending December 31,* 2003 2004
-------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.605 $ 9.889
Accumulation Unit Value, End of Period $ 9.889 $ 9.863
Number of Units Outstanding, End of Period 77,339 76,112
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.112 $ 9.978
Accumulation Unit Value, End of Period $ 9.978 $ 10.030
Number of Units Outstanding, End of Period 52,185 49,973
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.219 $ 11.035
Accumulation Unit Value, End of Period $ 11.035 $ 11.350
Number of Units Outstanding, End of Period 80,837 80,837
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 12.228 $ 12.217
Accumulation Unit Value, End of Period $ 12.217 $ 12.350
Number of Units Outstanding, End of Period 25,026 23,535
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.545 $ 7.195
Accumulation Unit Value, End of Period $ 7.195 $ 6.979
Number of Units Outstanding, End of Period 29,497 27,704
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.510 $ 9.582
Accumulation Unit Value, End of Period $ 9.582 $ 10.234
Number of Units Outstanding, End of Period 3,304 3,578
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.442 $ 9.202
Accumulation Unit Value, End of Period $ 9.202 $ 8.893
Number of Units Outstanding, End of Period 89,645 80,195
DREYFUS SOCIALLY RESPONSIBLE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.808 $ 8.480
Accumulation Unit Value, End of Period $ 8.480 $ 8.203
Number of Units Outstanding, End of Period 1,323 1,514
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.750 $ 9.834
Accumulation Unit Value, End of Period $ 9.834 $ 9.847
Number of Units Outstanding, End of Period 13,107 13,597
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.148 $ 10.195
Accumulation Unit Value, End of Period $ 10.195 $ 9.903
Number of Units Outstanding, End of Period 11,244 11,237
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 11.245 $ 11.194
Accumulation Unit Value, End of Period $ 11.194 $ 11.152
Number of Units Outstanding, End of Period 7.225 9,183
43 PROSPECTUS
|
FIDELITY VIP CONTRAFUND(R) SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 10.281 $ 13.057
Accumulation Unit Value, End of Period $ 13.057 $ 13.691
Number of Units Outstanding, End of Period 105,900 102,482
FIDELITY VIP EQUITY INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.110 $ 11.738
Accumulation Unit Value, End of Period $ 11.738 $ 11.879
Number of Units Outstanding, End of Period 139,986 138,095
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.536 $ 9.896
Accumulation Unit Value, End of Period $ 9.896 $ 9.351
Number of Units Outstanding, End of Period 144,374 135,616
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.631 $ 9.600
Accumulation Unit Value, End of Period $ 9.600 $ 9.969
Number of Units Outstanding, End of Period 97,563 69,011
FTVIP FRANKLIN SMALL CAP INVESTMENTS (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP FRANKLIN SMALL CAP (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 12.390 $ 16.810
Accumulation Unit Value, End of Period $ 16.810 $ 16.895
Number of Units Outstanding, End of Period 1,445 2,004
FTVIP MUTUAL SHARE SECURITIES (CLASS 2)
SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 13.017 $ 16.104
Accumulation Unit Value, End of Period $ 16.104 $ 16.556
Number of Units Outstanding, End of Period 9,109 8,304
FTVIP MUTUAL SHARES INVESTMENTS (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP TEMPLETON DEVELOPING MARKETS SECURITIES (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.331 $ 11.088
Accumulation Unit Value, End of Period $ 11.088 $ 11.907
Number of Units Outstanding, End of Period 0 0
FTVIP TEMPLETON FOREIGN SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.267 $ 9.499
Accumulation Unit Value, End of Period $ 9.499 $ 9.824
Number of Units Outstanding, End of Period 2,769 2,764
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 10.686 $ 13.959
Accumulation Unit Value, End of Period $ 13.959 $ 14.431
Number of Units Outstanding, End of Period 13,430 13,020
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.051 $ 9.848
Accumulation Unit Value, End of Period $ 9.848 $ 9.713
Number of Units Outstanding, End of Period 573 573
GOLDMAN SACHS VIT CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.803 $ 15.592
Accumulation Unit Value, End of Period $ 15.592 $ 16.113
Number of Units Outstanding, End of Period 714 714
|
44 PROSPECTUS
GOLDMAN SACHS VIT CORE(SM)US EQUITY SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 8.081 $ 10.343
Accumulation Unit Value, End of Period $ 10.343 $ 10.781
Number of Units Outstanding, End of Period 158 158
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT(3)
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.590 $ 10.167
Accumulation Unit Value, End of Period $ 10.167 $ 9.952
Number of Units Outstanding, End of Period 0 820
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.146 $ 9.200
Accumulation Unit Value, End of Period $ 9.200 $ 9.021
Number of Units Outstanding, End of Period 83,943 72,029
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.311 $ 8.828
Accumulation Unit Value, End of Period $ 8.828 $ 8.809
Number of Units Outstanding, End of Period 30,413 28,480
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 12.002 $ 15.866
Accumulation Unit Value, End of Period $ 15.866 $ 14.659
Number of Units Outstanding, End of Period 6,419 6,644
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 6.300 $ 7.766
Accumulation Unit Value, End of Period $ 7.766 $ 7.900
Number of Units Outstanding, End of Period 48,032 32,001
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 5.844 $ 7.255
Accumulation Unit Value, End of Period $ 7.255 $ 7.660
Number of Units Outstanding, End of Period 36,584 34,219
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.469 $ 9.668
Accumulation Unit Value, End of Period $ 9.668 $ 9.438
Number of Units Outstanding, End of Period 170,101 171,408
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 9.118 $ 12.892
Accumulation Unit Value, End of Period $ 12.892 $ 13.099
Number of Units Outstanding, End of Period 68,704 65,900
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(4)/
Accumulation Unit Value, Beginning of Period $ 6.932 $ 8.684
Accumulation Unit Value, End of Period $ 8.684 $ 8.660
Number of Units Outstanding, End of Period 272,277 267,039
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 11.354 $ 13.253
Accumulation Unit Value, End of Period $ 13.253 $ 13.621
Number of Units Outstanding, End of Period 69,493 68,750
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $ 12.439 $ 12.867
Accumulation Unit Value, End of Period $ 12.867 $ 13.164
Number of Units Outstanding, End of Period 3,413 3,412
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.879 $ 9.731
Accumulation Unit Value, End of Period $ 9.731 $ 9.445
Number of Units Outstanding, End of Period 2,298 2,402
|
45 PROSPECTUS
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(6)/
|
Accumulation Unit Value, Beginning of Period $ 8.937 $ 11.393
Accumulation Unit Value, End of Period $ 11.393 $ 11.516
Number of Units Outstanding, End of Period 115 115
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(7)/
Accumulation Unit Value, Beginning of Period $ 9.752 $ 13.642
Accumulation Unit Value, End of Period $ 13.642 $ 13.939
Number of Units Outstanding, End of Period 7,762 7,683
VAN KAMPEN UIF VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.279 $ 12.300
Accumulation Unit Value, End of Period $ 12.300 $ 13.085
Number of Units Outstanding, End of Period 1,016 1,117
|
* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.05% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998, except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Variable Sub-Accounts that commenced operations on November 1, 1999.
(2) Variable Sub-Accounts that commenced operations on May 1, 2000.
(3) Goldman Sachs VIT Global Income Sub-Account is not available to new investors as of May 1, 2002.
(4) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(6) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(7) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
46 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
WITH ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER (FOR CONTRACTS ISSUED
BEFORE 9/22/00)
|
For the Years Beginning January 1
and Ending December 31,* 1998 1999 2000 2001 2002
-------------------------------------------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.73 $ 12.66 $ 11.99 $ 10.50
Accumulation Unit Value, End of Period $10.73 $ 12.66 $ 11.99 $ 10.50 $ 8.450
Number of Units Outstanding, End of Period 0 7,487 52,646 90,025 89,074
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.36 $ 15.09 $ 12.74 $ 9.72
Accumulation Unit Value, End of Period $11.36 $ 15.09 $ 12.74 $ 9.72 $ 7.966
Number of Units Outstanding, End of Period 0 12,180 53,747 73,192 55,288
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.22 $ 9.91 $ 9.87 $ 10.10
Accumulation Unit Value, End of Period $10.22 $ 9.91 $ 9.87 $ 10.10 $ 10.034
Number of Units Outstanding, End of Period 0 721 721 721 1,484
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.38 $ 9.85 $ 10.73 $ 11.28
Accumulation Unit Value, End of Period $10.38 $ 9.85 $ 10.73 $ 11.28 $ 12.007
Number of Units Outstanding, End of Period 0 0 2,954 12,908 0
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.83 $ 15.82 $ 12.43 $ 8.12
Accumulation Unit Value, End of Period $11.83 $ 15.82 $ 12.43 $ 8.12 $ 5.445
Number of Units Outstanding, End of Period 0 13,275 69,688 57,165 104,504
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.68 $ 16.38 $ 11.92 $ 9.00
Accumulation Unit Value, End of Period $10.68 $ 16.38 $ 11.92 $ 9.00 $ 7.374
Number of Units Outstanding, End of Period 0 0 4,196 43,53 2,927
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.52 $ 14.80 $ 12.49 $ 12.49
Accumulation Unit Value, End of Period $11.52 $ 14.80 $ 12.49 $ 10.79 $ 7.307
Number of Units Outstanding, End of Period 0 42,074 115,418 133,037 126,176
DREYFUS SOCIALLY RESPONSIBLE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.78 $ 14.33 $ 12.55 $ 9.46
Accumulation Unit Value, End of Period $10.78 $ 14.33 $ 12.55 $ 9.56 $ 6.685
Number of Units Outstanding, End of Period 0 5,493 7,121 6,350 5,661
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.87 $ 12.90 $ 11.52 $ 9.96
Accumulation Unit Value, End of Period $10.87 $ 12.90 $ 11.52 $ 9.96 $ 7.610
Number of Units Outstanding, End of Period 401 19,955 21,326 19,024 16,309
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.64 $ 12.40 $ 11.75 $ 10.886
Accumulation Unit Value, End of Period $10.64 $ 12.40 $ 11.75 $ 10.886 $ 8.000
Number of Units Outstanding, End of Period 0 3,983 3,676 3,568 2,993
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.04 $ 10.36 $ 10.81 $ 11.057
Accumulation Unit Value, End of Period $10.04 $ 10.36 $ 10.81 $ 11.057 $ 11.042
Number of Units Outstanding, End of Period 0 577 489 16,157 14,874
FIDELITY VIP CONTRAFUND(R) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.65 $ 14.26 $ 13.10 $ 11.315
Accumulation Unit Value, End of Period $11.65 $ 14.26 $ 13.10 $ 11.315 $ 10.096
Number of Units Outstanding, End of Period 387 32,161 13,1791 134,375 114,720
|
47 PROSPECTUS
|
FIDELITY VIP EQUITY INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.47 $ 10.96 $ 11.70 $ 10.994
Accumulation Unit Value, End of Period $10.47 $ 10.96 $ 11.70 $ 10.944 $ 8.946
Number of Units Outstanding, End of Period 0 11,621 45,849 55,016 54,937
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.19 $ 15.15 $ 13.27 $ 10.756
Accumulation Unit Value, End of Period $11.19 $ 15.15 $ 13.27 $ 10.756 $ 7.399
Number of Units Outstanding, End of Period 0 22,088 151,189 149,935 123,919
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.43 $ 11.10 $ 8.47 $ 7.359
Accumulation Unit Value, End of Period $10.43 $ 11.10 $ 8.47 $ 7.359 $ 7.493
Number of Units Outstanding, End of Period 0 3,667 31,190 24,128 17,717
FTVIP FRANKLIN SMALL CAP INVESTMENTS (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.66 -- --
Accumulation Unit Value, End of Period -- $ 12.66 $ 20.95 -- --
Number of Units Outstanding, End of Period -- 0 158 -- --
FTVIP FRANKLIN SMALL CAP (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 12.16 $ 17.509
Accumulation Unit Value, End of Period -- -- $ 12.16 $ 17.509 $ 12.244
Number of Units Outstanding, End of Period -- -- 0 0 0
FTVIP MUTUAL SHARE SECURITIES (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 14.07 $ 15.42
Accumulation Unit Value, End of Period -- -- $ 14.07 $ 15.42 $ 12.864
Number of Units Outstanding, End of Period -- -- 4,992 0 0
FTVIP MUTUAL SHARES INVESTMENTS (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.30 -- --
Accumulation Unit Value, End of Period -- 10.30 $ 10.30 -- --
Number of Units Outstanding, End of Period -- 0 0 -- --
FTVIP TEMPLETON DEVELOPING MARKETS SECURITIES (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.15 $ 8.13 $ 7.48
Accumulation Unit Value, End of Period -- $ 12.15 $ 8.13 $ 7.48 $ 7.230
Number of Units Outstanding, End of Period -- 0 0 0 0
FTVIP TEMPLETON FOREIGN SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.25 $ 10.82 $ 9.64
Accumulation Unit Value, End of Period -- $ 11.25 $ 10.82 $ 9.64 $ 7.167
Number of Units Outstanding, End of Period -- 0 0 0 0
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 $ 13.55 $ 13.17
Accumulation Unit Value, End of Period -- -- $ 13.55 $ 13.17 $ 10.561
Number of Units Outstanding, End of Period -- -- 9,457 10,221 10,224
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- -- $ 10.00 -- --
Accumulation Unit Value, End of Period -- -- $ 11.39 -- --
Number of Units Outstanding, End of Period -- -- 0 -- --
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.09 $ 13.92 $ 12.61 $ 10.615
Accumulation Unit Value, End of Period $11.09 $ 13.92 $ 12.61 $ 10.615 $ 7.906
Number of Units Outstanding, End of Period 0 2,449 41,73 2,958 3,144
GOLDMAN SACHS VIT CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.59 $ 12.30 $ 12.32 $ 12.674
Accumulation Unit Value, End of Period $10.59 $ 12.30 $ 12.32 $ 12.674 $ 10.607
Number of Units Outstanding, End of Period 0 17,918 18,069 17,077 13,981
GOLDMAN SACHS VIT CORE(SM) US EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.89 $ 13.39 $ 11.91 $ 10.322
Accumulation Unit Value, End of Period $10.89 $ 13.39 $ 11.91 $ 10.322 $ 7.935
Number of Units Outstanding, End of Period 401 20,515 23,250 20,215 16,365
|
48 PROSPECTUS
|
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $10.00 $ 9.66 $ 9.87 $ 10.60 --
Accumulation Unit Value, End of Period $ 9.66 $ 9.87 $ 10.60 $ 11.013 --
Number of Units Outstanding, End of Period 0 0 0 --
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.84 $ 14.18 $ 12.12 $ 9.273
Accumulation Unit Value, End of Period $10.84 $ 14.18 $ 12.12 $ 9.273 $ 7.453
Number of Units Outstanding, End of Period 0 0 1,812 1,812 1,812
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.94 $ 20.78 $ 16.44 $ 10.76
Accumulation Unit Value, End of Period $11.94 $ 20.78 $ 16.44 $ 10.76 $ 7.017
Number of Units Outstanding, End of Period 377 19,189 63,991 65,183 58,274
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.81 $ 11.35 $ 11.16 $ 9.23
Accumulation Unit Value, End of Period $10.81 $ 11.35 $ 11.16 $ 9.23 $ 7.179
Number of Units Outstanding, End of Period 0 4,808 11,160 9,277 7,991
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 11.38 $ 19.42 $ 18.74 $ 17.51
Accumulation Unit Value, End of Period $11.38 $ 19.42 $ 18.74 $ 17.51 $ 11.785
Number of Units Outstanding, End of Period 0 707 1,509 0 1,214
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 11.52 $ 10.79 $ 8.365
Accumulation Unit Value, End of Period -- $ 11.52 $ 10.79 $ 8.365 $ 6.231
Number of Units Outstanding, End of Period -- 0 60,709 0 69,858
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.72 $ 11.99 $ 8.11
Accumulation Unit Value, End of Period -- $ 13.72 $ 11.99 $ 8.11 $ 5.763
Number of Units Outstanding, End of Period -- 0 38,398 42,643 36,265
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 12.10 $ 11.89 $ 10.23
Accumulation Unit Value, End of Period -- $ 12.10 $ 11.89 $ 10.23 $ 7.365
Number of Units Outstanding, End of Period -- 0 35,976 43,914 42,764
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 13.10 $ 13.55 $ 11.73
Accumulation Unit Value, End of Period -- $ 13.10 $ 13.55 $ 11.73 $ 8.992
Number of Units Outstanding, End of Period -- 0 33,241 33,299 34,078
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(4)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.77 $ 9.67 $ 8.55
Accumulation Unit Value, End of Period -- $ 10.77 $ 9.67 $ 8.55 $ 6.836
Number of Units Outstanding, End of Period -- 0 130,587 144,668 119,776
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- $ 10.00 $ 10.15 $ 10.26 $ 10.59
Accumulation Unit Value, End of Period -- $ 10.15 $ 10.26 $ 10.59 $ 11.197
Number of Units Outstanding, End of Period -- 0 19,624 26,549 31,069
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.94 $ 15.02 $ 13.04 $ 10.973
Accumulation Unit Value, End of Period $10.94 $ 15.02 $ 13.04 $ 10.973 $ 12.214
Number of Units Outstanding, End of Period 406 7,464 11,011 0 8,976
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 10.15 $ 9.82 $ 10.75 $ 11.642
Accumulation Unit Value, End of Period $10.15 $ 9.82 $ 10.75 $ 11.642 $ 7.737
Number of Units Outstanding, End of Period 0 0 0 0 0
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(6)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.42 $ 10.69 $ 11.72 $ 1.799
Accumulation Unit Value, End of Period $10.42 $ 10.69 $ 11.72 $ 10.799 $ 8.775
Number of Units Outstanding, End of Period 0 245 363 0 243
|
49 PROSPECTUS
|
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(7)/
Accumulation Unit Value, Beginning of Period $10.00 $ 10.96 $ 13.01 $ 14.18 $ 13.611
Accumulation Unit Value, End of Period $10.96 $ 13.01 $ 14.18 $ 13.611 $ 9.576
Number of Units Outstanding, End of Period 0 1,788 4,089 0 3,137
VAN KAMPEN UIF VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.00 $ 9.95 $ 9.61 $ 11.82 $ 11.975
Accumulation Unit Value, End of Period $ 9.95 $ 9.61 $ 11.82 $ 11.975 $ 9.112
Number of Units Outstanding, End of Period 0 17,465 16,697 0 12,180
|
|
For the Years Beginning January 1
and Ending December 31,* 2003 2004
-------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.450 $ 9.677
Accumulation Unit Value, End of Period $ 9.677 $ 9.611
Number of Units Outstanding, End of Period 79,043 63,895
AIM V.I. CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.966 $ 9.755
Accumulation Unit Value, End of Period $ 9.755 $ 9.773
Number of Units Outstanding, End of Period 49,921 50,120
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.034 $ 10.789
Accumulation Unit Value, End of Period $ 10.789 $ 11.060
Number of Units Outstanding, End of Period 134 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 12.007 $ 11.944
Accumulation Unit Value, End of Period $ 11.944 $ 12.034
Number of Units Outstanding, End of Period 0 0
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 5.445 $ 7.034
Accumulation Unit Value, End of Period $ 7.034 $ 6.800
Number of Units Outstanding, End of Period 105,887 101,131
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.374 $ 9.368
Accumulation Unit Value, End of Period $ 9.368 $ 9.972
Number of Units Outstanding, End of Period 2,660 530
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.307 $ 8.996
Accumulation Unit Value, End of Period $ 8.996 $ 8.665
Number of Units Outstanding, End of Period 117,821 102,217
DREYFUS SOCIALLY RESPONSIBLE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 6.685 $ 8.290
Accumulation Unit Value, End of Period $ 8.290 $ 7.993
Number of Units Outstanding, End of Period 7,252 5,120
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.610 $ 9.614
Accumulation Unit Value, End of Period $ 9.614 $ 9.595
Number of Units Outstanding, End of Period 13,791 17,721
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.000 $ 9.967
Accumulation Unit Value, End of Period $ 9.967 $ 9.649
Number of Units Outstanding, End of Period 1,614 1,674
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 11.042 $ 10.944
Accumulation Unit Value, End of Period $ 10.944 $ 10.867
Number of Units Outstanding, End of Period 7,405 1,510
|
50 PROSPECTUS
FIDELITY VIP CONTRAFUND(R) SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 10.096 $ 12.765
Accumulation Unit Value, End of Period $ 12.765 $ 13.340
Number of Units Outstanding, End of Period 105,800 98,026
FIDELITY VIP EQUITY INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 8.946 $ 11.475
Accumulation Unit Value, End of Period $ 11.475 $ 11.575
Number of Units Outstanding, End of Period 59,907 58,079
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.399 $ 9.675
Accumulation Unit Value, End of Period $ 9.675 $ 9.112
Number of Units Outstanding, End of Period 111,514 99,339
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.493 $ 9.385
Accumulation Unit Value, End of Period $ 9.385 $ 9.714
Number of Units Outstanding, End of Period 16,572 15,444
FTVIP FRANKLIN SMALL CAP INVESTMENTS (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP FRANKLIN SMALL CAP (CLASS 2) SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 12.244 $ 16.540
Accumulation Unit Value, End of Period $ 16.540 $ 16.569
Number of Units Outstanding, End of Period 0 0
FTVIP MUTUAL SHARE SECURITIES (CLASS 2)
SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 12.864 $ 15.846
Accumulation Unit Value, End of Period $ 15.846 $ 16.237
Number of Units Outstanding, End of Period 0 0
FTVIP MUTUAL SHARES INVESTMENTS (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
FTVIP TEMPLETON DEVELOPING MARKETS SECURITIES (CLASS 2)
SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.230 $ 10.886
Accumulation Unit Value, End of Period $ 10.886 $ 11.652
Number of Units Outstanding, End of Period 0 0
FTVIP TEMPLETON FOREIGN SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.167 $ 9.326
Accumulation Unit Value, End of Period $ 9.326 $ 9.614
Number of Units Outstanding, End of Period 0 0
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 10.561 $ 13.735
Accumulation Unit Value, End of Period $ 13.735 $ 14.152
Number of Units Outstanding, End of Period 13,430 13,370
FTVIP TEMPLETON STOCK (CLASS 2) SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.906 $ 9.628
Accumulation Unit Value, End of Period $ 9.628 $ 9.464
Number of Units Outstanding, End of Period 3,053 3,013
GOLDMAN SACHS VIT CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.607 $ 15.243
Accumulation Unit Value, End of Period $ 15.243 $ 15.701
Number of Units Outstanding, End of Period 12,774 12,650
51 PROSPECTUS
|
GOLDMAN SACHS VIT CORE(SM) US EQUITY SUB-ACCOUNT
|
Accumulation Unit Value, Beginning of Period $ 7.935 $ 10.112
Accumulation Unit Value, End of Period $ 10.112 $ 10.505
Number of Units Outstanding, End of Period 15,131 14,610
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT(3)
Accumulation Unit Value, Beginning of Period -- --
Accumulation Unit Value, End of Period -- --
Number of Units Outstanding, End of Period -- --
GOLDMAN SACHS VIT INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.453 $ 9.939
Accumulation Unit Value, End of Period $ 9.939 $ 9.697
Number of Units Outstanding, End of Period 1,812 1,812
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.017 $ 8.994
Accumulation Unit Value, End of Period $ 8.994 $ 8.790
Number of Units Outstanding, End of Period 53,387 46,204
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.179 $ 8.631
Accumulation Unit Value, End of Period $ 8.631 $ 8.583
Number of Units Outstanding, End of Period 6,780 6,887
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 11.785 $ 15.511
Accumulation Unit Value, End of Period $ 15.511 $ 14.284
Number of Units Outstanding, End of Period 2,605 2,604
MFS RESEARCH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 6.231 $ 7.625
Accumulation Unit Value, End of Period $ 7.625 $ 7.731
Number of Units Outstanding, End of Period 66,528 64,762
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 5.763 $ 7.124
Accumulation Unit Value, End of Period $ 7.124 $ 7.496
Number of Units Outstanding, End of Period 33,266 29,258
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 7.365 $ 9.492
Accumulation Unit Value, End of Period $ 9.492 $ 9.236
Number of Units Outstanding, End of Period 36,722 31,520
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 8.992 $ 12.658
Accumulation Unit Value, End of Period $ 12.658 $ 12.819
Number of Units Outstanding, End of Period 31,907 23,290
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(1)(4)/
Accumulation Unit Value, Beginning of Period $ 6.836 $ 8.562
Accumulation Unit Value, End of Period $ 8.526 $ 8.475
Number of Units Outstanding, End of Period 114,351 108,999
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 11.197 $ 13.012
Accumulation Unit Value, End of Period $ 13.012 $ 13.330
Number of Units Outstanding, End of Period 37,883 39,319
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $ 12.214 $ 12.579
Accumulation Unit Value, End of Period $ 12.579 $ 18.827
Number of Units Outstanding, End of Period 1,130 1,997
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 7.737 $ 9.513
Accumulation Unit Value, End of Period $ 9.513 $ 9.203
Number of Units Outstanding, End of Period 8,598 8,461
|
52 PROSPECTUS
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(6)/
|
Accumulation Unit Value, Beginning of Period $ 8.775 $ 11.138
Accumulation Unit Value, End of Period $ 11.138 $ 11.221
Number of Units Outstanding, End of Period 243 243
VAN KAMPEN UIF U.S. MID CAP VALUE SUB-ACCOUNT/(7)/
Accumulation Unit Value, Beginning of Period $ 9.576 $ 13.337
Accumulation Unit Value, End of Period $ 13.337 $ 13.582
Number of Units Outstanding, End of Period 4,792 4,746
VAN KAMPEN UIF VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 9.112 $ 12.025
Accumulation Unit Value, End of Period $ 12.025 $ 12.750
Number of Units Outstanding, End of Period 12,203 12,370
|
* The Contracts were first offered on November 10, 1998. The Accumulation Unit Values in this table reflect a Mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before November 10, 1998 except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Variable Sub-Accounts that commenced operations on November 1, 1999.
(2) Variable Sub-Accounts that commenced operations on May 1, 2000.
(3) Goldman Sachs VIT Global Income Sub-Account is not available to new investors as of May 1, 2002.
(4) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(6) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(7) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
53 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED*
WITH ENHANCED DEATH AND INCOME BENEFIT COMBINATION RIDER II (FOR CONTRACTS
ISSUED ON OR AFTER 9/22/00)
|
For the Years Beginning January 1 and Ending December 31,* 2000 2001 2002 2003 2004
---------------------------------------------------------------------------------------------------------------
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.21 $ 8.024 $ 6.543 $ 7.489
Accumulation Unit Value, End of Period $ 9.21 $ 8.024 $ 6.543 $ 7.489 $ 7.434
Number of Units Outstanding, End of Period 4,545 61,468 57,002 58,920 62,743
AIM V.I.CORE EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.06 $ 6.117 $ 5.080 $ 6.217
Accumulation Unit Value, End of Period $ 8.06 $ 6.117 $ 5.080 $ 6.217 $ 6.225
Number of Units Outstanding, End of Period 20,079 104,459 86,197 83,406 78,041
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 7.80 $ 10.297 $ 10.249 $ 11.013
Accumulation Unit Value, End of Period $ 7.80 $ 10.297 $ 10.249 $ 11.013 $ 11.285
Number of Units Outstanding, End of Period 34,530 0 0 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.43 $ 10.785 $ 11.773 $ 11.704
Accumulation Unit Value, End of Period $ 10.43 $ 10.785 $ 11.773 $ 11.704 $ 11.787
Number of Units Outstanding, End of Period 0 0 3,383 3,383 3,383
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 7.52 $ 4.890 $ 3.320 $ 4.286
Accumulation Unit Value, End of Period $ 7.52 $ 4.890 $ 3.320 $ 4.286 $ 4.142
Number of Units Outstanding, End of Period 32,771 133,470 115,932 110,527 94,083
AIM V.I. INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.32 $ 6.255 $ 5.188 $ 6.586
Accumulation Unit Value, End of Period $ 8.32 $ 6.255 $ 5.188 $ 6.586 $ 7.008
Number of Units Outstanding, End of Period 0 1,446 0 0 0
AIM V.I. PREMIER EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.54 $ 7.345 $ 5.039 $ 6.199
Accumulation Unit Value, End of Period $ 8.54 $ 7.345 $ 5.039 $ 6.199 $ 5.969
Number of Units Outstanding, End of Period 22,904 96,014 89,919 84,217 75,997
DREYFUS SOCIALLY RESPONSIBLE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.42 $ 6.410 $ 4.480 $ 5.553
Accumulation Unit Value, End of Period $ 8.42 $ 6.410 $ 4.480 $ 5.553 $ 5.351
Number of Units Outstanding, End of Period 0 2,161 2,343 2,535 2,460
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.83 $ 7.626 $ 5.824 $ 7.353
Accumulation Unit Value, End of Period $ 8.83 $ 7.626 $ 5.824 $ 7.353 $ 7.335
Number of Units Outstanding, End of Period 403 5,634 7,533 7,597 7,543
DREYFUS VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.38 $ 8.683 $ 6.378 $ 7.940
Accumulation Unit Value, End of Period $ 9.38 $ 8.683 $ 6.378 $ 7.940 $ 7.684
Number of Units Outstanding, End of Period 0 6,523 4,071 4,069 4,067
DREYFUS VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.17 $ 10.400 $ 10.379 $ 10.281
Accumulation Unit Value, End of Period $ 10.17 $ 10.400 $ 10.379 $ 10.281 $ 10.204
Number of Units Outstanding, End of Period 8,743 10,868 14,612 11,408 8,425
|
54 PROSPECTUS
|
FIDELITY VIP CONTRAFUND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.23 $ 7.970 $ 7.107 $ 8.980
Accumulation Unit Value, End of Period $ 9.23 $ 7.970 $ 7.107 $ 8.980 $ 9.381
Number of Units Outstanding, End of Period 14,991 80,328 71,359 74,699 72,513
FIDELITY VIP EQUITY INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.42 $ 9.741 $ 7.958 $ 10.202
Accumulation Unit Value, End of Period $ 10.42 $ 9.741 $ 7.958 $ 10.202 $ 10.286
Number of Units Outstanding, End of Period 17,198 42,652 45,833 43,248 32,641
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.37 $ 6.782 $ 4.663 $ 6.094
Accumulation Unit Value, End of Period $ 8.37 $ 6.782 $ 4.663 $ 6.094 $ 5.736
Number of Units Outstanding, End of Period 21,583 76,935 76,809 72,242 67,032
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.30 $ 7.209 $ 7.335 $ 9.183
Accumulation Unit Value, End of Period 8.30 $ 7.209 $ 7.335 $ 9.183 $ 9.500
Number of Units Outstanding, End of Period 102 4,442 7,089 8,863 8,688
FTVIP FRANKLIN SMALL CAP INVESTMENTS (CLASS 2) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period -- -- -- -- --
Accumulation Unit Value, End of Period -- -- -- -- --
Number of Units Outstanding, End of Period -- -- -- -- --
FTVIP FRANKLIN SMALL CAP (CLASS 2) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 4.763 $ 6.430
Accumulation Unit Value, End of Period $ 6.430 $ 6.439
Number of Units Outstanding, End of Period 1,117 1,115
FTVIP MUTUAL SHARE SECURITIES (CLASS 2) SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.45 $ 11.00 $ 9.539 $ 11.743
Accumulation Unit Value, End of Period $ 10.45 $ 11.00 $ 9.539 $ 11.743 $ 12.028
Number of Units Outstanding, End of Period 0 2,884 4,094 4,090 4,087
FTVIP TEMPLETON DEVELOPING MARKETS SECURITIES (CLASS 2)
SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.17 $ 7.507 $ 7.254 $ 10.917
Accumulation Unit Value, End of Period $ 8.17 $ 7.507 $ 7.254 $ 10.917 $ 11.680
Number of Units Outstanding, End of Period 0 0 0 0 0
FTVIP TEMPLETON FOREIGN SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.60 $ 8.548 $ 6.353 $ 8.262
Accumulation Unit Value, End of Period $ 9.60 $ 8.548 $ 6.353 $ 8.262 $ 8.513
Number of Units Outstanding, End of Period 0 0 945 945 945
FTVIP TEMPLETON GROWTH SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.00 $ 9.703 $ 7.780 $ 10.112
Accumulation Unit Value, End of Period $ 10.00 $ 9.703 $ 7.780 $ 10.112 $ 10.414
Number of Units Outstanding, End of Period 2,289 2,050 7,098 4,154 9,771
GOLDMAN SACHS VIT CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.76 $ 7.737 $ 5.488 $ 6.679
Accumulation Unit Value, End of Period $ 8.76 $ 7.737 $ 5.488 $ 6.679 $ 6.563
Number of Units Outstanding, End of Period 1,593 4,137 5,854 5,928 5,876
GOLDMAN SACHS VIT CORE(SM) SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.61 $ 9.88 $ 8.267 $ 11.873
Accumulation Unit Value, End of Period $ 9.61 $ 9.88 $ 8.267 $ 11.873 $ 12.223
Number of Units Outstanding, End of Period 0 4,499 5,111 4,927 4,831
GOLDMAN SACHS VIT CORE(SM) US EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.81 $ 7.627 $ 5.859 $ 7.462
Accumulation Unit Value, End of Period $ 8.81 $ 7.627 $ 5.859 $ 7.462 $ 7.749
Number of Units Outstanding, End of Period 1,916 4,493 7,802 7,758 7,634
GOLDMAN SACHS VIT GLOBAL INCOME SUB-ACCOUNT/(1)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.36 -- -- --
Accumulation Unit Value, End of Period $ 10.36 $ 10.682 -- -- --
Number of Units Outstanding, End of Period 0 0 -- -- --
|
55 PROSPECTUS
|
GOLDMAN SACHS VIT INTERNATONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.09 $ 6.952 $ 5.584 $ 7.443
Accumulation Unit Value, End of Period $ 9.09 $ 6.952 $ 5.584 $ 7.443 $ 7.258
Number of Units Outstanding, End of Period 0 0 0 0 0
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.08 $ 5.286 $ 3.444 $ 4.412
Accumulation Unit Value, End of Period $ 8.08 $ 5.286 $ 3.444 $ 4.412 $ 4.310
Number of Units Outstanding, End of Period 11,866 61,761 75,018 71,114 66,448
MFS INVESTORS TRUST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.64 $ 7.965 $ 6.192 $ 7.440
Accumulation Unit Value, End of Period $ 9.64 $ 7.965 $ 6.192 $ 7.440 $ 7.396
Number of Units Outstanding, End of Period 576 15,527 22,272 23,237 23,178
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.55 $ 8.923 $ 7.142 $ 9.384
Accumulation Unit Value, End of Period $ 9.55 $ 8.923 $ 7.142 $ 9.384 $ 8.631
Number of Units Outstanding, End of Period 0 4,370 621 3,220 3,261
MFS RESEARCH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.61 $ 6.666 $ 4.948 $ 6.069
Accumulation Unit Value, End of Period $ 8.61 $ 6.666 $ 4.948 $ 6.069 $ 6.150
Number of Units Outstanding, End of Period 11,698 70,874 70,703 65,726 59,409
OPPENHEIMER AGGRESSIVE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 6.94 $ 4.694 $ 3.334 $ 4.119
Accumulation Unit Value, End of Period $ 6.94 $ 4.694 $ 3.334 $ 4.119 $ 4.332
Number of Units Outstanding, End of Period 8,000 54,096 76,844 68,188 69,130
OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.92 $ 7.667 $ 5.516 $ 7.105
Accumulation Unit Value, End of Period $ 8.92 $ 7.667 $ 5.516 $ 7.105 $ 6.910
Number of Units Outstanding, End of Period 18937 81840 79,255 76,584 74,628
OPPENHEIMER GLOBAL SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.41 $ 8.142 $ 6.236 $ 8.773
Accumulation Unit Value, End of Period $ 9.41 $ 8.142 $ 6.236 $ 8.773 $ 8.880
Number of Units Outstanding, End of Period 2,457 16,839 19,248 19,288 17,680
OPPENHEIMER MAIN STREET SUB-ACCOUNT/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.72 $ 7.702 $ 6.152 $ 7.668
Accumulation Unit Value, End of Period $ 8.72 $ 7.702 $ 6.152 $ 7.668 $ 7.618
Number of Units Outstanding, End of Period 33,469 16,839 127,294 125,761 115,872
OPPENHEIMER STRATEGIC BOND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.88 $ 10.184 $ 10.762 $ 12.500
Accumulation Unit Value, End of Period $ 9.88 $ 10.184 $ 10.762 $ 12.500 $ 12.799
Number of Units Outstanding, End of Period 976 34,123 32,383 32,808 32,710
VAN KAMPEN UIF CORE PLUS FIXED INCOME SUB-ACCOUNT/(3)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.49 $ 11.275 $ 11.904 $ 12.252
Accumulation Unit Value, End of Period $ 10.49 $ 11.275 $ 11.904 $ 12.252 $ 12.488
Number of Units Outstanding, End of Period 0 0 1,979 1,979 1,979
VAN KAMPEN UIF EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.06 $ 6.727 $ 4.773 $ 5.866
Accumulation Unit Value, End of Period $ 8.06 $ 6.727 $ 4.773 $ 5.866 $ 5.672
Number of Units Outstanding, End of Period 2,971 0 7,305 7,390 7,331
VAN KAMPEN UIF GLOBAL VALUE EQUITY SUB-ACCOUNT/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.50 $ 9.601 $ 7.851 $ 9.960
Accumulation Unit Value, End of Period $ 10.50 $ 9.601 $ 7.851 $ 9.960 $ 10.029
Number of Units Outstanding, End of Period 0 0 231 231 230
VAN KAMPEN UIF U.S. MID CAP CORE SUB-ACCOUNT/(5)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.92 $ 9.452 $ 6.692 $ 9.316
Accumulation Unit Value, End of Period $ 9.92 $ 9.452 $ 6.692 $ 9.316 $ 9.483
Number of Units Outstanding, End of Period 1,841 0 11,002 11,156 11,041
|
56 PROSPECTUS
|
VAN KAMPEN UIF VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $ 10.00 $ 11.65 $ 11.718 $ 8.972 $ 11.834
Accumulation Unit Value, End of Period $ 11.65 $ 11.718 $ 8.972 $ 11.834 $ 12.542
Number of Units Outstanding, End of Period 0 0 3,917 3,850 3,.868
|
* The Contracts with the Enhanced Death and Income Benefit Combination Rider II were first offered on September 22, 2000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.55% and an administrative charge of 0.10%. All of the Variable Sub-Accounts commenced operations on or before September 22, 2000, except as described in the footnotes below. The Accumulation Unit information shown for 2004 is for the period beginning January 1 and ending September 30.
(1) Goldman Sachs VIT Global Income Sub-Account is not available to new investors as of May 1, 2002.
(2) Effective May 1, 2003, Oppenheimer Main Street Growth & Income Fund/VA changed its name to Oppenheimer Main Street Fund/VA. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(3) Effective May 1, 2002, Van Kampen UIF Fixed Income Portfolio, Class I changed its name to Van Kampen UIF Core Plus Fixed Income Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(4) Effective May 1, 2001, Van Kampen UIF Global Equity Portfolio, Class I changed its name to Van Kampen UIF Global Value Equity Portfolio, Class I. We have made a corresponding change in the name of the Variable Sub-Account that invests in this Portfolio.
(5) Effective May 1, 2003, Van Kampen UIF Mid Cap Value Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I. Effective May 1, 2004, Van Kampen UIF U.S. Mid Cap Core Portfolio, Class I changed its name to Van Kampen UIF U.S. Mid Cap Value Portfolio, Class I.
57 PROSPECTUS
APPENDIX B
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the withdrawal, transfer, or death benefit request, or from the Payout Start Date to the end of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week preceding the receipt of the withdrawal, transfer, death benefit, or income payment request.*
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported in Federal Reserve Bulletin Release H.15.
* If a U.S. Treasury Note ("Note") with a maturity of the Guarantee Period is not available, we will determine an appropriate interest rate based on an interpolation of the next shortest duration and next longest duration Notes.
The Market Value Adjustment factor is determined from the following formula:
.9 X [I - J] X N
To determine the Market Value Adjustment, we will multiply the Market Value Adjustment factor by the amount transferred, withdrawn (in excess of the Free Withdrawal Amount), paid as a death benefit, or applied to an Income Plan from a Guarantee Period at any time other than during the 30 day period after such Guarantee Period expires.
58 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
|
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
|
EXAMPLE 1 (ASSUME DECLINING INTEREST RATES)
Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
|
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
Step 3: Calculate the Withdrawal I = 4.5%
Charge: J = 4.2%
730 days
N = -------- = 2
Step 4: Calculate the Market Value 365 days
Adjustment:
Market Value Adjustment Factor:.9
X [I - J] X N =.9 X [.045 -.042]
X 2 =.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to
Market Value Adjustment:
=.0054 X ($11,411.66 - $1,500.00) =
$53.52
Step 5. Calculate the amount
received by a Contract Owner as a
result of full withdrawal at the
end of Contract Year 3: $11,411.66 + $53.52 = $11,465.18
|
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
|
Step 1. Calculate Contract Value $10,000.00 X (1.045)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .15 X ($10,000.00) = $1,500.00
Withdrawal Amount:
Step 3: Calculate the Withdrawal I = 4.5%
Charge: J = 4.8%
Step 4. Calculate the Market Value 730 days
Adjustment: N = -------- = 2
365 days
Market Value Adjustment Factor:.9
X [I - J] X N =.9 X [.045 -.048
X 2 = -.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to
Market Value Adjustment:
= -.0054 X ($11,411.66 - $1,500.00) = -
$53.52
Step 5. Calculate the amount $11,411.66 - $53.52 = $11,358.14
received by a Contract Owner as a
result of full withdrawal at the
|
end of Contract Year 3:
59 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
THE CONTRACT
Purchase of Contracts
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
CALCULATION OF ACCUMULATION UNIT VALUES
NET INVESTMENT FACTOR
CALCULATION OF VARIABLE INCOME PAYMENTS
CALCULATION OF ANNUITY UNIT VALUES
GENERAL MATTERS
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
Tax Reserves
EXPERTS
FINANCIAL STATEMENTS
APPENDIX A: ACCUMULATION UNIT VALUES
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
60 PROSPECTUS
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registrant anticipates that it will incur the following approximate expenses in connection with the issuance and distribution of the securities to be registered:
|
Registration fees................ $0
Cost of printing and engraving... $____
Legal fees....................... $0
Accounting fees.................. $6,600
Mailing fees..................... $____
|
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Allstate Life Insurance Company ("Registrant") provide that Registrant will indemnify all of its directors, former directors, officers and former officers, to the fullest extent permitted under law, who were or are a party or are threatened to be made a party to any proceeding by reason of the fact that such persons were or are directors or officers of Registrant, against liabilities, expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by them. The indemnity shall not be deemed exclusive of any other rights to which directors or officers may be entitled by law or under any articles of incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. In addition, the indemnity shall inure to the benefit of the legal representatives of directors and officers or of their estates, whether such representatives are court appointed or otherwise designated, and to the benefit of the heirs of such directors and officers. The indemnity shall extend to and include claims for such payments arising out of any proceeding commenced or based on actions of such directors and officers taken prior to the effectiveness of this indemnity; provided that payment of such claims had not been agreed to or denied by Registrant before such date. The directors and officers of Registrant have been provided liability insurance for certain losses arising from claims or charges made against them while acting in their capacities as directors or officers of Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(1) (a) Form of Underwriting Agreement (Incorporated herein by reference to Pre-Effective Amendment No. 2 to Form N-4 Registration Statement (File No. 333-00999) dated August 23, 1996).
(1)(b) Assignment & Delegation of Administrative Services Agreements, Underwriting Agreements, and Selling Agreements between ALFS, Inc. and Allstate Life Insurance Company, Allstate Life Insurance Company of New York, Charter National Life Insurance Company, Intramerica Life Insurance Company, Allstate Distributors, LLC, Allstate Financial Services, LLC & Lincoln Benefit Life Company (Incorporated herein by reference to Registrant’s Current Report on Form 8-K (File No. 0-31248) dated September 1, 2011.)
(4)(a) Contract and Application (Incorporated herein by reference to Pre-Effective Amendment No. 2 to Form N-4 Registration Statement (File No. 333-00999) dated August 23, 1996).
(4)(b) Contract Endorsement (Incorporated herein by reference to Post-Effective Amendment No. 4 to Form N-4 Registration Statement (File No. 333-00999) (File No. 333-00999) dated September 30, 1998).
(4)(c) Form of Contract Endorsement (reflecting Allstate as issuer) (Incorporated by reference to Form S-3 Registration Statement (File No. 333-121741) dated December 28, 2004).
(5)Opinion and Consent of General Counsel re: Legality of securities being registered. Filed herewith.
(15) Letter re: unaudited interim financial information from Registered Public Accounting Firm. Filed herewith.
(23) Consent of Independent Registered Public Accounting Firm. Filed herewith.
(24) Powers of Attorney for Robert K. Becker, David A. Bird, Anurag Chandra, Don Civgin, Matthew S. Easley, Mark A. Green,
Judith P. Greffin, Mark R. LaNeve, Susan L. Lees, Samuel H. Pilch, John C. Pintozzi, Steven E. Shebik, Thomas J. Wilson,
and Matthew E. Winter. Filed herewith.
(99)(a) Merger Agreement and Articles of Merger Between Glenbrook Life and Annuity Company and Allstate Life Insurance Company. (Incorporated by Reference to initial Form S-3 Registration Statement (File No. 333-121742) filed December 28, 2004).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment to this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(2) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(3) That each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(5) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Township of Northfield, State of Illinois on the 21st day of October, 2011.
ALLSTATE LIFE INSURANCE COMPANY
(REGISTRANT)
|
By: /s/ SUSAN L. LEES
------------------------------------
Susan L. Lees
Director, Senior Vice President,
General Counsel & Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated and on the 21st day of October, 2011.
*MATTHEW E. WINTER Director, President and Chief Executive Officer
------------------------------------ (Principal Executive Officer)
Matthew E. Winter
*/JOHN C. PINTOZZI Director and Chief Financial
------------------------------------ Officer
John C. Pintozzi (Principal Financial Officer)
*/THOMAS J. WILSON Director and Chairman of the Board
------------------------------------
Thomas J. Wilson
*/ROBERT K. BECKER Director
------------------------------------
Robert K. Becker
*/DAVID A. BIRD Director
------------------------------------
David A. Bird
*/ANURAG CHANDRA Director
------------------------------------
Anurag Chandra
*/DON CIVGIN Director
------------------------------------
Don Civgin
*/MATTHEW S. EASLEY Director
------------------------------------
Matthew S. Easley
*/MARK A. GREEN Director
------------------------------------
Mark A. Green
*/JUDITH P. GREFFIN Director
------------------------------------
Judith P. Greffin
*/MARK R. LANEVE Director
------------------------------------
Mark R. LaNeve
/s/SUSAN L. LEES Director
-----------------------------------
Susan L. Lees
*/SAMUEL H. PILCH Director and Controller
------------------------------------ (Principal Accounting Officer)
Samuel H. Pilch
*/STEVEN E. SHEBIK Director
------------------------------------
Steven E. Shebik
*/By: Susan L. Lees, pursuant to power of attorney, filed herewith.
EXHIBIT LIST
|
Exhibit No. Description
----------- ------------------------------------------------------------------
(5) Opinion and Consent of General Counsel re: Legality of securities being registered
(15) Letter Re. Unaudited Interim Financial Information from Independent Registered Public Accounting Firm
(23) Consent of Independent Registered Public Accounting Firm
(24) Powers of Attorney for Robert K. Becker, David A. Bird, Anurag Chandra, Don Civgin, Matthew S. Easley, Mark A. Green, Judith P. Greffin, Mark R. LaNeve, Susan L. Lees, Samuel H. Pilch, John C. Pintozzi, Steven E. Shebik, Thomas J. Wilson, and Matthew E. Winter
(99)(b) Experts
|
Exhibit 5
ALLSTATE LIFE INSURANCE COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, Suite J5B
Northbrook, Illinois 60062
Direct Dial Number 847-402-2271
Susan L. Lees
Director, Senior Vice President,
Secretary and General Counsel
October 24, 2011
|
TO: ALLSTATE LIFE INSURANCE COMPANY
NORTHBROOK, ILLINOIS 60062
FROM: SUSAN L. LEES
DIRECTOR, SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 333-
-----
|
With reference to the Registration Statement on Form S-3 filed by Allstate Life Insurance Company (the "Company") with the Securities and Exchange Commission covering the Flexible Premium Deferred Variable Annuity Contracts, known as Allstate Provider Series and AIM Lifetime Plus Variable Annuity (the "Contracts"), I have examined such documents and such law as I have considered necessary and appropriate, and on the basis of such examination, it is my opinion that:
1. The Company is duly organized and existing under the laws of the State of Illinois and has been duly authorized to do business by the Director of Insurance of the State of Illinois.
2. The securities registered by the above Registration Statement when issued will be valid, legal and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the above referenced Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus constituting a part of the Registration Statement.
Sincerely,
|
/s/ SUSAN L. LEES
----------------------------------------
Susan L. Lees
Director, Senior Vice President,
Secretary and General Counsel
|
Exhibit 15
Allstate Life Insurance Company
3100 Sanders Road
Northbrook, IL 60062-6127
We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Allstate Life Insurance Company and subsidiaries for the three-month periods ended March 31, 2011 and 2010, and have issued our report dated May 4, 2011, and for the six-month and three-month periods ended June 30, 2011 and 2010, and have issued our report dated August 5, 2011. As indicated in such reports, because we did not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011, are incorporated by reference in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/DELOITTE & TOUCHE LLP
Chicago, Illinois
October 24, 2011
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form S-3 of our reports dated March 11, 2011 relating to the consolidated financial statements and financial statement schedules of Allstate Life Insurance Company and subsidiaries (which reports express an unqualified opinion and include an explanatory paragraph relating to a change in method of recognition and presentation for other-than-temporary impairments of debt securities in 2009), appearing in the Annual Report on Form 10-K of Allstate Life Insurance Company for the year ended December 31, 2010, and to the reference to us under the heading “Experts” in the Prospectus, which are incorporated by reference in this Registration Statement.
/s/DELOITTE & TOUCHE LLP
Chicago, Illinois
October 24, 2011
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Robert K. Becker
Robert K. Becker
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/David A. Bird
David A. Bird
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Anurag Chandra
Anurag Chandra
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Don Civgin
Don Civgin
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Matthew S. Easley
Matthew S. Easley
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Mark A. Green
Mark A. Green
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as her true and lawful attorney-in-fact and agent with all power and authority on her behalf to sign her name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Judith P. Greffin
Judith P. Greffin
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Mark R. LaNeve
Mark R. LaNeve
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of John C. Pintozzi and Matthew E. Winter, as her true and lawful attorney-in-fact and agent with all power and authority on her behalf to sign her name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Susan L. Lees
Susan L. Lees
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Samuel H. Pilch
Samuel H. Pilch
Director and Controller
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/John C. Pintozzi
John C. Pintozzi
Director and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Steven E. Shebik
Steven E. Shebik
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and Matthew E. Winter, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Thomas J. Wilson
Thomas J. Wilson
Director and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below does hereby make, constitute and appoint each of Susan L. Lees and John C. Pintozzi, as his true and lawful attorney-in-fact and agent with all power and authority on his behalf to sign his name, in any and all capabilities, Form S-3 registration statements of Allstate Life Insurance Company pertaining to, but not limited to, The Allstate Advisor Variable Annuities - Allstate Advisor, Allstate Advisor Plus, Allstate Advisor Preferred; The Allstate Variable Annuities - Allstate Variable Annuity, Allstate Variable Annuity – L Share; The Allstate Advisor Variable Annuities – Advisor, Advisor Preferred; AIM Lifetime Plus II Variable Annuity; AIM Enhanced Choice Variable Annuity; The Allstate Provider Suite Variable Annuities; The Allstate Provider Variable Annuity Series - The Allstate Provider Advantage Variable Annuity, The Allstate Provider Ultra Variable Annuity, The Allstate Provider Extra Variable Annuity; AIM Lifetime America Variable Annuities Series – AIM Lifetime America Classic, AIM Lifetime America Regal, AIM Lifetime America Freedom; The STI Classic Variable Annuity; and AIM Lifetime Plus Variable Annuity.
This grant of authority extends to any and all amendments to such registration statements, and also grants such attorneys-in-fact full power to appoint a substitute or substitutes to act hereunder with the same power and authority as said agent and attorney-in-fact would have if personally acting.
The undersigned does hereby ratify and confirm all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
The undersigned has subscribed hereunder this 21st day of October 2011.
/s/Matthew E. Winter
Matthew E. Winter
Director, President and Chief
Executive Officer
The consolidated financial statements and the financial statement schedules as of December 31, 2010 and 2009, and for each of the three years in the period ended December 31, 2010, of Allstate Life Insurance Company and subsidiaries, which are incorporated by reference in this Registration Statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which reports express an unqualified opinion on the financial statements and financial statement schedules and includes an explanatory paragraph relating to a change in recognition and presentation for other-than-temporary impairments of debt in 2009. Such consolidated financial statements and financial statement schedules have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods ended March 31, 2011 and 2010 and June 30, 2011 and 2010 which are incorporated herein by reference, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their reports included in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011 and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act.