Common use of EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT Clause in Contracts

EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT. When a Participant takes a loan, UNUM will subdivide his Participant's Account balance in the Guaranteed Interest Division by establishing a loan reserve account in an amount initially equal to the initial loan amount. Funds held in the loan reserve account are held as security for the loan and will accrue interest at a rate which is three percent (3.0%) below the loan interest rate. To the extent that the loan interest rate is subsequently reduced, the rate credited to funds in the loan reserve account will also be reduced in order to maintain the three percent (3.0%) differential. As the Participant makes repayments to UNUM on the loan, an amount equal to the principal component of the repayment, plus the interest accrued in the loan reserve account, will be transferred from his loan reserve account back to his Participant's Account balance in the Guaranteed Interest Division. In addition, an amount equal to ten percent (10%) of the principal of the loan will be held as security to cover the interest and the CDSC, should the Participant fail to make the required quarterly payments of principal and interest. This amount will earn interest at the interest rate in effect in the Guaranteed Interest Division but will not be available for withdrawals. As the principal is reduced, the amount held as security will also be reduced.

EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT. When a Participant takes a loan, UNUM Xxxxxxx Life will subdivide his Participant's Account balance in the Guaranteed Interest Division by establishing a loan reserve account in an amount initially equal to the initial loan amount. Funds held in the loan reserve account are held as security for the loan and will accrue interest at a rate which is three percent (3.0%) below the loan interest rate. To the extent that the loan interest rate is subsequently reduced, the rate credited to funds in the loan reserve account will also be reduced in order to maintain the three percent (3.0%) differential. As the Participant makes repayments to UNUM Lincoln Life on the loan, an amount equal to the principal component of the repayment, plus the interest accrued in the loan reserve account, will be transferred from his loan reserve account back to his Participant's Account balance in the Guaranteed Interest Division. In addition, an amount equal to ten percent (10%) of the principal of the loan will be held as security to cover the interest and the CDSC, should the Participant fail to make the required quarterly payments of principal and interest. This amount will earn interest at the interest rate in effect in the Guaranteed Interest Division but will not be available for withdrawals. As the principal is reduced, the amount held as security will also be reduced.

EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT. When a Participant takes a loan, UNUM will subdivide his Participant's Account balance in the Guaranteed Interest Division by establishing a loan reserve account in an amount initially equal to the initial loan amount. Funds held in the loan reserve account are held as security for the loan and will accrue interest at a rate which is three percent (3.0%) below the loan interest rate. To the extent that the loan interest rate is subsequently reduced, the rate credited to funds in the loan reserve account will also be reduced in order to maintain the three percent (3.0%) differential. As the Participant makes repayments to UNUM on the loan, an amount equal to the principal component of the repayment, plus the interest accrued in the loan reserve account, will be transferred from his loan reserve account back to his Participant's Account balance in the Guaranteed Interest Division. In addition, an amount equal to ten percent (10%) of the principal of the loan will be held as security to cover the interest and the CDSC, should the Participant fail to make the required quarterly payments of principal and interest. This amount will earn interest at the interest rate in effect in the Guaranteed Interest Division but will not be available for withdrawals. As the principal is reduced, the amount held as security will also be reduced.