Table of Contents
As filed
with the Securities and Exchange Commission on August 9, 2010
File Nos. 333- and 333-
File Nos. 333- and 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE SECURITIES ACT OF 1933
| Manulife Financial | (Exact name of each Registrant as specified in its charter) |
John Hancock Life | ||
| Corporation | Insurance | |||
| Company (U.S.A.) | ||||
| Canada | (State or other jurisdiction of | Michigan | ||
| incorporation or organization) | ||||
| 98-0361647 | (I.R.S. Employer Identification No.) | 01-0233346 | ||
| 200 Bloor Street East | (Address and telephone number of | 601 Congress Street | ||
| Toronto, Ontario, | each Registrant’s principal executive offices) | Boston, Massachusetts 02210-2805 | ||
| Canada M4W 1E5 | (617) 663-3000 | |||
| (416) 926-3000 | ||||
| Stephen P. Sigurdson, Esq. | (Name, address and telephone number of | Arnold R. Bergman, Esq. | ||
| Manulife Financial Corporation | agent for service) | Scott A. Lively, Esq. | ||
| 200 Bloor Street East | John Hancock Life Insurance | |||
| Toronto, Ontario, | Company (U.S.A.) | |||
| Canada M4W 1E5 | 601 Congress Street | |||
| (416) 926-3000 | Boston, Massachusetts 02210-2805 | |||
| (617) 663-3000 |
Copies to:
| Andrew J. Beck, Esq. | Stephen E. Roth, Esq. | |
| Torys LLP 237 Park Avenue |
Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, NW |
|
| New York, NY 10017 | Washington, D.C. 20004 -2415 | |
| (212) 880-6000 | (202) 383-0158 |
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Approximate date of commencement of proposed sale to the public: From time to time after
the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
please check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective
amendment thereto that shall become effective upon filing with the Commission pursuant to Rule
462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment to a registration statement filed pursuant to General
Instruction I.C. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following
box. o
box. o
CALCULATION OF REGISTRATION FEE
| Proposed | Proposed | |||||||||||||||||||||
| maximum | maximum | |||||||||||||||||||||
| Title of each class of securities to | Amount to be | aggregate price | aggregate offering | Amount of | ||||||||||||||||||
| be registered | registered (1) | per security (2) | price (2) | registration fee | ||||||||||||||||||
John Hancock Life
Insurance Company
(U.S.A.) Contract
Value Interests
under deferred
annuity contracts |
$ | 1,000,000,000 | 100 | % | 100 | % | $ | 71,300 | ||||||||||||||
Subordinated
guarantee relating
to Contract Value
Interests under
deferred annuity
contracts (3) |
None | |||||||||||||||||||||
| (1) | An indeterminate number or amount of Contract Value Interests under deferred annuity contracts of John Hancock Life Insurance Company (U.S.A.) that may from time to time be issued at indeterminate prices, in U.S. dollars. In no event will the aggregate maximum offering price of all securities issued pursuant to this registration statement exceed $1,000,000,000. | |
| (2) | Estimated solely for the purpose of determining the amount of the registration fee. | |
| (3) | The subordinated guarantee issued by Manulife Financial Corporation being registered hereon is being sold without separate consideration. Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate fee for the subordinated guarantee is payable. |
The Registrants hereby amend this registration statement on such date or dates as may be necessary
to delay its effective date until the Registrants shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated August 9, 2010
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
JH [Marketing Name]
SINGLE PAYMENT MODIFIED GUARANTEE DEFERRED ANNUITY
NON-PARTICIPATING
NON-PARTICIPATING
CONTRACT VALUE INTERESTS
Guaranteed as described herein by
MANULIFE FINANCIAL CORPORATION
Guaranteed as described herein by
MANULIFE FINANCIAL CORPORATION
This prospectus describes JH [Marketing Name], a single payment modified guarantee deferred annuity
contract with market value adjustment interests (“Contract”). JH [Marketing Name] is issued and
offered by John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA”) in all jurisdictions
except New York. Unless otherwise specified, “we,” “us,” “our,” or “Company” refers
to John Hancock USA. The prospectus also describes the subordinated guarantee by Manulife Financial
Corporation (“MFC”) of obligations of John Hancock USA under a Contract (the “MFC Subordinated
Guarantee”). MFC is our parent company.
The prospectus describes both an individual deferred annuity contract and certificates issued under
a group deferred annuity contract. We use the term “Contract” to describe both an individual
contract and a certificate under a group contract that evidences a participating interest in the
group contract.
The Contract is designed to provide retirement income pursuant to either nonqualified retirement
plans or plans qualifying for special income tax treatment under the Internal Revenue Code of 1986,
as amended (the “Code”). As used in this prospectus, “you” refers to the Owner of a Contract.
| • | You make a single Purchase Payment for the Contract. |
| o | The minimum Purchase Payment is $[10,000/$25,000]. | ||
| o | The maximum Purchase Payment (without our prior approval) is $1,000,000. |
| • | You may not make additional Purchase Payments for a Contract but may purchase additional Contracts at the then prevailing rates and terms. | ||
| • | You designate the Term to which we allocate your Purchase Payment. | ||
| Regardless of the annual changes in the CPI-U, the Indexed Crediting Rate will never be less than a Floor Rate of [0-1%] nor greater than a Rate Cap of [8%-10%]]. | |||
| • | You select an Annuity Option available under your Contract or an alternate form of settlement acceptable to us. |
Please read this prospectus carefully and keep it for future reference. It contains information
about the Contract and the MFC Subordinated Guarantee that a prospective purchaser should know
before investing.
There are risks associated with the Contract. These risks include liquidity risks, risk that the
Index Crediting Rate could be as low as the Floor Rate , risk that the CPI-U and the way the CPI-U
is calculated may change, risk that the change in CPU-U may not be the same rate of inflation that
individual consumers may experience, [risk that inflation and the change in CPI-U may exceed the
contract Rate Cap], risk that we may substitute the CPI-U with another index, and Company and
guarantor solvency risks. Also, withdrawal charges and a Market Value Adjustment may apply for a
number of years. Because of the Market Value Adjustment provision of the Contract, you bear the
investment risk that the Guaranteed Margins offered by us at the time of withdrawal or the start of
Annuity Payments may be higher than the Guaranteed Margins applied to the Contract with the result
that the amount you receive upon withdrawal or annuitization may be reduced by the Market Value
Adjustment and may be less than your original investment in the Contract. See “Risk Factors” on
page 7 and “Adjustments And Charges Upon Withdrawals” on page 15 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
These securities are not deposits with, or obligations of, or guaranteed or endorsed by, any bank
or any affiliate thereof, and are not insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency.
The MFC Subordinated Guarantee does not relieve the Company of any obligations under its Contracts.
Therefore, the MFC Subordinated Guarantee is in addition to all of the rights and benefits that the
Contracts otherwise provide.
You should be aware that owning these securities may have tax consequences both in the United
States and Canada. This prospectus and any applicable prospectus supplement may not describe these
tax consequences fully. You should read the tax discussion contained in this prospectus and in any
applicable prospectus supplement.
Your ability to enforce civil liabilities related to the MFC Subordinated Guarantee under U.S.
federal securities laws may be affected adversely by the fact that Manulife Financial Corporation
is organized under the laws of Canada, most of its officers and directors and some of the experts
named in this prospectus are residents of Canada, and a substantial portion of its assets are
located outside the United States.
You should rely on the information contained in or incorporated by reference in this prospectus or
any applicable prospectus supplement and on the other information included in the registration
statement of which this prospectus forms a part. We have not authorized anyone to provide you with
different or additional information. We are not making an offer of the securities covered by this
prospectus in any jurisdiction where the offer is not permitted by law. You should not assume that
the information contained in or incorporated by reference in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date on the front of this
prospectus or any applicable prospectus supplement, as the case may be.
There is no market through which these securities may be sold and purchasers may not be able to
resell securities purchased under this prospectus.
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
| Annuities Service Center | Mailing Address | ||
164 Corporate Drive
|
Post Office Box 9505 | ||
Portsmouth, NH 03801-6815
|
Portsmouth, NH 03802-9505 | ||
(617) 663-3000 or
|
www.jhannuities.com | ||
(800) 344-1029 |
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About This Prospectus
This prospectus describes both individual deferred annuity contracts and Certificates issued
under group deferred annuity contracts. We use the term “Contract” to describe both an individual
contract and a Certificate under a group contract that evidences a participating interest in that
group contract.
In this prospectus, unless otherwise specified or the context otherwise requires, references to
“MFC” refer to Manulife Financial Corporation. Unless otherwise specified, all dollar amounts
contained in this prospectus are expressed in U.S. dollars, and references to “dollars” or “$” are
to U.S. dollars and all references to “Cdn$” are to Canadian dollars. Unless otherwise specified,
MFC financial information included and incorporated by reference in this prospectus is prepared
using generally accepted accounting principles in Canada, which we refer to as “Canadian GAAP.”
The Company filed this prospectus as part of a joint registration statement with MFC relating to
the Contracts that it issues and a subordinated guarantee that MFC issues. This prospectus,
together with the documents incorporated by reference herein, describes information about both the
Contracts and the subordinated guarantee. Under the registration statements filed with the U.S.
Securities and Exchange Commission (“SEC”), John Hancock USA may, from time to time, sell the
Contracts described in this prospectus.
Before you invest, you should read this prospectus together with the additional information
described under the heading “Where You Can Find More Information.” This prospectus does not contain
all of the information contained in the registration statements, certain parts of which are omitted
in accordance with the rules and regulations of the SEC. You should refer to the registration
statements and the exhibits to the registration statements for further information with respect to
us and the Contracts.
MFC prepares its consolidated financial statements in accordance with Canadian GAAP, which differs
from generally accepted accounting principles in the United States, which we refer to as “U.S.
GAAP.” Although MFC reconciles its consolidated financial statements to U.S. GAAP to the extent
required by applicable SEC rules and guidelines, MFC’s consolidated financial statements
incorporated by reference in this prospectus and in the documents incorporated by reference in this
prospectus may not be comparable to financial statements prepared in accordance with U.S. GAAP. You
should refer to note 21 to MFC’s annual audited consolidated financial statements as at and for the
year ended December 31, 2009 on Form 40-F filed on March 19, 2010 and as amended and filed on Form
40-F/A on March 29, 2010, and to note 22 to MFC’s annual audited consolidated financial statements
as at and for the year ended December 31, 2008 on Form 40-F/A filed on May 8, 2009 and as amended
and filed on Form 6-K on March 29, 2010 for a discussion of the principal differences between MFC’s
financial results calculated under Canadian GAAP and under U.S. GAAP. MFC’s financial statements
include a footnote containing condensed consolidating financial information with separate columns
for MFC, John Hancock USA and other subsidiaries of MFC, together with consolidating adjustments.
John Hancock USA has been a subsidiary of MFC for financial reporting purposes since September,
1999 and, as a consequence, John Hancock USA has been, and will continue to be, included in the
consolidated financial statements of MFC in reports filed by MFC with the SEC since that date.
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I. Glossary Of Special Terms
Account Value: The amount we hold under the Contract for you at any given time. On the
Contract Date, the Account Value is equal to the Purchase Payment .
Annuitant: Any individual person or persons whose life is used to determine the duration of
Annuity Payments involving life contingencies. The Annuitant is as designated on the specifications
page of the Contract, unless changed prior to the Maturity Date.
Annuity Option: The method selected by you for Annuity Payments made by us.
Annuity Payment(s): Payment(s) by us to you or your Payee, which generally commence on or after
the Maturity Date and are in accordance with the Annuity Option elected under the terms of the
Contract.
Annuities Service Center: Any office designated by us for the receipt of Payment and processing of
Owner requests.
Beneficiary: The person, persons or entity to whom certain benefits are payable following the
death of an Owner, or if the Owner is a non-natural person, following the death of an Annuitant.
Certificate: For a group contract, the documents we issued to each Owner which summarize the
Owner’s rights and benefits under the contract.
Contingent Beneficiary: The person, persons or entity who becomes the Beneficiary if the
Beneficiary is not alive when a benefit is due and payable.
Contract: For an individual contract, the individual annuity Contract. For a group contract, the
Certificate evidencing a participating interest in the group annuity Contract. Any reference in
this prospectus to “Contract” shall, in the case of a group contract, refer to the Certificates
unless the context otherwise requires the underlying group annuity contract.
Contract Anniversary: For an individual Contract, the anniversary of the Contract beginning twelve
consecutive months from the Contract Date and each year thereafter. For a Contract issued under a
group contract in the form of a Certificate, the anniversary of the date we issued the Certificate.
Contract Date: In the case of an individual Contract, the date we issue the Contract as designated
on the Contract specifications page. In the case of a Contract issued under a group contract in the
form of a Certificate, the effective date of participation under the group contract as designated
in the Certificate specifications page.
Contract Value Interests: Amounts guaranteed by MFC, as described in “Description of MFC
Subordinated Guarantee” in Part VI.
Contract Year: The period of time measured twelve consecutive months from the Contract Date, or
any Contract Anniversary thereafter.
Code: The Internal Revenue Code of 1986, as amended.
CPI-U: The All Items Consumer Price Index for All Urban Consumers for the U.S. City Average
published monthly by the Department of Labor. It reflects spending patterns of almost all
residents of urban or metropolitan areas. If this index is discontinued or if the calculation is
changed substantially the Company may substitute a comparable index.
Due Proof of Death: We require Due Proof of Death upon the death of the Owner or Annuitant, as
applicable. We must receive one of the following at our Annuities Service Center:
| (a) | a certified copy of a death certificate; |
| (b) | a certified copy of a decree of a court of competent jurisdiction as to the finding of death; or |
| (c) | any other proof satisfactory to us. |
Declared Interest Rate: The interest credited on any given day at a rate that, if compounded daily
for one year, would equal the rate we declare for the first year of any selected Term under the
terms of the Contract, as shown on the specifications page of the Contract.
Fixed Annuity: An Annuity Option with payments which are predetermined and guaranteed as to dollar
amount.
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Floor Rate: The minimum rate of interest the Company will credit to the Contract regardless of
the year-over-year movement in the CPI-U. The Floor Rate applicable to you appears on the first
page of this prospectus.
General Account: All of the Company’s assets other than the assets in segregated asset accounts
which are maintained as “insulated” separate accounts under applicable law.
Group Holder: In the case of a group annuity contract, the person, persons or entity to whom we
issue the group contract.
Gross Withdrawal Amount: The amount deducted from the Account Value for a full or partial
withdrawal. For a full withdrawal, such amount is the Account Value. For a partial withdrawal, it
is the amount you request plus any applicable withdrawal charge, adjusted by any applicable Market
Value Adjustment.
Guaranteed Margin: A rate that is used to determine the Indexed Crediting Rate and the Market
Value Adjustment factor. The Guaranteed Margin remains constant for the Term. This rate will be
shown on the specifications page of the Contract.
Index: The price index used for determining the Indexed Crediting Rate, which is currently the All
Items Consumer Price Index for All Urban Consumers (“CPI-U”) for the U.S. City Average. This Index
is published monthly and reflects spending patterns of almost all residents of urban or
metropolitan areas. We may substitute a comparable index, subject to approval by the Interstate
Insurance Product Regulation Commission, if the CPI-U is discontinued or if its calculation is
changed substantially.
Indexed Crediting Rate: The crediting rate that is based on annual changes in the CPI-U, adjusted
by the Guaranteed Margin. This rate will never be less than the Floor Rate [or greater than the
Rate Cap]. See Appendix A.
Initial Term: The period of time that you select on the application form, beginning on the
Contract Date. The Initial Term continues for the period shown on the specifications page of the
Contract.
Market Value Adjustment: An adjustment we make to amounts that are withdrawn or annuitized on any
date other than during the period 30 days after the expiration of the Term. It may increase or
decrease the amount available for withdrawal or annuitization.
Maturity Date: The date on which annuity benefits are scheduled to commence. It is the date
specified on the Contract specifications page, unless changed.
CPI Separate Account: A non-registered separate account that we established within the General
Account and in which we hold reserves for our guarantees under the Contract. Our other General
Account assets are also available to meet the guarantees under the Contract and our other
general obligations. The assets of the CPI Separate Account are subject to the liabilities
that arise out of the other business that we conduct.
Nonqualified Contracts: Contracts which are not issued under Qualified Plans.
Owner or Contract Owner: In the case of an individual Contract, the person, persons or entity
entitled to the ownership rights under the Contract. In the case of a Contract issued under a group
contract in the form of a Certificate, the person, persons or entity named in the Certificate who
is entitled to all of the ownership rights under the group contract not expressly reserved to the
group contract holder. The Owner is as designated on the Contract, unless changed.
Payee: Any of the person(s) or entity to whom Annuity Payments are to be made.
Payment or Purchase Payment: An amount paid by a Contract Owner to us as consideration for the
benefits provided by the Contract.
Qualified Contracts: Contracts issued under Qualified Plans.
Qualified Plans: Retirement plans which receive favorable tax treatment under Section 401, 403,
408, 408A or 457 of the Code.
[Rate Cap: The maximum rate of interest the Company will credit to the Contract regardless of the
year-over-year movement in the CPI-U. The Rate Cap applicable to you appears on the first page of
this prospectus.]
Subsequent Term: A period of time beginning on the day following expiry of the immediately
preceding Term.
Term: The Initial Term or a Subsequent Term.
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II. Overview
This overview tells you some key points you should know about the Contract. Because this is an
overview, it does not contain all the information that may be important to you. You should read
carefully this entire prospectus, including its Appendices and your Contract for more detailed
information.
Insurance laws and regulations apply to us in every state in which our contracts are sold. As a
result, a Contract purchased in one state may have terms and conditions that vary from the terms
and conditions of a Contract purchased in a different jurisdiction. We disclose all material
features and benefits of the Contracts in this Prospectus.
What kind of Contract is described in this Prospectus?
The Contract is a single payment modified guarantee deferred annuity contract with market value
adjustment interests. It provides for the accumulation of the Account Value and the payment of
annuity benefits on a fixed basis.
Under the Contract, you make a Purchase Payment to us, you select a Term, and we credit interest
for the Term. At the end of each Term, you can choose:
| • | to start a Subsequent Term (up to a maximum Maturity Date), | ||
| • | to start Annuity Payments, or | ||
| • | to receive your Account Value. |
We may assess a withdrawal charge and make a Market Value Adjustment to your Account Value if you
elect to start Annuity Payments or receive your Account Value outside of a 30-day period at the end
of a Term (please see “Adjustments and Charges Upon Withdrawal” in “IV. Charges, Deductions and
Adjustments”).
How does the Contract Work?
The following example illustrates how a Contract can work. It assumes that you are 55 when you
purchase the Contract, you do not take withdrawals, and we make 5 year and 6 year Terms available
until you are 70:
Age 55 — You purchase a Contract and elect a 5 Year Term at the then current Declared Interest
Rate for the first year and the rate on each Contract Anniversary thereafter is determined by
the then current Indexed Crediting Rate
→ Age 60 — You renew for a subsequent 6 Year Term at the then current Declared Interest Rate for
the first year and the rate on each Contract Anniversary thereafter is determined by the then
current Indexed Crediting Rate
→ Age 66 – You renew for a Subsequent 5 Year Term at the then-current Declared Interest Rate
for the first year and the rate on each Contract Anniversary thereafter is determined by the
then current Indexed Crediting Rate
Age 71 – You elect to begin Annuity Payments
This prospectus describes both individual deferred annuity contracts and participating interests in
group deferred annuity contracts. For information on eligible groups, see “Eligible Groups For
Group Annuity Contract.”
| • | Participation in a group contract will be separately accounted for by the issuance of a Certificate evidencing the Owner’s interest under the Contract. |
| • | Ownership of an individual Contract will be evidenced by the issuance of an individual annuity Contract. |
In this prospectus, we refer to both the Certificate and the individual annuity Contract as the
“Contract.”
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Retirement Plans. We may issue the Contract pursuant to either nonqualified retirement plans or
plans qualifying for special income tax treatment under the Code. Qualified plans include
individual retirement accounts and annuities (including Roth IRAs), pension and profit-sharing
plans for corporations and sole proprietorships/partnerships (“H.R. 10” and “Keogh” plans),
tax-sheltered annuities, and state and local government deferred compensation plans (see “VII.
Federal Tax Matters — Qualified Retirement Plans”). If you are considering purchasing a Contract
for use in connection with a qualified plan, you should consider, in evaluating the suitability of
the Contract, that it allows only a single Purchase Payment in a minimum amount stated on the first
page of this prospectus. (See “Tax Deferral” below.)
How can I invest money in the Contract?
We use the term Purchase Payment to refer to the investment you make in the Contract. You make your
Purchase Payment to us at our Annuities Service Center. The minimum and maximum Purchase Payments
are stated on the first page of this prospectus. We allocate your Purchase Payment to the Term ,
which you designate.
While we will not accept additional Purchase Payments for a Contract, you may purchase additional
Contracts at the then prevailing rates and terms.
Prior to the Maturity Date and at our option, we may cancel a Contract if the Account Value is less
than $5,000. This cancellation privilege may vary in certain states to comply with the requirements
of their insurance laws and regulations (see “Purchase Payment”). If we cancel your Contract, we
will not apply a Market Value Adjustment factor or withdrawal charges (see “IV. Charges, Deductions
and Adjustments”).
What are my investment options?
Initial Term. When you purchase a Contract, you must elect one, and only one, Initial Term. We may
offer up to ten different Terms under the Contract: one year through ten years, for you to choose,
but we may not make all of these Terms available at all times or through all authorized
distributors of the Contracts. Similarly, at the end of a Term, you may elect a Subsequent Term
from among those we make available at that time. We do not expect to offer Terms of over ten
years.
What are the Crediting Rates?
Declared Interest Rate. We determine from time to time, in our sole discretion, the interest rates
that we will credit for the first year of any Initial Term or Subsequent Term. The Declared
Interest Rate will in no event be less than the minimum rate required by applicable law.
Indexed Crediting Rate. At each Contract Anniversary date within the selected Term, the Indexed
Crediting Rate applicable for the following Contract Year will be determined based on the annual
changes in the CPI-U, adjusted by the Guaranteed Margin. The Indexed Crediting Rate may change
annually based on the CPI-U, but the Guaranteed Margin will remain constant through out the Term.
Please See Appendix A. Regardless of the annual changes in the CPI-U, the Indexed Crediting Rate
will never be less than the Floor Rate[nor greater than the Rate Cap ] appearing on the first page
of this prospectus.
How the Declared Interest Rate and the Guaranteed Margin are Set. We consider various factors in
setting the Declared Interest Rate and the Guaranteed Margin, including investment returns
available at the time that we issue the Contract, sales commissions, administrative expenses,
regulatory and tax requirements, general economic trends, and competitive factors. In addition, the
Declared Interest Rate and the Guaranteed Margin may depend on the Term that you choose. In
general, a Term with a longer duration may have a higher Declared Interest Rate and Guaranteed
Margin.
May I make withdrawals under the Contract?
Withdrawals. Before the earlier of the Maturity Date or the death of a Contract Owner, you may
withdraw all or a portion of your Account Value.
| • | You must withdraw an amount at least equal to $1,000, the minimum specified in the Contract. |
| • | If a partial withdrawal (plus any applicable withdrawal charge and after giving effect to any Market Value Adjustment) reduces the Account Value to less than $5,000, the minimum specified in the Contract, we may treat the partial withdrawal as a total withdrawal. |
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What fees and charges do I pay under the Contract?
Withdrawal Charges. If you make a withdrawal from the Contract before the Maturity Date, we may
assess a withdrawal charge (contingent deferred sales charge) against amounts withdrawn (which will
never be more than 8% of your Account Value) and Market Value Adjustment. There is never a
withdrawal charge with respect to certain free withdrawal amounts. The amount of the withdrawal
charge and when it is assessed are discussed under “IV. Charges, Deductions and Adjustments” and
Appendix C “Withdrawal Charge Schedule.” A withdrawal may be subject to income tax and a 10%
penalty tax (see “VII. Federal Tax Matters” for possible qualifications and a more detailed
discussion).
Market Value Adjustment. We will adjust any amount withdrawn or annuitized prior to the end of
either the Initial Term or a Subsequent Term by the Market Value Adjustment factor. The Market
Value Adjustment factor, when it is assessed, and when it will not apply are discussed under “IV.
Charges, Deductions and Adjustments” and Appendix B “Example Of Market Value Adjustment
Calculation.”
Annual Fee. To compensate us for assuming certain administrative expenses, we reserve the right to
charge an annual administration fee, which will never exceed $50.00. If imposed, the fee will be
detailed on your Contract’s specifications page.
State Premium Taxes. State premium taxes may also apply to your Contract, which currently range
from 0.50% to 3.50% of each Purchase Payment (see Appendix E “State Premium Taxes”).
Confirmation Statements. We will send you confirmation statements for certain transactions in your
account. You should carefully review these statements to verify their accuracy and should report
any mistake immediately to our Annuities Service Center. If you fail to report any mistake to the
Annuities Service Center within 60 days of the mailing of the confirmation statement, you will be
deemed to have ratified the transaction.
What are some benefits of the Contract?
Telephone and Electronic Transactions. You may request withdrawals by telephone. We may also permit
you to access information through our website (see “Telephone And Electronic Transactions”).
Death Benefits. We will pay the death benefit to the Beneficiary if any Contract Owner dies before
the Maturity Date. The death benefit equals the Account Value. If there is a surviving Contract
Owner, that Contract Owner will be deemed to be the Beneficiary. No death benefit is payable on the
death of any Annuitant, except that if any Contract Owner is not a natural person, we will treat
the death of any Annuitant as the death of an Owner.
We will determine the death benefit as of the date we receive written notice and proof of death
(Due Proof of Death) and all required claim forms at our Annuities Service Center.
Annuity Payments. We offer a variety of Fixed Annuities. Periodic Annuity Payments will begin on
the Maturity Date. You select the Maturity Date, frequency of payment and Annuity Option (see
“Annuity Provisions”).
Can I return my Contract?
Right to Review. Within 15 days (or other time period as required by applicable state insurance
law) of your receipt of a Contract, you may cancel the Contract by returning it to us or our agent
(see “Right To Review”). Within seven days after we receive the returned Contract, we will pay you
an amount equal to the Account Value, adjusted by any Market Value Adjustment, if applicable,
computed on the day the contract is received by us. The Market Value Adjustment will only be
applied where the change in Guaranteed Margin, as determined by the formula in the contract
specifications page, is greater than 0.25%. If the purchase of this Contract involves the
replacement of any existing life insurance or annuity, then the right to review is extended to
thirty days. If the Contract is issued as an individual retirement annuity under Section 408 or
Section 408A of the Code or as otherwise required by applicable law, and you cancel during the
first seven days of this right to review period, then we will return the Payment made for the
Contract.
What are the tax consequences of purchasing the Contract?
Tax Deferral. The status of the Contract as an annuity generally allows all earnings under the
Contract to be tax-deferred until withdrawn or until Annuity Payments begin (see “VII. Federal Tax
Matters” for possible qualifications and a more detailed discussion). In most cases, no income tax
will have to be paid on your earnings under the Contract until these earnings are paid out. This
tax-deferred treatment may be beneficial to you in building assets in a long-term investment
program. When you purchase a
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Contract for any tax-qualified retirement plan, including an IRA, the Contract does not provide any
additional tax deferred treatment of earnings beyond the treatment provided by the plan.
Consequently, you should purchase a Contract for an IRA only on the basis of other benefits offered
by the Contract. These benefits may include lifetime income payments, protection through death
benefits, and guaranteed fees.
Are there any risks in purchasing this Contract?
There are various risks associated with an investment in the Contract that we summarize below.
Issuer/Guarantor Risk. Your Contract is issued by the Company and thus is backed by the Company’s
financial strength. If the Company were to experience significant financial adversity, it is
possible that the Company’s ability to pay interest and principal under the Contract could be
impaired. Contract Value Interests (as defined in the “The Subordinated Guarantee” section later
in this Prospectus) are subject to a subordinated guarantee by MFC. If MFC were to experience
significant financial adversity, it is possible that MFC’s ability to carry out its obligations
under the guarantee could be impaired.
Market Value Adjustment Risk. If you choose to withdraw your money or annuitize on any date other
than the period 30 days after the expiration of the Term, and the Guaranteed Margin that we offer
on a Term equal to the number of months remaining on the Term for new Contracts have risen above
their level when you selected your Term, you will experience a negative Market Value Adjustment.
You do not participate directly in the investment experience of the assets that the Company holds
to support the Contract. Nonetheless, the Market Value Adjustment formula (which is discussed below
under the caption “Market Value Adjustment” and in Appendix B to this prospectus) reflects the
effect that prevailing Guaranteed Margins have on those assets. If you need to withdraw your money
during a period in which prevailing Guaranteed Margins have risen above their level when you made
your purchase, you will experience a “negative” Market Value Adjustment. When we impose this Market
Value Adjustment, it could result in the loss of both the interest you have earned and a portion of
your Purchase Payment. The Market Value Adjustment, alone or in combination with the applicable
withdrawal charges, could result in your total withdrawal proceeds being less than your Purchase
Payment. Thus, before you commit to a particular Term, you should consider carefully whether you
have the ability to remain invested throughout the Term. In addition, we cannot, of course, assure
you that the Contract will perform better than another investment that you might have made.
Risks Related to the Withdrawal Charge. We may impose withdrawal charges that range as high as 8%.
If you anticipate needing to withdraw your money prior to the end of a Term, you should be prepared
to pay the withdrawal charge that we will impose.
Risks Related to the MFC Subordinated Guarantee. Your ability to enforce civil liabilities related
to the MFC Subordinated Guarantee under U.S. federal securities laws may be affected adversely by
the fact that Manulife Financial Corporation is organized under the laws of Canada, most of its
officers and directors and some of the experts named in this prospectus are residents of Canada,
and a substantial portion of its assets are located outside the United States.
The Index Crediting Rate Will Be Based upon the Annual Percentage Change of the CPI-U, combined
with the declared Guaranteed Margin for your current Term. The Indexed Crediting Rate Could be as
low as the Floor Rate[and will never be greater than the Rate Cap] shown on the first page of this
prospectus. Changes in the CPI-U are a function of the changes in specified consumer prices over
time, which result from the interaction of many factors over which we have no control. If the CPI-U
declines or does not change, you bear the risk that you will only receive the Floor Rate of
interest on your Purchase Payment. Under certain market conditions, the Guaranteed Margin may be a
negative number. You also bear the risk that sustained declines in the CPI-U may result in only the
Floor Rate being credited to your Purchase Payment for a prolonged period.
The CPI-U Itself and the Way the CPI-U is Calculated may Change in the Future There can be no
assurance that the Bureau of Labor Statistics of the U.S. Department of Labor will not change the
method by which it calculates the CPI-U. In addition, changes in the way the CPI-U is calculated
could reduce the level of the CPI-U and lower the interest payment with respect to the Indexed
Crediting Rate. Accordingly, the amount of interest, if any, payable on the Contract, and therefore
the value of the Contract, may be significantly reduced. If the CPI-U is discontinued or if its
calculations are changed substantially, then we may substitute a comparable index (subject to the
approval of the Interstate Insurance Product Regulation Commission or your state insurance
department ).
The Department of Labor’s Bureau of Labor Statistics may revise and republish prior published CPI-U
historic rates. We will not revise any Indexed Crediting Rate to reflect any such revisions made
by the Bureau of Labor Statistics.
[Inflation and year over year CPI-U change may exceed our rate cap on the Indexed Crediting Rate.
There can be no assurance that inflationary changes in specified consumer prices in any particular
year will not be greater than the Rate Cap
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that the Company has set on the first page of this prospectus as the maximum for the Indexed
Crediting Rate. In such event, your Contract credited interest earnings will not keep pace with
inflation. ]
The Historical Levels of the CPI-U are not an Indication of the Future Levels of the CPI. The
historical levels of the CPI are not an indication of the future levels of the CPI-U during the
Term of your Contract. In the past, the CPI-U has experienced periods of volatility, and such
volatility will occur in the future. Fluctuations and trends in the CPI-U that have occurred in the
past are not necessarily indicative, however, of fluctuations that will occur in the future.
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III. Description Of The Contract
Eligible Groups For Group Annuity Contract
We may issue the group deferred annuity contract to fund plans qualifying for special income tax
treatment under the Internal Revenue Code of 1986, as amended (the “Code”). Qualified Plans include
individual retirement accounts and annuities, pension and profit-sharing plans for corporations and
sole proprietorships/partnerships (“H.R. 10” and “Keogh” plans), tax-sheltered annuities, and state
and local government deferred compensation plans. If you are considering purchasing a Contract
under a group contract for use in connection with a Qualified Plan, you should consider, in
evaluating the suitability of the Contract, that it allows for only a single Purchase Payment in an
amount of at least the amount stated on the first page of this prospectus (see “Qualified
Retirement Plans”). The group deferred annuity contract is also designed for use with nonqualified
retirement plans and such other groups (customers of certain financial institutions, trusteed or
non-trusteed groups) as may be eligible under applicable law.
An eligible member of a group to which a Contract has been issued may become an Owner under the
Contract by submitting a completed application, if required by us, and a minimum Purchase Payment.
We will issue a Certificate summarizing the rights and benefits of the Owner under the Contract to
an applicant acceptable to us. We reserve the right to decline to issue a Certificate to any person
in our sole discretion, which we will exercise in a non-discriminatory manner.
All rights and privileges under the Contract may be exercised by each Owner as to such Owner’s
interest unless expressly reserved to the Group Holder. However, provisions of any plan in
connection with which we issue the Contract may restrict an Owner’s ability to exercise such rights
and privileges.
Accumulation Provisions
Purchase Payment
You make your Purchase Payment to us at our Annuities Service Center. The minimum Purchase Payment
for a Contract is stated on the first page of this prospectus. The maximum Purchase Payment which
you may make without our prior approval is also stated on the first page of this prospectus. We
allocate the entire Purchase Payment to the Term which you select. We will not accept additional
Purchase Payments for a Contract. You may, however, purchase additional Contracts at the then
prevailing rates and terms.
If your purchase is part of a tax-free exchange pursuant to Code Section 1035 (see “VII. Federal
Tax Matters — Exchanges of Annuity Contracts” for a more detailed discussion) or a
trustee-to-trustee transfer of Qualified Plan funds, the Purchase Payment may consist of multiple
components that we might receive on different dates. If this occurs, your Term shall commence on
the date the first Purchase Payment component is received (within 60 days of the receipt of your
application), and any subsequent component also received within 60 days of your application, shall
be applied to the same Term as the first component and interest shall accrue as of the date of
receipt of each component. In the event a subsequent Purchase Payment component is not received by
us within 60 days of the date of your application, we will seek your instructions to either return
the subsequent Purchase Payment component to you or, if the subsequent Purchase Payment component
is at least the amount stated on the first page of this prospectus, to establish a separate
additional annuity Contract. Some or all of the subsequent Purchase Payment component may be
taxable if we return it to you.
Prior to the Maturity Date, we may, at our option, cancel a Contract if the Account Value is less
than $5,000. If we cancel the Contract, we will pay the amount that would be paid as a result of a
total withdrawal, and we will not apply a Market Value Adjustment or assess withdrawal charges.
This cancellation privilege may vary in certain states in order to comply with the requirements of
insurance laws and regulations in such states. The amount paid may be treated as a withdrawal for
federal tax purposes and thus may be subject to income tax and to a 10% penalty tax. (See “VII.
Federal Tax Matters” for possible qualifications and a more detailed discussion.)
We may offer as many as ten Terms, ranging from one year through ten years, in connection with the
Contracts, but we may limit the number of Terms we make available at any time, or through any
authorized distributor of the Contracts. All Terms may not be available through all authorized
distributors of the Contracts. In no event will you be permitted to elect a Subsequent Term longer
than the shortest Term ending on or after the maximum Maturity Date.
We will declare the Declared Interest Rate applicable to the first year of the Initial Term and any
Subsequent Term. This Declared Interest Rate will be shown on your application and on the Contract
specifications page. At the Contract Anniversary, we will determine the Indexed Crediting Rate
applicable for the following year based on the year-over-year percentage change in the Index
adjusted by the
Guaranteed Margin as more fully described in Appendix A. At the end of a Term, you may choose a
Subsequent Term from any of the Terms that we are then offering.
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You will have a period of 30 days commencing with the expiration of a Term to elect in writing a
Subsequent Term from among those that are available. At least 15 days, but not more than 45 days
prior to that period, we will provide you with written notice of the expiry of the Term. If you do
not elect a Subsequent Term within the required period, we will select the next shortest Term
available for you. The effective date of the Subsequent Term will be the first day following the
expiry of the immediately preceding Term. Your Account Value will not be subject to any Market
Value Adjustment at the time it is applied to a Subsequent Term pursuant to this provision. Once
the Subsequent Term has been in effect for 30 days, the MVA formula will be re-imposed.
Withdrawals
Prior to the earlier of the Maturity Date or the death of a Contract Owner, you may withdraw all or
a portion of your Account Value by written request, complete with all necessary information, to our
Annuities Service Center. For certain qualified Contracts, the Code and regulations promulgated by
the Internal Revenue Service (“IRS”) may require the consent of a Qualified Plan participant’s
spouse to an exercise of the withdrawal right. (See “Adjustments And Charges Upon Withdrawals.”)
Under our current administrative practices for partial withdrawals, we will permit you to specify
whether the amount you request is to be treated as a “gross” withdrawal amount or a “net”
withdrawal amount. If you request a “gross” amount, we will reduce the Account Value of your
Contract by the amount requested, apply any applicable withdrawal charges and market value
adjustments to the amount withdrawn from your Account Value and pay you the difference. Because we
impose withdrawal charges upon a withdrawal, the amount you receive is likely to be less than the
“gross” amount you requested. Application of a Market Value Adjustment will further decrease the
amount you receive, if the adjustment is negative, and will increase the net amount you receive ,
if the adjustment is positive. (See “Adjustments And Charges Upon Withdrawals” and the examples in
Appendix B)
If you request a “net” amount, and you have sufficient Account Value, we will reduce your Account
Value by the gross amount necessary to cover any applicable withdrawal charges and market value
adjustments and leave a balance for payment to you of the “net” amount requested. (We may,
however, be required to reduce the amount payable because of tax withholding requirements. Please
read “VII. Federal Tax Matters” for more information.) The amount you receive as a result of a
“net” request may be less than the amount of reduction of your Account Value.
If you do not specify if you want a “gross” amount or a “net” amount, we will process your partial
withdrawal request as a request for a “gross” amount. We also may change our current administrative
practices and discontinue processing “net” requests at any time.
There is no limit on the frequency of partial withdrawals. However, the amount withdrawn from your
Account Value must be at least equal to $1,000, the minimum amount specified in the Contract, or,
if less, the entire Account Value. If a partial withdrawal plus any applicable withdrawal charge
and any applicable Market Value Adjustment would reduce the Account Value to less than $5,000, the
minimum specified in the Contract, we may treat the partial withdrawal as a total withdrawal of the
Account Value.
We treat all requests for a total withdrawal of the Account Value as a request to surrender your
Contract for a “gross” amount. As a result:
| • | you may receive less than the amount requested because of the imposition of contract charges, including any applicable administrative fee, and a Market Value Adjustment; and |
| • | we will cancel your Contract as of the date we receive the request at our Annuities Service Center. |
We may defer the payment of a full or partial withdrawal for not more than six months (or the
period permitted by applicable state law if shorter) from the date we receive the withdrawal
request. If we defer payments for more than 30 days, we will credit the amount deferred with
interest at a rate not less the minimum required by applicable law.
Withdrawals are subject to Contract charges and Market Value Adjustments (see “Adjustments And
Charges Upon Withdrawals”). Withdrawals from the Contract also may be subject to income tax and a
10% penalty tax. Withdrawals are permitted from Contracts issued in connection with Section 403(b)
qualified plans only under limited circumstances (see “VII. Federal Tax Matters”).
Special Withdrawal Services – The Systematic Withdrawal Program
We administer a Systematic Withdrawal Program (“SWP”) which permits you to pre-authorize a periodic
withdrawal of a specified
amount of Account Value. We apply a Market Value Adjustment factor and assess withdrawal charges
if a SWP withdrawal exceeds the free withdrawal amount (see “Free Withdrawal Amount” in “IV.
Charges, Deductions and Adjustments”). SWP withdrawals, like other withdrawals, may be subject to
income tax to the extent of earnings under the Contract and, if made prior to age 59 1/2, may also
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be subject to a 10% IRS penalty tax. If you are interested in a SWP, you may obtain a separate
authorization form and full information concerning the program and its restrictions from your
registered representative or our Annuities Service Center. There is no charge for participation in
the SWP program.
We may modify or suspend the SWP program at any time. If we do, existing systematic withdrawal
payments will not be affected.
Telephone and Electronic Transactions
You may request withdrawals by telephone if you elect that option on an appropriate authorization
form provided by us. We will not be liable for following telephone instructions that we reasonably
believe to be genuine. We will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine; such procedures include asking you, upon telephoning a
request, to provide certain identifying information. We may be liable for any losses due to
unauthorized or fraudulent instructions only where we fail to employ our procedures properly. For
your and our protection, we will tape record all such conversations. All telephone transactions
will be followed by a confirmation statement of the transaction.
We reserve the right to impose maximum withdrawal amounts and other procedural requirements related
to data security and identity verification in connection with the telephone withdrawal privilege.
From time to time, we may also permit you to access information through our website. If we do, we
will require you to create an account with a username and password, and to maintain a valid e-mail
address. You will be responsible for keeping your password confidential and notifying us of any
loss or theft of your password or any unauthorized use of your password.
Death Benefit Before Maturity Date
If any Owner dies prior to the Maturity Date (or date Annuity Payments begin, if earlier) the death
benefit will be equal to the Account Value, as of the date on which written notice and proof of
death (Due Proof of Death) and all required claim forms are received in good order at our Annuities
Service Center.
On the death of the last surviving Annuitant, the Owner becomes the new Annuitant, if the Owner is
an individual. If any Owner is a non-natural person, the death of an Annuitant is treated as the
death of an Owner.
If the co-Owner predeceases the Owner, the Owner will be treated as the Beneficiary.
The Beneficiary may continue the Contract as the Owner, subject to the requirements of Section
72(s) of the Code. If the Contract cannot continue under Section 72(s), or if the Beneficiary
elects not to continue the Contract, the death benefit will be distributed:
| (i) | as an Annuity Option as described in the Contract; or | ||
| (ii) | over the life of the Beneficiary, or over a period not to extend beyond the life expectancy of the Beneficiary, with such distributions beginning within one year from the date of the Owner’s death; or | ||
| (iii) | within five (5) years of the Owner’s death; or | ||
| (iv) | in one lump sum. |
Withdrawal Charges will be waived on any withdrawals under (ii), (iii) or (iv). If the Beneficiary
dies before distributions under (ii) or (iii) are complete, the remaining death benefit must be
distributed in a lump sum immediately. If there is more than one Beneficiary, the foregoing
provisions will independently apply to each Beneficiary.
The Contract will terminate if the death benefit is taken in one sum.
If the Beneficiary decides to continue the Contract as the Owner, subject to Section 72(s),
the new Owner must carry out the current Term and thereafter, applicable Market Value Adjustments
and withdrawal charges will apply to amounts withdrawn as described under the Contract. Such
amounts may be adjusted upward or downward by the application of a Market Value Adjustment factor.
Subject to the rights of an irrevocable Beneficiary, the new Owner in such instance may name a new
Beneficiary and, if no Beneficiary is so named, the new Owner’s estate will be the Beneficiary. If
the Contract is held as part of a Qualified Plan, the terms of your Qualified Plan endorsement form
will control.
We will permit the Owner to limit the death benefit option(s) to be offered to any named
Beneficiary, if the Owner provides notice in writing to the Company prior to death and the desired
option(s) is one provided for in the Contract.
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Annuity Provisions
General
You may apply the proceeds of the Contract payable on death or annuitization to the Annuity Options
described below, subject to the distribution of death benefit provisions (see “Accumulation
Provisions – Death Benefit Before Maturity Date”).
Generally, annuity benefits under the Contract will begin on the Maturity Date (the
“Annuitization”). The Maturity Date is the date specified on the Contract specifications page,
unless changed. If no date is specified, the Maturity Date is the maximum Maturity Date. The
maximum Maturity Date is the first day of the month following the 95th birthday of the
Annuitant. You may specify a different Maturity Date at any time by written request at least one
month before both the previously specified and the new Maturity Date. Without our consent, the new
Maturity Date may not be later than the maximum Maturity Date. In no event will you be permitted to
elect a Subsequent Term longer than the shortest Term ending on or after the Maximum Maturity Date
shown on the specifications page. The Maximum Maturity Date will be revised to match the expiration
date of that shortest available Subsequent Term. The occurrence or scheduled occurrence of
Maturity Dates when the Annuitant is at an advanced age, e.g., past age 95, may in some
circumstances have adverse income tax consequences (see “VII. Federal Tax Matters” for possible
qualifications and a more detailed discussion). Distributions from qualified Contracts may be
required before the Maturity Date.1
You may select the frequency of Annuity Payments. However, if the Account Value at the Maturity
Date is such that a monthly payment would be less than our minimum then in effect, we may make a
single payment in one lump sum adjusted by any Market Value Adjustment, if applicable, to the
Annuitant or Payee on the Maturity Date.
Annuity Options
Annuity benefits are available under the Contract on a fixed basis. When you purchase a Contract,
and on or before the Maturity Date, you may select one of the Annuity Options described below or
choose an alternate form of settlement acceptable to us. If you do not select an Annuity Option, we
will provide as a default option that Annuity Payments be made for a period certain of ten years
and continue thereafter during the lifetime of the Annuitant. IRS regulations may preclude the
availability of certain Annuity Options in connection with certain qualified Contracts. After the
Maturity Date, the Annuitant or Annuity Option selected may not be changed.
We guarantee the following Annuity Options in the Contract.
| • | Option (a): Non-Refund Life Annuity. We will make Annuity Payments during the lifetime of the Annuitant. No payments are due after the death of the Annuitant. Since we do not guarantee that any minimum number of payments will be made, an Annuitant may receive only one payment if the Annuitant dies prior to the date the second payment is due. |
| • | Option (b): Life Annuity with Payments Guaranteed for 5, 10 or 20 Years. We will make Annuity Payments for the guaranteed period elected and continuing thereafter during the lifetime of the Annuitant. Since we guarantee payments for the period elected, we will make Annuity Payments to the end of such period even if the Annuitant dies prior to the end of the period. |
In addition to the foregoing Annuity Options which we are contractually obligated to offer at all
times, we may offer other Annuity Options in the future.
Only an Account Value of $5,000 or more may be applied to one of the Annuity Options offered. If
the amount of the first Annuity Payment would be less than our minimum requirements then in effect,
we may make a single payment, adjusted by any Market Value Adjustment, if applicable, on the date
the first payment is payable. This single payment is in place of all other benefits provided by the
Contract.
| 1 | We will deny our consent to a later Maturity Date based solely upon any current or future legal restrictions imposed by state laws and regulations or by the Internal Revenue Code or the IRS. Currently, for Nonqualified Contracts, the IRS has not provided guidance with respect to a maximum date on which annuity payments must start. In the event that any future rulings, regulations, or other pronouncements by the IRS provide us with guidance, we may need to restrict your ability to change to a Maturity Date under a Nonqualified Contract which occurs when the Annuitant is at an advanced age (for example, past age 95). You should consult with a qualified tax advisor for information about potential adverse tax consequences for such Maturity Dates. |
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Death Benefit on or After Maturity Date
If you have selected an Annuity Option providing for payments for a guaranteed period, and the
Annuitant dies on or after the Maturity Date, we will make the remaining guaranteed payments to the
Beneficiary. We will make any remaining payments at least as rapidly as under the method of
distribution being used as of the date of the Annuitant’s death. If no Beneficiary is living, we
will commute any unpaid guaranteed payments to a single sum and pay that single sum to the estate
of the last to die of the Annuitant and the Beneficiary.
Other Contract Provisions
Right to Review
You may cancel the Contract by returning it to our Annuities Service Center or agent within a
specified number of days after receipt of the Contract. The right to review period may vary in
certain states in order to comply with the requirements of insurance laws and regulations in such
states. The right to review period applicable to you, usually between fifteen and thirty days, will
appear on the first page of the Contract delivered to you. Within seven days after we receive the
returned Contract, we will pay you an amount equal to the Account Value, adjusted by any Market
Value Adjustment, if applicable, computed on the date your Contract is received by us. The Market
Value Adjustment will only be applied where the change in rates, as determined by the formula in
the specifications page, is greater than 0.25%. If the purchase of this Contract involves the
replacement of any existing life insurance or annuity, then the right to review period is extended
to 30 days. If the Contract is issued as an individual retirement annuity under Section 408 or
Section 408A of the Code or as otherwise required by applicable law, and you cancel the Contract
during the first seven days of this right to review period, then we will return to you the Payment
made for the Contract.
We do not impose any withdrawal charge upon return of the Contract within the right to review
period, as determined by state insurance law. Upon cancellation, we will return to you either the
current Account Value or your full Purchase Payment, as required by state insurance laws and
regulations.
Ownership
In the case of an individual annuity Contract, the Contract Owner is the person entitled to
exercise all rights under the Contract. In the case of a group annuity Contract, the group annuity
Contract is owned by the Group Holder; however, all Contract rights and privileges not expressly
reserved to the Group Holder may be exercised by each Certificate Owner as to such Owner’s interest
as specified in his or her Certificate. The Contract Owner is the person designated in the Contract
specifications page or as subsequently named. If amounts become payable to any Beneficiary under
the Contract, then the Beneficiary becomes the Contract Owner.
In the case of Nonqualified Contracts, you may change the ownership of or collaterally assign the
Contract at any time prior to the Maturity Date, subject to the rights of any irrevocable
Beneficiary. Assigning a Contract, or changing the ownership of a Contract, may be treated as a
distribution of the Account Value for federal tax purposes (see “VII. Federal Tax Matters” for
possible qualifications and a more detailed discussion).
As the Owner of the Contract, you may have access to information for you or a member of your family
that we may provide regarding elder care needs and questions and informational assistance that may
help you identify various elder care service agencies available in your community.
You must make any request for a change of ownership or assignment in writing, and such a request is
subject to our approval. If approved by us, any assignment and any change will be effective as of
the date we receive your request at our Annuities Service Center. We assume no liability for any
payments made or actions taken before we approve a change or accept an assignment and no
responsibility for the validity or sufficiency of any assignment. If you make an absolute
assignment, it will revoke the interest of any revocable Beneficiary.
In the case of qualified Contracts, ownership of the Contract generally may be transferred only by
the trustee of an exempt employees’ trust which is part of a retirement plan qualified under
Section 401 of the Code or as otherwise permitted by applicable IRS regulations. Subject to the
foregoing, a qualified Contract may not be sold, assigned, transferred, discounted or pledged as
collateral for a loan or as security for the performance of an obligation or for any other purpose
to any person other than us.
Beneficiary
The Beneficiary is the person, persons or entity designated in the Contract specifications page or
as subsequently named. However, if there is a surviving Contract Owner, that person will be treated
as the Beneficiary. You may change the Beneficiary subject to the rights of any irrevocable
Beneficiary. You must make any request for a change in writing. Such a request is subject to our
approval and if approved by us, the change will be effective on the date the request is signed. We
assume no liability for any payments made or
actions taken before we approve the change. If no Beneficiary is living, the Contingent Beneficiary
will be the Beneficiary. The interest of any Beneficiary is subject to that of any assignee. If no
Beneficiary or Contingent Beneficiary is living, the Beneficiary is
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the estate of the deceased
Contract Owner. In the case of certain Qualified Contracts, IRS regulations prescribe certain
limitations on the designation of a Beneficiary.
Annuitant
The Annuitant is any natural person or persons to whom we will make Annuity Payments (unless you
designate a different Payee) and whose life is used to determine the duration of Annuity Payments
involving life contingencies. If you name more than one person as an Annuitant, the second person
named will be referred to as “co-Annuitant.” The Annuitant is as designated on the Contract
specifications page or in the application, unless changed.
On the death of the Annuitant, the co-Annuitant, if living, becomes the Annuitant. If there is no
living co-Annuitant, the Owner becomes the Annuitant. In the case of certain qualified Contracts,
there are limitations on the ability to designate and change the Annuitant and the co-Annuitant.
You may change the Annuitant subject to the rights of any irrevocable Beneficiary. You must make
any request for a change in writing. Such a request is subject to our approval and, if approved by
us, the change will be effective as of the date we receive your request at our Annuities Service
Center. The Annuitant may not be changed after the Maturity Date.
Spouse
Any federal tax provisions related to status as a “spouse” are governed by the Federal Defense
of Marriage Act (“DOMA”), which does not recognize civil unions or same-sex marriages that may be
allowed under state law. Therefore, the federal tax treatment available to spouses who fall within
the DOMA definition may not be available to civil union or same-sex marriage partners. However,
state law may extend to civil union and same-sex marriage partners some or all of the benefits
(other than federal tax benefits) accorded to spouses that fall under the DOMA definition. Please
consult with your tax advisor for information on how federal tax rules may affect Contracts where
civil union or same-sex marriage partners, either singularly or jointly own the Contract, or are
designated Annuitant(s), Beneficiary(ies) and/or Covered Person(s).
Some states require that civil union and same-sex marriage partners receive the same contractual
benefits as spouses who fall within the DOMA definition. You should consult with a qualified
financial professional for additional information on your state’s regulations regarding civil
unions and same-sex marriages.
Modification
We will not change or modify the Contract without the consent of the Owner or Group Holder, as
applicable, except to the extent necessary to conform to any applicable law or regulation or any
ruling issued by a government agency. However, on 30 days notice to the Group Holder, we may change
the withdrawal charges, annual fees, free withdrawal percentage, annuity purchase rate and the
Market Value Adjustment as to any Certificates issued after the effective date of the modification.
Code Section 72(s)
We will interpret the provisions of the Contract so as to comply with the requirements of Section
72(s) of the Code.
Our Approval
We may accept or reject a Contract application in our sole discretion, which we will exercise in a
non-discriminatory manner.
Discontinuance of New Owners
In the case of a group annuity Contract, we may, on 30 days notice to the Group Holder, limit or
discontinue acceptance of new applications and the issuance of new Certificates to group members or
participants.
Misstatement and Proof of Age, Sex or Survival
We may require proof of age, sex or survival of any person upon whose age, sex or survival an
Annuity Payment depends. If the age or sex of the Annuitant has been misstated, the benefits will
be those which the Annuity Payment would be provided for the correct age and sex. If we have made
incorrect Annuity Payments, the amount of any underpayments will be paid immediately. The amount of
any overpayment will be deducted from future Annuity Payments. We will uniformly charge or credit
interest in accordance with state law, as applicable. The provisions of the Contract shall be
interpreted so as to comply with the requirements of Section 72(s) of the Code.
Non-participating
Your Contract is non-participating and will not share in our profits or surplus earnings. We will
pay no dividends on your Contract.
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IV. Charges, Deductions and Adjustments
Adjustments And Charges Upon Withdrawals
We may apply a Market Value Adjustment factor and assess withdrawal charges under the Contracts if
you request a partial or full withdrawal of Account Value or annuitize any amount prior to the end
of either the Initial Term or a Subsequent Term. We may also assess an administrative fee if you
request a full withdrawal of Account Value or annuitize any amount prior to the end of these
periods.
We will not apply a Market Value Adjustment factor or assess withdrawal charges:
| • | if you request a withdrawal or annuitize any amount during the 30 day period after the expiration of any Term. (We must receive your written request for withdrawal at the end of a Term during the 30 day period following the end of that Term.); or | ||
| • | if you request to withdraw any available free withdrawal amount; or | ||
| • | if we cancel your Contract should you make withdrawals that bring your Account Value below $5,000 (However, if the Account Value at the Maturity Date is such that a monthly payment would be less than our minimum in effect, we may make a single payment in one lump sum adjusted by any Market Value Adjustment, if applicable, to the Annuitant or Payee on the Maturity Date.); or | ||
| • | if you should be confined to an eligible Nursing Home as described below in “Waiver of Withdrawal Charge and MVA — Confinement to Nursing Home” and request a total surrender of your Account Value; or | ||
| • | in connection with our payment of Contract proceeds following the death of the Owner or, if applicable, the Annuitant, except as described in “Accumulation Provisions - Death Benefit Before Maturity Date.” |
We will not apply withdrawal charges on distributions made during a one-year or a two-year
subsequent Term.
We provide information on the free withdrawal amount, Market Value Adjustment factor and withdrawal
charges in the sections that follow. We next provide examples to illustrate how these impact
“gross” and “net” requests to withdraw Account Value. We provide information on the administrative
fee that we may impose under the Contracts in “Other Charges And Deductions.”
Free Withdrawal Amount
We do not apply a Market Value Adjustment factor or assess withdrawal charges if your request does
not exceed a free withdrawal amount. The free withdrawal amount is the greater of:
| a) | the annual Required Minimum Distribution (“RMD”) amount for Owners of Qualified Contracts (see “VII. Federal Tax Matters”) who have attained age 70 1/2; or | ||
| b) | the amount of interest credited during the 12 months prior to the date of the request, less any Gross Withdrawal Amounts taken during the 12 month period prior to the date of the request. |
Market Value Adjustment Factor
The Market Value Adjustment factor may decrease or increase the amount that we pay to you or apply
to an Annuity Option.
We determine the amount of the Market Value Adjustment by multiplying the amount being withdrawn
(in excess of the Free Withdrawal Amount and before any applicable withdrawal charge) or applied to
an Annuity Option by a factor expressed by the following formula:
Missue= = the Guaranteed Margin in effect for the current Term for
this Contract (expressed as a decimal)
Mwithdrawal = the Guaranteed Margin (expressed as a decimal) offered
on a Term equal to the number of months remaining in the current Term, as of the date
the withdrawal or annuitization request is processed. For purposes of this calculation,
months remaining will be rounded up to the next nearest whole month. If an Guaranteed
Margin for this duration is not available for new purchases, we will declare a
Guaranteed Margin solely for this purpose that is consistent with the
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Guaranteed Margin
for durations that are currently available.
k = the adjustment factor.
n = the number of months from the date of withdrawal or annuitization to the end of
the current Term. In the case of partial months, ‘n’ is rounded up to the next month.
The Market Value Adjustment reflects the relationship between the applicable Guaranteed Margin in
effect for your Contract at the time of a withdrawal or annuitization and the applicable Guaranteed
Margin we then make available for new Terms equal to the remaining duration of the Term under your
Contract. In general:
| • | if the Guaranteed Margin in effect for your Contract is lower than our currently available Guaranteed Margin for a Term equal to the remaining duration of the current Term applicable to your Contract, the Market Value Adjustment will reduce the amount withdrawn or annuitized; and | ||
| • | if the Guaranteed Margin in effect for your Contract is higher than our currently available Guaranteed Margin for a Term equal to the remaining duration of the current Term applicable to your Contract plus the adjustment factor (‘k’ in the formula above), the Market Value Adjustment will increase the amount withdrawn or annuitized. |
The Market Value Adjustment factor contains an adjustment factor (‘k’ in the formula above) that is
designed to compensate us for certain expenses and losses that we may incur, either directly or
indirectly, as a result of withdrawal or annuitization. Thus, even if the Guaranteed Margin
remains the same during the period, or decreases by less than the adjustment, the Market Value
Adjustment will be negative due to the adjustment factor.
The greater the difference in these Guaranteed Margins, the greater the effect of the Market Value
Adjustment. The Market Value Adjustment also has a greater effect when Guaranteed Margins increase
than when they decrease. As can be seen from the examples in Appendix B, the negative adjustment
that results from an increase in Guaranteed Margins is higher in amount than the positive
adjustment that results from a decrease in Guaranteed Margins.
The Market Value Adjustment is also affected by the amount of time remaining in the Term.
Generally, the longer the time remaining in the Term, the greater the effect of the Market Value
Adjustment on the amount withdrawn or annuitized. This is because the longer the time remaining in
the Term, the higher the compounding factor ‘n’ in the Market Value Adjustment factor.
The Market Value Adjustment, alone or in combination with applicable withdrawal charges, could
result in your receiving less than your Purchase Payment.
Because of the Market Value Adjustment provision of the Contract, you bear the investment risk that
the current available Guaranteed Margin offered by us at the time of withdrawal or annuitization
may be higher than the initial or subsequent Guaranteed Margin applicable to the Contract with the
result that the amount you receive upon a withdrawal or annuitization may be substantially reduced.
For more information on the Market Value Adjustment, including examples of its calculation, see
“Impact of Market Value Adjustment and Withdrawal Charge” and Appendix B.
Withdrawal Charge
Please see Appendix C for a schedule of withdrawal charges applicable to the Contracts we offer
through this prospectus. A withdrawal charge will reduce the amount payable to you if you make a
withdrawal from the Contract before the end of your chosen Term.
We calculate the amount of the withdrawal charge by multiplying the Gross Withdrawal Amount, less
any applicable annual fee and free withdrawal amount, by the applicable withdrawal charge
percentage obtained from the tables set forth in Appendix C. We use separate withdrawal charge
percentages for Initial and Subsequent Terms. (Please read “Withdrawals” and Appendix C:
“Withdrawal Charge Schedules” for more information.)
We may subject withdrawals to a Market Value Adjustment in addition to the withdrawal charge
described above (see “Market Value Adjustment Factor” and “Impact of Market Value Adjustment and
Withdrawal Charge”). The Market Value Adjustment, alone or in combination with applicable
withdrawal charges, could result in your receiving total withdrawal proceeds of less than your
Purchase Payment.
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Withdrawals may be subject to income tax to the extent of earnings under the Contract and, if made
prior to age 591/2, may also be subject to a 10% IRS penalty tax (see “VII. Federal Tax Matters -
Taxation of Partial and Full Withdrawals”).
Waiver of Applicable Withdrawal Charge and MVA — Confinement to Nursing Home
(Not available in MA)
(Not available in MA)
In states where approved, any applicable withdrawal charge and market value adjustment will be
waived on a full or partial withdrawal prior to the Maturity Date if (1) beginning at least 30 days
after the Contract Date a “triggering event” occurs and the Covered Person ‘s attained age is less
than 80 on the Contract Date. Triggering events are as follows:
| • | A Covered Person being diagnosed with a first occurrence of any Covered Condition, subject to the Pre-existing Condition Limitation; or | ||
| • | A Covered Person’s confinement in a Nursing Home. |
In order for a Covered Person to be considered confined in a Nursing Home, the following
conditions must be met:
| a. | a Covered Person was not confined to a Nursing Home within two years prior to the Effective Date of the Contract. | ||
| b. | a Covered Person’s confinement is for at least 90 consecutive days; | ||
| c. | a Covered Person is receiving Nursing Care; | ||
| d. | such Nursing Care is based on a Physician’s plan in accordance with accepted standards of medical practice, and is Medically Necessary; | ||
| e. | such Nursing Care is needed because of a Covered Person’s inability to perform at least two of the Activities of Daily Living without Human Assistance because of either Physical Impairment or Cognitive Impairment; and | ||
| f. | such Nursing Care is received while the contract is in force, and is not assigned. |
“Covered Person” means the Owner. “Covered Person” will mean the Annuitant if the Contract is
owned by a Trust.
“Nursing Home” means a facility which meets both of the following requirements:
| • | it is licensed and operated to provide Nursing Care for a charge (including room and board), according to the laws of the jurisdiction in which it is located; | ||
| • | has services performed by or under the continual, direct, and immediate supervision of a registered nurse, licensed practical nurse, or licensed vocational nurse, on-site twenty-four (24) hours per day. |
A Nursing Home may be a freestanding facility or it may be a distinct part of a facility, including
a ward, wing, or swing-bed of a hospital or other facility.
Nursing Home does not mean:
| • | a hospital or clinic; | ||
| • | a rehabilitation hospital or facility; | ||
| • | an assisted care living facility; | ||
| • | a rest home (a home for the aged or a retirement home) which does not, as its primary function, provide custodial care; | ||
| • | your primary place of residence, including your living quarters in a continuing care retirement community or similar entity; | ||
| • | a facility for the treatment of alcoholism, drug addiction, or mental illness. |
Pre-Existing Condition Limitation. We will not waive any withdrawal charge for a diagnosis of a
first occurrence of a Covered Condition during the first two years after the effective date of the
Contract if it results from a Pre-existing Condition, as defined in your Contract.
“Pre-existing Condition” means the existence of symptoms which would cause an ordinarily prudent
person to seek medical diagnosis, care, and treatment within one year before the effective date of
the Contract or a condition for which medical consultation, advice, or treatment was recommended by
or received from or sought from a Physician during the two years immediately preceding the
effective date of the Contract.
A “Physician” is a person other than you, the Annuitant(s) or a member of your or the Annuitant’s
families who is a licensed medical doctor (M.D.) or a licensed doctor of osteopathy (D.O.),
practicing within the scope of that license.
Please refer to your Contract for additional information on Activities of Daily Living, Nursing
Care and other terms not specifically discussed in this prospectus.
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The waiver described above is not available in all states and certain terms may vary depending on
the state of issue as noted in your Contract. Withdrawals may be taxable and if made prior to age
591/2 may be subject to a 10% penalty (see “VII. Federal Tax Matters”).
Impact of Market Value Adjustment and Withdrawal Charge
Please see Appendix B for illustrative examples of the impact the Market Value Adjustment and
Withdrawal Charge may have on the Account Value of your Contract.
Other Charges and Deductions
Taxes
We reserve the right to charge or provide for certain taxes against Purchase Payments, Account
Values, death benefits or Annuity Payments. Such taxes may include premium taxes or other taxes
levied by any government entity which we determine to have resulted from the:
| • | establishment of the CPI Separate Account; | ||
| • | receipt by us of Purchase Payments; | ||
| • | issuance of the Contracts; | ||
| • | commencement or continuance of Annuity Payments under the Contracts; or | ||
| • | death of the Owner or Annuitant. |
In addition, we will withhold taxes to the extent required by applicable law.
Except for residents of those states which apply premium taxes upon receipt of Purchase Payments,
we will deduct premium taxes from the Account Value used to provide for Annuity Payments. For
residents of those states which apply premium taxes upon receipt of Purchase Payments, we will
deduct premium taxes upon payment of any withdrawal or death benefits or upon any annuitization.
The amount deducted will depend on the premium tax assessed in the applicable state. State premium
taxes currently range from 0% to 3.5% of the Purchase Payment, depending on the jurisdiction and
the tax status of the Contract and are subject to change by the legislature or other authority (see
Appendix E: “State Premium Taxes”).
Annual Fee
To compensate us for assuming certain administrative expenses, we reserve the right to charge an
annual administration fee, which will never exceed $50.00. If imposed, the fee will be detailed on
your Contract’s specifications page. Prior to the Maturity Date, we will deduct the annual fee on
each Contract Anniversary. If you surrender the Contract for its Account Value on any date other
than the Contract Anniversary, we will deduct the full amount of the annual fee from the amount
paid.
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V. General Information About Us
The Company
Your Contract is issued by John Hancock USA. John Hancock USA, formerly known as “The
Manufacturers Life Insurance Company (U.S.A.),” is a stock life insurance company originally
organized under the laws of Maine on August 20, 1955 by a special act of the Maine legislature.
John Hancock USA redomesticated under the laws of Michigan on December 30, 1992. John Hancock USA
is authorized to transact life insurance and annuity business in all states (except New York), the
District of Columbia, Guam, Puerto Rico and the Virgin Islands. Its principal office is located at
601 Congress Street, Boston, Massachusetts 02210-2805. John Hancock USA also has an Annuities
Service Center at 164 Corporate Drive, Portsmouth, NH 03801-6815.
The ultimate parent of John Hancock USA is Manulife Financial Corporation, a publicly traded
company, based in Toronto, Canada. Manulife Financial Corporation is the holding company of The
Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife
Financial. The Company changed its name to John Hancock Life Insurance Company (U.S.A.) on January
1, 2005 following Manulife Financial Corporation’s acquisition of John Hancock Financial Services,
Inc.
Rating Agencies, Endorsements and Comparisons. We are ranked and rated by independent financial
rating services, including Moody’s Investors Service, Inc., Standard & Poor’s Rating Services,
Fitch Ratings Ltd. and A.M. Best Company. The purpose of these ratings is to reflect the financial
strength or claims-paying ability of John Hancock USA. The ratings are not intended to reflect the
investment experience or financial strength of the CPI Separate Account or the Contracts. The
ratings are available on our website. We may from time to time publish the ratings in
advertisements, sales literature, reports to Contract Owners, etc. In addition, we may include in
certain promotional literature endorsements in the form of a list of organizations, individuals or
other parties that recommend the Company or the Contracts.
Regulation. John Hancock USA is subject to the laws of the State of Michigan governing insurance
companies and to the regulation of Michigan’s Office of Financial and Insurance Regulation. In
addition, we are subject to regulation under the insurance laws of other jurisdictions in which we
operate. Regulation by the applicable insurance department includes periodic examination of our
operations, including contract liabilities and reserves. Regulation by supervisory agencies
includes licensing to transact business, overseeing trade practices, licensing agents, approving
policy forms, establishing reserve requirements, fixing maximum interest rates on life insurance
policy loans and minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulation of the type and amounts of investments
permitted. Our books and accounts are subject to review by the applicable insurance department and
other supervisory agencies at all times, and we file annual statements with these agencies. A full
examination of our operations is conducted periodically by the applicable insurance departments.
Under insurance guaranty fund laws in most states, insurers doing business therein can be assessed
(up to prescribed limits) for policyholder losses incurred by insolvent companies. The amount of
any future assessments on us under these laws cannot be reasonably estimated. Most of these laws do
provide, however, that an assessment may be excused or deferred if it would threaten an insurer’s
own financial strength.
Although the federal government generally does not directly regulate the business of insurance,
federal initiatives often have an impact on the business in a variety of ways. Federal legislation
that removed barriers preventing banks from engaging in the insurance business or that changed the
federal income tax treatment of insurance companies, insurance company products, or employee
benefit plans could significantly affect the insurance business.
CPI Separate Account
We established the Company’s CPI Separate Account in 2010 as a non-unitized separate account under
Michigan law . The CPI Separate Account is not registered as an investment company under the
Investment Company Act of 1940. The Company maintains in its CPI Separate Account assets which it
selects in accordance with applicable state law and which have a market value (or other value
prescribed by applicable state law) equal to the reserves the Company must maintain for the
contracts and its other liabilities with respect to the account. A Contract Owner has no interest
in the performance of a CPI Separate Account. A Contract Owner’s Account Value is based on the
Declared Interest Rate and the Indexed Crediting Rates under the Contract and not on the
performance of a CPI Separate Account. Any gain or loss in the Company’s CPI Separate Account
accrues solely to the Company, and we assume any risk associated with the possibility that the
value of the assets in the CPI Separate Account might fall below the reserves and other liabilities
that must be maintained. Should the value of the assets in the Company’s CPI Separate Account fall
below reserve and other liabilities, the Company will transfer assets from its General Account to
its CPI Separate Account to make up the shortfall. The Company reserves the right to transfer to
its General Account any assets of its CPI Separate Account in excess of such reserves and other
liabilities.
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The Company reserves the right to maintain assets in its CPI Separate Account to support any number
of kinds of annuity contracts which it offers or may offer. These annuity contract owners would
stand in an equal position with regard to claims against the underlying assets in the CPI Separate
Account.
Both the assets accounted for in the Company’s CPI Separate Account and all the other assets
maintained in its General Account are available to meet the Company’s guarantees under its
contracts. These assets are not insulated from the claims of the Company’s creditors and may be
charged with liabilities which arise from other business the Company conducts. See “VI. The
Subordinated Guarantee” for information on the parent company’s, Manulife Financial Corporation’s,
guarantee of the MVA interest in the Contracts.
Distribution of the Contract
Our wholly-owned subsidiary, John Hancock Distributors, LLC (“JH Distributors”), acts as principal
underwriter of the Contracts.
The Contracts will be sold by registered representatives of broker-dealers authorized by JH
Distributors to sell them. Such registered representatives will also be our licensed insurance
agents. JH Distributors will pay distribution compensation to authorized broker-dealers in varying
amounts which under normal circumstances are not expected to exceed [5/6]% of Purchase Payments.
The registered representative through whom your Contract is sold will be compensated pursuant to
that registered representative’s own arrangement with his or her broker-dealer. The registered
representative and the firm may have multiple options on how they wish to allocate their
commissions and/or compensation. We are not involved in determining your registered
representative’s compensation. You are encouraged to ask your registered representative about the
basis upon which he or she will be personally compensated for the advice or recommendations
provided in connection with the sale of your Contract.
We may make additional payments to firms. These payments are sometimes referred to as “revenue
sharing.” Revenue sharing expenses are any payments made to broker-dealers or other intermediaries
to either (i) compensate the intermediary for expenses incurred in connection with the promotion
and/or sale of John Hancock investment products or (ii) obtain promotional and/or distribution
services for John Hancock investment products. Many firms that sell the Contracts receive one or
more types of these cash payments.
We are among several insurance companies that pay additional payments to certain firms to receive
“preferred” or recommended status. These privileges include: additional or special access to sales
staff; opportunities to provide and/or attend training and other conferences; advantageous
placement of our products on customer lists (“shelf-space arrangements”); and other improvements in
sales by featuring our products over others.
Revenue sharing payments assist in our efforts to promote the sale of the Contracts and could be
significant to a firm. Not all firms, however, receive additional compensation. We determine which
firms to support and the extent of the payments we are willing to make, and generally choose to
compensate firms that are willing to cooperate with our promotional efforts and have a strong
capability to distribute the Contracts. We do not make an independent assessment of the cost of
providing such services. Instead, we agree with the firm on the methods for calculating any
additional compensation. The methods, which vary by firm, may include different categories to
measure the amount of revenue sharing payments, such as the level of sales, assets attributable to
the firm and the annuity contracts covered under the arrangement (including contracts issued by any
of our affiliates). The categories of revenue sharing payments that we may provide to firms,
directly or through JH Distributors, are not mutually exclusive and may vary from contract to
contract. We or our affiliates may make additional types of revenue sharing payments for other
products, and may enter into new revenue sharing arrangements in the future.
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VI. The Subordinated Guarantee
Description of Manulife Financial Corporation
The Subordinated Guarantee is issued by MFC. MFC was incorporated under the Insurance Companies Act
(Canada) in 1999 for the purpose of becoming the holding company of The Manufacturers Life
Insurance Company, which was founded in 1887. As a mutual life insurance company, The Manufacturers
Life Insurance Company had no common shareholders and its board of directors was elected by its
participating policyholders. In September 1999, The Manufacturers Life Insurance Company
implemented a plan of demutualization and converted into a life insurance company with common
shares and became a wholly-owned subsidiary of MFC. MFC’s head office and registered office is
located at 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5 (Tel. No. 416-926-3000).
MFC and its subsidiaries provide a wide range of financial products and services, including
individual life insurance, group life and health insurance, pension products, annuities and mutual
funds, to individual and group customers in Canada, the United States, Asia and Japan. MFC and its
subsidiaries also offer reinsurance services, primarily life and accident and health reinsurance,
and provide investment management services with respect to MFC’s general fund assets, segregated
funds assets and mutual funds and, in Canada and Asia, provide institutional investment services.
MFC has directly or indirectly held all of the outstanding shares of John Hancock USA capital stock
since September 1999.
Description of the MFC Subordinated Guarantee
What additional guarantee applies to my Contract?
John Hancock USA’s ultimate corporate parent, MFC, guarantees its obligations with respect to any
Contract to which this prospectus relates (the “MFC Subordinated Guarantee”). The MFC Subordinated
Guarantee may only be terminated for Contracts issued after notice of termination is provided. The
MFC Subordinated Guarantee does not relieve the Company of any obligations under your Contract —
it is in addition to all of the rights and benefits that the Contract provides. There is no charge
or cost to you for the MFC Subordinated Guarantee, and there are no disadvantages to you of having
this additional guarantee.
What are the reasons for the additional MFC Subordinated Guarantee?
The MFC Subordinated Guarantee is being offered in order to relieve John Hancock USA of the
obligation to file with the SEC annual, quarterly and current reports on Form 10-K, Form 10-Q and
Form 8-K, and thus save each the expense of being an SEC reporting company. MFC, the company that
is providing the MFC Subordinated Guarantee, is the ultimate parent of all of the companies in the
John Hancock group of companies, including John Hancock USA. MFC is a company organized under the
laws of Canada and its common shares are listed principally on the Toronto Stock Exchange and the
New York Stock Exchange. MFC files with the SEC annual reports on Form 40-F and other reports on Form 6-K.
The financial results of John Hancock USA are included in MFC’s consolidated
financial statements in a footnote containing condensed consolidating financial information with
separate columns for MFC, John Hancock USA and other subsidiaries of MFC, together with
consolidating adjustments.
What are the terms of the MFC Subordinated Guarantee?
MFC unconditionally and irrevocably guarantees, as a principal and not merely as a surety, the full
and punctual payment when due of all Contract Value Interests payable by John Hancock USA pursuant
to or from the Contract to any holder, owner, annuitant or beneficiary under any Contract creating
such interest, to any successor, legatee, heir, or assignee of any such person or entity, to any
other account or option under the Contract, or to any other account of any such person or entity
(all of the foregoing persons, entities, accounts and options being referred to for this purpose as
“Payees”). For this purpose, Contract Value Interests are defined as guaranteed rates of return on
Contract values, inclusive of earnings. Contract Value Interests payable by John Hancock USA to a
Payee from a Contract
| (a) | upon a full or partial withdrawal, cancellation, a loan, a full or partial conversion of account value to annuity payments, or similar removal of assets, will be a net amount equal to the Contract’s then current account value after (i) increase for a positive market value adjustment that would be credited to a Payee under the Terms of the Contract for the transaction in question and (ii) reduction for any interest, fees, charges, outstanding loans, and negative market value adjustments that would be charged against a payee under the Terms of the Contract for the transaction in question; or | ||
| (b) | upon payment of any other amount as a consequence of the death of any owner, holder, or annuitant under a Contract prior to a completion conversion of account value to annuity payments, will be a net amount equal to the Contract’s then |
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| current account value after (i) increase to reflect any accrued but uncredited interest attributable thereto and (ii) reduction for any interest, fees, charges, and outstanding loans that would be charged against a payee under the Terms of the Contract for the transaction in question. |
For this purpose, Contract Value Interests include net amounts removed in connection with the above
transactions and amounts remaining in the Contract, but do not include annuity payments that are
made following the complete or partial conversion of account value to annuity payments.
This means that, if John Hancock USA fails to honor any valid request to pay a Contract Value
Interest, MFC guarantees the full amount that you would have received, or value that you would have
been credited with, had John Hancock USA fully met its obligations under your Contract with
respect to such Contract Value Interest. There is no charge or cost to you for receiving the MFC
Subordinated Guarantee. If John Hancock USA fails to make payment when due of any amount that is
guaranteed by MFC, you could directly request MFC to satisfy John Hancock USA’s obligation, and MFC
must do so. You would not have to make any other demands on John Hancock USA as a precondition to
making a claim against MFC under the MFC Subordinated Guarantee.
The MFC Subordinated Guarantee is issued pursuant to a subordinated guarantee dated the effective
date of the registration statement of which this prospectus forms a part, whereby MFC is a
guarantor.
Unless otherwise stated in this section, the MFC Subordinated Guarantee constitutes an unsecured
obligation of MFC as guarantor, and is subordinated in right of payment to the prior payment in
full of all other obligations of MFC, except for other guarantees or obligations of MFC which by
their terms are designated as ranking equally in right of payment with or subordinated to the MFC
Subordinated Guarantee, and effectively rank senior to MFC’s preferred and common shares. As a
result, in the event of MFC’s bankruptcy, liquidation, dissolution, winding-up or reorganization or
upon acceleration of any series of debt securities due to an event also triggering payment
obligations on other debt, MFC’s assets will be available to pay its obligations on the MFC
Subordinated Guarantee only after all secured indebtedness and other indebtedness senior to the MFC
Subordinated Guarantee has been paid in full. There may not be sufficient assets remaining to pay
amounts due on all or any portion of the MFC Subordinated Guarantee.
The MFC Subordinated Guarantee is governed by the laws of the Commonwealth of Massachusetts. The
MFC Subordinated Guarantee will provide that any claim or proceeding brought by a holder to enforce
the obligations of MFC, as guarantor, may be brought in a court of competent jurisdiction in the
City of Boston, Commonwealth of Massachusetts, and that MFC submits to the non-exclusive
jurisdiction of such courts in connection with such action or proceeding. MFC has designated John
Hancock USA as its authorized agent upon whom process may be served in any legal action or
proceeding against MFC arising out of or in connection with the MFC Subordinated Guarantee. All
payments on the Contracts offered by this prospectus by MFC under the MFC Subordinated Guarantee
will be made without withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of
the Government of Canada, or any province, territory or political subdivision thereof, or any
authority therein or thereof having power to tax, unless the withholding or deduction of such
taxes, duties, assessments or governmental charges by MFC is required by law or by the
administration or interpretation of such law. In the event of any withholding or deduction, MFC
will pay such additional amounts as may be necessary in order that the net amounts received by the
holders of the Contracts offered by this prospectus after such withholding or deduction shall equal
the respective amounts under such Contracts which would have been receivable in respect of those
Contracts in the absence of such withholding or deduction (“Guarantor Additional Amounts”), except
as described in this section and except that no such Guarantor Additional Amounts shall be payable
with respect to any Contract offered by this prospectus:
| (a) | by or on behalf of a holder who is liable for such taxes, duties, assessments or governmental charges in respect of such Contract (i) by reason of his being a person with whom John Hancock USA or the guarantor is not dealing at arm’s length for the purposes of the Income Tax Act (Canada), or (ii) by reason of his having a connection with Canada or any province or territory thereof other than the mere holding, use or ownership or deemed holding, use or ownership of such Contract; | ||
| (b) | by or on behalf of a holder who would not be liable for or subject to such withholding or deduction by making a claim for exemption to the relevant tax authority; or | ||
| (c) | more than 10 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to Guarantor Additional Amounts on presenting the same for payment on the last day of such period of 10 days. |
As used in this section “Relevant Date” shall mean the date on which such payment first becomes
due.
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Where You Can Find More Information
MFC is subject to the information requirements of the U.S. Securities Exchange Act of 1934, and, in
accordance with that Act, files reports and other information with the SEC. Under a
multijurisdictional disclosure system adopted by the United States and Canada, these reports and
other information (including financial information) may be prepared in accordance with the
disclosure requirements of Canada, which are different from those of the United States.
You may read and copy any reports, statements or other information filed by MFC at the SEC’s Public
Reference Room, Station Place, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference Room. You can also
inspect reports, proxy statements and other information about MFC at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
You may also obtain copies of this information by mail from the Public Reference Section of the
SEC, Station Place, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates, or from
commercial document retrieval services.
The SEC maintains a website that contains reports, proxy statements and other information,
including those filed by MFC, at http://www.sec.gov. You may also access the SEC filings and obtain
other information about MFC through the website maintained by MFC, which is
http://www.manulife.com. The information contained in that website is not incorporated by reference
into this prospectus.
The Company and MFC filed a joint registration statement on Form F-3 (“Registration Statement”)
relating to the Contracts offered by this prospectus with the SEC under the Securities Act of 1933,
as amended. This prospectus is a part of that registration statement. As permitted by SEC rules,
this prospectus does not contain all the information you can find in the registration statement.
The SEC allows MFC to “incorporate by reference” information into this prospectus, which means that
we can disclose important information to you by referring you to other documents filed separately
with the SEC. For more information about the Contracts and us, you may obtain a copy of the
Registration Statement (File number [ ]) in the manner set forth in the preceding paragraphs.
The information incorporated by reference is deemed to be part of this prospectus, except for any
information superseded by information in this prospectus. These documents contain important
information about the companies and their financial condition.
MFC incorporates by reference the documents listed below, which were filed with the SEC:
| (a) | MFC’s Reports of Foreign Issuer on Form 6-K filed March 29, May 12, and August ___, 2010; | ||
| (b) | MFC’s Report of Foreign Issuer on Form 6-K filed March 26, 2010, other than the sections of the Notice of Annual Meeting and Proxy Circular entitled “Report of the Management Resources and Compensation Committee,” “Performance Graph” and “Supplemental Shareholder Return” and other than the consolidated financial statements as at, and for the years then ended December 31, 2009 and 2008; | ||
| (c) | MFC’s Annual Report on Form 40-F for the year ended December 31, 2009, as filed on March 19, 2010 and as amended and filed on Form 40-F/A on March 29, 2010, other than the section of the Annual Information Form entitled “Ratings;” and | ||
| (d) | MFC’s Annual Report on Form 40-F for the year ended December 31, 2008, as filed on March 26, 2009 and as amended and filed on Form 40-F/A on May 8, 2009, other than the section of the Annual Information Form entitled “Ratings,” and other than the amended consolidated financial statements as at, and for the years then ended December 31, 2008 and 2007. |
Copies of the documents incorporated in this prospectus by reference may be obtained on request
without charge from:
Manulife Financial Corporation
ATTN: Corporate Secretary
200 Bloor Street East, NT-10
Toronto, Ontario Canada M4W 1E5
Telephone: (416) 926-3000
ATTN: Corporate Secretary
200 Bloor Street East, NT-10
Toronto, Ontario Canada M4W 1E5
Telephone: (416) 926-3000
Any annual reports on Form 20-F, Form 40-F or Form 10-K, any reports on Form 10-Q or Form 8-K,
other than current reports furnished to the SEC pursuant to Item 2.02 or Item 7.01 of Form 8-K, and
any Form 6-K specifying that it is being incorporated by reference in this prospectus, as well as
all prospectus supplements disclosing additional or updated information, filed by MFC with the SEC
subsequent to the date of this prospectus shall be deemed to be incorporated by reference into this
prospectus.
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Any statement contained in this prospectus or in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated by reference in
this prospectus modifies or supersedes such prior statement. Any statement or document so modified
or superseded shall not, except to the extent so modified or superseded, be incorporated by
reference and constitute a part of this prospectus.
Enforcement of Judgments
MFC is a corporation incorporated under the laws of Canada. Because a substantial portion of MFC’s
assets are located outside the United States and most of its directors and officers are not
residents of the United States, any judgment obtained in the United States against MFC or certain
of its officers and directors, including a judgment with respect to payments on the MFC
Subordinated Guarantee, may not be collectible within the United States.
Pursuant to the MFC Subordinated Guarantee, MFC agrees that any legal action or proceeding against
it arising out of or in connection with the MFC Subordinated Guarantee may be brought in any United
States federal or Massachusetts state court located in the City of Boston, Commonwealth of
Massachusetts (a “Massachusetts Court”), and irrevocably submits to the non-exclusive jurisdiction
of such courts in connection with such action or proceeding.
MFC has been informed by its Canadian counsel, Torys LLP, that the laws of the Province of Ontario
and the federal laws of Canada applicable therein permit an action to be brought in a court of
competent jurisdiction in that province on any final judgment in personam of any Massachusetts
Court, against MFC, which judgment is subsisting and unsatisfied for a fixed sum of money with
respect to the enforcement of the MFC Subordinated Guarantee and that is not impeachable as void or
voidable under the internal laws of the Commonwealth of Massachusetts if:
| (i) | the court rendering such judgment had jurisdiction over the judgment debtor, as recognized by the courts of Ontario (submission by MFC in the MFC Subordinated Guarantee to the non-exclusive jurisdiction of a Massachusetts Court , will be sufficient for this purpose); | ||
| (ii) | such judgment was not obtained by fraud or in a manner contrary to natural justice or other rule of law, whether equitable, legal or statutory and the enforcement thereof would not be inconsistent with public policy, as such term is understood under the laws of Ontario and the federal laws of Canada applicable therein or contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the Competition Act (Canada); | ||
| (iii) | the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue or penal laws in the Province of Ontario; and | ||
| (iv) | the action to enforce such judgment is commenced within the applicable limitation period. |
Enforcement of a judgment by a court in the Province of Ontario, as described above, may only be
given in Canadian dollars.
In the opinion of Torys LLP, there are currently no reasons under the present laws of the Province
of Ontario for avoiding recognition of said judgments of Massachusetts Courts on the MFC
Subordinated Guarantee based upon public policy. However, it may be difficult for holders of
Contracts to effect service within the United States upon MFC’s directors and officers and the
experts named in this prospectus who are not residents of the United States or to enforce against
them, both in and outside of the United States, judgments of courts of the United States predicated
upon civil liability under United States federal securities laws. MFC has designated John Hancock
USA as its authorized agent upon whom process may be served in any legal action or proceeding
against MFC arising out of or in connection with the applicable MFC Subordinated Guarantee. Based
on the opinion of Torys LLP, MFC believes that a monetary judgment of a United States court
predicated solely upon the civil liability provisions of United States federal securities laws
would likely be enforceable in Canada if the United States court in which the judgment was obtained
had a basis for jurisdiction in the matter that was recognized by a Canadian court for such
purposes. We cannot assure you that this will be the case since the case law in Canada in respect
of this matter is not entirely clear. It is less certain that an action could be brought in Canada
in the first instance on the basis of liability predicated solely upon such laws.
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VII. Federal Tax Matters
Introduction
Any discussion of the federal income tax treatment of the Contracts contained in this prospectus is
not exhaustive, does not purport to cover all situations, is not intended as tax advice and is not
intended for and cannot be used for the purpose of avoiding penalties. The federal income tax
treatment of the Contracts is unclear in certain circumstances, and you should consult a qualified
and independent tax advisor with regard to the application of law to your individual circumstances.
Bear in mind that the tax-related discussions herein may have been written to support the promotion
or marketing of a transaction or other matter that is relevant to you for tax purposes. The
following discussion is based on the Code, IRS regulations, and interpretations existing on the
date of this prospectus. These authorities, however, are subject to change by Congress, the IRS,
and judicial decisions. The prospectus does not address state or local tax consequences associated
with the purchase of the Contracts.
We make no guarantee regarding any tax treatment, federal, state or local, of any Contract or of
any transaction involving a Contract.
Our Tax Status
We are taxed as a life insurance company under the Code. The assets in the CPI Separate Account are
owned by us, and the income derived from such assets is includible in our income for federal income
tax purposes.
Taxation of Annuities in General
Tax Deferral During Accumulation Period. Under existing provisions of the Code, except as described
below, any increase in Account Value is generally not taxable to you as the Contract Owner or to
the Annuitant until received, either in the form of Annuity Payments as contemplated by the
Contracts, or in some other form of distribution. However, this rule applies only if the Contract
Owner is an individual or, in some cases, a trust or other entity treated as an agent for a natural
person.
As a general rule, deferred annuity contracts held by “non-natural persons,” such as a corporation,
trust or other similar entity, as opposed to a natural person, are not treated as annuity contracts
for federal income tax purposes. The income on such contracts (as defined in the tax law) is taxed
as ordinary income that is received or accrued by the owner during the taxable year. There are
several exceptions to this general rule for non-natural contract owners. First, annuity contracts
will generally be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as an agent for a natural person. However, this exception will not
apply in the case of any employer which is the nominal owner of an annuity contract under a
nonqualified deferred compensation arrangement for its employees.
Other exceptions to the general rule for non-natural contract owners will apply with respect to:
| • | annuity contracts acquired by an estate of a decedent by reason of the death of the decedent; | ||
| • | annuity contracts issued in connection with certain qualified retirement plans; | ||
| • | annuity contracts purchased by employers upon the termination of certain qualified retirement plans; | ||
| • | certain annuity contracts used in connection with structured settlement agreements; and | ||
| • | annuity contracts purchased with a single premium when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period. |
In addition to the foregoing, if the contract’s maturity date occurs, or is scheduled to occur, at
a time when the annuitant is at an advanced age, such as over age 95, it is possible that the owner
will be taxable currently on the annual increase in the account value.
The remainder of this discussion assumes that the Contract will constitute an annuity for federal
tax purposes.
Taxation of Partial and Total Withdrawals. In the case of a partial withdrawal, amounts received
generally are includible in income to the extent the Owner’s Account Value before the withdrawal
exceeds his or her “investment in the contract.” In the case of a total withdrawal, amounts
received are includible in income to the extent they exceed the “investment in the contract.” For
these purposes the “investment in the contract” at any time equals the total of the Purchase
Payments made under the Contract to that time (to the extent such payments were neither deductible
when made nor excludable from income as, for example, in the case of certain employer contributions
to qualified contracts) less any amounts previously received from the Contract which were not
included in income. If, however, the Contract was issued pursuant to a tax-deferred exchange under
Section 1035 of the Code, the “investment in the contract” at any time equals the amount brought
over in the exchange as investment in the contract less any amounts previously received from the
Contract whish were not included in income.
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Other than in the case of Qualified Contracts (which generally cannot be assigned or pledged), any
assignment or pledge (or agreement to assign or pledge) any portion of the Account Value is treated
as a withdrawal of such amount or portion. The investment in the Contract is increased by the
amount includible in income with respect to such assignment or pledge, though it is not affected by
any other aspect of the assignment or pledge (including its release). If you transfer your interest
in a Contract without adequate consideration to a person other than your spouse (or a former spouse
incident to divorce), you will be taxed on the difference between your Account Value and the
investment in the Contract at the time of transfer. In such case, the transferee’s investment in
the Contract will be increased by the amount included in the transferor’s income.
There is some uncertainty regarding the treatment of the Market Value Adjustment for purposes of
determining the amount includible in income as a result of any partial withdrawal, assignment or
pledge, or transfer without adequate consideration. The IRS has regulatory authority to address
this uncertainty. However, as of the date of this prospectus, the IRS has not issued any final
regulations addressing these determinations.
Taxation of Annuity Payments. Normally, the portion of each Annuity Payment taxable as ordinary
income is equal to the excess of the payment over the exclusion amount. The exclusion amount is the
amount determined by multiplying (1) the payment by (2) the ratio of the investment in the
Contract, adjusted for any period certain or refund feature, to the total expected value of Annuity
Payments for the term of the Contract (determined under Treasury Department regulations). A
simplified method of determining the taxable portion of Annuity Payments applies to Contracts
issued in connection with certain Qualified Plans other than IRAs.
Once the total amount of the investment in the Contract has been excluded using this ratio, further
Annuity Payments will be fully taxable. If Annuity Payments cease because of the death of the
Annuitant and before the total amount of the investment in the Contract is recovered, the
unrecovered amount generally will be allowed as a deduction to the Annuitant in his or her last
taxable year.
There may be special income tax issues present in situations where the Owner and the Annuitant are
not the same person or are not married. You should consult a tax advisor in those situations.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a Contract because of the
death of an Owner or, if the Owner is not a natural person, the death of the Annuitant. Prior to
the Maturity Date, such death benefit proceeds are includible in income as follows:
| • | if distributed in a lump sum, they are taxed in the same manner as a full withdrawal, as described above; or | ||
| • | if distributed under an Annuity Option, they are taxed in the same manner as Annuity Payments; as described above. |
| After the Maturity Date, where a guaranteed period exists under an Annuity Option and the Annuitant dies before the end of that period, payments made to the Beneficiary for the remainder of that period are includible in income as follows: |
| • | if received in a lump sum, they are includible in income to the extent that they exceed the unrecovered investment in the contract at that time; | ||
| • | if distributed in accordance with an existing period certain Annuity Option, they are fully excludible from income until the remaining investment in the contract is deemed to be recovered, and all Annuity Payments thereafter are fully includible in income; or |
Penalty Tax on Premature Distributions. Where a Contract has not been issued in connection with a
Qualified Plan, there generally is a 10% penalty tax on the taxable amount of any payment from the
Contract. This penalty is not applicable if the payment is:
| • | received on or after the date on which the Owner reaches age 591/2; | ||
| • | attributable to the Owner becoming disabled (as defined in the tax law); | ||
| • | made on or after the death of the Owner or, if the Owner is not an individual, on or after the death of the primary Annuitant (as defined in the tax law); | ||
| • | made as a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the owner or the joint lives (or joint life expectancies) of the owner and a “designated beneficiary” (as defined in the tax law), or | ||
| • | made under a contract purchased with a single premium when the maturity date is no later than a year from purchase of the contract and substantially equal periodic payments are made, not less frequently than annually, during the annuity period. |
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Aggregation of Contracts. In certain circumstances, the IRS may determine the amount of an annuity
payment or a withdrawal from a contract that is includible in income by combining some or all of
the annuity contracts owned by an individual which are not issued in connection with a Qualified
Plan. For example, if you purchase a Contract offered by this prospectus and also purchase at
approximately the same time an immediate annuity, the IRS may treat the two contracts as one
contract. Similarly, if a person transfers part of his interest in one annuity contract to purchase
another annuity contract, the IRS may in some instances treat the two contracts as one contract.
In addition, if you purchase two or more deferred annuity contracts from the same insurance company
(or its affiliates) during any calendar year, all such contracts will be treated as one contract
for purposes of determining whether any payment not received as an annuity (including withdrawals
prior to the maturity date) is includible in income. Thus, if during a calendar year you buy two or
more of the Contracts offered by this prospectus (which might be done, for example, in order to
invest amounts in different Terms), all of such Contracts would be treated as one Contract in
determining whether withdrawals from any of such Contracts are includible in income.
The effects of such aggregation are not always clear and depend on the circumstances. However,
aggregation could affect the amount of a withdrawal that is taxable and the amount that might be
subject to the 10% penalty tax described above.
Exchanges of Annuity Contracts. We may issue the Contract in exchange for all or part of another
annuity contract that you own. Such an exchange will be tax free under Code Section 1035 if certain
requirements are satisfied. If you exchange all of another annuity contract and the exchange is tax
free, your investment in the Contract immediately after the exchange will generally be the same as
that of the annuity contract exchanged, increased by any additional Purchase Payment made as part
of the exchange. Your Account Value immediately after the exchange may exceed your investment in
the Contract. That excess may be includable in income should amounts subsequently be withdrawn or
distributed from the Contract.
If you exchange part of an existing contract for the Contract, and within 12 months of the exchange
you receive a payment (e.g., you make a withdrawal) from either contract, the exchange may not be
treated as a tax free exchange. Rather, the exchange may be treated as if you had made a partial
withdrawal from the existing contract and then purchased the Contract. In these circumstances, some
or all of the amount exchanged into the Contract could be includible in your income and subject to
a 10% penalty tax.
You should consult your tax advisor in connection with any exchange pursuant to Code Section 1035
for the Contract, particularly if you plan to make a withdrawal from either contract within 12
months after the exchange.
Loss of Interest Deduction Where Contracts are Held by or for the Benefit of Certain Non-Natural
Persons. In the case of contracts issued after June 8, 1997 to a non-natural taxpayer (such as a
corporation or a trust), or held for the benefit of such an entity, a portion of otherwise
deductible interest may not be deductible by the entity, regardless of whether the interest relates
to debt used to purchase or carry the contract. However, this interest deduction disallowance does
not affect contracts where the income on such contracts is treated as ordinary income that is
received or accrued by the owner during the taxable year. Entities that are considering purchasing
the Contract, or entities that will be beneficiaries under a Contract, should consult a tax
advisor.
Qualified Retirement Plans
In General
The Contracts are also designed for use in connection with certain types of qualified retirement
plans which receive favorable treatment under the Code. Numerous special tax rules apply to
participants in such Qualified Plans and to Contracts used in connection with such Qualified Plans.
In this prospectus we provide only general information about the use of the Contract with the
various types of Qualified Plans. Persons intending to use the Contract in connection with a
Qualified Plan should seek competent advice.
The tax rules applicable to Qualified Plans vary according to the type of plan and the terms and
conditions of the plan itself. For example, for both withdrawals and annuity payments under certain
Qualified Contracts, there may be no “investment in the contract” and the total amount received may
be taxable. Both the amount of the contribution that may be made, and the tax deduction or
exclusion that the owner may claim for such contribution, are limited under Qualified
Plans. If you are considering purchasing a Contract for use in connection with a qualified
retirement plan, you should consider, in evaluating the suitability of the Contract, that the
Contract allows only a single Purchase Payment in an amount of at least [$5,000]. If this Contract
is used in connection with a Qualified Plan, the Owner and Annuitant must be the same individual.
If a co-Annuitant is named, all distributions made while the Annuitant is alive must be made to the
Annuitant. Also, if a co-Annuitant is named who is not the Annuitant’s spouse, the Annuity Options
which are available may be limited, depending on the difference in ages between the Annuitant and
co-Annuitant. Furthermore, the length of any Term may be limited in some circumstances to satisfy
certain minimum distribution requirements under the Code.
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Additionally, for Contracts issued in connection with Qualified Plans subject to the Employee
Retirement Income Security Act, the spouse or ex-spouse of the Owner will have rights in the
Contract. In such a case, the Owner may need the consent of the spouse or ex-spouse to a change
Annuity Options or make a withdrawal from the Contract.
In addition, special rules apply to the time at which distributions must commence and the form in
which the distributions must be paid. For example, failure to comply with minimum distribution
requirements applicable to Qualified Plans will result in the imposition of an excise tax. This
excise tax generally equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the Qualified Plan. In the case of Individual Retirement Accounts (“IRAs”)
(other than Roth IRAs), distributions of minimum amounts (as specified in the tax law) must
generally commence by April 1 of the calendar year following the calendar year in which the owner
attains age 70. In the case of certain other Qualified Plans, distributions of such minimum amounts
generally must commence by the later of this date or April 1 of the calendar year following the
calendar year in which the employee retires.
There is also a 10% penalty tax on the taxable amount of any payment from certain Qualified
Contracts. (The amount of the penalty tax is 25% of the taxable amount of any payment received from
a “SIMPLE retirement account” during the 2-year period beginning on the date the individual first
participated in any qualified salary reduction agreement (as defined in the tax law) maintained by
the individual’s employer.) There are exceptions to this penalty tax which vary depending on the
type of Qualified Plan. In the case of an IRA, including a “SIMPLE IRA,” exceptions provide that
the penalty tax does not apply to a payment (a) received on or after the date on which the owner
reaches age 591/2, (b) received on or after the owner’s death or because of the owner’s disability
(as defined in the tax law), or (c) made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life expectancy) of the owner or for the joint
lives (or joint life expectancies) of the owner and designated beneficiary (as defined in the tax
law). These exceptions, as well as certain others not described herein, generally apply to taxable
distributions from other Qualified Plans (although, in the case of plans qualified under sections
401 and 403, exception “c” above for substantially equal periodic payments applies only if the
owner has separated from service). In addition, the penalty tax does not apply to certain
distributions from IRAs taken after December 31, 1997 which are used for qualified first time home
purchases or for higher education expenses. Special conditions must be met to qualify for these two
exceptions to the penalty tax. In addition, the penalty tax does not apply to certain distributions
from IRAs that are used for first time home purchases or for higher education expenses, or for
distributions made to certain eligible individuals called to active duty after September 11, 2001.
Special conditions must be met to qualify for these three exceptions to the penalty tax. If you
wish to take a distribution from an IRA for these purposes, you should consult your tax advisor.
When issued in connection with a Qualified Plan, a Contract will be amended as generally necessary
to conform to the requirements of the plan. However, Owners, Annuitants, and Beneficiaries are
cautioned that the rights of any person to any benefits under Qualified Plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and conditions of the
Contract. In addition, we will not be bound by terms and conditions of Qualified Plans to the
extent such terms and conditions contradict the Contract, unless we consent.
Qualified Plan Types
Following are brief descriptions of various types of Qualified Plans in connection with which we
may issue a Contract.
Individual Retirement Annuities. Section 408 of the Code permits eligible individuals to contribute
to an individual retirement program known as an IRA. IRAs are subject to limits on the amounts that
may be contributed and deducted, the persons who may be eligible and on the time when distributions
may commence. Also, distributions from certain qualified plans may be “rolled over” on a
tax-deferred basis into an IRA. The Contract may not be used in connection with an “Education IRA”
under Section 530 of the Code.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code allows employers to establish
simplified employee pension plans for their employees, using the employees’ IRAs for such purposes,
if certain criteria are met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. Employers intending to use the
Contract in connection with such plans should seek competent advice.
SIMPLE IRAs. Section 408(p) of the Code permits certain small employers to establish “SIMPLE
retirement accounts,” including SIMPLE IRAs, for their employees. Under SIMPLE IRAs, certain
deductible contributions are made by both employees and employers. SIMPLE IRAs are subject to
various requirements, including limits on the amounts that may be contributed, the persons who may
be eligible, and the time when distributions may commence.
Roth IRAs. Section 408A of the Code permits eligible individuals to contribute to a type of IRA
known as a “Roth IRA.” Roth IRAs are generally subject to the same rules as non-Roth IRAs, but
differ in certain respects.
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Among the differences are that contributions to a Roth IRA are not deductible and “qualified
distributions” from a Roth IRA are excluded from income. A qualified distribution is a distribution
that satisfies two requirements. First, the distribution must be made in a taxable year that is at
least five years after the first taxable year for which a contribution to any Roth IRA established
for the owner was made. Second, the distribution must be:
| • | made after the owner attains age 591/2; | ||
| • | made after the owner’s death; | ||
| • | attributable to the owner being disabled; or | ||
| • | a qualified first-time homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Code. |
In addition, distributions from Roth IRAs need not commence when the owner attains age 701/2. A Roth
IRA may accept a “qualified rollover contribution” from a non-Roth IRA and from an “eligible
retirement plan” that satisfies certain requirements specified in section 408A(e)(1)(B) of the
Code.
Corporate and Self-Employed (“H.R. 10” and “Keogh”) Pension and Profit-Sharing Plans. Sections
401(a) and 403(a) of the Code permit corporate employers to establish various types of tax-favored
retirement plans for employees. The Self-Employed Individuals’ Tax Retirement Act of 1962, as
amended, commonly referred to as “H.R. 10” or “Keogh,” permits self-employed individuals also to
establish such tax-favored retirement plans for themselves and their employees. Such retirement
plans may permit the purchase of the Contract in order to provide benefits under the plans.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public school employees and employees
of certain types of charitable, educational and scientific organizations specified in Section
501(c)(3) of the Code to have their employers purchase annuity contracts for them and, subject to
certain limitations, to exclude the amount of purchase payments from gross income for tax purposes.
These annuity contracts are commonly referred to as “tax-sheltered annuities.” Purchasers of the
Contracts for such purposes should seek competent advice as to eligibility, limitations on
permissible amounts of Purchase Payments and other tax consequences associated with the Contracts.
Section 403(b) policies contain restrictions on withdrawals of (i) contributions made pursuant to a
salary reduction agreement in years beginning after December 31, 1988, (ii) earnings on those
contributions, and (iii) earnings in such years on amounts held as of the last year beginning
before January 1, 1989. These amounts can be paid only if the employee has reached age 591/2, had a
severance from employment, died, become disabled, or in the case of hardship. Amounts permitted to
be distributed in the event of hardship are limited to actual contributions; earnings thereon
cannot be distributed on account of hardship. Amounts subject to the withdrawal restrictions
applicable to Section 403(b)(7) custodial accounts may be subject to more stringent restrictions.
(These limitations on withdrawals do not apply to the extent we are directed to transfer some or
all of the Account Value to the issuer of another tax-sheltered annuity or into a Section 403(b)(7)
custodial account.)
Direct Rollover Rules
In the case of Contracts used in connection with a pension, profit-sharing, or annuity plan
qualified under Sections 401(a) or 403(a) of the Code, or in the case of a Section 403(b) tax
sheltered annuity, any “eligible rollover distribution” from the contract will be subject to direct
rollover and mandatory withholding requirements. An eligible rollover distribution generally is any
taxable distribution from a qualified pension plan under Section 401(a) of the Code, qualified
annuity plan under Section 403(a) of the Code, or Section 403(b) tax sheltered annuity or custodial
account, excluding certain amounts (such as minimum distributions required under Section 401(a)(9)
of the Code, distributions which are part of a “series of substantially equal periodic payments”
made for life or a specified period of 10 years or more, and hardship distributions).
Under these requirements, withholding at a rate of 20% will be imposed on any eligible rollover
distribution. In addition, the participant in these qualified retirement plans cannot elect out of
withholding with respect to an eligible rollover distribution. However, this 20% withholding will
not apply if, instead of receiving the eligible rollover distribution, the participant elects to
have amounts directly transferred to certain qualified retirement plans (such as to an IRA). Before
we make an eligible rollover distribution, a notice will be provided explaining generally the
direct rollover and mandatory withholding requirements and how to avoid the 20% withholding by
electing a direct rollover.
Federal Income Tax Withholding
We will withhold and remit to the U.S. government a part of the taxable portion of each
distribution made under a Contract unless (i) the distribution is not an eligible rollover
distribution and (ii) the distributee notifies us at or before the time of the distribution that he
or she elects not to have any amounts withheld. In certain circumstances, we may be required to
withhold tax. Except in the case of eligible rollover distributions, the withholding rates
applicable to the taxable portion of periodic annuity payments are the same as the
29
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withholding rates generally applicable to payments of wages. Except in the case of eligible
rollover distributions, the withholding rate applicable to the taxable portion of non-periodic
payments (including withdrawals prior to the maturity date and rollovers from non-Roth IRAs to Roth
IRAs) is 10%. As described above, the withholding rate applicable to eligible rollover
distributions is 20%.
30
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VIII. General Matters
Confirmation Statements
We will send you confirmation statements for certain transactions in your account. You should
carefully review these statements to verify their accuracy and should immediately report any
mistake to our Annuities Service Center. If you fail to notify our Annuities Service Center of any
mistake within 60 days of the mailing of the confirmation statement, you will be deemed to have
ratified the transaction.
Legal Proceedings
There are no material pending legal proceedings, other than ordinary routine litigation, to which
John Hancock USA or any of our subsidiaries is a party or to which any of our or their property is
subject. To the best of our knowledge, no such proceedings are contemplated by any governmental
authority.
For a description of legal proceedings to which MFC is a party, see “Legal Proceedings” in MFC’s Annual Information Form within MFC’s Annual Report on Form 40-F for the year ended December 31, 2009, as filed on March 19, 2010 and as amended and filed on Form 40-F/A on March 29, 2010 which is incorporated by reference in this prospectus and in the registration statement of which this prospectus forms a part.
For a description of legal proceedings to which MFC is a party, see “Legal Proceedings” in MFC’s Annual Information Form within MFC’s Annual Report on Form 40-F for the year ended December 31, 2009, as filed on March 19, 2010 and as amended and filed on Form 40-F/A on March 29, 2010 which is incorporated by reference in this prospectus and in the registration statement of which this prospectus forms a part.
Legal Opinions
The validity of the Contract Value Interests under deferred annuity Contracts and MFC Subordinated
Guarantee offered in this prospectus will be passed upon for us by Arnold R. Bergman, Esq., Vice
President and Annuities Chief Counsel, John Hancock USA. Certain matters regarding Canadian law
with respect to the MFC Subordinated Guarantee will be passed upon for MFC by Torys LLP, Toronto,
Canada. On the date of this prospectus, the partners and associates of Torys LLP own an aggregate
of approximately 22,000 MFC common shares.
Experts
The consolidated financial statements of MFC as at December 31, 2009 and 2008, and for the years
then ended, included in MFC’s Annual Report on Form 40-F for the year ended December 31, 2009,
filed with the SEC and the amended consolidated financial statements of MFC as at December 31, 2008 and
2007, and for the years then ended, included in MFC’s Report on Form 6-K, filed with the SEC on
March 29, 2010, which are incorporated by reference in this prospectus and in the registration
statement of which this prospectus forms a part, have been audited by Ernst & Young LLP, Toronto,
Canada, an independent registered public accounting firm, as set forth in their reports thereon, included therein by reference.
Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on their authority as experts
in accounting and auditing.
Notices and Reports to Contract Owners
At least once each Contract Year, we will send you a statement showing the Account Value of the
Contract as of the date of the statement. The statement will also show Purchase Payments and any
other information required by any applicable law or regulation.
Contract Owner Inquiries
You should direct all inquiries to our Annuities Service Center at 164 Corporate Drive, Portsmouth,
New Hampshire 03801.
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Appendix A: How Interest is Credited
The Declared Interest Rate is declared by us and will be shown on the Contract specifications
page. At each Contract Anniversary, we will determine the Indexed Crediting Rate applicable for the
following Contract Year based on the year-over-year change in the CPI-U as determined three months
prior to the Contract Anniversary and adjusted by a Guaranteed Margin. The Indexed Crediting Rate
will never fall below the Floor Rate [or be greater than the Rate Cap]as demonstrated in
example[s] B and C] below. The Indexed Crediting Rate will be applied on a daily basis, which, if
compounded daily for one year, would equal the applicable Indexed Crediting Rate determined for
that year. The Guaranteed Margin will be shown on the specifications page, remains constant for
the selected Term, and may be a negative value.
We will reference the CPI-U as published three months previous to determining the Indexed Crediting
Rate. The CPI-U is available approximately mid-month every month and calculated based upon the
previous month’s values.
The following examples assume that the current date is April 10, 2010. To set the Indexed Crediting
Rate as of April 10, 2010, we would look to the CPI-U that was available on February 19, 2010,
reflecting January 2010 values. This may be referred to as a “3 month look-back,” (April to
January). If today is instead April 20th 2010 and we are setting rates, we would still
look to the CPI-U that was available on February 19, 2010, rather than referencing the CPI-U
available on April 18, 2010. Therefore, any day in April would be using the CPI-U from January that
was released in February.
Indexed Crediting Rate Formula
The following formula represents that at the beginning of each Contract Anniversary within any
selected Term, the Indexed Crediting Rate (Rt) for each year of the Term (t) would be
the greater of the Indexed Crediting Rate as determined using the CPI-U plus the Guaranteed Margin
(M), or the Floor Rate [, and the lesser of the Indexed Crediting Rate or the Rate Cap].
Rt may not be less than the Floor Rate [nor greater than the Rate Cap].
Where:
Rt = Indexed Crediting Rate applicable for the following year
CPIt = the CPI-U value from 3 months prior to the rate determination date.
CPIt-1 = the CPI-U value 1 year prior to CPIt
M = the Guaranteed Margin
CPIt = the CPI-U value from 3 months prior to the rate determination date.
CPIt-1 = the CPI-U value 1 year prior to CPIt
M = the Guaranteed Margin
Example A. Determining the Indexed Crediting Rate
If the CPI-U value 3 months prior to the rate determination date is 200, the prior year’s CPI-U
value is 195, and the Guaranteed Margin is 0.50%, then the Indexed Crediting Rate before the Floor
Rate[and Rate Cap]is applied would be:
3.06% is greater than the Floor Rate, [and less than the Rate Cap], so the Indexed Crediting Rate
for the Contract Year is 3.06%.
A-1
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Example B Impact of Rate Floor on Indexed Crediting Rate
[If the CPI-U value 3 months prior to the rate determination date is 190, the prior year’s CPI-U
value is 200, the Rate Cap is 8%, and the Guaranteed Margin is 0.50%, then the Indexed Crediting
Rate before the Rate Floor and Rate Cap are applied would be:
Because -4.50% is less than the 1% Rate Floor, the Indexed Crediting Rate for the Contract Year is
1%.]
[If the CPI-U value 3 months prior to the applicable contract anniversary is 190, the prior year’s
CPI-U value is 200, and the Guaranteed Margin is 0.50%, then the Indexed Crediting Rate before the
Rate Floor is applied would be:
Because -4.50% is less than the 0% Rate Floor, the Indexed Crediting Rate for the Contract Year is
0%.]
Example C Impact of Rate Cap on Indexed Crediting Rate
[If the CPI-U value 3 months prior to the rate determination date is 220, the prior year’s CPI-U
value is 200, the Rate Cap is 8%, and the Guaranteed Margin is 0.50%, then the Indexed Crediting
Rate before the Rate Floor and Rate Cap are applied would be:
Because 10.50% is greater than the 8% Rate Cap, the Indexed Crediting Rate for the Contract Year is
8%]
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Appendix B: Examples of Market Value Adjustment Calculations
The examples do not account for the administrative fee.
Example 1: Request for Total Withdrawal with Negative MVA
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Withdrawal occurs at the end of year 2 |
||||
Account Value at time of Withdrawal |
106,812 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.71 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | 2.97 | % | 0.43 | % | 3.40 | % | 3,512 | 106,812 | (1,618 | ) | 7,231 | 97,963 | |||||||||||||||||||||||
9/15/2012 |
||||||||||||||||||||||||||||||||||||
9/15/2013 |
||||||||||||||||||||||||||||||||||||
9/15/2014 |
||||||||||||||||||||||||||||||||||||
9/15/2015 |
||||||||||||||||||||||||||||||||||||
Step 1: We first determine the portion of the gross withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. Since a total withdrawal of
Account Value was requested, the free withdrawal amount of $3,512 is
subtracted from the total amount of the Account Value of $106,812. The free withdrawal amount is equal to
the prior 12 months of interest earned. The gross withdrawal
amount subject to Market Value Adjustment and withdrawal charges in this case is $103,300.
Step 2: We next determine the amount of the Market Value Adjustment. In this
example, the Guaranteed Margin we assume to be in effect for the Contract
(0.43%) is lower than the Guaranteed Margin we assume to be offering for the
remaining duration of the Term (0.71% for a new 3 year Term). The resulting Market
Value Adjustment factor of 0.98433 would reduce the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of
months remaining in the current Term, as of the date the withdrawal request is processed. For
purposes of this calculation, months remaining will be rounded up to the next nearest whole
month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal
amount that is subject to a Market Value Adjustment ($103,300) by the Market Value Adjustment
factor of 0.98433, which produces a result of $101,682. The amount of Market Value Adjustment is
the difference between $101,682 and $103,300, or a negative $1,618.
Step 3: We next determine the amount of withdrawal charge. To do this, we multiply the gross
withdrawal amount that is subject to a withdrawal charge of $103,300 by the 7% withdrawal charge
to produce a withdrawal charge of $7,231.
Step 4: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $97,963
($106,812- $1,618 - $7,231),
assuming that no amount is withheld for taxes. The Contract is then terminated.
B-1
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Example 2: Request for Total Withdrawal with Positive MVA
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Withdrawal occurs at the end of year 2 |
||||
Account Value at time of Withdrawal |
106,812 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.10 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | 2.97 | % | 0.43 | % | 3.40 | % | 3,512 | 106,812 | 247 | 7,231 | 99,828 | ||||||||||||||||||||||||
9/15/2012 |
||||||||||||||||||||||||||||||||||||
9/15/2013 |
||||||||||||||||||||||||||||||||||||
9/15/2014 |
||||||||||||||||||||||||||||||||||||
9/15/2015 |
||||||||||||||||||||||||||||||||||||
Step 1: We first determine the portion of the gross withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. Since a total withdrawal of
Account Value was requested, the free withdrawal amount of $3,512 is
subtracted from the total amount of the Account Value of $106,812. The free withdrawal amount is equal to
the prior 12 months of interest earned. The gross withdrawal amount subject to Market
Value Adjustment and withdrawal charges in this case is $103,300.
Step 2: We next determine the amount of the Market Value Adjustment. In this
example, the Guaranteed Margin we assume to be in effect for the Contract
(0.43%) is higher than the Guaranteed Margin we assume to be offering for the
remaining duration of the Term (0.1% for a new 3 year Term). The resulting Market
Value Adjustment factor of 1.00239 increases the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of
months remaining in the current Term, as of the date the withdrawal request is processed. For
purposes of this calculation, months remaining will be rounded up to the next nearest whole
month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal
amount that is subject to a Market Value Adjustment ($103,300) by the Market Value Adjustment
factor of 1.00239, which produces a result of $103,547. The amount of Market Value Adjustment is
the difference between $103,547 and $103,300, or a positive $247.
Step 3: We next determine the amount of withdrawal charge. To do this, we multiply the gross
withdrawal amount that is subject to a withdrawal charge of $103,300 by the 7% withdrawal charge
to produce a withdrawal charge of $7,231.
Step 4: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $99,828
($106,812+ $247 - $7,231),
assuming that no amount is withheld for taxes. The Contract is then terminated.
B-2
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Example 3: Request for Gross Partial Withdrawal with Inflation all years
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Gross
Withdrawal occurs at the end of year 2 |
25,000 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.71 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | 2.97 | % | 0.43 | % | 3.40 | % | 3,512 | 25,000 | (337 | ) | 1,504 | 23,159 | |||||||||||||||||||||||
9/15/2012 |
81,812 | 3.99 | % | 0.43 | % | 4.42 | % | 3,612 | ||||||||||||||||||||||||||||
9/15/2013 |
85,424 | 2.08 | % | 0.43 | % | 2.51 | % | 2,140 | ||||||||||||||||||||||||||||
9/15/2014 |
87,565 | 4.28 | % | 0.43 | % | 4.71 | % | 4,125 | ||||||||||||||||||||||||||||
9/15/2015 |
91,689 | |||||||||||||||||||||||||||||||||||
Step 1: We first determine the portion of the partial withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. For a ‘gross’ partial withdrawal
request, the free withdrawal amount of $3,512 is subtracted from the
total amount of the request $25,000. The free withdrawal amount is equal to the prior 12 months of interest
earned. The gross withdrawal amount subject to Market Value
Adjustment and withdrawal charges in this case is $21,488.
Step 2: We next determine the amount of the Market Value Adjustment. In this
example, the Guaranteed Margin we assume to be in effect for the Contract
(0.43%) is lower than the Guaranteed Margin we assume to be offering for the
remaining duration of the Term (0.71% for a new 3 year Term). The resulting Market
Value Adjustment factor of 0.98433 would reduce the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of
months remaining in the current Term, as of the date the withdrawal request is processed. For
purposes of this calculation, months remaining will be rounded up to the next nearest whole
month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal
amount that is subject to a Market Value Adjustment ($21,488) by the Market Value Adjustment
factor of 0.98433, which produces a result of $21,151. The amount of Market Value Adjustment is
the difference between $21,151 and $21,488, or a negative $337.
Step 3: We next determine the amount of withdrawal charge. To do this, we multiply the gross
withdrawal amount that is subject to a withdrawal charge of $21,488 by the 7% withdrawal charge
to produce a withdrawal charge of $1,504.
Step 4: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $23,159
($25,000 - $337 - $1,504),
assuming that no amount is withheld for taxes. The remaining Account
Value is $81,812 ($25,000
was deducted) and the Contract remains in force.
B-3
Table of Contents
Example 4: Request for Gross Partial Withdrawal with Inflation and Deflation
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Gross
Withdrawal occurs at the end of year 2 |
25,000 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.71 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | -2.20 | % | 0.43 | % | 0.00 | % | 0 | 25,000 | (392 | ) | 1,750 | 22,858 | |||||||||||||||||||||||
9/15/2012 |
78,300 | 3.99 | % | 0.43 | % | 4.42 | % | 3,457 | ||||||||||||||||||||||||||||
9/15/2013 |
81,757 | -0.24 | % | 0.43 | % | 0.19 | % | 155 | ||||||||||||||||||||||||||||
9/15/2014 |
81,913 | 4.28 | % | 0.43 | % | 4.71 | % | 3,858 | ||||||||||||||||||||||||||||
9/15/2015 |
85,771 | |||||||||||||||||||||||||||||||||||
Step 1: We first determine the portion of the partial withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. For a ‘gross’ partial withdrawal
request, the free withdrawal amount of $0 is subtracted from the
total amount of the request $25,000. The free withdrawal amount is equal to the prior 12 months of interest
earned, and in this case there was no interest earned, because the 0% floor was reached. The gross withdrawal amount subject to Market Value Adjustment and withdrawal charges in
this case is $25,000.
Step 2: We next determine the amount of the Market Value Adjustment. In this
example, the Guaranteed Margin we assume to be in effect for the Contract
(0.43%) is lower than the Guaranteed Margin we assume to be offering for the
remaining duration of the Term (0.71% for a new 3 year Term). The resulting Market
Value Adjustment factor of 0.98433 would reduce the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of
months remaining in the current Term, as of the date the withdrawal request is processed. For
purposes of this calculation, months remaining will be rounded up to the next nearest whole
month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal
amount that is subject to a Market Value Adjustment ($25,000) by the Market Value Adjustment
factor of 0.98433, which produces a result of $24,608. The amount of Market Value Adjustment is
the difference between $24,608 and $25,000, or a negative $392.
Step 3: We next determine the amount of withdrawal charge. To do this, we multiply the gross
withdrawal amount that is subject to a withdrawal charge of $25,000 by the 7% withdrawal charge
to produce a withdrawal charge of $1,750.
Step 4: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $22,858
($25,000 - $392 - $1,750),
assuming that no amount is withheld for taxes. The remaining Account
Value is $78,300 ($25,000
was deducted) and the Contract remains in force.
B-4
Table of Contents
Example 4: Request for Gross Partial Withdrawal with Inflation and Deflation
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Gross
Withdrawal occurs at the end of year 2 |
25,000 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.71 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | -2.20 | % | 0.43 | % | 1.00 | % | 1,033 | 25,000 | (375 | ) | 1,678 | 22,947 | |||||||||||||||||||||||
9/15/2012 |
79,333 | 3.99 | % | 0.43 | % | 4.42 | % | 3,503 | ||||||||||||||||||||||||||||
9/15/2013 |
82,836 | -0.24 | % | 0.43 | % | 0.19 | % | 157 | ||||||||||||||||||||||||||||
9/15/2014 |
82,993 | 4.28 | % | 0.43 | % | 4.71 | % | 3,909 | ||||||||||||||||||||||||||||
9/15/2015 |
86,902 | |||||||||||||||||||||||||||||||||||
Step 1: We first determine the portion of the partial withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. For a
‘gross’ partial withdrawal request, the free withdrawal amount of $1,033 is subtracted from the total amount of the request $25,000. The free withdrawal
amount is equal to the prior 12 months of interest earned. The gross withdrawal amount subject to Market Value Adjustment and withdrawal charges in
this case is $23,967.
Step 2: We next determine the amount of the Market Value Adjustment. In this example, the Guaranteed Margin we assume to be in effect for the
Contract (0.43%) is lower than the Guaranteed Margin we assume to be offering for the remaining duration of the Term (0.71% for a new 3 year Term).
The resulting Market Value Adjustment factor of 0.98433 would reduce the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of months remaining in the current Term, as of the date the withdrawal request is processed. For purposes of this
calculation, months remaining will be rounded up to the next nearest whole month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal amount that is subject to a Market Value Adjustment ($23,967) by the Market Value Adjustment factor of 0.98433,
which produces a result of $23,592. The amount of Market Value
Adjustment is the difference between $23,592 and $23,967, or a negative $375.
Step 3: We next determine the amount of withdrawal charge. To do this, we multiply the gross withdrawal amount that is subject to a withdrawal
charge of $23,967 by the 7% withdrawal charge to produce a withdrawal charge of $1,678.
Step 4: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $22,947 ($25,000 - $375 - $1,678),
assuming that no amount is withheld for taxes. The remaining
Account Value is $79,333 ($25,000 was deducted) and the Contract remains in force.
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Table of Contents
Example 5: Request for Net Partial Withdrawal
Contract issue date: |
9/15/2010 | |||
Premium |
100,000 | |||
Term Selected |
5 | year | ||
Guaranteed Margin in effect for Current Term |
0.43 | % | ||
Net
Withdrawal occurs at the end of year 2 |
25,000 | |||
The Guaranteed Margin on a new 3-yr CPI-U MVA |
0.71 | % | ||
Adjustment factor |
0.25 | % | ||
Withdrawal Charge |
7.00 | % | ||
| Withdrawal | ||||||||||||||||||||||||||||||||||||
| Guaranteed | ||||||||||||||||||||||||||||||||||||
| Beginning | Margin in | Interest | Gross | Net | ||||||||||||||||||||||||||||||||
| of Year | CPI- U | Effect for | Index | Earned | Withdrawal | Withdrawal | ||||||||||||||||||||||||||||||
| Account | Percentage | Current | Crediting | Over The | (End Of | Withdrawal | (End Of | |||||||||||||||||||||||||||||
| Date | Value | Change | Term | Rate | Year | Year) | MVA | Charge | Year) | |||||||||||||||||||||||||||
9/15/2010 |
100,000 | 0.43 | % | 3.30 | % | 3,300 | ||||||||||||||||||||||||||||||
9/15/2011 |
103,300 | 2.97 | % | 0.43 | % | 3.40 | % | 3,512 | 27,013 | (368 | ) | 1,645 | 25,000 | |||||||||||||||||||||||
9/15/2012 |
79,799 | 3.99 | % | 0.43 | % | 4.42 | % | 3,523 | ||||||||||||||||||||||||||||
9/15/2013 |
83,322 | 2.08 | % | 0.43 | % | 2.51 | % | 2,088 | ||||||||||||||||||||||||||||
9/15/2014 |
85,410 | 4.28 | % | 0.43 | % | 4.71 | % | 4,023 | ||||||||||||||||||||||||||||
9/15/2015 |
89,433 | |||||||||||||||||||||||||||||||||||
Step 1: We will calculate a gross withdrawal amount that is large enough to cover any applicable Market Value Adjustment and withdrawal charge so that the requested net amount is received.
| Net
Withdrawal Amount + Free Amount * ((MVA factor – 1) – Withdrawal charge %)
|
||||||
| Gross Withdrawal Amount = | (1 + (MVA factor – 1) – Withdrawal Charge %) | |||||
In this example,
|
25,000 + 3,512 * ((0.9843
– 1) – 0.07)
|
= $27,013 | ||||
| Gross Withdrawal Amount = | (1 + (0.9843 – 1) – 0.07) | |||||
Step
2: We then determine the portion of the partial withdrawal request that is subject to a Market Value Adjustment and withdrawal charges. We subtract from the Gross Withdrawal Amount calculated above ($27,013) the
free withdrawal amount of $3,512. The free withdrawal amount is equal to the prior 12 months of interest earned. The gross withdrawal amount subject to Market Value Adjustment and withdrawal charges in this case is
$23,501.
Step 3: We next determine the amount of the Market Value Adjustment. In this
example, the Guaranteed Margin we assume to be in effect for the Contract
(0.43%) is lower than the Guaranteed Margin we assume to be offering for the
remaining duration of the Term (0.71% for a new 3 year Term). The resulting Market
Value Adjustment factor of 0.98433 would reduce the amount payable.
See below for MVA factor formula:
M issue is the Guaranteed Margin in effect for current Term
M withdrawal is the Guaranteed Margin offered on a Term equal to the number of
months remaining in the current Term, as of the date the withdrawal request is processed. For
purposes of this calculation, months remaining will be rounded up to the next nearest whole
month
n is the number of whole months remaining in the current Term, rounded up to nearest whole month.
k is the adjustment factor.
We determine the amount of the Market Value Adjustment by multiplying the gross withdrawal
amount that is subject to a Market Value Adjustment ($23,501) by the Market Value Adjustment
factor of 0.98433, which produces a result of $23,133. The amount of Market Value Adjustment is
the difference between $23,133 and $23,501, or a negative $368.
Step 4: We next determine the amount of withdrawal charge. To do this, we multiply the gross
withdrawal amount that is subject to a withdrawal charge of $23,501 by the 7% withdrawal charge
to produce a withdrawal charge of $1,645.
Step 5: Next apply the Market Value Adjustment and subtract the withdrawal charge from the gross
withdrawal amount. This results in a net amount payable of $25,000
($27,013 - $368 - $1,645),
assuming that no amount is withheld for taxes. The remaining Account
Value is $79,799 ($27,013 was
deducted) and the Contract remains in force.
B-6
Table of Contents
Appendix C: Withdrawal Charge Schedule
[APPLICABLE TO ACCOUNT VALUE DURING THE INITIAL TERM:
| CONTRACT/CERTIFICATE YEAR AT TIME OF WITHDRAWAL | ||||||||||||||||||||||||||||||||||||||||
TERM |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||||||||||||||
1 Year |
0 | % | ||||||||||||||||||||||||||||||||||||||
2 Year |
0 | % | 0 | % | ||||||||||||||||||||||||||||||||||||
3 Year |
8 | % | 7 | % | 6 | % | ||||||||||||||||||||||||||||||||||
4 Year |
8 | % | 7 | % | 6 | % | 6 | % | ||||||||||||||||||||||||||||||||
5 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | ||||||||||||||||||||||||||||||
6 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 5 | % | ||||||||||||||||||||||||||||
7 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 5 | % | 4 | % | ||||||||||||||||||||||||||
8 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 5 | % | 4 | % | 3 | % | ||||||||||||||||||||||||
9 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 5 | % | 4 | % | 3 | % | 2 | % | ||||||||||||||||||||||
10 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 5 | % | 4 | % | 3 | % | 2 | % | 1 | % | ||||||||||||||||||||
APPLICABLE TO ACCOUNT VALUE DURING ANY SUBSEQUENT TERM:
| NUMBER OF COMPLETE YEARS SINCE THE COMMENCEMENT OF THE SUBSEQUENT TERM | ||||||||||||||||||||||||||||||||||||||||
| AT THE TIME OF WITHDRAWAL | ||||||||||||||||||||||||||||||||||||||||
TERM |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | ||||||||||||||||||||||||||||||
1 Year |
0 | % | ||||||||||||||||||||||||||||||||||||||
2 Year |
0 | % | 0 | % | ||||||||||||||||||||||||||||||||||||
3 Year |
6 | % | 5 | % | 4 | % | ||||||||||||||||||||||||||||||||||
4 Year |
6 | % | 5 | % | 4 | % | 4 | % | ||||||||||||||||||||||||||||||||
5 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | ||||||||||||||||||||||||||||||
6 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | ||||||||||||||||||||||||||||
7 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | 2 | % | ||||||||||||||||||||||||||
8 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | 2 | % | 1 | % | ||||||||||||||||||||||||
9 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | 2 | % | 1 | % | 0 | % | ||||||||||||||||||||||
10 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | 2 | % | 1 | % | 0 | % | 0 | % | ||||||||||||||||||||
[APPLICABLE TO ACCOUNT VALUE DURING THE INITIAL TERM:
| CONTRACT/CERTIFICATE YEAR AT TIME OF WITHDRAWAL | ||||||||||||||||||||||||||||||||||||||||
TERM |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||||||||||||||
1 Year |
0 | % | ||||||||||||||||||||||||||||||||||||||
2 Year |
0 | % | 0 | % | ||||||||||||||||||||||||||||||||||||
3 Year |
8 | % | 7 | % | 6 | % | ||||||||||||||||||||||||||||||||||
4 Year |
8 | % | 7 | % | 6 | % | 6 | % | ||||||||||||||||||||||||||||||||
5 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | ||||||||||||||||||||||||||||||
6 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 4 | % | ||||||||||||||||||||||||||||
7 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 4 | % | 3 | % | ||||||||||||||||||||||||||
8 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 4 | % | 3 | % | 0 | % | ||||||||||||||||||||||||
9 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 4 | % | 3 | % | 0 | % | 0 | % | ||||||||||||||||||||||
10 Year |
8 | % | 7 | % | 6 | % | 6 | % | 5 | % | 4 | % | 3 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||
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Table of Contents
APPLICABLE TO ACCOUNT VALUE DURING ANY SUBSEQUENT TERM:
| NUMBER OF COMPLETE YEARS SINCE THE COMMENCEMENT OF THE SUBSEQUENT TERM | ||||||||||||||||||||||||||||||||||||||||
| AT THE TIME OF WITHDRAWAL | ||||||||||||||||||||||||||||||||||||||||
TERM |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | ||||||||||||||||||||||||||||||
1 Year |
0 | % | ||||||||||||||||||||||||||||||||||||||
2 Year |
0 | % | 0 | % | ||||||||||||||||||||||||||||||||||||
3 Year |
6 | % | 5 | % | 4 | % | ||||||||||||||||||||||||||||||||||
4 Year |
6 | % | 5 | % | 4 | % | 4 | % | ||||||||||||||||||||||||||||||||
5 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | ||||||||||||||||||||||||||||||
6 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 2 | % | ||||||||||||||||||||||||||||
7 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 2 | % | 1 | % | ||||||||||||||||||||||||||
8 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 2 | % | 1 | % | 0 | % | ||||||||||||||||||||||||
9 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 2 | % | 1 | % | 0 | % | 0 | % | ||||||||||||||||||||||
10 Year |
6 | % | 5 | % | 4 | % | 4 | % | 3 | % | 2 | % | 1 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||
C-2
Table of Contents
Appendix D: Historical rates for CPI and S&P
Year over Year change in CPI-U and S&P 500 Indices since 1950
Using January values of each year
| S&P 500 | S&P 500 | |||||||||||||||||||||||||||||||||||||||
| CPI Index | Index | CPI Index | Index | |||||||||||||||||||||||||||||||||||||
| Year over | Year over | Year over | Year over | |||||||||||||||||||||||||||||||||||||
| CPI | Year | S&P 500 | Year | CPI | Year | S&P 500 | Year | |||||||||||||||||||||||||||||||||
| Month | Index | % Change | Index | % Change | Month | Index | % Change | Index | % Change | |||||||||||||||||||||||||||||||
| 1/31/1950 | 23.50 | 17.05 | 1/31/1981 | 87.00 | 11.83 | % | 129.55 | 13.48 | % | |||||||||||||||||||||||||||||||
| 1/31/1951 | 25.40 | 8.09 | % | 21.66 | 27.04 | % | 1/31/1982 | 94.30 | 8.39 | % | 120.40 | -7.06 | % | |||||||||||||||||||||||||||
| 1/31/1952 | 26.50 | 4.33 | % | 24.14 | 11.45 | % | 1/31/1983 | 97.80 | 3.71 | % | 145.30 | 20.68 | % | |||||||||||||||||||||||||||
| 1/31/1953 | 26.60 | 0.38 | % | 26.38 | 9.28 | % | 1/31/1984 | 101.90 | 4.19 | % | 163.41 | 12.46 | % | |||||||||||||||||||||||||||
| 1/31/1954 | 26.90 | 1.13 | % | 26.08 | -1.14 | % | 1/31/1985 | 105.50 | 3.53 | % | 179.63 | 9.93 | % | |||||||||||||||||||||||||||
| 1/31/1955 | 26.70 | -0.74 | % | 36.63 | 40.45 | % | 1/31/1986 | 109.60 | 3.89 | % | 211.78 | 17.90 | % | |||||||||||||||||||||||||||
| 1/31/1956 | 26.80 | 0.37 | % | 43.82 | 19.63 | % | 1/31/1987 | 111.20 | 1.46 | % | 274.08 | 29.42 | % | |||||||||||||||||||||||||||
| 1/31/1957 | 27.60 | 2.99 | % | 44.72 | 2.05 | % | 1/31/1988 | 115.70 | 4.05 | % | 257.07 | -6.21 | % | |||||||||||||||||||||||||||
| 1/31/1958 | 28.60 | 3.62 | % | 41.70 | -6.75 | % | 1/31/1989 | 121.10 | 4.67 | % | 297.47 | 15.72 | % | |||||||||||||||||||||||||||
| 1/31/1959 | 29.00 | 1.40 | % | 55.42 | 32.90 | % | 1/31/1990 | 127.40 | 5.20 | % | 329.08 | 10.63 | % | |||||||||||||||||||||||||||
| 1/31/1960 | 29.30 | 1.03 | % | 55.61 | 0.34 | % | 1/31/1991 | 134.60 | 5.65 | % | 343.93 | 4.51 | % | |||||||||||||||||||||||||||
| 1/31/1961 | 29.80 | 1.71 | % | 61.78 | 11.10 | % | 1/31/1992 | 138.10 | 2.60 | % | 408.79 | 18.86 | % | |||||||||||||||||||||||||||
| 1/31/1962 | 30.00 | 0.67 | % | 68.84 | 11.43 | % | 1/31/1993 | 142.60 | 3.26 | % | 438.78 | 7.34 | % | |||||||||||||||||||||||||||
| 1/31/1963 | 30.40 | 1.33 | % | 66.20 | -3.83 | % | 1/31/1994 | 146.20 | 2.52 | % | 481.61 | 9.76 | % | |||||||||||||||||||||||||||
| 1/31/1964 | 30.90 | 1.64 | % | 77.04 | 16.37 | % | 1/31/1995 | 150.30 | 2.80 | % | 470.42 | -2.32 | % | |||||||||||||||||||||||||||
| 1/31/1965 | 31.20 | 0.97 | % | 87.56 | 13.66 | % | 1/31/1996 | 154.40 | 2.73 | % | 636.02 | 35.20 | % | |||||||||||||||||||||||||||
| 1/31/1966 | 31.80 | 1.92 | % | 92.88 | 6.08 | % | 1/31/1997 | 159.10 | 3.04 | % | 786.16 | 23.61 | % | |||||||||||||||||||||||||||
| 1/31/1967 | 32.90 | 3.46 | % | 86.61 | -6.75 | % | 1/31/1998 | 161.60 | 1.57 | % | 980.28 | 24.69 | % | |||||||||||||||||||||||||||
| 1/31/1968 | 34.10 | 3.65 | % | 92.24 | 6.50 | % | 1/31/1999 | 164.30 | 1.67 | % | 1279.64 | 30.54 | % | |||||||||||||||||||||||||||
| 1/31/1969 | 35.60 | 4.40 | % | 103.01 | 11.68 | % | 1/31/2000 | 168.80 | 2.74 | % | 1394.46 | 8.97 | % | |||||||||||||||||||||||||||
| 1/31/1970 | 37.80 | 6.18 | % | 85.02 | -17.46 | % | 1/31/2001 | 175.10 | 3.73 | % | 1366.01 | -2.04 | % | |||||||||||||||||||||||||||
| 1/31/1971 | 39.80 | 5.29 | % | 95.88 | 12.77 | % | 1/31/2002 | 177.10 | 1.14 | % | 1130.20 | -17.26 | % | |||||||||||||||||||||||||||
| 1/31/1972 | 41.10 | 3.27 | % | 103.94 | 8.41 | % | 1/31/2003 | 181.70 | 2.60 | % | 855.70 | -24.29 | % | |||||||||||||||||||||||||||
| 1/31/1973 | 42.60 | 3.65 | % | 116.03 | 11.63 | % | 1/31/2004 | 185.20 | 1.93 | % | 1131.13 | 32.19 | % | |||||||||||||||||||||||||||
| 1/31/1974 | 46.60 | 9.39 | % | 96.57 | -16.77 | % | 1/31/2005 | 190.70 | 2.97 | % | 1181.27 | 4.43 | % | |||||||||||||||||||||||||||
| 1/31/1975 | 52.10 | 11.80 | % | 76.98 | -20.29 | % | 1/31/2006 | 198.30 | 3.99 | % | 1280.08 | 8.36 | % | |||||||||||||||||||||||||||
| 1/31/1976 | 55.60 | 6.72 | % | 100.86 | 31.02 | % | 1/31/2007 | 202.42 | 2.08 | % | 1438.24 | 12.36 | % | |||||||||||||||||||||||||||
| 1/31/1977 | 58.50 | 5.22 | % | 102.03 | 1.16 | % | 1/31/2008 | 211.08 | 4.28 | % | 1378.55 | -4.15 | % | |||||||||||||||||||||||||||
| 1/31/1978 | 62.50 | 6.84 | % | 89.25 | -12.53 | % | 1/31/2009 | 211.14 | 0.03 | % | 825.88 | -40.09 | % | |||||||||||||||||||||||||||
| 1/31/1979 | 68.30 | 9.28 | % | 99.93 | 11.97 | % | 1/31/2010 | 216.69 | 2.63 | % | 1073.87 | 30.03 | % | |||||||||||||||||||||||||||
| 1/31/1980 | 77.80 | 13.91 | % | 114.16 | 14.24 | % | ||||||||||||||||||||||||||||||||||
The US Consumer Price Index — All Urban Consumers (CPI-U) — is compiled monthly by the U.S. Bureau of Labor Statistics
D-1
Table of Contents
Appendix E: State Premium Taxes
Premium taxes vary according to the state and are subject to change. In many jurisdictions
there is no tax at all. For current information, a tax advisor should be consulted.
| TAX RATE | ||||||||
| QUALIFIED | NONQUALIFIED | |||||||
| STATE1 | CONTRACTS | CONTRACTS | ||||||
CALIFORNIA |
0.50 | % | 2.35 | % | ||||
MAINE2 |
0.00 | % | 2.00 | % | ||||
NEVADA |
0.00 | % | 3.50 | % | ||||
PUERTO RICO |
1.00 | % | 1.00 | % | ||||
SOUTH DAKOTA2 |
0.00 | % | 1.25 | %3 | ||||
TEXAS4 |
0.04 | % | 0.04 | % | ||||
WEST VIRGINIA |
1.00 | % | 1.00 | % | ||||
WYOMING |
0.00 | % | 1.00 | % | ||||
| 1 | Based on the state of residence at the time the tax is assessed. | |
| 2 | Premium tax paid upon receipt of Purchase Payment (no tax at annuitization if tax paid on Purchase Payment at issue). | |
| 3 | 0.80% on Purchase Payments in excess of $500,000. | |
| 4 | Referred to as a “maintenance” tax. |
E-1
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers.
Manulife Financial Corporation
Under the Insurance Companies Act (Canada), a company may not, by contract, resolution or
by-law, limit the liability of its directors for breaches of their fiduciary duties. However, the
company may indemnify a director or officer, a former director or officer or a person who acts or
acted at the company’s request as a director or officer of or in a similar capacity for another
entity, against all costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal,
administrative, investigative or other proceeding in which he or she is involved because of that
association with the company or other entity, if:
(1) that person acted honestly and in good faith with a view to the best interests of, as the case
may be, the company or the other entity for which he or she acted at the company’s request as a
director or officer or in a similar capacity; and
(2) in the case of a criminal or administrative action or proceeding that is enforced by a monetary
penalty, that person had reasonable grounds for believing that his or her conduct was lawful.
These individuals are entitled to indemnity from the company if the person was not judged by
the court or other competent authority to have committed any fault or omitted to do anything he or
she ought to have done and fulfills the conditions set out in (1) and (2) above. A company may,
with the approval of a court, also indemnify that person against all costs, charges and expenses
reasonably incurred by them in connection with an action by or on behalf of the company or other
entity to procure a judgment in its favor, to which the person is made a party by reason of being
or having been a director or officer of the company or entity, if he or she fulfills the conditions
set out in (1) and (2) above.
The by-laws of Manulife Financial Corporation (“MFC”) provide that the board of directors of
MFC shall make provisions, by resolution, for the indemnification of directors, officers, employees
and such other persons as the directors shall decide on such terms and conditions as they
establish. MFC’s administrative resolutions provide that MFC shall indemnify a director, officer or
employee, a former director, officer or employee, or a person who acts or acted at MFC’s request as
a director, officer, employee or trustee of another corporation, partnership, joint venture, trust
or other enterprise against any liability and costs arising out of any action or suit against them
from the execution of their duties, subject to the limitations described in the administrative
resolutions.
MFC’s administrative resolutions provide that MFC will have no obligation to indemnify any
person for:
| • | any acts committed with actual dishonest, fraudulent, criminal or malicious intent; | ||
| • | any act of gross negligence or willful neglect; | ||
| • | any claims relating to liabilities of other persons assumed by any person entitled to indemnification; | ||
| • | any claims relating to enterprises owned, operated, managed or controlled by any person entitled to indemnification; | ||
| • | any claims relating to pension plans sponsored by any person entitled to indemnification; | ||
| • | bodily injury, sickness, disease or death of any person; | ||
| • | injury to or destruction of any tangible property; and | ||
| • | any actions which were in breach of compliance with MFC policy. |
MFC has also entered into agreements to indemnify its directors and officers. These agreements
indemnify our directors and officers for certain expenses, including, among other things,
attorneys’ fees, costs, fines and settlement amounts, reasonably incurred by any such person in any
civil, criminal, administrative or other proceeding related to such person’s services as a director
or officer of MFC, or any other entity to which the person
Table of Contents
provides services at MFC’s request. MFC’s obligation to indemnify such persons is subject to
similar limitations as those set forth in MFC’s administrative resolutions described above.
MFC maintains a directors’ and officers’ liability insurance policy with a policy limit of
U.S.$300,000,000. The policy is renewed annually. The policy provides protection to directors and
officers against liability incurred by them in their capacities as directors and officers of MFC
and its subsidiaries. The policy also provides protection to MFC (of which U.S.$125,000,000 is
available to MFC) for claims made against directors and officers for which MFC has granted
directors and officers indemnity, as required or permitted under applicable law and for securities
claims made against MFC, in each case subject to a deductible of U.S.$25,000,000 per claim.
John Hancock Life Insurance Company (U.S.A.)
Pursuant to Article XII of the Restated Articles of Redomestication of John Hancock Life
Insurance Company (U.S.A.) (“John Hancock (U.S.A.)”) and Sections 5241 through 5242 of the Michigan
Insurance Code, John Hancock (U.S.A.) indemnifies each person who is or was or has agreed to become
a director of John Hancock (U.S.A), or is or was serving at the request of John Hancock (U.S.A.) as
a director of another foreign or domestic corporation, joint venture, trust or other enterprise,
whether for profit or not, from liability incurred or imposed by reason of any action alleged to
have been taken or omitted in such capacity. Indemnification shall be made by John Hancock
(U.S.A.), unless a determination is made that the individual (i) breached his or her duty of
loyalty to John Hancock (U.S.A.) or its shareholders or its policyholders, (ii) failed to act in
good faith and in a manner in which the individual reasonably believed to be in or not opposed to
the best interests of John Hancock (U.S.A.), (iii) engaged in an intentional misconduct or knowing
violation of law, (iv) violated Sections 5036, 5276 or 5280 of the Michigan Insurance Code, or (v)
engaged in a transaction in which the individual derived an improper personal benefit, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful; provided that, to the extent that a present or former director of John Hancock
(U.S.A.) has been successful on the merits or otherwise in any defense of any proceeding, or in
defense of any claim, issue or matter therein, such person shall be indemnified against expenses
(including attorneys’ fees) actually and reasonably incurred by such person in connection
therewith. Expenses (including attorneys’ fees) incurred in defending any proceeding may be paid by
John Hancock (U.S.A.) in advance of its final disposition, but only upon receipt of an undertaking
by the person indemnified to repay such amounts if he or she should be determined not to be
entitled to indemnification.
As stated above, MFC maintains a directors’ and officers’ liability insurance policy with a
policy limit of U.S.$300,000,000. The policy provides protection to directors and officers against
liability incurred by them in their capacities as directors and officers of MFC and its
subsidiaries, including John Hancock (U.S.A.).
Item 9. Exhibits
The following exhibits are filed herewith or incorporated herein by reference:
| Exhibit No. | Description | |
1
|
Distribution and Servicing Agreement dated February 17, 2009 by and among John Hancock Distributors, LLC, Manulife Financial Securities, LLC, and John Hancock Life Insurance Company (U.S.A.) — Incorporated by reference to Exhibit (b)(3)(ii) to Form N-4, file number 333-143073, filed April 1, 2009. | |
4(a)(i)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract — Individual | |
4(a)(ii)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract Specifications Page — Individual | |
4(a)(iii)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract — Group | |
4(a)(iv)
|
Specimen Single Payment Modified Guaranteed Deferred Group Annuity Certificate | |
4(b)(i)(A)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Application (Individual) |
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| Exhibit No. | Description | |
4(b)(i)(B)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Application (Group) | |
4(b)(ii)(A)
|
Specimen Endorsements to Contract or Certificate Roth Individual Retirement Annuity | |
4(b)(ii)(B)
|
Specimen Endorsements to Contract or Certificate Simple Individual Retirement Annuity | |
4(b)(ii)(C)
|
Specimen Endorsements to Contract or Certificate Individual Retirement Annuity | |
4(c)(i)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — non-specific | |
4(c)(ii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — FL specific | |
4(c)(iii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MA specific | |
4(c)(iv)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MN specific | |
4(c)(v)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MT specific | |
4(c)(vi)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — NC specific | |
4(c)(vii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — NH specific | |
4(c)(viii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — OR specific | |
4(c)(ix)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — non-specific | |
4(c)(x)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — IL specific | |
4(c)(xi)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — MO specific | |
4(c)(xii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — SD specific | |
4(c)(xiii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Group) — TX specific | |
4(d)
|
Form of Subordinated Contract Value Interests Guarantee by Manulife Financial Corporation. | |
5(a)(i)
|
Opinion of Annuities Chief Counsel regarding the legality of the Contract Value Interests being registered. | |
5(a)(ii)
|
Opinion of Annuities Chief Counsel regarding the legality of the subordinated guarantee. |
Table of Contents
| Exhibit No. | Description | |
5(b)
|
Opinion of Torys LLP regarding validity under Canadian law of the subordinated guarantee and enforceability of judgments. | |
23(a)
|
Consent of independent registered public accounting firm for Manulife Financial Corporation. | |
23(b)(i)
|
Consent of Annuities Chief Counsel (included as part of its opinion filed as Exhibit 5(a)(i) and incorporated herein by reference). | |
23(b)(ii)
|
Consent of Annuities Chief Counsel (included as part of its opinion filed as Exhibit 5(a)(ii) and incorporated herein by reference). | |
23(c)
|
Consent of Torys LLP (included as part of its opinion filed as Exhibit 5(b) and incorporated herein by reference). | |
24(a)
|
Powers of Attorney (included on the signature pages and incorporated herein by reference). |
Item 10. Undertakings
(a) Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any facts or events arising after the effective
date of this registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of distribution
not previously disclosed in this registration statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the
information required to be included in a post-effective amendment by those paragraphs is contained
in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that
is part of the registration statement
(2) That, for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Manulife Financial Corporation hereby undertakes to file a post-effective
amendment to the registration statement to include any financial statements required by Item 8.A.
of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the Securities Act of 1933
need not be furnished, provided, that such registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this paragraph (b) and other
information necessary to ensure that all other information in the prospectus is at least as current
as the date of those financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be filed to include
financial statements and information required by Section 10(a)(3) of the Securities Act of 1933 or
Item 8 of Form 20-F if such financial statements and information are contained in periodic reports
filed with or furnished to the Commission by such registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(c) That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) If each registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430(B) relating to
an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described in
the prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be deemed to
be a new effective date of the registration statement relating to the securities
in the registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date, supersede
or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date; or
(ii) If each registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale prior
to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first use.
(d) That, for the purpose of determining liability of each registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the
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following communications, the undersigned registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of
the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(e) Each undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of such registrant’s annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, that is
incorporated by reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(f) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrants pursuant to the
foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of such registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, each registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such
issue.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Manulife Financial Corporation
certifies that it has reasonable grounds to believe that it meets all of the requirements for
filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on
August 6, 2010.
| MANULIFE FINANCIAL CORPORATION |
||||
| By: | /s/ Donald A. Guloien | |||
| Name: | Donald A. Guloien | |||
| Title: | President and Chief Executive Officer | |||
Each person whose signature appears below constitutes and appoints Donald A. Guloien, Michael
W. Bell and Jean-Paul Bisnaire, and each of them, any of whom may act without the joinder of the
other, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the U.S. Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents
or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated on
August 6, 2010.
| Signature | Title | |
/s/ Donald A. Guloien
|
President, Chief Executive Officer and Director (Principal Executive Officer) |
|
/s/ Michael W. Bell
|
Senior Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting Officer) |
|
/s/ Gail C.A. Cook-Bennett
|
Chair | |
Gail C.A. Cook-Bennett |
||
/s/ Linda B. Bammann
|
Director | |
Linda B. Bammann |
||
/s/ John M. Cassaday
|
Director | |
John M. Cassaday |
||
/s/ Thomas P. d’Aquino
|
Director | |
Thomas P. d’Aquino |
||
/s/ Richard B. DeWolfe
|
Director | |
Richard B. DeWolfe |
||
/s/ Robert E. Dineen, Jr.
|
Director | |
Robert E. Dineen, Jr. |
Table of Contents
| Signature | Title | |
/s/ Pierre Y. Ducros
|
Director | |
Pierre Y. Ducros |
||
/s/ Scott M. Hand
|
Director | |
Scott M. Hand |
||
/s/ Robert J. Harding
|
Director | |
Robert J. Harding |
||
/s/ Luther S. Helms
|
Director | |
Luther S. Helms |
||
/s/ Thomas E. Kierans
|
Director | |
Thomas E. Kierans |
||
/s/ Lorna R. Marsden
|
Director | |
Lorna R. Marsden |
||
/s/ John R. V. Palmer
|
Director | |
John R. V. Palmer |
||
| Director | ||
Hugh W. Sloan, Jr |
||
/s/ Gordon G. Thiessen
|
Director | |
Gordon G. Thiessen |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, John Hancock Life Insurance
Company (U.S.A.) certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of
Massachusetts, on August 9, 2010.
| JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) |
||||
| By: | /s/ James R. Boyle | |||
| Name: | James R. Boyle | |||
| Title: | Principal Executive Officer | |||
Each person whose signature appears below constitutes and appoints Lynne Patterson, Emanuel
Alves, John Danello, Scott A. Lively, Arnold R. Bergman, Thomas J. Loftus and David S. Pickett, and
each of them, any of whom may act without the joinder of the other, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the U.S. Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to
do and perform each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated on
August 9, 2010.
| Signature | Title | |
/s/ James R. Boyle
|
President and Chairman | |
James R. Boyle
|
(Principal Executive Officer) | |
/s/ Lynne Patterson
|
Senior Vice President, Chief Financial Officer | |
Lynne Patterson
|
(Principal Financial Officer) | |
/s/ Jeffery J. Whitehead
|
Vice President and Controller | |
Jeffery J. Whitehead
|
(Principal Accounting Officer) | |
/s/ Thomas Borshoff
|
Director | |
| Director | ||
Steven A. Finch |
||
/s/ Ruth Ann Fleming
|
Director | |
Ruth Ann Fleming |
||
/s/ James D. Gallagher
|
Director | |
James D. Gallagher |
||
/s/ Scott S. Hartz
|
Director | |
Scott S. Hartz |
||
Table of Contents
| Signature | Title | |
| Director | ||
Rex E. Schlaybaugh Jr. |
||
/s/ John G. Vrysen
|
Director | |
John G. Vrysen |
Table of Contents
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the
undersigned, the duly authorized representative of Manulife Financial Corporation in the United
States, has signed this Registration Statement on August 6, 2010.
| JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) |
||||
| By: | /s/ Emanuel Alves | |||
| Name: | Emanuel Alves | |||
| Title: | Vice President, Counsel and
Corporate Secretary |
|||
Table of Contents
EXHIBIT INDEX
| Exhibit No. | Description | |
4(a)(i)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract — Individual | |
4(a)(ii)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract Specifications Page — Individual | |
4(a)(iii)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Contract — Group | |
4(a)(iv)
|
Specimen Single Payment Modified Guaranteed Deferred Group Annuity Certificate | |
4(b)(i)(A)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Application (Individual) | |
4(b)(i)(B)
|
Specimen Single Payment Modified Guaranteed Deferred Annuity Application (Group) | |
4(b)(ii)(A)
|
Specimen Endorsements to Contract or Certificate Roth Individual Retirement Annuity | |
4(b)(ii)(B)
|
Specimen Endorsements to Contract or Certificate Simple Individual Retirement Annuity | |
4(b)(ii)(C)
|
Specimen Endorsements to Contract or Certificate Individual Retirement Annuity | |
4(c)(i)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — non-specific | |
4(c)(ii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — FL specific |
Table of Contents
| Exhibit No. | Description | |
4(c)(iii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MA specific | |
4(c)(iv)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MN specific | |
4(c)(v)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — MT specific | |
4(c)(vi)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — NC specific | |
4(c)(vii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — NH specific | |
4(c)(viii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Individual) — OR specific | |
4(c)(ix)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — non-specific | |
4(c)(x)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — IL specific | |
4(c)(xi)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — MO specific | |
4(c)(xii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Rider (Group) — SD specific | |
4(c)(xiii)
|
Specimen Nursing Home Waiver of Withdrawal Charge Endorsement (Group) — TX specific | |
4(d)
|
Form of Subordinated Contract Value Interests Guarantee by Manulife Financial Corporation. | |
5(a)(i)
|
Opinion and Consent of Annuities Chief Counsel regarding the legality of the Contract Value Interests being registered. | |
5(a)(ii)
|
Opinion and Consent of Annuities Chief Counsel regarding the legality of the subordinated guarantee. | |
5(b)
|
Opinion and Consent of Torys LLP regarding validity under Canadian law of the subordinated guarantee and enforceability of judgments. | |
23(a)
|
Consent of independent registered public accounting firm for Manulife Financial Corporation. |