4 IN THE circurr COURT oF COOK County, ILLINOIS County DEPARTMENT, CHANCERY DIVISION £55 Mi itrevocable trust of Dr. Michael Marchi, and all others simitarty situated, Plaintitts, v. No. 97 CH 04324 ROYAL, MACCABEES LIFE INSURANCE COMPany, Defendant, ROUICE OF FUNG PLEASE TAKE NOTICE that on the 20th day. of August, 1999, there Was filed with the Clerk of the Circuit Court of j “Cook inty, Maccabees! Response To Plaintitts' Motion To Reconsider, 4 Copy of which ig attached hereto, ) ) ) ) ) ) ) ) d ) d ) } ) Judge Michae) Getty ) ) ) TO: See Attached Service List SCHOENBERG, 'ISHER, NEWMAN , F & ROSENBERG, Lt, Mark K, Schoenfield Daniel E. Beederman David A. Axelrod Schoenberg, Fisher, Newman & Rosenberg, Ltd. 222 South Riversid Plaza, Suite 2109 Chicago, Minois 60606-6101 Phone: (312) 648-2399 . 9 Firm No. 9965 NUPLEADD ONES WOVAoToREE aeCERTIFICATE OF SERVICE To: — See Attached Service List Cathy Bennett, a non-attorney, certifies and states under oath that she caused a copy of the Notice and attached Royal Maccabees' Response To Plaintiffs' Motion To Reconsideres be Served upon the foregoing parties, via messenger, on or before 5:00 p.m., on August 20, 1999, ‘athy Bennett SUBSCRIBED AND SWORN TO before me this 2oth day of August, 1999, “OFFICIAL SEAL" Valerie L. Mai ag i, Notary Public, State of Hinois My Commission Exp. 127102001 Notary PublicLE) Nt PANY Case No, 97 CH 04324 Michael Childress Lawrence Schad Jane Hwang, David J. Philips Childress & Zdeb, Ltd Jim Shedden 6 West Hubbard, Sth Floor Beeler, Schad & Diamond Chicago, Ilinois 60610 332 South Michigan Ave. Facsimile: 312-494-0202 Christopher V. Langone ‘The Langone Law Firm 25 East Washington Street, Suite 1805 Chicago, IL 60602 Facsimile: 312-782-2000 Chicago, IL 60604 Facsimile: 312-939-4661 Anthony J. Madonia 150 N. Wacker Drive Suite 900 Chicago, IL. 60605 Facsimile: 312-578-9303INTHE Ch. iT COURT OF COOK COUNTY, INOIS COUNTY DEPARTMENT, CHANCERY DIVISION SUSAN MILLER, Dr. TASSOS P. ‘NASSOS individually and as Trustee of the living trust of Tassos Nassos and the irrevocable trust of Mary Nassos, MARY NASSOS as Trustee for the irrevocable trust of Tassos Nassos and JAMES MILLER, as Trustee for the irrevocable trust of Dr. Michael Marchi, and all others similarly situated, Plaintifts, Af No. 97 CH 04324 ROYAL MACCABEES LIFE INSURANCE COMPANY, Judge Michael Getty Defendant. ROYAL MACCABEES’ RESPONSE TO PLAINTIFFS’ MOTION TO RECONSIDER Defendant Royal Maccabees Life Insurance Company [“Royal Maccabees”], by its attorneys, states as follows for its response to plaintiffs’ motion to file a fourth amended complaint: Introduction Since plaintifis’ claims are barred by the voluntary payment defense, their motion for reconsideration of this Court’s determination that their claims are so barred should be denied. Argument L aoe i , Ce ES eee Lee Court's Di 0 ‘The “purpose of a motion for reconsideration is to apprise the trial court of newly discovered evidence, a change in the law, or errors in the court’s earlier application of the law.” Earley Metals, Inc. v. Barber Colman Co., 269 Ill App.3d 104, 206 Ill.Dec. 712, 719 (Ist Dist. 1994); Gardner v. ‘Navistar International Transportation Corp,, 213 Ill. App.3d 242, 157 IlLDec. 88, 92 (4th Dist. 1991).In this case, plaintiffs’ motion. econsideration really [a] reiterates tin. lier arguments before the court, and [b] erroneously attempts to assert new arguments, which could have been but were not previously raised in the briefs and oral argument before this Court ruled that the named plaints claims are barred by the voluntary payment doctrine. As such, the motion to reconsider does not bring newly discovered evidence to the court’s attention, indicate a change in the law or demonstrate that this Court misapplied the law. Therefore, plaintiffs’ motion for reconsideration must be denied. For example, the prior briefs raised the same issues about the sufficiency of the named plaintifis’ knowledge and opportunity to have paid payments under protest. These issues were discussed at oral arguments as well. Plaintiffs merely try to re-argue the sufficiency of the disclosure, regarding “taxes” and AIDS-related deaths, under the voluntary payment defense. Plaintiffs now argue there was a mistake of fact because they did not have full knowledge of the exact mortality ‘change and the reference to a new tax in the notice was purportedly misleading and fraudulent. [Mo. Reconsid, at 8], Regardless of whether plaintifis knew the exact AIDS related death figures, they knew that they were being charged, and could have questioned the increase if they had wanted to do so. As this Court found in its Opinion at page 9, this is sufficient knowledge under the voluntary payment doctrine. See Section IV below. The policy cancellation and surrender changes raised by plaintiffs [Mo. Reconsid. at 2] are a false issue. Regarding whether there was “compulsion” and whether “it would cost more or be difficult to obtain new insurance," even the proposed complaint, much less the current complaint which is to be considered on a motion to reconsider, has no allegations that such pressure was the motivation for the plaintiffS to make payments and does not allege that the payments were for a necessity oflife. In the prior oral argument, the defendant noted that there was no duress with regard to these payments since the pleintiffS could: (1) pay under protest (making a protest to the Department of Insurance); (2) not pay, and make protest during the grace period during which the policy remains in effect without the insured making payments; or (3) surrender the policy and seek 2” insurance elsewhere.” Op. a. “Jaintifs do not allege they attempte.._egotiate the surrender charge, because they never sought to do so, and therefore that charge cannot constitute duress Moreover, “.. in oral arguments the plaintiffs admitted that they did not allege that even one of the named plaintiffs had attempted to obtain different insurance and had either been denied or charged a higher rate for it, Op. at 4. “The existence of a reasonable altemative source precludes any arguments about whether a particular product or service constitutes 2 necessity..plaintiffs admit that they could have surrendered their policies; and not one of the named plaintiffs attempted to obtain different insurance and was denied coverage or charged a higher rate..” Op. at 9 Although plaintiffs refer to possible cancellation or surrender charges, their policies" all explain that, even when policy accumulation values are insufficient to pay the monthly expense charge, there is a 61 day grace period during which the policy death protection still exists. Furthermore, the policies provide that the policyholder can reinstate a lapsed policy during a five year petiod, as long as insurability requirements are met, In addition, the policies show that the surrender charge decreases as the policy remains in force. Thus, plaintiffs could have protested without suffering any loss, including due to surrender charges. Even if the surrender charge might be considered as possible duress under different facts and pleadings, they cannot be duress under the facts and pleadings in this case. Plaintiffs also assert that Dr. Nassos, Mary Ann Nassos and James Miller should not be barred by the voluntary payment doctrine because they owned "single premium policies" which they purchased with a “one time, lump sum payment" that was made before 1991, when Royal Maccabees notified policyholders about the Cost of Insurance rate increase. This is not correct. The fact is that none of the plaints purchased a single premium policy, which is a spetific type of life insurance product that permits only one payment at time of issue and has fully paid-up, guaranteed death ‘The policies are exhibits to the complaints and facts shown by exhibits control over inconsistent allegations, FH. Prince & Co. v. Towers Financial Corp., 275 Ill. App.3d 792. 656, N.B.2d 142 (Ist Dist. 1995); People ex rel, Hartigan v. E & E Hauling, 218 TL App.3d 28, 577 NE2d 1262, 1273 (ist Dist. 1991)benefits and cash values. Thi. is well known to named plaintiff Jai... _iller who was the very agent who sold these policies to the plaintiff, one of whom is his own wife. In fact, plaintiffs, through Mr. Miller, each purchased flexible premium universal life insurance policies (hereafter called "flexible policies"), which permit the policyholder to make premium deposits at any time in any amount (subject to federal tax premium limitations on life insurance policies and the minimum requirements specified in the policy). Under this type of policy, the policyholder makes premium deposits into an accumulation value, from which the insurance company deducts certain policy charges each month (including the Cost of Insurance or mortality cost, administrative expenses and policy fees or loads, depending on how the policy is designed). All of the policy's charges and any additional premium deposits are reported to the policy owner on a regular basis through the polioy’s Annual Statement ‘The fact that the plaintiffs made one premium deposit before they were notified about the Cost of Insurance rate increase in 1991, and then made no further deposits thereafter, means nothing as far as the voluntary payment doctrine is concerned because, before the rate increase went into effect, they each owned flexible policies, not single premium policies. These policies had accumulation values from which the Cost of Insurance was being continuously deducted each month by Royal Maccabees. In flexible policies, the Cost of Insurance charges and other policy costs are not "paid” ‘out of any one premium deposit, lie they are in @ fully paid-up single premium policy. Instead, they are deducted continuously, regardless of when policyholders choose to make premium deposits. Consequently, plaintiffs are relying on the wrong element about their policies to try to evade the voluntary payment doctrine. It is not the timing of their premium deposits that matters here because the Cost of Insurance charges are not paid once out of a flexible policy's premium, like they are in a single premium policy. The policies are called “Flexible Premium Adjustable Life” policies, and explain the “Adjustable Benefit Amount...Flexible Premium payments", as well as that there was an initial premium and monthly deduction of expense charges included for COI. The notice of the COI" increase was part of an annua — iement, which also shows that the t., © charge is a monthly deduction. In this case, Cost of Insurance charges were being deducted out of the accumulation values in plaintiff flexible policies before and after the Cost of Insurance rate increased occurred. The real clement of timing that matters is when Royal Maccabees notified the plaintiffs about the increased Cost of Insurance rates that were being deducted from their policies’ accumulation values (which notice was contained in each plaintiff 1991-92 Annual Statement). It was at that point that plaintifts had the opportunity to protest and avoid imposition of the voluntary payment doctrine, In its Opinion, the Court recognized this when it held that it did not matter when and how the plaintiffs made premium deposits to their flexible policies: “...it matters not whether. the premium is increased or the premium remains constant with the greater amount being allocated to the ‘COY' and lesser amount being allocated to the plaintiffs’ reserve accounts," {accumulation values], Op. at 8 ‘Therefore, this issue is not a basis for reconsideration ‘This contention, about whether there was payment, was considered and rejected by the Court in its prior ruling: “The plaintiffs next claim that the voluntary payment doctrine does not apply because there was no payment...no separate payments [Op. at 4]. . ‘The defendants ...point out that a greater portion of the premiums paid for by the plaintiffs were applied to the cost of insurance instead of becoming part of their cash accumulation; or, the costs were paid out of the deductions taken from the policies’ cash accumulations.” Op. at 7 Plaintiffs have not alleged that no single premium funds went into their accumulation accounts and then were not treated over time just as annual payment funds were, ie. the premiums were deducted periodically as due including the increased COI. Plaintiffs cannot make such allegations in good faith because they would be blatantly untrue. ‘The issue of whether payment was made is no different now than it was when the Court rendered its Opinion. ‘Thus, this issue is not a basis for reconsideration.Furthermore, a motiv.. _ -econsider cannot seek reconsiderai... sed on matters which ‘were not raised in the complaint which was pending at the time of this Court's ruling. See Continental Casualty v, Security Ins. Co. of Hartford, infra at 7. Plaintifis' erroneous factual assertion about payment is not found in the third amended complaint, and is contrary to the actual allegations of that pleading {"As a direct and proximate result of Defendant's [alleged] breach of contract...out of the premiums paid, or policy earnings, the Defendant charged more to the cost of insurance rates..." (Third Amended Complaint at (20)]. There is no question that the plaintiffs were charged for the increased cost of insurance for the reasons in the 1991 notice, and that notice was given of those charges in the 1991 premium notice. Although plaintiffs incorrectly characterize the premium payments by three of them, the facts were known to plaintiffs before the prior brief’, oral argument and ruling by this Court. Moreover, the prior briefs discussed the fact that some of the increased COT payments came from deductions out of the accumulated values of policies. Thus, even, if plaintiffs characterization was correct, reconsideration should be denied. U. Plaintiffs! Argument That The Voluntary Payment Doctrine Does Not Bar Equitable Ral Shonld Be Reesed Recast s morons Ras a ind Amand ier, Te Ui Ey ‘The Allegations Of The Thi i Complaint, And Is Incorrect As_A Matter Of Law Plaintiffs contend, for the very first time in their motion for reconsideration, that this Court's ruling should be reconsidered because it will deny them the opportunity to pursue equitable relief in the future. However, plaintiffs completely ignore the fact that they have not sought any such relief in this case under the pleadings pending at the time of the ruling in question. Rather, in their third amended complaint -- the pleading at issue in defendant's motion to dismiss and the subject of this court's Memorandum of Opinion -- plaintiffs have pleaded an action for an alleged breach of contract, for which they (and the proposed class) are secking monetary damages and declaratory relief that “Defendant has breached its contract....” Third Amended Complaint, prayer for relief at (B). Hence, by their own pleading, plaintifis have recognized that they have an adequate remedy at law, namelythe recoupment of moneys paw _3¢m to defendant (assuming argue...0 there is any merit to Plaintiffs' claim, which there is not). As such, plaintiffs are not entitled to equitable relief for the claims addressed in their third amended complaint, and their motion to reconsider should be denied. Plaintifs' new concer for what may happen in the future cannot relate back to the allegations made in the Third Amended Complaint. This new concern is not properly the basis for a motion to reconsider because it was not raised on the pleadings filed prior to the dismissal by the Court. Plaintifi' contention, that "{t]he complaint should not have been dismissed even if plaintiffs claims for damages is barred by the voluntary payment doctrine because they may obtain equitable relief preventing Maccabees from collecting these [alleged] unauthorized charges in the future" [Motion to Reconsider at p. 11], is an issue that falls outside the scope of the third amended complaint, defendant's motion to dismiss and the underlying facts and legal analysis of this court's Memorandum of Opinion. Simply stated, plaintiffS cannot, on a motion to reconsider, raise matters which they did not raise in their third amended complaint, See Continental Casualty Co. v. Security Ins, Co, of Hartford, 279 Il App.3d 815, 818, 665 N.E.2d 374 (Ist Dist. 1996), in which the court declined to consider an argument raised for the first time in a motion for reconsideration, holding that: “Motions for reconsideration are designed to bring to the court's attention newly discovered evidence that was unavailable at the time of the original hearing, changes in existing law or errors in the court's application of the law." Ina similar vein, in Kanter & Eisenberg v, Madison Associates 116 Ill.2d 506, 508 N.E.2d 1053 (1987) [a case cited by this Court in its Opinion at 3)], the Illinois Supreme Court dismissed the plaintiff's concer that its legal remedy was inadequate because of the possibility of successive actions between the parties. The Illinois Supreme Court stated that argument "had nothing to do with the salient question," which involved the existence of irreparable harm prior to the entry of the court’s final decision, 508 Ill, Dec. at 1057.. So, too, plaintiffs' new concern over being able to obtainequitable relief for “unauth.s charges in the future" -- which a 1 ihe basis of the third amended complaint -- cannot be properly raised in a motion to reconsider. Tn any event, the cases cited by plaintiffs at page 12 of their motion to reconsider, Kanter, Klesath v. Barber, 4 Il. App.3d 86, 280 N.B.2d 283 (3d Dist. 1972) and Cragg v. Levinson, 238 Til 69, 87 N.E. 121 (1909), are not helpful to plaintifs' position. Kanter involved issues about use of property consisting of an office lease. Klesath involved a farm lease. And, Cragg involved encroachments upon a residential lot by an adjoining lot owner. In all these cases, monetary damages were an inadequate remedy and there was ireparable harm that included the need for successive suits Both Kleseth and Cragg concern on-going and threatened continuing trespasses on each of the plaintiffs! respective properties. The court in Cragg also noted that when the threatened repeated trespasses did result in such litigation between the same parties, it first is necessary that the complainant's title be admitted or established in a prior action at law. In other words, equitable relief from successive actions required that a defendant admit to the on-going wrong or a prior finding of such by a court of law. Neither element is present in the instant case.. These cases provide no authority for the claim that the voluntary payment doctrine is not fully applicable to the facts alleged in the third amended complaint as found by this Court. This Court's Memorandum of Opinion demonstrates that the pleadings and motion papers, including the extensive briefs submitted to the court by the parties, were carefully and fully considered. The plaintiffs are not permitted to rehash arguments the court has rejected or to erect new arguments not based on the pleadings before the court. This court should reject their attempts to do s0 in the motion to reconsider. Tn addition, plaintifis filed to allege facts supporting such injunctive relief, or to even request such relief, in the third amended complaint. It is axiomatic, ...that an injunction is an extraordinary remedy which may be granted when the plaintiff establishes that his remedy at law is inadequate and he will suffer irreparable harm without the injunctive relief" (Sadat v. American Motors Corp. 104 8Ill.2d 105, 470 N.E.2d 977, . (1984). Moreover, "[a] well-pi. 1 complaint praying for injunctive relief must contain on its face a clear right to relief and state facts which establish the right to such relief in a positive, certain and precise manner.” (Sadat, 470N.E.2¢ at 1002). Further, “these factual allegations must specifically establish the inadequacy of legal remedy and the irreparable injury the plaintiff will suffer without the injunction." (Sadat 470 N.E.2d at 1002). Yet, despite plaintiffs’ current belated efforts to transform their breach of contract claim into that of an action for equitable relief, plaintiffy’ third amended complaint does not come close to satisfying these pleading requirements for injunctive relief. Rather, the essence of plaintiffs! claim is found in {20 of their third amended complaint, in which plaints state that they and the alleged class were damaged solely as "a direct and proximate result of Defendant’ [alleged] breach of contract," in that “out of the premiums paid, or policy earnings, the Defendant charged more to the cost of insurance rates .." These allegations refer to a monetary issue, and a past monetary issue at that. Plaintiffs ignore several of the most fundamental principles about injunctions. ILP "Injunctions": Sec. 16 at 267: "It should be shown that there isa clear and palpable violation of the plaintiffs rights or that the relief is necessary in order to prevent a definite violation of a lawful right by the defendant." Sec. 18 at 271: ...it must also appear that the injury is of an irreparable nature...an injury is irreparable when the injured party cannot be adequately compensated in damages or when the damages cannot be measured by any certain pecuniary standard.”. Sec. 20 at 273: “An injunction will not be granted where an adequate legal remedy exists, since an order to authorize an injunction there should be something particular or special in the case for which a court of law cannot afford adequate redress.” Sec. $1 at 299: “On the other hand, rights of property will not be protected by injunctive relief where there is another adequate remedy...[including] money damages for conversion.” Based on these principals of injunctive relief, although Royal Maccabees continues to bill and collect the COI charges, injunctive or other equitable relief is not appropriate under this motion to reconsider.Furthermore, the thin. ; 1ded complaint contained no refer. < , or even a hint that, plaintiffs were seeking injunctive relief. Plaintiffs incorrectly assert that their boilerplate request in the third amended complaint for "Such other and further relief as shall be just", amounts to a request for injunctive relief. Their reliance on Gleicher v. University Health Sciences, 224 Il. App.3d 77, 586 ‘N.E.2d 418 (Ist Dist. 1991), cited at page 11 of Plaintiff's Motion to Reconsider, is totally misplaced In Gleicher, the defendant was appealing the entry of a mandatory, permanent injunction that required it to honor its contract to appoint the plaintiff, a physician, to its professional staff. On appeal, the defendant argued that equitable relief was improper because plaintiff, in his complaint, had only sought damages. The Appellate Court held: "he purpose of a permanent injunction is to extend or maintain the status quo indefinitely after a hearing on the merits where it has been shown that the plaintiff is suffering irreparable harm and there is no adequate remedy at law." (166 Ill. Dec. 460, at 467) ‘The Appellate Court found that this requisite standard for equitable relief had been satisfied. Itheld there was sufficient evidence, including a judicial admission made by defendant in its answer, ‘to establish that, without the intervention of equity, plaintiff would suffer irreparable harm for which ‘there was no adequate remedy at law, It was in this factual context, including the defendant's judicial admission, that the Appellate Court also held that the prayer for relief in the plaintiff's complaint which sought "such other and further relief as shall be just," (166 Ill.Dec. at 467) was a sufficient basis to award equity. However, the Court went on to temper its decision on this point, noting that, *...where other reliefs sought, the court shall protect the adverse party against prejudice by reason of surprise." (166 Ill.Dec. 467). The Court found that based upon the facts of the case and relief granted, the defendant was not surprised or prejudiced. Such facts are not found in the instant case. Except now in its Motion to Reconsider, plaintiffs have never prayed for, requested or even suggested a need for injunctive relief, Plaintiffs! -entire focus has been on recovering premium payments previously made. Moreover, defendant has 10never made an admission agatuox rest evidencing the need for equita...._f. Most importantly, unlike in Gleicher, there has been no pleading or showing that plaintiffs have or will suffer irreparable harm for which there is no adequate remedy at law. Accordingly, the Gleicher decision is not applicable to the facts and issues at hand. While plaintiffs’ third amended complaint has a boilerplate ‘equitable prayer for relief, they never specifically raised the issue of equitable relief in their complaint or in their responses to defendant's motion to dismiss. Even assuming that plaintiffs had properly pled an action for such equitable relief in the context of the complaint itself (which they have not) or merely in their prayer for relief (which would be ineffective), the outcome of the instant motion would be the same because the voluntary payment doctrine also applies to claims for injunctive relief, In Corbett v. Devon Bank, 12 Ill. App.3d 559, 299 N.E.2d 521 (Ist Dist. 1973), the Appellate Court upheld the application of the voluntary payment doctrine in a case involving unauthorized fees allegedly charged by banks for issuance of Illinois license plates, ‘The Corbett plaintiffs contended that the voluntary payment doctrine of Illinois Glass Co.v, Chicago Telephone Co,, 234 Ill. 535, 85 N.E, 200 (1908), did not apply where an injunction was requested. The court rejected this position: “Nor can we find that the request for temporary injunction by plaintiffs was tantamount to payment under protest so as to defeat the defense of voluntary payment. The pendency of a suit praying for a temporary injunction cannot change the situation that the essence of all these transactions, as being purely voluntary, is established by the allegations of the complaint.” Corbett, 299 N.E 2d at 527-28. AAs the Corbett court held, the voluntary payment doctrine prechudes claims, not types of relief Corbett also held that a suit does not constitute a payment under protest, even for a named plaintiff, The Corbett court stated that plaintiffs, “urge a.fortiori, but without legal authority, that the filing of suit should also be sufficient. This argument is unavailing since plaintiffs’ second amended complaint alleges simply purchase of license plates by them from defendants in a necessarily voluntary manner." Corbett, 299 N.E.2d at 528. Furthermore, even assuming arguendo that the ulnamed plaintiffs could give ue given an appropriate protest of ,. at at some point, that protest does not apply to purported class members, Those other policyholders are continuing to voluntarily pay the COT increase, without filing any protest of their own. Therefore, even assuming arguendo reconsideration were justified for the named plaintiffs, a class action complaint still should not be allowed, The plaintiffs’ claims concerning injunctive relief are, therefore, belated arguments not supported by the record, legally incorrect, and a last ditch attempt to avoid the consequences of the correct application by this Court of the voluntary payment doctrine, Plaintiffs’ motion to reconsider should be denied. m. Previously Found By This Court, Plaintiffs H Ki Of Facts Under The Voluntary Payment Doctrine Re-hashing arguments from their brief, the plaintiffs again seek to challenge the “knowledge” requirement of the voluntary payment defense by arguing that their payments were made under various mistakes of fact: (1) plaintiffs had no knowledge of the true impact of AIDS-related deaths on mortality rates; and (2) that Maccabees’ statement relating to new federal taxes was allegedly “false and misleading,” ‘This point was rejected by this Court in its opinion, and is without merit now as well First, plaintiffs claim that the voluntary payment cannot apply to them because they did not have full knowledge of the impact of AIDS-related deaths upon the mortality rates of Maccabees’ insureds. The plaintiffS draw a quote from the 1908 case of Illinois Glass, in support of the mistaken contention that “full knowledge” means perfect knowledge. See Illinois Glass Co. v. Chicago ‘Telephone Co., 234 Ill. 535, 541 (Ill. 1908). Even assuming, arguendo, Ilinois Glass did stand for ‘his incorrect conclusion in 1908 when the case was decided, several more recently reported decisions have clarified that “full knowledge of the facts” does not mean perfect knowledge. Instead, as this Court already has ruled in this case, the voluntary payment doctrine requires only those facts 12necessury to provide payers waa site knowledge about the increase. C 18-9, Moreover, the Minois Glass cour itself did not have such a high standard in mind. For example, the actual opinion does not--as plaintiffs incorrectly attribute-- require “full knowledge of the facts,” but merely “knowledge of the facts.” Ilinois Glass, 234 Ill. at $41. In support of these arguments repeated in essence from its brief opposing Maccabees’ motion to dismiss, plaintiffs cite Papers Unlimited for the erroneous notion that the voluntary payment defense requires a defendant to assume the burden of proving the plaintiffs paid “with full knowledge ofthe facts.” Mo. to Reconsid, at p. 6 citing Papers Unlimited v, Park, 253 Ill. App. 3d 150, 152, 625 NE.2d 373, 375 (Ist Dist. 1993). The Papers Unlimited case, however, has nothing whatsoever to do with the voluntary payment doctrine, Instead, that case stands for an entirely different proposition; namely, a plaintiff is not precluded from seeking recovery on a second suit based upon the same claims against a different defendant, where he only learned of his claim against that defendant in the first suit, and there is no showing of identity or privity between the defendants in the two cases. 253 Ill. App. 34 at 153-54, 625 N.E.2d at 376. Papers Unlimited is limited to the application of the doctrines of res judicata and account stated, and offers nothing to the analysis of the law or facts at ber. As to plaintiff factual argument that the notice was insufficient, this Court clearly was satisfied that the plaintiffs had sufficient. knowledge of the relevant facts upon which to base a protest or raise questions, The Court found that the 1991-92 annual statement clearly advised the plaintiffs of negative mortality experience and a necessary adjustment-facts which were more than sufficient for the plaintiffs to have a basis to protest. Op. at 9. However, no protest was made, despite adequate notice to plaintiffs, Plaintiffs also repeat their argument that Maccabees’ 1991-92 annual statement was false and misleading. ‘This is an ineffective effort to avoid the voluntary payment doctrine through “fraud or misrepresentation.” While Plaintiffs cite Kanter in their motion to reconsider at 9 for other issues, 1BKanter also involved allegations ¢ 1d and misrepresentation by a lanuot agent concerning the level of costs that would be charged under a lease, The tenant allegedly relied on the agent's fraud and misrepresentation in signing the lease under which the disputed cost payments were made. ‘That court held that the voluntary payment doctrine was applicable, but that there was compulsion, so the claim was not barred. However, the mere fact that there were allegations of fraudulent misrepresentations of cost levels, purportedly relied on by a plaintifFin entering into a contract under which the disputed payments were made, did not in itself preclude application of the voluntary payment doctrine. Moreover, there was no fraud or misrepresentation here. ‘The Court’s Opinion addresses the specific points previously raised by plaintiff, including that plaintiffS had argued that the notice was inadequate because “the language does not explain the exact nature of the adjustments... the notice fails to tell the policy holder that the ‘new federal insurance taxes” referred to were not taxes, but were actually an accounting change...Op. at 4 However, as this Court found, “..all of the information necessary to inform the plaintiffs of the increase was provided in the Annual Statement.” Op. at 9-10. On the same issue, plaintiffs argue as if RMLIC invented the term DAC tax to mislead its customers, the term is the normal one used from inception of the tax. ‘There are hundreds of references using that term. For example [see copies attached as Exhibit A]: ‘The June 10, 1992 Proposed Rules, office of Personnel Management 48 CFR Ch. 21, 1992 WL 57 FR 24710, sec, 2131.205-41 regarding general and administrative expenses states: "Federal tax paid on policy acquisition expenses (Deferred Acquisition Cost ‘Dac’ tax) shall be an allowable cost. The DAC tax includes the tax on additional premiums remitted to the contractor to mect its DAC tax obligations.” Brostoff, “IRS Proposes Regulations On DAC," National Underwriter - Life & Health (Nov. 25, 1991), 1991 WL 2877539 uses the term "DAC tax." King, “Agents Take Stock Of Gains And Losses In 1991," National ‘Underwriter - Life & Health-Financial Services, 1991 WL 2877411, Dec. 30, 1991: "Policy performance in the form of interest rates and dividends has also 14been deflatea uy effect of Deferred Acquisition Cust: ore generally known as the DAC tax. Insurers also are slowly adjusting policies to reflect increasing mortality costs." ‘Town send, “It Was "The Year Of Shock’ From Mutual Life Companies," National Underwriter - Life & Health, Dec. 30, 1991, 1991 WL 2877429, “Federal income taxes have increased for the entire life industry, with the infamous DAC (deferred acquisition cost) tax." Plaintiffs refer to the fact that the DAC tax portion of the COT increase was not applied to policies which were not part of a pension plan [Mo. Reconsid, at 8]. This demonstrates that the company acted in good faith to limit the increase based on the actual impact of the tax changes Conclusion Because plaintiffs claims are barred by the voluntary payment defense, and since plaintiffs do not have a basis for this Court to reconsider and alter its prior Opinion, plaintiffs’ motion for reconsideration should be denied. Respectiilly submitted, ROYAL MACCABEES LIFE INSURANCE COMPANY MAE One of the Defendant’s Attorneys Mark K. Schoenfield Daniel E. Beederman David A. Axelrod Schoenberg, Fisher, Newman & Rosenberg, Ltd, 222 South Riverside Plaza, Suite 2100 Chicago, Illinois 60606-6101 Phone: (312) 648-2300 Firm No. 90689 PAUSERSHLANPLR ADINGMKSROYALIRECONSID 298.369 8109 15EXHIBIT APage 1 itation Found Document Rank 1 of 1 Database 1/25/91. NATUNDLH 1 NATUNDLA 1/25/91 Nat'l Underwriter - Life & Health Ins. Edition 1 991 WL 2877539 National Underwriter - Life & Health Copyright National Underwriter Co. 1991 Monday, November 25, 1991 IRS PROPOSES REGULATIONS ON DAC TAX. (DEFERRED ACQUISITION COSTS) By Steven Brostoff IRS Proposes Regulations On DAC Tax WASHINGTON--The Internal Revenue Service will hold a public \earing on Jan. 31, 1992, on proposed regulations relating to the x on deferred acquisition costs imposed on life insurance * sompanies last year. ‘The IRS requested that those interested in commenting on the sroposed regulations specifically discuss six issues: + Whether the categories of groups recognized for purposes of the yroup life insurance definition should be expanded to include jiscretionary groups; * Whether, and in what circumstances, the proposed treatment of exchanges in insurance contracts would require insurers to capitalize excessive amounts; + Whether, and in what circumstances, a duplication or omission >f net premiums may result under the proposed treatment of premiums and other considerations for reinsurance; * Whether special rules should be provided to ensure consistent creatment of reinsurance premiums in cases where the ceding company and the reinsurer have different taxable years; * How changes to the proposed regulations could ease the burden of complying with the regulations without creating undue tax avoidance opportunities; and, * How the law should apply to reinsurance agreements undertaken incident to different non-recognition transactions. The IRS estimated that the average recordkeeping burden relating to the proposed regulations would be one hour per respondent . Copr. © West 1999 No Claim to Orig. U.S. Govt. Works11/25/91 NATUNDLH 2 The DAC tax provision enacted in 1990 requires life insurers to sapitalize certain policy acquisition costs, rather than expense chem, according to a specified schedule. For group life contracts, 2.05 percent of premiums will have to oe capitalized as policy acquisition expenses. For annuities, the Figure is 1.75 percent. For most other contracts, the figure is 7.7 percent. Thus, the proposed definition of group life insurance is crucial for determining whether a particular contract will qualify for the 2.05 percent rate or the 7.7 percent rate. The proposed regulation appears to adopt a fairly restrictive definition of group life insurance. The proposal says that for a contract to qualify for group life treatment, it must cover a group of individuals defined by reference to employment relationsHip, membership in an organization or similar factor. The proposal says that the types of groups satisfying this requirement include an employee group, a debtor group, a labor union group, a credit union group or certain association groups. However, the proposal specifically does not adopt the group life insurance definition and Group Life Insurance Standard Provisions Model Act approved by the National Association of Insurance Commissioners. IRS noted that a group that might be treated as a discretionary group under the NAIC model act would not necessarily qualify as a group under the proposed regulations. Also relating to groups, the proposal says that all members of the group, in general, must be eligible for coverage without regard to evidence of insurability. There are two exceptions. First, for contracts that provide only group term insurance without cash surrender value, coverage may be denied or limited based on the response to a "permissible" questionnaire, but not on any other basis, including a medical examination. Second, coverage may be denied or limited to any member of the group based on any evidence of insurability obtained from the member or his doctor prior to Jan. 1, 1993. Also under the proposal, the only permissible differences in Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 211/25/91 NATUNDLH 2 sremiums are those based on age, gender or smoking habits. Turning to the definition of net premiums, the proposal notes that according to the law, net premiums for each category of insurance contracts will equal the excess, if any, of the "gross smount of premiums and other consideration" for the contracts, over rhe sum of return premiums and premiums incurred for reinsurance. Under the proposed regulations, this equation would work as follows: If an insurance or annuity contract is exchanged for a specified insurance contract, the insurance company must include the fair market value of the contract issued in the exchange in its "gross amount of premiums and other consideration" for the issuance of the new contract. thie rule applies whether the exchange is initiated by a policyholder or the insurance company. 2 In addition, the proposal says that an amount deposited with the insurance company is not to be treated as a premium until it is applied to, or irrevocably committed to, the payment of premiums. The proposal adds that payment made to an insurance company relating to a retired life reserve arrangement is treated as irrevocably committed to the payment of premiums. Deferred and uncollected premiums are not included in "gross amount. of premiums and other considerations" because they have not accrued for tax purposes. IRS also notes that the law excludes from "gross amount of premiums and other consideration" certain policyholder dividends that are treated as paid to the policyholder and returned to the insurance company as a premium. ‘The proposed regulation relating to this section of the law excludes from "gross amount of premiums and other consideration" amounts that are applied to increase benefits or reduce the premiums otherwise required to be paid on the same contract that generated the dividend. Regarding reinsurance, IRS noted that the law requires ceding companies to reduce their "gross amount of premium and other consideration" by the amount incurred as reinsurance premiums. Two “anti-abuse" rules applied to this. The first rule bars avoidance of the capitalization requirement when a United States Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 3[1/25/91 NATUNDLH 1 insurer pays premiums to a reinsurer that is not subject to U.S. reinsurance tax. The second rule authorizes the Treasury Department to issue regulations ensuring that reinsurance transactions are treated consistently. Under the proposed regulation, to determine "gross amount of premiums and other consideration," all items of consideration exchanged by a ceding company and a reinsurer are netted together. ‘The net negative consideration determined by a party reduces its net premiums. The net positive consideration determined by the other party increases its net premiums. This, IRS said, ensures consistency. The proposal also prevents the use of a reinsurance agreement to reduce the amount to be capitalized as a policy acquisition expense. 3£ a party to a reinsurance transaction that has net positive consideration has general deductions that limit the policy acquisition expenses it would otherwise be required to capitalize, the other party cannot reduce its net premiums by the full amount of the net negative consideration. - INDEX REFERENCES KEY WORDS: UNITED STATES. INTERNAL REVENUE SERVICE; LIFE INSURANCE INDUSTRY; CONSOLIDATION AND MERGER OF CORPORATIONS INDUSTRY: INSURANCE; LIFE INSURANCE (INS INL) SIC: 6311; 9311 Word Count: 1034 11/25/91 NATUNDLH 1 END OF DOCUMENT Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 4‘ Page 5 itation Found Document Rank 1 of 1 Database 2/30/91 NATUNDLH 39 NATUNDLH 2/30/91 Nat'l Underwriter - Life & Health Ins. Edition 39 991 WL 2877411 National Underwriter Life & Health-Financial Services Edition COPYRIGHT 1991 National Underwriter Company Monday, December 30, 1991 Agents take stock of gains and losses in 1991 carole King Agents Take Stock Of Gains And Losses In 1991 Nineteen ninety-one has been termed the "The Year of Disillusionment" . both as to how the public perceives the stability and safety of life Insurance products as well as in the ability of the U.S. ecdnomy to ul] itself out of recession. the year started out on a mild note, with only the slightest hint of what was to come in a article in NU on Jan. 7, declaring "Executive Life Cos. To Stop Sales in N.J. Pending State Study. Most people thought Executive Life was going to be a single isolated case of an overly-aggressive company getting its due, and that no other companies would be similarly affected. Equitable Life, New York, for sure, had its troubles but seemed to be moving toward a solution by demutualizing. But then the world began to unravel for real in April, with the california and New York departments moving on Executive Life companies, creditors closing in on Monarch Life, and California and Virginia seizing First Capital and Fidelity Bankers Life, respectively. Still, most agents were able to distance themselves from these events. But the crusher came in July with the seizure of the venerable Mutual Benefit Life by the New Jersey Department after a run on the company precipitated by a ratings downgrade, nervous agents and policyholders, and negative press reports. Agents not only felt betrayed by the industry but victimized by the press, which most thought was spending undue ink comparing the ills of the industry with the Savings and Loan crisis and, thereby, unduly alarming consumers. However, behind the scenes, some agents were capitalizing on the woes Copr. © West 1999 No Claim to Orig. U.S. Govt. Works[2/30/91 NATUNDLE 39 >f other companies and creating their own form of alarm among consumers xy denigrating competitors. Equitable agents, for instance, were caught in a barrage of negative selling tactics that destroyed morale and scared away clients. At the General Agents‘ and Managers‘ Association annual meeting in san Francisco, Equitable agency head, George Karr, 1990 inductee into 3AMA's hall of fame gave an impassioned diatribe against company oashing and agent stealing. Mr. Karr predicted that if agent and policyholder recycling continued there will be no career agency companies because bottom line pressures would be too great. Not only have industry leaders like Ernest Cragg, chairman of the uife Insurance Marketing and Research Association, called for the pashing to stop but state insurance departments have issued warnings to the industry that negative selling tactics may violate laws ‘against unfair trade practices. Most of the industry's ills, however, have been the result of precipitous decline in the value of insurer investments in real estate, junk bonds and general interest rates. Policy performance in the form of interest rates and dividends has also been deflated by the effects of Deferred Acquisition Costs, more generally known as the DAC tax. Insurers also are slowly adjusting policies to reflect increasing mortality costs. News about policy performance, however, has taken a lot longer in getting to the public than company performance. Policy illustrations and projections of future values have not fully reflected current economics, and consumers are beginning to sue for what they feel are misrepresentations. In reaction to sagging consumer confidence, groups like the American Society of CLU & ChFC, along with National Association of Life Underwriters, are revising their suggested illustration standards. The Society of Actuaries' task force is doing a study of its own. Agents and companies are firing salvos at each other as to who is to blame for misleading proposals, but this is a chicken-and-egg situation with origins in the high-flying days of the early @0s when inflation ruled the roost. John Neighbors, 1990-91 president of NALU, said he has heard both Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 612/30/91 NATUNDLH 39 sides of the situation: Agents contend that companies prepare the llustrations, yet company officers say they are only responding to the jemands of agents. However, Mr. Neighbors believes most of the major companies with large field forces are now acting responsibly and are adjusting policy srojects, although a minority of small companies still are competing vith unrealistic proposals because they can't compete any other way, he said. This also has been the year of rating agencies. Some have compared che raters to invading armies sweeping in to capitalize on civil mrest, and to which all good subjects must pay homage. Others see the agencies as fulfilling the role regulators should have performed. But nost agents, whether or not they like or understand the ratings, have seen forced to use one or all of them to quell policyholder fears. Agents groups have coined their own term to identify the research and analysis agents must do on the companies they sell. "Due Care," not "Due Diligence," is the industry correct term to describe what agents Jo, according to the American College, the American Society of CLU and ChFC, and the National Association of Life Underwriters. Tax-wise, agents had been hoping for resolution of the status of long-term care benefits payments and clarification of technical concerns relating to pension simplification. However, Congress did very little to answer some of these concerns, said Mr. Neighbors. We were hoping that by getting some pension simplification passed that employers would be more inclined to improve their pensions where a lot of them have been put on hold because of the complexity of the rules and regulations," he said. Legislatively, agents also were disappointed that Congress chose not to close two banking loopholes: the Delaware loophole allowing bank sales of insurance nationwide through Delaware-chartered banks, and the towns of 5,000 loophole. On the plus side, the industry was spared any new tax laws. However, as the year comes to an end, fears of recession's effects on the industry are replacing anxieties about insurer insolvency. Although the recession has certainly hurt corporate business, said Donald Mehlig, 1990-91 president of the American Society of CLU & ChFC, estate planning sales have been the one bright spot in the sales year. Insurance company consolidations will be the savior of the industry Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 7-2/30/91 NATUNDLH 39 in the 90s or there will be more Mutual Benefits, Mr. Mehlig predicts. For agents, this will mean a return to the career agency field force sy independent producers who left in the 80s. Agents will be looking for more support from insurers, although the levels of support are likely to be a lot lower than in the past, said Mr. Mehlig, adding that che alternative is to have no support at all as an independent. Companies will have much more control over their agents and will much nore be able to say "The business stays here or adios," he said. Variable products are predicted to be a big player for the 90s. With these products, companies will be able to gain even more control over agents because of National Association Securities Dealers licensing requirements. This is a zero sum game for agents, said Mr. Mehlig. "Insuxance companies got clobbered because they paid all the expenses and only got half of the business and the other half went to niche companies that were living off their field forces." The payoff for agents, he believes, is that as insurers are able to provide more services and better support because of increased business from their career field forces, agents' lives should be simplified. - INDEX REFERENCES - KEY WORDS: INSURANCE AGENTS LIFE INSURANCE INDUSTRY: Insurance (INS) sic: 6311 6411 Word Count: 1207 12/30/91 NATUNDLH 39 END OF DOCUMENT Copr. © West 1999 No Claim to Orig. U.S. Govt. Works Page 8Page 9 titation Found Document Rank 1 of 1 Database 12/30/91 NATUNDLH 4 NATUNDLE 12/30/91 Nat'l Underwriter - Life & Health Ins. Edition 4 1991 WL 2877429 National Underwriter - Life & Health Copyright National Underwriter Co. 1991 Monday, December 30, 1991 IT WAS 'THE YEAR OF SHOCK' FOR MUTUAL LIFE COMPANIES. By Frederick $. Townsend It Was degrees The Year Of Shock! For Mutual Life Companies 1991 was "The Year of Shock" for mutual life insurance companies. Eten considered invincible and problem-free, because of their age, size, traditional whole life products and policy dividend buffer against adverse experience, mutual life insurers fell prey to the sumulative impact of changes in the life insurance industry. Many major life insurers found themselves exposed to changes in sroducts and product mix, the interest rate environment, highyield sond euphoria, overbuilding and overlending in the commercial real estate market, and an increase in taxation of the life insurance industry. Equitable Life Assurance Society of the United States gave notice chat all was not well with major mutual life insurers when, in December 1990, it announced that it would seek to demutualize and raise additional capital. Mutual Benefit Life stunned the life insurance industry in May 1991, when news of merger talks with Metropolitan Life Insurance company appeared in the press. This was followed by Mutual Benefit joing into conservation. Product changes in the life insurance industry over the last few years have moved many major companies away from traditional whole life policies with long liability and long asset durations, to investment products with short liability and short asset durations (if properly matched) . In a move to capture investment-oriented business, companies invested in high-yield bonds, commercial mortgage loans and real estate. Ultimately, this impacted liquidity and asset values when pusiness stalled, vacancies rose and real estate prices tumbled, and annuity policyholders took advantage of surrender options. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 10 12/30/91 NATUNDLH 4 Investment grade bonds are only 47 percent of the mutual life industry invested assets, and 41 percent of their total bonds are srivate placements. High-yield bonds, mortgages and real estate were 36 percent of mutual life industry assets at 12/31/90. At 12/31/90, Mutual Benefit and Equitable ranked @0th and 78th among 80 large mutuals, with 24 percent and 32 percent of their assets in investment grade bonds (versus a 47 percent composite) . Several major mutual life insurers have mortgages and real estate equal to 30 percent to 50 percent of total surplus, versus 30.2 percent for the mutual life industry as a whole. Many mortgages have palloon payments at the end of three to seven year terms, to match maturities on guaranteed investment contracts. Mortgages, real estate, high-yield bonds and LBO funds were 55 percent of Equitable's invested assets at 12/31/90, leading‘ Equitable to demutualize and sell 45 percent of the company for $1 pillion to Axa-Midi, a French concern. Such assets were 43 percent of Mutual Benefit's investments at 12/31/90, with a concentration in four major real estate projects. Mutual Benefit was forced to sell its group life and health operations for a contigent $506 million. Chief executives must relearn the three R's: reading, writing, arithmetic, have become real estate, rumors, run on the bank. Short term liabilities, and surrender options, require holding short term, liquid assets. Due to surrenders and maturities, net operating cash flow fell steadily from 24 percent to 17 percent of total income from 1986 to 1990. Net yield for mutuals was 8.76 percent in 1990, 55 basis points below the entire life industry yield of 9.31 percent. Sources of surplus growth include earnings and equity in affiliates. Mutual company returns rose for the third consecutive year in 1990, but were only an 8.4 percent return on mean equity and a 0.59 percent return on mean invested assets. Federal income taxes have increased for the entire life industry, with the infamous DAC (deferred acquisition cost) tax. Pretax 1990 returns for mutuals were 10.4 percent on mean equity and 0.72 percent on mean invested assets. Net capital losses of $1,913 million in 1990 consumed 64 percent of $2,973 operating gain for mutual life insurers. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 11 12/30/91 NATUNDLH 4 The number of mutual life insurers fell 32 percent, from 171 sompanies in 1953 to 117 companies in 1989 (ACLI data). In the last three years, Chicago Metropolitan, Maccabees Mutual, Mutual Security and Rushmore Mutual demutualized, and Charlotte Liberty, Manhattan Mutual, Praetorian Mutual and Standard Mutual were merged into other companies. Demutualizations, mergers sales of business lines, and joint ventures will continue to occur, not only to survive current conditions, but also to achieve efficient expense ratios and offer competitive products, whether reflected in product prices or policyholder dividend scales. Despite the cushion perceived in dividend scales, mutual companies are facing the same competitive conditions as stock companies, and have no access to capital markets. Those mutual companies that cannot respond to changing industry conditioris are likely to merge or demutualize. only 42 percent of 110 U.S. mutual life insurance companies earned their aggregate policyholder dividends during each of the five years 1986-1990, inclusive, according to research which my firm, Townsend & Schupp Co., recently completed. Comparable ratios for the five years ending 1988, 1989 and 1990, respectively, are 46 percent, 44 percent and 42 percent. Thus, the percent of comapnies earning their policy dividends has been decreasing. When one considers that non-earning companies have been acquired, or demutualized, the downward trend may be slightly sharper than indicated by the preceding ratios. Table I shows the distribution of 110 mutual life insurance companies by the trend of their aggregate policyholder dividend payments during 1986-1990, and their ability to earn such aggregate dividends. table : Table I Companies Reporting Pretax Operating Gains Aggregate Policy Dividends All Years Less Than For 1986-1990 Were: 1986-1990 All Years Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 12 12/30/91 NATUNDLH 4 Increasing 17 12 Relatively Constant 15 15 Decreasing 7 7 Total Div. Paying Companies 39 34 Small Companies: Life Exposure 6 19 A&H Exposure 1 a Total Smaller Companies 7 30 Total All Companies 46 64 7 Aggregate policyholder dividends are a function of (i) changes in dividend scales, (2) changes in new business mix, and (3) changes in the age of the in-force business. Thus, a rise or decline in aggregate policyholder dividends does not necessarily reflect a corresponding change in the company's current dividend scales. The first group consists of 73 mutual companies which paid policyholder dividends in 1990, and is split (vertically) according to the trend of their aggregate policyholder dividends paid during 1986-1990. Aggregate policyholder dividends were earned in all five years (1986-1990) by 59 percent of 29 companies with increasing aggregate dividends, and by 50 percent of both 30 companies with relatively constant aggregate dividends, and 14 companies with decreasing aggregate dividends. The second group consists of 37 smaller mutual life companies which paid less than $0.5 million in policyholder dividends per year during 1986-1990. Only seven of 37 small companies earned their dividend scale in all five years. Only one of 12 health insurers earned their policyholder dividends in all five years. Of companies with more than $1 billion total surplus (surplus plus MSVR), all but Equitable Life Assurance reported pretax earnings in all five years, 1986-1990. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 13 2/30/91 NATUNDLH 4 Only 17 of 73 major companies experienced a rising trend in their ggregate policy dividends from 1986 to 1990, and earned their lividends in all five years. Large companies which earned their rising aggregate policy lividends during 1986-1990 included Massachusetts Mutual, jetropolitan, New York Life, Northwestern Mutual, Principal Mutual znd (surprise) Mutual Benefit. Smaller companies in this category included Berkshire Life, ‘entury Life, Columbian Mutual, Government Personnel, Home Life, Jinnesota Mutual, Ohio National, Security National (both Nebraska and N.Y.), Shenandoah Life and state Mutual of Ga. Twelve companies had a rising trend in aggregate policy dividends From 1986 to 1990, but pretax operating earnings before dividends vere less than policy dividends in one or more years. Provident futual reported pretax operating losses after policy dividends in all five years, New England Mutual in four of five years, and \merican Mutual, Covenant Life, Guardian Life and State Life [Insurance Fund in two of five years. It must be kept in mind that certain companies, such as Jorthwestern Mutual and New England Mutual, have a policy of funding sart of their surplus growth and dividend scale from capital gains. Thus, policy dividend payments could be "earned" despite incurring oretax operating losses. only half of companies with constant and/or decreasing aggregate policy dividends earned their policy divedends in ali five years, 1986-1990. Such companies may have reduced dividend scales to try to produce surplus growth. Thirty of 73 major companies paid relatively constant aggregate dividends from 1986 to 1990. Only seven of 30 companies had surplus and M.S.V.R. over $140 million. This may reflect the inability of smaller companies to raise dividend scales, or to generate in-force growth . Ten of the 15 companies with relatively constant aggregate policyholder dividends from 1986 to 1990, which failed to earn their dividends in at least one year, have less than $85 million total surplus. Seven companies failed to earn their dividends in two or more of the five years. North Carolina Mutual had operating losses after policy dividends in each of the last four years, and sold an investment management company to raise money in 1991. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 14 .2/30/91 NATUNDLH 4 Fourteen of 73 major companies experienced a decreasing trend in their aggregate policy dividends from 1986 to 1990, which may -eflect a change in business mix, termination of older policies, or , reduction in dividend scales. Hach of the 14 companies had less chan $750 million of surplus and M.S.V.R,, but 11 companies exceeded 3100 million total surplus. Seven of the 14 companies failed to earn their policy dividends in at least one year, including Acacia Mutual, Fidelity Mutual and Jational Life of Vermont. Twenty-five small companies (a) paid either zero, or less than $0.5 million in policyholder dividends in 1990, and (b) earned less than $2 million in each of the last five years, 1986-1990. Surplus and M.S.V.R, ranges from $0.4 million to $24 million for the 25 companies. Nineteen of the 25 small companies failed to earn their aggregate policy dividends in all five years, 1986-1990, and 13 companies failed to earn their policy dividends in two or more years. American ome, Charlotte Liberty, and Western Mutual Life and Casualty failed to earn their policy dividends in three of five years. Mutual Life of D.C. had pretax operating losses in all five years, and total surplus fell from $3.2 million to §1.8 million, Golden Eagle had operating losses in each of the last four years, 1987-1990, and total surplus fell from $2.3 million to $1.4 million. Twelve companies have high health insurance exposure, in addition to paying less than $0.5 million in policy dividends in each of the last five years. Only one of the companies, Physicians Mutual, reported operating earnings in all five years. Seven companies (Arkansas Blue Cross, Central States, Educators Mutual Insurance, Electric Mutual, Guarantee Trust, Health Care, and United Mutual) failed to earn their policy dividends in two or more years. Health premiums in force range from 1.5 to 17.7 times total surplus. Net capital gains are a secondary source of potential surplus growth, in addition to statutory earnings. Some companies have invested heavily in subsidiary companies, or in investment real estate, intending to generate surplus through realized capital gains, and unrealized capital gains or equity in undistributed earnings of subsidiaries. Four companies reported $0.5 million or more in capital gains in Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 15 12/30/91 NATUNDLH 4 each of the last five years, 1986-1990. Their cumulative capital yains generated 68 percent of present total surplus for Unity Mutual, 47 percent for New England Mutual, 15 percent for American United, and 13 percent for Ohio National. Conversely, capital losses are a source of erosion of a company's surplus position. Chicago Metro Mutual reported net capital losses in each year, 1986-1990, which $2 million, and was recently acquired by Atlanta Life. Frederick S. Townsend ie president of The Townsend & Schupp Co., a Hartford-based investment banking and credit research firm specializing in the ineurance industry. This article is based on information in The Mutual Life Insurance Industry Handbook by The Townsend & Schupp Co. TABULAR OR GRAPHIC MATERIAL SET FORTH IN THIS DOCUMENT IS NOT DISPLAYABLE ILLUSTRATION: table ~--- INDEX REFERENCES ---- KEY WORDS: LIFE INSURANCE INDUSTRY INDUSTRY: INSURANCE; LIFE INSURANCE (INS INL) sIc: 6311 Word Count: 1968 12/30/91 NATUNDLH 4 END OF DOCUMENT copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 18 citation Found Document Rank 1 of 1 Database 57 FR 24704-01 FR 1992 WL 124210 (F.R.) (Cite as: 57 FR 24704) PROPOSED RULES OFFICE OF PERSONNEL MANAGEMENT 48 CFR Chapter 21 RIN 3206-AEO4 Federal Employees’ Group Life Insurance Program; Acquisition Regulation Wednesday, June 10, 1992 AGENCY: Office of Personnel Management . ACTION: Proposed rulemaking. SUMMARY: The Office of Personnel Management is proposing to establish Chapter 21 in Title 48 of the Code of Federal Regulations (Parts 2100-2199). This regulation describes the method by which the Office of Personnel Management (OPM) implements and supplements the Federal Acquisition Regulation (FAR) for the Federal Employees! Group Life Insurance (FEGLI) Program. OPM is proposing this regulation to identify basic and significant acquisition policies unique to the FEGLI Program. The regulation would be referred to as the Federal Employees’ Group Life Insurance Program Acquisition Regulation (LIFAR) . PATES: Comments must be received on or before July 10, 1992. ADDRESSES: Written comments may be sent to Andrea S. Minniear, Assistant Director for Retirement and Insurance Policy, Retirement and Insurance Group, Office of Personnel Management, P.O. Box 57, Washington, DC 20044, or delivered to OPM, room 4351, 1900 E Street, NW., Washington, DC. FOR FURTHER INFORMATION CONTACT: Abby L. Block, (202) 606-0191. SUPPLEMENTARY INFORMATION: OPM is proposing thie regulation to provide direction and uniformity in the agency's procurement of life insurance coverage for Federal employees, retirees, and survivors and to assist life insurance carriers and other interested parties in understanding OPM's application of the Federal Acquisition Regulation (FAR) (48 CFR chapter 1) to the FEGLI Program. The FAR system was established for the codification and publication of uniform policies and procedures for acquisition by all executive agencies. The FAR system consists of those Government-wide acquisition regulations in 48 CFR chapter 1 and agency acquisition regulations in subsequent chapters issued by individual Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 19 57 FR 24704-01 (Cite as: 57 FR 24704) agencies. OPM is now proposing the LIFAR, established as chapter 21 within title 48 of the Code of Federal Regulations, to describe the method by which it will implement and supplement the FAR for the specific purpose of acquiring and administering contracts with life insurance carriers in the FEGLI Program. The fundamental principle underlying the LIFAR is that the FAR is applicable in general to contracts negotiated under the FEGLI Program although specific application of the FAR necessarily differs from its application to other procurement contracts because of the distinct nature of the service procured, i.e., life insurance coverage. Indeed, it is well understood that a number of provisions of the FAR would be impossible to apply literally in a practical manner to a life insurance contract. In accordance with FAR subpart 1.3, the LIFAR does not unnecessarily repeat, paraphrase, or otherwise restate material contained in the FAR. Therefore, the LIFAR is not, by itself, a complete document as it must be used in conjunction with the FAR. Where the FAR has no practical applicability to the FEGLI Program, and attempts to apply a given provision would be counterproductive and inconsistent with the intent of the FAR, specific notation is provided along with the authority for the determination of nonapplicability. Where a FAR part or subpart is adequate for use without further OPM implementation or supplementation, or is clearly irrelevant, no mention is cited in the LIFAR. Thus, the order of use is (1) FAR; (2) LIFAR. The LIFAR is intended to identify basic and significant acquisition policies unique to the FEGLI Program. It is also important to note that the LIFAR does not replace, incorporate, or supplement regulations found at 5 CFR part 870 which provide the substantive policy guidance for administration of the life insurance program under 5 U.S.C. chapter 87. LIFAR subpart 2115.9 provides a profit opportunity for the contractor in the form of a service charge which may be negotiated in lieu of the risk charge that OPM has provided in the past. The service charge represents that element of the total remuneration that contractors may receive for contract performance over and above allowable costs (FAR 15.901). It does not guarantee a profit but is intended to be used as an incentive to stimulate efficient contract performance and as a guide to agencies entering negotiations. Thus, the proposed factors are intended to give structure to the process of determining a profit prenegotiation objective and to provide justification and documentation of the profits paid. The service charge formula allows for appropriate increases over time based on contractor performance. While OPM was developing the LIFAR, Congress passed the Omnibus Budget Reconciliation Act of 1990. Section 11301 of title XI of this Act, now codified at 26 U.S.C. 848, prescribes new rules for the capitalization of insurance policy acquisition expenses (Deferred Acquisition Cost "DAC" tax). Since the DAC tax, as it relates to the FEGLI Program, is a tax on assets rather than net profit, it is an allowable contract expense under Government contract cost principles (see 2131.205-41(c)). For purposes of the LIFAR, the DAC tax includes the tax on additional premium remitted to the contractor to meet its DAC tax obligations. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 20 57 FR 24704-01 (Cite as: 57 FR 24704) 2.0. 12291, Federal Regulation OPM has determined that this is not a major rule as defined under section 1(b) >f E.0, 12291, Federal Regulation. Regulatory Flexibility Act 1 certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation implements and supplements che Federal Acquisition Regulation, which has already been established for entities contracting with the Federal Government. List of Subjects in 48 CFR Chapter 21 Administrative practice and procedure, Government contracts, Life insurance. Office of Personnel Management. Constance Berry Newman, Director. Accordingly, OPM proposes to amend title 48, Code of Federal Regulations, by adding chapter 21 (parts 2100-2199) to read as follows: CHAPTER 21--OFFICE OF PERSONNEL MANAGEMENT, FEDERAL EMPLOYEES GROUP LIFE INSURANCE ACQUISITION REGULATION SUBCHAPTER A--GENERAL Part 2101 Federal Acquisition Regulations system. 2102 Definitions of words and terms. 2103 Improper business practices and personal conflicts of interest. 2104 Administrative matters. SUBCHAPTER B--ACQUISITION PLANNING 2105 Publicizing contract actions. 2106 Competition requirements. 2109 Contractor qualifications. SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES 2114 Sealed bidding. #24705 2115 Contract by negotiation. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 21 57 FR 24704-01 (Cite as: 57 FR 24704, #24705) 2116 Types of contracts. SUBCHAPTER D--SOCIOECONOMIC PROGRAMS 2122 Application of labor laws to government acquisitions. 2124 Protection of privacy and freedom of information. 2129 Taxes. SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS 2131 Contract cost principles and procedures. 2132 Contract financing. 2133 Protests, disputes, and appeals. 2137 Service contracting. 2143 Contract modifications. 2144 Subcontracting policies and procedures. 2146 Quality assurance. 2149 Termination of contracts. SUBCHAPTER H--CLAUSES AND FORMS 2152 Contract clauses. SUBCHAPTER A--GENERAL PART 2101--FEDERAL ACQUISITION REGULATIONS SYSTEM Subpart 2101.1--Purpose, Authority, Applicability and Issuance 2101.101 Purpose. 2101.102 Authority. 2101.103 Applicability. 2101.104 Issuance. 2101.104-1 Publication and code arrangement. 2101.104-2 Arrangement of regulation. Subpart 2101.3--Agency Acquisition Regulation (LIFAR) 2101,301 Policy. Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2101.1--Purpose, Authority, Applicability, and Issuance 2101.101 Purpose. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 22 57 FR 24704-01 (Cite as: 57 FR 24704, *24705) (a) This subpart establishes chapter 21, Office of Personnel Management Federal Employees' Group Life Insurance Acquisition Regulation, within title 48, the Federal Acquisition Regulation System, of the Code of Federal Regulations. The short title of this regulation shall be LIFAR. (b) The purpose of the LIFAR is to implement and supplement the Federal Acquisition Regulation (FAR) specifically for acquiring and administering a contract, or contracts, for life insurance under the Federal Employees’ Group Life Insurance (FEGLI) Program. 2101.102 Authority. (a) The LIFAR is issued by the Director of the Office of Personnel Management in accordance with the authority of 5 U.S.C. chapter 87 and other applicable law and regulation. (b) The LIFAR does not replace or incorporate regulations found at 5 CFR part 870, et seq., which provide the substantive policy guidance ‘for administration of the FEGLI Program under 5 U.S.C. chapter 87. ‘The contractor should follow the following order of precedence in contracting with OPM under the FEGLI Program: (1) 5 U.S.C. chapter 87. (2) 5 CFR part 870, et seq. (3) 48 CFR chapter 1. {4) 48 CFR chapter 21. (5) The FEGLI Program contract. 2101.103 Applicability. The FAR is generally applicable to contracts negotiated in the FEGLI Program pursuant to 5 U.S.C. chapter 87. The LIFAR implements and supplements the FAR where necessary to identify basic and significant acquisition policies unique to the FEGLI Program. 2101.104 Issuance. 2101.104-1 Publication and code arrangement - (a) The LIFAR and its subsequent changes are published in-- (1) Daily issues of the Federal Register; and (2) Cumulative form of the Code of Federal Regulations. (b) The LIFAR ie issued as chapter 21 of title 48 of the Code of Federal Regulations. 2101.104-2 Arrangement of regulation. (a) General. The LIFAR conforms with the arrangement and numbering system prescribed by FAR 1.104. However, when a FAR part or subpart is adequate for use without further OPM implementation or supplementation, there will be no Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 23 57 FR 24704-01 (Cite as: 57 FR 24704, *24705) corresponding LIFAR part, subpart, etc, The LIFAR is to be used in conjunction with the FAR and the order for use is: (1) FAR; (2) LIFAR. (b) Citation, (1) In formal documents, such as legal briefs, citation of chapter 21 material that has been published in the Federal Register will be to title 48 of the Code of Federal Regulations. (2) In informal documents, any section of chapter 21 may be identified as "LIFAR" followed by the section number. Subpart 2101.3--Agency Acquisition Regulation (LIFAR) 2101.301 Policy. (a) Procedures, contract clauses, and other aspects of the acquisition process for contracts in the FEGLI Program shall be consistent with ‘the principles of the FAR. Changes to the FAR that are otherwise authorized by statute or applicable regulation, dictated by the practical realities associated with certain unique aspects of life insurance or necessary to satisfy specific needs of the Office of Personnel Management, to the extent not otherwise regulated in the FAR, shall be implemented as amendments to the LIFAR and published in the Federal Register, or as deviations to the FAR in accordance with FAR subpart 1.4. (b) Internal procedures, instructions, and guides which are necessary to clarify or implement the LIFAR within OPM may be issued by agency officials designated by the Director, OPM. Normally, such designations will be specified in the OPM Administrative Manual, which is routinely available to agency employees and will be made available to interested outside parties upon request. Clarifying or implementing procedures, instructions, and guides issued pursuant to this section of the LIFAR must: (1) Be consistent with the policies and procedures contained in this regulation as implemented and supplemented from time to time; and (2) Follow the format, arrangement, and numbering system of this regulation to the extent practicable. PART 2102--DEFINITIONS OF WORDS AND TERMS Subpart 2102.3--Definitions of FEGLI Terms 2102.370 Scope of subpart. 2102.371 Definitions. Authority: 5 U.S.C, 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2102.3--Definitions of FEGLI Terms 2102.370 Scope of subpart. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 24 57 FR 24704-01 (Cite as: 57 FR 24704, *24705) This subpart defines words and terms commonly used in this regulation. 2102.371 Definitions. In this chapter, unless otherwise indicated, the following terms have the neaning set forth in this subpart. Contract means a policy or policies of group life and accidental death and jismemberment insurance to provide the benefits specified by 5 U.S.C. Chapter 87. Contractor means an insurance company contracted to provide the *24706 benefits specified by 5 U.S.C. Chapter 87. Director means the Director of the Office of Personnel Management . Enployees' Life Insurance Fund means the trust fund established under 5 U.S.C. 714. FEGLI Program means the Federal Smployees' Group Life Insurance Program. Fixed price with limited cost redetermination plus fixed fee contract means a sontract which provides for: Lt (1) A fixed price during the contract year with a cost element that is adjusted at the end of the contract term based on costs incurred under the contract; and, (2) A profit or fee that is fixed at the beginning of the contract term. The amount of adjustment for costs is limited to the amount in the Employees' Life Insurance Fund. The fee will be in the form of either a risk charge or a service charge. Insurance company, as provided in 5 U.S.C. 8709, means a company licensed to rransact life and accidental death and dismemberment insurance under the laws of all the States and the District of Columbia. It must have in effect, on the most recent December 31 for which information is available to the Office of Personnel Management, an amount of employee group life insurance equal to at least 1 bercent of the total amount of employee group life insurance in the United states in all life insurance companies. OPM means the Office of Personnel Management. Reinsurer means a company that veinsures portions of the total amount of insurance under the contract as specified in 5 U.S.C. 8710 and is not an agent or representative of the contractor. Subcontract means a contract entered into by any subcontractor that furnishes supplies or services for performance of a prime contract under the FEGLI Program. Except for the purpose of FAR Subpart 22.8--Equal Employment Opportunity, the cerm "subcontract" does not include a contract with a reinsurer under the FEGLI program. Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor under the FEGLI contract: Except for the purpose of FAR Subpart 22.8--Equal Employment Opportunity, the cerm "subcontractor" does not include reinsurers under the FEGLI Program. PART 2103--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST Subpart 2103.70--Misleading, Deceptive, or Unfair Advertising Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 25 57 FR 24704-01 (Cite as: 57 FR 24704, ¥24706) 2103.7001 Policy. 2103.7002 Contract clause. Authority: 5 U.S.C. 8716; 40 U.S.C, 486(c); 48 CFR 1.301. Subpart 2103.70--Misleading, Deceptive, or Unfair Advertising 2103.7001 Policy. (a) OPM prepares and makes available to enrolled Federal employees a booklet jescribing the provisions of the FEGLI Program which includes information about sligibility, enrollment, and general procedures. The booklet also operates as a sextification of the employee's enrollment in the FEGLI Program. Because all necessary information is made available by OPM, advertising directed specifically at Federal employees and life insurance agent contacts with Federal employees for che purpose of selling FEGLI coverage are prohibited. (b) The contractor is prohibited from making incomplete, incorrect comparisons or using disparaging or minimizing techniques to compare its other products or services to the benefits of the FEGLI Program. The contractor will use its best sfforts to assure that its life insurance agents are aware of and abide by this >rohibition. (c) The contractor's failure to conform to the requirements of this subpart shall be considered by OPM in the determination of the service charge srenegotiation objective. 2103.7002 Contract clause. The clause at 2152.203-70 shall be inserted in all FEGLI Program contracts and in all subcontracts as defined at 2102.371. PART 2104--ADMINISTRATIVE MATTERS Subpart 2104.7--Contractor Records Retention 2104.703 Policy. 2104.705 Specific retention periods. Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2104.7--Contractor Records Retention 2104.703 Policy. In view of the unigue payment schedules of FEGLI contracts and the compelling need for records retention periods sufficient to protect the Government's interest, contractors shall be required to maintain records for periods determined in accordance with the provisions of FAR 4.703(b) (1). Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 26 57 FR 24704-01 (Cite as: 57 FR 24704, *24706) 2104.705 Specific retention periods. Unless the contracting officer determines that there exists a compelling reason to include only the contract clause specified by FAR 52.215-2, “Audit- Negotiation," the contracting officer shall insert the clause at 2152.204-70 in 211 FEGLI Program contracts. SUBCHAPTER B--ACQUISITION PLANNING PART 2105--PUBLICIZING CONTRACT ACTIONS Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2105.70--Applicability 2105.7001 Applicability. FAR part 5 has no practical application to the FEGLI Program because OPM does not issue solicitations. Eligible contractors (i.e., qualified life insurance companies) are identified in accordance with 5 U.S.C. 8709. PART 2106--COMPETITION REQUIREMENTS Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2106.70--Applicability 2106.7001 Applicability. FAR part 6 has no practical application to the FEGLI Program in view of the statutory exception provided by 5 U.S.C. 8709. PART 2109--CONTRACTOR QUALIFICATIONS Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 48 CPR 1.301. Subpart 2109.70--Minimum standards for FEGLI contractors 2109.7001 Minimum standards for FEGLI contractors. (a) The contractor must meet the requirements of chapter 87 of title 5, United States Code; parts 870, 871, 872, 873, and 874 of title 5, Code of Federal Regulations; chapter 1 of title 48, Code of Federal Regulations, and the standards in this subpart. The contractor shall continue to meet these and the following statutory and regulatory requirements while under contract with OPM. Failure to meet these requirements and standards is *24707 cause for OPM's Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 27 57 FR 24704-01 (Cite as: 57 FR 24704, *24707) termination of the contract in accordance with part 2149 of this chapter. (b) The contractor must actually be engaged in the life insurance business and must be licensed to transact life and accidental death and dismemberment insurance under the laws of all the States and the District of Columbia at the time of application. (c) The contractor must not be a Federal, State, local or territorial government entity. (a) The contractor must not be debarred, suspended or ineligible to participate in Government contracting or subcontracting for any reason. (e) The contractor must keep statistical and financial records regarding the FEGLI Program separate from that of all its other lines of business. (£) The contractor must enter into rate redeterminations as deemed necessary by OPM. (g) The contractor must furnish such reasonable reports as OPM determines are necessary to administer the FEGLI Program. (h) The contractor must establish and maintain a system of ‘internal control that provides reasonable assurance that: (1) The payment of claims and other expenses is in compliance with legal, regulatory, and contractual guidelines; (2) Funds, property, and other FEGLI assets are safeguarded against waste, loss, unauthorized use, or misappropriation; (3) Revenues and expenditures applicable to FEGLI operations are properly recorded and accounted for to permit the preparation of reliable financial reporting and to maintain accountability over assets; and, (4) Data are accurately and fairly disclosed in all reports required by OPM. (i) The contractor must permit representatives of OPM and of the General Accounting Office to audit and examine records and accounts pertaining to the FEGLI Program at such reasonable times and places as may be designated by OPM or the General Accounting Office. SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES . PART 2114--SEALED BIDDING Authority: 5 U.S.C. 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2114.70--Applicability 2114.7001 Applicability. FAR part 14 has no practical application to the FEGLI Program in view of the statutory exemption provided by 5 U.S.C. 8709, 8714a, 8714b, and 8714c. PART 2115--CONTRACTING BY NEGOTIATION Subpart 2115.1--General Requirements for Negotiation Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 28 97 FR 24704-01 (Cite as: 57 FR 24704, *24707) 2115.170 Negotiation authority. Subpart 2115.4--Solicitation and Receipt of Proposals and Quotations 2115.401 Applicability. Subpart 2115.6--Source Selection 2115.602 Applicability. Subpart 2115.8--Price Negotiation 2115.802 Policy. 2115.802-70 Contractor investment of FEGLI funds. 2115.802-71 Investment income clause. Subpart. 2115.9--Profit 2115.902 Policy. 2115.905 Profit analysis factors. Authority: 5 U.S.C, 8716; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2115.1--General Requirements for Negotiation 2115.170 Negotiation authority. The authority to negotiate FEGLI contracts is conferred by 5 U.S.C. 8709. Subpart 2115.4--Solicitations and Receipt of Proposals and Quotations 2115.401 Applicability. (a) FAR subpart 15.4 has no practical application to the FEGLI Program because OPM does not issue solicitations. (b) OPM will announce any opportunities to submit applications to provide life insurance through the FEGLI Program in insurance industry periodicals and other publications as deemed appropriate by OPM. The announcement will contain information on the address to which requests for application packages should be submitted and on deadline dates for submission of completed applications. (c) Eligible contractors (i.e., qualified life insurance companies) are identified in accordance with 5 U.S.C. 8709. Offerors voluntarily come forth in accordance with procedures provided in 2115.602. (a) OPM may approve one or more life insurance companies that, in its judgement, Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 29 57 FR 24704-01 (Cite as: 57 FR 24704, *24707) sre best qualified to provide life insurance coverage to Federal enrollees. Subpart 2115.6--Source Selection 2115.602 Applicability. (a) FAR subpart 15.6 has no practical application to the FEGLI Program because srospective contractors (insurance companies) are considered for inclusion in the PEGLI Program in accordance with criteria provided in 5 U.S.C. chapter 87, LIFAR 2109.7001, and the following: (b) Applications must be signed by an individual with legal authority to enter into a contract on behalf of the company of the dollar level of claims and =xpenses anticipated. (c) Applications will be reviewed for evidence of substantial compliance in the following areas: (1) Management: Stable management with experience pertinent’ to the life insurance industry and, in particular, large group management; sufficient sperating experience to enable OPM to evaluate past and expected future performance. (2) Marketing: Past ability to attract and retain large group contracts; steady or increasing amount of group life insurance in force. (3) Legal expertise: Demonstrated competence in researching, compiling, and implementing various Federal and State laws that may impact payment of benefits; ability to defend legal challenges to payment of benefits. (4) Financial condition: Establishment of firm budget projections and demonstrated success in keeping costs at or below those projections on a regular basis; evidence of the ability to sustain operations in the future and to meet obligations under the contract OPM might enter into with the company; adequate reserve levels; assets exceeding liabilities. (5) Establishment of Office: Ability to establish an administrative office capable of assessing, tracking, and paying claims. (6) Internal Controls: Ability to establish and maintain a system of internal control that provides reasonable assurance that the payment of claims and other expenses will be in compliance with legal, regulatory, and contractual guidelines; funds, property, and other FEGLI assets will be safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues and expenditures applicable to FEGLI operations will be properly recorded and accounted for to permit the preparation of timely and accurate financial reporting and to maintain accountability over assets. #24708 Subpart 2115.8--Price Negotiation 2115.802 Policy. Pricing of FEGLI Program premium rates is governed by 5 U.S.C. 8707, 8708, 8711, 8714a, 8714b, and 8714c. FAR subpart 15.8 shall be implemented by applying cost Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 30 57 FR 24704-01 (Cite as: 57 FR 24704, *24708) ynalysis policies and procedures. To the extent that actuarial estimates are used for pricing, such estimates will be deemed acceptable and if inaccurate, do not constitute defective pricing. 2115.802-70 Contractor investment of FEGLI funds. (a) The contractor is required to invest and reinvest all FEGLI funds on hand including any attributable to the special Contingency Reserve until needed to Jischarge promptly the obligations incurred under the contract. Within the sonstraints of safety and liquidity of investments, the contractor shall seek to naximize investment income. (b) The contractor is required to credit income earned from its investment of PEGLI funds to the FEGLI Program. Thus, the contractor must be able to allocate investment income to the FEGLI Program in an appropriate manner. If the sontractor fails to invest funds on hand, properly allocate investment income, or credit any income due the contract, for whatever reason, it shall return or credit any investment income lost to OPM or the FEGLI Program, retroactive to the Jate that such funds should have been originally invested in accordance with 2152.215-70. (c) Investment income is the net amount earned by the contractor after deducting reasonable, necessary, and properly allocated investment expenses. 2115.802-71 Investment income clause. The contracting officer shall insert the clause at 2152.215-70 in all FEGLI Program contracts. Subpart 2115.9--Profit 2115.902 Policy. (a) Risk charge: (1) Section 8711(d) of title 5, United States Code, provides for payment of a risk charge to FEGLI contractors as compensation for the risk assumed under the FEGLI Program. It is appropriate to pay such a charge when substantial risk is borne by the contractor; that is, when the balance in the Employees' Life Insurance Fund is no larger than five times annual claims. (2) The risk charge is determined by agreement between the contractor and OPM. The amount of risk charge shall be specified in the contract (b) Waiver of the risk charge. (1) When the Fund balance is greater than five times annual claims, OPM and the contractor may agree that the contractor will relinquish the risk charge in favor of a profit opportunity in the form of a service charge for the contractor. ‘The service charge so determined shall be the total service charge that may be negotiated for the contract and shall encompass any service charge (whether entitled service charge, profit, fee, contribution to surpluses, etc.) that may have been negotiated by the prime contractor with any subcontractor. At no time may both a risk charge and a service charge be paid for the same portion of a policy year. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 31 57 FR 24704-01 (Cite as: 57 FR 24704, *24708) (2) once agreement to relinquish the risk charge is made, the agreement may not se cancelled unless OPM and the contractor mutually agree to reinstitute payment >f a risk charge; or unless the Fund balance falls below the level defined in 2115.902(a} and 30 days notice of cancellation is provided; or unless the Sontractor or OPM provide notice of cancellation for any reason 1 year prior to che date cancellation is sought. (c) Any profit prenegotiation objective (service charge) will be determined on che basis of a weighted guidelines structured approach. 2115.905 Profit analysis factors. (a) The OPM contracting officer will apply a weighted guidelines method when developing the prenegotiation objective (service charge) for the FEGLI contract. In accordance with the factors defined in FAR 15.905-1, OPM will apply the appropriate weights derived from the ranges specified in paragraph (b) of this section and will determine the prenegotiation objective based on the contractor's Basic and Family Optional insurance claims paid in the previous contract year. (1) Contractor performance. OPM will consider such elements as the accurate and timely processing of benefit claims, the volume and validity of complaints received by OPM, effectiveness of internal controls systems in place, the timeliness and adequacy of reports on operations, and responsiveness to OPM offices, enrollees, beneficiaries, and Congress as measures of economical and efficient contract performance. This factor will be judged apart from the contractor's basic responsibility for contract compliance and will be a measure of the extent and nature of the contractor's contribution to the FEGLI Program through the application of managerial expertise and effort. Evidence of effective contract performance will receive a plus weight, and poor performance or failure to comply with contract terms and conditions a zero weight. Innovations of benefit to the PEGLI Program will generally receive a plus weight; documented inattention or indifference to effective operations, a zero weight. (2) Contract cost risk. OPM will evaluate the contractor's risk annually in relation to the amount in the Employees’ Life Insurance Fund and will evaluate this factor accordingly. (3) Federal socioeconomic programs. OPM will consider documented evidence of successful, contractor-initiated efforts to support such Federal socioeconomic programs as drug and substance abuse deterrents, and other concerns of the type enumerated in FAR 15.905-1(c) as a factor in negotiating profit. This factor will be related to the quality of the contractor's policies and procedures and the extent of unusual effort or achievement demonstrated. Evidence of effective support of Federal socioeconomic programs will result in a plus weight; indifference to Federal socioeconomic programs will result in a zero weight; and only deliberate failure to provide opportunities to persons and organizations that would benefit from these programs will result in a negative weight. (4) Capital investments. This factor is generally not applicable to FEGLI Program contracts because facilities capital cost of money may be an allowable administrative expense. Generally, this factor shall be given a weight of zero. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 32 37 FR 24704-01 (Cite as: 57 FR 24704, *24708) jowever, special purpose facilities or investment costs of direct benefit to the "EGLI Program that are not recoverable as allowable or allocable administrative sxpenses may be taken into account in assigning a plus weight. (5) Cost Control. This factor is based on the contractor's previously jemonstrated ability to perform effectively and economically. In addition, -onsideration will be given to measures taken by the contractor that result in roductivity improvements and other cost containment accomplishments that will be >f future benefit to the FEGLI Program. Examples are containment of costs sssociated with processing claims; success at preventing waste, loss, mauthorized use, or misappropriation of FEGLI assets; and success at limiting and recovering erroneous benefit payments. (6) Independent Development. Consideration will be given to independent sontractor-initiated efforts, such as the development of a unique and enhanced sustomer support system, that are of demonstrated value to the FEGLI Program and for which developmental costs have not been recovered directly or indirectly chrough allowable or allocable administrative expenses. This *24709 factor will se used to provide additional profit opportunities based upon an assessment of he contractor's investment and risk in developing techniques, methods, sractices, etc., having viability to the Program at large. Improvements and Innovations recognized and rewarded under any other profit factor cannot be sonsidered. (b) The weight ranges for each factor to be used in the weighted guidelines approach are set forth below: PART 2116--TYPES OF CONTRACTS Subpart 2116.1--Selecting Contract Types 2116.105 Solicitation provisions. subpart 2116.2--Fixed-Price Contracts 2116.270 FEGLI Program contracts. 2116.270-1 Contract clause. 2116.271 Fixed-Price with limited cost redetermination plus fixed fee contract. 2116.271-1 Contract clauses. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CFR 1.301. SUBPART 2116.1--SELECTING CONTRACT TYPES 2116.105 Solicitation provisions. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 33 57 FR 24704-01 (Cite as: 57 FR 24704, *24709) FAR 16.105 has no practical application because the statutory provisions of 5 J.$.C. chapter 87 obviate the issuance of solicitations. Subpart 2116.2--Fixed-Price Contracts 116.270 FEGLI Program contracts. FEGLI Program contracts will be fixed price with limited cost redetermination slus fixed fee. The premium to the contractor will be based on an estimate of yenefits and administrative costs, plus the fixed service or risk charge, and sill be redetermined annually. Claims costs, including benefits and ,dministrative expenses, in excess of premiums will be paid up to the amount in “he Employees' Life Insurance Fund. Payment for costs exceeding the amount in she Fund are the responsibility of the contractor and reinsurers. The fee is fixed at the inception of each contract year. The fee does not vary with the actual costs, but may be adjusted as a result of changes in the work to be nerformed under the contract. The fee will be in the form of either a risk charge or a service charge. (a) Risk charge. The risk charge will be determined as prescribed in 5 U.S.C. s711(a) and paragraph 2115.902(a) (2) of this subchapter. It will consist of a negotiated amount which will reflect the risk assumed by the contractor and the reinsurers and may be adjusted as a result of increased or decreased risk under che contract. When the applicable fee is a risk charge, no service charge shall pe payable for the same period of time. (b) Service charge. The amount of the service charge will be determined using a weighted guidelines structured approach in accordance with 2115.905 and negotiated with the contractor at the beginning of the contract term. when the applicable fee is a service charge, no risk charge will be paid for the same portion of a policy year in which a service charge is paid. 2116.270-1 Contract clause. The clause at 2152.216-70 shall be inserted in all FEGLI Program contracts. 2116.271 Fixed price with limited cost redetermination plus fixed fee contract. 2116.271-1 Contract clauses. (a) The clause at 2152.216-71 shall be inserted in all FEGLI Program contracts when a risk charge is negotiated. (b) The clause at 2152.216-72 shall be inserted in all FEGLI Program contracts when a service charge is negotiated. SUBCHAPTER D--SOCIOECONOMIC PROGRAMS PART 2122--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 34 57 FR 24704-01 (Cite as: 57 FR 24704, *24709) Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2122.1--Basic Labor Policies 2122.170 Contract clause. The clause at 2152.222-70 shall be inserted in all FEGLI Program contracts. PART 2124--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION Subpart 2124.70--Protection of Individual Privacy 2124.7001 Policy. 2124.7002 Contract clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2124.70--Protection of Individual Privacy 2124.7001 Policy. Records retained by FEGLI contractors on Federal insureds and members of their families serve the contractors’ own commercial function of paying FEGLI claims and are not maintained to accomplish an agency function of OPM. Consequently, the records do not fall within the provisions of the Privacy Act. Nevertheless, OPM recognizes the need for the contractors to keep certain records confidential. The clause at 2152.224-70 addresses this concern. 2124.7002 Contract clause. The clause at 2152.224-70 shall be inserted in all FEGLI Program contracts. PART 2129--TAXES Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2129.3--State and Local Taxes 2129.370 Application of State and local taxes to FEGLI contractors. (a) 5 U.S.C. 8714(c) (1) prohibits the imposition of taxes, fees, or other monetary payment, directly or indirectly, on FEGLI premiums by any State, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision or governmental authority of those entities. (b) Paragraph (a) of this section shall not be construed to exempt the contractor from the imposition, payment, or collection of a tax, fee, or other Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 35 57 FR 24704-01 (Cite as: 57 FR 24704, #24709) monetary payment on the net income or profit accruing to or realized by it from business conducted under the FEGLI Program if the tax, fee, or payment is applicable to a broad range of business activity. SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS PART 2131--CONTRACT COST PRINCIPLES AND PROCEDURES Subpart 2131.2--Contracts With Commercial Organizations 2131.200 Scope of subpart. 2131.201-70 FEGLI Program credits. 2131.203-70 FEGLI General and Administrative (G&A) expenses. 2131.205 Selected costs. 2131.205-41 Taxes. 2131.205-70 FEGLI public relations and advertising costs. 2131.205-71 FEGLI bad debts. 2131.205-72 FEGLI compensation for personal services. #24710 2131.205-73 Selling costs. 2131.205-74 Trade, business, technical and professional activity costs. 2131.205-75 FEGLI and nonrecurring costs. 2131.205-76 Major subcontractor service charge. 2131.205-77 Reinsurer administrative expense costs. Authority: 5 U.S.C, 8709; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2131.2--Contracts With Commercial Organizations 2131.200 Scope of subpart. The cost principles under this subpart apply to all FEGLI Program contracts. 2131.201-70 FEGLI Program credits. The provisions of FAR 31.201-5 shall apply to income, rebates and other credits resulting from benefit payments that include, but are not limited to-- (a) Uncashed and returned checks. (b) Refunds attributable to litigation with regard to payments of FEGLI Program life insurance monies. (c) Erroneous benefit payment, refunds, overpayment, and duplicate payment recoveries. (d) Escheatments. 2131.203-70 FEGLI General and Administrative (G&A) expenses. The provisions of FAR 31.203 apply to the allocation of indirect costs by means Copr, © West 1999 No Claim to Orig. U.S. Govt. WorksPage 36 57 PR 24704-01 (Cite as: 57 FR 24704, *24710) of a "dividend or retention formula." 2131.205 Selected costs. 2131.205-41 Taxes. (a) Any tax incurred by the contractor in connection with the operation of this contract shall be deemed an after-imposed tax and not an excepted tax within the meaning of FAR 52.229-4. However, the contractor shall be liable for any income tax assessed on the contractor's profit derived from administering this contract. (b) The provision at FAR 31.205-41 is modified to include as unallowable costs taxes on FEGLI premiums by any State, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision or governmental authority of those entities (see 2129.370(a)). (c) Federal tax paid on policy acquisition expenses (Deferred Acquisition Cost "DAC" tax) shall be an allowable cost. The DAC tax includes the tax on additional premium remitted to the contractor to meet its DAC tax obligations. 2131.205-70 FEGLI public relations and advertising costs. The provisions of FAR 31.205-1 shall be modified to include the following: (a) Costs of media messages are allowable if approved by the contracting officer and all of the following criteria are met: (1) The primary objective of the message is to disseminate information on general health and fitness or encouraging healthful lifestyles; (2) The costs of the contractor's messages are allocated to all underwritten and non-underwritten lines of business; and (3) The contracting officer approves the total dollar amount of the contractor's messages to be charged to the FEGLI Program in advance of the policy year. (b) Costs of media messages that inform enrollees about the FEGLI Program are allowable if approved by the contracting officer. (c) In those instances where contracting officer approval of the total dollar amount is not solicited in advance, it is incumbent upon the contractor to show the contracting officer, for subsequent approval, that the costs are reasonable and do not unduly burden the administrative cost to the contract. (d) Costs of messages that are intended to, or which have the primary effect of, calling favorable attention to the contractor or subcontractor for the purpose of enhancing its overall image or selling its prodict or services are not allowable. 2131.205-71 FEGLI bad debts. Erroneous benefit payments. If the contractor or OPM determines that a FEGLI benefit has been paid in error for any reason, the contractor shall make a diligent effort to recover such erroneous payment from the recipient. If the contractor is unable to recover the erroneous payment from the recipient, the contracting officer shall allow the amount of the payment to be charged to the Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 37 57 FR 24704-01 (Cite as: 57 FR 24704, *24710) contract provided the contractor has demonstrated that payment was made in accordance with an approved debt collection system as referenced in 2146.271(b) and that either a diligent effort to recover, or a determination that it would not be cost effective to recover, the erroneous overpayment has been made. The contractor's compliance with a system maintained under 2146.271(b) will be deemed co be a diligent effort to recover an overpayment. 2131.205-72 FEGLI compensation for personal services. FAR 31.205-6 is supplemented as follows: Overtime on a FEGLI contract would normally meet the condition specified in FAR 22.103. Premiums for overtime, extra-pay shifts, and multi-shifts meeting the specified conditions shall be allowed without prior approval. 2131.205-73 Selling costs. ; Selling costs are allowable costs to FEGLI contracts only to the extent that they are attributable to conducting contract negotiations with the Government and for liaison activities involving ongoing contract administration, including the conduct of informational and enrollment activities as directed by the contracting officer. 2131.205-74 Trade, business, technical and professional activity costs. (a) FEGLI contractors shall seek the advance written approval of the contracting officer for allowability of all or part of the costs associated with trade, business, technical, and professional activities (FAR 31.205-43) when the allocable costs of such participation to the FEGLI Program will exceed $2,500 annually and the contractor allocates more than 50% of the membership cost of a trade, business, technical, or professional organization to the FEGLI Program. (b) When approval of costs for membership in an organization is required, the contractor must demonstrate conclusively that membership in such an organization and participation in its activities extend beyond the contractual relationship with OPM, have a reasonable relationship to providing services to FEGLI Program insureds, and that the organization is not engaged in activities such as those cited in FAR 31.205-22 (lobbying costs) for which costs are not allowable. 2131.205-75 FEGLI nonrecurring costs. Nonrecurring costs that exceed $25,000, such as forms printing costs and any open season costs that may arise shall be allowed only to the extent provided for by advance agreement in accordance with FAR 31.109. 2131.205-76 Major subcontractor service charge. When costs are determined on the basis of actual costs incurred, any amount that Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 38 57 FR 24704-01 (Cite as: 57 FR 24704, *24710) exceeds the allowable cost of a major subcontract (whether entitled service charge, incentive fee, profit, fee, surplus, or any other title) is not allowable under the contract. Amounts which exceed allowable costs may be paid to a major subcontractor only from the risk charge or service charge negotiated between OPM and the contractor *24711 2131.205-77 Reinsurer administrative expense costs. A charge of $500 per policy year per reinsurer of the FEGLI Program as set forth in the contract is an allowable cost when documented through an internal accounting entry of the contractor and actually paid. This amount is deemed to pe sufficient to reimburse reinsurers for the minor administrative expenses incurred in reinsuring the FEGLI Program. PART 2132--CONTRACT FINANCING Subpart 2132.1--General 2132.170 Recurring premium payments to contractors. 2132.171 Contract clause. Subpart. 2132.6--Contract Debts 2132.607 Tax credit. 2132.617 Contract clause. Subpart 2132.7--Contract Funding 2132.770 Insurance premium payments and special Contingency Reserve. 2132.771 Non-commingling of FEGLI Program funds. 2132.772 Contract clause. Subpart 2132.8--Assignment of Claims. 2132.870 Contract clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 40 CFR 1.301. Subpart 2132.1--General 2132.170 Recurring premium payments to contractors. OPM and the contractor will concur on an estimate of benefits and administrative Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 39 57 FR 24704-01 (Cite as: 57 FR 24704, *24711) costs plus the fixed service or risk charge for the forthcoming contract year, as specified in the contract. The annual premium to the contractor will be determined based on this estimate. The premium will be redetermined annually and will be provided to the contractor in 12 equal monthly installments due on the first day of each month. Following the close of the contract year, a reconciliation of premiums, benefits, and other costs will be performed and additional payment by OPM or reimbursement by the contractor will be made as necessary. 2132.171 Contract clause. The clause at 2152.232-70 shall be inserted in all FEGLI Program contracts. Subpart 2132.6--Contract Debts 2132.607 Tax credit. FAR 32.607 has no practical application to FEGLI contracts. The statutory provisions at 5 U.S.C. 8707 and 8708 authorize joint enrollee and Government contributions to the Bmployees' Life Insurance Fund. Because the Fund is comprised of contributions by enrollees as well as the Government, contractors may not offset debts to the Fund by a tax credit that is solely a Government obligation. 2132.617 Contract clause. The clause at FAR 52.232-17 will be modified in FEGLI Program contracts to exclude the words "net of any applicable tax credit under the Internal Revenue Code (26 U.S.C. 1481)." Subpart 2132.7--Contract Funding 2132.770 Insurance premium payments and special Contingency Reserve. Insurance premium payments and a special Contingency Reserve are made available to FEGLI Program contractors in accordance with 5 U.S.C. 8712 and 8714. 2132.771 Non-commingling of FEGLI Program funds. (a) FEGLI Program funds shall be maintained in such a manner as to be separately identifiable from other assets of the contractor. Cash and investment balances reported on the FEGLI Program Annual Accounting Statement must be supported by the contractor's books and records. (b) This requirement may be modified by the contracting officer in accordance with the clause at 2152.232-71 when adequate accounting and other controls are in effect. If the requirement is modified, such modification will remain in effect Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 40 57 FR 24704-01 (Cite as: 57 FR 24704, *24711) until rescinded by OPM. 2132.772 Contract clause. The clause at 2152.232-71 shall be inserted in all FEGLI Program contracts. Subpart 2132.8--Assignment of Claims 2132.870 Contract clause. The clause set forth in 2152.232-72 shall be inserted in all FEGLI Program contracts. PART 2133--PROTESTS, DISPUTES, AND APPEALS Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CPR 1.301. Subpart 2133.70--Contract Appeals Board 2133.7001 Designation of the Board of Contract Appeals. The Armed Services Board of Contract Appeals (ASBCA) serves as the Board of Contract Appeals for the FEGLI Program. The rules of procedure followed in a dispute shall be those prescribed by the ASBCA. PART 2137--SERVICE CONTRACTING Subpart 2137.1--Service Contracts--General 2137.102-70 Policy. 2137.110-70 Contract clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CFR 1.301. 2137.102-70. Policy. (a) The services under this contract are of vital interest to the Government and must be continued without interruption in the event the contract is terminated. (b) To assure an orderly and efficient transition to a successor insurance company upon termination of the contract, the clause at FAR 52.237-3, Continuity of Services, will be modified in PEGLI contracts to extend the time period for contractor phase-in, phase-out services up to 10 months after termination of the contract. (c) The contractor shall be reimbursed for all reasonable phase-in, phase-out costs (i.e., costs incurred within the agreed upon period after contract termination that result from phase-in, phase-out operations). The contractor also shall receive a fee (profit) for the full period after contract termination copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 41 57 FR 24704-01 (Cite as: 57 FR 24704, #24711) during which services are continued, not to exceed a pro rata portion of the fee (profit) for the final contract year. The amount of profit shall be based upon the accurate and timely processing of benefit claims, the volume and validity of complaints received by OPM, the timeliness and adequacy of reports on operations, and responsiveness to OPM offices, enrollees, beneficiaries, and Congress. (a) Paragraph (d) of FAR clause 52.237-3 shall be modified to read as follows: (a) The Contractor shali be reimbursed for all reasonable phase-in, phase-out costs (i.e., costs incurred within the agreed period after contract termination that result from phase-in, phase-out operations) and a fee (profit) not to exceed a pro rata portion of the fee (profit) under this contract. The amount of profit shall be based upon the accurate and timely processing of benefit claims, the volume and validity of complaints received by OPM, the timeliness and adequacy of reports on operations, and responsiveness to OPM offices, enrollees, beneficiaries, and Congress. In setting the final profit figure, obstacles overcome by the *24712 contractor during the phase-in, phase-out period will be taken into consideration." 2137.110-70 Contract clause. The clause at FAR 52.237-3, as modified in 2137.102-70(d), shall be inserted in all FEGLI contracts. PART 2143--CONTRACT MODIFICATIONS, Subpart 2143.1--General 2143.170 FEGLI Program contract modifications. 2143.171 Contract clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CFR 1.301. -General Subpart 2143.1 2143.170 FEGLI Program contract modifications. Except as necessary to implement new or existing legislation, if the regulatory requirements published in accordance with 2301.301 are amended in a manner which would increase the contractor's liability under the contract, the amendment will pe made effective for the contract period subsequent to the period in which the amendment is promulgated, However, if the amendment is promulgated after July 31, it will not be effective until the second contract year following the year in which it is promulgated, unless the contractor agrees to an earlier date. 2143.171 Contract clause. The clause at FAR 52.243-3, Alternate I, shall be modified in FEGLI contracts by Copr. ® West 1999 No Claim to Orig. U.S. Govt. WorksPage 42 57 FR 24704-01 (Cite as: 57 FR 24704, *24712) inserting the following at the beginning of paragraph (a) : "Except as provided in paragraph (£)," and by adding a new paragraph (f) to read as follows: "(£) Except as necessary to implement new or existing legislation, if the regulatory requirements published in accordance with 2101.301 are amended in a manner which would increase the contractor's liability under the contract, the amendment will be made effective for the contract period subsequent to the period in which the amendment is promulgated. However, if the amendment is promulgated in August or September, it will not be effective until the second contract year following the year in which it is promulgated, unless the contractor agrees to an earlier date." PART 2144--SUBCONTRACTING POLICIES AND PROCEDURES Subpart 2144.1--General 2144.170 Policy for FEGLI Program subcontracting consent. Subpart 2144.2--Consent to Subcontracts 2144.270 Contract clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CFR 1.301. Subpart 2144,1--General 2144.170 Policy for FEGLI Program subcontracting consent. For all FEGLI contracts, advance approval shall be required on subcontracts or modifications to subcontracts when the amount charged the FEGLI contract exceeds $200,000 and over 25% of the subcontract cost is charged to the FEGLI contract. Subpart 2144.2--Consent to Subcontracts 2144.270 Contract clause. The clause set forth at 2152.244-70 shall be inserted in all FEGLI Program contracts. PART 2146--QUALITY ASSURANCE Subpart 2146.2--Contract Quality Requirements 2146.270 General. 2146.271 FEGLI Program quality assurance requirements. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CPR 1.301. Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 43 57 FR 24704-01 (Cite as: 57 FR 24704, *24712) Subpart 2146.2--Contract Quality Requirements 2146.270 General. (a) This part prescribes policies and procedures to ensure that services acquired under the FEGLI contract conform to the contract's quality requirements, (b) OPM shall evaluate the contractor's system of internal controls under the quality assurance program required by 2146.271 prior to each contract year and will acknowledge in writing whether or not the system is consistent with the requirements set forth in this subpart. After the initial review, each annual review may be limited to changes in the contractor's internal control guidelines. However, a limited review does not diminish the contractor's obligation to apply the full internal control system. 2146.271 FEGLI Program quality assurance requirements. : (a) The contractor shall develop and apply a quality assurance program specifying procedures for assuring contract quality. At a minimum, the program should include procedures to address: (1) Accuracy of payments and recovery of overpayments; (2) Timeliness of payments to beneficiaries; (3) Quality of services and responsiveness to beneficiaries; (4) Quality of service and responsiveness to OPM; and (5) Detection and recovery of fraudulent claims. (b) The contractor shall prepare overpayment recovery guidelines to include a system of internal control for approval annually by the contracting officer. The contracting officer may withdraw such approval with 90 days' notice of prospective withdrawal. (c) The contractor shall keep complete records of its quality assurance procedures and the results of their implementation and make them available to the Government during contract performance and for as long afterwards as the contract requires. {d) The contracting officer or his or her representative has the right to inspect and test all services called for by the contract, to the extent practicable, at all times and places during the term of the contract and for as long afterwards as the contract requires. The contracting officer or his or her representative shall perform any inspections and tests in a manner that will not unduly delay the work. (e) The contracting officer may order the correction of a deficiency or a modification in the contractor's services and/or quality assurance program. The contractor shall take the necessary action promptly to implement the contracting officer's order. If the contracting officer orders the correction of a deficiency or a modification of the contractor's services and/or quality assurance program pursuant to this paragraph after the contract year has begun, the costs incurred in correcting the deficiency or making the modification will not be considered to the contractor's detriment in the cost control factor of the Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 44 57 FR 24704-01 (Cite as: 57 FR 24704, *24712) service charge (if applicable). However, if there is a deficiency, the deficiency itself may be taken into consideration. PART 2149--TERMINATION OF CONTRACTS 2149.002-70 Applicability of the FAR to FEGLI Program acquisitions. Subpart 2149.1--General Principles 2149.170 FEGLI Program contract termination clause. Authority: 5 U.S.C. 8709; 40 U.S.C. 486(c); 48 CFR 1.301. #24713 2149,002-70 Applicability of the FAR to FEGLI Program acquisitions. (a) Termination. (1) Termination of FEGLI Program contract's is controlled by 5 U.S.C. 8709(c) and this regulation. The procedures for termination of FEGLI ontracts shall be those contained in FAR part 49. For the purpose of this Part, discontinue" in 5 U.S.C. 8709(c) means "terminate." (2) A life insurance contract entered into by OPM may be terminated by OPM at any time for default by the Contractor. A life insurance contract entered into by OPM may terminate at the end of the 31st day after default by OPM (see 2152,232-70, Payments) . (3) A life insurance contract entered into by OPM may be terminated for convenience of the Government 60 days after the Contractor's receipt of OPM's notice to terminate. (4) The contractor may terminate its contract with OPM at the end of any policy year when notice of intent to terminate is given to OPM in writing at least sixty days prior to the end of the policy year. (b) Continuation of services. The services under this contract are of vital interest to the Government and must be continued without interruption in the event the contract is terminated. Consequently, the contract termination procedures contained in this paragraph must be used in conjunction with the provisions of the "Continuity of Services" clause at FAR 52.237-3, as modified at 2137.102-70. (c) Settlement. The procedures for settlement of contracts after they are terminated shall be those contained in FAR part 49. Subpart 2149.1--General Principles 2149.170 FEGLI Program contract termination clause. The clause in 2152.249-70 shall be inserted in all FEGLI Program contracts. SUBCHAPTER H--CLAUSES AND FORMS PART 2152--CONTRACT CLAUSES copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 45 7 BR 24704-01 (Cite as: 57 FR 24704, *24713) 152.000 Applicable clauses. subpart 2152.2--Texts of FEGLI Program Contract Clauses 152.203-70 Misleading, deceptive, or unfair advertising 1152.204-70 Contractor records retention 1152.215-70 Investment income 1152.216-70 Accounting and allowable cost 152.216-71 Fixed price with limited cost redetermination-risk charge 1152.216-72 Fixed price with limited cost redetermination-service charge 1152.222-70 Notice of significant events 152.224-70 Confidentiality of records 1152.232-70 Payments 152.232-71 Non-commingling of FEGLI Program funds ,152.232-72 Approval for assignment of claims 152.244-70 Subcontracts 152.249-70 Renewal and termination Subpart 2152.3--FEGLI Program Clause Matrix 152.370 Use of the matrix. Authority: 5 U.S.C. 8709; 40 U.S.C, 486(c), 48 CFR 1.301. 2152.000 Applicable clauses. The clauses of FAR subpart 52.2 specified below shall be applicable to FEGLI Srogram contracts. ‘The most recent edition of the clause in the FAR shall be spplied unless otherwise provided in the contract. section and Clause Title 52.202-1 Definitions 52.203-1 Officials not to Benefit 52.203-3 Gratuities 52.203-5 Covenant Against Contingent Fees 52.203-6 Restrictions on Subcontractor Sales to the Government 52.203-7 Anti-Kickback Procedures 52.203-9 Requirement for Certificate of Procurement Integrity-- Modification 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity 52.203-12 Limitation on Payments to Influence Certain Federal Transactions 52.209-6 Protecting the Government's Interest When Subcontracting With contractors Debarred, Suspended, or Proposed for Debarment 52.215-1 Examination of Records by Comptroller General 52.215-2 Audit--Negotiation 52.215-22 Price Reduction for Defective Cost or Pricing Data Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 46 7 FR 24704-01 Cite as: 57 FR 24704, *24713) 2.215-24 Subcontractor Cost or Pricing Data 2.215-27 Termination of Defined Benefit Pension Plans 2.215-30 Facilities Capital Cost of Money 2.215-31 Waiver of Facilities Capital Cost of Money 2215-39 Reversion or Adjustment of Plans for Postretirement Benefits (PRB) ther Than Pensions 2.219-8 Utilization of Small Business Concerns and small Disadvantaged Business oncerns 2.219-13 Utilization of Women-Owned Small Businesses 2.220-3 Utilization of Labor Surplus Area Concerns 2.222-1 Notice to the Government of Labor Disputes 52.222-3 Convict Labor 2222-4 Contract Work Hours and Safety Standards Act--Overtime Compensation-~ seneral 52.222-21 Certification of NonSegregated Facilities 2.222-22 Previous Contracts and Compliance Reports 52.222-25 Affirmative Action Compliance 52.222-26 Equal Opportunity 2.222-28 Equal Opportunity Preaward Clearance of subcontracts 32.222-29 Notification of Visa Denial 32.222-35 Affirmative Action for Special Disabled and Vietnam Era Veterans 32.222-36 Affirmative Action for Handicapped Workers 32.222-37 Employment Reports on Special Disabled Veterans and Veterans of the Vietnam Exa 32.222-41 Service Contract Act of 1965, as Amended 52.223-2 Clean Air and water 52.223-6 Drug-Free Workplace 52.227-1 Authorization and Consent 52.227-2 Notice and Assistance 52,228-7 Insurance--Liability to Third Persons 52.229-4 Federal, State, and Local Taxes (Noncompetitive Contract) 52.229-6 Taxes--Foreign Fixed-Price Contracts 52.232-9 Limitation on Withholding of Payments 52.232-17; 2132.617 Interest 52.232-23 Assignment of Claims 52.232-28 Electronic Funds Transfer Payment Method 52.233-1 Disputes (Alternate 1) 52.237-3 Continuity of Services 52.242-1 Notice of Intent to Disallow Costs 52.242-13 Bankruptcy 52.243-1 Changes--Fixed-Price--Alternate I 52.244-5 Competition in Subcontracting 52.245-2 Government Property (Pixed-Price Contracts) 52.246-4 Inspection of Services--Fixed Price 52.246-25 Limitation of Liability--Services 52.247-63 Preference for U.S.-Flag Air Carriers Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 47 57 FR 24704-01 (Cite as: 57 FR 24704, *24713) 32.249-2 Termination for Convenience of the Government (Fixed Price) 52.249-14 Excusable Delays 52.251-1 Government Supply Sources 52,.252-4 Alterations in Contract 52.252-6 Authorized Deviations in Clauses subpart 2152.2--Texts of FEGLI Program Contract Clauses 2152.203-70 Misleading, deceptive, or unfair advertising As prescribed in 2103.7002, the following clause shall be inserted in all FEGLI Program contracts: Misleading, Deceptive, or Unfair Advertising The Contractor agrees that any advertising material released by the contractor which mentions the FEGLI Program shall be truthful and not misleading, and shall present an accurate statement of FEGLI Program benefits. The Contractor agrees to use its best efforts to assure that its agents are aware of and abide by this provision. The Contractor agrees to incorporate this clause in all subcontracts as defined at LIFAR 2102.371- (End of Clause) 2152.204-70 Contractor records retention. As prescribed in 2104.705, the following clause shall be inserted in all FEGLI Program contracts. #24714 Contractor Records Retention Notwithstanding the provisions of FAR 52.215-2(d), "Audit-Negotiation," the Contractor will retain and make available all records applicable to a contract term that support the annual statement of operations for a period of 5 years after the end of the contract term to which the records relate. Individual enrollee and/or beneficiary claim records shall be maintained for 10 years after the end of the policy year to which the claim records relate. (End of Clause) 2152.215-70 Investment income. As prescribed in 2115.802-71, the following clause shall be inserted in all FEGLI Program contracts. Investment Income (a) The Contractor shall invest and reinvest all FEGLI Program funds on hand Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 48 57 FR 24704-01 (Cite ac: 57 FR 24704, *24714) until needed to discharge promptly the obligations incurred under the contract. @ithin the constraints of safety and liquidity of investments, the Contractor shall seek to maximize investment income (b) All investment income earned on FEGLI Program funds shall be credited to the FEGLI Program. (c) When the Contracting Officer concludes that the Contractor failed to comply with paragraph (a) or (b) of this clause, the Contractor shall pay to the Office of Personnel Management (OPM) the investment income that would have been earned, at the rate(s) specified in paragraph (d) of this clause, had it not been for the Contractor's noncompliance. "Failed to comply with paragraph (a) or (b)" means: (1) Making any charges against the contract which are not allowable, allocable, or reasonable; or (2) failing to credit any income due the contract and/or failing to place funds on hand, including premium payments and payments from OPM not needed to discharge promptly the obligations incurred under the contract, tax refunds, credits, deposits, investment income earned, uncashed checks, or other amounts owed OPM in income-producing investments and account's. (a) (1) Investment income lost as a result of unallowable, unallocable, or unreasonable charges against the contract shall be paid from the 1st day of the contract term following the contract term in which the unallowable charge was made and shall end on the earlier of: (i) The date the amounts are returned to OPM; (ii) The date specified by the Contracting Officer; or (iii) The date of the Contracting Officer's Final Decision. (2) Investment income lost as a result of failure to credit income due the contract or failure to place funds on hand in income-producing investments and accounts shall be paid from the date the funds should have been invested or appropriate income was not credited and shall end on the earlier of: (i) The date the amounts are returned to OPM; (ii) the date specified by the Contracting Officer; or, (iii) the date of the Contracting Officer's Final Decision. (3) The Contractor shall credit to the FEGLI Program income that is due in accordance with this clause. All amounts payable shall bear lost investment income compounded semiannually at the rate established by the Secretary of the Treasury as provided in section 12 of the Contract Disputes Act of 1978 (Pub. L. 95-563), during the periods specified in paragraphs (d) (1) and (d) (2). (4) All amounts due and unpaid after the periods specified in paragraphs (d) (1) and (d) (2) shall bear simple interest at the rate applicable for each 6-month period as fixed by the Secretary until the amount is paid (see FAR 32.614-1). (End of Clause) 2152.216-70 Accounting and allowable cost. As prescribed in 2116.270-1, the following clause shall be inserted in all FEGLI Program contracts: Accounting and Allowable Cost Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 49 7 FR 24704-01 (Cite as: 57 FR 24704, *24714) (a) Annual Accounting Statement. (1) The contractor shall prepare annually an yccounting statement summarizing the financial results of the FECLI Program for le previous contract year. This statement shall be prepared in accordance with che requirements issued annually by OPM and shall be due to OPM in accordance vith a date established by those requirements. (2) The Contractor shall have the most recent financial statement for the FEGLI srogram audited by an accounting firm that ascribes to the standards of the american Institute of Certified Public Accountants. The report shall be submitted to OPM along with the annual accounting statement. (3) Based on the results of either the independent audit or a Government audit, che annual accounting statements for the FEGLI Program may be (i) adjusted by “mounts found not to constitute properly allocable or allowable costs; or (ii) sdjusted for prior overpayments or underpayments. (b) Definition of costs. (1) The allowable costs chargeable to the contract for , policy year shall be the actual, necessary, reasonable, and allocable amounts incurred with proper justification and accounting support, determined in accordance with subpart 31.2 of the Federal Acquisition Regulation (FAR) and subpart 2131.2 of the Federal Employees Group Life Insurance Program Acquisition Regulation (LIFAR) applicable on October 1 of each year, and the terms of this contract . (2) In the absence of specific contract terms to the contrary, contract costs shall be classified in accordance with the following criteria: (i) Benefite. Claims costs consist of payments made and costs incurred for life insurance and accidental death and dismemberment insurance on behalf of FEGLI subscribers, including interest paid on delayed claims, less any overpayments, refunds, or other credits received. (id) Administrative expenses. Administrative expenses consist of all allocable, allowable, and reasonable expenses incurred in the adjudication of beneficiary claims or incurred in the Contractor's overall operation of the business. Unless otherwise provided in the contract, FAR, or LIFAR, administrative expenses include, but are not limited to, taxes, insurance and reinsurance premiums, the cost of investigation and settlement of policy claims, the cost of maintaining files regarding payment of claims, and legal expenses incurred in the litigation of benefit payments. Administrative expenses exclude the expenses related to investment income in paragraph (iii) below. (444) Investment income, Within the constraints of liquidity and safety, the contractor is required to invest and reinvest all FEGLI funds on hand until needed to discharge promptly the obligations incurred under the contract. Investment income represents the amount earned by the Contractor after deducting reasonable, necessary, and properly allocable investment expenses as a result ‘of investing the FEGLI Program funds. The direct or allocable indirect expenses incurred with respect to the investment of Program funds, such as brokerage fees, are netted against investment income earned rather than as part of administrative expenses. (ec) Certification of Annual Accounting Statement. (1) The Contractor shall certify the annual accounting statement in the form set forth in paragraph (c) (3) copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 50 57 FR 24704-01 (Cite as: 57 FR 24704, *24714) >f this clause. The certificate shall be signed by the chief executive officer for the Contractor's FEGLI operations and the chief financial officer for the contractor's FEGLI operations and shall be returned with the annual accounting statement. (2) The certification required shall be in the following form: Sertification of Annual Accounting Statement This is to certify that I have reviewed this accounting statement and, to the pest of my knowledge and belief, attest that: 1. The statement was prepared in conformity with the guidelines issued by the office of Personnel Management and fairly presents the financial results of this policy year in conformity with those guidelines; 2. The costs included in the statement are allowable and allocable in accordance with the terms of the contract and with the cost principles of the federal Employees! Group Life Insurance Program Acquisition Regulation (LIFAR) and the Federal Acquisition Regulation (FAR); 3. Income, overpayments, refunds, and other credits made or owed in accordance with the terms of the contract and applicable cost principles have been included in the statement. Contractor Name Name of Chief Executive Officer for FEGLI Operations Date signed: Name of Chief Financial Officer for FEGLI Operations (Type or print and sign) Date signed: (End of Certificate) (End of Clause) #24715 2152.216-71 Fixed price with limited cost redetermination--risk charge. As prescribed in 2116.271-1(a), the following clause shall be inserted in FEGLI Program contracts when a risk charge is negotiated. Risk Charge OPM shall pay the Contractor the risk charge specified in appendix __ for the risk assumed in performing this contract. (Bnd of clause) 2152.216-72 Pixed price with limited cost redetermination--service charge. As prescribed in 2116.271-1(b), the following clause shall be inserted in FEGLI Program contracts when a service charge is negotiated. Service Charge Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 51 7 FR 24704-01 Cite as: 57 FR 24704, *24715) OPM shall pay the Contractor the service charge specified in appendix __ ‘End of clause) 152.222-70 Notice of Significant Events. As prescribed in 2122.170, the following clause shall be inserted in all FEGLI rogram contracts: lotice of Significant Events (a) The Contractor agrees to notify OPM of any Significant Event within 10 working days after the Contractor becomes aware of it. As used in this section, , Significant Event is any occurrence or anticipated occurrence that might “easonably be expected to have a material effect upon the Contractor's ability to meet its obligations under this contract, including, but not, limited to, any of she following: 7 (1) Disposal of 25 percent or more of the Contractor's assets within a six- ronth period; (2) Termination or modification of any contract or subcontract if such -ermination or modification might have a material effect on the Contractor's sbligations under this contract; (3) Loss of 20 percent or more of FEGLI Program reinsurers in a policy year. (4) The imposition of, or notice of the intent to impose, a receivership, sonservatorship, or special regulatory monitoring; (5) The withdrawal of, or notice of intent to withdraw, by any State of its license to do business or any other change of status under Federal or State law; (6) The Contractor's default on a loan or other financial obligation; (7) any actual or potential labor dispute that delays or threatens to delay -imely performance or substantially impairs the functioning of the Contractor's facilities or facilities used by the Contractor in the performance of the contract; (8) Any change in its charter, constitution, or by-laws which affects any provision of this contract or the Contractor's participation in the Federal Employees' Group Life Insurance Program; (9) Any significant changes in policies and procedures or interpretations of the contract which would affect the benefits payable under the contract or the costs charged to the contract; (10) Any fraud, embezzlement or misappropriation of FEGLI Program funds; or (11) Any written exceptions, reservations or qualifications expressed by the independent accounting firm (which ascribes to the standards of the American Institute of Certified Public Accountants) contracted with by the Contractor to provide an opinion on the annual accounting statements required by OPM for the FEGLI Program. (b) Upon learning of a Significant Event, OPM may institute action, in proportion to the seriousness of the event, to protect the interest of insureds, including, but not limited to-- Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 52 7 FR 24704-01 Cite as: 57 FR 24704, *24715) (2) Directing the Contractor to take corrective action; (2) Making a downward adjustment to the weight in the "Contractor Performance" actor of the service charge; or, (3) Withholding payment of the service charge. (c) Prior to taking action as described in paragraph (b) of this clause, OPM 411 notify the Contractor and offer an opportunity to respond. (a) The Contractor agrees to insert this clause in any subcontract or jubcontract modification if both the amount of the subcontract or modification Sharged to the FEGLI Program exceeds $200,000, and the amount of the subcontract sr modification to be charged to the FEGLI Program exceeds 25 percent of the sotal cost of the subcontract or modification. (znd of Clause) 2152.224-70 Confidentiality of records. As prescribed in 2124.7002, the following clause shall be inserted in all FEGLI program contracts: Confidentiality of Records (a) The Contractor shall use the personal data on employees and annuitants that ig provided by agencies and OPM, including for the data and published annually in the Federal Register as a part of OPM's notice of systems of records. (b) ‘The Contractor shall also hold all medical records, evidence of insurability for insurance coverage, designations of beneficiaries, amounts of insurance, and information relating thereto, of the insured and family members confidential except for disclosure as follows: (1) as may be reasonably necessary for the administration of this contract; (2) As authorized by the insured or his or her estate; (3) As necessary to permit Government officials having authority to investigate and prosecute alleged civil or criminal actions; and (4) As necessary to audit the contract. (End of Clause) 2152.232-70 Payments. As prescribed in 2132171, the following clause shall be inserted in all FEGHT Program contracts: Payments (a) OPM will provide to the Contractor, in full settlement of its obligations under this contract, subject to adjustment based on actual claims and Rgministrative cost or for Contractor fraud, a fixed premium once per month on the first business day of the month. The premium will be determined by an Secimate of costs for the contract year as provided in section _, and will be Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 53 57 FR 24704-01 (Cite as: 57 FR 24704, *24715) redetermined annually. In addition, an annual reconciliation of premiums and ,ctual costs will be performed, and additional payment by OPM or reimbursement by che contractor will be paid as necessary. (b) If OPM fails to provide the premium in full by the due date, a grace period 5£ 31 days shall be granted to OPM for providing any premium due, unless OPM has breviously given written notice to the Contractor that the contract is to be Jiscontinued on the premium due date. ‘The contract shall continue in force during the grace period. (c) If OPM fails to provide any premiums within the grace period, the contract shall be discontinued at the end of the 31st day of the grace period, unless the Contractor and OPM agree to continue the contract. OPM shall be liable to the Contractor for all premiums then due and unpaid. If during the grace period OPM presents written notice to the Contractor that the contract is to be discontinued before the expiration of the grace period, the contract shall be discontinued the later of the date of receipt of such written notice by the Contractor or the date specified by OPM for discontinuance. OPM shall be liable to the Contractor for all premiums then due and unpaid. (d) The specific premium rates, charges, allowances and limitations applicable to the contract are set forth in 5 CFR part 870, et. seq., 48 CFR chapter 1, LIFAR, and this contract. (e) In accordance with FAR 52.243-2, if a change is made to the contract that increases or decreases the cost of performance of the work under this contract, the Contracting Officer shall make an equitable adjustment to the estimate on which the monthly premiums axe based. (2) In the event this contract is terminated in accordance with LIFAR Part 2149, the special Contingency Reserve held by the Contractor shall be available to pay the necessary and proper charges against this contract after other Program assets held by the Contractor are exhausted. (Bnd of Clause) 2152.232-71 Non-commingling of FEGLI Program funds. As prescribed in 2132.772, the following clause shall be inserted in all FEGLT Program contracts. Non-Commingling of Funds (a) FEGLI Program funds shall be maintained in such a manner as to be separately identifiable from other assets of the contractor. Cash and investment balances reported on the PEGLI Program Annual Accounting Statement must be supported by the contractor's books and records. (b) The Contractor may request a modification of this requirement from the Contracting Officer. The modification shall be requested in advance and the Contractor shall demonstrate that accounting techniques *24716 have been established that will clearly measure FEGLI Program cash and investment income (i.e., subsidiary ledgers). Reconciliations between amounts reported and actual Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 54 37 FR 24704-01 (Cite as: 57 FR 24704, *24716) snounts shown in accounting records shall be provided as supporting schedules to che Annual Accounting Statements. (End of Clause) 2152.232-72 Approval for the Assignment of Claims. As prescribed in 2132.870, the following clause shall be inserted in all FEGLI program contracts: approval for Assignment of Claims (a) The Contractor shall not make any assignment of FEGLI funds under the assignment of Claims Act without the prior written approval of the Contracting Officer. (b) Unless a different period is specified in the Contracting Officer's written approval, an assignment of FEGLI funds shall be in force only for a period of 1 year from the date of the Contracting Officer's approval. However, assignments may be renewed upon their expiration. (End of Clause) 2152.244-70 Subcontracts. As prescribed by 2144.270, the following clause shall be inserted in all FEGLI Program contracts: Subcontracts (a) The Contractor shall notify the Contracting Officer reasonably in advance of entering into any subcontract or subcontract modification, or as otherwise specified by this contract, if both the amount of the subcontract or modification charged to the FEGLI Program exceeds $200,000 and is 25 percent of the total cost of the subcontract. (b) The advance notification required by paragraph (a) of this clause shall include the information specified below: (1) A description of the supplies or services to be subcontracted; (2) Identification of the type of subcontract to be used; (3) Identification of the proposed subcontract and an explanation of why and how the proposed subcontractor was selected, including the competition obtained; (4) The proposed subcontract price and the Contractor's cost or price analysis; (5) The subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions. (6) The subcontractor's Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract; and (7) A negotiation memorandum reflecting- Copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 55 7 FR 24704-01 Cite as: 57 FR 24704, *24716) (i) The principal elements of the subcontract price negotiations; (ii) The most significant consideration controlling establishment of initial or vised prices; (iii) The reagon cost or pricing data were or were not required; (iv) The extent, if any, to which the Contractor did not rely on the jubcontractor's cost or pricing data in determining the price objective and in regotiating the final price; (v) The extent to which it was recognized in the negotiation that the jubcontractor's cost or pricing data were not accurate, complete, or current; the vction taken by the Contractor and the subcontractor; and the effect of any such jefective data on the total price negotiated; (vi) The reasons for any significant difference between the Contractor's price objective and the price negotiated; and (vid) A complete explanation of the incentive fee or profit plan when incentives are used, The explanation shall identify each critical performance element, management decisions used to quantify each incentive element’, reasons for the incentives, and a summary of all trade-off possibilities considered. (c) The Contractor shall obtain the Contracting Officer's written consent before placing any subcontract for which advance notification is required under paragraph (a) of this clause. However, the Contracting Officer may ratify in writing any such subcontract. Ratification shall constitute the consent of the Contracting Officer. (a) The Contracting Officer may waive the requirement for advance notification and consent required by paragraphs (a), (b), and (c) of this clause where the Contractor and subcontractor submit an application or renewal as a contractor team arrangement as defined in FAR Subpart 9.6 and (1) The Contracting Officer evaluated the arrangement during negotiation of the contract or contract renewal; and (2) The subcontractor's price and/or costs were included in the plan's rates that were reviewed and approved by the Contracting Officer during negotiations of the contract or contract renewal. (e) Unless the consent or approval specifically provides otherwise, consent by the Contracting Officer to any subcontract shall not constitute a determination (1) of the acceptability of any subcontract terms or conditions; (2) of the Mliowability of any cost under this contract; or (3) to relieve the Contractor of any responsibility for performing this contract. (£) No subcontract placed under this contract shall provide for payment on @ cost -plus-a-percentage-of-cost basis. Any fee payable under cost reimbursement type subcontracts shall not exceed the fee limitations in FAR 15.903(d) . | Ray profit or fee payable under a subcontract shall be in accordance with the provisions of Section __, Service Charge. (g) The Contractor shall give the Contracting Officer immediate written notice of any action or suit filed and prompt notice of any claim made against the Contractor by any subcontractor or vendor that, in the opinion of the Contractor, may result in litigation related in any way to this contract with respect to which the Contractor may be entitled to reimbursement from the Government. Copr. © West 1999 No Claim to Orig. U.S. Govt. worksPage 56 57 FR 24704-01 (Cite as: 57 FR 24704, *24716) (Bnd of Clause) 2152.249-70 Renewal and termination. As prescribed in 2149.170, the following clause shall be inserted in all FEGLI Program contracts: Renewal and Termination (a) This contract renews automatically each October 1st, unless written notice >f termination is given by the Contractor not less than 60 calendar days before the renewal date. (b) This contract may be terminated by OPM at any time for default by the Contractor. This contract terminates at the end of the 31st day after default by the Government, unless the Contractor and OPM agree to continue the contract. (c) This contract may be terminated for convenience of the Government 60 days after the Contractor's receipt of OPM's written notice of termination. (a) Upon termination of the contract, the Contractor agrees to assist OPM with an orderly and efficient transition to a successor in accordance with FAR 52.237-3, Continuity of Services, as modified at 2137.102-70(b). (e) After receipt of a termination notice, the prime contractor shall, unless directed otherwise by the Contracting Officer, terminate all subcontracts to the extent that they relate to the performance of the FEGLI contract. The failure of the prime contractor to include an appropriate termination clause in any gubcontract, or to exercise the clause rights, shall not affect the Contracting Officer's right to require the termination of the subcontract; or increase the obligation of the Government beyond what it would have been if the subcontract had contained an appropriate clause. (Bnd of Clause) Subpart 2152.3--FEGLI Program Clause Matrix 2152.370 Use of the matrix. (a) The matrix in this section lists the FAR and LIFAR clauses to be used with the FEGLI Program contract. The clauses are to be incorporated in the contract in full text. : (b) Certain contract clauses are mandatory for FEGLI Program contracts. Other clauses are to be used only when made applicable by pertinent sections of the FAR or LIFAR. An "M" in the "use Status" column indicates that the clause is mandatory. An "A" indicates that the clause is to be used only when the applicable conditions are met. #24718 (FR Doc. 92-13270 Filed 6-9-92; 8:45 am) BILLING CODE 6325-01-M copr. © West 1999 No Claim to Orig. U.S. Govt. WorksPage 57 57 FR 24704-01 (Cite as: 57 FR 24704, *24718) 57 FR 24704-01, 1992 WL 124210 (P.R.) END OF DOCUMENT Copr. © West 1999 No Claim to Orig. U.S. Govt. Workslas yen 3 Ja a Ade IN THE CIRCUIT COURT OF COOK COUNTY con COUNTY DEPARTMENT CHANCERY DIVISION feos. FIiLe SUSAN MILLER, Dr. TASSOS P. ) NASSOS individually and as Trustee ) of the living trust of Tassos Nassos and the ) irrevocable trust of Mary Nassos, ) MARY NASSOS as Trustee for the ) irrevocable trust of Tassos Nassos and ) -F I L JAMES MILLER, as Trustee ) Ep for the irrevocable trust of ) JUL Dr. Michael Marchi, ) 7 22 1999 and all others similarly situated, ) URE} ) olen Get ues Plaintiffs, fe v. ) No. 97 CH 04324 ) ROYAL MACCABEES LIFE ) Judge Michael Getty INSURANCE COMPANY, ) ) ) TO: See Attached Service List PLEASE TAKE NOTICE that on July 22, 1999, we filed a consolidated copy of the Proposed Fourth Amended Class Action Complaint. The document attached to this Notice represents a complete and consolidated copy of the proposed amended complaint combining into a single document the exhibits from the PlaintifPs Motion for Leave to File a Fourth Amended Class Action Complaint Instanter and Motion for Leave File an Additional Count for an Accounting in the Proposed Fourth Amended Class Action Complaint Instanter. By: One’of the Plafntifis” Attomeys Dated: July 22, 1999 Christopher V. Langone Joel D. Dabsich The Langone Law Firm 25 East Washington, Suite 1805 Chicago, illinois 60602 Firm No. 34257Lawrence W. Schad James Shedden Steven J, Tomielto Charles D. Marshall Beeler, Schad & Diamond, P.C. i S. Michigan Avenue, Suite 1000 igo, Illinois 60604 fim No. 91028 Michael Childress Paul Andrews Childress & Zdeb, Ltd. 6 West Hubbard, 5th Floor Chicago, Ilinois 60610 Firm No. 34877 Anthony J. Madonia Beth Alcantar Anthony J. Madonia & Associates, Ltd. 150.N, Wacker Dr., Suite 900 Chicago, Mlinois 60606 Firm No. 33696IN THE CIRCUIT COURT OF COOK COUNTY COUNTY DEPARTMENT CHANCERY DIVISION SUSAN MILLER, Dr. TASSOS P. ) NASSOS individually and as Trustee ) of the living trust of Tassos Nassos and the ) irrevocable trust of Mary Nassos, ) MARY NASSOS as Trustee for the ) irrevocable trust of Tassos Nassos and. ) JAMES MILLER, as Trustee ) for the irrevocable trust of ) Dr. Michael Marchi, ) and all others similarly situated, ) ) ) ) ) ) ) ) ) FILED ur 22 999 YCINSKL URL sir COURT Plaintiffs, oi Ee v. No. 97 CH 04324 ROYAL MACCABEES LIFE Judge Michael Getty INSURANCE COMPANY, Defendant. PROPOSED Ft TH AMENDED CLASS ACTION COMPLAINT Plaintiffs, SUSAN MILLER, Dr. TASSOS P. NASSOS individually and as Trustee of the irrevocable trust of Mary Nassos and the living trust of Tassos Nassos, MARY NASSOS as Trustee for the irrevocable trust of Dr. Tassos Nassos, JAMES MILLER, as Trustee for the irrevocable trust of Dr. Michael Marchi, individually and on behalf of all others similarly situated, bring this action against Defendant for its unauthorized increase in the cost of insurance rates charged and collected for the life insurance they purchased.THE PARTIES 1. Defendant, Royal Maccabees Life Insurance Co., (“Maccabees”), is an insurance company licensed to sell insurance in the State of Illinois. Maccabees does business in Cook County. 2. Plaintiff, SUSAN MILLER, is a resident of Kane County, Illinois. Susan Miller purchased a life insurance policy from Maccabees on or about September 15, 1987. A copy of the policy is attached as Exhibit A. 3. Plaintiff, JAMES MILLER is a resident of Kane County, Illinois and the Trustee of the Dr. Michael Marchi irrevocable trust (“Marchi Trust”). On June 1, 1989, Maccabees issued a life insurance policy to James Miller as Trustee of the Marchi Trust. This policy was purchased by Dr. Marchi, A copy of the policy is attached as Exhibit B. 4. Plaintiff, DR. TASSOS P. NASSOS is a resident of Cook County, Illinois, Dr. Nassos is the trustee of both the Tassos Nassos living trust (“Tassos Nassos Trust”) and the irrevocable trust of Mary Nassos (“Mary Nassos Trust”). Dr. Nassos purchased a life insurance policy, as an individual, from Maccabees on May 9, 1989. Dr. Nassos, as trustee of the Tassos Nassos Trust and the Mary Nassos Trust, purchased two additional life insurance policies from Maccabees on May 9, 1989 and April 1, 1989 respectively. Copies of these policies are attached as Exhibits C, D, and E.5. Plaintiff, MARY NASSOS is a resident of Cook County, Illinois. Mary Nassos is the Trustee for the Tassos P. Nassos irrevocable Trust. Tassos Nassos purchased a life insurance policy from Maccabees for Mary Nassos as Trustee of the Tassos P. Nassos irrevocable trust. The policy was issued to Mary Nassos on May 9, 1989. A copy of this policy is attached as Exhibit F. 6. — Ceratin Plaintiffs and members of the Class purchased their policies with a single premium payment, while other policyholders pay annual premium payments. THE INSURANCE POLICIES 7. The insurance policies issued by Maccabees to the Plaintiffs and the class were universal life insurance cash-value policies and not term life insurance policies. Under the policy terms, if the Plaintiffs and the class paid their premiums on time, Maccabees could not cancel or unilaterally alter the terms of the polices, The policies of the Plaintiffs and the class, referred to as “the Policies”, contain form terms and provisions. 8. Under the terms of the Policies, a certain minimum percentage of each premium payment accrues, on a monthly basis with interest, to the benefit of the Policies, i.e., the “Accumulation Value.”9. Bach policy has a “cash value” equal to the accumulation value less any surrender charges. 10, The “Surrender Charge” is the lesser of a) the Accumulation Value, and b) the Maximum Surrender Charge. The Maximum Surrender Charge is shown on the Schedule Page and this figure is multiplied by the factor from the Table of Surrender Charge Factors that correspond to the policy year of surrender. 11. Out of each annual premium payment ~ or the Accumulation Value in the case of single premium polices - Maccabees is entitled to keep a certain portion of the payment to cover the “Cost of Insurance” (“COI”). The COI is determined on a monthly basis and is based on the sex, attained age, and rating class of the person insured. Maccabees may change the cost of insurance rates based upon its reasonable expectations as to future mortality experience. 12. The Plaintiffs and the Class have a protectable property interest in the Policies. Maccabees cannot cancel the Policies or alter the terms if the premiums are timely paid. The Policies have a cash value and are assignable. Maccabees Wrongfully Increased the Cost of Insurance Rate 13. Certain COI adjustments are permitted by the terms of the Policies. 14. On September 15, 1991, Maccabees sent Plaintiff Miller her “Annual Statement Policy Year Ending September 14, 1991,” a copy of which is attached as Exhibit G. This document states:[s}tarting Sep 15, 1991, current monthly insurance charges on this policy will be adjusted. ... The adjustments reflect the increasing number of AIDS- related deaths and, for policies which are not part of a pension plan, new federal corporate insurance taxes: This document is a form document and it was sent to each policyholder on the anniversary date of his or her policy. 15. | Maccabees increased the COI rate on the Policies for reasons other than adverse expectations as to future mortality. 16. Maccabees’ statement that the increase in the COI was due to new federal corporate insurance taxes on policies, which were not part of a pension plan, is false and misleading 17. Maccabees’ statement that the increase in the COI was due to new federal corporate insurance taxes on policies which were not part ofa pension plan creates a false impression that Congress decided to tax those policies. 18. There were no new federal taxes on insurance policies. Instead Congress instituted a change in the tax code relating to the timing of the deduction of certain expenses by Maccabees that-did not apply to the policyholders or the Policies themselves.19. Plaintiffs also believe Maccabees stated that it was not going to impose this so-called new federal insurance tax on policies that were part of a pension plan because doing so would have raised a red flag since those plans are tax exempt. 20, On information and belief, AIDS-related deaths did not increase in sufficient numbers as to warrant an adjustment in the COI due to changes in mortality rates. Plaintiffs and members of the Class did not know this fact before paying their premiums because this information is held by Maccabees — because it relates to the future mortality expectations of Maccabees’ insureds, not the general public. Plaintifffs and members of the Class could not confirm this before paying their premiums because this can only be determined from information held by Maccabees. 21. Maccabees’ 1991 annual statement did not provide the Plaintiffs and members of the Class with full knowledge of all the facts. Policyholders continued to pay premiums in reliance on the statements made in the annual notice, without the knowledge that Congress had not taxed insurance polices that were not part of a pension plan or that AIDS-related deaths did not increase in sufficient numbers as to warrant an adjustment in the COI due to mortality rates.22. Plaintiffs had the right to pay their premiums notwithstanding the improper COI charges in order to protect the property interest they held in the Policies and to keep their insurance in effect. For example, Plaintiff Susan Miller would have incurred a $ 2,033 “surrender charge” had she elected not to pay the improper charge. 23. Plaintiffs, Dr. Tassos Nassos, Mary Ann Nassos and James Miller procured single premium policies, They made only one premium payment on their policies, and did not make any premium payments on their policies after Maccabees increased the COI in 19991. 24. Because Dr. Tassos Nassos, Mary Ann Nassos and James Miller procured single premium policies, and no premiums payments were made after they received the annual statement announcing the unauthorized COT increase, they did not make payment with full knowledge of all the facts and cannot be deemed to have made payment voluntarily. 25. There was no increase in premiums for policyholders who did not have single premium policies. The premium payments that the policyholders made were the payments required to be made under the terms of the contract as written. In order to perform their obligation under the contract, the policyholders had to make these payments, otherwise they would have been in breach of thecontract. The harm to the policyholders occurred after they made their payments when Maccabees misapplied part of the payments by wrongfully taking more of the premiums paid and applying it to the COI and reducing the investment component in breach of its duty and the terms of the policy. 26. Maccabees continues to take a larger portion of the premium payment for itself through the unauthorized COI increase and investing a smaller portion of the policyholders funds. 27. This lawsuit was initially filed on April 8, 1997. Every payment made after that date was made under protest. 28. Attached as Exhibit H are Plaintiffs’ executed Stipulation To Remittal Of Potential Disqualification. THE CLASS ALLEGATIONS 29. Plaintiffs bring this action on behalf of a Class consisting of all people nationwide who: (a) _ at any time during the ten years before the filing of this action, owned a policy of insurance issued by Royal Maccabees, including those whose policies lapsed, which insurance contract provided that cost of insurance rates will be determined based ‘on expectations of “future mortality experience”; and,(b) had their cost of insurance rates increased for reasons other than adverse expectations of “future mortality experience”, namely, Defendant increased the cost of insurance for new federal corporate insurance taxes and for an alleged increase in AIDS related deaths, 30. Joinder of all members of the class is impracticable because, on information and belief, Exhibits A, B, C, D, B & F are all standard, form insurance contracts as to which more than 38,000 life insurance policies were issued. 31. — Questions of fact and law common to all members of the class predominate over those peculiar to individual class members. These common questions include: (a) ) whether the statement that the “Monthly Cost of Insurance Rates will be determined by the Company [Maccabees] from time to time based on its expectations as to future mortality experience.” amounts to a representation that rates would not be increased unless mortality rates changed adversely; and, whether Maccabees breached the contracts it had with the plaintiffs and the class (policyholders) by increasing the cost of insurance rates for any reason other than adverse expectations as to future mortality experience. 32. Plaintiffs will fairly and adequately protect the interests of the class because the named Plaintiffs’ claims are typical of the claims of all of the members of the class and because all claims are based on the same facts and legal theories.33. Plaintiffs and their counsel will fairly and adequately represent the interests of the class members and will vigorously pursue this action on their behalf. Plaintiffs and their counsel have no interests that are adverse to those of the Class members. 34. Certification of the class is appropriate. A class action is the only appropriate means of resolving this controversy because each class member’s individual claim is relatively small and will not justify an individual action, In addition, class members are not aware of their rights. In the absence of a class action, a failure of justice will result. Prosecution of separate actions by individual members of the class would create the risk of inconsistent or varying standards for the parties. COUNT I BREACH OF CONTRACT 35. Defendant’s insurance policies with Plaintiffs and the class members are written contracts. The contracts were executory at the time Maccabees began to improperly increase the COI. 36. Plaintiffs performed all of their obligations under their insurance contracts, including the payment of premiums.37. Defendant Maccabees increased the COI rates for reasons other than those allowed under its contracts, and thereby breached its contracts with the Plaintiffs, namely by: (A) imposing costs it incurred as a result of “new federal corporate insurance taxes” on the Plaintiffs when it was not permitted to do so according to the terms of the Policy (Exhibit A). This Contract provides that “Monthly Cost of Insurance Rates will be determined [by Maccabees]... based on its expectations as to future mortality experience.” The Contract did not authorize Defendant to include in the COI rates new or increased insurance taxes, even if such a tax did exist. The Contract did not allow Maccabees to pass to policyholders any cost it incurred due to changes in the timing of deductions of its cost of doing business. (B) _ increasing Plaintiffs’ cost of insurance rates as a result of “AIDS-related deaths” even though, on information and belief, AIDS-related deaths were not such as to adversely effect as to future mortality experience. 38. The increase in cost of insurance rates for any reason other than adverse expectations as to future mortality experience, (e.g., for “new federal corporate insurance taxes”) was and is a breach of the Defendant’s insurance contracts with Plaintiffs and the Class.39, Asa direct and proximate result of the Defendant’s breach of contract, the Plaintiffs and the class were damaged in that out of the premiums paid, or policy earnings, the Defendant charged more to the cost of insurance rates for a reason other than adverse expectations as to future mortality experience. The increases in the cost of insurance rates were not authorized by the insurance contracts. 40. In addition to money damages, Plaintiffs and the Class are entitled to specific performance or injunctive relief preventing Defendant from collecting these unauthorized COI charges in the future. WHEREFORE, Plaintiffs pray for relief as set forth at the conclusion of Count VI. COUNT I Recovery of Money Paid Under Mistake of Fact 41. Plaintiffs reallege paragraphs 1-40 as paragraph 41 of Count Two. 42. Plaintiffs may recover payments made for the increased COI because they paid the charge under several mistakes of fact. (See Illinois Graphics Co. v. Nickum, 159 Ill.2d 469 (Ill. 1994) ("A cause of action for the recovery of voluntary payments made because of a mistake of fact has long been recognized.")).43. Section 28 of the Restatement of Restitution explains the basis of recovery for money paid due to mistake of fact: "A person who has paid money to another because of a mistake of fact and who does not obtain what he expected in return is entitled to restitution from the other if the mistake was induced: (a) _ by the fraud of the payee, or (b) _ by his innocent and material misrepresentation..." 44. Plaintiffs and the class paid the increased “cost of insurance charge’ without knowing that: (a) _ the federal corporate insurance taxes were not in fact taxes but rather an accounting change relating to the timing of deduction of certain expenses that did not apply to the policyholders or even to the policies themselves; and (b) AIDS-related deaths did not increase in sufficient numbers as to warrant an adjustment in the cost of insurance to reflect changes in mortality rates, ‘These constitute material mistakes of facts. Plaintiffs and the Class would have refused to pay the insurance charge if they had not been mistaken concerning these facts.45. Payment was obtained by Maccabees’ fraud, or in the alternative, through Maccabees’ material omissions and misrepresentations. Further, it was Maccabees’ omissions of material facts and misrepresentations which caused Plaintiffs and the Class to make payment under mistakes of fact. 46. Maccabees at all times knew, or should have known, that Plaintiffs and the class were entitled to restitution or refund of the insurance payments because it knew it had failed to disclose information necessary to correct these material mistakes of fact. 47. — Plaintiffs and the Class did not receive anything from Maccabees in exchange for their increased cost of insurance payments. Equity and good conscience requires that Maccabees refund all of the money it received from its increased COI charge. Maccabees would be unjustly enriched if allowed to retain the money collected. 48. In addition to receiving a refund of the increased COI charges, Plaintiffs and the Class are entitled to statutory or common law prejudgment interest. WHEREFORE, Plaintiffs pray for relief as set forth at the conclusion of Count VI.COUNT II Common Law Fraud 49. Plaintiffs reallege paragraphs 1-48 as paragraph 49 of Count Three. 50. Inthe 1991 annual statement to its customers, Maccabees misrepresented and omitted certain facts. These misrepresentations and omissions include the following: @ (b) (©) @) Maccabees’ annual statement stated that the COI increase was due, in part, to “new federal corporate insurance taxes” on policies that were not part of a pension plan. However; there were no new federal corporate insurance taxes on insurance but rather Congress had instituted a change in the tax code relating to the timing of the deduction of certain expenses ~ that change did not apply to the policyholders or the policies themselves; Maccabees’ annual statement failed to disclose that the COI was being increased because Congress had instituted a change in the tax code that required an accounting change relating to the timing of the deduction of certain expenses incurred by Maccabees’ that did not apply to the policyholders or the policies themselves; Maccabees’ annual statement stated that the COI increase was due, in part, to “the increasing number of AIDS-related deaths”, when, upon information and belief, AIDS-related deaths did not increase in sufficient numbers among the policyholders as to warrant an adjustment in the COI to reflect changes in mortality rates; and Maccabees failed to disclose that AIDS-related deaths did not increase in sufficient numbers to warrant an adjustment in the col.51, Maccabees knowingly and intentionally made these misrepresentations and omissions. Maccabees intended that the Plaintiffs and each member of the class would rely on them, and Maccabees intended to deceive Plaintiffs and the class by making them. 52. Maccabees had a duty to disclose the omitted information because Maccabees had knowledge superior to the Plaintiffs. Plaintiffs had no knowledge of these omitted facts and the Plaintiffs could not discover these facts in the exercise of reasonable diligence because only Maccabees knew the truth of the matters it asserted in the annual statement. 53. Maccabees also had a duty to disclose this information because once Maccabees disclosed some information about the increased COI charge, it had a duty to disclose the whole truth about the increase. Because Maccabees told policyholders that the COI increase was the result of a new federal corporate insurance tax and AIDS-related deaths, it had to tell them all of the facts about the so-called tax and the alleged increase in AIDS-related deaths necessary to enable them to make an informed decision about whether to pay the increased COI charge or protest.54. The misrepresentations and omissions were material. Plaintiffs and the members of the class would have refused to pay the increased COI had they known the truth. 55. Plaintiffs and the class reasonably and justifiably relied on the misrepresentations and omissions to their detriment because they paid the increased COI. 56. As aresult of Maccabees’ misrepresentations and omissions, Plaintiffs and the class have been damaged in the amount of the increased COL charges paid. In addition to refund or restitution of these increased COI charges paid, they are entitled to statutory or common law prejudgment interest, or interest at the rate called for under their policy terms— whichever is higher. WHEREFORE, Plaintiffs pray for relief as set forth at the conclusion of Count VI. COUNT IV Consumer Fraud and Deceptive Trade Practices Claim 57. Plaintiffs reallege paragraphs 1-56 as paragraph 57 of Count Four, 58. Under the Illinois Consumer Fraud and Deceptive Business Practices Act, any unfair or deceptive act or practice in the conduct of trade or commerce is actionable. (815 ILCS 505/1 et seq.). The statute expressly covers misrepresentations and omissions.59, Maccabees misrepresented that the COI being increased, in part, due to “new federal corporate insurance taxes”, when there was no such federal corporate insurance tax. Maccabees misrepresented that the COI was being increased due to an increase in AIDS-related deaths when, upon information and belief, AIDS-related deaths among the policyholders did not increase. 60. Maccabees failed to disclose the COI was being increased because Congress had instituted a change in the tax code that required an accounting change relating to the timing of the deduction of certain expenses incurred by Maccabees’ that did not apply to the policyholders or the policies themselves. Maccabees failed to disclose that AIDS-related deaths did not increase in sufficient numbers to warrant an adjustment in the COI. 61. Maccabees intended that its policyholders rely on its mistepresentations and omissions, namely that they rely by paying for the unauthorized increase in COI. 62. The misrepresentations and omissions were material, Plaintiffs and the members of the class would have refused to pay for the increased COI had they had full knowledge of all the facts.63. Plaintiffs and the other members of the class sustained actual damages as a result of Maccabees’ conduct in the amount of the increased COI charges paid. In addition to refund or restitution of the increased COI charges paid, Plaintiffs and the class are entitled to statutory or common law prejudgement interest, or interest at the rate called under their policy terms~ whichever is higher. 64. The Consumer Fraud Act authorizes the Court to grant injunctive relief where appropriate. (815 ILCS 505/10a(c)). Maccabees continues to collect the unauthorized COI charges from the policyholders, and thus Plaintiffs request that the Court declare that Maccabees has breached its policies by collecting the increased COI charges, and that Maccabees be enjoined from collecting the increased COI charges on future premium payments. 65. The Illinois Consumer Fraud Act authorizes the award of attorneys’ fees to persons who recover under the Act in addition to damages and other relief. (815 ILCS 505/10(c)). 66. Plaintiffs assert the same claim under the consumer fraud, deceptive trade practice, and false advertising statutes of all fifty states, the District of Columbia and all U.S. territories. 67. Maccabees made the misrepresentations and omissions at issue knowingly and intentionally.68. Plaintiffs and the class reasonably and justifiably relied on the misrepresentations and omissions to their detriment because they paid the unauthorized COI increase charge. 69. WHEREFORE, Plaintiffs pray for relief as set forth at the conclusion of Count VI. COUNT V Breach of Fiduciary Duty 70. Plaintiffs reallege paragraphs 1-69 as paragraph 70 of Count Five, 71. The Policies charged Maccabees with the duty to hold and manage the money paid in premiums on behalf of each policyholder, and as a result, Maccabees had the fiduciary duty of good faith and fair dealing to manage that money for the policyholder’s benefit while subordinating its own interests. 72. The Plaintiffs and members of the Class reposed confidence and trust in Maccabees to hold and manage their money as an important aspect of their investment, retirement and estate planning portfolios. 73. A portion of the Plaintiffs’ and members of the Class’ premiums pay for administrative expenses and the COI, while the remainder of the premiums accrue as part of an accumulated value of the life insurance policy. At some point, Plaintiffs and the members of the Class will receive that accumulated value, whether they surrender the policy, borrow monies against the policy or die and their heirs receive the accumulated value up to the date of death. 2074. Maccabees had guaranteed Plaintiffs and members of the Class a return on their accumulated value. 75. In 1991, Congress changed the tax code relating to the timing of the deduction of certain expenses by Maccabees ~ a change that did not apply to the policyholders or the Policies themselves. 76. For its own benefit, Maccabees improperly passed this cost on to the policyholders by impermissibly transferring funds to the COI which had been designated to be held as accumulated value. 77. Maccabees misrepresented to the policyholders that the increased COI charge was due to new federal corporate insurance taxes and an alleged increase in the number of AIDS-related deaths. 78. Maccabees, without consent or consideration paid, reduced the accumulated value of the Policies by increasing the COI charges, and thereby reducing the extent of the policy guarantees to the policyholders. 79. Maccabees should be held accountable as a fiduciary to the extent of the accumulated values of its policy holders, and that duty has been breached by converting funds of others for its own benefit, without consent or consideration paid. 80. Wherefore, Plaintiffs pray for relief as set forth at the conclusion of Count VI. 21COUNT VI ; ACCOUNTING ACTION IN EQUITY 81, Plaintiffs reallege paragraphs 1-80 as paragraph 81 of Count Six. 82, By the terms of the Policies, Maccabees may only change the COI rates of the Plaintiffs' and members of the Class' policies based upon its reasonable expectations as to future mortality experience. (See Exhibit A, p. 7; and Exhibit B, p. 10; Exhibits C- E, p. 9). 83. Defendant Maccabees increased the COI rates for reasons other than those allowed under its contracts, and thereby breached its contracts with the Plaintiffs and members of the Class by raising the COI (a) based upon the false representation of "new federal corporate insurance taxes" and (b) as a result of "AIDS-related deaths" even though, on information and belief, AIDS-related deaths were not such as to adversely effect the future mortality experience of the Plaintiffs and members of the Class. (See Exhibit G), 84. Inits 1991 Annual Statement to the Plaintiffs and members of the Class, Maccabees misrepresented that the COI was being increased due to "new federal corporate insurance taxes," but failed to disclose that there were no such federal corporate insurance taxes and that the COI was being increased because Congress had instituted a change in the tax code that required an accounting change relating to the timing of the deduction of certain expenses incurred by Maccabees that did not apply to the policyholders or the Policies themselves. 2285. Maccabees misrepresented that the COI was increased due to an increase in AIDS-related deaths, when, on information and belief, AIDS-related deaths among the policyholders did not increase in sufficient numbers to warrant an adjustment to the COI. 86. Since 1991, Maccabees has wrongfully and in violation of the Policies collected the unauthorized COI charges from the Plaintiffs and members of the Class, and as a result, there are million of dollars due from Maccabees to the Plaintiffs and the members of the Class — but the Plaintiffs are unable to specifically state the amounts collected or misapplied, not having access to the books of account and records, and not being informed by Maccabees. 87. The accounting requested should be conducted in equity because (a) equitable jurisdiction is based on fraud or a fiduciary relationship and (b) the accounting would be complex and intricate in the following respects: (1) the accounting would involve COI charges since 1991 for over 65,000 policyholders; (2) separating the COI charges based on the fraudulent “new federal corporate insurance taxes” from that related to the claimed increase in “AIDS-relate deaths” involves intricate prorations and actuarial calculations (3) these calculations would be based on data only available to Maccabees, precluding the Plaintiffs’ ability to verify the accounting. 2388. Plaintiffs seek a permanent injunction against Maccabees to prevent it from assessing these improper charges on the Policies in the future, and an accounting is ancillary to such an injunction. 89. Plaintiffs ask that a constructive trust for the benefit of the Plaintiffs and the members of the Class be imposed on the proceeds collected by Maccabees as a result of the unauthorized COI charges. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, SUSAN MILLER, Dr. TASSOS P. NASSOS individually and as Trustee of the living trust of Tassos Nassos and the irrevocable trust of Mary Nassos, MARY NASSOS as Trustee for the irrevocable trust of Dr. Tassos Nassos and JAMES MILLER, as Trustee for the irrevocable trust of Dr. Michael Marchi, pray that this Court: (A) . Certify this action as a class action and appoint SUSAN MILLER, Dr. TASSOS P. NASSOS individually and as Trustee of the irrevocable trust of Tassos Nassos and the irrevocable trust of Mary Nassos, MARY NASSOS. as Trustee for the irrevocable trust of Dr. Tassos Nassos and JAMES MILLER, as Trustee for the irrevocable trust of Dr. Michael Marchi, as representatives of the Class and their attorneys as Class Counsel; (B) Declare that Defendant has breached its contract with Plaintiffs and the Class by increasing the cost of insurance rates in violation of the terms of their insurance policies; 24(C) Enter judgment against Defendant requiring that all money collected by MACCABEES as a result of its increases in the cost of insurance rates that were not authorized by its contract be disgorged and repaid to the Class, plus statutory or common law prejudgement interest or at a rate called for under the policy terms — whichever is higher; (D) Award reasonable attorneys’ fees and costs as provided by the Illinois Consumer Fraud Act (815 LCS 505/10a(c)); (E) Permanently enjoin MACCABEES from assessing these improper charges. (©) That MACCABEES be compelled to account to the Plaintiffs and members of the Class as to all the amounts charged for the COI increase separately for charges based upon (1) the false representation of "new federal corporate insurance taxes" and (2) an alleged increase in "AIDS-related deaths." (G)_ That MACCABEES credit to the policies of the Plaintiffs and members of the Class as a result of the unauthorized COI increase such sum as may be found due to the Plaintiffs and members of the Class. 25(H) That this Court impose a constructive trust upon the proceeds collected by MACCABEES as a result of the unauthorized COI charges, naming the Plaintiffs and members of the Class as beneficiaries. (1) Any other relief that the Court deems just. One of Plaintiffs’ Attomeys Dated: July 22, 1999 Christopher V. Langone Joel D. Dabsich The Langone Law Firm 25 East Washington, Suite 1805 Chicago, Illinois 60602 Firm No. 34257 Lawrence W. Schad James Shedden Steven J. Tomiello Charles D, Marshall Beeler, Schad & Diamond, P.C. 332 S. Michigan Avenue, Suite 1000 Chicago, Illinois 60604 Firm No. 91028 Michael Childress Paul Andrews Childress & Zdeb, Ltd. 6 West Hubbard, 5th Floor Chicago, Illinois 60610 Firm No. 34877 26Anthony J. Madonia Anthony J. Madonia & Associates, Ltd. 150 N. Wacker Dr., Suite 900 Chicago, Mlinois 60606 Firm No. 33696DULE OF BENEFITS AND INITIAL MONTHLY EXPENSE CHARGES INITIAL DATE TO WHICH 7 SPECIFIED ° COVERAGE IS - BENEFIT | PROVIDED toe ‘AKOUNT : SXI6LE PREMIUM $250:0C0% SEPTEMBER 15, 2040 JSTABLE LIFE VI~100 . c . STHTS AMOUNT DOES INCLUDE, THE ACCUMULATION “VALUE ‘TMUH ADHINISTRATIVE CHARGE? $5.00 HAXIMUH PREMIUM’ LoaD? "MUM SURRENDER CHARGES __ $32987-50 WITHORAWAL CHARGES JERAGE CONTINUATION.COMPONENT: = $72091 0 2 = i THE TERMINATION DATE IS THAT ELECTEO BY THE OWNERS IT. TS POSSIBLE THAT COVERAGE WILL CEASE PRIOR TO THE MATURITY SHOWN ‘IF SUBSEQUENT PREHTUHS AND INTEREST CREDITED ARE INSUFFICIENT TO CONTINUE COVERAGE ‘TO SUCH A OATES LICY NUMBER: 4074-420" SURED: SUSAN G HILLER MATURITY DATESSEPTEMBER 15¢ 2049, Xt FEMALE ISSUE AGE? 46 . Hiaetasicd EMIUM CLASS? $TANDARO-NONSHOKER MONTHLY DEDUCTION DAY IS: THE LSTH OAY OF EACH HONTH LETAL PREMIUM: $875.80 PLANNED PERIODIC PREMTUH: 7 $875.80 (ANNUAL) HOT SURRENDER YOUR POLICY OR ALLOW [T TO LAPSE FOR ANY REASON WITHOUT NSULTENG THE COMPANY. IM CASE OF ANY QUESTION ABOUT THIS POLICY, CONTACT (i LOCAL Maccaaees AGENCY OR WRITE THE gee ITS HOME OFFICE. eee ReeE Eta E SESEDEFINITIONS Whenever used In the Policy, the following words mean: ; . ACCUMULATION VALUE ‘Tho amount of money that Is credited with Interest to the Policy on a monthly basis. BENEFICIARY ‘The person named In writing by the Gwner to receive the Insurance Proceeds in the event of the Insurad’s death, : CASH VALUE The amount of Accumulation Value of this Policy less any Surrender Charges. ‘COMPANY ‘The Maccabees Mutual Life Insurance Company, DATE OF Issuz Tha dato shown on the Schedule Page from which Policy years, months and anniversaries shall ba determined, HOME OFFICE OF THE COMPANY 25800 Northwestern Highway, P.O. Box 2165, Southfield, Michigan 48037-2165 oa INDEBTEDNESS The sum of any unpaid policy loans and any unpaid policy loan interest, INITIAL PREMIUM The amount di at the Data of Issue shown on the ‘Schedule Paga and payable in advance. INSURANCE PROCEEDS Tha total amount the Company will pay upon the death of the Insured, INSURED The person named on the Schedule Page whose life this Policy insures, LOAN VALUE Tha amount that can be borrowed under the Policy. MATURITY DATE ; Tho date specified as such on the Schedule Page, upon which the Surrender Value will beeoma payable Wthe Insured Is living, 7 MONTHLY DEDUCTION DAY The day of each month shown on the Schedule Page when the Accumulation Value of the Polley ie Galculated and the Monihly Expense Charge. 1s ~ | eductad. The first Monthly Deduction. Day shall be the Date of lssue, : _ MONTHLY EXPENSE CHARGE The {otal amount deducted each month for the Coverage provided under the Policy and any additional” benefits provided by rider. ‘OWNER - Tha person to whom this Policy belongs, PARTIAL SURRENDER ‘An amount avaliable in cash at any time upon request qual to 50% or mora of the Surrender velue. PLANNED PERIODIC PREMIUM PAYMENT The amount of regular premium payment elected by tha Insured. This amount and the frequency of Payment are shown on tlie Schedule Page. The Owner may change the amount and frequency of the Planned Periodig Premium Payment at any time subject to the policy provisions. Any change in {frequency and amount will ba rellected in the Annual Report provided by the Company, ‘SPECIFIED BENEFIT AMOUNT ‘The initial amount of coverage shown on the'Schedule Page. This Amount may be changed by the Ownor at any time subject {0 the policy provisions. Any change In tha Specified Benefit Amount tollected in a Specification Endorsement. ‘SURRENDER CHARGE ‘The amount deducted by the Company from the Accumulation Value if the Policy is surrendered. ‘SURRENDER VALUE ‘Tha amount of Cash Value, plus tha cash value of any Pald up dividend additions, less any indebledness, available in cash or an Optional Method of Settlement upon the lermination or maturily of this Policy, WITHORAWAL ‘An amount available in cash at any time upon request which Is less than 50% of the Surrender Value. @ iPROCEEDS PAYABLE This Policy shall terminate upon thé death of the Insured, The Company will pay the Ineurance Proceeds subjact tothe provisions ofthis Polo the Benelictary upon receipt of duo proof ofthe insureds death. The Company will require surrender of this Policy as a condition of payment. ‘The Insurance Proceeds payable depend on the ‘Specified Benafit Amouint Option in effect athe dale of death. a ‘Two Specified Benefit Amount Options are available under this Policy: LEVEL OPTION—The Specified Benefit Amount a3 shown on the Schedule Page includes the Accumulation Value. Under this option, the Insurance Proceeds at tha Insured's date of death shall aqual the greater of: 1) the Spectited Benefit Amount on the date of death; or 2) the Accumulation Value on the date of death ultiptied by the percentage shown in the Table of Minimum Death Benelit Percentages for the Insured's attained age. INCREASING OPTION—Tha Specified Benefit Amount as showin on the Schedule Page isin addition to the Accumulation Value. Under this option, the Insurance Proceeds at the Insured’s date of death shall equal the greater of: 1) The Specified Benefit’ Amount on the date of Of death; or 2) the Accumulation Value on the date of death ‘multiplied by the percentage shown in the Table of Minimum Death Benefit Percantagés for the Insured's attained age, Any increases or decreases made fo the Specified Benefit Amount may change the Insurance Proceeds ayablo. Any loan, Withdrawal, of Partal Surender Of this Policy will be subtracted from the Insurance Proceeds, UW the Insured Is living on the Maturity Date and this Policy is in force, this Policy shall terminate and the Company shall pay the Surrendor Value tothe Cwner. The Maturity Date is shown on the Schedule Page. {tis possibie that coverage will terminate prior fo the Maturity Date if premiums paid following payment of the Initial Premium are insufficient to continue coverage to such date. It is also possible that coverage will tarminata prior to the Maturity Dats shown if the Company changes the interast rato or the Monthly Cost of Insurance ales. CHANGES IN SPECIFIED BENEFIT AMOUNT OPTION The Schedule Pago shows tha option elected in the ori I application. The option may be changed by SL death, plus the Accumulation Value on the date _ INSURANCE PROCEEDS: ‘the Omer as allowed by the Company, It the Increasing Option Is In effect and the ‘Owner ‘changes to tha Level Option, the Specified Benefit ‘Amount subsequent to this change will equal the total of the Specified Benefit Amount prior to the change lls the, Accumulation Value. Thereatter, the peclilad Benolit Amount vill Include .the Accumulation Value, Ifthe Level Option fs In eifect, and the Owner changes to the Increasing Option, the Speclted Banat Ariount su If equal the Specified Benefit Amount prior to the: ” jYes- GLNo Dec. Term 5, (years, Gein) Spouses Dec. Term a “ol Dividends? Red Prem, O tele at Taterest Term, balance to___ IFYe ete t i tivestatement. Goth oowxy Ge (es, complete the appropriate comparative s| ‘ash CO One-Year i faid up additions emium Frequency. Life, * 22e6TAL |. ES No. of units Agent's Signature Health @ ge. is iéplacerient involved Yes MNo YORoyal Royal Maccabees Life Insurance Company will pay the Insurance Proceeds to the Beneficiary if the insured ‘dies while this Polcy is In force. The ” Surrender Value ofthis Policy willbe paid tothe Policy Owner if the Insured is living on the Maturity Date. All of tha rights and benefits of this Policy may be exercised by the Owner. This Policy is a legal contract between the Policy uwner and the Company. . . READ YOUR POLICY CAREFULLY. ade This Policy is issued in consideration of the attached * Signed for the Company at its Home Office in Tih &. woh Secretary FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY Vit ‘Adjustable Benefit Amount Maccabees Life Insirance Company 125800 Northwestern Highway Southold, Michigan 48075 ‘Stock ‘ ri aseckconeery — BUPLIG: application and the advance payment of premium’ shown on the Schedule Page. m ‘TEN DAY RIGHT TO EXAMINE POLICY If, forany reason, this Polley is not satisfactory, it may, be returned within ten days after receipt by delivering it to any agent of the Company or mailing it to the Home Office of the Company. immediately upon such delivery ot mailing, this Policy will be deemed void from the beginning. Al premiums paid will be refunded to the Owner.within ten days of the policy return. ° Southfleld, Michigan allo. President Flexible Premium Payments Insurance Praceeds Payable ‘At Death Before The Maturity Date ‘Surrender Value Payable On The Maturity Date Non-Participating Schedule Of Benefits And Premiums Appears On Page 3 MM-FPAL-7 A1‘TABLE OF CONTENTS ANNUAL REPORT .. ++ L2 (FPAL-T) ASSIGNMENT sees LS (FPALT) BENEFICIARY 4.0... ++ LS (FPALT) DEFINITIONS .. MMDEF (FPAL7) NON-PARTICIPATION . + LS (FPAL) FI, GENERAL PROVISIONS . 2 (FPALT) GRACE PERIOD . = Lt (FPL) INSURANGE PHOCEEDS . 24 (FPALT) LOAN PROVISIONS La (PAL) NONFORFEITURE PROVISIONS - LS (FPAL-7) OWNERSHIP . 3 (FPALZ) PREMIUMS Lo4 (FPALT) REINSTATEMENT L4 (FPAL-7) ‘SETTLEMENT OPTIONS L9 (FPAL7)_ } AFPAL-7-Tc RYSCHEDULE OF BENEFITS AND INITIAL MONTHLY EXPENSE CHARGES ~ENEFIT 2 INETIAL DATE TO WHICH INITIAL —yPE SPECIFIED COVERAGE IS MONTHLY . BENEFIT PROVIDED EXPENSE AMOUNT poate FLEXIBLE PREMIUM $745,465 JUNE 1, 2029 $258. ADJUSTABLE LIFE VII-250 7 het ¥THIS AMOUNT DOES INCLUDE THE ACCUHULATIO! “WAXIMUM ADMINISTRATIVE CHARGE: $5.00 MAXIMUM PREMIUM LOAD: IAXIMUM SURRENDER CHARGE: $27,932.57 WITHDRAWAL CHARGE: JOVERAGE CONTINUATION COMPONENT: — #690-00 loTe: THE TERMINATION DATE IS THAT ELECTED BY THE OWNER. iIT Is POSSIBLE THAT. COVERAGE WILL CEASE PRIOR TO THE MATURITY SHOWN IF “SUBSEQUENT PREHIUMS AND INTEREST CREDITED “ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH A DATE. POLICY NUMBER: 4095-201 7 DATE OF ISSUE: JUNE 1, 198° INSURED: HICHAEL MARCHI MD : MATURITY DATE? JUNE 1, 2025 SEX: MALE ISSUE AGE: 56 PREMIUM CLASS: STANDARD-NONSMOKER HONTHLY DEDUCTION DAY IS: THE DAY OF EACH MONTH INITIAL PREMIUM: 397,820.00 PLANNED PERIODIC PREMIUM: #.00 DO NOT SURRENDER YOUR POLICY OR ALLOW IT TO LAPSE FOR ANY REASON WITHOUT See Eee eer ey OR ce ANY QUESTION ABOUT THIS POLICY, CONTACTTABLE OF GUARANTEED VALUES fJLICY NUHBER 4095-201 | \CE AMOUNT $745,465 : INSURING MICHAEL MARCHI MD te te END GF ATTAINED cASH ; _ CONTINUATION “OF” POLICY AGE OF OR LOAN INSURANCE .PERIOD YEAR INSURED VALUE YEARS *** MONTHS | 1 57 . 64,674.23" : “ta. 2 5B 61,686.78 : 9 2 3 59 : 157,882.32 a 2 4 60 bss 53,129.06 7 2 5. 61 47,277.77 6 2 6 62 45,743.17 5 “2 “7 63 42,701.61 4 2 8 64 a 37,888.36 3 2% 9 65 31,015.97 2. 2 10 66 21,766.92 1 2 ql 67 4119.64 0 2 THIS POLICY WILL LAPSE AT AGE 68 UNLESS A HIGHER PREMIUM IS PAID. FLEXIBLE PREMIUM OJUSTABLE LIFE VII-250 THE GUARANTEED CASH VALUES ASSUKE THAT THE GUARANTEED HAXIMUM INSURANCE ATES ARE CHARGED, THAT NO EXCESS INTEREST IS PAID, AND THAT'NO’ CHANGE IN HE SPECIFIED BENEFIT AMOUNT OR OPTION, NO CHANGE IN THE PLANNED PERIODIC PREMIUH SHOWN-ON THE SCHEDULE PAGE, AND NO PARTIAL SURRENDERS OR, LOANS ” “RE MADE. 5 FORM HH-Cvcr1 gl ‘The amount of money that is credited with interest the Policy on a monthly basis. BENEFICIARY ‘The person named in writing by the Owner to receive the Insurance Proceeds in the event of the Insured's death, CASH VALUE ‘The amount of Accumulation Value ofthis Policy ess any Surrender Charges. COMPANY ‘The Maccabees Life Insurance Company. DATE OF ISSUE ‘The date shown on the Schedule Paga from which policy years, months and anniversaries shall be determined. . HOME OFFICE OF THE COMPANY 25800 Northwestern Highway, P.O. Box 2165, Southfield, Michigan 48037-2165 INDEBTEDNESS _ ‘Tha sum of any unpaid policy loans and any unpaid policy loan interest, INITIAL PREMIUM ‘The amount due at the Date of Issue shown on the Schedule Pago and payable in advance. INSURANCE PROCEEDS The total amount the Company will pay upon the death of the Insured. INSURED ‘The person named on the Schedule Page whose life this Policy insures. LOAN VALUE The amount that can be borrowed under ‘he Policy. able ifthe Inswed fs living. Pere MONTHLY DEDUCTION DAY. ‘The dayof each month shown Gn the caletiated and the Monthly Expense, Charge Is “deducted. The first Monthly Deduction Day shail bo -tha Dale of Issue. | Sate MONTHLY EXPENSE CHARGE ‘Tho lil amount deducted edch month fof thé ‘coverage provided under the Policy and any additional benefis provided by rider. - ‘OWNER “The person to whom this Policy belon: PARTIAL SURRENDER * - ” ‘An amount available in cash at any time upon request equal to §0% or. more of the Surrender value.. PLANNED PERIODIC PREMIUM PAYMENT ‘Tho noun of equa premium payment elected by the Insured, This amount and the frequency of payment are shown on the Schedule Pag (Ovmermay change the aunt and frequency of the Planned Periodic Premium Payment at any time subject to the policy provisions. Any change In frequency and amount will bo reflected in the Annual Report provided by the Company: * ‘SPECIFIED BENEFIT AMOUNT, “The ital amourit of coverage shown on the Schedule Page. This Amount may be changed by the Qwner at any time subject to the policy provisions. Any change in the Specified Benefit Amount will be teflected in a Specification Endorsement. SURRENDER CHARGE =” a ‘The amount deducted by the Company from tha Accumulation Value if the Policy ts surrendered. ‘SURRENDER VALUE ‘The amount of Cash Value, less any Indebtedness, available in cash or an Optional Method of Settlement upon the termination or maturity of this Policy: WITHDRAWAL ‘An amount available in cash at any timo upon request which is less than 50% of the Surrender Value. © Schedule Page . when tha Accumulation Value of the Polley Is. ‘The * LL DEFINITIONS Whenever used in the Polly, the following words’ MATURITY DATE oH mean: ‘The date spacified as such on the Schedule Page, STEN aH upon ih the Surrender Value will bacome pi 60 - iPPROCEEDS PAYABLE This Policy shall terminate upon the death of the Insured, The Company will pay the. Insurance Proceeds subject to the provisions ofthis Policy tothe Beneficiary upon receipt of due proof of the Insured's death. The Company will require surrender of this Policy as a‘condition of payment. “The Insurance Proceeds payable depend on the ‘Specified Benefit Amount Option in effect atthe date of death. : “Two Specified Benefit Amount Options are available under this Policy: ‘i LEVEL OPTION—The Specified Benefit Amount as shown on the Schedule Page includes the ‘Accumulation Value. Under this option, the Insurance Proceeds at the Insured’s date of death shall equal the greater of: 4) the Specified Benefit Amount on the date of T+ death; of 7 2) the Accumulation Value on the date of death muliplied py the percentage shown in the Table of Minimum Death Benefit Percentages for the Insured’ attained age. i INCREASING OPTION—The Specified Benefit ‘Amount as shown on the Schedule Page isin addition to the Accumulation Value. Under this option, the Insurance Proceeds at the.Insured’s dale of death shall equal the greater of: 4) The Specified Benefit Amount on the date of death, plus the Accumulation Value on the date of death; or 2) the Accumulation Value on the date of death muliplied by the percentage shown in the Table of Minimum Death Benefit Percentages for tho Insured's attained age. ‘Any increases or decreases made to the Specified Banefit Amount may change the Insurance Proceeds payable. Any loan, Withdrawal, or Partial Surrender Of this Policy will be subtracted from the Insurance Proceeds. If the Insured is living on the Maturity Dato and this Policy isin force, this Policy shall terminate and the ‘Company shall pay the Surrender Value tothe Owner, ‘The Maturity Date is shown on the Schedule Page. US possible that coverage will terminate prior to the Maturity Date if premiums paid following payment of the Initial Premium are Insufficient to, continue coverage to such date. It Is also possible that coverage will terminate prior to the Maturity Date shown if the Company changes the interest rata or the Monthly Cost of Insurance Rates. ‘CHANGES IN SPECIFIED BENEFIT AMOUNT OPTION ‘The Schedule Page shows the option elected In tho INSURANCE PROCEEDS the Owner 2s allowed by the Company. If the Increasing Option fs In effect and the Owner changes to the Level Option, the Specified Benafit ‘Amount subsequent to this change will equal the total of the Specified Benefit Amount prior to the change plus the Accumulation Value. Thereafter, the Specified Benefit Amount will include . the ‘Accumulation Valuo, If the Level Option Is In effect and the Owner changes to the Increasing Option, the Specified Benefit Amount subsequent to this change vail equal the Specified Benefit Amount prior to the ‘change less the Accumnulation Value, Thereafter, the Specifiad Boneft Amount will net Include’ the ‘Accumulation Value. : CHANGES IN SPECIFIED BENEFIT AMOUNT “The Specified Benefit Amount of this Policy may ba increased or decroased upon written request by the ‘Gwner subject to the following conditions: 4) Any decreasé will become effective on the Monthly Deduction Day that falls on or next follows the date the request is received by the Sompany. Such decrease will reduce the ‘Specified Benefit Amount in the following order: 4)" Itill decrease the insurance provided by the most recent increases successively; then b) itwil decrease the Initial Specified Benefit’ Amount 2) The Specified Benefit Amount may not. be decreased fo an amount less than $250,000. 3) The Specified Benefit Amount may not be changed by an amount fess than $10,000. 4) Any request for an increase must be applied for ‘onasupplemental application. Such increase will» tba subject fo evidence of insurability satisfactory to the Company. Any increase will be subject to the sufficiency of the Accumulation Valu, tess any indebtedness, to cover the next Monthly Expense Charge. Any Increase will become effective on the effective date shown on tho Spacification Endorsement. 5) ‘The Specified Benefit Amount may not be. increased if there has been a prior decrease. [APPLICATION FOR ADDITIONAL INSURANCE ‘Additional insurance on the fife of the Insured’s ‘spouse of child may be applied for by supplemental application, Approval of the additional Insurance shall be subject to evidence of insurability satisfactory to the Company. Additional insurance shall also be ‘subject o the sufficiency of the Accumulation Value, * fess any Indebtedness, to cover the next Monthly. Expense Charge. Such new Insurance will be provided by rider and will become effective on the eifactiva date shown on the Specification original application. The option may be changed by GunsGENERAL PROVISIONS THE CONTRACT + This Policy, the attached application for this Polley, any attached riders, any supplemental applications for Increases in the Specified Benefit Amount, and any Sgecificatfon Endorsements make up the entire contract between the parties. ‘This Policy shail take effect upon delivery, provided the Initial Premium has been paid, the Insured. is living, and thera has been no material change in the health of the Insured as shown in the application. ‘All statements made ig the application aa, In the absence of fraud, deemed represertations and not + warrantles. No statement mada by :«3 Insured or on his behalf will bo used In defense ct a claim under this Poilcy unless it is made In a written application and a copy of the application containing that statement is attached to the Policy when Issued, Policy years, policy months, and policy anniversaries are measured from tha Data of Issue of the Policy. Attained age means age last birthday on the prior policy anniversary. : Any change or waiver of any provision ofthis Policy must bo in writing and signed by an offer of the Company. SUICIDE If the Insured dies by’suicide while sane or insane, within two years from tha Date of Issue, the Insurance Proceeds will not bo paid. The amount payable will ba the total of premiums paid less any indebtedness on this Policy, and less any Withdrawal and Partial Surrender amounts paid. A new two-year perlod will apply to any increase in the Specified Benefit Amount bbaginning on the date of each increase, The amount payable under this provision attributable to a policy increasa will be the Costs of Insurance for that increase if death by suicide, while sane or insane, occurs during the first two years following the increase. ‘The amount payable under this provision willbe paid to the Bersticiary. INCONTESTABILITY Arter this Poticy has been in force during the Insured's lifetime for two years {rom the Date of Issue, the Company losas the right to contest a claim based on ‘Statements made in the application. ‘Ate this Poloy hes been In force during the Insured’s lifetime for two years from the date on which the Spacifed Benefit Amount s Increased, the Company foses the right to contest a claim which Involves the Increase In Specified Benefit Amount, “This provision does not apply to any Disability Benefit or Accidental Benefit attached to this Policy, MISSTATEMENT OF AGE OR SEX If the Insured’s age or sex'has been misstated, the proceeds payable upon death will be: 4) the Accumulation Value on the date of death; plus 2) that amount of insurance which would have beén. _ purchased by tha most racent Cost of Insurance deduction had the correct Cost of Insurance Rate ‘been used. : ANNUAL REPORT - [Atleast once each year the Company will send the (viner an Annual Report which shows: . 4) The current Accumulation Values”. 2) The current Surrender Value; 3) The amount of any outstanding policy loan; 4) Promlums paid since the last Repo: 8) Expense Charges since the last Report; 6) The Specified Benetit Amount; 7) Interest cfedited since the last Report; and 8) Any Partial Surrenders or Withdrawals since the. last report, ILLUSTRATIVE REPORT ‘The Company will provide an illustrative report of projected future insurance Proceeds and Cash Values ‘which will be sent fo the Owner upon request. The Company may charge a reasonable fee for providing such a Report,BENEFICIARY The Insurance Proceeds will be pald to the Beneficiary last named In writing by the Owner. Two or more Boneficlarias will receive equal shares of the proceads unless a different allocation is specified. A Beneficiary must survive the Insured, Otherwise, his share will bo pald to the surviving Beneficiary or Beneficiaries in equal shares. |f no Beneficiary has been named or there are no surviving Beneficiaries, the Insurance Proceeds will ba pald to the Owner, ifliving; otherwise to the Owner's estate. : CHANGE OF BENEFICIARY ‘The Ownor may change any Beneficiary at any time wile the Insured iiving. written notice of change Tust be sent to the Company atits Home Office. The change will take effact-on the day it was signed, subject to any action taken by the Company prior to the recording of the change at the Home Office. OWNERSHIP ‘This Policy belongs to the Owner. If the Owner dies; this Policy belongs to the Owner's designee, or the Owner's estate if no Owner's designee has been named. i CONTROL OF POLICY CHANGE OF OWNERSHIP" ‘The Owner may name a new Owner by written notice malled to the Company. The change will take effect ‘on the day It was signed, subject to any action taken bythe Sampany prior to the recording of the change at the Home Office. . ASSIGNMENT This Policy may be assignéd by the Owner as collateral. Any assignment must be In writing and a signed copy sent to the Company.atits Homa Office. ‘Tho rights’ of the Owner and the Interdst of any Beneficiary will be subject to the Tights of any assignee of record as specified in the assignment. Tha ‘Company Is not subject to the rights of any assignee ° of record. The Company-Is not responsible for the validity or effect of. any aselonment a NON-PARTICIPATION Maacabees Life Insurance Company is a stock company. This Policy shall not participate in the divisible surplus of the Company.fr PREMIUMS PAYMENT “The Initial Premium is due on the Date of Issue and Is payable in advance. Subsequent premiums aro + payable In advance of the period to which they apply. No benefit will be provided on the basis of any premium until that premium has been paid. The . amounts and frequency of Planned Petiodic Premium Payments are shown on the Schedule Page. Premiums must be paid to the Company at its Home Office. Upon request, a receipt signed by the President or Secretary of the Company wil be furnished for any premium payment. ‘Changes in frequency and increases or decreases in the amount of Planned Periodic Premium Payments may, ba made by the Owner. The Planned Periodic Premium cannot be changed to an amount less than ‘$50.00. Premium payment notices willbe sent to the (Owner upon written request. The notices may be sent . annually, semFannually, or quarterly. ‘Under the special payment facility, Planned Periodic * Premium Payments of $25.00 or more may be made on a monthly basis, Additional premium payments may bé made at any time during the continuance of this Polloy. ‘The Company reserves the right to refusa to accept any premiums which would disqualify this Paley rom favorable tax trealment a life insurance under federal “Taw. If premiums paid during any policy yeer exceed the federal life insurance premium guidelines, the ‘Company will return the excess premiums with __ Interest of at least 4%6 within sixty days after the end of the policy year. GRACE PERIOD Except as provided below; this Policy will enter the Grace Period if the Surrender Value an the Monthly Oeduction Day is’ insufficient to cover the Monthly Expense Charge. (The Accumulation Value, Surrender Walué; and Monthly Expense Charge are . described in_the Nonforleitura Provisions.) The above notwithstanding, priar to the ninth poli anniversary, this Policy will entes the Grace Period if ‘The Accumulation Value less indeblecness on the Monthly Deduction Day Is less than the Monthly Expense Charge; or it The Surrender Value on the Monthly Deduction Day is tese than the Monthly Expense Chat ani The sum of the premiums paid since the Date of Issue, less any loans, Withdrawals or Partial Surrenders, is less than the Coverage Continuation Requirement 2s of the Monthly Deduction Day. +} Coverage Continuation Component will change as of 4 ) will apply from the elfective date of reinstatement. -.As of each Monthly Deduction Day during the first nine ‘alley years, he Coverage Continuation Requirement Shall be the sum of the Coverage Continuation ‘Components applicable to each policy month from the Date of issue. . ao ‘The Coverage Continuation Component in effect on the Date of ssue is shown on the Schedule page. The the effective dala of any increasa.in the Specified eneft Amount, or any addition of, or increase in, any ser, The Coverage Conruafon Camponentin effect as of any Monthly Deductfon Day will apply to the policy month next following. The Company will notify ~ fe Owner of any change in: the Goverag _ Continuation Component. fi ‘A Grace Period of sixty-one days will be allowed for the payment of premiums sulficient to cover any past. due Nontly Expense Charges and applicabla foan interest. Written notica of such premium will ba maile to the fast known address of the Qwner and any” assignee of record at least thity days before the rece Period ends, if such premium is not paid within the Grace Period, all coverage will terminate without value at the end of the Grace Period, If’a claim by. death during tha Grace Period becomes payable under the Policy, any overdue Monthly Expense °” Charge will be-deducted from the, Insurance * Proceeds. tet Pee REINSTATEMENT i ihis Policy terminates as provided in’ tite Grace. . Petiod provision, the Owner may apply for relnstalement. The application must be received by. tha Company at its Home Office within five. years of tha dale of termination, but before the Maturity Dato, and myst include: : - ) evidénce of insurabilty ofthe Insured satisfactory “to.the Company; aoe payment of a premium sufficient to prevent this Policy from entering a Grace Period for at least + three months after the date of reinstatement: 3 4 paymentor reinstatement of any policy loan; and payment of interest on the reinstated loan from the Gale of reinstatement to the end of the policy yea. Reinstatement will not be effective until the date the application is approved by the Company. The Incontestability pravision with respect to the reinstatement application and the Suicide provisionTH NONFORFEITURE PROVISIONS ACCUMULATION VALUE ‘The Accumulation Value on the Date of Issue shall be at least 97 percent of premiums paid on or before the Date of Issue, tess the Monthly Expense Charge for the first month. On each Monthly Deduction Day the Accumulation Value shall be calculated as}, plus (©) plus (c), minus the sum of (4) plus (e) where: (@) Is the Accumulation Value on the preceding Monthly Deduction Day; (b) is one month's interest on (a); 7k (¢) is 97 percent or more of all premiuris received since the preceding Monthly Deduction Day;_ (@) is the amount of any Partial Surrender, Partial * Surrender Charge, Withdrawat and Withdrawal «fee since the preceding Monthly Deduction Day; (@) Is the Monthly Expense Charge for the month * following the Monthly-Deduction Day. ‘On any day other than a Monthly Deduction Day, the Accumulation Value shall be calculated as () plus (9) minus (h), where: ° () is the Accumulation Value’ as of the preceding Monthly Deduction Day; ; (9) Is 97 percent or moré of all premiums received since the preceding Monthly Deduction Day; (h) Is the amount of any Partial Surrender, Partial ‘Surrender Charge, Withdrawal or Withdrawal fee since the preceding Monthly Deduction Day. MONTHLY EXPENSE CHARGE ‘The Monthly Expense Charge shall be calculated as @) plus (@), where: +) isthe Cost of Insurance (as described below) plus. the cost of additional benefits provided by rider; ) Is the Administrative Charge, ‘The Administrative Charge shall not exceed, but may be less than, the Maximum Administrative Charge shown on the Schedule Page. INTEREST RATE The interest rate used in the calculation of the Accumulation Value is guaranteed to be a minimum of 32737 percent per month, compounded monthly, which is equal to 4 percent per year compounded annually, Interest In excess of the guaranteed minimum rate may be credited as determined by the Company's Board of Directors. Interest credited on the portion of the Accumulation Value that is loaned. will at no time be less than the guaranteed minimum interest rate, COST OF INSURANCE, ‘The Cost of Insurance is determined on a monthly basls. The Cost of Insurance is determined separately {or the Initial Specified Benefit Amount and for each Increase in Specified Benefit Amount, ‘The Cast of Insurance is calculated as (a), multiplied by the result of (b) minus (o), where: (2) isthe Cost of Insuranca Fate as described in the Cost of Insurance Rates section; (©) isthe insurance Proceeds at the beginning of the policy month divided by 1.032737; (©) isthe Accumulation Value at the beginning of the * * policy month. poet Ifthe Accumulation Value is included in the Specified” Benefit Amount and there have been increases in the Insurance Proceeds, then the Accumulation Value shall be first consideréd a part of the Initial Specified Benefit Amount. If the Accumulation Value exceeds the lniial Specified Benefit Amount, it shall then be considered a part of additional Specified Benefit Amoints resulting from increases in the order of the increases. ‘Atiy deduction for the Cost of Insurance during the Grace Period shall notbe considered a waiver by the Company of the terms of the Grace Period provision. ‘Any such charge shall be deducted from the ‘Accumulation Value as of the date of the, charge. COST OF INSURANCE RATES The monthly Cost of insurance Rate is based on the sex, attained age, and rating class of the person insured, Monthly Cést of Insurance Rates will be dolermined by the Company from time to time based nits expectations as to future mortality experience. However, the Cost of Insurance Rates will not be . grealerthan those shownin the Table of Guaranteed Maximum Insurance Rates or as the same are amended by the rating factor, if any, shown on the ‘Schedule Page. Any change in the Cost of Insurance Rates wil be on a uniform basis for insureds of the same age, sex and classification whose policies have beenin force for the same length of time. The interest + rate used to calculale the guaranteed Cost of " Insurance Rates is 4% per year. The Table of Guaranteed Maximum Insurance Rates. is also * applicable to increase amounts of insurance subject to any applicable rating factor shawn on the Schedule Page, The guaranteed Cost of Insurance Rates are based cn the 1980 Smoker.or Nonsmoker Commissioner's Standard Ordinary Mortality Table (CSO), Age Last @® Birthday.NONFORFEITURE PROVISIONS (Continued) CASH VALUE "The Cash Value shalt be calculated as the Accumulation Value less the Surrender Charge. SURRENDER CHARGE ‘Tho Surrender Charge isthe lesser of (a) or (b), where (2) Is the Accumulation Value; (©) Is the Maximum Surrender Charge shown on the Schedule Page multiplied by the factor from the Table of Surrender Charge Factors that corresponds to the policy year of surrender. SURRENDER CHARGE FOR INCREASES IN SPECIFIED BENEFIT AMOUNT If the Specified Benefit Amount is increased, 2 separate Surrender Charge will be applied atthe time of the increase. The Specification. Endorsement providing for the increase will include the Maximum Additional Surrender Charge resulting from the increase. The Additional Surrender Charge will equal the Maximum Additional Surrender Charge shown on the Specification Endorsement multiplied by the factor from the Table of Surrender Charge Factors that corresponds to the number of years since the increase. ‘The Additional Surrender Charge resulting from an increase shall be added to the amount specified in (0) above to determine the total Surrender Charge. BASIS OF COMPUTATIONS Accumulation Values are based on the 1980 Smoker. or Nonsmoker CSO Mortality Table, Age Last Birthday, with interest at 4 percent per year compounded annually. Accumulation Values are at feast equal to those required on the Date of issue by the state in which this Policy was purchased. Reserves are based on tha 1980 Smoker or Nonsmoker CSO Mortality Table, Age Last Birthday, with interest at the Calendar Year Statutory Valuation Interest Rate. Reserves are caloulated using 2 Modified Preliminary Term method, but are not less than the reserves calculated using the Commissioner's Reserve Valuation method. Where required, a detaited statement of the method of computation of Accumulation Values and reserves: under this Policy has been filed with the insurance department of the state in which this Policy was purchased, d CONTINUATION OF INSURANCE In the event Planned Periodic Premium payments are not continued, insurance coverage under this Policy and any benefits provided by rider will be continued in force, Such coverage shall be continued unti termination, as provided In the Grace Period provision, This provision shall not continue the Policy beyond the Maturity Date nor continue any rider beyond the {or its termination, as provided In the rider. If the Insuredis ving on the Maturity Date and the Policy is sil in force, the Company will pay the Surrender Velue to the Owner. WITHDRAWAL ‘A Withdrawal from this Policy may be made at any time priot to termination upon written request by the ‘Owner to the Company at its Home Office. The sum of all Withdrawals cannot equal or exceed 50% of the ‘Surrender Value. When a Withdrawal is made, the amount of the ‘Withdrawal will be deducted from the Accumulation. ‘Value. The Insurance Proceeds shall be reduced by the amount of the Withdrawal. An additional fee of ‘$25.00 willbe deducted from the Accumulation Value for each Withdrawal. Not more than three Withdrawals will be allowed in any policy year. ‘The Company reserves the right to defer a Withdrawal for a period permitted by law, but not for more than six months from the date of receipt of the request by the Company at its Home Office, unless such paymelnt ‘would be used to pay premiums on policies in force with the Company. PARTIAL SURRENDER A Partial Surrender of this Policy may be made at any time prior to termination by written request of the” COvinerto the Company at its Home Office, A Partial ‘Surrender Is an amount which when added to all previous Partial Surrenders and Withdrawals equals ‘or exceeds 80% of the Surrender Value. If a Partial Surrenders made, an additional fee willbe deducted from the Accumulation Value as follows. The additional feo will equal the Surrender Charge multpied by the ratio that the Partial Surrender bears. to tha Surrender Value. After a Partial Surrender, the Surrender Charge for the Policy will be reduced by the addtional fee. The Insurance Proceeds, tho Accumulation Value, and the Cash Value will be reduced by the amount of the Partial Surrender. Not ‘more than three Partial Surrenders will bo allowed in any policy year. ‘The Company reserves the right to defer a Partial Surrender lor a period permitted by law, but not for ‘mora than six months from the date of receipt of the request by the Company at its Home Office, unless such payment would be used to pay premiums on policies in force with the Company.The NONFORFEITURE SURRENDER AND SURRENDER VALUE «his Policy may be surrendered at any time prior to lermination upon written request by the Owner to the “ompany at its Home Office. The amount payable on utrender of this Policy shall be the Surrender Value, which is the Cash Value, less any indebtedness, on the date of surrender. The Surrender Value will be aid in cash or under an elected Settlement Option. If surrender is requested under this section within 30 ays alter a policy anniversary, the Surrender Value hall not be less than the Surrender Value on that PROVISIONS (Continued) anniversary, less any Partial Surrenders, Withdrawals, or loans made on or after such anniversary. If this Policy is surrendered, coverage shall terminate a of the next Monthly Deduction Day. The Company reserves the right to defer the payment of the ‘Surrender Value for the period permitted by law, but not for more than six months from the date of receipt of the request by the Company al its Home Office, unless such payment would be used to pay premiums ‘on policies in force with the Company. POLICY LOAN PROVISIONS POLICY LOANS the Owner can borrow against this Policy as sole security for any amount up to the Loan Value at any me prior to the termination of this Policy. The loan ust be requested by the Owner in writing. ‘na policy anniversary, premium due date, or during Grace Period the Loan Value is the Cash Value less any loan and accrued interest, Otherwise, the Loan Value is the amount with interest which equals the ‘ean Value on the next policy anniversary. Before advancing the loan amount, the Company may ithhold an amount sufficient to pay interest on total adebtedness to the end of the policy year and any Monthly Expense Charges dua during the next three months, of to the end of the polley year, whichever \cours first. a ‘The Owner may be required to sign a loan agreement issigning this Policy to the Company as security. The Jompany may delay the payment of the loan. Payment may be delayed up to six months from the date the request was received unless such payment vould be used to pay premiums on policies in force vith the Company. ‘.OAN INTEREST RATE interest Is payable in advance on the first interest payment due date and on each policy anniversary that allows. The first interest payment due date Is the date af the loan, it Loans under this policy willbear interest at a rate that Is subject to adjustment on each policy anniversary. ‘The intial interest rate charged on any loan will be the Company's Adjustable Loan Interest Rate in effect ‘on the previous policy anniversary. As of each subsequent policy anniversary, the interest rate charged for the policy year following will be the Adjustable Loan Interest Rate in effect on that policy anniversary. ‘The Owner will be notified of the initial interest rate at the time the loan request is made, The Company ‘will also notify the Owner of any change if the interest rate applicable to an outstanding policy loan, No Policy will erminate in a polley year as the sole result of a change in the interest rate during that policy year. Insurance will remain in force until the time it would have otherwise terminated had the interest rale not been changed. Interest not paid when due is added to the loan and bears interest at the same rate as the loan. “The Adjustable Loan Interest Rate will be determined as of the lirst day of each January, April, July, and October, and will be determined by comparing the Adjustable Loan Interest Rate in effect for the preceding three months with a maximum interest rate defined by law and described below. Any change In the Adjustable Loan Interest Rate will be subject to the following: Qa. The Adjustable Loan Interest Rate willbe lowered fo be equal to or less than the legal maximum interest rato if such legal maximum rata is 5% ‘or more lower than the Adjusted Loan Interest . Rata-for the preceding threa months. b. The Adjustable Loan Interest Rate may be increased by at least .5% but not higher than the legal maximum interest rate, if ha legal maximum interest rate is .5% or more higher than the Adjustable Loan Interest Rate for the preceding three months. ‘The Adjustable Laan Interest Rate will not exceed the greater of: t (1) The Published Monthly Average for the calendar ~ month ending two months before the date on which the rate is determinéd; or . 2 The interest rate used to compute the Accumulation Value under the Policy during the applicabie period plus 1% per year. ‘The Published Monthly Average is Moody's Corporate Bond Yield Average-Monthly Average Corporate 2s POLICY LOAN PROVISIONS (Continued) pubilshed by Moody's Investors Servica, Inc., of any.;- successor tot. n the event that Moody's Corporate, Bond Yield Average-Monthly Average Corporata is no {onger published, the Published Monthly Average will - be a substantially similar average established by \ ‘regulations [ssued by tha Insurance Commissioner of. the slate’ in which this Polley was purchased. REPAYMENT AND TERMINATION ~~ Policy loans, including accrued interest, may. be. repaid in whole or part at any time prior to termination. of this Policy. A foan outstanding at the end of the’. Grace Period may not be repaid until this Pollcy Ts ~ reinstated. All funds recelved by the Company under this Policy wil be creditéd as premium payment unless clearly marked for loan repayment. ‘Wheneier the policy Ioan plus accrued interest equal or exceeds the Cash Value of this Polley, written: notification will be sent to the last known address of the Owner and assignee, if any. This’ Pollcy: will terminate sixty-one days after tha data of mailing notification, cee BeSETTLEMENT OPTIONS AVAILABILITY The Insurance Proceeds of this Policy will be paid ‘one sum unless a payment option is chosen. All or part of the Insurance Proceeds may be applied under ne of the following options. However, the amount to be applied must be at least $3,500.00. The amount must also provide a periodic payment of at least ‘$20.00 to each payee. If the payee is not 2 natural person, the proceeds may not be placed under. a Settlement Option without the consent of the Company. ELECTION ‘The Owner may elect a Settlement Option or change apriof election at any time while the insuredisliving. ‘The election must be recorded by the Company atts Home Office before itis effective. The Company shall not be liable for any payments it may have made “Before receiving that notice, E in If no option is in effect at the Insured’s death, any Beneliciary may choose a Settlement Option. Unless this election is made irrevocable belore the proceeds are placed under a Settlement Option, the payee may change the election at any time. “OPTIONS 1. INTEREST OPTION. Left on deposit with the ‘Company with the interest payable at not less than 3% per year. The deposit period and ‘withdrawal rights will be as agreed atthe time of the election. INSTALLMENT OPTION, FIXED PERIOD. Payable in equal installments for the number of years elected (not more than 20). Tho amount of each payment is shown in the Settlement Option Tables. Rights of commutation of unpaid installments will be as approved by the Company at the time of election. LIFE INCOME OPTIONS. 10 or 20 YEARS CERTAIN. ‘Payable in installments for certain period elected, and continuing thereafter for the remaining lifetime of the person on whose life the income depends. The amount of each installment Is shown In the Settlement Option Tables. INSTALLMENT OPTION, FIXED AMOUNT. Payable In Installments until tha proceeds applied, together with interest on the unpaid balance at the effective rate of 3% per year, are exhausted, Amounts of installments and withdrawal rights wilt be as approved by the Company at the time of election, 8, ANNUITY OPTION. Annuity paymonts will be ‘made during the lifetime of a payee; or jointly to two payees, one of whom must bo tho Insured, during their lifetimes; and continuing to the ‘survivor duting his remaining lifetime. willbe made under any single premium immediate life or joint and survivor annuity contract as may be issued by the Company on the date proceeds become payable. The amount of each annuity payment wil be 102% of the which. the amount retained by the Company would otherwise purchase. The ’srates in use on such date will be used, , as the basis for payment. ‘The ‘amount payable under any option shall be the actuarial equivalent of the amount of Insurancé Proceeds applied under that option. : Under Options 3 and 5 proof salisfactory to the Company : ) ofthedale of bith and sex of the payees; and b) that the payee is alive may be requited before payment is made. In the event of the death of a Payee under a ‘Settlement Option containing a period certain, any remaining proceeds shall be paid to the Beneficiary © jenefaries designated by the Owner. If no has been named or there are no surviving Benefidates, the proceeds will be paid to the Payee's designated Beneliciary or the Payee's estate. PAYMENT “Tho first payment under Options 2, 3 and 4 will be due the dale the proceeds are applied under the Settlement Option. If the proceeds are payable due to the insured's death, the first payment will be due ‘onthe date of death. The first payment under Options ‘and 5 wil be due one, three, six, or twelve months thereafter, depending ‘on the mode of payment selected. EXCESS INTEREST The interest payments under Option 1 and the guaranteed payments under Options 2, 3, or 4 are Based ona guaranteed interest rate of 3% per year. The interest payments under Option 1 or the 1 guaranteed payments under Options 2 and 3 may be increased by excess interest as declared by the ‘Company. Excess interest wil be used to extend the poriod under Option 4. PROTECTION OF PROCEEDS “The proceeds of payments due or to become due under any option may not be assigned by the Beneficiary, To the: exlent permitted by law, the proceads will nt be subject to the'claims of creditors of the Beneficiary or the Insured. SrSETTLEMENT OPTION TABLES MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS OPTION 2 OPTION 3 FIXED PERIOD LIFE INCOME * PER $1,000 APPLIED PER $1,000 APPLIED : Age Guaranteed Period No. of Annual Monthly . 10 20 Years Payment Payment Male Female Years Years 1 "$1,000.00 $84.47 . 45 $399 $3.87 2 507.39 "42.86 48 405. 3.92 3 343.23 28.99 47 AM 8.97 4 261.19 22.06 480° «447 | 4.02 5 21199 17.91 49 «424 4.07 6 179.22 15.14 as 80 1; 42 7 185.83 13,16 46 St. 488° 417 8 19831 11.68 47 52 «4AS 4.22 9 124.69 10.53 48 53 453 4.28 10 113.82 © 9.61 49 «544.61 4.84 14 104.93 8.88 50 «654.70 + 489 12 (9754 Bg 5108684445 13-9129 7.71 5287) 4.88 4.50 1485.95 7.268 +53 58497 456 15 8193 6.87 5459 807 4.62 16 729° «6.53 55 60 BAB 468 17 7374 6.23 5 Bt 828 478 18 7059 6.86 8702 589A 19 67.78 5.73 58 63 551 4.84 200 65.260 B.St 5964 «563. 4.90, 60-65) 0575495 61 68 «= 588 5.00 62 «67 «= Ot 505 6g 68 B14 5.10 6 6 «69 2B 4 6s 70 6425.19 671 857 5.23 67 72 671 5.26 68 73886 8.90 6 747.02 8.33 70 78) TAT 8.38 nN 78 = 782 5.88 7 7 = 67aT (5.40 73 78 542 ma 79 Bad 7 80 8.45 7% at 5.47 77 82 5.48 7 (83 5.49 739 (at 5.49 80 85 5.50 at 82 83 a4 85 OPTION 5 UFEINCOME . PER $1,000 APPLIED * NO GUARANTEED PERIOD Age Monthi Male “Femete Payment 45 $4.02 46° “409 47 415 48 4.22 - 49 * 4.29 45 50 4.37 46 5t 4.45 47 52 4.53 48 53 4.62 49 54 ~ 474 50 85 4.81 st 58 4ST 52 a7 6.01 53 58 5.12 54 59 5.24 55 60 . 56 61 57 62 58 63 59 a 60 65 - 6t 66 62 a7 63 68 64 69 65 70 “66 71 67. 72 - 68 73 69 4 > 70 75 71 76 72 7 73 78 74 79 rE) 80 76 at 7 82 78 83 73 84 80 85 81 82 83“TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES Attained Age Percentage Attained Age Percentage Through 40 250% 60 130 41 243, “61 128 42 236 e - 4128 43 229 63 124 4 222 64 : 122 45 215 65 120 48 209 65 119 47 203 67 118 48 197 68 417 49 191 69 116 . 50 185 70 118 * Bt 178 7 113 52 7 72 oat Battie 164 73 109 54 - 487 - 74 407 55 150 7580 105 ; 56 148 7 st 104 87 142 92 103 ‘58 138 93 102, 59 134 94 401 F 95 100 TABLE OF SURRENDER CHARGE FACTORS Policy Year Of Surrender 1 Or Years Since Increase Factor 1,00 1.00 1.00 1,00 1.00 80 40 20 10 And After 0 waVanaans a huereeee : ;AGE TABLE OF GUARANTEED MAXIMUM MALE INSURANCE RATES. NON-SMOKER MONTHLY RATE AGE 08584 48 + 08251 49 08084 50 ‘07781 5t 107334 52 106917 53 06500 54 “06250 55 106167 56 06250 87 108750 58 .07667 59 ~ 08917 60 -10334 61 111395 62 112338 63 13085 64 113585 +65 113819 88 14002 67 119895 68 13885 69 13252 70 "12918 a 12502 72 112282 2 142085 74 "12001 78 “12001 76 12085 7 “42338 738° 18668 79 613168 80 613752 81 14419 82 -15169 83 16169 84 17253, 8s "18420 86 19837 87 ‘21338 88 “22922 89 .24673 30 .26590 ot “28758 92 31093 93 33595 a4 9s PER $1,000 MONTHLY RATE 38047 1 29249 2 ‘AzT68 3 48628 4 51193 8 55365 8 B12 7 “SB5A7 8 T5557 9 2085 10 ‘91250 u 1.00518 12 4.10873 13 22400 4 1.35684 18 4.50727 16 4.57447 7 185761 18 208588 19 226044 20 249957 a 2.75591 22 g.04soa 23 337720 24 375992 25 419334 26 467004 27 5.18003 28 571919 2 6.28340 30 687612 3 751607 32 922075 33 901810 34 991569 35 4091280 36 41.99040, a7 49,12418 38 1429994 3 15.49991 40 1671910 at 1797489 42 1928574 9 20,68243 44 2221791 45 24,04969 46 26.50348 v7 30.20740 MONTHLY RATE 8584 8251 08084 ST7St 7834 6917 * (96500 + 96250 06167 06250 06750 07687 98917 10334 14669" 46936 17503 18420 49004 19337 © 19337 19004 18670 ta170 17586 SMOKER AGE “48 49 £50 51 52, MONTHLY RATE “70383 + 78559 * 91166 - 99933, - 1.09871 "1.20728 (1.92842 1.44626 1.87681 1.71209 "4.85343 , 5 2.02158 "2.20569 2.41331 2.64531 2.89921 9.16834 | 3.45020 3.74229 4.04883 4.38161. a7agtt - 5.16235 5.62985 ie 12,24906 13.18893 - 14,18421 15.18083 16.16034 17.16810 18.22020 18.74923 20,32834 21.49307 22.71710 24.36888 26,62992 30,20740 iTABLE OF GUARANTEED MAXIMUM FEMALE INSURANCE RATES io NON-SMOKER + MONTHLY : AGE RATE AGE 1.07000 48 2 , 06657 49 3°” .06500 50 4.06417 51 5.06250 52 6- — .06000 53 7 05917 54 8 05834 55 9 05750 56 10 05750 &7 11 105834" 5B 12 - 106187, 53 13 ~~ 108500 60 14 .06834 61 45 .06887 62 18 © .07501 63 17 08167 64 18 .08001 85 19 .08251 66 20 © 08417 er at 08584 68 22 08867 69 23 08834 70 24 09001 n 25° (09168 2 26 09418 73 27 .08584 74 28 + 108834 78 29 10168 76 30” 0418 7 3140751 78 32 11085 79 33 611501 80 34 12001 81 3512585 82 36 13418 83 37 314419 84 3 -18502 85 39 «16669 86 40 .18087 87 At 19587 88 42 -21088 89 43, 4.22588 390 44 24089 o1 45 (25757 92 48 (27508 93 47 (29425 94 95 ae ~.PER $1,000 MONTHLY RATE AGE 31427 1 “33678 2 36180 3 38932 4 82101 5 45604 6 “agit 7 53028 8 55866 9 80620 10 54375 n 68630 12 73638 13 73814 4 87493 15 ‘96927 16 1.07532 7 1.18975 8 4.30838 9 1.42054 20 155491 at 1.69453 22 1.85845 23 2.05639 24 220363 25 2.59756 26 2.93610 27 331428 28 372082 29 4.16308 30 4.63892 3t 5.16658 32 576724 33 6.45895 4 725729 35 815937 36 9.15556- 7 1023837 38 41:39164 39 1262319 40 1399142 at 1532721. 42 16.82248 4a 1845266, 4 2028063 45 22,49826 48 5.22305 47 29.24956 MONTHLY RATE 67000 96867 06500 06417 06250 96000 5917 05834 £5750 05750 05834 06167 98500 06834 98001 08417 08834 09251 09501 99751 2918 10168 10418 10668 “10918 11335 11668 12085 12585 13168 43669 114252 45002 15836 16753 48170 19837 21755 23839 26340 29008 31677 34345 37014 39849 42768 AST SMOKER AGE 438 49 50 51 52 53 54 55 56 87. 58 59 60 61 MONTHLY RATE 49024 52611 58449 60537 65209 70383 (75644 81086 88408 1417 96343 1.01603 4.07866 4.48717 4.25825 1.38107 1.51813 1.66276 1.80994 1.95214 2.09605 2.25256 2.43759 2.67212 2.95957 3.30170 3.69191 4.41856 4.57248 5.04701 5.54895 6.09610 6.70972 7.40896 8.20087 9.11907 10.11631 1.47773 12.2957 13.45788 14.67216 15,93752 20.5522 2.54368 25.2305 29.24956i * db ders Ss ' ; ‘ead y BHEtete 28000 North | @ Royal : eee ee Maccabees Life Insurance Company 7 Southfield, Michigan 48097-2165 Life and Annuity Company _ o (819) 357-4800 S Insured! Michael Maxeht. My Pollcy Number: 4095-202 a (1 CHANGE OF BENEFICIARY eee GI cHANGE OF OWNERSHIP oh a Jictary inthis policy and release The Company {rom all labilly thereunder and do heret dare veka ha forma eae tra by rnsn of dl chlbe pl totha prensa nth anne, chara, and oe dorlans, 2nd only onthe terme, condliana, and eontngences a flows: : : PRIMARY BENEFICIARY: gan rut tne Ou of ir ad Rlatenip onsen) CONTINGENT BENEFICIARY: pices, om tt at ata er IMPORTANT 4 thorviso sircted, proceeds wil be pad in efual shares to any primary benefictares who survive the Ue ORTANT NOTE: Unlens chonin a Fe cto wren utero she eed. ‘As owner of tho potcy sted abav, thereby cequest ransfor of caetship and successor ownership tet (Choose Only Ona) 0 wompuat: s Ba : ae Tr Se ST RAT 1D successon OWNER rs are ae ‘Wisma ol Corporation . Corps Tax kD, Number : Date of cooperation: a ae Gi Trust: Wikhael Macchi, 199 regavgcable teust ° 22/260 Dated at bie nidses DOS Thig__Sth. + Day of February Trustee ._ Signature of New Owner: tS NS kama Cal iF eapaaoTee Street Address: 2600 £. visite. 7 === Giy/SlaterZipcode: St- Charles, ZL _S0274 C1 cHaNGE NAME OF: © inwed Ci Owner ~ From: Te: aaa : FAR Reason: Signature of Owner (ile whore appteay Owner Tax tO. we Social Secusity No SIGNATURE SECTION (Must Be In INK) sack gidge. UE ate Signed: ___February 6, 1992 Sgawet_——> ¢ Winess (ot eT +, Othe @ wo— CHANGE ACKNowIFpGrD: ROYAL MACCABEES LIFE INSURANCE COMPANYRoyal soo 2stnd Nonhwestorn Highway : P.O, Box 2168 : Maccabees Life Insurance Company _ Southifleld, Michigan 48097-21 i (13) 357-4800 fa Life and Annuity Company i secs Insured:_Yichael Marchi, wp ______________ Polley Number: 4ogs-20% 9 wn vet (GI cHANGE OF BENEFICIARY : Ido hereby emer ale of benetelaryInth’s pocy and eleasé The Company Som al abt thoroundor and do he ‘doruey ove tho fnpa esa payoio beacon of da chal bo palothe pee) ant inte manna, eharea, and pre. porons, and only on the tems, condons, and contingonces a flows: a ‘and pre PRIMARY BENEFICIARY: Pare ut Mane, ose of Sih and Flatoratip oe) Michael Macchi 1991 Irrevocable Trust “ CONTINGENT BENEFICIARY: prix Ft rane, Oe of Hh and Reape anew) : eee ee tee IMPORTANT NOTE: Unless othersis crecod, proceeds wil be pad in equal shares lo any primary beneficiaries who survive the * ‘ranscd Iva sorvec proceeds wil bo pad in equal shares to any contngent beneiare who suvive the Insured, : (il cHANGE OF OWNERSHIP : er ‘As oner ofthe poe ited above, thereby request tafe of ewnersip and successor omenip fo: (Choose Only One) |” w A ‘Michael Marchi =e INOMOUAL: Michaels ‘Reap ae +i Oia Socal Saearty O su OWNER: - ee ts en Ratan 7 Fania eed ‘Soc Sac Rao, Q corporate: ane a Capen Can Tax Paar ane tae Dated at__: Geneva, 1h” This__i6thD Day of, December Signature of New Owner: 2 Bhpatey oH Oro Wg ‘Street Address: 2600 B. Main St, Ste. 7 CityiStateZingode: St. charles: IL “60174 a 1 CHANGE NAME OF: © inswed O Onrier : Peete From: Te ee aay aaa ; Reason: 7 i SIGNATURE SECTION (Must Be In INK) Signed a GE Ste: Geneva, 1h ra ate Signed: December 16, 1891 : Si Signature of Owner a Signature of a Ee (itle where applicable) We) Brena (Sensbiea Owner Tax D.1 cr : : CHANGE ACKNOWLEOGED: ROYAL MACCABEES LIFE INSURANCE COMPANYts APPLICATION FORANSURANCE Pl ch “eee g80031 MACCABEES LIFEERSUHRRRICE COMPANY Ne. | Proposed Insured (Print first name, inital, last name) - Michael Maxchi, ¥D ; soc. see. No. 6 12162 [aL ol 486 7 Second Proposed Insured DSpoue . © Payor Benefit soc. See. No LLLLL Children Gf Childrens Term applied for) Cornplete Part It LL 10. Owner—Proposed Insured(s). shall be owner, unles peghanrdse span below apf and Disability Income) ul ight_ Weight ____—fullName__Bithdate Height WSl | yepined Benefit Pension Plan! _- - t : Print Name Age Relations! T 1501 S. Western Ave [3 P [8 [5] 35 ]7 I Address Soe. Sec. or Tax No. | i “Owner's Designee ‘Relationship Residence Address (Sweat and Number, City, State, Zip) 1501 Ss Western Ave 71. Beneficiary Park Ridge, IL 60068 cane ZI —himary SSSR ta. Send Premium notices to: Residence Address B) Other | Contingent ‘Relationship b. Premium Payor, Proposed Insured 1 Beneficiary O Cl Applicant Other (Give name/telationship in Q. 25) Owner oreonnepeemio sue Bla i [es8465 [SN 14, Answer forrboth Life and Disability treome a, Has the Proposed Insured(s) in Question 1. smok cigarettes at any time within the past 12 months? 5 O Yes h b, Does the Proposed Insured use tobacco in other for WE "Yes,"" describe) + O Yes fe SG Pald up additions sag siiaw sine LE ES PERE o te eee Pee eee 9. Premium Frequency Life Single Health __—— } 15. Is the Proposed Insured a U.S. citizen? Bes as PAC MasterList Bill No. IF "No," give details including visa status. 42-6839-1 (1/89)DISABILILTENCOME ORDT 46" 3H er ITS APPLIED FOR . ‘22a, Name & Address of Employer: plan Ps Benefit 5 : Benefit Period_________O Lifetir Ser b, Length of Service: — : “e A Elimination Peried_—___ tfor adit peticys) ¢. Areyouactively a workt (Have you worked at least'30 houis| _ describe fully in #25), per rec during te past 6 fete CSRENG i ADDITIONAL BENEFITS. - D7 Initial Add Benefit 5, cota’ —_% G Future Increase Option $=. O Cash Value —- .,, O Hospital Indemnity DRetuin of Premiur Dl s0s 5. 7 LIFE AND DISABILITY INCOME . Has the Proposed Insured(s) in Question 1 (Give-details of "Yes" answers in Question 25). a reinstatement or an application for life or- health Insurance pending or contemplated in” ~ any company? - : b. any intention to travel or reside outside the United States or Canada? | oo in the past {wo years flown as a pilot, student pilot or crew member, or intend to do sot (If yes, complete attached Aviation Questionnaire) gto, ‘ 4, engaged in ‘underwater diving, hang gliding, cluded in 18a". parachuting, auto, motorcycle or vehicle rac- * ing or is such activity coftemplated? OF "Yes," describe in #25) ce, had a drivers liénse suspended or revoked or been convicted in the fast3 years ofa moving violation, or of driving while impaired or intoxicated? Give rivers license number f. ever bee convicted of a felony? . . . everbeen told he/she had AIDS (Acquired Immune Deficiency Syndrome) or ever been treated for AIDS? 7 h. ever used Heroin, Morphine, Cocaine, 1SD, Marjuana or other narcotles except as prescribed by a physicfant « ‘rom your occupaifon ie less business expenses} Will the disability 24, Amount paid with Application Life $____. Annuity $. Health $. 25, Remarks ~ Pobiy pte lta inplomat a Qatied +" Paamect tin ein nonrantenitn + * ec ie ce a ee - It is understood and agreed that: (1) the answers recorded in Part I above and Part Il, bearing the same number, and any Part il required are, to the best of my knowledge and belief, icue and complete and correctly recorded and will become part ofthis application and any contract for insurance issued upon; (2) Except as provided for in the attached Receipts) no insurance shall take effect uatl the policy is accepted by the Owner and the first premium is paid to the Company and the health, habits and occupation of all proposed insureds remain as stated in the application; (3) Acceptance of any policy issued shall constitute a ratification of any change, correction or addition made by the Company, except in states where cequiced; any change in amount, plan of insurance, classification, age at issue or benefits shall require the signature Of the Owners (4) That no Agent has the authority to waive the answer to any question, o pass on insurability, to waive any of the Company's rights or requirements of to make or alter any contract. Application made fae ‘Rese sate He Date S13 ane acknowledge receipt co | fone nonin en ans 1 cettity that this application accurately cords thewnloina’ tion 54 by the Applica; Proposed insured ANS a Spouse If to be Insured) Witness a jecond, Proposed Insured Licensed Kesidant Agent a f Joint Wit.) t a My TD @t £ ' TricHace MARCH! 7 t AgplicantiOwner Deieen _Gewerie Fla) Byline GS pus Te :a at lication to MAC CAD EES ea ee OID PANY pare ita Continvation of Applicationto MACCABEES LIFE AND ANNUITY COMPANY a Ge Yes ANSWERS (ldenilfy ee number and iets al agate items, include dlagnosts, dates, duration, and names and addresses ofall physicians and Ss meee C5 5, : ee 2, When did Proposed! Doctor/Address 3. Has any parent, brother, or sister ever had tubercul high blood pressure, heart disease, kidney disease, of mental illness? “4. Have you within the past five years: : : a. Been examined by of consulted a physician or other pratitonert} 7 bb. Been undet observation or treatment in 2 hospital sanitaium or institution? : jo & _Hadanx-ray,electrocardiogram, blood, 5, Have youever: . “a. Received benefits or compensation for ckness or njury oc hadlif or Gisability ingurance rated up, modified, rejeced, cancelled or not} ¢ renewed? + . Soughtadvice or reatment for or beenarrestedfororbeenaddlctedto} the'use of alcohol or drugs? <._ Had any disease of the reproductive organs, gentalorgans, breasts, 0r _ |. 5 anyamputation octodiyeformity hetia ce ppture,pemorrHoideory varicose veins? zo 4. Been advised tohave any diagnostic tes espitalzalon orsurgery which was not completed? : 6. Have you ever had or been treated for: a. Any disease or digrder ofthe eyes ears nose threat orthyroidgland? be ‘Any deformity of disorder ofthe back spine, muscles, bones or joints? © Chestpain, heart murmur high blood pressureyor any other disease or} disorder of te heat, drculatory system, Blood, or Blood vessels? d. Péptic ulcer indigestion, or any disease of the stomach, Intestine, gall bladder, liver, pancreas, spleen, or enlarged lymph glands fe. Tuberculosis, asthma, pleursy, or any other diseate of the chest or Tangs? a £2. Albumin, pus, blood orsugarin urine,urinary stone, the kidneys, Bladder or prostate? : Severe headaches, fainting spell, dizziness, vertigo, synedpe, enlepsy. paralysis, nervousess, mental disorder, orany ober disease or disorder of the brain or nervous system : fh. Rheumatic or other fever, syphilis, gout, ans, goiter, diabetes, cancer, tumor or dsocderof the lymph nodest : i. AIDS (Acquired immune Deficiency Syndrome of infection with HIV (Human immunodeficiency Sit) eetldete hed ADST ofotherdiseaseot| Any suigial operation, testment,o any illness, ailment abronmaliy, | ‘or injury not mentioned above within the past five yéarst + Jo" «7. Are-you now under treatment or taking any prescription drugs? 8, Are you pregnantt i “Yes,” give date child is expected) 9. Are you aware of any other medical information nat listed aboved hereby declare that ail the statements and answers fo the above questions a1 and | agree thatthe foregoing together with his declaration shall form a par, de the examining physician to give the Maccabees Mulual JApasurance Comp information he may have jn his flae= nature of person examined or applicantif.child under age Witness Examining PhysicianFLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY, Vit ‘Adjustable Benefit Amount : Flexible Premlum Payments : Insurance Proceeds Payable At Death Before The Maturity Date - ‘Surrender Value Payable On The Maturity Date Non-Partlcipating Schedule Of Benefits And Premiums Appears On Page 3 MM-FPAL-7 AtnEDULE OF BENEFITS AND INITIAL MONTHLY EXPENSE CHARGES T INITIAL DATE TO WHICH “INITIAL SPECIFIED . COVERAGE IS ‘MONTHLY 2 BENEFIT _ PROVIDED ‘EXPENSE AMOUNT CHARGE BLE PREMIUM #100,000% MAY 9, 2038 TABLE LIFE VI~-250 i “ xTHIS AMOUNT DOES INCLUDE THE ACCUMULATION UM ADMINISTRATIVE CHARGE: 195.00 MAXIMUM PREMIUM LOAD: M SURRENDER CHARGE: $2,556.00 WITHDRAWAL CHARGE: GE CONTINUATION COMPONENT: 948-91 : THE TERMINATION DATE IS THAT ELECTED BY THE OWNER. IT Is POSSIBLE THAT COVERAGE WILL CEASE PRIOR TO THE MATURITY ~ SHOWN IF SUBSEQUENT PREMIUMS AND INTEREST CREDITED ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH A DATE. Y NUMBER: 4089-849 DATE OF Issue: MAY €D: TASSOS P NASSOS HD . MATURITY DATE: MAY HALE ISSUE AGE: 50 MONTHLY DEDUCTION DAY IS DAY OF EACH MONTH UN CLASS: STANDARD-NONSHOKER AU PREMIUM: $10,830.00 PLANNED PERIODIC PREMIUM 3.00 1 SURRENDER YOUR POLICY OR ALLOW IT TO LAPSE FOR ANY REASON WITH! o, a VALUE 1989 2038 _ : THE out oFMAGCABEES LIFE INSURANCE COMPANY 25800 Northwestern sghway. Box “168, Souhfeta, Michigan 48037:2165 Maccabees Life Insurance Company will pay the Insurance Proceeds ta the Beneficiary if the Insured dies whila this Policy is in force. The Surrender Value of this Policy will be pad to the Policy Owner if the Insured is ving on the Maturity Date. Allof the rights and benefits cf this Policy may be exercised by the ‘Owner. ‘This Policy is a legal contract between the Policy ‘Owner and the Company . . . READ YOUR POLICY CAREFULLY. ‘This Policy is issued in consideration of the attached application and the advance payment of premiums shown on the Schedule Page. : TWENTY DAY RIGHT TO EXAMINE POLICY. Uf, for any reason, this Policy is not satisfactory, it may be returned within twenty days after recelpt hy delivering ittoany agentof the Company or mailing itto the Home Offica of the Company. Immediately upon such delivery ot mailing, tis Polcy wil! be deemed void from the. beginning. All premiums paid will be refunded to the Owner within ten days of the policy return. Signed for the Company at its Home Office in Southfield, Michigan WAL @. whisk Secretary yet 1. fp Melb. President FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY VII : ‘Adjustable Benefit Amount Flenble Premium Payments z .dg Payable At Death Before The Maturity Date ase vceder Vale Payable On The Maturity Date Nor-Partieipating : Schedule Of Senefits And Premiums Appears On Page 3 FPAL-T (Rt) (20)‘TABLE OF CONTENTS ANNUAL REPORT | L-2 (FPAL7) ASSIGNMENT . ie (FRAL7) BENEFICIARY ... ts. (FPALT) DEFINITIONS ... tee becnaee (FPAL-7) NON-PARTICIPATION . + L3 (FPAL7) Ft GENERAL PROVISIONS: 7 aici (FPALT) GRACE PERIOD . 4 (FPALT) INSURANCE PROCEEDS - Lt (FRAL7) LOAN PROVISIONS = L7 (PAL) NONFORFEMTURE PROVISIONS - Ls (PAL?) OWNERSHIP. 2 Ld (FPAL-7) PREMIUMS . fe at REINSTATEMENT .. . 4 (FPALD) SETTLEMENT OPTIONS . U9 (FPAL-7) AM-FPAL-7-TC (R1) .ar DEFINITIONS Whenever used in the Polley, the following words mean: ACCUMULATION VALUE ‘The amount of money that is credited with interest to the Policy on a monthiy basis. BENEFICIARY ‘The person named in writing by the Owner to receive the Insurance Proceeds in the event of the Insured's death. CASH VALUE ‘The amount of Accumulation Value of this Policy less any Surrender Charges. COMPANY ‘The Maccabees Life Insurance Company. DATE OF ISSUE ‘The date shown on the Schedule Page from which policy years, months and anniversaries ‘shall be determined. HOME OFFICE OF THE COMPANY 25800 Northwestern Highway, P.O. Box, 2165, Southfield, Michigan 48037-2165 INDEBTEDNESS ‘The sum of any unpaid policy loans and any unpaid policy loan interest. INITIAL PREMIUM ‘The amount due at the Date of Issue shown on the Schedule Page and payable in advance. INSURANCE PROCEEDS The total amount the Company will pay upen the death of the Insured. INSURED The person named on the Schedule Page whose lile this Policy insures. LOAN VALUE The amount that can be borrowed under ihe Felicy. MATURITY DATE ‘ “The date specified as such on the Schedule Page, ‘upon which the Surrender Value wil become payable ifthe Insured is ving. MONTHLY DEDUCTION DAY ‘Tha day of each month shawn da the Schedule Page when the Accumulation Value of the Polley Is calculéted and the Monthly Experise Charge is deducted. The first Monthly Deduction Day shail be the Dale of Issue. 7 MONTHLY EXPENSE CHARGE ! The total amount deducted each month for the coverage provided under the Policy and any additional benefits provided by rider. OWNER : ‘The person to whom this Policy belongs. PARTIAL SURRENDER ‘An amount available in cash at ahy time upon request equal to 50% or more of the Surrender value. PLANNED PERIODIC PREMIUM PAYMENT * ‘The amount of regular premium payment elected by © the Insured, This amount and the frequency of payment are shown on the Schedule Page. The Owner may change the amount and frequency of the Planned Periodic Premium Payment at any time subject to the policy provisions. Any change in frequency and amount willbe reflected in the Annual Report provided by the Company. ‘SPECIFIED BENEFIT AMOUNT ‘Thé nial amount of coverage shawn on the Schedule Page. This Amount may be changed by the Owner at any fime subject to the policy provisions. Any change in the Specified Beneft Amount will be reflected in a Specification Endorsement. SURRENDER CHARGE ‘The amount deducted by the Company from the Accumulation Value if the Policy is surrendered. SURRENDER VALUE ‘The amount of Cash Value, less any indebtedness, availablein cash or an Optional Method of Settlement ‘upon tha termination or maturity of this Policy. WITHDRAWAL ‘An amaunt available in cash at any time upon request ‘which is less than S0% of the Surrender Value. OQ clPROCEEDS PAYABLE ‘This Policy shall terminate upon the death of the Insured. The Company will pay the insurance Proceeds subject to the provisions of this Policy to the Beneficiary upon receipt of due proof of the Insured’s death. The, Company wil require surrender of this Policy as a'condition of payment. The Insurance Proceeds payable depend on the Specified Benefit Amount Option in etfect atthe date of death, + ‘Two Specified Benefit Amount Options are available under this Policy: LEVEL OPTION—The Specilfed Benefit Amount as shown on, the Schedule Page includes the Accumulation Value. Under this option, the Insurance Proceeds at the Insuréd's date of death shall equal the greater oft 1) the Specified Benefit Amount on the date of death; or 2) the Accumulation Value on the date of death multiplied by the percentage shown in the Table af Minimum Death Benefit Percentages for the Insured's attained age, INCREASING OPTION—The Specified Benefit Amount as shown on the Schedule Page isin addition to the Accumulation Value. Under this option, the Insurance Proceeds at the Insured’s date of death shall equal the greater of: 1) The Specified Benefit Amount on the date of death, plus the Accumulation Value on the date of death; or . 2) the Accumulation Value on the date of death multiplied by the percentage shown inthe Table of Minimum Death Benefit Percentages for the Insured's attained age. Any increases or decreases made to the Specified Benefit Amount may change the Insurance Proceeds payable. Any loan, Withdrawal, or Partial Surender of this Policy will be subtracted from the Insurance Proceeds. If the Insured is living on the Maturity Oate and this Policy is in force, this Policy shail terminate and the Company shall pay the Surrender Value to he Owner The Maturity Date is shown on the Schedule Pace. tis possible that coverage will terminate priar to the Maturity ate if premiums paid following payment of the Initial Premium are insulficient to continue Coverage to such date, It is also possitle that Coverage will terminate prior to the Maturity Ozte shown if the Company changes the inlerest rate ot the Monthly Cost of Insurance ates. CHANGES IN SPECIFIED BENEFT AMOUNT CPTICN The Schedule Page shows the option elected in the INSURANCE PROCEEDS 5 original application. The option may be changed 6) Endorsement. the Oumer 25 allowed by the Company, It the tnereasing Option isin effect and the Owner changes to the Level Option, the Specified Benefit Amouni subsequent to this change will equal the total of the Specified Benefit Amount prior fo the change plus ‘the Accumulation Value. Thereatter, the Specified Benefit Amount will include the ‘Accumulation Value, ifthe Level Option is in effect ‘and the Owner changes tothe Increasing Option, the ‘Specified Benefit Amount subsequent this change will equa the Specified Benefit Amount prior to the ‘changaless the Accumulation Value, Thereafter, the Speciied Benefit Amount ‘will not include’ the ‘Accumulation Value. see CHANGES IN SPECIFIED BENEFIT AMOUNT ‘The Specified Benefit Amount of this Policy may be increased or decreased upon written request by the ‘Owner subject to the folowing condiions: 1) Any decrease will become effective on the Monthly Deduction Day that falls on or next follows the date the request is received by the Company. Such decrease will teducs the Specified Beneiit Amount in the following order: a) Itwilldecrease the insurance provided by the ~ ‘most recent increases successively; then b) it wil decrease the Inifal Specified Benefit Amount. - 2) The Specified Benefit Amount may-not be decreased to an amount less than $25,000. 3) The Speciied Beneitt Amount may riot be changed by an amount less than $10,000", ~ 4) Any tequest for an increase must be ‘applied for * ‘on asupplemental application. Such increase will be subjectto evidence of insurablity satistactory tothe Company. Any increase will be subject to the sufficiency of the Accumulation Value, tess any indebtedness, to cover the next Monthly Expense Charge. Any increase will become effective on the effective date shdwn on the Specification Endorsement. 8) The Specified Benefit Amount may not be increased if there has been a prior decrease. APPLICATION FOR ADDITIONAL INSURANCE Additional insurance on the life of the Insured’s spouse of child may be applied for by supplemental application. Approval ofthe additional insurance shall be subject to evidence of insurabilily satisfactory to the Company. Additional insurance shall also be subjecttothe sufficiency of the Accumulation Value, less any indebtedness, to cover the next Monthly Expense Charge. Such new insurance will be provided by rider and will become effective on the ellective date shown on the Specification ——}‘THE CONTRACT This Policy, the attached application for this Policy, any atached rides, ny supplemental applieatons for Inéreases in the Specified Benefit Amount, and any Specification Endorsements make up the entire contract between the parties. This Polfcy shall take effect upon delivery, provided the Initial Premium has been paid, the Insured is living, and thera has been no material change in the heaith of the insured as shown in the application. All, statements made in the application are, In the absence of fraud, deemed tepresentations and not warranties, No statement made by the Insured or on his behalf will be used in defensa of a claim under this Policy unless it is made In a written application anda copy of the application containing that statement is attached to the Policy when issued. Policy years, policy months, and policy anniversaries aré measured from the Date of Issue of the Policy. Attained age means age last birthday on the prior policy anniversary. ‘Any change or waiver of any provision of this Policy must be in writing and signed by an officer of the Company. SUICIDE If the Insured dies by suicide while sane or insane, within two years from the Date of Issue, the Insurance Proceeds will not be paid. The amount payable will be the total of premiums paid less any indebtedness on this Policy, and less any Withdrawal and Partial Surrender amounts paid. A new two-year petiod will apply to any increase in the Specified Benefit Amount beginning on the date of each increase. The amount payable under this provision attributable to a policy increase will be the Costs of Insurance for that “crease if death by suicide, while sane or insane, oe during the first two years following the increase, ‘The amount payable under this provision will be paid to the Beneticiary, INCONTESTABILITY Aiter this Policy has beenin force during the insureds lifetime {cr two years trom the Date of Issue, the Company foses the right to contest a cisim based on statements mace in the application. GENERAL PROVISIONS ‘Aer this Policy has been In force during the insured's lifetime for two years from the date on which the Specified Benefit Amounts increased, the Company {oses the right to contest a claim which involves tha increase in Specified Benefit Amount. ‘This provision does not apply to any Disability Benefit or Accidental Benefit attached to this Paley. . MISSTATEMENT OF AGE OR SEX If the Insured’s age or sex has been misstated, the proceeds payable upon death will be: 4) the Accumulatfon Value on the date of death; plus | 2) that amount of insurance which would have been purchased by the most recent Cost of insurance deduction had the correct Cost of Insurance Rate been used, ANNUAL REPORT At least once each year the Company will send the ‘Owner an Annual Report which shows: : 4) The current Accumulation Yat 2) The current Surrender'Vaiue; ete 3) The amount of any outstanding policy lean; 4) Premiums paid since the last Report; 5) Expense Charges since the last Report; 6) The Specified Benefit Amount; 7) Interest credited since the last Report; and 8) Any Partial Surrenders or Withdrawals since the last report, ILLUSTRATIVE REPORT The Company will provide an illustrative report of ptcjected future Insurance Proceeds and Cash Values ‘which wil be sent to the Owner upon request. The Company may charge a reasonable (ee for providing such a Report, @BENEFICIARY The insurance Proceeds will be paid to the Beneficiary fast named in writing by the Owner. Two or more Beneficiaries will receive equal shares of the proceeds unless a different allocation is specified, A Beneficiary must survive the Insured, Otherwise, his shara will be paid to the surviving Beneficiary or Beneficiaries in equal shares. If no Beneficiary has been named or there are no surviving Beneficiaries, the Insurance Proceeds will be paid fo tha Owner, ifliving; otherwise to the Owner's estate, CHANGE OF BENEFICIARY ‘The Owner may change any Beneficiary at any time while the Insured is living. A written notice of change must be sent to the Company atils Home Office. The change will take effect on the day it was signed, subject to any action taken by the Company prior to the recording of the chenge at the Home Office. OWNERSHIP ‘This Policy belongs to the Owner. If the Owner dies, this Policy belongs to the Owner's designee, or the Owner's estate if no Owner's designee has been named. CONTROL OF POLICY CHANGE OF OWNERSHIP ‘The Owner may namo a new Owner by written notice mailed to the Company. The change will take effect con the day it was slaned, subject to any action taken by the Company prior tothe recording of the change at the Home Office, ‘ASSIGNMENT This Policy may be assigned by the Owner as collateral. Any assignment must be in writing and a. signed copy sent to the Company at its Home Office. Tha righis of the Owner and the interést of any Beneficiary will be subject.to the rights of any assignee of record as specifed in the assignment. Tho - Companys not subject tothe rights of any assignee of record. The Company is not responsible for the validly or effect of any assignment. Hise NON-PARTICIPATION Maccabees Life Insurance Companys sleck company. This Policy shall not participate in the divisible surplus of the Company,PAYMENT ‘The Initial Premium Is due on the Date of Issua and is payable In advance. Subsequent premiums are ‘payabla in advance of the period to which they apply. No benefit will be provided on the basis of any premium until that premium hes been paid. The amounts and frequency of Planned Periodic Premium Payments are shown on the Schedule Page. Premiums must be paid to the Company atits Home Office. Upon request, a receipt signed by the President or Secretary of the Company will be furnished for any premium payment. ‘Changes tn frequency and increases or decreases in ;the amount of Planned Periodic Premium Payments may be made by the Owner. The Planned Periodic Premium cannot be changed an amountless than $50.00. Premium payment notices will be sent to the ‘Owner upon written request. The notices may be sent annuelly, semi-annually, or quarterly. * Under the special payment facility, Planned Periodic Premium Payments of $25,00 or more may be made on a monthly basis. : ‘Additional premlur payments may be made at any time during the continuance of this Policy. ‘The Company reserves the sight to reluse to accept ‘any premiums which would disqualy this Policy from favorable tax treatment as fie insurance under federal {avy. If premiums paid during any poly yeas exceed the federal life insbrance premium guidelines, the Company will return the excess premiums with, Interest of at least 4%6 within sity days aftr the end of the policy year. * GRACE PERIOD Except as provided below, this Policy will enter the Grace Period if the Surrender Value on the Monthly Deduction Day is insufficient to cover tho Monthly Expense Charge, (The Accumulation Value, Surrender Value, and Monthly Expense Charge are descrited in the Nonforteiture Provisions ) Tha above notwithstanding, prior to the ninth policy ‘anniversary, this Policy will enter the Grace Peed it ‘The Accumulation Value lessindebtecnesson the ‘Monthly Ceduction Day is less than the Menthly Excense Charge; or it a ge ‘Tha Surrender Value on the Monthly ect ay is less than the Monthly Expense Ch and Tha sum of the premiums paid since the Date cl Issue, less any loans, Withcrawals or Pera Surrenders, is less than the Coversce Continuation Requirement as of tha Monthly Deduction Day. (8) PREMIUMS ‘Asoleach Monthly Deduction Day during the first nine- falc years, the Coverage Continuation Requlrament shall bo the sum of the Coverage Continuation Components applicable to each polley month from the, Date of Issue. eastereee ee ‘The Coverage Continuation Component in effect on the Date of Issue Is shown on the Schedule page: The Coverage Continuation Component will change as of the effective date of any increase In the Specified Benefit Amount, or any addition of, or increase In, any rider. The Caverage Continuation Componentin effect as of any Monthly Deduction Day will apply to the policy month next following, The Company will notify, the Owner of any change in the Coverage Continuation Component, : : ‘A Grace Paried ot sixty-one days will be allowed for the paymentof premiums sufficient to cover any past’ due Monthly Expense Charges and applicable loan interest Write notice of such premium will be mailed to the last known address of the Owner and’any assignee of record at least thirty days before the Grace Peried ends. such premium is not paid within, the Grace Period, all coverage will terminate without value at the end of the Grace Period. if a claim by death during the Graca Petiod becomes payable under the Policy, any overdue Monthly Expense - Charge wil be deductéd from the Insurance Proceeds, - REWISTATEMENT . It this Policy terminates as provided in the’ Grace * Period provision, the Owner may apply for ‘einstatement. Tha application must be received by the Company at its Home Otfice within five years of the date of termination, but before the Maturity Date, and must include: . 4) evidence ofinsurabilty of the Insured satisfactory to the Company; 2) payment of a premium sufficient to prevent this Policy from entering a Grace Period for at least three months after the date of reinstatement; 3) paymentor reinstatement of any policy loan; and 4} payment of interest onthe reinstated foan from the date ol einstalement tothe end of the policy year. Reinstatement will not te effective until the date the apalcation is approved by the Company. The Incontestabilly provision with respect to ‘einstatement application and the Suicide provision will apply from the effective date of reinstatement.NONFORFEITURE PROVISIONS ACCUMULATION VALUE ‘The Accumulation Value on the Date of Issue shall be atleast 937% percent of premiums pald on or before the Date of Issue, less the Monthly Expense Charge for the first month. On.each Monthly Deduction Day the Accumulation Value shall be calculated as (0), plus. (©) plus (©), minus the sum of (@) plus (e) where: (a) is the Accumulation Value on the preceding Monthly Deduction Day; (0) Is one month's interest on (a)? (6) is 93% percent or more ofall premiums received since the preceding Monthly Deduction Day; (@ is the amount of any Partial Surrender, Partial ~ Surender Charge, Withdrawal and Wilhdrawal {fee since the preceding Monthly Deductlon Day; (e) Is the Monthly Expense Charge for the month following the Monthly Deduction Day. On any day other than a Monthly Deduction Day, the Accumulation Vatue shall be calculated as () plus (9) minus (f), where: P (is the Accumulation Value as of the preceding Monthly Deduction Day; 7 : (Q) 893% percent or more of all premiums received since-the preceding Monthly Deduction Day: (h) is the amount of any Partial Surrender, Partial « Surrender Charge, Withdrawal or Withdrawal fee sinice the preceding Monthly Deduction Day. MONTHLY EXPENSE CHARGE The Monthly Expense Charge shail be calculated as ( plus @), where: 7 )_ isihe Cost of Insurance {as described below) plus the cost of additional benefits provided by rider; @ is the Administrative Charge. The Administrative Charge shall not exceed, but may be less than, the Maximum Administrative Charge shown on the Schedule Page. INTEREST RATE The interest rate used in the calculatio Accumulation Value is guaranteed to be a minimum of 32737 percent per month, compounded monthly, which is equal to 4 percent per year compounded annually. Interest in excess of the guaranteed minimum rate may be credited as determined by the Company's Board of Directors, Interest credited on will at no time be less than ihe guaranteed minimurry interest rate, the portion of the Accumulation Value that is loaned 9) COST OF INSURANCE ‘The Cost of Insurance is determined on a monthly basis. The Cost of Insurance is determined separately {or the Initial Specified Benefit Amount and for each Increase in Specified Benefit Amount, _ “The Cost of Insurance is calculated as (a), multipited by the result of &) minus (¢), where: @ isthe Cost of Insurance Rate as described in the Cost of Insurance Rates section; - (@) isthe Insurance Proceeds at he beginning of ihe policy month divided by 1.0032737; (©) isthe Accumulation Value at the begin! policy month. ifthe Accumulation Value Is included in the Specified Benefit Amount and there have been increases In the * Insurance Proceeds, then the Accumulation Value shall be first considered a part of the Initial Specified Benefit Amount. If the Accumulation Value exceeds the Ital Specified Benefit Amount, it shall then be considered a part of additional Specified Benefit Amounts resulting from increases in the order of the Increases. Et Any deduction for the Cost of Insurance during the ‘Grace Period shall not be considered a waiver by he ‘Company of the terms of the Grace Period provision. Any ‘such charge shail be deduete % o ‘Accumulation Value as of the date +: COST OF INSURANCE RATES The monthly Cost of Insurance Rate is based on the ex, attained age, and rating class of tho person insured, Monthly Cost of Insurance Rates will be determined by the Company from time to time based oni expectations as to future mortality expefience. However, the Cost of Insurance Rates will not be greater than those shown inthe Table of Guaranteed Maximum Insurance Rates or as the same are amended by the rating factor, if any, shown on the Schedule Page. Any change in the Cost of Insurance Rates will be on a uniform basis for insureds of the same age, sex and classification whose policies have beenin fore forthe same length of lime. The interest rate used (o calculate the guaranteed Cost of Insurance Rates is 4% per year. The Table of Guaranteed Maximum Insurance Rates Is also applicable o increase amounts of insurance subject to any applicable rating factor shown on [he Schedule Page. Sey The guaranteed Cost of Insurance Rales are based on the 1960 Smoker or Nonsmoker Commissioner's Slandard Ordinary Mortality Table (CSO), Age Last Binhday.* NONFORFEITURE PROVISIONS (Continued) CASH VALUE : The Cash Value shall be calculated as the Accumulation Valua less the Surrender Charge. SURRENDER CHARGE | The Surrender Charge isthe lesser of (a) or (b), where: {a) is the Accumulation Value; (b} isthe Maximum Surrender Charge shown on the Schedule Page multiplied by the factor from the Table of Surrender Charge Factors that Corresponds to tha policy year of surrender. SURRENDER CHARGE FOR INCREASES IN SPECIFIED BENEFIT AMOUNT If the Specified Benefit Amount is increased, a separate Surrender Charge will be applied at the time of the increase, The Specification Endorsement providing for the increas will include the Maximum Additional Surrender Charge resulting from the increase. The Additional Surrender Charge will equal the Maximum Additional Surrender Charge shown on the Specification Endorsement multiplied by the factor from the Table of Surrender Charge Factors that corresponds to the number of years since the increase, The Additional Surrender Charge resulting from an. increase shall be'added to the amount specified in (0) above to determine the total Surrender Charge. BASIS OF COMPUTATIONS ‘Accumulation Values are based on the 1980 Smoker of Nonsmoker CSO Mortality Table, Age Last Birthday, with interest at 4 percent per year compounded annually. Accumulation Values are at least equal to those requifed on the Date of Issue by the state in which this Policy was purchased. Reserves are’ ‘based on the 1960 Smoker or Nonsmoker CSO Mortality Table, Age Last Birthday, with interest at the Calendar Year Statutory Valuation Interest Rate. Reserves are calculated using @ Modified Preliminary Term method, but are not less than the reserves calculated using the Commissioner's Reserve Valuation methed. Where required, a detailed statement of the method of computation of Accumulation Values and reserves under this Policy has been filed with the insurance cepartment of the state in which this Policy was purchased, CONTINUATION OF INSURANCE In the event Planned Periccic Premium payments af2 fot continued, insurance coverage under this Policy and any benefits provided by rider will be continued in force, ‘Such coverage shall be continued unt! termination as provided in tho Grace Period provision. ‘This provision shall not continue the Polley beyond the Malurity Date nor continue any rider beyond tha date fois amination, a8 prov ed in the da. the Insu ing on the Maturity Date and the Polley ig sill in force, the Company will pay the Surrender Value to the Owner, ee WITHDRAWAL, A Withdrawal from this Policy may'be made at any time prior to termination upon written request by the ‘Owner to the Company at ts Home Office, The sum of all Withdrawals cannot equal or exceed 50% of the Surrender Value. : When a Withdrawal is made, the amount of the Withdravral will be deducted from the Accumulation Value. The Insurance Proceeds shall be reduced by the amount of the Withdrawal, An additional fee of ‘$25.00 will be deducted from the Accumulation Value for each Withdrawal. Not more than three Withdrawals, will be allowed in any policy year. ‘The Company reserves the ight deter 0 Withdrawal for a peried permitted by law, but not for more than six months from the date of receipt of the reqtiost by the Company atits Home Office, unless such payment ‘would be used to pay premiums on polices In force with the Company. PARTIAL SURRENDER ‘Partial Surrendef ofthis Policy may be made‘at any time prior to termination by written request. of the ‘Owner to the Company 2t its Home Office. A Partial Surrender is an amount which when added to all previous Partial Surrenders and Withdrawals equals or exceeds 50% of the Surrender Value. Ia Partial ‘Surrenderis made, an additional ea will be deducted from the Accumbiation Value as follows. The additlonal fee will equal the Surrender Charge multiplied by the ratio that the Partial Surrender bears tothe Surrender Value. After a Partial Surrender, the ‘Surrender Charge for the Policy will be reduced by the additional fee. The Insurance Proceeds, the ‘Accumulation Value, and the Cash Value will be reduced by the amount of the Partial Surrender. Not more than three Partial Surrenders will be allowed in any policy year. ‘The Company reserves the right lo defer a Partial ‘Surrender for a period permilted by law, but not for more than six months from the date of receipt of the fequest by the Company at its Home Ottice, unless such payment would be used to pay premiums on ® Policies in force with the Company.qe SURRENDER AND SURRENDER VALUE This Policy may be surrendered at any tme prior to termination upon written request by the Owner to the Company at ils Home Office. The amount payable on ‘surrender of this Policy shail be the Surrender Value, which is the Cash Value less any indebtedness, on the date of surrender. The Surrender Value will be Paid in cash or under an elected Settlement Option. 1! surrender is requested under this section within 20 days after a policy anniversary, the Surrender Value shall not be less than the Surrender Value on that The NONFORFEITURE PROVISIONS (Continued) anniversary, less any Partial Surrenders, Withdrawals, or loans made on or after such anniversary, this Polley is surrendered, coverage shall terminate ‘asofthenext Monthly Deduction eserves the tight to defer-the payment of the ‘Surrender Value for tha period permitted by law, but ‘ot for more than six months from the date of receipt ofthe request by the Company at its Homa Office, unless such payment would be used to pay premiums on policies in force with the Company, Fe POLICY LOAN PROVISIONS POLICY LOANS ‘The Owner can borrow against this Policy as sole security for any amount up to the Loan Value at any time prior to the termination of this Policy. The loan Must be requested by the Owner in writing. * Ona policy anniversary, premium due date, or during & Grace Period the Loan Value is the Cash Value less any loan and accrued interest. Otherwise, the Loan- Value is the amount with interest which equals the Loan Value on the next policy anniversary. Before advancing the loan amount, the Company may withhold an amount sufficient to pay interest on tolal indebtedness to the end of the policy year and any Monthly Expense Charges due during the next three months, or to the end of the policy year, whichever occurs first, «+ The Owner may be required to sign a loan agreement assigning this Policy to the Company as security, The Company may delay the payment of the loan. Payment may be delayed up to six months from the dale the request was received unless such payment Would be used io pay premiums on policies in force with the Company. LOAN INTEREST RATE Interest is Payable in advance on the first interest Payment due date and on each policy anniversary that ‘ollows. The first interest payment due dates the date of the loan. Loans under this palicy will ear interest at arate that is subject o adjustment on ezch policy anniversary. The inital interest rate charged on any foan will be the Company's Adjustable Loan Interest Rate in effect on the previous policy anniversary. As of each “subsequent policy anniversary, the interest rate charged for the policy year following «sil he the Adjustable Loan Interest Rale in cf. i 2 saa pulley anniversary. The Owner will be notified ofthe initial interest rate at the time the loan request is made. The Company wil alsonotly the Owner ofany change in the interest fate applicable to an outstanding policy loan. No Policy wil terminate in a policy year as the sole result ‘of achangein the interest rate during that palicy year. Insuranca will remain in force until the time it would have olhenwise terminated had the interest rate not ‘been changed. Interest not paid when due is added to the loan and bears inlerest at the same rate as the loan. ‘The Agjustable Loan Interest Rate will be determined as of the fst day of each January, April, July, and Ocicter, and will be determined by comparing the Adjustable Loan Interest Rate in ellect for the preceding ree months with a maximum interest rate Sefined by law and described below, Any change in the Adjustable Loan Interest Rate will be subject to the folowing: @a. The Adjustable Loan Interest Rate will be lowered ‘be equal to or less than the legal maximum interest rate if such legal maximum rate is 5% ‘or more lower than the Adjusted Loan Interest Rate for the preceding three months... b. The Adjustable Loan Interest Fale may be + Increased by at least .5% but not higher than the egal maximum interest rate, ifthe legal maximum interest rate is 5% or more higher than the Adjustable Loan Interest Rate for the preceding lhvee months, ‘The Adjustable Loan interest Rate will not exceed the greater of: (1) The Published Monthly Average for the calendar month ending two months before the data on which the rate is determined; or (2) The interest rate used to compute the Accumulation Value under the Policy during the applicable period plus 1% per year. ‘The Published Monthly Average is Moody's Corporate Sond Yield Average-Monthly Average Corporate as POLICY LOAN PROVISIONS (Continued) published by Moody's Investors Service, Inc., or any Successor ta it In the event that Moody's Corporate Bond Yield Average-Monthly Average Corporata Is no longer published, the Published Monthly Average will be a substantially similar average established. by regulations Iss the state in which this Pollcy. was purchased, REPAYMENT AND TERMINATION Policy loans, including accrued interest, may be repaid in whole or part at any time prior to termination ‘of this Policy, A loan outstanding at the end of the Grace Period may not be repaid until this Polley is reinstated. All funds received by the Company under this Policy wil be credited as premium payment unless clearly marked for loan repayment. Whenever the policy loan plus accrued interest equals or exceeds the Cash Valua of this Policy, written Nolfication will bs sent to the last known address of the Owner and assignee, If any. This Policy will terminate sixty-one days after the date of mailing the notification, by tha Insurance Commissioner of «./AVAILABILITY ‘The Insurance Proceeds of this Policy will be pald in one sum unless a payment option is chosen, All.or part of the Insurance Proceeds may be applied under ‘one of the following options. However, the amount to ‘be applied must be at least $3,500.00, The amount must also provide a periodic payment of at least ‘$20.00 to each payee. If the payee is not a natural e'son, the proceeds may not be placed under a Settlement Option without the consent of the ‘Company. ELECTION : ‘The Owner may elect a Settlement Option ot change A prior election at any time while the insuredis living. ‘The election must be recorded by the Company atts Home Office before itis effective. The Company shall not ba liable for any payments it may have made before receiving that notice. If no option is in effect at the insured's death, any Beneficiary may choose a Settlement Option. Unless this election is made irrevocable before the Proceeds ara placed under a Seltlement Option, the Payee may change the election at any time. - OPTIONS 1. INTEREST OPTION. Left on deposit with the Company with the interest payable at ndt less than 3% per year. The deposit period and withdrawal rights wil be as agreed atthe ime of the election. 2. INSTALLMENT OPTION, FIXED PERICO. Payable in equal installments for the number of Years elected (not more than 20). The amount of Gach payments shown in the Settlement Option Tables. Rights of commutation of unpaid installments will be as approved by the Company at the time of election. 3, LIFE INCOME OPTIONS. 10 or 20 YEARS CERTAIN. Payable in installments for certain Period elected, and continuing thereafter for the femaining lifetime of the perscn on whose life the Income depends, The amount of each installment is shown in the Settlement Option Tables. 4. INSTALLMENT OPTION, FIXED AMOUNT. Payable in installments until the proceeds applied, ogether with interest on the unpaid balance at the elfective rate of 3% per year, are exhausted. Amounts of installments and withcrawal fights wil bea ve Company at the time of : elaine Ye Compare pies taco J SETTLEMENT OPTIONS 8) ANNUITY OPTION. Annuity payments will be made during the lifetime of a payee; or jointly to {wo payees, one of whom must be the Insured, 1 during thelr Wetimes; and continuing to the survivor during his remaining lifetime, 6, Payments willbe made under any single premium ' immedato fle or jot and. Surivor annuity { eonlract 2s may be issued by the Company on * the date proceeds become payable, The amount ; of each annuity payment-will be 102% of the * payment the amount retained by the ' Company would otherwise purchase. The + Company's rates in use on such date will be used + as the basis for payment, ‘The amount payable under any option shall be the actuarial equivalent of the amount of Insurance Ploceads applied under that option, Under Options 3 and 8, proof satisfactory to the Company or) ‘ofthe date of birth and sex of the payees; and b) thet the payee fs alive may be required before payment is made. In the event of the death of a Payee under a ‘Setlement Option containing a period certain, any remaining proceeds shall be paid to the Beneficrary (or Beneficiaries designated by the Owner. If no Senefcaryhas been named or there are no survi carie dea. ‘The frst payment under Options 2, 3 and 4 will. be. due the date the proceeds are applied under ihe Setlement Option. If the proceeds are payable due to the Insured’s death, the first payment will be due on the data ct death, The frst payment under Options 4 and Swill be due one, thes, six, or twelve months thereafter, depending 'on the mode of payment selected. EXCESS INTEREST The interest payments under Option 1 and the guaranteed payments under Options 2, 3, or 4 are based on a quaranteed interest rate of 396 per year. The interest payments under Option 1 or the guaranteed payments under Options 2 and 3 may be increased by excess interest as declared by the Company. Excess interest will be used to extend the period under Option 4, PROTECTION OF PROCEEDS The proceeds of payments due of to become due under any option may aot be assigned by the Beneficiary. To the exient permitted by law, the Proceeds wil not be subject o the claims of creditors LNo. of Annual 1 $1,000.00 2 507.39 3 343.23 4 281.19 5 211.99 8 179;22 7 155.83 8 138.31 9 124.69 10 113.82 11 104.93 12 97.54 13 91.29 1488.95 15 81.33 16 7 18 19 20 OPTION 2 FIXED PERIOD PER $1,000 APPLIED Years Payment Payment SETTLEMENT OPTION TABLES MONTHLY PAYMENTS. FOR EACH $1,000 OF PROCEEDS :OPTION 3 OPTION & Lire INcoME LIFE INCOME PER $1,000 APPLIED PER $1,000 APPLIED i RANTEED faa orca PERIOD Monthly 10 ~ 20 Age Monthly Male Female Years Years Male “Female Payment $24.47 45 $2.99 $387 45° $4.02 42.86 46 405 "3.92 4824.09 28.98 47 AMT 997 47448 22.06 4a 417 402 432423 1731 49 (424 «407 49. 4.29. 1844+ 48 80 AE AI 48 50 437 13.16 46 00«S1 40847 48 O5t 445° 11.68 47 52 4S 42D 47 52453 1053 4a «53453428 48 “462 9.61 49 4 ABT 4.34 4900 4 4.71 8.88 go 85 470 439 sO 6S 4.81 824 si 8494.45 S166 4.94 771 52 57) 488450 52 «B70 726 5358497, 456 83 &B B42 6.87 5459 SOT 462 S492. 6.53 660 SB 468 8 608.87 623 sé 61 5.28473 56 G1” «G50 5.96 e7. 62889479 87 62° «5.63 5.73 5a 63 SST 484 58° gS: B78 551 ss 64 883.480 59. 4 |. B83 60°) 65 (57S 495 86s. | 3.05 sr | 6 = 5.88 5.00 6 66” 6.26 62 67 8.01 «8.05 e2 67 + Bag 6 6814 BAO 6 BG. et 69 2B Bd rd 65 70 642 5.19 6s 70 7.05 667157 528 6. 71 727 e772 BT 828 e771 73 530 6 737.76 533 69 74 = 8.03 5.268 wo 75 8.82 538 n 7 (8.62 5.40 Tm 77 B84 542 73 7809.28 5ag 7% 79 (984 545, 7S 80 10.03 587 7 881 10.44 548 7 8210.88 5.49 73 8314.34 549 79 8414.84 $50 20 085 12.97 at 12.93 82 13.54 ag 1.18 8s 14.87 8S 15,60aI TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES Attained Age Percentage Altalned Age Percentage ‘Through 40 250% 60 130 at 243, 61 128 42 238 62 126 43 229 63 i 124 44 22 64 122 45 215 65 120 46 209 66 119 47 203 e7 118 48 197 68 17 49 i 191 69 116 50 185 70 15 st 178 n 113 52 m7 72 WW 53 164 73 09 oi 54 157 74 107 55 160 f 78-80 105 56 148 at - 104 57 142 92 103, 58 138, 93 102 "59 14 94 103 96-97 00 TABLE OF SURRENDER CHARGE FACTORS Polley Year Of Surrender (Or Years Since Increase Factor 1.00 1.00 1.00 1.00 1.00 80 60 40 20 10 And After 0TABLE OF GUARANTEED MAXIMUM MALE INSURANCE RATES : PER $1,000 NON-SMOKER 7 ‘SMOKER MONTHLY OHTHLY MONTHLY Mol AGE RATE AGE RATE AGE - RATE AGE RATE 1 oases 43° ST 1 08884 48 rosea 2 108281 49 ea 2° 08251 49 "76559 3.8084 50 68 5 98084 50 ‘aaaoa 4 07751 st EB 4 7751 51 91168° | 5.07324 52 «51193 5 2 ‘e9sa3 6 06917 53 RES & 53 1.09871 7.06500 54 BaZa 7 54 1.20729 8.06250 . 55 BEAT a “85 -1192842 9.06167 so EST 9 . 58 1.44626 10 .06250 57 885 jo 2 sr 4.57581 11 08750 5351250 1 88. 1.71209 12 07687 59 10518 12 “58 1.85343 13° .08917 60 (10873 13 60 202158 - 14 10334 ei + 42400 14 61 220569 18411335 62 Eset 18 62 2.41931 16 12305 63 1gre7 18 63 2.84531 17 143085 e4 ASAT 7 64 = 2.89921 18110585 65 asrét 18 65: 3.16834 1913919 66 (206588 13 66 © 3.45020" 20 14002 67 «(ams 20 67 = 3.74229 j 2113895 63 (2857 a 68 4.04883 2243685 69 (27581 22 6s 498161 23 19252. 70 auns82 a. 70 474911 24 reste 71 | amr 24 Ti = 8.16208 25 12802 72 SRR2 25° 72 5.62985 ! 26 12252. 7a -Aisaa¢ 26 73 814841 7 27 - 42085 74° ABTOOA . 14 6.71732 28 12001 +75 = Brg003 2B 15 7.32878 a 12001 - 76 = amsts 29 76 7.94851 30 4208s Tr (Rae40 20 7° 357456 at 12335 78 §u612 at 738 9.20818 2 12668 79. 251607 32 73 9.87149 33 tgt6a “80 aS 33 80 10.58674 3 ia7s2 ai 801810 4 81 -1%.97459 3s 14419 82 SSID 35 82 © 12.24906 36 sts169 ga (ast2e0 36 83 13.18803 7 16163 84 1198040 a7 84 -14.18421 88 117283 as raid 38 85 15.18033 so 18420 a6 =| ead 59 86 16.16034 i 40 49897 ez wsgot 40 87 17.46810 41 21338 aa aN1O a 88 10.22020 42 (ze022 a9 97489 42 eg 18.74923 be 24873 so 1928974 43 so -20,92884 43 (26580 si masi2ss 4 gi 21.49307 45 28758 92 aig 45 92 © 22,71710 46 (31093 so MO69 48 93 -24,96868 473895 so INS 7 34 26.6292 35 anTt0 95 90,20740 ge sa25e03 96 26.3203, 97 azi80 97 47.21180 93 z0701 98 §6.20701 =| @ 77 7 L r TABLE OF GUARANTEED: MAXIMUM FEMALE INSURANCE RATES | PER $1,000 + 7 : 4 . NON-SMOKER . SMOKER : | MONTHLY MONTHLY MONTHLY Mol j AGE = RATE AGE RATE AGE. A AGE RATE 1 07000 4a 3427 1 reer dat + 49024 2 (06667 49 33678 2 49 152611 3.06800 50 © 35180 3 50 (56449 4 06417 51 38932 4 51 60537, § 06250 52 (Azi01 5 Et 52 65209 . 6 06000 53 (45604 6 i §3 .70383 7 605917 54 4si91 7 n 54 75641 * 8 ‘9834 55 52028 8 55 ‘81068 9.05750 56 S866 s 56°, ‘86408 10 .08750 57 50620 10 : 87°” 91417 i 05834 “58 S75 4 58 96343 12 06167 59 2630 22 38. 1.01603 | 13 .06500 60 3838 13 I 60 1.07866 { 14 06834 61 9814 14 . 61 1.45717. 18 losea7 62-7493 18 62 1.28825 16 07501 63 26927 16 3 1.38107 17 08167 64° 101532 7 64° 1.51813 18 08001 65 118975 18 65 1.66276 19 .08251 66 (130808 19 66 = 1.80984 } 20 08417 67 12954 20 67 1,95214 i 21 .0sse4 68155401 21 68 2.09605 | 22 69 188453 22 69- 2.25256 | 23 7o | (1845 23 70 © 2.43780 i 24 71 (208899 24 7.267212 | 2s 72 20063. 25 72 2.95857 ie 26 73 ‘259756 26° 73 3.30170 | 27 74 = 2610 27 74 = 3.69191 | 28 75 aa1428 23 78 411386.) 29 76 = 3mn82. 29 76 4.57248 i 30 7 30 7 8.04701 l at 78 3 78. 5.54895 a2 -79 32 73 6.09610 j 33 80 33 ao. 670972 t 4 at 34 81 (7.40696 35 82 35 82 8.20087 36 83 36 83 9.11907 ae 84 MISSES 37 84 10.11631 | 38 85 1028537 . @ 8s 4.17773 | i 86 1116+ 39 86 0 t2.29517 r i 87 1282819 40 a7 13.45788 i. as ga 108142 4 aa 1467218 | i. ag 1832721 42 sg 18:90752 bd so 1402248 a so 17.34402 | a 91 188265 44 91 ta.86254 i 92 2078063 48 92 _20.55222 | 46 93 Kees 48 so 2258368 47 Qa 47 93 © 25.22505 | 9s zs 95 -29,.24956, | $6 3572205 96 —35.72205 | 97 4898829 97 46.86829 1 nase ga 6800429 98 © 66.09429MACCABEES LIFE INSURANCE COMPANY 25800 Northwestern tgneay, 20. Bor 2168, Southnbld, Michigan 48037-2165 AMENDMENT ; Attached to and forming part of the Polic] as of its effective Date of Issue, ‘ ‘The Section of the policy entitled "NONFORFEITURE PROVISIONS” under "INTEREST RATE” is hereby amended by adding as the second paragraph the'following language: As of every fifth Policy Anniversary of the Date of Issue through the Twentleth Anniversary, an additional sum will be credited to the Accumulation Value. That additional sum shall be calculated by multiplying the percentage spetified for the anniversary in te table below by the total amount of excess interest, including previous fith-anniversary-credited sums, credited to the Accumulation Value from the Date of Issue, and then reducing that product by the total amount of all previous fifth-anniversary-credited sums. ! : Policy Anniversary __ Percentages bth 1 7.8% 40th 7 + 25.0% 48th 45.0% 20th 60.0% Beginning with the Monthly Deduction Day first following the Twentieth Annivers every Monthly Deduction Day thereafter, each interest rate used in the calculation of the Accumulation Value shell equal the declared interest rate 2s determined by the Company's Board of Directors plus half of the excess of that declared rate over the guaranteed minimum rate. Signed for the Company at its Home Office in Southfield, Michigan WAL 6. with Via Secrelary President“f GUARANTEED VALUES Y NUMBER 4089-849 A OUNT $100,000 ING TASSOS P NASSOS MD END OF ATTAINED POLICY AGE OF YEAR INSURED 51 52 53 54 55 uoouye 56 57 58 59 6a Seana 1 11 61 12 62 13 63 CASH OR LOAN VALUE 7s444.03 5 71269.02 * 7,036.26 6,735.25 6,356.04 6,397.95 * 6 4338.14 6,165.82 5,864.60 5,414.52 4,281.75 2,951.38 1,387.64 CONTINUATION OF -* INSURANCE PERTOD™, YEARS, 12 2L 19 UsaNAN oo orn TIS POLICY WILL LAPSE AT AGE 64, UNLESS A HIGHER PREMIUM Is PATO. E.€ PREMIUM TABLE LIFE vi-250 HON’ wapgon woduu U.RANTEED CASH VALUES ASSUME THAT THE GUARANTEED MAXIMUM INSURANCE ARE CHARGED, THAT NO, EXCESS INTEREST IS PAID, AND THAT NO CHANGE .IN #TCIFIED BENEFIT AMOUNT OR OPTION, NO CHANGE IN THE PLANNED PERIODIC LI-SHOWN ON THE SCHEDULE PAGE, AND NO PARTIAL SURRENDERS OR LOANS - ADE. t t-cver THS: wowCode 0877 Credit £20” pny DBs Miteet, Eve agent S22 ever %- Agent ~ Code, Credit % 4212 APPLICATION FOR INSURANCE 12 12 8 8 ann (& MACCABEES MUTUAL LIFE INSURANCE COMPA 4028265" 139051 1 posed Insured (Prini first name, aiid last name) TASSeS “P: Vasses Bb) lol3fole OO MACCABEES LIFE AND ANNUITY COMPANY «K See, See. No. econd Proposed Insured DSpoue O Payor Benefit soc. sec. NoLLI | I Slden WY Chiais Term ‘2eplied for) Complete Part It Full Name Birthdate Height Weight_ “TO. Owner—Proposed Insured) shall be owne\ unless otherwis ~ Relationship ial ‘ts Soc. Sec. or Tax No. esidence Address (Street and Number, Chy, State, Zip) 2 44 Wulecawag ewe vorta Been. 12. bobr Ree Eee eee eee eee eee Residence Address Other Proposed Insured O) Beneficiary G ¢. J Premium notices to: remium Payor: J Applicant QOther (Give nameftelstionship in Q. 25) * LiFe ONIY K id of Policy ‘3b. Amount Maseeurers VP _B jto.o00 « Prem, Adjust. Lile Oi Basic + Cash vale | aned Period’ Premium $10 850 Mode SW GLE an Additional Benefits Checked Belows: Losn No. of units insurability Beneht 5 Spouses Term ____No of units vonthly Disability Rider $. of Dividends? Gi Rad. Prem. Gilt at iateiest is J Cash C One-Year Term, balance to ] “aid up additions A mura Frequency Life Sat Uti, AT Masterilist Bil No. ‘Owners Designee _ Relationship Te eee 1 Boe Cuurctk, 0. GBB UIEO IC = Relationship 12, Life Insurance in Force on Proposed Insured. Company __Yr.ofssue Plan Amount - Acc. Death Yass, Ge tieel (63 TWL Thasxoco] 0. Hass.Geo Weel Ged Twtl a 3eab . Mass Gee Leet 1984 lw [ joo, vo 13, Will the Life Insurance applied lor. if issued, replace any existing insurance or annuities in this or any other com- any? Please circle policies to be replaced. {Yes ENO eee ee eer aes 14, Answer for both Life and Disability Income 222" XC 3. Has the Proposed Insured(s) in Question 1. smoked cigarettes at any time within the past 12 months? OG Yes No 5. Gees the Proposed inswed ue tcbacco in other (ims? es," describe) O Yes R NoBENLFITS APPLIED FOR Plan Pw rBendlivPe D tiletime Accdent +" Elimination Period. (or add'l policys) describe fully in #25) ADDITIONAL BENEFITS Z © Initial Addit Benefit s___ = COLA Future Increase Option 5 Cash Value —G Hospital tademnity $_—— DB Return of Premium Q sos s___ DRor O Requested Eifective Date: LOSS PAYEE: The Ownerls) shall another loss payee is shown, 7 What were your net eamings from your occupation or profession last year? (Gross income less business expenses) S. be the loss payee unless + What did you contribute to IRA, HR10, qualified pension or profit sharing plans? ts this included in 18a? Yes Ono s. See What was Vother income” last year from dividends, in- ferest. rents, royalties, estates and trusts, ete? (Circle & Addiess of fmplove, Goa BS 223, Name ay NZL) - Are you actively at work (Have you worked at least 30 he «per week dung he past 6 moni LIFE AND DISABILITY INCOME 23, Has the Proposed Insured) in Question 1; (Give details of "Yes" answves in Question 25).” Yes EE & 2 tenslalement of an application for life on health insurance pending or contemplated Inf - any company? '. any intention to travel Or reside United States or Canada? it ct ©. In the past two years flown as a pilot, students pilot or crew inember, or intend-to do so? (1h ¥es, complete attached Aviation Questionnaire) 4. engaged in underwater diving, hang gliding parachuting, auto, motorcycle or vehicle racy ing or is such activity contemplated? 7 (if "Yes, desczibe in #25) 6. hada divers license suspended or revoked or been’ om outside the : a a o ene sire items} s. 5 Convicted in he last 3 years ofa moving violation, {. What Is your approximate net worth? (Assets less 4 of criving while impaired or intoxlcaled? Give, liabilities). 7 ditess Nezase ney Goat 7 7 ; :_lnsurance in force, applied for or applying to reinstate. : Seats eed pe i Insurer Issue [Mo. | Elim. | Ben 1 | Type ‘iency Syndrome) or ever treated for, £ Resostate) | Date |nen.|periodpedga |?2¥" | TYP NDS? : bog i ae Fe Yioal Zo Teh aah WAS | her used Heroin, Morphine, Cocaine, LSD,, * & Marijuana or other narcotics except as prescribed i 7 t by a physician & ‘Will the disability policy applied for replace any existing f “E coverage. (If Yes, give details in Question 25.) OYes No 7 id with Applica ’ 5 & Does any of the above coverage coordinate with Social | 24. Amount paid with Application - oe _ Security? Yes, which Polieyis}t§ 2Oresklno | life s Annuity $. Health “s__§_ ‘Ave you covered under a state di scupational Duties—Fully Describe wistall imporant duties and percentage of time spenton each, Geusen Nie gro is understood and agreed that (1) he answers recorded in Pact Ill required uot this application and any contract for insurance issued see e ith habits and occupation of all proposed insureds aolicy issued shall consttare of the Con * plication made at Menten Sertily thst this application aceurately records the inlorma- as lied by the Applicant, viness Dreronses AG Icensed Resitent Agent” . alicantiOwner Fother than a4. are, to the best of my knowledge and belie/, saan ghall take effect until the policy is accepted by the Owner and the first ion of any change, corre’ 1 The Seguitess any change in amount. plan of insurance, classic ion, age at issue oF Sr ine Qesee (4) That no Agent has the authority to waive the answer toany question te Pass or NP2ny's tights or requirements of to make or alter any contract, 25, Remarks ao. ROCESS WITH” TEGE6 - Tt Part | above and Part II, bearing the same number, and any “ teue and complete and correctly recorded and will become Lupen it (2) Except as provided for in the attached Receipts), premium is paid to the Company and ~ remain as stated in the application: (3) Acceptance of any o* addition made by the Company. except in states beneli State e_ Date 12-1 __ 1982) 541 acknowledge seceipt of Outline of Coverage.” Proposed insured © S700 epee Spouse [to be insured) Second Proposed Insured a G wyACCABLES MUTUAL LIFE INSURANCE COMPANY : ; MACCABEES LIFEAND ANNUITY COMPANY’ +” PROPOHO INSURED “Paceos >= WASTOS- Dae anh ODO BE i Ja When did Proposed insureds we Continuation of Application to ‘onultaahy nat consult ah DETAILS OF YES ANSWERS (Identify question eumber and circle all agplicable item, Include diagnosis, dates, duration, and a= | names and addresses of all physicjans and 3. Has any parent, brother, or sinter ever had wwberculoss, diabetes concer rane | ™#Ceal facies), : : high blood presure, hea ducue, uidney diene, of menalithest! |G! 3. Frrstce Dewy Ace Ze AID 4. Have you within the past five yeast : 4 3. Been examined by or consulted a physidan or other pracitonert} °D | As Ago ver * se b Been under observation or testment in 2 ‘hospital, sanitarium or} | Fasieae Ree esveaner. institution? ft &_Hadans-ray,electocatdiogram, bload,urineorotherlaboratorytesst} aro | - 4 Prysicere, Feeder 5. Have you ever: at He 3 Received benefits of compensation for sickness or injury or hadlifeor|. shiabliy insurance ated up, mode, rejected, canceled or na] "| renewed? jo m 1B. Sought advice or reatment for or been arresiedlororbeenadditedto = the use of alcohol or drugs? oe] Had any disease ofthe ceproductive organs genital organs, breass,or any 2mputation or bodilydeformity hernia orrupture,hemorthotdsor varicose veins? 4. Been advised o have any diagnostic est, hospitalization or surgery which | Was nol comoleted? 6 Have you ever had or been treated lor: a. Any disease or disorder of he eyes, e215, nose,throat orthyroidghand? | b. Any deformity or disorder of the back,spi mutts bnesornsta © Chestpain, heart murmur high blood pressure, or anyother diseaseor disorder of the hea creaatory stem, bload,or bleed vexelst [0 OY] d. Peptic ulcer, indigestion, or any disease of the stomach, intestine, gall 5 bladder, liver, pancieas, spleen, or enlarged lymph Ceres : io & Tuberculosis, asthy sy, other disease of the chest or| ubercuoss, sah, pleurisy, of any 5 ad us, blood orsugarin urine urinarystone,orotherdisezsect e Pc ineys, bladder or prostate? : 7 io . 8 Severe headaches, fainting spells, dizziness, venigo, syncope, epilepsy, lysis: nervousness mental disorder, or any oer denser dso. of the brain oF nervous sysiem? i jo ey h. Rheumatic or other fever, syphilis, gout, anhritis, goiter, diabetes, : ‘ancer, tumor or disorder of the lymph nodest : i AIDS tAcquited Immune Deliciency Syndrome) ot infection with HIV (Human immunedeiciency Virus) or been told helshe had AIDSt dy of 7 Any surgical operation, weatment, ot any illness, ailment, abnormality, i or injury nt rmenioned sbove win hep five Yen wali rime. srebame] 7. Are you now uncer treatment or taking any prescition dss? ss ‘Nf vou pregnant? al “Yes,” give date child is evsee 9. Ate you aware ot any other medical inioimation no tited shoved 3 U hereby declare that a gpd statements and answets to she above questions ace complete and true 19 the best of my knowledge and belief and! agree that he lnynapacte nh ‘hive! orion shall orm a pan, detignated s Pa ill fe sppleaion for iasuranee. | authori he the examining physi i ishe“@y \tutual Life Insurance Company or the Maccahiees Life And Annuity Company any medica egearning ay ie ihe acess tal Ue 9 ity Company any wines ZL Lollvman x Beet 7S © tapiinidy Physictan 7 ‘Signature ol person gs=mined or applicantif child under age on (0 Atteantee~ G9" FLeKIeLe PREMIUM ADJUSTABLE LIFE INSURANCE POLICY VII ‘Adjustable Benefit Amount Flexible Premium Payments Insurance Proceeds Payable At Death Before The Maturity Date : Surrender Value Payable On The Maturity Date : Non-Participating Schedule or Benefits And Premiums Appears On Page 3 -FPAL-7 Al cee : ‘coyeee Royal Maccabees Life Insurance Company will pay the Insurance Proceeds to" the Beneficiary if the Insured dies while this Policy s in force. The Surender Value of this Policy will be paid to the Polley Owner if the Insured is living on the Maturity Date. All of the rights and benefits of this Policy may be exercised by the Owner. ‘This Policy is a legal contract between the Policy Qwner and the Company ... READ YOUR POLICY CAREFULLY, This Policy is issued in consideration of the attached Royal Maccabees Life Insurance Company 25800 Northwestern Highway Southifeld, Michigan 48075 A Stack Company application and the advance payment of premiums ‘shown on the Schedule Page, ‘TEN DAY RIGHT TO EXAMINE POLICY Uf, for any reason, this Policy is not satisfactory, it may be retumed within ten days after receipt by delivering it to any agent of the Company or mailing it to the ‘Home Office of the Company. Immediately upon such delivery or mailing, this Policy will be deemed void . ; from the beginning. All premiums paid wil be refunded * fo the Owner within ten days of the policy return. Signed for the Company at its Home Office in Southfield, Michigan WAL &. wrk Secretary V fan. President FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY Vil ‘Adjustable Benefit Amount Flexible Premlum Payments, ce eds Payable At Death Before The Maturity Date eran proc der Value Payable On The Maturity Date Nor-Participating : Schedule Of Benetits And Premiums Appears On Page 3. MM-EPAL-7 RY DPLICaTS‘TABLE OF CONTENTS seers L2 (FPALT) ANNUAL REPORT .. ; ASSIGNMENT . seeseereeeeedgeevee LG (PALTZ) BENEFICIARY oe ee) DEFINITIONS .. Hee MM-OEF (FPAL-7) NON-PARTICIPATION + U3 (FPAL7) AI ‘ GENERAL PROVISIONS ... = LO FPALT) GRACE PERIOD ......0..600+ -"L4 (FPAL) INSURANCE PROCEEDS sivtess Let (FPALT) LOAN PROVISIONS . + G7 (FPAL7) NONFORFEITURE PROVISIONS ” + LS (FPAL7) OWNERSHIP ........ + LS (FPAL7) PREMIUMS .. L4 (FPALZ) REINSTATEMENT, La (FAL) SETTLEMENT OPTIONS - L9 (FPAL7) M-FPAL-7-TC R1SCHEDULE OF BENEFITS AND INITIAL MONTHLY EXPENSE CHARGES ENEFIT INITIAL DATE TO“WHICH INITIAL 2 SPECIFIED COVERAGE IS MONTHLY =; * BENEFIT PROVIDED EXPENSE AMOUNT : CHARGE | EXIBLE PREMIUM Hae $3,300,000% MAY 9, 2035 $648.45 DJUSTABLE LIFE vir-250 * 5 : vee : MTHIS AMOUNT DOES INCLUDE THE ACCUMULATION’ VALU adIMUM ADMINISTRATIVE CHARGE: $5.00 HAXIMUH PREMIUM LOAD: 5.00%. AXIMUM SURRENDER CHARGE: «$84,348.00 | WITHDRAWAL CHARGE: ‘- $25.00 ( ERAGE CONTINUATION COMPONENT: $1,501.41 : ‘ QTE: THE TERMINATION DATE IS THAT ELECTED BY THE. OWNER. IT Is POSSIBLE THAT COVERAGE WILL CEASE PRIOR TO THE HATURITY SHOWN IF SUBSEQUENT PREMIUHS AND INTEREST CREDITED ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH A DATE. ILICY NUMBER: 4989-759 + DATE OF ISSUE: MAY 9, 1989 i-JRED: TASSGS P NASSOS HD : MATURITY DATE: HAY 9, 2035~ + MALE ISSUE AGE: 50 !ATUM CLASS: STANDARD-NONSMOKER MONTHLY DEDUCTION DAY IS: THE 9TH DAY OF EACH MONTH “TAL PREMIUM: $288,119.54 FLANNED PERIODIC PREMIUM: = 3.01 CANNUAL) OT suRReNDER YOUR POLICY OR ALLOW IT TO LAPSE FOR ANY REASON WITHOUT NSULTING THE COMPANY. IN CASE OF ANY QUESTION ABOUT THIS Poltcy. coyracT“INCREASING OPTION—The Spe SL INSURANCE PROCEEDS PROCEEDS PAYABLE This Policy shall terminate upon the Insured, the ‘Company ‘il pay the Insurance Proceeds subject to the provisions ofthis Pty tothe Beneficiary upon receipt of due proof of the insureds death. The Company will require surrender of this Policy as a condition of payment. H The Insurance Proceeds payable depend on the Specitied Beneiit Amount Option in effect atthe date of death, ‘Two Specified Benefit Amount Options are available under this Policy: ‘ LEVEL OPTION—The Specified Benefit Amount as shown on the Schedule Page includes the’ ‘Accumulation Value. Under this option, the Insurance Proceeds at the Insured's date of death shall equal the greater of: 1) the Specified Benefit Amount on’the date of death; or 2) the Accumulation Value oni the date of death multiplied by the percentage shown in the Table ‘of Minimum Death Benefit Percentages for the Insured's attained age: Benelit ‘Amount as shown on the Schedule Pages inadsiion to the Accumulation Value. Under this option, the Insurance Proceeds at the Insured's date of death shail equal the greater of: : 1)" The Specified Benefit Amount on the dale of death, plus the Accumulation Value on the date of death; or "2) the Accumulation Value on’ tHe dete of death multiplied by tha percentage shown in the Table of Minimum Death Benefit Percentages for the Insured's attained age, Any increases or decreases made to the Specified Benefit Amount may change the Insurance Proceeds Payable. Any loan, Withdrawal, or Partial Surender Of this Policy will be subtracted from the Insurance Proceeds. If the Insured is living on the Maturity Date and this Policy is in force, this Policy shall terminate and the Company shail pay the Surrender Value fo the Owner. The Maturity Date is shown on the Schedule Pace. tis possible that coverage will terminate pricr o the Maturity Date if premiums paid following payment of the Initial Premium are insufficient to continue coverage {to such date, It is also possible that coverage will terminate prior to the Maturiy Date ‘shown if the Company changes the interest rate or the Monthly Cost of Insurance Rates. (CHANGES IN SPECIFIED BENEFIT AMCUNT CPTICN The Schedule Page shows the opticn alectad in the, tho Owner as alowed by the Company, {tthe Increasing Option is In effect and the Owner changes to the Level Opticn, the Specitfed Benefit Amount subsequent fo this change will equal the total of tha Specified Benefit Amount prior to tha change plus the Accumulation Value, Thereafter, the Specified Benefit Amount will Include the ‘Accumulatlon Value. if the Level Option is in effect ‘and the Oumer changes tothe Increasing Option, the Specified Benefit Amount subsequent to this change ‘will equal the Specified Benefit Amount Prior to the - change less the Accumulation Value, Thereatter, the Specified Benefit Amount will not include’ the ‘Accumulation Value. CHANGES IN SPECIFIED BENEFIT AMOUNT The Specified Benefit Amount of this Folley may be increased or decreased upon written request by the ‘Owner subject to the following conditions: 1) Any decrease will become effective on the Monthly Deduction Day that falls on or next follows the date the request is received by the Company. Such decrease will reduce the ‘Specified Benefit Amount in the following order: 4) Itwilldectease the insurance provided by the ‘most recent increases successively; then * b) itwil decrease the Initial Specified Benefit Amount. 2) The Specified Benefit Amount may not be decreased to an amount less than $250,000, 3) The Specified ‘Benefit’ Amount’ may not be ~ changed by an amount less than $10,000. 4) Any request for an increasa must be applied for ‘on asupplemental appication, Such increase will ‘be subject fo evidenca of insurability salistactory to tha Company, Any increase will be subject to the sulfciency of the Accumulation Value, less any indebtedness, to cover the next Monthly Expense Charge.’ Any increase will become effective on the effective date shawn on the Specification Endorsement. 5) The Specified Benefit Amount may not be increased if thera has been a prior decrease. APPLICATION FOR ADDITIONAL INSURANCE ditional insurance on the life of the Insured’s spouse of child may be applied for by supplemental application, Approval ofthe additional insurance shall tte subject fo evidence of insurability satisfactory to the Company. Additional insurance shall also be subject tothe sufficiency of the Accumulation Value, less any indebtedness, to cover the next Monthly Exgensa Charge, Such now insurance will be provided by rider ard will become atfective on the (fectiva date shown on the Specilication original application, The option may be changed by xy ) Encersement,DEFINITIONS Whenever used in the Policy, the following words mean: ACCUMULATION VALUE The amount of money that is credited with interest to the Policy on a monthly basis. BENEFICIARY The person named in writing by the Owner to receive the Insurance Proceeds in the event of the Insured’s death. CASH VALUE i ‘The amount of Accumulation Value of this Policy less any Surrender Charges. COMPANY The Royal Maccabees Life Insurance Company. DATE OF ISSUE ‘The date shown on the Schedule Page from which policy years, months and anniversaries shail be determined. HOME OFFICE OF THE COMPANY 25800 Northwestern Highway, P.O, Box 2165, Southfield, Michigan 48037-2165 INDESTEDNESS ‘The Sum of any unpaid policy loans and any unpaid policy loan interest, INITIAL PREMIUM The amount due at the Date of Issue shown on the Schedule Page and payable in advance. INSURANCE PROCEEDS The total amount the Company will pay upon the Ceath of the Insured. INSURED The person named on the Schedule Page whose life this Pcticy insures, LOAN VALUE The amount that can be borrowed under the Policy MATURITY DATE, ‘Tha dato specified as such cn the Schedule Pago, which the Surrender Value will becom 2 ifthe insured ving. ean MONTHLY DEDUCTION DAY ‘The day of each month shown on the Schedule Page ‘when the Accumulation Value of the Policy Is calculated and the Monthly’ Expense Charge Is * deducted. The first Monthly Deduction D: pee ete eee aero MONTHLY EXPENSE CHARGE The oe anaeet Geducted each month for the average provided under the Polcy and any adeitional Benes provided by tdens Oo! 06a any ac OWNER . ‘The person to whom this Policy belongs. PARTIAL SURRENDER 7 Anamount available in cash at any time upon request equal to 50% or more of the Suitender value. PLANNED PERIODIC PREMIUM PAYMENT. ‘The amount of regular premium payment elected by the Insured. This amount and the frequency of ~ payment are shown on the Schedule Page. The ‘Owner may change the amount and frequency of the Planned Periodic Premium Payment at any time subject to the policy provisions, Any change in quency and amount will be reflected in the Annual. freq Repott provided by the Company. SPECIFIED BENEFIT AMOUNT The nal amount of coverage shown on the Schedule Page. This Amount may be changed by the Owner at any time subject to the policy provisions. Any change in the Spactfied Bonafit Amount will be relleciad in a Specification Endorsement. ; SURRENDER CHARGE ‘The amount deducted by the Company from the Accumulation Value if the Policy is surrendered. SURRENDER VALUE ‘The amount of Cash Value, plus the cash value of any paid up dividend additions, tess any indebtedness. available in cash or an Opticnal Method of Settlement ‘upon the termination or maturity of this Policy. WITHDRAWAL © ‘An amount available in cash at any time upon request which is lass than 50% of the Surrender Value.THE CONTRACT This Policy, the attached application for this Policy, any attached riders, any supplemental applicaons for increases in the Speciffad Benefit Amount, and any Specification Endorsements make up the entire contract between the pariles. ‘This Policy shall take effect upon delivery, provided the Initial Premium has been paid, the Insured is living, and there has been no material change in the health of the Insured as shown in the application. absence of fraud, deemed representations and not warranties, No statement made by the Insured or on his behalf will be used in defense of a claim under this Policy unless itis made in a writen application and a copy of the application containing that statement is attached to the Policy when issued. Policy yeats, policy months, and policy anniversaries ate measured from the Data of Issue of the Policy. Attained age means age last birthday on the prior policy anniversary. an Any change or waiver of any provision of this Policy rnust be in wring ard signed by an offest ofthe Company. SUICIDE If the Insured dies by Suicide while sane or insane, within two years from the Date of Issue, the Insurance Proceeds will not be paid. The amount payable will bbe the total of premiums paid less any indebledness €n this Policy, and less any Withdrawal and Partial Surrender amounts paid. A now two-year period will #pBY I any increase nto Speciid Ban Avount ‘beginning on the data of each increase. Tha amount payable under this provision attributable to a policy increase will be the Costs of Insurance for that increase if death by suicide, while sane or insane, occurs during the first two years following the increase, ‘The amount payable under this provision willte paid to the Beneficiary. INCONTESTABILITY Aiter this Policy has been in force curing the Insured’s lifetime for two years from the Dale of Issue, the Company loses the right to contest a claim based on statements made in the application. All statements made in the application are, in the , GENERAL PROVISIONS ‘After this Policy has been in force during the Insured's Metime for two years from the date on which the ‘Specified Benefit Amounts increased, the Company {oses tha right to contest a claim which Involves the, Increase in Specified Benefit Amount, ‘This provision does not apply to any Disability Benefit or Aasdenal Bent stteted ta this Paley, MISSTATEMENT OF AGE OR SEX It the Insurad’s age or sex has been misstated, the proceeds payable upon death willbe: 1) the Accumulation Value on the date of death: plus 2) thatamount of insurance which would have been purchased by the most recent Cost of Insurance deduction had the correct Cost of Insurance Rate been used. ANNUAL REPORT Atleast once each year the Company will send the ‘Owner an Annual Report which shows: 4) The current Accumulation Value; 2} The curent Surender Valuo; 3) The amount of any outstanding policy loan; 4) Proniums paid sinca the last Report; 5) Expense Charges since the last Report; 8) The Specified Beneft Amount; 7) Interast credited since the last Report; and 8) Any Partial Surrenders of Withdrawals since the fast report. ILLUSTRATIVE REPORT ‘The Company will provide an illustrative report of picjected fuura Insurance Proceeds and Cash Values ‘which wil ba sent to tha Cwner upon request. The Company may charge a reasonable faa for providing such a Report. OBENEFICIARY The Insurance Procesds will be paid tothe Beneficiary {fast named in writing by the Owner. Two or more Seneficiaries will racsive equal shares of the proceeds unless a different allocation is specified. A Beneficiary ‘must survive tha Insured, Otherwise, his shar wil b Pald to the surviving Beneficiary of Beneficiaries in equal shares. If no Beneficiary has been named or thera are no surviving Beneficiaries, the Insurance Proceeds will be paid to the Owner, if living; otherwise to the Owner's estate. CHANGE OF BENEFICIARY The Owner may change any Beneficiary at any time while the Insured is ving, Menten nles olehenge must be sent to the Company at its Home Office. The change will take effect on the day it was sig subject to any action taken by the Company prior the recording of the change at the Home Office. OWNERSHIP * ‘This Policy belongs to the Owner, If the Owner dies, this Policy belongs ta the Gwner's designee, or the Owner's estate if no Owner's designee has been named, CONTROL OF POLICY CHANGE OF OWNERSHIP ‘The Owner may name a now Owner by written notice maied o the Company. Tha change will take effect ‘on the dayit was slgned, subject to any action taken by the Company prior fo the recording of the change: at the Home Cfffee, ASSIGNMENT This Policy may be assigned by tha Owrier as colatera. Any assignment must be in wilting and a signed copy sent fo the Company at its Home Office: ‘The righis of the Owner and the interest of any Beneficiary will be subject to the rights of any assignes f record as specified in the assignment. The Company is not subject to the rights of any assignee of record, The Company ts not responsible for the validity or effect of any assignment. NON-PARTICIPATION Royal Maccabees Life Insurance Companyis@ stock company. This Policy shall not participate in the divisible Surplus of the Company, 7PAYMENT {The Initial Premium is due on the Date of Issue and 4s payable in advance, Subsequent premiums aro payable in advance of the period to which they apply. No benefit will be provided on the basis of any Promium until that premium has been pald. The ‘mounts and frequency of Planned Perladie Premium Payments are shown on the Schedule Page. Premiums must be paid to the Company at its Home Office. Upon request, a receipt signed by the President or Secretary of the Company will be furnished for any premium payment. ‘Changes in frequency and increases or decreases in the amount of Planned Periodic Premium Payments may be made by the Owner. The Planned Periodic Premium cannot be changed to an amount less than ‘$50.00. Premium payment notices will be sent to Ihe ‘Owner upon written request, The notices may be sent ‘annually, semi-annually, or quarterly. Under the spectal payment facility, Planned Petiadio Premium Payments of $25.00 or more may be made ‘on a monthly basis, Additional premium payments may be made at any {ime during the continuance of this Policy.~ ‘The Company reserves the right to refuse to accept ‘any premiums which would disqualify this Policy from favorable ax treatment as ie insurance under federal law. If premiums paid during year excec tho federal lite incuranco, ‘artia chidelines, tha Company will, return the excess premiums with interest of at least 4% within sixty days after the end of tha policy year, GRACE PERIOD Except as provided below, this Policy will enter the Grace Period if the Surrender Value on the Monthly Geduction Day is insufficient to cover the Monthly Expensa Charge. (The Accumulation Value, Surrender Valua, and Monthly Expense Charga are described in the Nonforfeiture Provisions.) The above nctwithstanding, prior to the ninth policy anniversary, this Policy will enter the Grace Period if: ‘The Accumulation Vajue less indebtedness on the Monthly Deduction Day is less than the Monthly Expense Charge; orit The Surrender Value on the Monthly Deduction Day's less than the Monthly Expense Charge: an ‘The sum of the premiums paid since the Date of Issue, less any loans, Wilhdrawals or Partial Surrenders, is less than the Coverage Continuation Requirement as of the Monthly Deduction Day. PREMIUMS ‘Asof each Monthly Deductlon Day during the frst nine polley years, the Coverage Continuation Requirement Shall bo the sum of the _carerage Continuation Components applicable to each polley month from the Dato of Issue. i ‘The Benefit Amount, or any adeton of, or increase in, any ‘der, Tha Coverage Continuation Component in etfect as of any Monthly Deduction Day will apply to the policy month next following. The Company will notity tha Owner of any change In the Coverage Contiauatfon Component. A Grace Period of sixty-one days will be allowed for tha payment of premiums sufficient to cover any past ue Monty Expenea Charges and appteabia foan eres to the last know address of the Owner and any assignes of record at least thiry days before the ‘Grace Period ends. f such premium is not paid within the Grace Petiod, all coverage will terminate without vvaluo at the end of the Grace Period, if a claim by ~ death during the Grace Period becomes payable - under the Policy, any overdue Monthly Expenso Charge. will be deducted from the Insurance Proceeds, 7 ae REINSTATEMENT If this Polcy terminates as provided in the Grace Period provision, the Owner may apply for reinstatement. The application must ba received by tho Company at its Home Ofce within five years of the date of termination, but before the Maturity Date, * and must include: 1) evidence of insurabilily of the Insured satisfactory to the Company; 2) payment of a premium suificient to prevent this Policy from entering a Grace Period for at least twee months after the date of reinstalement; 3) payment or reinstatement of any policy loan; and 4) payment of interest on the reinstated loan from the dala of reinstatement io the end of the policy year Reinstatement will not ba etfective until the date the apalication is approved by the Company. The Inconlestability provision with respect to the ‘reinstatement application and the Suicide provision il apply Irom the elfective date of reinstatement. notice of such premium willbe mailed * irACCUMULATION VALUE ‘The Accumulation Value on the Date of Issue shall be at least 97 percent of premiums pald on or before the Date of Issue, less the Monthly Expense Charge {or the first month. On each Monthly Deduction Day the Accumulation Value shall be calculated as (2), plus (®) plus (c), minus the sum of (d) plus (e) where: (a) is the Accumulation Value on the preceding Monthly Deduction Day; (b) is one month's interest on (a); z (©) Is 97 percent or mora of all premiums received sinca the preceding Monthly Deduction Day; (@) is the amount of any Partial Surrender, Partial Surrender Charge, Withdrawal and Withdrawal {fee since the preceding Monthly Deduction Day; (©) Is the Monthy Expense Charge for the month following the Monthly Deduction Day. ‘On any day other than a Monthly Deduction Day, the Accumulation Vaiue shall be calculated as (f) plus (¢) minus (h), where: (Is the Accumulation Value as of the preceding Monthly Deduction Day; é (9) Is 97 percent or more of all premiums received since the preceding Monthly Deduction Day; (h) fs the amount of any Partial Surrender, Partial Surrender Charge, Withdrawal or Withdrawal fee since the preceding Monthly Deduction Day. MONTHLY EXPENSE CHARGE ‘The Monthly Experise Charge shall be caleulated as @ plus Q), where: : @ isthe Cost of Insurance (as described below) plus the cost of additional benefits provided by rider; © Is tha Administrative Charge. ‘The Administrative Charge shall not exceed, bul may be fess than, the Maximum Administrative Charge shown on the Schedule Page. INTEREST RATE The interest rate used in the calculation of the Accumulation Value is guaranteed to be a minimum of 32797 percent per month, compounded monthly, which is equal to 4 percent per year compounded annuaily. Interest in excess of the guaranteed minimum rate may be credited as determined by the Company's Board of Directors. Interest crecited on the portion of the Accumulation Value that is loaned will at no time be less than the guaranteed minimum interest rate, NONFORFEITURE PROVISIONS COST OF INSURANCE ‘The Cost of Insurance Is determined on a monthly basis. The Cost of Insurance is determined separatel {orth laital Specfed Benefit Amount and for each Increase In Specified Benefit Amount, . “The Cost of Insurance s calculated as (a), multiptied by the result of (2) iminus (¢), where: {@) {the Cost of nsurancs Rate as described in the Cost of Insurance Rates sectlon; (©) [bibs Insurance Proceeds at the beginning of the * policy month divided by 1.0032737; : (6) sth Accumulation Value at the beginning of the policy month. Ifthe Accumulation Value is included in the Specified Benefit Amount and there have been increases In the Insuranca Procaeds, then the Accumulation Value ‘shall bo first considered a part of the Initfal Specified * Benefit Amount. if the Accumulation Value exceeds the inital Specified Benefit Amount, it shall then ba considered a part of additional Specified Benofit - Amounis resulting from increases in the order of the increases. Any deduction for the Cost of Insuranca during the (Grace Petiod shall notbe considered a waiver by the ‘Company of the terms of the Graca Period provjsion. Any such ‘charge “shall be deducted’ from .the ‘Accumulation Value as of the date of the char; COST OF INSURANCE RATES : ‘The monthly Cost of insurance Rafe Is based on the sex, afained ago, and rating class of the person insured. Monthly Cost of Insurance Rates will be determined by the Company from time to time based on ts expectations as to future mortality experience. Howaver, the Cost of Insurance Rates will not be greater han thosa shown in the Table of Guaranteéd Maximum Insurance Rates or as the-same are amended by the rating factor, if any, shown on the ‘Schedulo Page. Any change in the Cost of Insurance Fates will be on a uniform basis for inst °° a ‘The Owner will be notified of the initial interest rate at the time the loan request is made. The Company will also nol the Owner of any change in the interest rate applicable to-an outstanding policy loan, No Policy wil terminate in a policy year as the sole result ‘of achangein tha interest rate during that policy year. . Insurance will remain in force until the time it would have othemwise terminated had the interest rate nat been changed. : Interest not paid when due is added to the loan and bears interest at the same rate as the loan. ‘The Adjustable Loan Interest Rate will be determined as of the fst day of each January, Apri, July, and October, and will be determined by comparing the ‘Adjustable Loan Interest Rate in elfect for the preceding three months with a maximum interest rate defined by law and described below. Any change in the Adjustable Loan Interest Rate will be subject to the following: 15AVAILABILITY ‘The Insuranca Proceeds of this Hers pits be paid in one sum unless a jent option loses partal the insurance Proceeds may be applied under one of the following options, However, the amount to be applied must be at least $3,500.00. The amount must also provide a periodic payment of at least $20.00 fo each payee. If the payee is not a natural person, the proceeds may not be placed under a Settlement Option without the consent of the Company. ELECTION ‘The Owner may elect a Settlement Option of change & prior election at any time while the Insured isliving. ‘The election must be recorded by the Company at its Home Office before itis effective. The Company shall not be liable for any payments it may have made before receiving that notice. If no option is in effect at the Insured’s death, any Beneficiary may cheose a Settlement Option. . Unless this election ts made irrevocable before the proceeds are ptaced under a Settlement Option, tha Payee may change the election at any time. OPTIONS. 1. INTEREST OPTION, Left on deposit with the Company with the interest payable at not less .then 3% per year. The deposit period and ‘withdrawal rights wil be as agreed at the time of the election. 2. INSTALLMENT OPTION, FIXED PERIOD. Payable in equal installments for the number of years elected (not moro than 20), The amount of each payment is shown in the Settlement Option Tables. Rights of commutation of unpaid installments will be as approved by the Company at the time of election, 3. LIFE INCOME OPTIONS, 10 or 20 YEARS CERTAIN, Payable in installments for certain fod elected, and continuing thereafter for the lifetime of the person on whose life the me depends. The amount of each installment is shown in the Seltlement Option Tables. 4. INSTALLMENT OPTION, FIXED AMOUNT. Payable in installments until the proceeds applied, tegether with interest on the unpaid balance at the elfective rate of 3% per year, aro exhausted. Amounts of installments and withdrawal rights will be as approved by the Company a he jime of election. SETTLEMENT OPTIONS 8. ANNUITY OPTION, Annuity payments: will be made during the lifetime of a Payee; or Jointly to wo payees, one of whom must be the Insured, during their lifetimes; and continuing to the suivivor during his temalning lifetime, 8, Payments willbe mado under any single premium Immediate ‘fe’ or Joint and Surver annuigy contract as may be Issued by the Company on the data proceeds become payable, Tha amount of each annuity payment will be 102% of the payment which the amount retained by- the ‘Company would otherwisa purchase. The Company's rates in use on such date will bo used as the badls for payment, ‘The amount payable under any option shall be the actuafal equivalent of tho amount of Insurance Proceeds applied under that option. Under Options 3 and 5, proof satisfactory to the ‘Company a ofthe date of bith and sex of the payees; and b) that the payee Is alive may be required before payment is made. In the event of the death of a Payee under a Settlement Option containing a pericd certain, any remainicg proceeds shall be paid to the Beneficiary or Beneficiaries designated by the Owner. If no Beneficiary has been named or there are no surviving Beneficiaries, the proceeds will be paid to the Payee’s designated Beneficiery or the Payee's estate. PAYMENT ‘The first payment under Options 2, 3 and 4 will be due the date the proceeds are applied under the Settlement Option. If tho proceeds are payable due to the Insured’s death, tha first payment will be due con tha dale of death. The frst payment under Options 1 and 5 will be due one, thre, six, or twelve months thereafter, depending on tha mods of payment selected. EXCESS INTEREST The interest payments under Option 1 and the guaranteed payments under Options 2, 3, or 4 are based on a quarsnteed interest rate of 3% per year. The interest payments under Gption 1 or the guaranteed payments under Options 2 and 3 may be increased by excess interest as declared by the ‘Company. Excess interest will be used to extend the period under Option 4, : PROTECTION OF PROCEEDS The proceeds of payments due or to tecome due under any option may not be assigned by the Beneficiary. To the extent cermitted by law, the proceeds will notte subject to ihe claims of creditors of the Beneliciary of the Insured.if POLICY LOAN PROVISIONS (Continued) a. The Adjustable Loan Interest Rate willbe lowered to be equal to or tess than the legal maximum interest rate if such legal maximum rate is 5% ‘or mote lower than the Adjusted Loan Interest Rate for the preceding three months. 6, The Adjustable Loan Interest Rata may be increased by at least 59 but not higher than the legal maximum interest rate, f he legal maximum interest rate Is .5% of more higher than the Adjustable Loan Interest Rate for the preceding three months, Tha Adjustable Loan Inierest Rate willnot exceed the greater of: i (1) The Published Monthly Average for the calendar month ending two months before the dale on which the rate Is determined; or (2) The interest rate used to compute the ‘Accumulation Value under the Policy during the applicable periad plus 196 per year. ‘The Published Monthly Average is Mocdy's Corporate Bond Yield Average-Monthiy Average Corporate a8 published by Moody's Investors Service, Inc., or any successor toi. In the event that Moody's Corporat Bond Yield Average-Monthly Average Corporate is no. longer published, the Published Monthly Average will be a substantially similar average established by regulations issued by the insurance Commissioner of the stato in which. this Policy was purchased. REPAYMENT AND TERMINATION Policy loans, including accrued interest, may be repaid in whole or part at any ime prior to termination of this Policy. A loan outstanding at thé end of the Grace Period may not be repald until this Policy is reinstated. All funds received by the Company under this Policy will be credited as premium payment unless clearly marked for loan repayment. ‘Whenever the policy loan plus accrued interest equals or exceeds the Cash Value of this Policy,’ written notification wil be sent fo the last known address. of the Owner and assignes, if afy. This Policy will terminate sixty-one days after the dale of mailing the notifcatton. fi 4OPTION 5 | LIFE INCOME PER $1,000 APPLIED NO GUARANTEED PERIOD - Age -" . Monthl; « Male Femate Payment 45 $4.02 48 “4.09 av 415 43. «423 + 49 4.29 458° 50° 487 48 381 47 ‘52. 4853 49 4 50 - 55 S156. 52 7 53 58 54 59 5560 58 Gt 57 “82, seg 69 a4 6 65 sts e287 6 6a 64° 9. 6s 70 66 7 ey 72 68 73 69 74s 7: 7 7 76 vate, 73 78 “a 79 re 20 76 a 7 82 73 83 79 84 so as 81 62 83 SETTLEMENT OPTION TABLES MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS OPTION 2 OPTION 3 FIXED PERIOD LIFE INCOME 7 PER $1,000 APPLIED PER $7,000 APPLIED Age Guaranteed N Péfied lo. of Annual Monthi 7 1020 Years Payment Payment Male Female Years Years 1 $1,000.00 45 ($389 $3.87 2 "oras ee86 48 405 “a92 3 343.23 28,99 a7 ait 397 4 261.19 22.06 48 417 4.02 S 21199 17.91 - "49-424 407 6 179.22 15.14 45 «80 4814.12 7 185.83 13.16 4600 St 4887 8 138.31 11.68 47-52. AAS 2D S$ 12463 1053 43 53 453° 428 10° 113.82 9.61 49 «54 BLA 11 104.9386 60-55 470-439 12 97.54 = 824 St 5649 4.45 130 9129771 52 57) 4884.50 14 85.95 7.26 53 58 497” 456 15 81.33.87 5459507 4.62 16 67.29 «653 85 60 5184.68 7 7374 623 SB 61 5.2873 18 70.59 5.96 57 62 «839479 19 67.78 573 58 63 BST 4.84 200 85.28 5.51 5964 4s0 6 65 435 si. 66 500 s2 & - 505 6368 510 64-69 514 6s 70 + B19 6671 523 67. 72 528 sa 73 530 6974 533 70 | 78 536 n 76 538 m 7 840 73 | (78 542 4% 78 B44 75 © 80 545 7 8t 847 7 8 548 7a 83 549 79 at . 549 80 550 at 82 83 at 85TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES Aitained Age ‘Through 40 ai Percentage 250% 243 236 187 150 148 142 188 134 ét Attained Age Percentage 130° 128 126 124 122, 120 19 118 7 16 115 113 tit 108 107 + 105 104 103 102 101 100 TABLE OF SURRENDER CHARGE FACTORS Polley Year Of Surrender Or Years Since Increase warannors 10 And After Y =TABLE OF GUARANTEED MAXIMUM MALE INSURANCE RATES PER $1,000 NON-SMOKER ‘SMOKER - MONTHLY MONTHLY MONTHLY Mo! AGE RATE AGE RATE AGE RATE AGE RATE 1 oased 48 36047 1 08584 48 7031 2 ‘8251 4938048 2 “oest 4a esse 3 ‘oao84 50 A218 3 oa84 50 Ja3403 4 07751 - 53 148688 4 STB 51 ‘1168, 5S 07884 521183 ee cc) 52° ..gg933 6 06917 53 “BBQ6S 6 .n6st7 83 4.09871 7 .06500 54 B2t22 7 06500 541120729 8 . .06250 55 “88547 8 06250 5 1130342 9.06167 58 TEST 9 96167 _ 58 1.44628 10° .06250 57 + 92985, 1006250 's7 1.57sa1 ast 08750 58 ‘s1250° 1 06750 58 (1.71209 12 .07667 59 1.00518 1207667 59 1.85343, 13 08917 60 (1.49873 13 60 2.02158 14 toas4 61 1.22400 14 61 2.20869 1841385 62 1.35664 15 62 2.41931 16 42935, 63 150727 18 63 2.84531 17113085 64 LEAT 17 ‘84, Basset 18143585 65° 1.88761 18 6s 3.16834 19 43019 65 205588 18 66 3.45020 20 14002 67 2.26044 20 or 8.74229 a 1138350684857 at 68 4.04863 2200113586 69 (278591 2248004 69 4.98161 23119252 70 9.04592 2318670 70 4.74914 24 a2018 m 337720 24 18170 Ti 516235 25 12502 72 3.75982, 2S 17588 72 5.62985, 28 112252 73 Aig334 26 17253 73 (6.14841 27112085 74 467004 27 7086 A. . GrtT32 28412001 75 5.18003 2817086 75 7.92578 29 12001 76° 571919 2917386 78 | 7.94851 30 -12085 7 6.2840 30 A773 .. 7 8.57456 a 12935 73 G8T612 3t 13997 73 = 9.20818 32 12668 72 ‘751607 s2 19087 79 9.87149 83. 13168 * 80° aZa7S 33 20087 80 10.58674 34° 113752 ai 301810 3421255 ai, 14.37459 3s 14419 82, 9.91569 35 22672 82, 1224806 36 15169 83 -10.91280 36 24339 83 13,18833 37 -18169 84 11.99040 a7 26424 84 = 14.18421 38 7253 Bs 13.1248 38 28758 85 1518033 as 18420 as = 14,29804 39 31427 86 -16.16034 40 19837 a7 15.9991 40 ast2 87 17.16810 41 (21398 ap 1871910 4 37848 88 18,22020 42 22822 gg 1797489 42 41517 89 18.74923 43 24673 so 19.28574 43 48521 $0 —-20,82834 44 -26590 gt 20,68243 44 49942 91 21.43907 4s 28758 92 © 2221791 45 54613 92 2271710 46 31093 93 24,04369 46 59452 93 24,6888 ar 33585 84 26.50346 a7 64708 94 6.62992 95 3020740 $5 90.20740 GMR-7M* TABLE OF GUARANTEED MAXIMUM FEMALE INSURANCE RATES ] PER $1,000 NON-SMOKER . SMOKER a MONTHL' MONTHLY MONTHLY MONTHI ace “RATE AGE RATE AGE RATE AGE Pare” 1 07000 48 147 oe £7000 43 49024. 2 06667 4g 33678 2 26667 49 152611 3 ‘08500 50036160 3 98500 50 156449 4.08617 51 38902 4 tea? 51. 80537 5 06260 52 #2101 5 06250 +. 52 85209 6 ‘06000 53 AS6O4 & e000 53 "70383 7 05817 54 A191 7 5817 54 75641 8 0se34 55 2028 8 9584 +85 ‘81066 8.08750 56 SGRGE 9 $8750 . 58 86408 10 05750 57, $0620 10 - 95750 57° ..91417 11 105834 sa} eg7s 1 584 58 196243. 12 .08t67 5958630 12- $6167 59 4.01603 13 L08s00 60 | eee 13 -98800 60 1.07866 14 06834, 61 wet 14° £6834 61 418717, 15 08667 62 B7ASS 18° e001 62 (1.25825 18.0750 63 er 18 best7 63 1.98107 17 08167 64 UTES 17, 8834 64 1.51813 18 .08001 65 LME975. 18° 2st 65 1.66276 19 08251 66130838 198501 6s 1.80994 20° 08417 87 (Lanes 20 SSSI 67 1.95214 21 Cosse4 68 1564St ar sega 68 = 2.09605 22 08667 69 14S3 22 10168 63 2.25256 23 logsa4 70 (1845 23, tosis 70. 249759 24 08001 1 205839 24 to66a 71 2.67212 25 .osi6a 72. 220868 25 «918 - 72 2.95957 28 .09418 73 2u7ES 28. 11335 73. 330170 27 losses 74 2610 27. 11868 74” 3.69191 28 .08834 7 asa8 2842085 - 7 4.11866 2 “40168 76 72382 29 1585 7 (457248 30 40418 3609 go gt6a 77 5.04701 3t 110751 % 452892 au 13669 78 *°5.54895 82 4108s 79 816658 324252 73° 6.09610 33111501 go T6724 33 “45002 80 6.70972 oa 12001 a1 GASES a4 15896 Bt 740696 35 42865 a2 (725728 35 $6753. e2 ° 9.20087 36 18418 83 BIS957 36 tBt70 83 9.11807 a7 staat 84 SIBESS 379837 84 10.11631 28 115502 as 1020697 38 2755 8 14.1773 39° “16669 ee 112164 39 a8 86 12,29517 40 48087 87 1262319 40 2340 87 19,45788 at 19687 ea 1393142 4 22008 28 14,67216 42° ‘21088 eg 1532721 420031877 go 15.99752 43.2588 so 1682248 8 as so 1734402 44 24089 91 1848268, 4 B0t4 91 18.86254 43 (25757 $2 2026063, 48 ada 92 20.55222 48 (27508 g3 s876 46 Az768 93 22.54968 47 (29425 s4 2522005, 378771 94 25.22305 es 2a24S55 95 -29.24958 Q A GMR-7F3LE OF GUARANTEED VALUES ILICY NUMBER Gaa9-759 : Peer “cE AMOUNT $3,300,000 ISURING TASSOS P NASSOS HD : : teen : CASH : CONTINUATION OF - Patan eee oR LOAN INSURANCE PERIOD, . YEAR INSURED VALUE - YEARS . MONTHS l 51 F 7 190,455.32. 11 7 2 2 184,117.64 10 7. 3 53 175,816.68 9 7 4 54 165,198.54 8 ad 5 55 151,927.21 7 7 é 36 152,470.83 6 wat 7 57 149,565.94 5 7 a 58 192,847.72 4 z 9 59 131,761.44 3 ~7 10 60 115,632.96, 2 7. 1 i 76,827.33 L 7 ante oe : 31,331.62 0 7 THIS POLICY WILL LAPSE AT AGE 63 UNLESS A HIGHER PREMIUN ZS: PATO. i SEBLE PREMIUM ae terre eee JUSTABLE LIFE vir-250 A XIMUM INSURANCE . GUARANTEED CASH VALUES ASSUME THAT THE GUARANTEED MA‘ isS ARE CHARGED, THAT NO EXCESS INTEREST IS PAID, AND THAT NO CHANGE IN SPEGIFIED BENEFIT AMOUNT OR OPTION, NO CHANGE IN THE PLANNED PERTODIC IUH SHOWN ON THE SCHEDULE PAGE, AND NO PARTIAL SURRENDERS OR LOANS MADE. t Pro . to MM-cver25800 Northwestern High Royal oo Maccabees Life Insurance Company A Stock Company RIDER FOR USE WITH LIFE INSURANCE AND ANNUITY CONTRACTS, ISSUED TO A QUALIFIED RETIREMENT PLAN The provisons of this rider shall be avilable for use by the Owner with respect to the Insured/Annuitant’s contract to which this rider has been attached. The settlement options contained herein are available and guaranteed by Royal Maccabees Life Insurance Company as long as (1) the Insured/Annuitant is a Participant of a Qualified Retirement Plan that owns this Royal Maccabees Policy and (2) premiums on the Policy are fully paid. The Settlement Options contained in the Royal Maccabees Policy are normally limited to the Insurance Proceeds of the Policy. These Proceeds ae ether Cash Surender Values or Death Proceeds. In cases where its policies are used to fund Qualified Retirement Plans, however, Royal Maccabees hereby agrees to waive this limitation and agrees to permit the Settlement Options listed below to-be purchased with funds not accumulated in the Policy. The limitation will be waived only where the funds have accumulated in a Qualified Plan in- which the Employee/Insured/Annuitant is a Participant. In addition the Employee/Insured/Annuitant will only be permitted to purchase Installment Income upto $30 for each $1,000 (or each unit) of the initial face amount in the case of life insurance and up to $30 of each $100.00 of initial annuity premium. : The Settlement Options available and guaranteed are: SPECIFIED PERIOD OF TIMEIAMOUNT—The funds will be distributed in equal installments to the Payee for the period of time or amount elected. LIFE ONLY*The funds will be distributed in equal installments to the Payee-for as long as the Payee lives. 5 LIFE AND PERIOD CERTAIN—The funds will be distributed in equal installments to the Payee for as long as the Payee lives. Howeves ifthe Payee should die before the end of the Period Certain (either 120 months or 240 months), payments will continue for the remaining time guaranteed by the Period Certain. ~ JOINT AND SURVIVOR (survivor benefit 50%)~This Option will pay equal installments so long as the Payee and the Payee's Spouse ae living. It will continue to pay the Spouse 50% of the benefit after the death of the Payes. JOINT AND SURVIVOR (survivor benefit 100%)\This Option will pay equal installments 0 long as the Payee and the Payee's Scoute a living. It will continue to pay the same amount of benefit until the last person dies. d from the mean of the male and female 1971 Individual Annuity Mortality interest. ce * Rates deri Tables at Signed for the Company at its Home Office in Southiield, i secaty 3) resentThe following Home Office, ¥ 1RQP.2 (RI WOVouaWN Ve MONTHLY INCOME TAYABLE FOR EACH $1,000 OF PROCEEDS A AGE B c D E ‘DESCRIPTION A-PAYMENTS FOR SPECIFIED PERIOD OF TIME B-LIFE ONLY (C-LIFE AND 10 YEARS CERTAIN D—LIFE AND 20 YEARS CERTAIN, E-JOINT AND SURVIVOR (50%) ANNUITANTS EQUAL AGE F-JOINT AND SURVIVOR (100%) ANNUITANTS EQUAL AGE fates are availdble for the ages indicated, Other rates are available from the.”\ ; Fey 25800 Northwester es Royal ’ P. bow tag” Mahony o eS eer Maccabees Life Insurance Company + (19) 387-4800 « Fax (319) 748-8780 AMENDMENT Altached to and forming part of the Polly as ofits elective Date-of issue. The Section of tha policy entitled “NONFORFEITURE PROVISIONS" under INTEREST RATE”. is hereby amended by adding as the second paragfaph the following language: As of every fifth Policy Anniversary of the Date of Issue through the Twentieth Anniversary, an adcitional sum will be credited to the Accumulation Value, That additonal sum shall be calculated by multiplying the percentage specified for the anniversary in the table below by the total amount of excess interest, including previous fifth-anniversary-credited sums, credited to the Accumulation Value from the Date of Issue, and then reducing that product by the total amount of all previous fifth-anniversary-credited sums. ca . Polley Anniversary : Percentages 5th : “7.5% ieeesiestatie 4oth : 25.0% 45th + 48.0% 20th 60.0% Beginning with the Monthly Deduction Day first following the Twentieth Anniversary, and on every Monthly Deduction Day thereafter, each interest.rate-used in.the calculation of the * Accumulation Value shall equal the declared interest rate as determined by the Company's Board of Directors plus half of the excess of that declared rate over the guaranteed minimum fate, ft Signed for the Company at its Home Office in Southfield, Michigan Tach dint Jie — Secretary President + 7307 (Ra) :ROYAL MACCABEES LIFE INSURANCE COMPANY-SOUTHFIELD, MICHIGAN. es ‘ a POLICYHOLDER SEAVICE REQUEST fa SUREDS Wane POUDY OnE “passes D. Mastos 108 754 = REQUEST FOR DUPLICATE COPY oy 7 era deca that my ple, sted above, weal ot estoyed under ie otovigcicastanca nd I hraby requ ecue ieee Sin CHANGE OF NAME FROM (Former Nam HER ORE ~~ TO lew Nanay = Z i oe Bowen Hee ee (CHANGE OF OWNERSHIP [a ‘As owner of this policy, sted above, | hereby request ransfer of my ownership 10: THe INDIVIDUAL, CORPORATE - Raa FT rl aap aa — oe Bet rei ? as ils ioe ae ‘TRUST tach copy tasics ©P. Masses gn Dnedocasee Thus, - Decewsat. 22, 19625 : ase SE SEHESTE 23.1802. Dated at_Nowrmnese tt tie 222 wy Dec + gaa New: 7/7 ere nee Msg: heacseb 5 SY aa TA CE OE te Ot Wd PEST i "CHANGE OF BENEFICIARY. Pre io Co hereby revoke the former designation of benaficiary in ths poly sted above and release the Company from all lablity thereunder and do hereby designato thal ino procaedsof is poly payabl by casa cf death shallb pald tothe parsoi(} ond shares, and proportions, sad cok on tho tre, fandfans and conigendes as fofowse ° PeTOMS and inthe manner, i i | Print Name(s) of Beneficiary (equally with survivorship uness otherwise inccated) Rolatonship to insured! i i TASbos P. Nasses 1942. rpsvecasce Fpust- i ig indé ae "AGREEMENT AND SIGNATURE SECTION cae ‘ a) undstand that t making a pieyehango, ules th change vb oh sama plano insurance, no eisai ; oa cnuamcgemremomeneee | 4 y : ° the apples for any new patey sad ate gal appetton sal ba changed enya the teapeveg” 1 4) roquast that al ransactons marked above be conglild by Royal Maceaboes Lila Insurance Company and | (ersaives), Rote, bonefiaros and all eters calming unt th above poy fo reloaca, Idem an Pad tno Regal Maccabees ‘Ute insurance Company harmless Fam any Tasty need becatee of conpatng the above ansacons | (e) agescy warrant that all persone signing Below te of egal age an thal no proceecgs a bankpley a pendng aguas ny ef hom, Its understood that he singular tense a5 used In Ws ance requests tobe ead inthe plural appcable, Dated at WoeriRrece IC ms__"222 aya Dee gaa OQ iD asa (Sot Related) - insureds), Owner), signees) = poms © Maw Sr Sve 7 Tus WWiecauM? J Aaddvess Tears i Sr wuss oi _NoweruBreee 1h benh2- Gy Saas ap By Sale Ze ENDORSEMENT This change of name, ownership, andlor beneficiary has been filed with the Company at its Hom® Otfice and 869 ROYAL MACCABEES LIFE INSURARESCORY ANY, Ne copy wit med and shouid bo anactcd ToLive pal ‘Company hereby agrees to the above modification(s) of said policy. 7 Yt 70 “(S Déted at ‘Souiteld, Michigan on NOTE: Aitor being recorded at the Homo Olies, a copy- |ENT AND SIGNATURE SECTION ASEM rales Ge A SE <1(we) request that all wansacllons marked above ba completed by The Company and ‘agrea for myself (ourselves), heirs, beneficiaries and ail others elalming under tha above policy to release, ‘hdemai and hold The Com | harmless from any llability incurred because of completing the above transactions, | (We) expressly warrant that Persons signing befow are of legal age and that no proceedings In bankruptcy are pending against any of them. IIs understood that the singufar tense as used in this service request is to be read in the plural if applicable. ” ~ ‘This application is dated __ JU A@c __(monit) 22 (dayy 922 (year) Polieyows "fax LD. Number “(MANDATORY) * ‘Res w tt bo poset aoe i ED Number “C BB IESE. Signature-sf Poliayoy yj aaat Reigsntatne ure of Witness fe Related) Wi E 5 Meas a e Completes sectonifslgninginaierthananlncaealCapacty | Agaregs of Witness * ; in Ma ord “PBR “re” Pisco Toucr~ | atone _Maw = 8 et : Lae Miter = gy Ks oi (Sinatra of Otter or Trotee) Signature of Spouse-in Community Property State or Joint Policyowner ¢t any: : : SSeS assesceeeensseo tssrannneraaEERUAOOOEESD Official Title. Signature of Assignee (it any) oF Irrevocable Beneficiary Siteet Address City, State or Provines, Zip Cods ya 2 7 wm |