1
EXHIBIT 4(a)(i)(B)
[SAGE LOGO]
A Stock Company
Home Office Customer Service Center
000 Xxxxxxxx Xxxxxx 000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
0-000-XXX-XXXX
PLEASE READ THIS CONTRACT CAREFULLY. This Contract is a legal contract
between the Contractholder (you) and Sage Life Assurance of America, Inc. You
have the rights described in the Contract. We will make Income Payments
beginning on the Income Date shown in the Schedule if the Annuitant is living
on that date.
RIGHT TO EXAMINE THIS CONTRACT:
IF FOR ANY REASON YOU ARE NOT SATISFIED WITH THIS CONTRACT, YOU MAY RETURN IT
TO US OR THE AGENT WHO SOLD IT TO YOU WITHIN 10 DAYS AFTER YOU RECEIVE IT (THE
FREE LOOK PERIOD). WHEN WE RECEIVE IT, WE WILL PROMPTLY REFUND YOU THE ACCOUNT
VALUE PLUS ANY CHARGES SHOWN IN THE SCHEDULE THAT WE HAVE DEDUCTED FROM THE
ACCOUNT VALUE ON OR BEFORE THE DATE THE RETURNED CONTRACT WAS RECEIVED BY US,
OR IF REQUIRED BY THE LAW OF YOUR STATE, THE INITIAL PURCHASE PAYMENT (MINUS
ANY WITHDRAWALS).
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT, MAY INCREASE OR DECREASE, DEPENDING ON THIS CONTRACT'S
INVESTMENT RESULTS AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. ALL PAYMENTS
AND VALUES BASED ON THE FIXED ACCOUNT MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT, THE OPERATION OF WHICH MAY CAUSE SUCH PAYMENTS AND VALUES TO
INCREASE OR DECREASE.
[SIG]
Chairman
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
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TABLE OF CONTENTS
SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MAKING PURCHASE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 9
VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
TRANSFERS AMONG ACCOUNTS . . . . . . . . . . . . . . . . . . . . . 13
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE . . . . . . 13
CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
OWNER, ANNUITANT AND BENEFICIARY . . . . . . . . . . . . . . . . . 13
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 14
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 16
ANNUITY INCOME BENEFITS . . . . . . . . . . . . . . . . . . . . . . 17
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SCHEDULE
Contract No.:
Owner: Contract Date: XX/XX/XXXX
Issue Age/Sex:
Annuitant: Income Date: XX/XX/XXXX
Issue Age/Sex:
Initial Purchase
Payment: $
This Schedule sets forth additional information that relates to the provisions
in this Contract with the corresponding headings.
MAKING PURCHASE PAYMENTS
The Designated Sub-Account is the Money Market Sub-Account.
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than $250.
Additional purchase payments are subject to the following limits:
1. [Non-qualified plan: Additional purchase payments may be made until
the earlier of the year in which you attain age 85 or the year in
which the Annuitant attains age 85.]
OR
[Qualified plan: Additional purchase payments may be made until the
year in which you attain age 70 1/2, except rollover contributions
may be made until the year in which you attain age 85.]
2. The minimum additional purchase payment we will accept is $1,000.
3. Our prior approval is required before you make a purchase payment
that causes the Account Value of all annuities that you maintain with
us to exceed $1,000,000.
VARIABLE ACCOUNT
The Variable Account for this Contract is The Sage Variable Annuity Account A.
It is a unit investment trust variable account.
FIXED ACCOUNT
The Fixed Account for this Contract is The Sage Fixed Interest Account A.
The Minimum Guaranteed Interest Rate is 3%.
The Minimum Deferral Interest Rate is 3%.
Index Rate: The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the
Index Rate for a calendar week on the reported rate for the preceding calendar
week. We reserve the right to set it less frequently but in no event less
often than monthly.
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TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is $250. However, if less remains
in a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below $250, we will treat
the transfer request as a request to transfer the entire amount.
Your transfer request must clearly state the Sub-Accounts from which and to
which transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers you
may make to one per calendar month or 12 per Contract Year.
After the Income Date, we reserve the right to:
1. disallow transfers from the Fixed Account to the Variable Account, or
from the Variable Account to the Fixed Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts
to 1 per Contract Year.
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
(a) is the excess of 10% of the total purchase payments over 100%
of all prior withdrawals including any associated surrender
charges and Market Value Adjustment incurred in that Contract
Year; and
(b) is the excess of the Account Value on the date of withdrawal
over the unliquidated purchase payments.
The minimum amount that can be withdrawn is $250. If a withdrawal request
would reduce the Account Value remaining in a Sub-Account below $250, we will
treat the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below $2,000, we
reserve the right to treat the request as a withdrawal of only the excess over
$2,000.
Unless you specify otherwise, we will make withdrawals proportionately from all
Sub-Accounts in which you are invested.
CHARGES
SURRENDER CHARGE - A surrender charge may be imposed upon surrender of this
Contract or when an Excess Withdrawal is made. The surrender charge is applied
to each purchase payment and is a percentage of each purchase payment as
follows:
The maximum surrender charge percentage is 0% for all Contract Years.
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TRANSFER CHARGE - We reserve the right to charge a maximum of $25 for each
transfer after the 12th in a Contract Year. Each request is considered to be
one transfer regardless of the number of Sub-Accounts affected by the transfer.
The transfer charge will be deducted proportionately from all Sub-Accounts from
which the transfer is made.
ADMINISTRATION CHARGE - $40 a year. This charge is incurred at the beginning
of each Contract Year and deducted on each Contract Anniversary or upon
surrender. The charge will be waived:
1. if the Account Value is at least $50,000 at the time of deduction; or
2. beginning on and after the 8th Contract Anniversary.
PURCHASE PAYMENT TAX CHARGE - The amount of any state and local taxes levied by
any governmental entity on purchase payments may be deducted from the Account
Value when such taxes are incurred. We reserve the right to defer the
collection of this charge and deduct it against your Account Value on the
surrender of this Contract, or Excess Withdrawal, or application of the Account
Value to provide income payments.
ASSET-BASED CHARGES - We deduct asset-based charges to compensate us for
assuming mortality and expense risks, and certain administrative expenses.
Prior to the Income Date asset-based charges are calculated as a percentage of
the Variable Account Value on the date of deduction. On the Contract Date, and
monthly thereafter, the asset-based charges are deducted in proportion to the
Variable Sub-Accounts in which you are invested. The maximum charges are:
Asset-Based Charges Annual Charge Monthly Charge
------------------- ------------- --------------
Contract Years 1-7 1.40% .116667%
Contract Years 8+ 1.25% .104167%
We also reserve the right to deduct asset-based charges on the effective date
of any transfer from the Fixed Account, or allocation of purchase payment to
the Variable Account, based on the amount transferred or allocated, and based
on the number of days remaining until the next date of deduction.
VARIABLE SUB-ACCOUNT CHARGES - On and after the Income Date we deduct the
asset-based charges above from the assets in each Variable Sub-Account on a
daily basis. The maximum charges are:
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- ------------- ------------
Contract Years 1-7 1.40% .0038626%
Contract Years 8+ 1.25% .0034462%
CHARGE DEDUCTION RULES - Unless otherwise specified above, charges are deducted
from the Account Value proportionately from all Sub-Accounts in which you are
invested.
ANNUITY INCOME BENEFITS
If you have not chosen an income plan, Life Annuity with 10 Years Certain will
automatically apply.
The Maximum Income Date is the first day of the first calendar month following
the Annuitant's 95th birthday.
We reserve the right to require that the Income Date be at least 2 years after
the Contract Date.
The minimum amount that can be applied under any Variable or Fixed Income
Annuity is $5,000.
The minimum income payment is $100.
We currently allow assumed investment rates of 3% and 6%. If you do not
specify one of these rates when you choose an income plan, the assumed
investment rate will be 3%.
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below assume 3%) are
available on request. Monthly income payments are shown for each $1,000
applied.
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INCOME TABLE FOR A FIXED PERIOD
Fixed Monthly Fixed Monthly Fixed Monthly
Period Income Period Income Period Income
of Years Payment of Years Payment of Years Payment
--------- ------- --------- ------- -------- -------
11 $8.88 21 $5.33
12 8.26 22 5.16
13 7.73 23 5.00
14 7.28 24 4.85
5 17.95 15 6.89 25 4.72
6 15.18 16 6.54 26 4.60
7 13.20 17 6.24 27 4.49
8 11.71 18 5.98 28 4.38
9 10.56 19 5.74 29 4.28
10 9.64 20 5.53 30 4.19
INCOME TABLE FOR LIFE
Male/Female Male/Female Male/Female
Age Life Only 10 Years Certain 20 Years Certain
--- --------- ---------------- ----------------
50 4.28 / 3.92 $4.24 / 3.90 $4.10 / 3.84
55 4.72 / 4.27 4.64 / 4.24 4.40 / 4.12
60 5.31 / 4.74 5.17 / 4.68 4.73 / 4.45
65 6.13 / 5.38 5.84 / 5.25 5.04 / 4.81
70 7.28 / 6.29 6.65 / 6.00 5.29 / 5.14
75 8.90 / 7.62 7.53 / 6.92 5.43 / 5.37
80 11.19 / 9.62 8.37 / 7.93 5.50 / 5.48
85 14.36 / 12.63 9.00 / 8.77 5.52 / 5.52
RIDERS
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DEFINITIONS
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"ACCOUNT VALUE" is the entire amount we hold under this Contract for you before
the Income Date. It is equal to the sum of the Variable Account Value and the
Fixed Account Value.
"ACCUMULATION UNIT" is the unit of measure we use before the Income Date to
keep track of the value of each Variable Sub-Account.
"ANNUITANT" is the natural person whose age determines the Maximum Income Date
and the amount and duration of income payments involving life contingencies.
The Annuitant may also be the person to whom any payment will be made starting
on the Income Date. The Annuitant's name appears in the Schedule.
"BENEFICIARY" is the person or persons to whom we pay a death benefit if any
Owner dies prior to the Income Date.
"CONTRACT DATE" is the date this contract is issued at our Customer Service
Center. The Contract Date is shown in the Schedule. While this Contract is in
force, every anniversary of the Contract Date is the CONTRACT ANNIVERSARY and
each and every consecutive twelve-month period beginning on the Contract Date
and each Contract Anniversary is a CONTRACT YEAR.
"CONTINGENT ANNUITANT" is the natural person who becomes the Annuitant if the
Annuitant dies prior to the Income Date.
"CONTINGENT BENEFICIARY" is the person that becomes the Beneficiary if the
named Beneficiary dies prior to the Income Date.
"CUSTOMER SERVICE CENTER" is where we provide service to you. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of this Contract.
"EXCESS WITHDRAWAL" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"EXPIRY DATE" is the last day in a Guarantee Period.
"FIXED ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred.
"FIXED ACCOUNT VALUE" is the sum of the value of each Fixed Sub-Account on any
particular day.
A "FIXED SUB-ACCOUNT" is established when purchase payments are invested or
amounts are transferred to the Fixed Account. The value of each Fixed
Sub-Account is equal to the amount invested, increased by interest and reduced
by any withdrawals or transfers from, or charges assessed against the Fixed
Sub-Account.
"FREE WITHDRAWAL AMOUNT" is the maximum amount that can be withdrawn in a
Contract Year without being subject to a surrender charge. This amount is
described in the Schedule.
"GENERAL ACCOUNT" consists of all our assets other than those held in any
separate investment accounts.
"GUARANTEED INTEREST RATE" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
"GUARANTEE PERIOD" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to
yield the declared annual Guaranteed Interest Rate.
"HOME OFFICE" is our main office. The mailing address is shown on the first
page of this Contract.
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"INCOME DATE" is the date when income payments under this Contract commence.
This date is shown in the Schedule.
"INCOME UNIT" is the unit of measure we use to calculate the amount of income
payments under the Variable Income Annuity.
"MARKET VALUE ADJUSTMENT" is a positive or negative adjustment that may apply
to surrender, withdrawals, transfers and amounts applied to an income plan,
from a Fixed Sub-Account before the end of a Guarantee Period.
"NET ASSET VALUE" is the price of one share of an investment portfolio.
"SATISFACTORY NOTICE" is a notice or request authorized by you, in a form
satisfactory to us, received at our Customer Service Center.
"SUB-ACCOUNT" includes both Variable Sub-Accounts and Fixed Sub-Accounts,
unless the context indicates otherwise.
"SURRENDER VALUE" is the amount you receive upon surrender of this Contract
before the Income Date. It is your Account Value, plus or minus any applicable
Market Value Adjustment, and less any applicable surrender charges or other
charges shown in the Schedule.
"VALUATION DATE" is the date at the end of a Valuation Period when each
Variable Sub-Account is valued.
"VALUATION PERIOD" is the period between one calculation of an Accumulation
Unit value and the next calculation. Normally, we calculate Accumulation Units
daily when the New York Stock Exchange is open for trading and we are open for
business. We can delay this calculation if an emergency exists, making
disposal or fair valuation of assets in the Variable Account not reasonably
practicable, or the Securities and Exchange Commission (SEC) permits the delay.
We may change when we calculate the Accumulation Unit value by giving you 30
days notice, or such notice as may be required by law.
"VARIABLE ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"VARIABLE ACCOUNT VALUE" is the sum of the value of each Variable Sub-Account
on a Valuation Date.
"VARIABLE SUB-ACCOUNT" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable
Sub-Account is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable
Sub-Account; and
(b) equals the value of the Accumulation Unit for the Variable
Sub-Account.
"WE", "US" OR "OUR" is Sage Life Assurance of America, Inc.
"YOU" OR "YOUR" is the Owner of this Contract. Your name appears in the
Schedule. You are entitled to exercise all rights under this Contract.
However, if you designate an irrevocable beneficiary, you may need that
beneficiary's consent before you exercise your rights under this Contract. The
death of any Owner before the Income Date initiates payment of the death
benefit.
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MAKING PURCHASE PAYMENTS
-------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT - You must make the initial purchase payment in order
to put this Contract in force. The amount of your initial purchase payment is
shown in the Schedule.
ADDITIONAL PURCHASE PAYMENTS - After the initial purchase payment, additional
purchase payments may be made at any time while this Contract is in force and
before the Income Date. The amount of any additional purchase payments may
vary but are subject to limits described in the Schedule.
ALLOCATION OF PURCHASE PAYMENTS AMONG THE VARIABLE AND FIXED ACCOUNTS - Subject
to limits described in the Schedule, you tell us how to allocate your purchase
payment, less any applicable taxes, by notifying us of your choices. You
specified how to allocate your initial purchase payment in your application for
this Contract. Initial purchase payments allocated to the Fixed Account will
be invested in Fixed Sub-Accounts with the Guarantee Periods that you specified
in your application. We may, however, require that an initial purchase payment
allocated to a Variable Sub-Account be invested in the Designated Sub-Account
shown in the Schedule during the Free Look Period. At the end of the Free Look
Period, if your initial purchase payment was allocated to the Designated
Sub-Account by us, we will transfer the value of the Designated Sub-Account to
the Sub-Account(s) you specified in your application. For the purpose of
processing transfers from the Designated Sub-Account, the Free Look Period will
end 15 days after the Contract Date.
Subject to our rules, you may tell us how to allocate any additional purchase
payments. If you do not tell us, they will be allocated in the same manner as
your most recent purchase payment.
CANCELLATION OF CONTRACT - If you have not made a purchase payment for more
than 2 years and your Account Value is less than $2,000 on a Contract
Anniversary, we may cancel this Contract and pay you the Surrender Value as
though you had made a full withdrawal. We will send you written notice at your
address of record. You will be allowed 61 days from the date we mail you the
notice to submit an additional purchase payment to us in an amount not less
than the difference between $2,000 and the Account Value on the last Contract
Anniversary. The additional purchase payment is subject to the limits and
minimums shown in the Schedule.
VARIABLE ACCOUNT
-------------------------------------------------------------------------------
VARIABLE ACCOUNT - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will
not be charged with liabilities that arise from any other business that we
conduct. We may transfer to our General Account assets that exceed the reserves
and other liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
We may offer certain series or variable accounts that may not be registered
with the SEC under the Securities Act of 1933. Any such series or variable
account, if offered, will be described in the applicable offering document.
The Variable Account for this Contract is shown in the Schedule. The laws of
our state of domicile govern this Variable Account.
VARIABLE SUB-ACCOUNTS - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified
in the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
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CHANGES WITHIN THE VARIABLE ACCOUNT - We may, from time to time, make
additional Variable Sub-Accounts available to you. These Sub-Accounts will
invest in investment portfolios we find suitable for this Contract. We also
have the right to eliminate Sub-Accounts, to combine two or more Sub-Accounts
or to substitute a new investment portfolio for the portfolio in which a
Sub-Account invests. Such an action may become necessary if, in our judgment, a
portfolio or Sub-Account no longer suits the purposes of this Contract. This
may happen due to a change in laws or regulations, or a change in a portfolio's
or Sub-Account's investment objectives or restrictions, or because the
portfolio or Sub-Account is no longer available for investment, or for some
other reason. We will get prior approval from the insurance department of our
state of domicile before taking such action. If required, this approval
process will be on file with the insurance department of the jurisdiction in
which this Contract is delivered. We will also get any required approval from
the SEC and any other required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of contracts to which this Contract belongs, to another variable account
or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act
of 1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit
investment trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other
persons who have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment
accounts; and
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying
investments of a Variable Sub-Account in which you are invested, we will notify
you of the change. You may then choose a new Sub-Account.
ACCUMULATION UNITS - We keep track of the value of each of your Variable
Sub-Accounts by crediting you with Accumulation Units for each Sub-Account.
The number of Accumulation Units credited to you for each Sub-Account is
determined by dividing (a) by (b) where:
(a) is the dollar amount allocated to that Sub-Account; and
(b) is the value of the Accumulation Unit for that Sub-Account for
the Valuation Date on which the purchase payment or
transferred amount is invested in that Sub-Account.
Accumulation Units will be adjusted for any transfers and will be canceled on
payment of a death benefit, a withdrawal, a surrender, the application of
Account Value to an income plan on the Income Date, or assessment of charges
shown in the Schedule (other than the variable sub-account charges) based on
their value for the Valuation Period in which the transaction occurs.
VALUE OF ACCUMULATION UNITS - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding
Valuation Period; and
(b) is the "net investment factor" for the Variable Sub-Account
for the Valuation Period for which the value is being
determined.
The value of an Accumulation Unit may increase, decrease or remain the same
from one Valuation Period to the next.
NET INVESTMENT FACTOR - The net investment factor for a Variable Sub-Account is
an index that measures
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the investment performance of that Sub-Account from one Valuation Period to the
next. The net investment factor for any Valuation Period is determined by
dividing (a) by (b), and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio
share in which the Sub-Account invests determined at the
end of the current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares
held in the Sub-Account if the "ex-dividend" date occurs
during the current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for,
which is determined by us to have resulted from the
operations of that Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
immediately preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT
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FIXED ACCOUNT - The Fixed Account is a separate investment account under state
insurance law. It is maintained separate from our General Account and separate
from any other separate investment account that we may have. We own the assets
in the Fixed Account. Notwithstanding the foregoing, our obligations under
(and the values and benefits under) the Fixed Account option of this Contract
do not vary as a function of the investment performance of the Fixed Account.
Owners and Beneficiaries with rights under this Contract do not participate in
the investment gains or losses of the assets of the Fixed Account. Such gains
or losses accrue solely to us. We retain the risk that the value of the assets
in the Fixed Account may fall below the reserves and other liabilities that we
must maintain in connection with our obligations under the Fixed Account option
of this Contract. In such event, we will transfer assets from our General
Account to the Fixed Account to make up the difference. The Fixed Account will
not be charged with liabilities that arise from any other business that we
conduct. We may transfer to our General Account assets that exceed the
reserves and other liabilities of the Fixed Account. The Fixed Account is not
required to be registered with the SEC as an investment company under the
Investment Company Act of 1940.
FIXED SUB-ACCOUNT - We will establish a separate Fixed Sub-Account for you each
time you allocate amounts to the Fixed Account. Amounts invested in these
Fixed Sub-Accounts earn interest at the Guaranteed Interest Rate in effect on
the date the amounts are allocated.
GUARANTEE PERIODS - Each Fixed Sub-Account is guaranteed an interest rate for a
period we refer to as a Guarantee Period. The Guaranteed Interest Rate for a
Fixed Sub-Account is effective for the entire Guarantee Period. The length of
a Guarantee Period is measured from the end of the calendar month in which the
amount is allocated to the Fixed Sub-Account. The last day of the Guarantee
Period is its Expiry Date. Surrender, or withdrawals or transfers from all or
part of a Fixed Sub-Account, and amounts applied to an income plan, made prior
to the Expiry Date of a Guarantee Period may be subject to a Market Value
Adjustment.
We will notify you at least thirty days prior to an Expiry Date of your options
for renewal, which include:
1. electing a new Guarantee Period from among those then offered by
us, but excluding any that extend beyond your Income Date; or
2. transferring the value of the Fixed Sub-Account to one or more
Variable Sub-Accounts.
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If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Fixed Sub-Account to a Fixed Sub-Account
with the same Guarantee Period, but not longer than 5 years, nor extending
beyond your Income Date. The transfer will be effective as of the Expiry Date
of the previous Guarantee Period.
GUARANTEED INTEREST RATES - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates
will never be less than the Minimum Guaranteed Interest Rate shown in the
Schedule.
MARKET VALUE ADJUSTMENT - A Market Value Adjustment may be applied to
surrender, withdrawals, transfers or amounts applied to an income plan when
taken from a Fixed Sub-Account other than the thirty-day period prior to its
Expiry Date. A Market Value Adjustment is applied separately to each Fixed
Sub-Account.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or applied to an income plan by the following factor:
N/365
[(1+I)/(1+J+.0025)] -- 1
Where:
- I is the Index Rate for a maturity equal to the Fixed
Sub-Account's Guarantee Period;
- J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period; and
- N is the remaining number of days in the Guarantee Period at the
time of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
1. For a surrender, withdrawal, transfer or amount applied to an
income plan, the Market Value Adjustment will be calculated on the
total amount that must be surrendered, withdrawn, transferred or
applied to an income plan in order to provide the amount
requested.
2. If the Market Value Adjustment is negative, it is deducted from
any remaining value in the Fixed Sub-Account or amount
surrendered. Any remaining Market Value Adjustment is deducted
from the amount withdrawn, transferred or applied to an income
plan.
3. If the Market Value Adjustment is positive, it is added to any
remaining value in the Fixed Sub-Account or amount surrendered.
If the full amount of the Fixed Sub-Account is withdrawn,
transferred or applied to an income plan, the Market Value
Adjustment is added to the amount withdrawn, transferred or
applied to an income plan.
TRANSFERS AMONG ACCOUNTS
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Prior to the Income Date and while the Annuitant is living, you may transfer
Account Value among Sub-Accounts. Certain restrictions may apply during the
Free Look Period. To make a transfer, you must give us Satisfactory Notice.
Transfers generally take effect when we receive the notice. The number of free
transfers that we allow each Contract Year is shown in the Charges section of
the Schedule. Restrictions for transfers are shown in the Schedule. A
transfer from a Fixed Sub-Account may be subject to a Market Value Adjustment.
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SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
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Prior to the Income Date and while the Annuitant is living, you may withdraw
all or part of your Account Value by giving us Satisfactory Notice. The
minimum withdrawal is shown in the Schedule.
If you request a surrender, we will terminate this Contract and pay you the
Surrender Value. This amount may also be applied to the income plans subject
to any restrictions described in this Contract. Unless specified otherwise, we
will make partial withdrawals as described in the Schedule. Surrender and
withdrawals generally take effect on the date we receive Satisfactory Notice.
If you make a withdrawal from this Contract in excess of the Free Withdrawal
Amount described in the Schedule, a surrender charge may be assessed.
Surrender charges are described in the Schedule. A withdrawal from the Fixed
Account may also be subject to a Market Value Adjustment.
EXCESS WITHDRAWALS - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc.,
until all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of the purchase payment being liquidated by the
applicable percentage shown in the Schedule. The total surrender charge will
be the sum of the surrender charges for each purchase payment being liquidated.
In a partial withdrawal, the surrender charge is deducted from the Account
Value remaining after you are paid the amount requested. The amount requested
from a Sub-Account may not exceed the value of that Sub-Account less any
applicable surrender charge. In a complete withdrawal (or surrender of this
Contract), it is deducted from the amount otherwise payable.
CHARGES
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The types and amounts of charges and when and how they are deducted are
described in the Schedule.
OWNER, ANNUITANT AND BENEFICIARY
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THE OWNER - You are the Owner of this Contract. You have the rights and options
described in this Contract, including but not limited to the right to receive
the income payments beginning on the Income Date. One or more people may own
this Contract.
THE ANNUITANT - Unless another Annuitant is shown in the Schedule, you are also
the Annuitant. You may name a Contingent Annuitant. You will be the
Contingent Annuitant unless you name someone else. If there are joint Owners,
we will treat the youngest Owner as the Contingent Annuitant, unless you elect
otherwise.
If you are not the Annuitant and the Annuitant dies before the Income Date, the
Contingent Annuitant becomes the Annuitant. If the Annuitant dies and no
Contingent Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as Annuitant.
THE BENEFICIARY - We pay the death benefit to the primary Beneficiary (unless
there are joint Owners in which case proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death benefit is
paid to the Contingent Beneficiary, if any. If there is no surviving
Beneficiary,
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we pay the death benefit to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any death benefit is to be paid in equal shares to
the multiple surviving Beneficiaries unless you specify otherwise.
You have the right to change Beneficiaries. However, if you designate the
primary Beneficiary as irrevocable, you may need the consent of that
irrevocable Beneficiary to exercise the rights and options under this Contract.
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT - During your lifetime and while this
Contract is in force you can transfer ownership of this Contract or change the
Beneficiary, or change the Annuitant. (However, the Annuitant cannot be
changed after the Income Date.) To make any of these changes, you must send us
Satisfactory Notice. If accepted, any change in Owner, Beneficiary or
Annuitant will take effect on the date you signed the notice. Any of these
changes will not affect any payment made or action taken by us before our
acceptance. A CHANGE OF OWNER MAY BE A TAXABLE EVENT and may also affect the
amount of death benefit payable under this Contract.
DEATH BENEFITS
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DEATH BENEFIT BEFORE THE INCOME DATE - If any Owner dies before the Income
Date, we will pay the Beneficiary the greatest of the following:
(a) the Account Value determined as of the day we receive proof of
death; or
(b) 100% of the sum of all purchase payments made to this Contract,
reduced by any prior withdrawals (including any associated
surrender charge and Market Value Adjustment incurred); or
(c) the Highest Anniversary Value.
HIGHEST ANNIVERSARY VALUE - The Highest Anniversary Value is equal to the
greatest anniversary value attained from the following:
Upon our receipt of proof of death, we will calculate an anniversary
value for each Contract Anniversary before the Owner's death
excluding, however, Contract Anniversaries that come after the Owner
attains age 80. An anniversary value is equal to the Account Value on
a Contract Anniversary, increased by the dollar amount of any purchase
payments made since that Contract Anniversary and reduced for any
withdrawals (including any associated surrender charge and Market
Value Adjustment incurred) taken since that anniversary. This
reduction will be made in proportion to the reduction in the Account
Value that results from a withdrawal.
MULTIPLE OWNERS - If there are multiple Owners, the age of the oldest Owner
will be used to determine the death benefit.
DEATH BENEFIT WHEN NO NATURAL OWNERS - If there is no Owner who is a natural
person, we will treat the Annuitant as Owner for the purpose of paying the
death benefit, and the Annuitant's age will determine the death benefit payable
to the Beneficiary.
REQUIRED DISTRIBUTION OF PROCEEDS ON THE DEATH OF THE OWNER - The three
sub-sections indented below are required to qualify this Contract as an annuity
contract under Section 72(s) of the Internal Revenue Code of 1986, as amended.
Where the terms of these three sub-sections are in conflict with any other
sections or sub-sections of this Contract, these three sub-sections will
control. We reserve the right to amend or administer this Contract as
necessary to comply with the applicable tax requirements. These three
sub-sections and this Contract should be construed so that they comply with the
applicable tax requirements.
DEATH BENEFIT OPTIONS BEFORE INCOME DATE - In the event any Owner dies
before the Income
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Date, the death benefit may be taken in one sum, in which case this
Contract will terminate. Such sum shall be paid within five years of
the Owner's death unless one of the options for continuation of this
Contract below is elected by the person entitled to make that
election.
CONTRACT CONTINUATION OPTION - If the death benefit is not
taken in one sum immediately, this Contract will continue subject to
the following provisions:
1. If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.
2. Unless specified otherwise, any excess of the death benefit
over the Account Value will be allocated to and among the
Variable and Fixed Accounts in proportion to their values as
of the date on which the death benefit is determined. We will
establish a new Fixed Sub-Account for any allocation to the
Fixed Account based on the Guarantee Period you then elect.
3. No additional purchase payments may be applied to this
Contract.
4. If the new Owner is not the deceased Owner's spouse, the
entire interest in this Contract must be distributed under one
of the following options:
a. The entire interest in this Contract must be distributed
over the life of the new Owner, or over a period not
extending beyond the life expectancy of the new Owner,
with distributions beginning within one year of the
Owner's death; or
b. The entire interest in this Contract must be distributed
within 5 years of the Owner's death.
5. If the new Owner is the deceased Owner's spouse, this Contract
will continue with the surviving spouse as the new Owner. The
surviving spouse may name a new Beneficiary. If no
Beneficiary is so named, the surviving spouse's estate will be
the Beneficiary. Upon the death of the surviving spouse, the
death benefit will equal the Account Value as of the date we
receive proof of the spouse's death, and the entire interest
in this Contract must be distributed to the new Beneficiary in
accordance with the provisions of 4 (a) or 4 (b) above.
If there is more than one Beneficiary, the foregoing provisions
will independently apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER THE INCOME DATE - If any Owner dies on or
after the Income Date but before the time the entire interest in this
Contract has been distributed, the remaining portion will be
distributed at least as rapidly as under the method of distribution
being used as of the date of the Owner's death.
If income payments have been selected based on an income plan
providing for payments for a guaranteed period, and the Annuitant dies
on or after the Income Date, we will make the remaining guaranteed
payments to the Beneficiary. Any remaining payments will be made 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 (on the basis
of the interest rate used in determining the payments) and pay that
single sum to the estate of the last to die of the Annuitant or the
Beneficiary.
PROOF OF DEATH - Proof of death must be received at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
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GENERAL PROVISIONS
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ENTIRE CONTRACT - This Contract including any attached riders, endorsements,
amendments and the application, if one is attached to this contract when
issued, constitutes the entire contract between you and us. All statements
made by you, or any Owner, or any Annuitant will be deemed representations and
not warranties.
ASSIGNMENT - You may assign this Contract at any time prior to the Income Date.
No assignment will be binding on us unless we receive Satisfactory Notice. We
will not be liable for any payments made or actions we take before the
assignment is accepted by us. An absolute assignment will revoke the interest
of any revocable Beneficiary. We will not be responsible for the validity of
any assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
CLAIMS OF CREDITORS - To the extent permitted by law, no benefits payable under
this Contract will be subject to the claims of your, the Beneficiary's, or the
Annuitant's creditors.
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 any payments
depend. If the age or sex of the Annuitant has been misstated, or if the age
of the Owner has been misstated, the benefits will be those that the Account
Value applied would have provided for the correct age and sex. If we have made
incorrect income payments, the amount of any underpayment will be paid
immediately. The amount of any overpayment will be deducted from future income
payments.
NO DIVIDENDS PAYABLE - This Contract is non-participating and does not share in
any distribution of our surplus. We will not pay any dividends.
INCONTESTABILITY - This Contract is incontestable from its Contract Date.
REQUIRED REPORTS - We will furnish a report to you as often as required by law,
but at least once each Contract Year before the Income Date. The report will
show the number of Accumulation Units credited to each Variable Sub-Account in
which you are invested and the corresponding Accumulation Unit value as of the
date of the report. It will also show your Fixed Account Value.
MORTALITY AND EXPENSES - Our actual mortality and expense experience will not
affect the amount of any income payments or any other values under this
Contract.
TAXES BASED UPON PURCHASE PAYMENT OR VALUE - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of this
Contract, we reserve the right to charge you and all similarly situated Owners
proportionately for that tax. This would include a tax based upon our realized
net capital gains in the Variable Sub-Accounts and on earnings in the Fixed
Account, on which we are not currently taxed.
PAYMENTS WE MAY DEFER - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading;
2. The SEC determines that a state of emergency exists;
3. An order or pronouncement of the SEC permits a delay for the
protection of Owners; or
4. The check used to pay the purchase payment has not cleared
through the banking system. This may take up to 15 days.
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any
withdrawal;
2. Determination and payment of any death benefit if death occurs
before the Income Date;
3. Transfers of the Account Value; or
4. Application of the Account Value under an income plan.
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We reserve the right to delay payment of amounts from the Fixed Account for up
to six months. If deferred 30 days or more, the amount deferred will earn
interest at a rate not less than the Minimum Deferral Interest Rate shown in
the Fixed Account section of the Schedule.
AUTHORITY TO MAKE AGREEMENTS - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of this Contract or make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS - We have filed a detailed statement of our
computations with the insurance supervisory officials in the appropriate
jurisdictions. The values are not less than those required by the laws of
those states or jurisdictions. Any benefit provided by an attached rider will
not increase these values unless otherwise stated in that rider.
ANNUITY INCOME BENEFITS
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CHOOSING AN INCOME DATE AND INCOME PLAN - On the Income Date, if the Annuitant
is alive and this Contract is in force, income payments will begin under the
income plan you have chosen. If you have not chosen an income plan, the option
shown in the Schedule will automatically apply. If you have not selected an
Income Date, the Maximum Income Date shown in the Schedule will automatically
apply.
You may choose or change an income plan or the Income Date by giving us
Satisfactory Notice at least 30 days before the Income Date. However, any
Income Date must meet the restrictions described in the Schedule.
Once income payments have begun, we reserve the right to disallow further
changes without our prior approval.
MINIMUM AMOUNTS - If the amount available to apply under any variable or fixed
option is less than the minimum amount shown in the Schedule, we reserve the
right to pay such amount in a lump sum in lieu of the payment otherwise
provided for.
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by giving us Satisfactory Notice at least 30 days before
the Income Date. However, if at any time the payment becomes less than the
minimum income payment shown in the Schedule, we reserve the right to reduce
the frequency of payment to an interval that results in each payment being at
least equal to the minimum income payment. In no event will the interval be
less frequent than annual.
ALLOCATION OF ANNUITY - At the time you elect the income plan, you may also
elect to have the Account Value applied to provide a Variable Income Annuity, a
Fixed Income Annuity, or a combination of both. Unless you specify otherwise,
we will provide either variable or fixed, or a combination of variable and
fixed income payments in proportion to the Sub-Accounts in which you are
invested as of a date not more than 5 Valuation Days before the due date of the
first income payment. If any applicable purchase payment taxes are then due
us, we will also deduct them proportionately.
VARIABLE INCOME ANNUITY
AMOUNT OF FIRST VARIABLE PAYMENT - The Income Tables shown in the Schedule are
used to determine the first monthly variable income payment for an assumed
investment rate of 3%. The Income Tables show the dollar amount of the first
monthly variable income payment that can be purchased with each $1,000 applied.
The assumed investment rates we currently allow are shown on the Schedule.
VALUE OF INCOME UNITS - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the
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value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the
number of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
NUMBER OF INCOME UNITS - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable income payment
attributable to that Sub-Account by its Income Unit value as of a date not more
than 5 Valuation Days before the due date of the first variable income payment.
AMOUNT OF SECOND AND SUBSEQUENT VARIABLE PAYMENTS - The dollar amount of the
second and subsequent variable income payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
income payment will be equal to the sum of the variable income payments in each
Variable Sub-Account. The dollar amount of each payment for a Variable
Sub-Account is determined by multiplying the number of Income Units by the
Income Unit value for the Variable Sub-Account for the Valuation Period which
ends on a consistently applied date not more than 5 Valuation Days before the
payment is due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
EXCHANGE OF INCOME UNITS - After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable
Sub-Accounts into other Income Units, the value will be such that the dollar
amount of income payment made on the date of exchange would be unaffected by
the exchange.
FIXED INCOME ANNUITY
A Fixed Income Annuity is an annuity with income payments that remain fixed as
to dollar amount throughout the payment period. The Income Tables shown in the
Schedule are used to determine the monthly fixed income payment. The Income
Tables show the dollar amount of the monthly fixed income payment that can be
purchased with each $1,000 applied.
INCOME PLANS
The following is a list of income plans we guarantee to make available.
INCOME PLAN 1. LIFE ANNUITY - An annuity payable during the lifetime of the
Annuitant and terminating with the last payment preceding the death of the
Annuitant.
INCOME PLAN 2. LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN - An annuity payable
during the lifetime of the Annuitant with the provision that payments will be
made for a minimum of 10 or 20 years, as elected.
INCOME PLAN 3. JOINT AND LAST SURVIVOR ANNUITY - An annuity payable during the
joint lifetime of the Annuitant and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor.
INCOME PLAN 4. PAYMENTS FOR A SPECIFIED PERIOD CERTAIN - An amount payable for
the number of years selected which may be from 5 to 30 years.
INCOME PLAN 5. ANNUITY PLAN - An amount can be used to purchase any single
premium annuity we offer on the Income Date for which you and the Annuitant are
eligible.
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