THE XXXX XXXXXXX LIFE INSURANCE COMPANY (U.S.A.)
A STOCK COMPANY (XXXX XXXXXXX(R) LOGO)
OVERNIGHT MAILING ADDRESS: ANNUITY SERVICE OFFICE: HOME OFFICE
[000 Xxxxxxxxx Xxxxx [P.O. Box 9505 Bloomfield Hills, MI
Portsmouth, NH 03801-6815] Portsmouth, NH 03802-9505]
[0-000-000-0000]
THIS IS A LEGAL CONTRACT - READ IT CAREFULLY.
WE AGREE to pay the benefits of this Contract in accordance with its terms.
THIS CONTRACT is issued in consideration of the Payments.
Xxxx Xxxxxxx Life Insurance Company (U.S.A.) will provide a guaranteed annual
amount for withdrawal beginning on the Lifetime Income Date and continuing for
the life of the Annuitant. We will pay an annuity benefit beginning on the
Annuity Commencement Date to the Annuitant, if living, unless otherwise directed
by the Owner, in accordance with the Annuity Payments provision of this
Contract. If the Annuitant dies while this Contract is in effect prior to the
Annuity Commencement Date, we will pay the Contract Value to the Beneficiary
upon receipt of all required claim forms and proof of death of the Annuitant at
the Annuity Service Office.
[TEN] DAY RIGHT TO REVIEW
YOU MAY CANCEL THE CONTRACT BY RETURNING IT TO OUR ANNUITY SERVICE OFFICE OR
REGISTERED REPRESENTATIVE WHO SOLD IT TO YOU AT ANY TIME WITHIN [10] DAYS AFTER
RECEIPT OF THE CONTRACT. DURING THE FIRST 7 DAYS OF THIS [10] DAY PERIOD, WE
WILL RETURN THE GREATER OF (I) THE CONTRACT VALUE COMPUTED AT THE END OF THE
VALUATION PERIOD DURING WHICH THE CONTRACT IS RECEIVED BY US OR (II) THE SUM OF
ALL PAYMENTS. AFTER 7 DAYS, WE WILL PAY THE CONTRACT VALUE COMPUTED AT THE END
OF THE VALUATION PERIOD DURING WHICH THE CONTRACT IS RECEIVED BY US. WE WILL PAY
THE REFUND AMOUNT TO THE OWNER WITHIN 7 DAYS OF RECEIPT OF THE CONTRACT BY US.
SIGNED FOR THE COMPANY at Boston, Massachusetts, on the Contract Date.
DETAILS OF VARIABLE ACCOUNT PROVISIONS ON PAGE 6.1
/s/ Xxxx XxxXxxx XXX /s/ Xxxxxxx Xxxxx
President Secretary
Flexible Payment Deferred Variable Annuity
Guaranteed Lifetime Withdrawal Benefit
Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS
TO FIXED DOLLAR AMOUNT.
[NATIONAL]
VENTURE.201.08
INTRODUCTION
This is a flexible payment deferred variable annuity contract. This Contract
provides that, prior to the Annuity Commencement Date, the Contract Value will
accumulate on a variable basis. Subject to the provisions of the Contract, you
may take withdrawals and transfer amounts among the Investment Options. If you
limit withdrawals to the amounts described in the Lifetime Income Benefits
provision, we guarantee that the Lifetime Income Amount will be available for
withdrawal each Contract Year after the Lifetime Income Date and during the life
of the Annuitant. After the Annuity Commencement Date, Annuity Payments may be
either fixed or variable, or a combination of fixed and variable.
The Contract Value will vary with the investment performance of your Investment
Options.
If you select Annuity Payments on a variable basis, the payment amount will vary
with the investment performance of the Variable Account.
You must allocate Payments among one or more Investment Options. The Investment
Options are identified on the Specifications Page.
TABLE OF CONTENTS PAGE
----------------- ----
SPECIFICATIONS PAGES...................................................... S.1
PART 1 - DEFINITIONS..................................................... 1.1
PART 2 - GENERAL PROVISIONS.............................................. 2.1
PART 3 - OWNER, BENEFICIARY.............................................. 3.1
PART 4 - PAYMENTS........................................................ 4.1
PART 5 - FEES AND DEDUCTIONS............................................. 5.1
PART 6 - VARIABLE ACCOUNT PROVISIONS..................................... 6.1
PART 7 - TRANSFERS....................................................... 7.1
PART 8 - WITHDRAWAL PROVISIONS........................................... 8.1
PART 9 - LIFETIME INCOME BENEFIT......................................... 9.1
PART 10 - DISTRIBUTIONS DURING ANNUITANT'S LIFE........................... 10.1
PART 11 - DISTRIBUTIONS AFTER ANNUITANT'S DEATH........................... 11.1
PART 12 - ANNUITY PAYMENTS................................................ 12.1
PART 13 - ANNUITY OPTIONS................................................. 13.1
PART 1 DEFINITIONS
------ -----------
WE AND YOU "We", "us" and "our" means the Company. "You"
or "your" means the Owner of this Contract.
ACCUMULATION UNIT A unit of measure that is used to calculate the
value of the Variable Account of this Contract
before the Annuity Commencement Date.
ADDITIONAL PAYMENTS Any Payment made to us after the initial
Payment.
ANNUITANT A person whose age and life is used to
determine eligibility for the Lifetime Income
Benefit and the amount and duration of Annuity
Payments involving life contingencies. The
Annuitant is as designated on the
Specifications Page, unless changed.
ANNUITY COMMENCEMENT DATE The date Annuity Payments begin. It is the date
selected by you and specified on the
Specifications Page, unless changed. This date
may not be later than the Maturity Date.
ANNUITY OPTION The method selected by you for Annuity Payments
made by us.
ANNUITY PAYMENT(S) Payment(s) by us to you, in accordance with the
Annuity Option elected under the terms of this
Contract.
ANNUITY SERVICE OFFICE Any office designated by us for the receipt of
Payments and processing of Owner requests.
ANNUITY UNIT A unit of measure that is used after the
Annuity Commencement Date to calculate Variable
Annuity payments.
BENEFICIARY The person, persons or entity to whom certain
benefits are payable following the death of the
Annuitant.
BENEFIT BASE The Benefit Base is the total amount used for
purposes of calculating guaranteed lifetime
withdrawals. The Benefit Base cannot be
withdrawn in a lump sum.
CO-ANNUITANT The second person whose age and life may be
used to determine the amount and duration of
annuity payments under the Joint Life Annuity
option. The co-Annuitant may be named at
election of the Joint Life Annuity option.
COMPANY The insurance company named on the first page
of this Contract (or any successor insurance
company named by endorsement to this Contract)
that will pay benefits in accordance with this
Contract.
CONTRACT ANNIVERSARY The annual anniversary of the Contract
beginning twelve months from the Contract Date
and each year thereafter.
CONTRACT DATE The date of issue of this Contract as
designated on the Specifications Page.
CONTRACT VALUE The total of your Investment Account Values.
CONTRACT YEAR The period of time measured twelve consecutive
months from the Contract Date or any Contract
Anniversary thereafter.
CONTINGENT BENEFICIARY The person, persons or entity who becomes the
Beneficiary if the Beneficiary is not alive.
ENDORSEMENT An Endorsement modifies the contract to which
it is attached. Endorsements must be signed by
an officer of the Company in order to be
effective.
1.1
FIXED ANNUITY An Annuity Option with payments which are
predetermined and guaranteed as to dollar
amount.
GENERAL ACCOUNT All the assets of the Company other than assets
in separate accounts.
INTERNAL REVENUE CODE (IRC) The Internal Revenue Code of 1986, as amended
from time to time, and any successor statute of
similar purposes.
INVESTMENT ACCOUNT VALUE The value of your investment in an Investment
Option.
INVESTMENT OPTIONS The investment choices available to you. The
Investment Options available under this
Contract are shown on the Specifications Page.
When you select an Investment Option, we
allocate your Contract Value to a Sub-Account
of the Variable Account that invests in a
corresponding Portfolio.
LIFETIME INCOME AMOUNT The Lifetime Income Amount is the amount that
is guaranteed to be available for withdrawal
each Contract Year after the Lifetime Income
Date and during the life of the Annuitant while
this Contract is in effect. The LIA reduces to
zero upon the death of the Annuitant.
LIFETIME INCOME DATE The Lifetime Income Date is the date on which
the initial LIA is calculated.
LIFETIME INCOME PERCENTAGE The percentage used to determine your Lifetime
Income Amount.
MATURITY DATE The latest date on which annuity benefits may
commence. It is the date specified on the
Specifications Page, unless changed.
NET PAYMENT The Payment less the amount of premium tax, if
any, deducted from the Payment.
OWNER The person, persons or entity entitled to the
ownership rights under this Contract. The Owner
is as designated on the Specifications Page,
unless changed.
PORTFOLIO The investment choices available to the
Variable Account.
PAYMENT An amount paid to us by you as consideration
for the benefits provided by this Contract.
QUALIFIED CONTRACTS Contracts issued under Qualified Plans.
QUALIFIED PLANS Retirement plans which receive favorable tax
treatment under sections 401, 403, 408 or 457,
of the Internal Revenue Code of 1986, as
amended.
RIDER A rider provides an optional benefit, which may
result in an additional charge to the Contract.
A rider supplements the contract to which it is
attached. Riders must be signed by an officer
of the Company in order to be effective.
SEPARATE ACCOUNT A segregated account of the Company that is not
commingled with our general assets and
obligations.
SUB-ACCOUNT(S) The Variable Account is divided into
Sub-Accounts. Each Sub-Account is invested in
shares of a different Portfolio.
SURRENDER VALUE The Contract Value on any Valuation Date, less,
if applicable, any contract fees, any rider
charges, and any deduction for premium taxes or
similar taxes.
VALUATION DATE Any date on which the New York Stock Exchange
is open for business and the net asset value of
a Portfolio is determined.
VALUATION PERIOD Any period from one Valuation Date to the next,
measured from the time on each such date that
the net asset value of each Portfolio is
determined.
VARIABLE ACCOUNT The Company's Separate Account as shown in the
Specifications Page.
1.2
VARIABLE ANNUITY An Annuity Option with payments which: (1) are
not predetermined or guaranteed as to dollar
amount; and (2) vary in relation to the
investment experience of one or more specified
variable Investment Options.
WITHDRAWAL AMOUNT The amount deducted from the Contract Value
when you request a withdrawal. This amount is
the total of the amount paid to you plus the
following, if applicable: any contract fees,
any rider charges, any deduction for premium
taxes or similar taxes, and any income taxes
resulting from the withdrawal and withheld by
us. The Withdrawal Amount may not exceed the
Contract Value.
1.3
PART 2 GENERAL PROVISIONS
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ENTIRE CONTRACT The entire Contract consists of this Contract,
Endorsements and Riders, if any, and the
application, if one is attached to this
Contract.
The benefits and values available under this
Contract are not less than the minimum required
by any statute of the state in which this
Contract is delivered. We have filed a detailed
statement of the method used to calculate the
benefits and values with the Department of
Insurance in the state in which this Contract
is delivered, if required by law.
MODIFICATION Only the President, a Vice President, or the
Secretary of the Company has authority to agree
on our behalf to any alteration of the Contract
or to any waiver of our rights or requirements.
The change or waiver must be in writing. We
will not change or modify this Contract without
your consent except as may be required to make
it conform to any applicable law or regulation
or any ruling issued by a government agency; or
unless we have reserved the right to change the
terms herein.
CHANGE IN ANNUITY Prior to the Annuity Commencement Date, an
COMMENCEMENT DATE Owner may request in writing a change of the
Annuity Commencement Date. Any extension of the
Annuity Commencement Date beyond the Maturity
Date will be subject to our prior approval and
any applicable law or regulation then in
effect.
ASSIGNMENT This Contract is subject to assignment
restrictions for Federal Income Tax purposes.
It is established for the exclusive benefit of
the Annuitant and his or her Beneficiaries. It
shall not be sold, assigned, discounted, or
pledged as collateral for a loan or as security
for the performance of an obligation or for any
other purpose, to any person other than us.
CLAIMS OF CREDITORS All benefits and payments under this Contract
shall be exempt from the claims of creditors to
the extent permitted by law.
MISSTATEMENT AND PROOF OF We may require proof of age, sex or survival of
AGE, SEX OR SURVIVAL any person upon whose age, sex or survival any
Lifetime Income Benefit, Annuity Payments or
other benefits provided by this Contract or any
Rider attached thereto depend. If the age or
sex of the Annuitant or any co-Annuitant has
been misstated, the benefits will be those
which would have been provided for the correct
age and sex. If we have made incorrect benefit
payments, we will immediately pay the amount of
any underpayment. We will deduct the amount of
any overpayment from future benefit payments.
ADDITION, DELETION OR We reserve the right, subject to compliance
SUBSTITUTION OF INVESTMENT with applicable law, to make additions to,
OPTIONS deletions from, or substitutions for the
Portfolio shares that are held by the Variable
Account or that the Variable Account may
purchase. We reserve the right to eliminate the
shares of any of the eligible Portfolios and to
substitute shares of another Portfolio. We will
not substitute any shares attributable to your
interest in a Sub-Account without notice to you
and prior approval of the Securities and
Exchange Commission to the extent required by
the Investment Company Act of 1940. Nothing
contained herein shall prevent the Variable
Account from purchasing other securities for
other series or classes of contracts, or from
effecting a conversion between shares of
another open-end investment company.
2.1
We reserve the right, subject to compliance
with applicable law, to establish additional
Sub-Accounts which would invest in shares of a
new Portfolio. We also reserve the right to
eliminate existing Sub-Accounts, to combine
Sub-Accounts or to transfer assets in a
Sub-Account to another Separate Account
established by us or an affiliated company. In
the event of any such substitution or change,
we may, by appropriate endorsement, make such
changes in this and other Contracts as may be
necessary or appropriate to reflect such
substitutions or change. If deemed by us to be
in the best interests of persons having voting
rights under the Contracts, the Variable
Account may be operated as a management company
under the Investment Company Act of 1940 or it
may be de-registered under such Act in the
event such registration is no longer required.
NON-PARTICIPATING Your Contract is non-participating and will not
share in our profits or surplus earnings. We
will pay no dividends on your Contract.
REPORTS We will send you reports containing information
required by the Investment Company Act of 1940
and applicable state law at least annually
without charge. We will provide annual calendar
year reports concerning the status of the
Contract and such information concerning
required minimum distributions as is prescribed
by the Commissioner of Internal Revenue.
INSULATION The portion of the assets of the Variable
Account equal to the reserves and other
contract liabilities with respect to such
account are not chargeable with liabilities
arising out of any other business we may
conduct. Moreover, the income, gains and
losses, realized or unrealized, from assets
allocated to the Variable Account shall be
credited to or charged against such account
without regard to our other income, gains or
losses.
CURRENCY AND PLACE OF PAYMENTS All payments made to or by us shall be made in
the lawful currency of the United States of
America at the Annuity Service Office or
elsewhere if we consent.
NOTICES AND ELECTIONS To be effective, all notices and elections you
make under this Contract must be in writing,
signed by you and received by us at the Annuity
Service Office. Unless otherwise provided in
this Contract, all notices, requests and
elections will be effective when received by us
at our Annuity Service Office, complete with
all necessary information and your signature.
GOVERNING LAW This Contract will be governed by the laws of
the jurisdiction indicated on the
Specifications Page.
2.2
PART 3 OWNER, BENEFICIARY
------ ------------------
OWNER The Owner must be one natural person who is the
sole Owner of the Contract and the Annuitant,
or a Trust established for the exclusive
benefit of the Annuitant or his or her
Beneficiaries. The contract is established for
the exclusive benefit of the Annuitant or his
or her beneficiaries.
BENEFICIARY The Beneficiary is as designated on the
Specifications Page, unless changed. If no such
Beneficiary is living, the Beneficiary is the
Contingent Beneficiary. If no Beneficiary or
Contingent Beneficiary is living, the
Beneficiary is the estate of the deceased
Annuitant.
CHANGE OF OWNER, Except as permitted under the Death Before
ANNUITANT, BENEFICIARY Maturity Date provision, and otherwise
permitted under applicable federal tax law,
neither the Owner nor the Annuitant may be
changed. A co-Annuitatn may be added at the
Annuity Commencement Date if the Joint Life
Annuity option is elected.
Subject to the right of an irrevocable
Beneficiary, you may change the Beneficiary by
written request in a form acceptable to us and
which is received at our Annuity Service
Office. Any change must be approved by us. If
approved, any change of Beneficiary will take
effect on the date the request is signed. We
will not be liable for any payments or actions
we take before the change is approved.
3.1
PART 4 PAYMENTS
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GENERAL The Contract is not effective until Payment is
received by us at our Annuity Service Office or
such other place designated by us. All Payments
under this Contract are payable at our Annuity
Service Office or such other place as we may
designate. Payment Limits are identified on the
Specifications Page.
ALLOCATION OF NET PAYMENTS When we receive Payments, the Net Payments will
be allocated among Investment Options in
accordance with the allocation percentages
shown on the Specifications Page. You may
change the allocation of subsequent Net
Payments at any time, without charge, by giving
us written notice in a form acceptable to us.
4.1
PART 5 FEES AND DEDUCTIONS
------ -------------------
CONTRACT ASSET FEE To compensate us for assuming certain
administration expenses, expense risks and
mortality risks, we deduct from each variable
Investment Option a fee each Valuation Period
at an annual rate set forth on the
Specifications Page. A portion of this Asset
Fee may also be used to reimburse us for
distribution expenses. This fee is reflected in
the Net Investment Factor used to determine the
value of Accumulation Units and Annuity Units
of the Contract.
ANNUAL CONTRACT FEE To compensate us for assuming certain
administrative expenses, we charge an Annual
Contract Fee as set forth on the Specifications
Page. Prior to the Annuity Commencement Date,
the Annual Contract Fee is deducted on each
Contract Anniversary. We withdraw the Annual
Contract Fee from each Investment Option in the
same proportion that the Investment Account
Value of each Investment Option bears to the
Contract Value.
After the Annuity Commencement Date, we deduct
the Annual Contract Fee on a pro rata basis
from each Annuity Payment.
LIFETIME INCOME BENEFIT FEE To compensate us for assuming risks associated
with the Lifetime Income Benefit, we charge an
annual Lifetime Income Benefit Fee. The
Lifetime Income Benefit Fee is deducted on each
Contract Anniversary. This fee is withdrawn
from each Investment Option in the same
proportion that the Investment Account Value of
each Investment Option bears to the Contract
Value. The amount of the fee is equal to the
Lifetime Income Benefit Fee Percentage, shown
in the Specifications, multiplied by the
"Adjusted Benefit Base." The Adjusted Benefit
Base is the Benefit Base that was available on
the prior Contract Anniversary adjusted for
Additional Payments applied to the Benefit Base
during the Contract Year prior to the current
Contract Anniversary.
The Lifetime Income Benefit Fee will not be
deducted during the Settlement Phase. The fee
will not be deducted after the Maturity Date if
an Annuity Option has commenced.
The initial Lifetime Income Benefit Fee
Percentage is shown in the Specifications. We
reserve the right to increase the Lifetime
Income Benefit Fee Percentage on the effective
date of each Step-Up. In such a situation, the
percentage will never exceed the Maximum
Lifetime Income Benefit Fee Percentage, shown
in the Specifications.
TAXES We reserve the right to charge certain taxes
against your Payments (either at the time of
payment or liquidation), Contract Value,
payment of Death Benefit, withdrawals, or
Annuity Payments, as appropriate. Such taxes
may include premium taxes or other taxes levied
by any government entity which we, in our sole
discretion, determine have resulted from the
establishment or maintenance of the Variable
Account, or from the receipt by us of Payments,
or from the issuance of this Contract, or from
the commencement or continuance of Annuity
Payments under this Contract.
5.1
PART 6 VARIABLE ACCOUNT PROVISIONS
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INVESTMENT ACCOUNT VALUE The Investment Account Value of an Investment
Option is determined by multiplying (a) times
(b) where:
(a) equals the number of Accumulation Units
credited to the Investment Option; and,
(b) equals the appropriate Accumulation Unit
Value.
ACCUMULATION UNITS We will credit Net Payments to your Investment
Options in the form of Accumulation Units. The
number of Accumulation Units we will credit to
each Investment Option will be determined by
dividing the Net Payment allocated to that
Investment Option by the Accumulation Unit
Value for that Investment Option.
Accumulation Units will be adjusted for any
transfers and will be canceled on payment of a
death benefit, withdrawal, maturity or
assessment of certain charges based on their
value for the Valuation Period in which such
transaction occurs.
ACCUMULATION UNIT VALUE We will determine the Accumulation Unit Value
for a particular Investment Option for any
Valuation Period by multiplying the
Accumulation Unit Value for the immediately
preceding Valuation Period by the net
investment factor for the corresponding
Sub-Account for the Valuation Period for which
the value is being determined. The Accumulation
Unit Value may increase, decrease or remain the
same from one Valuation Period to the next.
NET INVESTMENT FACTOR The net investment factor is an index that
measures the investment performance of a
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 subtracting (c) from the result
where:
(a) is the net result of:
1) the net asset value per share of a
Portfolio share held in the
Sub-Account determined as of the end
of the current Valuation Period,
plus:
2) the per share amount of any dividend
or capital gain distributions made by
the Portfolio on shares held in the
Sub-Account if the ex-dividend date
occurs during the current Valuation
Period, and
(b) is the net asset value per share of a
Portfolio share held in the Sub-Account
determined as of the end of the
immediately preceding Valuation Period,
and
(c) is the Contract Asset Fee shown on the
Specifications Page.
The net investment factor may be greater or
less than, or equal to, one.
6.1
PART 7 TRANSFERS
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TRANSFERS BEFORE MATURITY DATE Before the Maturity Date or the Annuity
Commencement Date, if earlier, you may transfer
amounts among Investment Options of the
Contract. Amounts will be canceled from the
Investment Options from which amounts are
transferred and credited to the Investment
Options to which amounts are transferred. We
will effect such transfers so that the Contract
Value on the date of transfer will not be
affected by the transfer.
TRANSFERS ON OR AFTER MATURITY Once variable Annuity Payments have begun, you
DATE may transfer all or part of the investment upon
which your variable Annuity Payments are based
from one Investment Option to another. To do
this, we will convert variable Annuity Units
you hold in the Investment Option from which
you are transferring to variable Annuity Units
of the Investment Option to which you are
transferring. We will determine the number of
Annuity Units to transfer so that if the next
Annuity Payment were made at that time, it
would be the same amount that it would have
been without the transfer. You must give us
notice at least 30 days before the due date of
the first variable Annuity Payment to which the
transfer will apply. Transfer charges and
limitations are identified on the
Specifications Page.
After the Annuity Commencement Date, transfers
will not be allowed from a fixed to a variable
Annuity Option, or from a variable to a fixed
Annuity Option.
DEFERRAL, MODIFICATION OR We reserve the right to defer, modify or
TERMINATION OF TRANSFER terminate the transfer privilege at any time
PRIVILEGE that we are unable to purchase or redeem shares
of the Portfolios or when a portfolio requires
us to impose restrictions due to violation of
its short term trading policy. Transfer charges
and limitations are identified on the
Specifications Page and in the Suspension of
Payments provision in the Withdrawals
Provisions section.
7.1
PART 8 WITHDRAWAL PROVISIONS
------ ---------------------
PAYMENTS OF WITHDRAWALS You may withdraw part or all of the Surrender
Value, at any time before the earlier of the
death of the Annuitant, the Annuity
Commencement Date or the Maturity Date, by
sending us a written request. We will pay all
withdrawals within seven days of receipt at the
Annuity Service Office subject to postponement
in certain circumstances, as specified below.
SUSPENSION OF PAYMENTS We may defer the right of withdrawal from, or
postpone the date of payments from, the
variable Investment Options for any period
when: (1) the New York Stock Exchange is closed
(other than customary weekend and holiday
closings); (2) trading on the New York Stock
Exchange is restricted; (3) an emergency exists
as a result of which disposal of securities
held in the Variable Account is not reasonably
practicable or it is not reasonably practicable
to determine the value of the Variable
Account's net assets; or (4) the Securities and
Exchange Commission, by order, so permits for
the protection of security holders; provided
that applicable rules and regulations of the
Securities and Exchange Commission shall govern
as to whether the conditions described in (2)
and (3) exist.
TOTAL WITHDRAWAL Upon receipt of your request to withdraw the
entire Contract Value, we will terminate the
Contract and pay you the Surrender Value.
At the time of the total withdrawal, we will
deduct the total amount of the Annual Contract
Fee from the Contract Value in determining the
Surrender Value. We will also deduct a pro rata
share of the Lifetime Income Benefit Fee. A pro
rata share of the fee is equal to the Lifetime
Income Benefit Fee Percentage, shown in the
Specifications, multiplied by the Adjusted
Benefit Base, and then multiplied by the number
of days that have elapsed since the previous
Contract Anniversary and divided by 365. For
purposes of determining the Lifetime Income
Benefit Fee, a total Withdrawal will be deemed
to have been taken on the date the Death
Benefit is determined and once an Annuity
Option has been elected.
PARTIAL WITHDRAWAL If you request to withdraw an amount less than
the Surrender Value, we will pay you the amount
requested and deduct the Withdrawal Amount from
the Contract Value. Unless you specify the
amount to be withdrawn from each Investment
Option, the Withdrawal Amount will be withdrawn
from each Investment Option on a pro rata
basis.
Any withdrawals prior to the Lifetime Income
Date, or withdrawals after the Lifetime Income
Date that exceed the Lifetime Income Amount,
may reduce the Lifetime Income Benefit.
FREQUENCY OF PARTIAL You may make as many partial withdrawals as you
WITHDRAWALS wish.
8.1
PART 9 LIFETIME INCOME BENEFIT
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GENERAL This benefit guarantees that each Contract Year
after the Lifetime Income Date and during the
life of the Annuitant you may take Withdrawals
up to an amount equal to the Lifetime Income
Amount (LIA), even if your Contract Value
reduces to zero. The LIA is described below in
the "Lifetime Income Amount (LIA)" provision.
The Lifetime Income Date is the Contract
Anniversary on or after the later of (a) the
date the Annuitant reaches the Lifetime Income
Age or (b) the Minimum Holding Period
Expiration. We reserve the right to establish a
new Minimum Holding Period equal to the Minimum
Holding Period Duration listed in the
Specifications, if Additional Payments in any
Contract Year prior to the Lifetime Income Date
exceed the Benefit Base multiplied by the
Payment Limit Percentage.
BENEFIT BASE - INITIAL The initial Benefit Base equals the greater of
the Initial Payment or the Benefit Base
Percentage multiplied by the Transferred
Benefit Base. The Benefit Base is available
only for the purpose of the Lifetime Income
Benefit. It can not be withdrawn as a lump sum.
BENEFIT BASE - IMPACT OF Each time an Additional Payment is received
ADDITIONAL PAYMENTS prior to the Lifetime Income Date, the Benefit
Base will increase by the amount of that
Additional Payment. After the Lifetime Income
Date, an increase to the Benefit Base due to an
Additional Payment is determined as follows:
(a) If there have been no Additional
Payments, Step-Ups or reductions of
the Benefit Base since the Lifetime
Income Date, then all Withdrawals
since the Lifetime Income Date will
be deducted from the Additional
Payment. Any Additional Payment
remaining after that deduction will
be applied to the Benefit Base.
(b) If the Benefit Base has been
increased due to Additional Payments
or Step-Ups, or has been decreased
due to a withdrawal in excess of the
LIA, then the current Additional
Payment will be reduced by
Withdrawals less the amount of
Additional Payments that have not
adjusted the Benefit Base. The
Withdrawals and Additional Payments
that have not adjusted the Benefit
Base are determined beginning with
the most recent (i) increase in
Benefit Base by an Additional
Payment, or (ii) Step-Up, or (iii)
decrease of the Benefit Base. Any
amount of the current Additional
Payment remaining after the reduction
will be applied to the Benefit Base.
BENEFIT BASE - IMPACT OF If the Contract Value on any Step-Up Date is
STEP-UPS greater than the Benefit Base on that date, the
Benefit Base will automatically Step-Up to an
amount equal to the Contract Value on that
Step-Up Date. If the Lifetime Income Benefit
Fee Percentage would increase as a result of a
Step-Up, you will receive advance notice of the
increase and be given the opportunity to
decline the automatic Step-Up. If we increase
the fee and you decline an automatic Step-Up,
you will have the option to elect to Step-Up
within 30 days following any subsequent Step-Up
Date and this election will resume automatic
Step-Ups.
9.1
BENEFIT BASE - IMPACT OF Prior to the Lifetime Income Date, the Benefit
WITHDRAWALS Base will decrease as a result of any
Withdrawals. The amount deducted in connection
with the Withdrawal will be equal to (i) times
(ii), where (i) is equal to the Benefit Base
prior to the withdrawal, and (ii) is equal to
the amount of the partial withdrawal divided by
the Contract Value prior to the partial
withdrawal.
Beginning on the Lifetime Income Date, the
Benefit Base will not reduce if total
Withdrawals during a Contract Year are less
than or equal to the LIA.
If a Withdrawal causes total Withdrawals during
a Contract Year to exceed the LIA or if total
Withdrawals during a Contract Year already
exceeded the LIA, then the Benefit Base will be
decreased as a result of the Withdrawal. The
amount deducted in connection with the
Withdrawal will be equal to (i) times (ii),
where (i) is equal to the Benefit Base prior to
the withdrawal, and (ii) is equal to the amount
of the partial withdrawal divided by the
Contract Value prior to the partial withdrawal.
Notwithstanding the discussion above, the
Benefit Base will not be reduced when all
Withdrawals during the Contract Year are Life
Expectancy Distributions elected under an
automatic distribution program, provided by us,
even if such Life Expectancy Distributions
exceed the LIA for the Contract year. (See the
"Life Expectancy Distributions" provision.)
LIFETIME INCOME AMOUNT (XXX) The initial LIA will be determined at the time
of the first withdrawal on or after the
Lifetime Income Date. The initial LIA is equal
to the Lifetime Income Percentage multiplied by
the Benefit Base on the date of that
withdrawal.
Each time the Benefit Base is changed after the
Lifetime Income Date, then the new LIA will
equal the Lifetime Income Percentage multiplied
by the new Benefit Base.
LIFE EXPECTANCY DISTRIBUTIONS For purposes of this benefit, Life Expectancy
Distributions are distributions within a
calendar year that:
(a) are part of a series of substantially
equal periodic payments over the
Annuitant's Life Expectancy (or, if
applicable, the joint Life Expectancy
of the Annuitant and the Annuitant's
spouse); and are paid to the Owner as
required or contemplated by Code
Section 401(a)(9), Section 408(b)(3),
or Section 408A(c), as the case may
be ("Qualified Death Benefit Stretch
Distributions" and "Required Minimum
Distributions"); and
(b) are the Contract's proportional share
of all such distributions as
determined by the Company and based
on the Company's understanding of the
Code.
For purposes of this "Life Expectancy
Distributions" provision, references to Owner
or Annuitant also include the Beneficiary, as
applicable.
We reserve the right to make any changes
necessary to comply with the Code and Treasury
Regulations.
9.2
SETTLEMENT PHASE The Contract will enter its Settlement Phase if
the Contract Value reduces to zero, Withdrawals
during the Contract Year do not exceed the LIA,
and the Benefit Base is still greater than
zero. When the Contract enters its Settlement
Phase the Lifetime Income Benefit will
continue, however all other rights and benefits
under the Contract, including death benefits,
will terminate and additional Payments will not
be accepted.
You will automatically receive settlement
payments equal to the LIA each Contract Year of
the Settlement Phase during the life of the
Annuitant. If the Settlement Phase is entered
prior to the Lifetime Income Date, then
settlement payments will begin on or after the
Lifetime Income Date. The settlement payments
will be paid no less frequently than annually.
The Lifetime Income Benefit Fee will not be
deducted during the Settlement Phase.
If the Annuitant dies during the Settlement
Phase, then the Lifetime Income Benefit
terminates and no additional settlement
payments will be paid.
9.3
PART 10 DISTRIBUTIONS DURING ANNUITANT'S LIFE
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GENERAL Notwithstanding any provision of this Contract
to the contrary, the distribution of the
Annuitant's interest in the Contract shall be
made in accordance with the requirements of IRC
Sections 401(a)(9) and 408(b)(3) and the
regulations thereunder, the provisions of which
are herein incorporated by reference. If
distributions are not made in the form of an
annuity on an irrevocable basis (except for
acceleration), then distribution of the
interest in the Contract, as described below,
must satisfy the requirements of IRC Section
408(a)(6) and the regulations thereunder,
rather than this Part and paragraphs (c) and
(d) of Part 11 of this Contract. The required
minimum distribution for this Contract may be
withdrawn from another Individual Retirement
Account in accordance with Q&A-9 of Section
1.408-8 of the Income Tax Regulations.
There is no required distribution during the
life of the Annuitant if this Contract is
issued as a Xxxx XXX as indicated in the Type
of Contract on the Specifications Page.
INTEREST IN THE CONTRACT Unless otherwise provided under applicable
federal tax law, the "interest" in the Contract
includes the amount of any outstanding
rollover, transfer, and recharacterization
under Q&As-7 and -8 of Section 1.408-8 of the
Income Tax Regulations. Also, prior to the date
that annuity payments commence on an
irrevocable basis (except for acceleration),
the "interest" in the Contract includes the
actuarial value of any other benefits provided
under the Contract, such as guaranteed death
benefits or the Lifetime Income Benefit.
REQUIRED BEGINNING DATE The "required beginning date" means April 1 of
the calendar year following the calendar year
in which the Annuitant attains age 70 1/2, or
such later date provided by applicable tax law.
DISTRIBUTIONS Unless otherwise permitted under applicable
federal tax law, the entire interest will
commence to be distributed no later than the
required beginning date over (i) the life of
the Annuitant or the lives of the Annuitant and
his or her designated beneficiary (within the
meaning of IRC Section 401(a)(9)), or (ii) a
period certain not extending beyond the life
expectancy of the Annuitant, or joint life and
last survivor expectancy of the Annuitant and
his or her designated beneficiary.
If the interest in the Contract is to be
distributed over a period greater than one
year, the amount to be distributed by December
31 of each year (including the year in which
the required beginning date occurs) shall be
determined in accordance with the requirements
of IRC Section 401(a)(9) and the regulations
thereunder. Payments must be made in periodic
payments at intervals of no longer than one
year. Unless otherwise provided by applicable
federal tax law, payments must be either
nonincreasing or they may increase only as
provided in Q&As-1 and -4 of Section
1.401(a)(9)-6 of the Income Tax Regulations. In
addition, any distribution must satisfy the
incidental benefit requirements specified in
Q&A-2 of Section 1.401(a)(9)-6.
The distribution periods described above cannot
exceed the periods specified in Section
1.401(a)(9)-6 of the Income Tax Regulations
(except as otherwise provided by applicable
federal tax law). If annuity payments commence
on or before the required beginning date, the
first required payment can be made as late as
the required beginning date and must be the
payment that is required for one payment
interval. The second payment need not be made
until the end of the next payment interval.
10.1
PART 11 DISTRIBUTIONS AFTER ANNUITANT'S DEATH
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DEATH BEFORE MATURITY DATE If the Annuitant dies prior to the Maturity
Date or Annuity Commencement Date, if earlier,
the interest in the Contract will be
distributed as follows. Written notice and
proof of death and all required claim forms
must be received at the Company's Annuity
Service Office prior to any distribution.
The Contract Value may be withdrawn by the
Beneficiary in one sum immediately, in which
case the Contract will terminate. If the
Contract Value is not taken in one sum
immediately, the Contract will continue subject
to the following provisions:
(a) The Beneficiary becomes the Owner.
(b) No additional Payments may be applied to
the Contract.
(c) If the Beneficiary is not the deceased
Annuitant's spouse, the Lifetime Income
Benefit will no longer be available and
the entire interest in the Contract must
be distributed under one of the following
options:
(i) The entire interest in the Contract
must be distributed over the life of
the Beneficiary, or over a period not
extending beyond the life expectancy
of the Beneficiary, with
distributions beginning by the end of
the calendar year following the
calendar year of the Annuitant's
death; or
(ii) the entire interest in the Contract
must be distributed by the end of the
calendar year containing the fifth
anniversary of the Annuitant's Death,
or.
(iii) the entire interest in the Contract
must be distributed as Annuity
Payments under one of the options
described in the Annuity Options
section.
An irrevocable election of the method of
distribution must be made no later than
the end of the calendar year immediately
following the calendar year in which the
Annuitant died. If no election is made,
the interest in the Contract will be
distributed as described in (ii) above.
The life expectancy of the beneficiary is
determined using the age of the
Beneficiary as of his or her birthday in
the year following the year of the
Annuitant's death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are
complete, the entire remaining Contract
Value must be distributed at least as
rapidly as under the distribution option
chosen.
(d) The following options apply if the sole
Beneficiary is the Annuitant's spouse.
If the sole Beneficiary is the deceased
Xxxxxxxxx's spouse, the surviving spouse
may elect to continue the Contract as the
new Owner/Annuitant but the Lifetime
Income Benefit will no longer be
available.
The surviving spouse may name a new
Beneficiary (and, if no Beneficiary is so
named, the surviving spouse's estate will
be the Beneficiary).
The spouse may also elect distributions
under one of the following options:
11.1
(i) the entire interest in the Contract
may be distributed over the life of
the Beneficiary, or over a period not
extending beyond the life expectancy
of the Beneficiary, with
distributions beginning by the end of
the calendar year following the
calendar year of the Annuitant's
death (or by the end of the calendar
year in which the Annuitant would
have attained age 70 1/2, if later);
or
(ii) the entire interest in the Contract
may be distributed by the end of the
calendar year containing the fifth
anniversary of the Annuitant's Death;
or
(iii) as Annuity Payments under one of the
options described in the Annuity
Options section.
Such election must be made no later than
the earlier of the date distributions are
scheduled to begin under (i) above or
December 31 of the year containing the
fifth anniversary of the Annuitant's
death. If no election is made, the entire
interest in the Contract will be
distributed as described in (ii) above.
If the surviving spouse dies before
required distributions commence, the
remaining interest will be distributed,
starting by the end of the calendar year
following the calendar year of the
spouse's death, over the designated
beneficiary's life expectancy determined
using the beneficiary's ages as of his or
her birthday in the year following the
death of the spouse. If elected, the
interest may be distributed as described
in (ii) above.
If there is no beneficiary, the entire interest
in the Contract will be distributed by the end
of the calendar year containing the fifth
anniversary of the Annuitant's death.
Life expectancies are determined using the
Single Life Table in Q&A-1 of Section
1.401(a)(9)-9 of the Income Tax Regulations. If
distributions are made to a surviving spouse as
the sole designated beneficiary, such spouse's
life expectancy for a year is the number in the
Single Life Table corresponding to such
spouse's age in the year. In all other cases,
remaining life expectancy for a year is the
number in the Single Life Table corresponding
to the Beneficiary's age in the year
distributions must begin, reduced by 1 for each
subsequent year.
We will permit the Owner to limit the option(s)
offered to any named Beneficiary, if the Owner
provides written notice to the Company prior to
death and the desired option(s) is one provided
for in this Contract and it satisfies the
applicable requirements of IRC Sections
401(a)(9) and 408(b)(3) and the regulations
thereunder.
If the Annuitant dies after required
distributions commence, the remaining portion
of his or her interest in the Contract, if any,
will be distributed at least as rapidly as
under the distribution option chosen.
If there is more than one Beneficiary, the
foregoing provisions will independently apply
to each Beneficiary, to the extent of that
Beneficiary's share.
DEATH BENEFIT ON OR AFTER If Annuity Payments have been selected based on
MATURITY DATE an Annuity Option providing for payments for a
guaranteed period, and the Annuitant dies on or
after the Annuity Commencement Date, we will
make the remaining guaranteed payments to the
Beneficiary. Any remaining payments will be
made at least as rapidly as under the method of
distribution being used as of the date of the
Annuitant's death. If no Beneficiary is living,
we will commute any unpaid guaranteed payments
to a single sum (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 and the Beneficiary.
PROOF OF DEATH We will require Proof of death upon the death
of the Annuitant or the Owner. Proof of death
is one of the following received at the Annuity
Service Office:
11.2
(a) A certified copy of a death certificate.
(b) A certified copy of a decree of a court of
competent jurisdiction as to the finding
of death.
(c) Any other proof satisfactory to us.
11.3
PART 12 ANNUITY PAYMENTS
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GENERAL Benefits payable under this Contract may be
applied in accordance with one or more of the
Annuity Options described below, subject to any
restrictions of Internal Revenue Code sections
401(a)(9) and 408(b)(3). If guaranteed payments
are to be made, the period over which the
guaranteed payments are made may not exceed the
period permitted under Section 1.401(a)(9)-6 of
the Income Tax Regulations. Once Annuity
Payments commence, the Annuity Option may not
be changed.
We will send you information about Annuity
Options before the Annuity Commencement Date.
If by the Maturity Date, you do not choose an
Annuity Option, make a total Withdrawal of the
Surrender Value, or ask us to change the
Maturity Date, we will automatically pay you
Annuity Payments under the Annuity Option shown
in the Specifications Page and the Annuity
Commencement Date is considered to be the
Maturity Date. You can change the Annuity
Option at any time before Annuity Payments
commence.
You may select a Fixed or Variable Annuity. We
will provide variable Annuity Payments unless
otherwise elected. Once Annuity Payments
commence, the Annuity Option may not be
changed.
The method used to calculate the amount of the
initial and subsequent Annuity Payments is
described below.
If the monthly income is less than $20, we may
pay the greater of the Contract Value or the
commuted value of the Lifetime Income Benefit
in one lump sum on the Maturity Date, or the
Annuity Commencement Date if earlier.
VARIABLE ANNUITY PAYMENTS We will determine the amount of the first
Variable Annuity Payment by applying the
portion of the Contract Value used to effect a
Variable Annuity (minus any applicable premium
taxes) to the Annuity Option elected based on
the mortality table and assumed interest rate
shown in the Specifications Page. We will
provide a table of the annuity factors upon
request. If the current rates in use by us on
the Annuity Commencement Date are more
favorable to you, we will use the current
rates. The portion of the Contract Value used
to effect a Variable Annuity will be measured
as of a date not more than 10 business days
prior to the Annuity Commencement Date.
Subsequent payments will be based on the
investment performance of the Investment
Options you elected. The amount of each
subsequent variable annuity payment is
determined by multiplying the number of Annuity
Units credited for each Investment Option you
elect by the appropriate Annuity Unit value on
each subsequent determination date, which is a
uniformly applied date not more than 10
business days before the payment is due. The
number of Annuity Units is determined by
dividing the portion of the first payment
allocated to an Investment Option by the
Annuity Unit value for that Investment Option
determined as of the same date that the
Contract Value used to effect Annuity Payments
was determined. The portion of the first
payment allocated to an investment Option will
be determined in the same proportion that the
Investment Account Value of each Investment
Option bears to the Contract Value used to
effect the Variable Annuity, unless you elect a
different allocation.
MORTALITY AND EXPENSE We guarantee that the dollar amount of each
GUARANTEE Variable Annuity payment will not be affected
by changes in mortality and expense experience.
ANNUITY UNIT VALUE The value of an Annuity Unit for each
Investment Option for any Valuation Period is
determined as follows:
12.1
(a) The net investment factor for the
corresponding Sub-Account for the
Valuation Period for which the Annuity
Unit value is being calculated is
multiplied by the value of the Annuity
Unit for the preceding Valuation Period;
and
(b) The result is adjusted to compensate for
the interest rate used to determine the
first Variable Annuity payment.
The dollar value of Annuity Units may increase,
decrease or remain the same from one Valuation
Period to the next.
FIXED ANNUITY PAYMENTS We will determine the amount of each Fixed
Annuity payment by applying the portion of the
Contract Value used to effect a Fixed Annuity
measured as of a date not more than 10 business
days prior to the Annuity Commencement Date
(minus any applicable premium taxes) to the
Annuity Option elected based on the mortality
table and interest rate shown on the
Specifications Page. The Fixed Annuity payment
will not be less than that available by
applying the Contract Value to purchase a
single premium immediate annuity then offered
to the same class of annuitants by us or a
company affiliated with us.
We guarantee the dollar amount of Fixed Annuity
payments.
12.2
PART 13 ANNUITY OPTIONS
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DESCRIPTION OF ANNUITY OPTIONS Option 1:Life Annuity
Life 5-Year Certain. We will make Annuity
Payments for 5 years and after that during the
lifetime of the Annuitant. No payments are due
after the death of the Annuitant or, if later,
the end of the 5-year period.
Option 2: Joint Life Annuity
Joint Life 5-Year Certain. We will make Annuity
Payments for 5 years and after that during the
joint lifetime of the Annuitant and a co
Annuitant. No payments are due after the death
of both the Annuitant and the co-Annuitant or,
if later, the end of the 5-year period.
Option 3: Fixed Life Annuity
Life Annuity with Cash Refund: We will make
payments during the lifetime of the Annuitant.
After the death of the Annuitant, we will pay
the Beneficiary a lump sum amount equal to the
excess, if any, of the Contract Value at the
election of this option over the sum of the
annuity payments made under this option. This
option is available on or after the later of
the Annuitant's 90th birthday or the tenth
Contract Anniversary.
The annual amount of the annuity payments will
equal the greater of
(a) the Lifetime Income Amount, or
(b) the annual amount determined by
applying the Contract Value to a Cash
Refund Annuity Option based on the
Mortality Table and Fixed Annuity
Payment Interest Rate listed in the
Specifications.
ALTERNATE ANNUITY OPTIONS Instead of settlement in accordance with the
Annuity Options described above, you may choose
an alternate form of settlement acceptable to
us. Once Annuity Payments commence, the form of
settlement may not be changed.
13.1
THE XXXX XXXXXXX LIFE INSURANCE COMPANY (U.S.A.)
A STOCK COMPANY (XXXX XXXXXXX(R) LOGO)
