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FIDELITY BANKERS LIFE INSURANCE COMPANY In Receivership for Conservation and Rehabilitation
Election Notice Package February 15, 1993
Fidelity Bankers Life Insurance Company 1011 Boulder Springs Drive $ Richmond, Virginia 23225 $ (1-800) 366-4488 |
| Notice: First Capital Holdings Corporation, Fidelity Bankers' ultimate parent company, has appealed to the Virginia Supreme Court the Commission's Order approving the Deputy Receiver's Rehabilitation Plan. It is possible, therefore, that the Plan may be delayed or even modified. If this occurs, the Election Form provided in this Election Notice Package may be voided, and the Deputy Receiver will inform you of the Court's decision. The Deputy Receiver will continue to defend the Plan and will do everything possible to expedite its implementation. |
Table of Contents for
Election Notice Package
| Page No. | |
| 1. Letter from Deputy Receiver Steven T. Foster | 1 |
| 2. Introduction to the Rehabilitation Plan | 2-5 |
| 3. Election Information and Contract Restructuring Guide | 6-26 |
The Election Notice Package also contains (not available on-line in this document): |
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4. Election Form |
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5. Hartford Brochure |
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6. Return Envelope |
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(If any of the above items are missing from this Package, please contact our Information Service Center at 1-800-366-4488.)
In Receivership for Conservation & Rehabilitation
February 15, 1993
To All Fidelity Bankers Contract-holders and Option One holders:
You will be pleased to learn we are ready to take an important step toward concluding the receivership of Fidelity Bankers Life Insurance Company. As Deputy Receiver, my foremost goal has been to protect your best interests. After you review the enclosed materials describing the Rehabilitation Plan, I believe you will agree the Plan achieves this goal by providing you with the opportunity to have your life, annuity, and health insurance protection continued and 100% of your contract's Account Value assumed by an excellent and reputable insurer, the Hartford Life Insurance Company.
Hartford, an insurance subsidiary of ITT Corporation, has over $20 billion in assets, making it the 18th largest life insurer in the United States. With current surplus of over $600 million, Hartford has earned top ratings from major insurance rating agencies including Standard & Poor's, Duff & Phelps, A.M. Best, and Moody's.
If you elect to allow Hartford to assume your contract, you may be eligible to receive Plan Enhancements, consisting of a Plan Credit and a Plan Dividend. These Enhancements are designed to compensate you for your inability to gain access to your account value during the receivership and for any material differences between your Fidelity Bankers contract and the restructured contract you will receive when Opting In. Please refer to the enclosed Introduction to the Rehabilitation Plan and the Election Information and Contract Restructuring Guide for further information about the Enhancements and your specific contract or account.
You may be assured that my top priority is to provide Fidelity Bankers Contract-holders and Option One holders with the benefits of the Plan. I anticipate this can be accomplished by June 15, 1993. You can now choose whether to participate in the Plan by completing your Election Form and returning it to Fidelity Bankers by April 15, 1993. The following materials provide you with the information you need to make your decision. I recommend you read these materials carefully.
Thank you for your continued patience and understanding as we work together to bring the receivership to a satisfactory conclusion.
Respectfully yours,
Steven T. Foster
Deputy Receiver
Enclosures
The Deputy Receiver's Plan for the rehabilitation of Fidelity Bankers was approved by the Virginia State Corporation Commission on September 29, 1992. The Plan consists of comprehensive measures to protect Contract-holders, Option One holders, and other creditors. This Package summarizes the Plan's most significant elements and provides the information you need to decide whether to participate in the Plan.
Fundamentally, the Plan offers you two options: (1) You may participate in the Plan by electing to Opt In, thus becoming a "Participating Contract-holder", or (2) you may decline the Plan's benefits by electing to Opt Out, thus becoming a "Declining Contract-holder". The Deputy Receiver firmly believes that, in most cases, Opting In provides greater benefits than Opting Out. You should, however, consult your own advisors about how the Plan affects you.
To inform the Deputy Receiver of your decision, you must return the enclosed Election Form by April 15, 1993 (the "Election Deadline"). If your Election Form is not received by Fidelity Bankers by the Election Deadline, you will be deemed to have Opted In and, if applicable, to have selected a 10-year interest rate Guarantee Period. Election Forms received after April 15, 1993, (regardless of when postmarked) will not be honored.
Before the Plan can be implemented, some aspects of the Plan must be approved by various states. If the Virginia Supreme Court affirms the Plan on appeal and the required approvals are received timely, we expect to implement the Plan on June 15, 1993 (the "Effective Date").
Opting In. If you Opt In, your contract or account will be restructured and 100% of any Account Value will be assumed by Hartford Life Insurance Company. Individual health insurance contracts will be assumed by Hartford's wholly-owned subsidiary, ITT Life Insurance Corporation. In return for assuming and reinsuring the contracts of Participating Contract-holders, Hartford will receive from Fidelity Bankers assets currently estimated to have a market value equal to 94% of the account value for the policies assumed. Fidelity Bankers will use retained assets to discharge its other liabilities, including Plan Enhancements credited to the accounts of eligible Participating Contract-holders. These Plan Enhancements (consisting of a "Plan Credit" and a "Plan Dividend") are designed to compensate you for your inability to gain access to your account value during the receivership and for any material differences between your Fidelity Bankers contract and the restructured contract you will receive when Opting In. The Plan Credit will be credited on the Effective Date, or as soon thereafter as possible. The Plan Dividend will be credited, to the extent possible, seven years after the Effective Date.
Opting Out. If you Opt Out, your contract will be canceled, and, if such contract has an Account Value ("account value contract"), you will receive an Opt Out Cash Payment and an Opt Out Annuity, as soon after the Effective Date as possible. The Opt Out Cash Payment for Annuity and Single Premium Whole Life Contract-holders and Option One holders will equal 85% of their Non-Loaned Account Value. Universal Life and Interest Sensitive Whole Life Contract-holders will receive an Opt Out Cash Payment equal to the lesser of (1) their cash surrender value or (2) 85% of their Non-Loaned Account Value. Declining Contract-holders with account value contracts will also receive an Opt Out Annuity for 15% of their Non-Loaned Account Value. Term, Whole Life, and Accident and Health Contract-holders will receive an Opt Out Cash Payment equal to their unearned premium, but will not receive an Opt Out Annuity. Declining Contract-holders will not receive a Plan Credit or a Plan Dividend.
Other Features of the Rehabilitation Plan1. A complete description of the restructured contracts and the Opt Out Annuity is contained in the Election Information and Contract Restructuring Guide which follows. Definitions of many of the terms used in this Package are contained in Section O of the Guide.
2. Throughout these materials we have included several recommendations to assist you in dealing with the issues surrounding the Plan. These recommendations, and any other advice offered you in these materials, are neither binding nor conditions to your receipt of any benefits. Rather, they are designed to assist you given our general conclusions regarding the elements of the Plan and the circumstances that we believe exist. In each case, any decision you make should be based on your particular requirements and circumstances. The recommendations are general in nature and do not constitute elements of the Rehabilitation Plan. Many of the tax consequences of the Plan are uncertain and will vary depending on your circumstances. The comments in these materials regarding tax matters are for general information only. Accordingly, no representation or warranty is made by the Deputy Receiver or Hartford about any favorable or adverse tax consequences resulting from the restructured contracts or other aspects of the Plan. Nothing herein or in the attached materials should be interpreted as, nor shall constitute, legal, tax or other professional advice. If such advice is required, you should consult your own attorneys or other professional advisors.
3. The Internal Revenue Service ("IRS") recently decided that contracts restructured as an integral part of a rehabilitation plan do not lose "grandfathered" status or other favorable tax attributes of the original contracts (See Revenue Procedure 92-57). In comparable rehabilitation situations, the IRS has ruled that this favorable tax treatment extends to restructured contracts assumed by another insurer and that enhancements added to account values of restructured contracts are taxed in the same manner as other contract benefits. The Deputy Receiver intends to request a ruling from the IRS confirming that the assumption of the restructured contracts by Hartford, including the Plan Credit and the Plan Dividend, will be granted such favorable tax treatment.
4. It is believed that each state's life and health insurance guaranty association act or its equivalent may cover Opt In benefits, including the Plan Credit and the Plan Dividend, up to each state's coverage limits. The National Organization of Life and Health Insurance Guaranty Associations ("NOLHGA") has entered into a tentative agreement with the Deputy Receiver under which its members may agree to "guarantee" certain aspects of the Plan. Member states may participate by signing the agreement. Neither the Deputy Receiver nor the State Corporation Commission administer such coverages and, therefore, we are not in a position to make any recommendations or express opinions as to whether you may have a claim arising thereunder. You should consult your own advisors regarding the extent to which, if any, such coverage may apply to you.
5. It may not be in your best interest to Opt Out and terminate your existing insurance contract and replace it with one issued by another insurer. The purchase of a new insurance contract may include acquisition costs (including agent commissions, underwriting, and issue expenses) reducing your future contract values. You should also be aware that premiums charged for new life insurance contracts could be substantially higher because rates are based on your current age and health. Before you terminate your present coverage, please make sure the agent with whom you discuss this provides you adequate information to compare the essential features of the proposed policy to those of the restructured contract you will receive if you Opt In. Once you terminate your Fidelity Bankers contract, it cannot be reinstated for any reason. You should, therefore, first secure other life or health insurance coverage before Opting Out.
6. Fidelity Bankers will continue to cover all legitimate contract claims incurred under Fidelity Bankers contracts, including death benefits, until the Effective Date.
7. If you own more than one contract or Option One Account, you are being sent a separate Election Notice Package for each one. A single election must be made for each contract or account. Separate contracts or portions thereof may not be combined. If you elect to Opt Out as to one or more contracts, but fail to make an election as to any other contracts, you will be deemed to have Opted In as to such other contracts, regardless of your having Opted Out for specific contracts. If you do not receive an Election Notice Package for each contract or account, contact our Information Service Center at 1-800-366-4488.
8. If you requested a withdrawal or loan from your contract during the Receivership Period, you will receive one Election Notice Package. You must make one election which will apply to both your contract and its corresponding Option One Account. If you Opt In, the Option One Funds will be applied to your contract prior to its assumption by Hartford (Option One Funds that resulted from loans will be reapplied as loan repayments).
9. Receipt of an Election Notice Package does not automatically entitle you to benefits under the Plan. To be eligible to Opt In or Opt Out, your contract must be in-force on the Effective Date or you must have funds in an Option One Account.
10. The account values on the enclosed Election Form are as of January 31, 1993. These values will be recalculated to reflect activity in your account to the Effective Date. If you disagree with the account values shown as of January 31, 1993, you must notify the Deputy Receiver in writing by March 31, 1993. Contested account values will be determined in accordance with the Receivership Appeal Procedure and when so contested, the Account Value determined pursuant to the Receivership Appeal Procedure shall become the Account Value of the contract owned by such Contract-holders or Option One holders and shall be the final Account Value as of the Account Value date shown on the Election Form for all purposes. If you do not contest the Account Value, the Account Value shown will be deemed to be the correct and accurate Account Value for all purposes.
11. Contract-holders and Eligible Option One holders will be deemed to have agreed that Hartford shall be obligated only under the express terms of the restructured contracts notwithstanding any representation to the contrary by Fidelity Bankers, the Deputy Receiver, or any employee, agent or representative of any of them, and that any Contract-holders or Eligible Option One holders seeking to assert any claim against Fidelity Bankers must Opt Out and reject the assumption by Hartford with respect to the contract giving rise to such claim.
4 in assets. Thus, the Commission found Fidelity Bankers to be insolvent by more than $200 million. Since then, Fidelity Bankers' assets have been successfully managed by a team of experts and consultants retained by the Deputy Receiver and, as a result, the Plan should return benefits to all Contract-holders in excess of the Liquidation Value. The Deputy Receiver believes that the law requires that Contract-holders receive benefits at least equal in value to the Liquidation Value. The Deputy Receiver does not, however, believe the law requires that Declining Contract-holders receive benefits in excess of the Liquidation Value. Nonetheless, it is estimated that the value of both Opt In and Opt Out benefits substantially exceeds the Liquidation Value.12. The Commission determined that the ratio of the Company's assets to liabilities on May 13, 1991, did not exceed 93% (the "Liquidation Value"). This means that, when the receivership began, for each $1.00 of Contract-holder liability Fidelity Bankers had no more than 93
13. One of the Deputy Receiver's goals in formulating the Plan was to preserve Fidelity Bankers as an insurance company if that could be accomplished while fully protecting your interests. The Plan seeks to accomplish this goal by reorganizing Fidelity Bankers as a mutual life insurer. The corporate structure will be changed from a company owned by its stockholder to a mutual company owned by its contract-holders. Initially, the primary business of the mutual company will be the annuities issued to Declining Contract-holders. It is hoped that, eventually, the new mutual company will be able to compete in the marketplace, as a safe and secure member of the insurance industry. We anticipate that the Company will continue to provide administrative services to Contract-holders for at least a year after the Effective Date.
14. For further details about the receivership proceedings and the Plan, you may refer to the "Proposed Rehabilitation Plan" published on May 1, 1992, the proceedings before the Commission during the Confirmation Hearing that commenced on June 1, 1992, and the Commission's opinions and orders.
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Contract Restructuring Guide |
This Index will help you quickly find specific information affecting your contract or account. The type of contract or account you own is shown on your Election Form. Should you have any questions, please call our Information Service Center at 1-800-366-4488.
Index to Guide
Section Opt In Information
B. Annuity Contracts & Option One Accounts
D. Universal Life & Interest Sensitive Whole Life
E. Individual Accident & Health Insurance
F. Group Accident & Health Insurance
G. Term, Whole Life, & Annuitized Contracts
H. Plan Credit
J. Opt In & Opt Out Account Examples
Opt Out Information
K. General Opt Out Information
M. Tax Withholding Election Notice
Miscellaneous Information
N. Signature Guide for Election Form
O. Definitions
Opt In Information
General Opt In InformationIf you Opt In, your contract or account will be restructured as described in the following sections and 100% of your Account Value, if any, will be assumed by Hartford. If you Opt In, you may also be eligible to receive a Plan Credit and a Plan Dividend.
B.
Annuity Contracts & Option One AccountsIf you own an annuity contract or an eligible Option One Account, your contract or account will be restructured into an annuity contract as described in this section. The restructured contract will be funded on the Effective Date with 100% of your Non-Loaned Account Value. (This section does not apply to Annuitized contracts. See Section G.) You should note that the surrender charge schedule and the interest rate to be credited to your account value will be established on the Effective Date to reflect the fair market value of assets transferred to Hartford.
Interest Crediting and Guarantee Periods
C You can choose on your Election Form either a 5-year or a 10-year initial interest rate Guarantee Period. In general, the 10 year interest rate tends to be greater than the 5 year interest rate. The interest rates are intended to be competitive with those offered by other established insurers marketing similar products with similar guarantee periods and will reflect financial market conditions on the Effective Date. In addition, the interest rates will be established to reflect the fair market value of assets transferred to Hartford on the Effective Date. Your account value will earn interest at the guarantee rate until the end of the Guarantee Period.About 30 days before the end of each Guarantee Period, Hartford will notify you of your option to select a subsequent Guarantee Period. If you do not select a new Guarantee Period, another Guarantee Period of the same duration will be applied automatically. The subsequent guarantee rate will be at least equal to the initial guarantee rate Hartford is then crediting to new contracts of this type and duration, but will never be less than 3% per year. Subsequent Guarantee Periods cannot extend beyond the "Annuity Commencement Date" in effect. The maximum annuitization age is 90 (85 in Pennsylvania).
Surrender Charge
C The restructured contracts will contain a new schedule of decreasing surrender charges. The schedule will be established to reflect the fair-market value of assets transferred to Hartford on the Effective Date. It is anticipated that the following schedule of surrender charges will apply:Year 1 2 3 4 5 6 7 Thereafter
Charge 7% 6% 5% 4% 3% 2% 1% 0%
Years are measured from the Effective Date. Under no circumstances will the surrender charge schedule be established to exceed 11% in the first year, grading down to 0% by the eleventh year.
Market Value Adjustment ("MVA")
C An MVA applies to full or partial surrenders and annuitizations that occur prior to the end of any Guarantee Period. The MVA reflects changes in interest rates during the Guarantee Period. Generally, as interest rates fall below the guarantee rate, the MVA will result in a higher cash payment upon surrender. Conversely, the MVA will result in a lower cash surrender payment in a rising interest rate environment. Thus, it is possible that the amount received upon full surrender could be less than the Account Value on the Effective Date. Please note, as the end of a Guarantee Period approaches, the MVA becomes smaller for a given change in interest rates. The MVA formula is calculated on a daily basis as follows:
I = Guarantee rate in effect for your current Guarantee Period.
J = The rate Hartford is then crediting to new contracts of this type with a duration equal to the number of years remaining in your current Guarantee Period.
N = The number of complete months remaining in your current Guarantee Period.
You may annuitize your contract at any time without a surrender charge, subject to an MVA. An MVA will not be applied, however, to annuitizations or surrenders on the Effective Date or at the end of any Guarantee Period.
Guaranteed Death Benefit
C The death benefit is the account value. It is not subject to a surrender charge or an MVA.Special Surrenders (Free Withdrawals)
C After the Effective Date, you may withdraw up to the interest credited by Hartford during the 12-month period (or portion thereof) immediately preceding the date of your request. A Special Surrender is not subject to a surrender charge or an MVA. These withdrawals may be subject to taxation and, in some instances, to additional penalty taxes for premature distributions.Automatic Interest Withdrawals
C This feature provides income after the Effective Date without annuitizing the contract. These withdrawals are limited to the interest credited by Hartford during the 12-month period (or portion thereof) immediately preceding the date of your request. A monthly, quarterly, semi-annual, or annual payment mode may be selected. Automatic interest withdrawals are not subject to a surrender charge or an MVA. These withdrawals may be subject to taxation and, in some instances, to additional penalty taxes for premature distributions.Minimum Withdrawal
C $250 (not applicable to Special Surrenders or Automatic Interest Withdrawals). After withdrawal, the remaining account value must be at least $1,000.Variable Annuity Exchange Option
C Your restructured contract can be exchanged for a variable annuity contract made available by Hartford specifically for this purpose (Non-Qualified Unallocated ContractsCdiscussed on page 10Cwill not include this option). This exchange option will be available for 1 year after the Effective Date and will be subject to both a surrender charge and an MVA. However, a surrender-charge credit will be added to the variable annuity account 60 days following the exchange, resulting in a net surrender charge of 2.5%. State life and health insurance guaranty association acts generally do not provide coverage for contracts or any portion of contracts not guaranteed by the insurer or for which the contract-holder has assumed the risk, such as these variable contracts. Hartford sells these variable annuities by prospectus. Neither the Deputy Receiver nor Fidelity Bankers is offering or endorsing this variable annuity. For information about the variable annuity, you may call Hartford at 1-800-847-4712.Annuitization
C When the Annuity Commencement Date is reached, some or all of the account value may be applied to any of the annuity options described below, subject to an MVA.C Life Annuity C An annuity payable monthly during the annuitant's lifetime, ceasing with the last payment due prior to the annuitant's death.First Option
Second Option
C Life Annuity with 120, 180, or 240 Monthly Payments Certain C An annuity providing monthly income for a fixed period of your choice of 120, 180, or 240 months and for as long thereafter as the annuitant lives or, if the annuitant dies, to the beneficiary for the remainder of the fixed period.Third Option
C Cash Refund Annuity C An annuity payable monthly during the annuitant's lifetime. If the annuitant dies before receiving benefits equal to the proceeds (i.e., the account value applied on the Annuity Commencement Date), the beneficiary receives a cash refund equal to the amount needed to make total payments equal to the proceeds.Fourth Option
C Joint and Last Survivor Life Annuity C An annuity payable monthly during the joint lifetime of the annuitant and a secondary payee. After the death of the first to die of the annuitant or the secondary payee, payments will continue for the lifetime of the survivor. All payments cease with the last payment prior to the survivor's death.Fifth Option
C Payments for Designated Period C An amount payable monthly for the number of years selected which may be from 5 to 30 years.Premium Payments
C The restructured annuity contact will not permit further premium payments.Bailouts and Penalty-Free Withdrawals
C All original Fidelity Bankers contract provisions relating to bailout options and surrender-charge-free withdrawal periods will be deleted.Loans
C All loan provisions will be deleted. Outstanding annuity loan balances will be charged against the contract's Account Value, reducing it to the Non-Loaned Account Value. To the extent that this application of the account value to pay the outstanding loan balance is attributable to any investment in the contract (tax basis) as of August 14, 1982, and the earnings thereon, this amount of the loan repayment may be subject to adverse tax consequences, to the extent that this amount exceeds such tax basis as of August 14, 1982. This matter should be discussed with your tax advisors.Annuitant
C The "annuitant" will be the annuitant named in the Fidelity Bankers contract. The restructured annuity contracts will not allow an annuitant to be changed.1 Joint Annuitants. Fidelity Bankers contracts with joint annuitants will be restructured with a "Primary Annuitant" and a "Contingent Annuitant". Unless written notification is received from the Owner prior to the Election Deadline, the Primary Annuitant will be the younger annuitant, and the Contingent Annuitant will be the older annuitant.
2 Option One Accounts. Option One holders will be issued the restructured annuity contract described in this section, even if the terminated Fidelity Bankers contract was a life insurance contract. The former insured or annuitant will be designated as the annuitant. Option One holders with an Account Value of less than $1000.00 on the Effective Date will automatically be deemed to have Opted Out. Only Option One holders with Account Values projected to be at least $1000.00 on the Effective Date will receive an Election Form.
3 Qualified Unallocated Group Annuities. Annuity contracts owned by a trustee or sponsored by an employer pursuant to a tax qualified retirement plan are considered "unallocated group annuity" contracts. These contracts will be restructured into unallocated group deferred annuity contracts with provisions as described in this section. One restructured contract will be issued to the trustee or employer. Each retirement plan participant will be treated as an annuitant.
4 Non-Qualified Unallocated Contracts. Unallocated contracts owned by a non-natural entity will be restructured into a "funding agreement". The funding agreement will not have an annuitant and will be on an unallocated funding basis. (The Federal tax treatment of funds held under funding agreements may be different from those under annuity contracts. This matter should be discussed with your tax advisors.)
If you own a Single Premium Whole Life contract, your contract will be restructured into a Single Premium Adjustable Life contract as described in this section. The restructured contract will be funded on the Effective Date with 100% of your Account Value. Outstanding policy loans will also be assumed. You should note that the surrender charge schedule and the interest rate to be credited to your account value will be established on the Effective Date to reflect the fair market value of assets transferred to Hartford.
Death Benefit
C 100% of the death benefit will be preserved.Interest Crediting and Guarantee Periods
C You can choose on your Election Form either a 5-year or a 10-year initial interest rate Guarantee Period. In general, the 10 year interest rate tends to be greater than the 5 year interest rate. The interest rates will be competitive with those offered by other established insurers marketing similar products with similar guarantee periods and will reflect financial market conditions on the Effective Date. In addition, the interest rates will be established to reflect the fair market value of assets transferred to Hartford on the Effective Date. Your account value will earn interest at the Guarantee Rate until the end of the Guarantee Period.About 30 days before the end of each Guarantee Period, Hartford will notify you of your option to select a subsequent Guarantee Period. If you do not select a new Guarantee Period, another Guarantee Period of the same duration will be applied automatically. The subsequent guarantee rate will be at least equal to the initial guarantee rate Hartford is then crediting to new contracts of this type and duration, but will never be less than 4% per year.
Surrender Charge
C The restructured contracts will contain a new schedule of decreasing surrender charges. The schedule will be established to reflect the fair market-value of assets transferred to Hartford on the Effective Date. It is anticipated that the following schedule of surrender charges will apply:Year 1 2 3 4 5 6 7 Thereafter
Charge 7% 6% 5% 4% 3% 2% 1% 0%
Years are measured from the Effective Date. Under no circumstances will the surrender charge schedule be established to exceed 11% in the first year, grading down to 0% by the eleventh year.
Market Value Adjustment ("MVA")
C An MVA applies to full or partial surrenders, certain loans, and annuitizations that occur prior to the end of any Guarantee Period. The MVA reflects changes in interest rates during the Guarantee Period. Generally, as interest rates fall below the guarantee rate, the MVA will result in a higher cash payment upon surrender. Conversely, the MVA will result in a lower cash surrender payment in a rising interest rate environment. Thus, it is possible that the amount received upon full surrender could be less than the Account Value on the Effective Date. Please note, as the end of a Guarantee Period approaches, the MVA becomes smaller for a given change in interest rates. The MVA formula is calculated on a daily basis as follows:
I = Guarantee rate in effect for your current Guarantee Period.
J = The rate Hartford is then crediting to new contracts of this type with a duration equal to the number of years remaining in your current Guarantee Period.
N = The number of complete months remaining in your current Guarantee Period.
An MVA will not be applied to surrenders, loans, or annuitizations on the Effective Date or at the end of any Guarantee Period.
Cost of Insurance
C A "cost of insurance" charge will be deducted monthly from the account value. Rates will be determined at the beginning of each contract year based on expectations for such factors as investment earnings, mortality, taxes, persistency, and expenses. Any change will be made uniformly for insureds of the same age, sex, and contract year. A change will not be based on the deterioration of the insured's health and will not exceed the maximum rates stated in your Fidelity Bankers contract.Preferred Loans
C After the Effective Date, the owner may borrow, without an MVA C at a zero net cost C an amount up to the interest credited by Hartford during the 12-month period (or portion thereof) immediately preceding the date of the request.Loans
C After the Effective Date, the owner may borrow an amount in excess of preferred loans at a 2% net cost. Loans made prior to the Effective Date will continue to be subject to the Fidelity Bankers contract provisions. Loan repayments will earn interest at the current rate in effect for new contracts when the repayment is made. Thus, interest earned on loan repayment funds may be different from the guarantee rate applicable to non-loaned cash values.Bailouts and Penalty-Free Withdrawals
C All Fidelity Bankers contract provisions relating to bailout options and surrender-charge-free withdrawal periods will be deleted.Joint Last Survivor Contracts
C This applies only to Single Premium Whole Life contracts insuring two lives on a joint last survivor basis. These contracts will be divided into separate coverages on each insured, and such separate coverages will be restructured into two "single premium adjustable life" contracts. The Account Value and death benefit of each contract will be determined in accordance with the "split rider" provisions included with the Fidelity Bankers contract.D. Universal Life & Interest Sensitive Whole Life
If you own a Universal Life or Interest Sensitive Whole Life contract, your contract will be restructured into a Flexible Premium Adjustable Life contract as described in this section. The restructured contract will be funded on the Effective Date with 100% of your Account Value. Outstanding policy loans will also be assumed. You will have immediate access to policy loan values in accordance with your Fidelity Bankers contract's current loan provisions.
Death Benefit
C 100% of the death benefit will be preserved.Front End Sales Charge
C A 6% premium charge will be deducted from premiums paid after the Effective Date. A front end sales charge will not, however, be applied to your Account Value on the Effective Date.Monthly Administrative Fee
C A $4.00 monthly administrative fee will be deducted.Deferred Expense Charge
C The following schedule of "deferred expense charges" will replace your Fidelity Bankers surrender charge schedule (the values shown are per thousand dollars of face amount):
| Age |
Non- Smoker |
Smoker |
Age |
Non- Smoker |
Smoker |
Age |
Non- Smoker |
Smoker |
0-15 |
$3.40 |
$5.10 |
31 |
$7.32 |
$9.38 |
47 |
$12.35 |
$15.58 |
16 |
3.57 |
5.36 |
32 |
7.69 |
9.66 |
48 |
12.75 |
16.14 |
17 |
3.74 |
5.62 |
33 |
8.06 |
9.94 |
49 |
13.16 |
16.72 |
18 |
3.91 |
5.88 |
34 |
8.43 |
10.22 |
50 |
13.60 |
17.34 |
19 |
4.08 |
6.14 |
35 |
8.75 |
10.51 |
51 |
14.06 |
17.99 |
20 |
4.25 |
6.40 |
36 |
8.98 |
10.83 |
52 |
14.55 |
18.69 |
21 |
4.42 |
6.66 |
37 |
9.23 |
11.17 |
53 |
15.09 |
19.44 |
22 |
4.59 |
6.92 |
38 |
9.49 |
11.53 |
54 |
15.67 |
19.46 |
23 |
4.76 |
7.10 |
39 |
9.76 |
11.92 |
55 |
16.29 |
19.46 |
24 |
4.93 |
7.44 |
40 |
10.05 |
12.32 |
56 |
16.94 |
19.46 |
25 |
5.10 |
7.70 |
41 |
10.35 |
12.74 |
57 |
17.59 |
19.46 |
26 |
5.47 |
7.98 |
42 |
10.64 |
13.16 |
58 |
18.31 |
19.46 |
27 |
5.84 |
8.26 |
43 |
10.94 |
13.59 |
59 |
19.06 |
19.46 |
28 |
6.21 |
8.54 |
44 |
11.26 |
14.04 |
60-94 |
19.46 |
19.46 |
29 |
6.58 |
8.82 |
45 |
11.60 |
14.53 |
|||
| 30 |
6.95 |
9.10 |
46 |
11.96 |
15.04 |
The above charge will be applied to surrenders that occur within 5 years of the Effective Date. Beginning 6 years after the Effective Date, the above charge will decrease 20% per year. There will be no deferred expense charge after 9 years. In addition, a 2% surrender charge will be deducted if the contract is surrendered within 2 years after the Effective Date. "Age" is the insured's age on the Effective Date.
Interest Crediting
C The "minimum guaranteed interest rate" will be 4%.Cost of Insurance
C "Cost of insurance" rates will not exceed the maximum cost of insurance rates stated in your Fidelity Bankers contract.Premiums
C Premiums will be flexible as to amount and frequency. Due to the significant changes in market interest rates since these contracts were originally issued, it may be necessary to increase your premiums to maintain your benefits. If this is the case, you will be notified and given the opportunity to adjust the premium billing amount.E. Individual Accident & Health Insurance
If you have an Individual Accident and Health insurance contract, your contract will not be restructured except as noted in this section.
The provision in Fidelity Bankers contract forms AH-IHM (numbers 1, 2, 76, and 79) entitled "Coverage Division II" will be deleted if the insured is under age 65. This means the contract cannot be converted into a Medicare Supplement policy when the insured reaches age 65. Insureds over age 65 will continue receiving Medicare Supplement benefits according to the terms of their Fidelity Bankers contract.
All Individual Accident and Health Insurance contracts will be assumed by ITT Life Insurance Corporation, a subsidiary of Hartford. ITT Life is not a specialist in Medicare Supplement policies. Frequent changes in Medicare and in each state's requirements for Medicare Supplement contracts make Medicare Supplements a highly specialized product. Contact your state insurance department or state agency on aging for a list of Medicare Supplement insurers.
F. Group Accident & Health Insurance
If you have a Group Accidental Death, Hospital Indemnity, or Cancer contract, the contract will be restructured to allow either Hartford or the master group Contract-holder to cancel the contract on 30-days notice. The Cancer contract will be further restructured to include a maximum lifetime benefit of $250,000 per insured for "Parts 1 and 2" combined. All other contract provisions remain the same. The master group Contract-holder will make a single election which will apply to all certificate-holders.
G. Term, Whole Life, & Annuitized Contracts
If you own a Term or an Annuitized contract, your contract will not be restructured. Whole Life contracts (except for Interest Sensitive Whole Life and Single Premium Whole Life contracts) will not be restructured. Annuitized Contract-holders will continue to receive periodic income payments in accordance with their previously elected settlement option.
Annuity, Single Premium Whole Life, Universal Life, Interest Sensitive Whole Life, and Option One holders who Opt In are eligible for a Plan Credit and a Plan Dividend. (Declining Contract-holders are not eligible for these benefits.)
In addition to assumption of their contracts by Hartford, Participating Contract-holders with the cash value contracts listed above are eligible to receive Plan Enhancements. These Plan Enhancements (consisting of a "Plan Credit" and a "Plan Dividend") are designed to compensate you for your inability to gain access to your account value during the receivership and for any material differences between your Fidelity Bankers contract and the restructured contract you will receive when Opting In.
H. Plan Credit
The Plan Credit is designed to replace account values that may have been lost because of any "Loss of Credited Interest" or "Loss of Liquidity" experienced during the receivership period. Option One holders are not eligible for the Credit for Loss of Credited Interest but are eligible for the Credit for Loss of Liquidity.
The Plan Credit will be added to the account value on the Effective Date and will be subject to the terms of the restructured contract (such as surrender charges and MVA). If there are insufficient assets to fund the Plan Credit on the Effective Date, the Plan Credit will earn interest at a rate established by the Deputy Receiver until it is transferred to Hartford. Once transferred, it will earn interest at the rate Hartford is then crediting.
Credit for Loss of Credited Interest
C The Credit for Loss of Credited Interest is equal to the difference between (1) the account value on the Effective Date, calculated using the "business as usual" (BAU) rate, and (2) the actual Account Value using the interest rates credited by the Deputy Receiver beginning at the end of any previous guarantee period. The BAU rate equals an appropriate treasury rate index plus or minus a historical spread. The BAU rates, based on the Fidelity Bankers contract type, are:C .32%CD Annuity 1 Yr. Treasury + .63%
All Other Annuities 5 Yr. Treasury + .01%
Single Premium Whole Life 30 Yr. Treasury
Universal Life 1 Yr. Treasury + .91%
Interest Sensitive Life 1 Yr. Treasury + .91%
The account value for Single Premium Whole Life contracts will be calculated without the application of "cost of insurance". If the Credit for Loss of Credited Interest is negative, it will be subtracted from the Credit for Loss of Liquidity. The entire Plan Credit, however, will never be less than zero.
Credit for Loss of Liquidity
C The Credit for Loss of Liquidity is equal to the contract's maximum cash surrender value during the Receivership Period times a liquidity factor. This factor measures the market interest differential for investments of comparable durations and has been selected as a fair economic measure of the cost to you because your account value has been inaccessible during the receivership. Surrender-charge-free and bailout provisions are taken into consideration.The Plan Dividend is designed to replace account values that may be lost because of any "Loss of Credited Interest" or "Loss of Liquidity" experienced because of contract restructuring. Option One holders are not eligible for the Dividend for Loss of Credited Interest but are eligible for the Dividend for Loss of Liquidity. Since the death benefit under restructured life contracts is equal to that under the Fidelity Bankers contracts, life contracts terminating by death will not be eligible for a Plan Dividend. However, Universal Life contracts with a death benefit equal to the face amount plus the account value are eligible.
The Plan Dividend will be a liability of the Fidelity Bankers Trust. After seven years, if there are sufficient assets, the Plan Dividend will be credited to your Hartford contract. If your Hartford contract is not in-force, the Plan Dividend will be paid to you, your beneficiaries, or your estate. If there are insufficient assets to fund the entire Plan Dividend, you will receive your proportional share.
Dividend for Loss of Credited Interest
C The Dividend for Loss of Credited Interest is calculated from the Effective Date until the earlier of (1) the date the contract terminates by maturity, surrender, or death, or (2) seven years after the Effective Date. At the end of each year (or fraction of a year for terminating contracts), the Dividend for Loss of Credited Interest will be calculated by multiplying the account value at the beginning of the year times the difference between (1) the "business as usual" (BAU) interest rate and (2) the actual rate credited by Hartford. The BAU rates are based on the same index used to calculate the Plan Credit for Loss of Credited Interest.The Dividend for Loss of Credited Interest will be prorated for the fraction of the year that the contract was in-force, other than certain life policies terminating by death. If the Dividend for Loss of Credited Interest is negative, it will be subtracted from the Dividend for Loss of Liquidity. The entire Plan Dividend, however, will never be less than zero.
Dividend for Loss of Liquidity
C The Dividend for Loss of Liquidity applies to all restructured contracts surrendered during the first seven years after the Effective Date. The Dividend for Loss of Liquidity compensates you for the difference between (1) any surrender charges and MVAs imposed by your restructured contract and (2) the surrender charges that would have been imposed had your Fidelity Bankers contract still been in-force (all Fidelity Bankers surrender-charge-free windows and bail-out provisions will be taken into consideration). If the Dividend for the Loss of Liquidity is negative, it will be subtracted from the Dividend for Loss of Credited Interest. The entire Plan Dividend, however, will never be less than zero.J. Opt In & Opt Out Account Examples
The following hypothetical examples demonstrate how you should calculate the benefits you will receive by Opting In or Opting Out. The amounts in each of the following examples are strictly hypothetical as are their relationships to each other. You should not assume that a given account value will produce the Plan Credit or other balances suggested in each example. These amounts will depend on several factors, some of which remain to be determined. The account values shown on your Election Form will be recalculated as of the Effective Date.
| 1. Annuity Contracts: | |
| Values as of the Effective Date Account Value $35,585.61 Loan Balance N/A Cash Surrender N/A Option One Fund N/A Plan Credit 800.67 |
Opt Out Benefits Cash Payment (85% of the Account Value): $30,247.77 Annuity (15% of the Account Value): 5,337.84 Total Opt Out Benefits: $35,585.61 |
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| 2. Single Premium Whole Life Contracts: |
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| Values as of the Effective Date Account Value $75,414.14 Loan Balance 19,304.64 Cash Surrender N/A Option One Fund N/A Plan Credit 1,696.82 |
Opt Out Benefits Cash Payment (85% of Non-Loaned Account Value): $47,693.08 Annuity (15% of Non-Loaned Account Value): 8,416.43 Total Opt Out Benefits: $56,109.50
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| 3. Universal Life & Interest Sensitive Whole Life Contracts: Example 1 - $0.00 Loan Balance |
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| Values as of the Effective Date Account Value $13,309.47 Loan Balance 0.00 Cash Surrender 10,482.69 Option One Fund N/A Plan Credit 13.30 |
Opt Out Benefits 1. Cash Surrender Value: $10,482.69 2. 85% of Non-Loaned Account Value: $11,313.05 Cash Payment (lesser of #1 or #2 above): $10,482.69 Annuity (15% of Non-Loaned Account Value): $ 1,996.42 Total Opt Out Benefits: $12,479.11 |
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| 4. Universal Life & Interest Sensitive Whole Life Contracts: Example 2 - With Loan Balance |
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| Values as of the Effective Date Account Value $18,432.52 Loan Balance 7,451.00 Cash Surrender 9,944.29 Option One Fund N/A Plan Credit 18.45 |
Opt Out Benefits 1. Cash Surrender Value: $9,944.29 2. 85% of Non-Loaned Account Value: $9,334.29 Cash Payment (lesser of #1 or #2 above): $9,334.29 Annuity (15% of Non-Loaned Account Value): 1,647.23 Total Opt Out Benefits: $10,981.52 |
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| 5. Universal Life & Interest Sensitive Whole Life Contracts: Example 3 - $0.00 Cash Surrender Value |
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| Values as of the Effective Date Account Value $8,445.00 Loan Balance 0.00 Cash Surrender 0.00 Option One Fund N/A Plan Credit 8.45 |
Opt Out Benefits 1. Cash Surrender Value: $0.00 2. 85% of Non-Loaned Account Value: $7,178.25 Cash Payment (lesser of #1 or #2 above): $0.00 Annuity (15% of Non-Loaned Account Value): 1,266.75 Total Opt Out Benefits: $1,266.75 |
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Opt Out Information
K. General Opt Out Information
If you Opt Out, you are eligible to receive two benefits: (1) an "Opt Out Cash Payment" and (2) an "Opt Out Annuity". You will not be eligible to receive a Plan Credit or a Plan Dividend.
1 To Opt Out, complete and return the enclosed Election Form by April 15, 1993 (the "Election Deadline").
2 The Election Form must be received by Fidelity Bankers by the Election Deadline, or you will be deemed to have Opted In and, if applicable, to have selected a 10-year interest rate Guarantee Period. You should select a method of returning the Election Form that will assure proof of delivery by the Election Deadline. Election Forms received after the Election Deadline (regardless of when postmarked), will not be honored. Once submitted, the Election Form is irrevocable and cannot be changed without the Deputy Receiver's written consent.
3 Option One holders who choose to decline the benefits of the Plan must return an Election Form by the Election Deadline to Opt Out.
4 The Opt Out Cash Payment and the Opt Out Annuity benefits will be as follows:
| Contract or Account Type |
Opt Out Cash Payment |
Opt Out Annuity |
| 1) Annuity 2) Single Premium Whole Life 3) Option One Account |
85% of Non-Loaned Account Value | 15% of Non-Loaned Account Value |
| 1) Universal Life 2) Interest Sensitive Whole Life |
Lesser of: 1) Cash surrender value 2) 85% of Non-Loaned Account Value |
15% of Non-Loaned Account Value |
| 1) Term Life 2) Whole Life 3) Accident & Health |
100% of unearned premium C prorated | Not Applicable |
5 Holders of annuitized contracts who Opt Out will continue to receive periodic income payments in accordance with their previously selected settlement option. Continued payment of these benefits will become the obligation of the new mutual company described in the Introduction.
6 Opt Out Cash Payments will be distributed shortly after the Effective Date. However, if payment is not made within 90 days after the Effective Date, interest will accrue at 3% per year. If you Opt Out, your contract, including death benefits, will be terminated as of 11:59 p.m. on the day preceding the Effective Date.
7 All Opt Out Cash Payments will be paid directly to the Owner and, if applicable, the assignee, and will be mailed first class to the Owner's address provided in Section C of the Election Form. Opt Out Cash Payments cannot be distributed through wire transfer or overnight delivery.
8 Fidelity Bankers will not transfer Opt Out Cash Payments directly to another insurer on the owner's behalf, e.g., to qualify for tax-free exchange treatment under Section 1035(a) of the Internal Revenue Code. Any 1035 Exchange forms received by Fidelity Bankers will be returned.
9 The IRS recently decided that contract-holders receiving distributions directly from insurers subject to rehabilitation can, under certain circumstances, reinvest the proceeds in another contract within 60 days of receipt and qualify for tax-free exchange treatment under 1035(a) (See Revenue Procedure 92-44). However, such an exchange will not preserve certain "grandfathered" status and other favorable tax attributes of the original contracts such as those preserved under an Opt In election (please refer to page 3). In addition, if you invest your Opt Out Cash Payment in a new contract issued by another insurer, you may be required to assign all future distributions from any related Fidelity Bankers contract (e.g., Opt Out Annuity) to your new insurer when you purchase the new contract for investment in the new contract to qualify for such tax-free exchange treatment. Forms to assign the Opt Out Annuity to the new insurer will be available after the Opt Out Cash Payment is distributed. The Deputy Receiver can offer no opinion as to whether the Opt Out Cash Payment and Opt Out Annuity will qualify for such treatment. It is recommended, therefore, that Contract-holders consult their tax advisors before electing to Opt Out.
There is a substantial risk that, absent a qualification for the tax-free exchange treatment described in the preceding paragraph, the Opt Out Cash Payment and any outstanding policy loans will be treated as a distribution for Federal income tax purposes, and thus be taxable to the extent of gain in your Fidelity Bankers contract (the excess of its gross account value over its tax basis). Declining Contract-holders may also be subject to penalty taxes for premature distributions.
10 You may maintain your insurance coverage until 11:59 p.m. of the day preceding the Effective Date by making your scheduled premium payments. Fidelity Bankers will stop billing for premiums during the month before the Effective Date.
11 If the amount due after the Opt Out Cash Payment is made is too small to justify the issuance of an Opt Out Annuity, a cash payment of the undistributed account value due may be made. The decision as to whether to issue an Opt Out Annuity rests exclusively with the Deputy Receiver.
12 Payment of the Opt Out Annuity is supported solely by the financial performance of the assets transferred to the new mutual company described in the Introduction. The Deputy Receiver intends to provide sufficient assets to support the liability reserves associated with the Opt Out Annuity, assuming sufficient assets are available. It is possible the Opt Out Annuity may not be a covered contract under any state life and health insurance guaranty association acts.
If you own an Annuity, Single Premium Whole Life, Universal Life, Interest Sensitive Whole Life, or Option One Account and you elect to Opt Out, you will receive the single premium deferred annuity described in this section. Payments under this Opt Out Annuity will not be available for at least 2 years after the Effective Date, except as death proceeds.
Single Premium C The Opt Out Annuity will be funded with an amount equal to 15% of your Non-Loaned Account Value.
Accumulated Value C The "accumulated value" as of each policy anniversary date will be the accumulated value as of the preceding anniversary, plus accrued interest. The Opt Out Annuity does not have a surrender value.
Annuitant C The "annuitant" will be the annuitant or insured named in the original Fidelity Bankers contract.
Owner C The "owner" will be the Declining Contract-holder. The owner may be changed by notifying the company in writing.
Beneficiary C The "beneficiary" will be as named in the Fidelity Bankers contract. The owner may change the beneficiary by notifying the company in writing.
Interest C The "minimum guaranteed interest rate" is 3%. The company may apply a declared interest rate in excess of this rate.
Death Benefit C Upon the annuitant's or owner's death, before the annuity date and while the contract is in-force, the company will provide a death benefit equal to the accumulated value on the date of death, in accordance with the contract terms, upon receipt of due proof of death.
Annuity Date C The "annuity date" is the date payments begin. The annuity date will be the later of (1) the policy anniversary date following the annuitant's 65th birthday or (2) ten years from the Effective Date. The annuity date may be changed by notifying the company in writing at least 30 days in advance. The annuity date may not be earlier than 2 years after the Effective Date. However, the annuity date may not be later than the anniversary date nearest the annuitant's 90th birthday (85th birthday in Pennsylvania).
Settlement Date C The earlier of the annuity date or the date of the first to die of the owner or the last surviving annuitant.
Settlement Provisions C The following "settlement options" will be available as of the settlement date:
First Option C Payment in Two Installments C At least 2 years after the Effective Date (except in the case of death), a payment equal to 2 of the accumulated value will be made. The unpaid balance will be paid 6 months later.
Second Option C Proceeds Left at Interest C The company will retain the proceeds during the lifetime of the payee or for a fixed period of not more than 30 years. Interest will be paid in 1, 3, 6, or 12 month intervals.
Third Option C Payment for a Specified Period C The company will make payments for a specified number of years.
Fourth Option C Payment of a Specified Amount C The company will make periodic payments of a specified amount. The sum of the payments in each year must equal at least 6% of the proceeds. Payments will continue until the proceeds, plus interest on the unpaid balance, are exhausted. The final payment will equal the unpaid balance.
Fifth Option C Life Income C The company will make payments, with or without a guaranteed period, for as long as the payee lives according to annuity purchase rate guarantees as set forth in the Opt Out Annuity.
Sixth Option C Special Settlement Agreement C The company will pay the proceeds in accordance with terms agreed upon between the contract-holder and the company. However, no such payment can be made before two years after the Effective Date except in case of death.
M. Tax Withholding Election Notice
If you Opt Out, you should read this Notice carefully before completing Section B of the Election Form.
Current tax law requires that a Federal tax of 10% be withheld from the taxable portion of certain payments you receive from life insurance and annuity contracts, unless you have informed Fidelity Bankers that you elect not to have tax withheld from those payments. Withholding applies only to the taxable portion of the payment you receive and not to the entire payment.
Even if you elect not to have Federal income tax withheld, you are still liable for payment of Federal income tax on the taxable portion of the payment. You may be subject to tax penalties under the Federal estimated income tax payment rules if your payments of estimated tax and withholding, if any, are insufficient. If you do not provide your Social Security or Tax ID number, as requested on the Election Form, the IRS requires us to withhold 10% of any taxable payment.
N. Signature Guide for Election Form
The following provides examples of how the Election Form should be signed. Please sign with full, legal names.
| Contract-holder: |
Sign the Election Form this way: | For example: |
| Individual | Sign name. Spouse's signature also required in LA, TX, and WI. If single or spouse is deceased, please state this on the Election Form. | John A. Doe Ann C. Doe, Spouse |
| Corporation | Sign name of corporation "By:" two authorized officials, followed by their titles. | Acme Corporation By: Lee D. Jones, Pres. By: Mary K. Smith, Treas. |
| Partnership | Sign name of partnership "By:" one or more authorized partners, followed by "Partner". | Acme & Company By: Lee D. Jones, Partner By: Mary K. Smith, Partner |
| Company Not Incorporated | Sign name of company "By:", then signature, followed by "Sole Owner". | Acme Company By: John A. Doe, Sole Owner |
| Irrevocable Beneficiary | Both the Contract-holder and the irrevocable beneficiary must sign. | John A. Doe Mary K. Smith, Beneficiary |
| Assignee | Both the Contract-holder and Assignee must sign. | John A. Doe Mary K. Smith, Assignee |
| Representative: |
Sign the Election Form this way: | For example: |
| Power of Attorney | Sign name "By:", then signature, followed by "Attorney in Fact" C furnish copy of power of attorney. | John A. Doe By: Mary K. Smith, Attorney in Fact |
| Executor/ Guardian/ Administrator |
Sign name of estate "By:", then signature, followed by title C furnish certified copy of current appointment. | Estate of John A. Doe By: Lee D. Jones, Executor |
| Trustee | All Trustees must sign, followed by "Trustee". | Lee D. Jones, Trustee Mary K. Smith, Trustee |
| Custodian of IRA or UGMA | Sign name, followed by "Custodian". | Mary K. Smith, Custodian |
O. Definitions
Unless otherwise specifically provided or the context requires, the terms listed below shall have the following definitions:
Account Value means
For annuities: the sum of all premiums paid and all interest earned less any withdrawals and partial surrenders.
For Single Premium Whole Life: the sum of the single premium and all interest earned less cost of insurance charges, monthly fees, and partial surrenders.
For Universal Life and Interest Sensitive Whole Life: the sum of all net premiums paid and all interest earned less cost of insurance charges, monthly fees, and partial surrenders.
For Option One holders: the sum of the initial deposit and all interest earned less any approved "hardship withdrawals".
Note: Under an Opt In election, Hartford will assume both the Account Value and any outstanding loan balance, except for annuities. For annuities, any outstanding loan balance will be deducted from the Account Value and the resulting Non-Loaned Account Value will be assumed. The account value shown on the Election Form for annuities is the Non-Loaned Account Value.
Annuitized contract means an annuity which makes a periodic payment to a Contract-holder under a previously selected settlement option.
Annuity Commencement Date (Annuity Date) means the date that income payments commence according to the annuity settlement option elected.
Commission means the State Corporation Commission of the Commonwealth of Virginia.
Contingent Annuitant means the person designated by the contract owner who, upon the Primary Annuitant's death (prior to the Annuity Commencement Date), becomes the annuitant.
Contract-holder means the owner of an in-force Fidelity Bankers contract.
Declining Contract-holder means a Contract-holder or an Option One holder who has made, or is deemed to have made, an election to Opt Out of the Plan.
Effective Date means the date the Plan takes effect. On that date, the contracts and accounts of Participating Contract-holders are restructured and then assumed by Hartford.
Fidelity Bankers Trust means the trust or trusts created and operated pursuant to the Commission's Order for the benefit of Fidelity Bankers, its Contract-holders, and its creditors.
Guarantee Period means the period during which either an initial or a subsequent guarantee interest rate is credited.
Hartford means Hartford Life Insurance Company, a Connecticut stock life insurer, and all of its affiliates.
Non-Loaned Account Value means the Account Value minus any outstanding loan balance.
Option One Account means the account created when a Contract-holder surrendered his or her contract during the receivership.
Option One holder means a Contract-holder who surrendered a contract during the receivership and whose cash value is being held in an Option One Account pursuant to the moratorium on cash value payments.
Option One Funds means those funds held by Fidelity Bankers in an Option One Account pursuant to the receivership moratorium on cash value payments.
Opt In means to elect or be deemed to have elected to participate in the Plan and to allow Hartford to assume the contract or Option One Account.
Opt Out means to elect or be deemed to have elected not to participate in the Plan.
Owner means the person or entity designated as owner of an in-force Fidelity Bankers contract.
Participating Contract-holder means a Contract-holder or an Option One holder who has made or has been deemed to have made an election to Opt In to the Plan.
Plan means the Rehabilitation Plan as approved by the State Corporation Commission on September 29, 1992, as the same may be amended by Order of the Supreme Court of the Commonwealth of Virginia or Order of the Commission.
Primary Annuitant means the person on whose life the annuity is issued.
Receivership Period means the period of time between May 13, 1991, and the Effective Date.
Fidelity Bankers Life Insurance Company
Post Office Box 2368 C Richmond, Virginia 23218 C (800) 366-4488