[COMMONWEALTH ANNUITY LOGO]
Commonwealth Annuity and Life Insurance Company
a ▇▇▇▇▇▇▇ ▇▇▇▇▇ Company
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
Home Office: Southborough, MA
SERVICE CENTER - [P.O. BOX 758550, TOPEKA, KANSAS 66675-8550, ▇-▇▇▇-▇▇▇-▇▇▇▇.]
PLEASE READ THIS CONTRACT CAREFULLY
This is a legal contract between the Owner and Commonwealth Annuity and Life
Insurance Company. The provisions on this cover and the pages that follow are
part of this Contract.
We agree to pay annuity payments provided this Contract is in force on the
Annuity Date. While this contract is in effect, we will pay a Death Benefit if
the Owner dies prior to the Annuity Date.
This Contract is issued in consideration of the initial Purchase Payment.
Payments may be allocated to the Subaccounts of the Separate Accounts.
ALL BENEFITS, PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF THE SUBACCOUNTS, MAY INCREASE OR DECREASE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. PLEASE REFER TO THE VARIABLE ACCOUNT PROVISIONS
FOR ADDITIONAL INFORMATION.
RIGHT TO CANCEL -- FREE LOOK PERIOD --Within the "free look" period, which is
[ten] days after receiving this Contract, you may cancel the Contract and
receive a refund by returning it to us, along with written instructions to
cancel. In most states, the refund will be the Contract Value on the Valuation
Date the Contract and written instructions are received at our Service Center.
However, in a state which requires the refund of Purchase Payments, or if the
Contract is issued as an Individual Retirement Annuity, Simplified Employee
Pension-IRA, or ▇▇▇▇ Individual Retirement Annuity, the Company will refund the
greater of (1) your Purchase Payment(s), less any withdrawals or (2) the
Contract Value. If we are required to provide for a full refund of Purchase
Payments, we will initially allocate the Purchase Payment(s) to the Money Market
Subaccount stated in the Contract schedule. At the end of the free look period,
we will allocate all amounts according to your allocation instructions, as then
in effect.
Signed for Commonwealth Annuity and Life Insurance Company at its home office in
Southborough, Massachusetts.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------- ----------------------------------------
President Corporate Secretary
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY. NON-PARTICIPATING.
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TABLE OF CONTENTS
PAGE
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CONTRACT SCHEDULE 4
DEFINITIONS 6
GENERAL PROVISIONS 8
The Contract 8
Modification of Contract 8
Incontestability 8
Change of Annuity Date 8
Assignment 8
Minimum Benefits 8
Non-Participating 8
Reports 8
Premium Taxes 8
Qualified Plans 8
OWNERSHIP PROVISIONS 9
Owner 9
Annuitant 9
PURCHASE PAYMENT PROVISIONS 10
Purchase Payment Limitations 10
Application of Purchase Payments 10
Place of Payment 10
VARIABLE ACCOUNT PROVISIONS 11
Separate Account 11
Liabilities of Separate Account 11
Substitution 11
Rights Reserved by the Company 11
Accumulation Unit Value 11
Investment Experience Factor 11
TRANSFER PROVISIONS 12
Disruptive Trading 12
Transfer Procedures 12
WITHDRAWAL AND SURRENDER PROVISIONS 13
Withdrawal and Surrender Procedures 13
PAYMENTS TO CONTRACT OWNERS 13
DEATH BENEFIT PROVISIONS 13
Amount Payable Upon Death 13
Payment of Death Benefit 14
ANNUITY PERIOD PROVISIONS 15
Annuity Payments 15
Annuity Options 15
Basis of Annuity Options 16
Death Proceeds 16
2
MISCELLANEOUS PROVISIONS 17
Termination of Contract 17
Evidence of Age, Sex and Survival 17
Misstatement of Age or Sex 17
Protection of Benefits 17
Creditors 17
Guarantees 17
ANNUITY OPTION TABLE 18
ENDORSEMENTS, if any Follows Annuity Option Table
APPLICATION Follows Endorsements, if any
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CONTRACT SCHEDULE
CONTRACT NUMBER: [1234567]
DATE OF ISSUE: [May 1, 2009]
OWNER: [▇▇▇▇ ▇▇▇]
OWNER DATE OF BIRTH
OR TRUST INCEPTION DATE: [March 04, 1968]
JOINT OWNER: [None]
JOINT OWNER DATE OF BIRTH: [N/A]
ANNUITANT: [▇▇▇▇ ▇▇▇]
ANNUITANT GENDER: [Male]
ANNUITANT DATE OF BIRTH: [March 04, 1968]
JOINT ANNUITANT: [None]
JOINT ANNUITANT GENDER: [N/A]
JOINT ANNUITANT DATE OF BIRTH: [N/A]
PRIMARY BENEFICIARY(IES) As designated by you on the application for this Contract
CONTINGENT BENEFICIARY(IES) As designated by you on the application for this Contract
TYPE OF CONTRACT: [Non-Qualified]
INITIAL PURCHASE PAYMENT: [$5,000]
MAXIMUM TOTAL PURCHASE PAYMENTS: [$5,000,000] or a higher amount with our prior approval
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$250]
ANNUITY DATE: [April 1, 2067]
MINIMUM ANNUITY DATE: [May 1, 2010]
MAXIMUM ANNUITY DATE: [April 1, 2067]
The Maximum Annuity Date is the Valuation Date on or next following the later
of: (1) ten years from the Date of Issue; or (2) the first day of the month
following the month in which the older Annuitant attains age 99.
4
ANNUAL CONTRACT FEE (deducted monthly from Contract Value) $[30.00]
During the Accumulation Period, we deduct one-twelfth of this fee from
Contract Value on each Monthiversary.
We will waive this fee for Contracts with Contract Value of $[50,000] or
more as of the Monthiversary we would otherwise deduct the fee. We deduct
this fee pro-rata from the Subaccounts in which the Owner invests in
proportion to the Contract Value each Subaccount bears to the total
Contract Value. We do not assess the contract fee upon surrender,
annuitization, or death.
MORTALITY AND EXPENSE RISK CHARGE (as a percentage of Contract Value): [0.60]%
ADMINISTRATION CHARGE (as a percentage of Contract Value): [0.15]%
PREMIUM TAX: [0.00%]
INITIAL ALLOCATION
ALLOCATIONS PERCENTAGE(S)
[insert Subaccount name 80%
Insert Subaccount name 20%]
MONEY MARKET SUBACCOUNT: Subaccount investing in the [▇▇▇▇▇▇▇ ▇▇▇▇▇ VIT Money
Market Fund]
SEPARATE ACCOUNT: Commonwealth Annuity Separate Account A
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DEFINITIONS
ACCUMULATION PERIOD--The period between the Date of Issue of a Contract and the
Annuity Date.
ACCUMULATION UNIT--A unit of measurement used to determine the value of each
Subaccount during the Accumulation Period.
ANNUITANT-- The person designated in the Contract whose life is used to
determine the duration of Annuity Payments involving a life contingency. When
two people are named as joint Annuitants, the term "Annuitant" means the joint
Annuitants or the survivor.
ANNUITY DATE--The Valuation Date on which annuity payments are to commence. The
Annuity Date may not be earlier than the Minimum Annuity Date or later than the
Maximum Annuity Date stated in the Contract Schedule.
ANNUITY OPTION--One of several forms in which annuity payments can be made.
ANNUITY PERIOD--The period starting on the Annuity Date during which we make
annuity payments to you.
BENEFICIARY--The person designated to receive any benefits under a Contract upon
your death. (see Primary Beneficiary and Contingent Beneficiary).
CODE--The Internal Revenue Code of 1986, as amended.
COMPANY ("WE", "US", "OUR", "COMMONWEALTH ANNUITY")--Commonwealth Annuity and
Life Insurance Company.
CONTINGENT BENEFICIARY--The person designated to receive any benefits under a
Contract upon your death should all Primary Beneficiaries predecease you. In the
event that a Contingent Beneficiary predeceases you, the benefits will be
distributed pro rata to the surviving Contingent Beneficiaries. If there are no
surviving Contingent Beneficiaries, the benefits will be paid to your estate
(see Beneficiary and Primary Beneficiary).
CONTRACT--A Flexible Premium Variable Deferred
Annuity Contract.
CONTRACT ANNIVERSARY--The same date each year as the Date of Issue. If there is
no Valuation Date in a year that coincides with the Date of Issue, the Contract
Anniversary is the next Valuation Date.
CONTRACT VALUE--The sum of your values in the Subaccount(s).
CONTRACT YEAR--A period of twelve consecutive months starting on the Date of
Issue or on any Contract Anniversary.
DEATH BENEFIT - If an Owner dies before the Annuity Date, the Death Benefit will
be equal to the Contract Value, less any applicable premium taxes, on the
Valuation Date we receive Due Proof of Death.
DUE PROOF OF DEATH --Due Proof of Death means a certified death certificate and
all necessary claim paperwork, settlement instructions, and such other
information we may require to process the Death Benefit. The Company may require
return of the Contract.
DATE OF ISSUE--The date on which the first Contract Year commences.
FUND OR FUNDS-- An investment company or separate series thereof, in which
Subaccounts of the Separate Account invest.
GENERAL ACCOUNT--All our assets other than those allocated to any legally
segregated separate account.
MONTHIVERSARY--The same date each month as the Date of Issue. If the Date of
Issue falls on the 29th, 30th, or 31st and there is no corresponding date in a
subsequent month, the Monthiversary will be the last date of that month. If
there is no Valuation Date in the calendar month that coincides with the Date of
Issue, the Monthiversary is the next Valuation Date.
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NON-QUALIFIED CONTRACT--A Contract which does not receive favorable tax
treatment under Sections 401, 403, 408, 408A or 457 of the Code.
OWNER ("CONTRACT OWNER", "YOU", "YOUR", "YOURS")--The person(s) designated in
the Contract Schedule who has the privilege of ownership of this Contract. The
Contract may be owned by natural persons, or by trusts or custodial accounts
that hold the Contract as agent for and for the sole benefit of a natural
person. When two people are named as joint Owners, the term "Owner" means the
joint Owners or the survivor.
PRIMARY BENEFICIARY -- The person designated to receive any benefits under a
Contract upon your death. In the event that a Primary Beneficiary predeceases
you, the benefits will be distributed pro rata to the surviving Primary
Beneficiaries. In the event that all Primary Beneficiaries predecease you,
proceeds will be paid to the surviving Contingent Beneficiaries (see Beneficiary
and Contingent Beneficiary).
PURCHASE PAYMENTS--The dollar amount we receive in U.S. currency to buy the
benefits the Contract provides.
QUALIFIED CONTRACT--A Contract issued in connection with a retirement plan which
receives favorable tax treatment under Sections 401, 403, 408, 408A or 457 of
the Code.
SEPARATE ACCOUNT--
Commonwealth Annuity Separate Account A.
SERVICE CENTER--[P.O. Box 758550, Topeka, Kansas 66675-8550, ▇-▇▇▇-▇▇▇-▇▇▇▇].
SUBACCOUNTS--The subdivisions of the Separate Account, the assets of which
consist solely of shares of the corresponding Fund.
VALUATION DATE-- Each day when the New York Stock Exchange is open for trading.
The close of business on each Valuation Date is generally 3:00 p.m. Central
time.
VALUATION PERIOD--The interval of time between two consecutive Valuation Dates.
7
GENERAL PROVISIONS
THE CONTRACT -- This Contract, any written application attached to this
Contract, and any endorsements and riders constitute the entire contract between
the parties. All statements made in any attached application are deemed
representations and not warranties. No statement will void this Contract or be
used as a defense of a claim unless it is contained in an attached application.
MODIFICATION OF CONTRACT -- Only our President, Vice President, Secretary and
Assistant Secretaries have the power to approve a change or waive any provisions
of this Contract. Any such modifications must be in writing. No agent or person
other than the named officers has the authority to change or waive the
provisions of this Contract.
Upon notice to you, this Contract may be modified by us at any time as is
necessary to comply with any law, regulation, or ruling issued by a governmental
agency or as is necessary to assure continued qualification of this Contract
under the Code or other laws relating to retirement plans or annuities or as
otherwise may be in your best interest. In the event of a modification, we may
make appropriate endorsement to this Contract and we will obtain all required
regulatory approvals.
INCONTESTABILITY -- The Company cannot contest this contract.
CHANGE OF ANNUITY DATE -- You may change the Annuity Date by written request
during the Accumulation Period. The new Annuity Date must not be earlier than
the Minimum Annuity Date or later than the Maximum Annuity Date stated in the
Contract Schedule.
ASSIGNMENT -- All assignments are subject to acceptance by the Company. The
Company reserves the right to refuse any assignment or other transfer of the
Contract at any time on a non-discriminatory basis.
Subject to the acceptance of the assignment by the Company, you may assign a
Non-Qualified Contract during the Accumulation Period and prior to the death of
an Owner by completing and returning our assignment form to our Service Center.
No assignment is binding on us until we accept it, and we assume no
responsibility for the validity of any assignment. Generally, an interest in a
Qualified Contract may not be assigned.
If an assignment of the Contract is in effect on the Annuity Date, we reserve
the right to pay the assignee, in one sum, that portion of the Contract Value
(less any applicable premium taxes) to which the assignee appears to be
entitled. Amounts payable during the Annuity Period may not be assigned or
encumbered (to the extent permitted by law, annuity payments are not subject to
levy, attachment or other judicial process for the payment of the payee's debts
or obligations). An assignment may be a taxable event and may subject you to
immediate tax liability and to a 10% tax penalty. Any claim is subject to proof
of interest of the assignee. You are solely responsible for the validity or
effect of any assignment.
MINIMUM BENEFITS -- Amounts payable upon withdrawal, death, and annuitization
are not less than the minimum benefits required by the statutes of the state in
which this Contract is delivered.
NON-PARTICIPATING -- This Contract does not pay dividends. It will not share in
our surplus or earnings.
REPORTS -- At least once each Contract Year we will send you a statement showing
Purchase Payments received, investment experience and charges made since the
last report, as well as any other information required by statute.
PREMIUM TAXES -- If we pay state premium taxes, we will deduct the amount paid
from:
- Purchase Payments when we receive them; and/or
- Partial withdrawals or full surrender; and/or
- The Death Benefit; and/or
- Contract Value applied to an Annuity Option at the time annuity
payments start.
QUALIFIED PLANS -- If this Contract is issued under a qualified plan additional
provisions may apply. The rider or endorsement to this Contract used to qualify
it under the applicable section of the Code will indicate the extent of change
in the provisions.
8
OWNERSHIP PROVISIONS
OWNER -- You may exercise every option and right conferred by this Contract.
Where the Contract is owned jointly, the consent of both Owners is required in
order to exercise any ownership rights.
Upon written request to the Service Center prior to the death of an Owner, you
may request the addition, change or removal of an Owner. You must furnish
information sufficient to clearly identify a new Owner to us. An addition,
change, or removal of an Owner is subject to our approval.
If we approve the change, the effective date of the change will be the date the
request was signed by you, except for action taken by us prior to receiving the
request. Any change is subject to the payment of any proceeds. We may require
you to return this Contract to us for endorsement of a change. .
Changing the owner may result in certain tax consequences to you.
ANNUITANT -- The original Annuitant is shown in the Contract Schedule. Before
the Annuity Date, you may add, change, or remove an Annuitant by written request
to our Service Center. The addition, change or removal of an Annuitant is
subject to our approval. After the Annuity Date, you may not add, change, or
remove an Annuitant. For Contracts with non-natural Owners, changing the
Annuitant may result in certain tax consequences. We may require you to return
this Contract to us for endorsement of a change.
There must be at least one Annuitant at all times. If an Annuitant who is not an
Owner dies prior to the Annuity Date, a surviving joint Annuitant, if any, will
become the sole Annuitant. If there is no surviving joint Annuitant, the Owner
may name a new Annuitant. If the Owner does not name a new Annuitant, the
youngest Owner will become the new Annuitant.
We will not pay a Death Benefit upon the death of an Annuitant unless the sole
Owner is a non-natural person. If the sole Owner is a non-natural person, we
will pay a Death Benefit of the Contract Value less any applicable premium taxes
upon the death of an Annuitant. If the sole Owner is a non-natural person, we
will pay the Contract Value less any applicable premium taxes upon a change in
an Annuitant. This will terminate the Contract.
Joint Annuitants are only permitted in Non-Qualified Contracts. Under Qualified
Contracts, the Owner and the Annuitant generally must be the same individual.
BENEFICIARY DESIGNATION AND CHANGE OF BENEFICIARY -- The Beneficiary is stated
in the Contract Schedule. You designate the Beneficiary. During the Accumulation
Period and prior to the death of an Owner, you may change a Beneficiary at any
time by sending a written change form to our Service Center. After the Annuity
Date, the Beneficiary may be changed prior to the death of an Owner or the
Annuitant. However, in the case of joint Owners, the surviving joint Owner is
automatically the Primary Beneficiary and cannot be changed. No Beneficiary
change is binding on us until we receive it. We assume no responsibility for the
validity of any Beneficiary change. Under a Qualified Contract, the provisions
of the applicable plan may prohibit a change of Beneficiary.
Beneficiary changes are subject to the following:
1. The change must be filed while you are alive;
2. The Contract must be in force at the time you file a change;
3. Such change must not be prohibited by the terms of an existing
assignment, Beneficiary designation, or other restriction;
4. Such change will take effect when we receive it. However, action taken
by us before the change form was received will remain in effect;
5. The request for change must provide information sufficient to identify
the new Beneficiary; and
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6. In the case of joint Owners, we will consider the designation of a
Beneficiary other than the surviving joint Owner to be a Contingent
Beneficiary.
DEATH OF BENEFICIARY -- In the event that all Primary Beneficiaries predecease
you, we will pay the Death Benefit proceeds to the surviving Contingent
Beneficiaries. In the event that a Contingent Beneficiary also predeceases you,
we will distribute the Death Benefits pro rata to the surviving Contingent
Beneficiaries. If there are no surviving Contingent Beneficiaries, we will pay
the Death Benefits to your estate.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENT LIMITATIONS -- You may make Purchase Payments during the
Accumulation Period. We will not accept Purchase Payments after the date of
death of an Owner. The Minimum Subsequent Purchase Payment is set forth in the
Contract Schedule.
Without our approval, the sum of all Purchase Payments allocated to the Contract
without our approval may not exceed the Maximum Total Purchase Payments shown on
the Contract Schedule. We will aggregate multiple contracts you own for purposes
of this limitation. In addition, for Qualified Contracts, the maximum annual
amount of Purchase Payments may be limited by the retirement plan funded by the
Contract.
We reserve the right to waive or modify these limits. We also reserve the right
not to accept any Purchase Payment.
APPLICATION OF PURCHASE PAYMENTS -- You select allocation of Purchase Payments
to the Subaccount(s). When you allocate Purchase Payments to a Subaccount, we
credit Accumulation Units to that Subaccount based on the value of an
Accumulation Unit, as computed after we receive the Purchase Payment at our
Service Center. If we receive a Purchase Payment at our Service Center before
3:00 p.m. Central time, we will credit Accumulation Units based on Accumulation
Unit values determined at the end of that Valuation Date. If we receive a
Purchase Payment at our Service Center on or after 3:00 p.m. Central time, we
will credit Accumulation Units based on Accumulation Unit values determined at
the end of the next Valuation Date.
We will credit an initial Purchase Payment no later than the end of the second
Valuation Date following the Valuation Date we receive the Purchase Payment at
our Service Center, provided that the Purchase Payment is preceded or
accompanied by an application that contains sufficient information to establish
an account and properly credit such Purchase Payment.
For each Purchase Payment, we determine the number of Accumulation Units
credited by dividing the Purchase Payment allocated to a Subaccount by the
Subaccount's Accumulation Unit value as computed on the Valuation Date that we
receive the Purchase Payment at our Service Center. After we determine the
number of Accumulation Units credited, the number of Accumulation Units will not
change due to investment experience. Accumulation Unit value varies to reflect
the investment experience of the Subaccount and the assessment of charges
against the Subaccount. We reduce the number of Accumulation Units when we
assess one-twelfth of the contract fee on each Monthiversary.
PLACE OF PAYMENT -- All Purchase Payments under this Contract must be paid to us
at the Service Center.
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VARIABLE ACCOUNT PROVISIONS
SEPARATE ACCOUNT -- The variable benefits under this Contract are provided
through the Separate Account identified in the Contract Schedule. The Separate
Account is registered with the Securities and Exchange Commission ("SEC") as a
unit investment trust under the Investment Company Act of 1940 (the "1940 Act").
It is a separate investment account maintained by us.
LIABILITIES OF SEPARATE ACCOUNT -- Benefits provided under the Contracts are our
obligations. Although the assets in the Separate Account are our property, they
are held separately from our other assets and are not chargeable with
liabilities arising out of any other business we may conduct. Income, capital
gains and capital losses, whether or not realized, from the assets allocated to
the Separate Account are credited to or charged against the Separate Account
without regard to the income, capital gains and capital losses arising out of
any other business we may conduct.
SUBSTITUTION -- We reserve the right to make additions to, deletions from, or
substitutions for the shares held by the Separate Account or that the Separate
Account may purchase. If investment in the Funds is no longer possible, in our
judgment becomes inappropriate for the purposes of the Contract, or for any
other reason in our sole discretion, we may substitute another fund without your
consent. The substituted fund may have different fees and expenses. Substitution
may be made with respect to existing investments or the investment of future
Purchase Payments, or both. However, no such substitution will be made without
the approval of the Securities and Exchange Commission, if required.
Furthermore, we may close Subaccounts to allocations of Purchase Payments or
Contract Value, or both, at any time in our sole discretion. The Funds, which
sell their shares to the Subaccounts pursuant to participation agreements, also
may terminate these agreements and discontinue offering their shares to the
Subaccounts.
RIGHTS RESERVED BY THE COMPANY -- We may establish additional Subaccounts of the
Separate Account, each of which would invest in a new fund, or in shares of
another investment company. New Subaccounts may be established when, at our
discretion, marketing needs or investment conditions warrant. New Subaccounts
may be made available to existing Owners as we determine. We may also eliminate
or combine one or more Subaccounts, transfer assets, or substitute one
Subaccount for another Subaccount, if, in our discretion, marketing, tax, or
investment conditions warrant. We will notify you of any such changes.
If we deem it to be in the best interests of persons having voting rights under
the Contract, we may deregister the Separate Account under the1940 Act, make any
changes required by the 1940 Act, operate the Separate Account as a management
investment company under the 1940 Act or any other form permitted by law,
transfer all or a portion of the assets of a Subaccount or Separate Account to
another Subaccount or separate account pursuant to a combination or otherwise,
and create new separate accounts. The Company reserves the right to change the
names of the Separate Account or the Subaccounts. Before we make certain changes
we may need approval of the SEC and applicable state insurance departments. We
will notify you of any changes.
VALUE OF A SUBACCOUNT - The value of a Subaccount on a Valuation Date is
determined by multiplying the number of Accumulation Units in the Subaccount by
the applicable Accumulation Unit Value as of the Valuation Date.
When an amount is allocated to a Subaccount, the number of units credited is
equal to the allocated amount divided by the applicable Accumulation Unit Value
at the end of the Valuation Period in which the amount is allocated. When
amounts are transferred out of or deducted from a Subaccount, units are redeemed
in a similar manner.
ACCUMULATION UNIT VALUE - Each Subaccount has an investment experience factor
for each combination of asset based charges. The value of a Subaccount
Accumulation Unit at the end of a Valuation Period is determined by multiplying
the value of that Subaccount Accumulation Unit on the preceding Valuation Date
by the applicable investment experience factor for the Valuation Period.
INVESTMENT EXPERIENCE FACTOR -- The investment experience factor of a Subaccount
for any Valuation Period is equal to 1.000000 plus the result (which may be
positive or negative) from dividing (1) by (2) and subtracting (3) where:
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(1) is the investment income of a Subaccount for the Valuation Period,
including realized or unrealized capital gains and losses during the
Valuation Period, adjusted for provisions made for taxes, if any;
(2) is the value of that Subaccount's assets at the beginning of the
Valuation Period,
(3) is the factor representing Subaccount asset-based charges (the
mortality and expense risk charge and the administration charge) for
the Valuation Period.
Subject to applicable state and federal laws, we may change the methodology used
to determine the investment experience factor.
TRANSFER PROVISIONS
During the Accumulation Period, you may transfer Contract Value among the
Subaccounts subject to the following provisions:
- You must request transfers in excess of $250,000 per Contract, per
day, through standard United States mail.
- We reserve the right to require transfers into and out of one
Subaccount in excess of $50,000, per Contract, per day, to be
requested through standard United States mail.
- We reserve the right to limit transfers to twelve per Contract Year.
Any transfer request must clearly specify the amount which is to be transferred
and the names of the Subaccounts that are affected. All transfers are subject to
our Disruptive Trading Procedures as well as any disruptive trading policies and
procedures adopted by the Funds.
DISRUPTIVE TRADING -- This Contract is not designed for use by individuals,
professional market timing organizations, or other entities that engage in
short-term trading, frequent transfers, programmed transfers or transfers that
are large in relation to the total assets of a Fund (collectively, "Disruptive
Trading"). Your ability to make transfers is subject to modification or
restriction if we determine, in our sole opinion, that your exercise of the
transfer privilege may disadvantage or potentially harm the rights or interests
of other contract owners (or others having an interest in the Contract).
If we determine you are engaged in disruptive trading, we reserve the right to
prohibit transfers requested by telephone, fax, overnight mail, or Internet. We
may require that you submit written transfer requests with an original signature
to our Service Center by standard United States mail. We reserve the right to
restrict the transfer privileges of others acting on your behalf. We may also
limit the number of transfers you may make to twelve during a calendar year and
we may limit the number of times you may transfer Contract Value into particular
Subaccounts. We reserve the right to impose, without prior notice, additional or
alternate restrictions on allocations and transfers that we determine, in our
sole discretion, may disadvantage or potentially hurt the rights or interests of
other contract owners or other holders of the Funds. We will reverse any
transactions inadvertently processed in contravention of our restrictions within
two days of the date the inadvertently processed transaction occurred.
Our procedures may vary among the Subaccounts. We reserve the right to not
effect certain allocations or transfers that you have requested if a Fund
refuses a transfer request from us. We reserve the right to administer and
collect any redemption fees imposed by the Funds on their behalf. Upon request
by a Fund, we reserve the right to provide to the Fund information about your
trading activity, and execute instructions from the Fund to restrict or prohibit
further purchases or transfers by you.
TRANSFER PROCEDURES -- We will make transfers pursuant to proper written or
telephone instructions to our Service Center that specify in detail the
requested changes. Transfers will be based upon the Accumulation Unit values
determined following our receipt of complete transfer instructions. If we
receive a transfer request at our Service Center before 3:00 p.m. Central Time,
we will process the request based on Accumulation Unit values determined at the
end of that Valuation Date. If we receive a transfer request at our Service
Center on or after 3:00 p.m. Central Time, we will process the request based on
Accumulation Unit values determined at the end of
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the next Valuation Date. If you or your authorized representative call us to
request a telephone transfer but have not given instructions to us prior to 3:00
p.m. Central Time, even if due to our delay in answering your call, we will
consider your telephone transfer request to be received after 3:00 p.m. Central
Time.
WITHDRAWAL AND SURRENDER PROVISIONS
WITHDRAWALS AND SURRENDERS DURING THE ACCUMULATION PERIOD -- You may make a
partial withdrawal subject to the restrictions set forth below. You also may
withdraw all of the Contract Value, less any applicable premium taxes, and
surrender the Contract. The following rules may apply:
- Withdrawals and surrenders may be subject to federal and state income
tax and a 10% penalty tax.
- Partial withdrawals reduce your Contract Value and your Death Benefit.
- Your ability to withdraw or surrender may be limited by the terms of a
qualified plan such as Section 403(b) plans.
- We may assess premium taxes on partial withdrawals and surrenders.
WITHDRAWAL AND SURRENDER PROCEDURES -- Election to withdraw (including the
withdrawal amount) shall be made in writing to us at our Service Center and
should be accompanied by this Contract if surrender is requested. The Contract
Value, less any applicable premium taxes, is determined on the basis of the
Accumulation Unit values calculated after we receive the request. If we receive
a withdrawal or surrender request at our Service Center before 3:00 p.m. Central
Time, we will process the request based on Accumulation Unit values determined
at the end of that Valuation Date. If we receive a withdrawal or surrender
request at our Service Center on or after 3:00 p.m. Central Time, we will
process the request based on Accumulation Unit values determined at the end of
the next Valuation Date.
PAYMENTS TO CONTRACT OWNERS
Generally, we will make any Death Benefit, withdrawal, surrender, or annuity
payment to you within seven days after the Valuation Date we receive your proper
request at our Service Center. However, we may suspend or postpone payments of
any amount where permitted under applicable federal or state laws, rules, or
regulations.
We may suspend or defer payments or transfers involving any Subaccount:
- during any period when the New York Stock Exchange is closed;
- when trading is restricted or the SEC determines an emergency exists;
or
- as the SEC by order may permit.
We also may defer any annuity payment from our General Account for the period
permitted by law.
DEATH BENEFIT PROVISIONS
DUE PROOF OF DEATH -- We must receive Due Proof of Death in order to pay a Death
Benefit. Due Proof of Death means a certified death certificate and all
necessary claim paperwork, settlement instructions, and such other information
we may require to process the Death Benefit. The Company may require return of
the Contract.
AMOUNT PAYABLE UPON DEATH -- If an Owner dies before the Annuity Date, the Death
Benefit will be equal to the Contract Value, less any applicable premium taxes,
on the Valuation Date we receive Due Proof of Death. Payment of the Death
Benefit may be subject to federal and state income tax. If any Owner dies on or
after the Annuity Date, and before the entire interest in the Contract has been
distributed, any remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of
death.
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PAYMENT OF DEATH BENEFIT -- If there is only one Owner under the Contract, we
will pay the Death Benefit to the Beneficiary upon the death of such Owner
before the Annuity Date. Upon the death of a joint Owner before the Annuity
Date, we will pay the Death Benefit to the surviving joint Owner. We will pay
the Death Benefit upon the first to die of any joint Owners. If any Owner is not
a natural person, we will treat each Annuitant under the Contract as an Owner
for Death Benefit payment purposes and we will pay the Death Benefit upon the
death of any Annuitant or upon the change of any Annuitant.
We will pay the Death Benefit to the Beneficiary (or joint Owner, if applicable)
after we receive Due Proof of Death. We will then have no further obligation
under the Contract. The Valuation Date on which we receive all required
paperwork is the date the Contract is tendered for redemption and the date for
calculation of the benefits.
If we receive Due Proof of Death at our Service Center before 3:00 p.m. Central
Time, we will calculate the Death Benefit based on Accumulation Unit values
determined at the end of that Valuation Date. If we receive a Due Proof of Death
at our Service Center on or after 3:00 p.m. Central Time, we will calculate the
Death Benefit based on Accumulation Unit values determined at the end of the
next Valuation Date.
The Death Benefit may be paid in a lump sum. The Beneficiary (or the surviving
joint Owner, if applicable) may defer this sum for up to five years from the
date of death. Instead of a lump sum payment, the Beneficiary (or the surviving
joint Owner), may elect to have the Death Benefit distributed under one of the
following Annuity Options:
- OPTION 2 over the lifetime of the Beneficiary, or
- OPTION 1 OR 3 with a specified period or certain period no longer than
the life expectancy of the Beneficiary. The life expectancy of the
Beneficiary must be at least ten years as of the date that he or she
elects Option 1 or Option 3
The Beneficiary (or the surviving joint Owner) must make this election within 60
days of the time we receive Due Proof of Death, and distribution under these
Annuity Options must commence within one year of the date of death.
If the Beneficiary is not a natural person, the entire Death Benefit must be
distributed within five years of your death.
If your surviving spouse is the only Primary Beneficiary when you die, your
surviving spouse may elect to be the successor Owner of the Contract by
completing the spousal continuation section of the claim form submitted with Due
Proof of Death. The date of continuance of the Contract will be the Valuation
Date that we receive Due Proof of Death. If no Annuitant is living at the time
of your death, your surviving spouse will become the Annuitant.
If your surviving spouse elects to become the successor Owner of the Contract on
your death, thereby waiving claim to the Death Benefit that is otherwise
payable, we will not pay out a Death Benefit on your death. Any subsequent
spouse of your surviving spouse will not be entitled to continue the Contract
upon the death of your surviving spouse.
In all events, we will pay or apply the Contract's Death Benefit in accordance
with Sections 72(s) or 401(a)(9) of the Code, as applicable.
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ANNUITY PERIOD PROVISIONS
Annuity Payments will be made to you, unless you direct otherwise. Contracts may
be fully annuitized under one of several Annuity Options, which are available on
a fixed basis. You may annuitize any time on or after the Minimum Annuity Date
shown in the Contract Schedule. Annuity payments will begin on the Annuity Date
under the Annuity Option you select. You may write to us during the Accumulation
Period to request a change of the Annuity Date. The Annuity Date may not be
earlier than the Minimum Annuity Date or later than the Maximum Annuity Date
stated in the Contract Schedule. We do not permit partial annuitization.
ANNUITY PAYMENTS -- On the Annuity Date, we will transfer your Contract Value,
less any applicable premium taxes, to our General Account. To determine the
first fixed annuity payment, we apply an annuity factor for the Annuity Option
that you selected to this value. Each annuity payment will be equal to the first
regardless of investment, mortality or expense experience, unless the Annuity
Option selected specifies that there is to be a reduction in payments after the
death of an Annuitant.
The amount of the first guaranteed annuity payment depends on:
- the selected Annuity Option; and
- the interest rate and mortality assumption (for Annuity Options 2, 3,
4, and 5) shown in the Basis of Annuity Options in this Contract; and
- for Annuity Options 2, 3, 4, and 5, the age and gender of the
Annuitant; and
- the Contract Value, less any applicable premium taxes, on the Annuity
Date; and
- the frequency of annuity payments.
ANNUITY OPTIONS -- You may elect one of the Annuity Options. We must receive an
election of an Annuity Option in writing at our Service Center at least 15
calendar days before the Annuity Date. If no Annuity Option is elected, monthly
annuity payments will be made in accordance with Option 3 below if there is one
Annuitant on the Annuity Date or under Option 5 if there are joint Annuitants on
the Annuity Date. You may change an Annuity Option before the Annuity Date. You
cannot change an Annuity Option after the first annuity payment is made. We
reserve the right to add additional Annuity Options in the future.
We will cancel any election of an Annuity Option if, before the Annuity Date,
there is: 1) a subsequent change of Beneficiary, or 2) an assignment of the
Contract unless the assignment provides otherwise.
The Annuity Option selected must result in an initial payment that is at least
equal to our minimum payment, according to our rules, at the time the Annuity
Option is chosen. If the selected Annuity Option does not produce an initial
payment which meets this minimum, we reserve the right to decrease the payment
frequency to quarterly, semi-annually, or annually to meet this minimum, or to
make a single lump sum payment.
If you die before the Annuity Date, available Annuity Options are limited. The
Annuity Options available are:
- Option 2 over the lifetime of the Beneficiary; or
- Option 1 or 3 with a specified period or certain period no longer than
the life expectancy of the Beneficiary. The life expectancy of the
Beneficiary must be at least ten years as of the date that he or she
elects Option 1 or Option 3.
The Death Benefit distribution must begin no later than one year from your
death, unless a later date is permitted by federal regulation.
If the Beneficiary is not an individual, the entire interest must be distributed
within five years of your death.
OPTION 1--INCOME FOR SPECIFIED PERIOD. Option 1 provides an annuity payable
monthly for ten years. If you must take required minimum distributions from a
Qualified Contract, consult a tax advisor before selecting this Option, as it
may not satisfy those requirements in all situations.
15
OPTION 2--LIFE INCOME. Option 2 provides for an annuity payable monthly over the
lifetime of the Annuitant. If Option 2 is elected, annuity payments terminate
automatically and immediately on the Annuitant's death without regard to the
number or total amount of payments made. Thus, it is possible for you to receive
only one payment if the Annuitant dies prior to the date the second payment was
due.
OPTION 3--LIFE INCOME WITH INSTALLMENTS GUARANTEED. Option 3 provides an annuity
payable monthly for a certain period of ten years and thereafter during the
Annuitant's lifetime. If you must take required minimum distributions from a
Qualified Contract, consult a tax advisor before selecting this Option, as it
may not satisfy those requirements in all situations.
OPTION 4--JOINT AND SURVIVOR ANNUITY. Option 4 provides an annuity payable
monthly while both Annuitants are living. Upon either ▇▇▇▇▇▇▇▇▇'s death, the
monthly income payable continues over the life of the surviving Annuitant at
100% of the original payment. At the time the Annuity Option is chosen, we may
offer other percentages of the original payment that continue over the life of
the surviving Annuitant. Annuity payments terminate automatically and
immediately upon the surviving Annuitant's death without regard to the number or
total amount of payments received. Thus, it is possible for you to receive only
one payment if both Annuitants die prior to the date the second payment was due.
OPTION 5--JOINT AND SURVIVOR ANNUITY WITH INSTALLMENTS GUARANTEED. Option 5
provides an annuity payable monthly for a certain period of ten years and
thereafter while either ▇▇▇▇▇▇▇▇▇ is alive. If you must take required minimum
distributions from a Qualified Contract, consult a tax advisor before selecting
this Option, as it may not satisfy those requirements in all situations.
In lieu of monthly payments, you may request quarterly, semi-annual, or annual
payments, with our prior approval.
BASIS OF ANNUITY OPTIONS -- This Contract contains tables for each Annuity
Option that show the guaranteed monthly payment for each $1,000 applied to an
Annuity Option. The guaranteed monthly payments are based on an interest rate of
1.50% per year and, where mortality is involved, the "Annuity 2000 Table"
developed by the Society of Actuaries projected using 200% of Scale G to the
year 2030. We may offer annuity rates that are more favorable than those
contained in this Contract. Any such rates will be applied uniformly to all
Owners of the same class.
DEATH PROCEEDS -- If the Annuitant (or surviving joint Annuitant) dies during
the Annuity Period, we will automatically continue any unpaid installments for
the remainder of the certain period under Annuity Options 1, 3 or 5.
If an Owner, who is not also an Annuitant, dies after the Annuity Date, the
following provisions apply:
- If the Owner was the sole Owner, the remaining annuity payments will
be payable to the Beneficiary in accordance with the provisions
described above. The Beneficiary will become the Owner of the
Contract.
- If the Contract has joint Owners, the annuity payments will be payable
to the surviving joint Owner in accordance with the provisions
described above. Upon the death of the surviving joint Owner, the
Beneficiary becomes the Owner.
VOTING RIGHTS
Owners have voting rights in a Fund based upon the Owner's proportionate
interest in the corresponding Subaccount. Owners have voting rights before the
Annuity Date, surrender, or the death of an Owner.
We will notify Owners with interests in a Subaccount of any shareholders'
meeting at which Fund shares held by such Subaccount will be voted and will
provide proxy materials together with a form to be used to give voting
instructions to the Company. The Company will vote Fund shares for which no
timely instructions have been received in the same proportion as shares of that
Fund for which instructions have been received.
16
MISCELLANEOUS PROVISIONS
TERMINATION OF CONTRACT -- Prior to the Annuity Date, we may terminate your
Contract and pay you the Contract Value in one sum if:
- You have not made any Purchase Payments for two full years; and
- Your Contract Value at or after the end of such two-year period is
less than $2,000; and
- The sum of all of your Purchase Payments, less any withdrawals at or
after the end of such two-year period is less than $2,000; and
- We notified you in writing that your Contract is inactive and subject
to termination, and six months following the date of this notice you
have not made any Purchase Payments to increase your Contract Value or
the sum of all of your Purchase Payments, less any withdrawals to
$2,000.
EVIDENCE OF AGE, SEX AND SURVIVAL -- We may require satisfactory evidence of the
age, gender and the continued survival of any Annuitant.
MISSTATEMENT OF AGE OR SEX -- If the Annuitant's age or gender has been
misstated, the amount payable under the Contract will be recalculated based on
the correct age or gender. Interest of 3% will be charged to any overpayment or
credited to any underpayment against future payments we may make under the
Contract.
PROTECTION OF BENEFITS -- The Owner may not commute, anticipate, assign,
alienate or otherwise hinder the receipt of any payment.
CREDITORS -- The proceeds of this Contract and any payment under an Annuity
Option will be exempt from the claim of creditors and from legal process to the
extent permitted by law.
GUARANTEES -- Guarantees are subject to our financial strength and claims-paying
ability.
17
ANNUITY OPTION TABLES
AMOUNT OF MONTHLY PAYMENT FOR EACH $1,000 OF VALUE APPLIED
OPTION 1 - INCOME FOR SPECIFIED PERIOD
Months of Guaranteed Payments: 120
Monthly Payment 8.96
OPTION 2 - LIFE INCOME
Months of Guaranteed Payments: None
ATTAINED
AGE OF
ANNUITANT MALE FEMALE
--------- ----- ------
55 3.06 2.85
56 3.12 2.90
57 3.19 2.96
58 3.26 3.02
59 3.33 3.08
60 3.41 3.14
61 3.49 3.21
62 3.58 3.29
63 3.67 3.37
64 3.77 3.45
65 3.88 3.54
66 3.99 3.63
67 4.11 3.73
68 4.23 3.83
69 4.37 3.95
70 4.51 4.07
71 4.66 4.20
72 4.82 4.33
73 4.98 4.48
74 5.16 4.64
75 5.35 4.81
76 5.56 5.00
77 5.77 5.19
78 6.01 5.40
79 6.26 5.63
80 6.53 5.88
81 6.82 6.15
82 7.13 6.44
83 7.47 6.75
84 7.84 7.10
85 8.24 7.47
86 8.68 7.89
87 9.16 8.34
88 9.70 8.85
89 10.28 9.39
90 10.91 9.99
91 11.60 10.65
92 12.35 11.36
93 13.17 12.15
94 14.11 13.05
95 15.22 14.10
OPTION 3 - LIFE INCOME WITH INSTALLMENTS GUARANTEED
Months of Guaranteed Payments: 120
ATTAINED
AGE OF
ANNUITANT MALE FEMALE
--------- ----- ------
55 3.05 2.84
56 3.11 2.89
57 3.17 2.95
58 3.24 3.01
59 3.31 3.07
60 3.39 3.13
61 3.47 3.20
62 3.55 3.28
63 3.64 3.35
64 3.73 3.43
65 3.83 3.52
66 3.93 3.61
67 4.04 3.70
68 4.16 3.80
69 4.27 3.91
70 4.40 4.02
71 4.53 4.14
72 4.66 4.27
73 4.80 4.40
74 4.95 4.55
75 5.10 4.69
76 5.26 4.85
77 5.43 5.02
78 5.61 5.19
79 5.79 5.38
80 5.98 5.57
81 6.17 5.77
82 6.37 5.98
83 6.57 6.19
84 6.77 6.41
85 6.98 6.64
86 7.19 6.87
87 7.40 7.11
88 7.61 7.34
89 7.83 7.59
90 8.03 7.82
91 8.22 8.05
92 8.40 8.25
93 8.54 8.43
94 8.66 8.58
95 8.76 8.70
RATES FOR AGES NOT SHOWN WILL BE PROVIDED UPON REQUEST
18
OPTION 4 - JOINT AND 100% SURVIVOR ANNUITY
Months of Guaranteed Payments: None
ATTAINED
AGE OF ATTAINED AGE OF FEMALE ANNUITANT
MALE -------------------------------------------------------------
ANNUITANT 55 60 65 70 75 80 85 90 95
--------- ---- ---- ---- ---- ---- ---- ---- ---- -----
55 2.62 2.74 2.84 2.92 2.97 3.01 3.03 3.05 3.05
60 2.70 2.86 3.02 3.15 3.24 3.31 3.36 3.39 3.40
65 2.75 2.96 3.18 3.38 3.55 3.68 3.77 3.82 3.85
70 2.79 3.03 3.31 3.59 3.86 4.09 4.26 4.38 4.45
75 2.81 3.08 3.40 3.76 4.16 4.53 4.84 5.07 5.22
80 2.83 3.11 3.46 3.89 4.40 4.95 5.48 5.92 6.23
85 2.84 3.13 3.50 3.97 4.58 5.31 6.12 6.90 7.53
90 2.84 3.13 3.52 4.02 4.69 5.57 6.67 7.95 9.17
95 2.84 3.14 3.53 4.05 4.76 5.73 7.07 8.85 11.02
OPTION 5 - JOINT AND SURVIVOR ANNUITY WITH INSTALLMENTS GUARANTEED
Months of Guaranteed Payments: 120
ATTAINED
AGE OF ATTAINED AGE OF FEMALE ANNUITANT
MALE -------------------------------------------------------------
ANNUITANT 55 60 65 70 75 80 85 90 95
--------- ---- ---- ---- ---- ---- ---- ---- ---- -----
55 2.62 2.74 2.84 2.92 2.97 3.01 3.03 3.04 3.05
60 2.70 2.86 3.02 3.14 3.24 3.31 3.35 3.38 3.39
65 2.75 2.96 3.18 3.38 3.54 3.67 3.76 3.81 3.83
70 2.79 3.03 3.30 3.59 3.86 4.08 4.24 4.34 4.39
75 2.81 3.08 3.40 3.76 4.15 4.51 4.80 4.99 5.08
80 2.83 3.11 3.45 3.88 4.38 4.91 5.39 5.75 5.93
85 2.83 3.12 3.49 3.96 4.54 5.23 5.95 6.56 6.90
90 2.84 3.13 3.51 4.00 4.64 5.45 6.37 7.29 7.87
95 2.84 3.13 3.52 4.02 4.69 5.55 6.59 7.72 8.52
RATES FOR AGES NOT SHOWN WILL BE PROVIDED UPON REQUEST
19
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY. NON-PARTICIPATING
ALL BENEFITS, PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF THE SUBACCOUNTS, MAY INCREASE OR DECREASE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. PLEASE REFER TO THE VARIABLE ACCOUNT PROVISIONS
FOR ADDITIONAL INFORMATION.
[COMMONWEALTH ANNUITY LOGO]
Commonwealth Annuity and Life Insurance Company
a ▇▇▇▇▇▇▇ ▇▇▇▇▇ Company
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
SERVICE CENTER : [▇.▇.▇▇▇ 758550, TOPEKA, KANSAS 66675-8550, ▇-▇▇▇-▇▇▇-▇▇▇▇]
