Exhibit 4(a)
This Contract is issued in consideration of the application of the Contractowner
and of the payment of purchase payments as provided in the Contract.
This contract is delivered in the jurisdiction of and is governed by the laws of
[state of Contractowner].
Signed for The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Xxx X. Xxxxxx, President Xxxxxxx Xxxxxxxxx, Second Vice President
Allocated
Group Deferred Variable Annuity or Variable and Fixed Annuity
Periodic Premium
Nonparticipating
ALL VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
Table of contents
Article Page
Contract specifications 3
1 Special terms 5
2 Purpose of contract 7
3 Funding 8
4 Transfers and withdrawals 11
5 Death benefits 14
6 Annuity options 15
7 Contract loan 19
8 Contract discontinuance 21
9 General provisions 22
10 Annuity purchase rates under a fixed annuity payout option 24
11 Annuity purchase rates under a variable annuity payout option 25
2
Contract specifications
CONTRACT NUMBER:
CONTRACTOWNER:
EFFECTIVE DATE:
EMPLOYER:
PLAN:
VARIABLE ACCOUNT: Lincoln Life Variable Annuity Account Q. There are currently
14 subaccounts in the variable account. Purchase payments may be directed to
any of the available subaccounts, subject to limitations. The amounts allocated
to each subaccount will be invested at net asset value in the shares of one of
the regulated investment companies. The funds and series are:
1. [Lincoln National Growth and Income Fund]
2. [Lincoln National Bond Fund]
3. [Lincoln National Money Market Fund]
4. [Lincoln National Managed Fund]
5. [Lincoln National Special Opportunities Fund]
6. [Lincoln National Global Asset Allocation Fund]
7. [Lincoln National Equity-Income Fund]
8. [Lincoln National Aggressive Growth Fund]
9. [Lincoln National Capital Appreciation Fund]
10. [Lincoln National Social Awareness Fund]
11. [Lincoln National International Fund]
12. [Delaware Emerging Growth Series]
13. [Delaware Equity/Income Series]
14. [Delaware Global Bond Series]
See Article 3 for provisions governing any substitution or elimination of funds
or series.
FIXED ACCOUNT GUARANTEED INTEREST RATE: [3.00%] during all years.
LIMITATIONS ON TRANSFERS AND WITHDRAWALS: See Article 4 for provisions governing
the limitations on transfers and withdrawals.
ANNUAL ACCOUNT CHARGE: [$25.00] per account maintained on behalf of a
participant or contractowner.
ANNUAL MORTALITY AND EXPENSE RISK CHARGE: [1.002%]
[This contract will be eligible for a lower annual Mortality and Expense Risk
3
Charge of [0.75%] if on the last calendar day of any calendar quarter the sum of
all account value under this contract equals or exceeds $5 million. The lower
charge will be implemented on the calendar quarter-end valuation date following
the end of the calendar quarter in which the contract became eligible for the
lower charge.]
4
CONTINGENT DEFERRED SALES CHARGE (CDSC):
Withdrawal During
Contract Year 1 2 3 4 5 6 7 8 9 10 11+
CDSC (as a
percentage of
withdrawal amount) [6]% [6]% [6]% [6]% [5]% [4]% [4]% [3]% [2]% [1]% [0]%
There will be no CDSC after the contract has been in force for [10] complete
contract years.
LOAN SET-UP CHARGE: [$35.00]
5
Article 1
Special terms
(Throughout this contract, in order to make the following information more
understandable to you, we have italicized the special terms.)
Section
1.01 Account value - Value held under this contract. The value may be
maintained in either the fixed account, the variable account or both,
depending on allocations.
1.02 Accumulation unit - A unit of measure used to calculate the variable
account value during the accumulation period.
1.03 Annuitant and contingent annuitant - The persons upon whose lives the
annuity payouts made after the annuity commencement date will be based.
1.04 Annuity commencement date - The valuation date when money is withdrawn
for payment of annuity payouts under the annuity option selected.
1.05 Annuity payout - An amount paid at regular intervals under one of
several options available to the annuitant and/or any other payee. This
amount may be paid on a variable or fixed basis, or a combination of
both.
1.06 Annuity unit - A unit of measure used after the annuity commencement
date to calculate the amount of variable annuity payout.
1.07 Beneficiary - The person or entity designated by a participant under a
403(b) plan that is not subject to ERISA or an annuitant to receive a
death benefit, if any, payable upon the death of the participant or the
annuitant.
1.08 Code - This is the Internal Revenue Code of 1986, as amended.
1.09 Contingent deferred sales charge (CDSC) - This charge is assessed on
certain premature withdrawals of account value, calculated according to
the contract provisions.
1.10 Contract - The agreement between the contractowner and Lincoln Life
providing a variable annuity to fund the plan.
1.11 Contractowner (you, your) - The contractowner named in the Contract
Specifications.
1.12 Contract year - This is the 12 month period which begins on the
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effective date as set forth in the Contract Specifications or on the
anniversary of the effective date.
1.13 December 31, 1988 grandfathered balance - This is the balance that is
available for withdrawal, under a 403(b) plan, without meeting an
otherwise distributable event such as death, disability, termination of
employment or attainment of age 59-1/2.
1.14 ERISA - This is the Employee Retirement Income Security Act of 1974.
1.15 Fixed account - An account established for this contract by Lincoln Life
which is a part of the general assets of Lincoln Life.
1.16 Funds - Any of the mutual funds into which purchase payments allocated
to the variable account are indirectly invested.
1.17 Home office - The Lincoln National Life Insurance Co., 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000 or an institution designated
by us.
1.18 Lincoln Life (we, us, our) - The Lincoln National Life Insurance Co.
1.19 Net asset value per share - The value of a fund or series share
calculated in accordance with the fund's or series' prospectus.
1.20 Participant - A person defined as a participant in the plan, who has
enrolled under this contract and on whose behalf Lincoln Life maintains
an account value.
1.21 Pending allocation account - This is an account established under the
variable account that invests purchase payments received without
allocation instructions in shares of a money market mutual fund.
1.22 Plan - The plan or arrangement named in the Contract Specifications,
which includes any employer based arrangement whether or not considered
a plan under State or Federal law.
1.23 Purchase payments - Amounts paid into the contract to purchase an
annuity.
1.24 Series - Any of the underlying portfolios of a fund in which purchase
payments allocated to the variable account are indirectly invested.
1.25 Subaccount - That portion of the variable account which invests in
shares of a particular fund or series. There is a separate subaccount
that corresponds to each fund and series.
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1.26 Valuation date - Each day the New York Stock Exchange (NYSE) is open for
trading and we are open for business.
1.27 Valuation period - The period commencing at the close of trading on the
NYSE on a valuation date and ending at the close of trading on the NYSE
on the next succeeding valuation date.
1.28 Variable account - The segregated investment account into which Lincoln
Life sets aside and invests the variable assets attributable to this
variable annuity contract.
8
Article 2
Purpose of contract
Section
2.01 This is a group annuity contract. This contract may be used to fund all or
part of the plan's obligation to the participants.
2.02 The provisions of the plan control the operation of the plan. The
provisions of the contract control the operation of this contract.
2.03 We are not a party to the plan. The plan is mentioned merely for reference
purposes. Except for the obligations provided under this contract, we have
no liability under the plan. We are under no obligation under or by reason
of issuance of this contract either (a) to determine whether any payment,
distribution or transfer under this contract complies with the provisions,
terms and conditions of the plan or with applicable law, or (b) to
administer the plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984.
2.04 This contract can be issued in connection with a plan which meets the
requirements of Sections 401(a), 403(a), 403(b), 414(d) or 457 of the
code. We may require evidence of qualification of the plan.
9
Article 3
Funding
Section
3.01 Account value will be maintained by us on behalf of each participant.
At your request, account value will also be maintained by us for your use
under this contract.
3.02 Purchase payments must be made to us at our home office.
3.03 Purchase payments under this contract may be allocated to the variable
account and/or to the fixed account of this contract in 1% increments.
If complete allocation instructions have not been received by us in order
for us to perform our duties under this contract, we will direct such
purchase payment to the pending allocation account as described in
Section 1.21.
We will follow up with you monthly for a period of 90 days for allocation
instructions for account values in the pending allocation account.
Within 2 business days of receipt of complete allocation instructions, the
account value in the pending allocation account will be transferred to the
accounts as instructed.
If allocation instructions are not received after the 90 day notice, the
purchase payments in the pending allocation account will be refunded to
you within 105 days of the date of receipt of the initial purchase
payment.
The pending allocation account will only be used for the purpose mentioned
in this Section 3.03; you or participants may not direct a portion of
purchase payments to this subaccount. Purchase payments directed to the
pending allocation account will not be afforded the same rights as
purchase payments under this contract. The following Articles and/or
Sections under this contract will not be applicable: Section 3.13 of this
Article 3-Funding, Article 4-Transfers and withdrawals, Article 6-Annuity
options and Article 7-Contract loan.
3.04 Purchase payments in any one contract year which exceed twice the amount
of purchase payments made in the first contract year may be made only with
our permission. If purchase payments are stopped, the account values will
remain in force as paid-up. Purchase payments may resume at any time until
the participant's annuity commencement date, a request to withdraw the
entire account value or payment of any death benefit,
10
whichever comes first.
3.05 We will credit interest daily on the account values in the fixed account.
The rate of interest credited each day, if compounded for 365 days, yields
the annual interest rate in effect for the day. We guarantee that we will
credit interest on account values in the fixed account at an effective
annual rate not less than [3.00%] during all years. We may credit interest
at rates in excess of the guaranteed rate at any time.
All account values maintained in the fixed account will be guaranteed
against loss of principal.
3.06 Purchase payments may be directed to any of the available subaccounts. The
purchase payments allocated to each subaccount will be applied to purchase
accumulation units at the accumulation unit value next calculated after
receipt at our home office.
3.07 We reserve the right to eliminate the availability of the shares of any
fund or series and substitute the securities of a different investment
company if the shares of a fund or series are no longer available for
investment, or, if in our judgment, any fund or series should become
inappropriate in view of the purposes of this contract. We may add a
subaccount investing in a new fund or series. We will give you written
notice of the elimination or substitution of any fund or series no later
than 15 days after the substitution occurs. Any such eliminations,
substitutions or additions will be subject to compliance with any
applicable regulatory requirements.
3.08 We will use each purchase payment allocated to the variable account to buy
accumulation units in the subaccount(s) selected by you. The number of
accumulation units bought will be determined by dividing the amount
directed to the subaccount by the dollar value of an accumulation unit in
that subaccount as of the end of the valuation period during which the
purchase payment is received at our home office. The number of
accumulation units held for the variable account by you will not be
changed by any change in the dollar value of accumulation units in any
subaccount.
3.09 The value of a subaccount on any valuation date is the number of
accumulation units in the subaccount multiplied by the value of an
accumulation unit of the subaccount at the end of the valuation period.
3.10 Purchase payments allocated to the variable account are converted into
accumulation units. The number of accumulation units resulting from each
purchase payment is equal to the purchase payment divided by the value of
an accumulation unit for the valuation period during which the
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purchase payment is allocated to the variable account. The accumulation
unit value for each subaccount was or will be arbitrarily established at
the inception of the subaccount. It may increase or decrease from
valuation period to valuation period. The accumulation unit value for a
subaccount for any later valuation period is determined as follows:
1. The total value of fund or series shares held in the subaccount is
calculated by multiplying the number of fund or series shares owned by
the subaccount at the beginning of the valuation period by the net
asset value per share of the fund or series at the end of the
valuation period, and adding any dividend or other distribution of the
fund or series if an ex-dividend date occurs during the valuation
period; minus
2. The liabilities of the subaccount at the end of the valuation period;
such liabilities include daily charges imposed on the subaccount, and
may include a charge or credit with respect to any taxes paid or
reserved for by us that we determine as a result of the operations of
the variable account; and
3. The result of 2. is divided by the outstanding number of accumulation
units in the subaccount at the beginning of the valuation period.
The daily charges imposed on a subaccount for any valuation period are
equal to the daily mortality and expense risk charge and the daily
administrative charge multiplied by the number of calendar days in the
valuation period.
3.11 The assets of the variable account equal to its reserves and other
liabilities will not be charged with the liabilities arising from any
other part of our business.
3.12 The accumulation unit value may increase or decrease the dollar value of
benefits under the contract.
3.13 On the last day of the contract year, we will deduct the account charge,
specified in the Contract Specifications. Such amount will be deducted
from the account value maintained on behalf of each participant and on
behalf of the contractowner on a pro rata basis based on the balances of
such account values on such date in the fixed account and variable
account. The full account charge will be deducted upon withdrawal of the
entire account value. If you choose to pay the account charge, we will
bill you at the end of each contract year for an amount equal to the
account charge times the number of participants and contractowner on whose
behalf account values are maintained as of the last day of the contract
year plus the number of participants and contractowner that have withdrawn
their entire account values within the last 6 months of
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the contract year. If the account charge is not paid within 30 days of
receipt of the bill, the amount will be deducted from each account value
as described in this section.
3.14 At least once during each contract year, we will provide a report of the
account value, including account value maintained on behalf of each
participant and on behalf of the contractowner.
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Article 4
Transfers and withdrawals
Section
4.01 A transfer of funds may be directed from one subaccount to another
subaccount or to the fixed account. A transfer of account value may be
directed from the fixed account to one or more subaccounts of the variable
account, subject to the limitations described in Section 4.03. A transfer
request may be in writing, or by telephone provided we have received the
appropriate authorization from you. Amounts transferred to the
subaccount(s) will purchase accumulation units as described in Section
3.08.
There may not be more than one transfer in any 30 day period. We reserve
the right to further limit the number of transfers.
There is no charge for a transfer. However, we reserve the right to impose
a charge in the future for any transfers.
Transfers after the annuity commencement date will be subject to the
provisions in Section 6.10.
4.02 A transfer among subaccounts will result in the purchase of accumulation
units in one subaccount and the redemption of accumulation units in the
other subaccount. Such a transfer will be effected at accumulation unit
values calculated at the end of the valuation period during which the
transfer request is received at our home office. The valuation of the
accumulation units is described in Section 3.10.
4.03 Subject to the following limitations, account value held in the fixed
account may be transferred to any subaccount or may be withdrawn from this
contract. A withdrawal for any reason not stated in Section 4.05 will be
subject to this Section.
. Periodic elective transfers or withdrawals - The cumulative percentage
limit available under this paragraph for a transfer or withdrawal is
20% in any 365 day period. The cumulative percentage is the sum of all
transfers and withdrawals under this Section in the preceding 364 day
period plus the amount to be transferred or withdrawn under this
Section, divided by the then current account value in the fixed
account. A cumulative percentage exceeding 20% in any 365 day period
will not be allowed.
. Systematic transfers or withdrawals - A scheduled transfer or
withdrawal of the entire account value in the fixed account may be
elected over a 5 year period. The timing and percentage of each
14
transfer or withdrawal is indicated in the following schedule.
Transaction dates Percentage eligible for transfer or withdrawal
Initial date 20% of the balance on such date
First anniversary 20% of the balance on such date
Second anniversary 20% of the balance on such date
Third anniversary 20% of the balance on such date
Fourth anniversary 50% of the balance on such date
Fifth anniversary 100% of the balance on such date
If systematic transfers or withdrawals are elected, periodic elective
transfers or withdrawals will not be available during the period of
scheduled payments. This election may at any time after the initial
date be rescinded. In this event, periodic elective transfers or
withdrawals will not be available until the 1 year anniversary of the
last systematic transfer or withdrawal made before rescinding the
election.
If systematic transfers or withdrawals are elected and a periodic
elective transfer or withdrawal was made within the last 364 day
period, the payment due on the initial date will be reduced by the sum
of any periodic elective transfers or withdrawals made within the last
364 day period.
If systematic transfers or withdrawals are elected, no further purchase
payments may be allocated to the fixed account unless the election is
rescinded.
4.04 All withdrawal requests must be submitted in writing to us. A withdrawal
request for a participant must be authorized by you. A withdrawal request
for a participant under a 403(b) plan that is not subject to ERISA must be
authorized by the participant. Withdrawals will be effected at
accumulation unit values calculated at the end of the valuation period
during which we receive written request at our home office. We reserve the
right to require proof of the event giving rise to any withdrawal under
this contract.
4.05 Withdrawals of account value will be allowed during the life of this
contract without being subject to the CDSC, if the withdrawal is for one
of the following reasons:
. To make a payment due to the participant's death, disability,
retirement or termination of employment, excluding termination of
employment due to plan termination, plant shutdown, or any other
program instituted by the participant's employer which would reduce
15
the work force by more than 20%;
. To make a payment for a participant hardship situation as allowed by
the plan;
. To make a payment pursuant to a Qualified Domestic Relations Order
(QDRO);
. To purchase an annuity option under Article 6;
A withdrawal from the account value, for any reason outlined in this
Section, will not be subject to the provisions of Section 4.03, 4.06 or
4.07.
4.06 Subject to the following limitations and the limitations set forth in
section 4.03, a partial withdrawal, without being subject to CDSC, of
account value may be requested during the contract year for any reason
other than those specified in Section 4.05.
The cumulative percentage limit available under this Section for partial
withdrawal, without being subject to the CDSC, is 20% in any contract
year. The cumulative percentage is the sum of all withdrawals under this
Section during the contract year plus the amount to be withdrawn under
this Section divided by the then current account value.
Partial withdrawals under this Section exceeding the 20% cumulative
percentage will be subject to the CDSC.
4.07 If we receive a request for a withdrawal of 100% of the account value for
any reason other than those specified in Section 4.05 the account value
will be distributed as follows:
. 100% of the account value in the variable account will be subject to
the CDSC and will be paid in a cash payment as provided in Section
4.08.
. The account value in the fixed account will be paid in accordance with
the systematic withdrawal schedule over a 5 year period as provided in
Section 4.03. 100% of each scheduled withdrawal will be subject to the
CDSC.
4.08 Any cash payment will be mailed from our home office within 7 days after
the date of withdrawal; however, we may be permitted to defer payments
from the variable account under the Investment Company Act of 1940, as in
effect at the time a request for withdrawal is received. We reserve the
right to defer any payment from the fixed account for a period not
16
to exceed 6 months after a request is received.
17
Article 5
Death benefits
Section
5.01 Article 5 only applies to a participant under a 403(b) plan that is not
subject to ERISA.
5.02 If a participant dies prior to the annuity commencement date, upon receipt
of due proof of death we will pay the beneficiary, if one is living, a
death benefit equal to the account value less any outstanding loan
balance.
5.03 We will calculate the death benefit as of the end of the valuation period
during which we receive due proof of death, pursuant to Section 5.04, and
the election of a form of benefit.
5.04 Due proof of death will be a certificate of death, a copy of the certified
statement of death from the attending physician, a copy of a certified
decree of a court of competent jurisdiction as to the finding of death, or
any other proof satisfactory to us.
5.05 All death benefit payments will be subject to the laws and regulations
governing death benefits.
Notwithstanding any provision of this contract to the contrary, no payment
of death benefit provided upon the death of the participant will be
allowed that does not satisfy the requirements of section 401(a)(9) of the
code. All such requirements are herein incorporated by reference.
5.06 The death benefit may be paid in a lump sum or under a settlement option
then available. If a lump sum settlement is elected, the proceeds will be
paid within 7 days of approval by us of the claim. This payment may be
postponed as permitted by the Investment Company Act of 1940, as amended.
5.07 Unless otherwise provided in the beneficiary designation, if no
beneficiary survives the participant, the death benefit will be paid in
one sum to the participant's estate.
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Article 6
Annuity options
Section
6.01 You may purchase an annuity option for any participant or beneficiary. The
annuity option will be purchased using the rates in Article 10 or 11.
6.02 The following annuity options are available:
. Life annuity/life annuity with fixed period - Annuity payouts will be
made for the life of the annuitant with no certain period, or with a 10
years certain period, or with a 20 years certain period. Upon the death
of the annuitant, annuity payouts will continue to the beneficiary for
the remainder, if any, of the certain period.
. Joint life annuity/joint life annuity with fixed period - Annuity
payouts will be made for the joint lives of the annuitant and a
contingent annuitant of the annuitant's choice with no certain period,
or with 10 years certain period, or with a 20 years certain period.
Xxxxxxx payouts continue for the life of the survivor at the death of
the annuitant or contingent annuitant. Upon the death of both
annuitants, annuity payouts will continue to a beneficiary for the
remainder, if any, of the certain period.
. Unit refund life annuity - Annuity payouts will be made for the life of
the annuitant with the guarantee that upon the death of the annuitant a
payout to the beneficiary will be made of the value of the number of
annuity units equal to the excess, if any, of (a) over (b) where (a) is
the total amount applied under the option divided by the annuity unit
value at the annuity commencement date and (b) is the product of the
number of annuity units represented by each annuity payout and the
number of annuity payouts paid before death.
. Other options may be available as agreed upon in writing by us.
6.03 At the time an annuity option is selected under the provisions of this
contract, you may specify an annuity commencement date and elect, on
behalf of the participant, to have the total account value applied to
provide a variable annuity payout, a fixed annuity payout or a combination
fixed and variable annuity payout.
The amount of annuity payout will depend on the age and sex (except in
cases where unisex rates are required) of the annuitant as of the annuity
commencement date. A choice may be made to receive payouts once each
month, four times each year, twice each year or once each year. The
19
account value and annuity unit value used to effect annuity payouts will be
calculated as of the annuity commencement date.
For a 100% fixed annuity payout, the annuity commencement date must be at
least 30 days before the first annuity payout date. For a combination fixed
and variable annuity payout or a 100% variable annuity payout, the annuity
commencement date will be 14 days before the first annuity payout date.
After the annuity commencement date, the annuity payout option can not
be changed.
6.04 Article 10 of this contract illustrates the minimum annuity payout amounts
and the age adjustments which will be used to determine the monthly annuity
payouts under a fixed annuity payout option. The tables show the dollar
amount of the guaranteed monthly annuity payout which can be purchased with
each $1,000.00 of account value, after deduction of any applicable premium
tax. Amounts shown use the [1983 'a' Individual Annuity Mortality Table,
modified, with an assumed interest rate of return of 3.00% per year and a
2.00% expense load].
6.05 Article 11 of this contract illustrates the minimum annuity payout amounts
and the age adjustments which will be used to determine the first monthly
annuity payout under a variable annuity payout option. The tables show the
dollar amount of the first monthly annuity payout which can be purchased
with each $1,000.00 of account value, after deduction of any applicable
premium taxes. Amounts shown use the [1983 'a' Individual Annuity
Mortality Table, modified, with an assumed interest rate of return of 5.00%
per year and a 2.50% expense load].
6.06 To determine the amount of the variable annuity payouts after the first
payout, the first variable annuity payout is subdivided into components
each of which represents the product of: (a) the percentage elected by you
on behalf of the participant of a specific subaccount, the performance of
which will determine future variable annuity payouts, and (b) the entire
first variable annuity payout. Each variable annuity payout after the first
payout attributable to a specific subaccount will be determined by
multiplying the annuity unit value for that subaccount for the date each
payout is due by a constant number of annuity units. The number of annuity
units for each specific subaccount is determined by dividing the component
of the first payout attributable to that subaccount as described previously
by the annuity unit value for that subaccount on the annuity commencement
date. The total variable annuity payout will be the sum of the payouts
attributable to each subaccount.
6.07 The annuity unit value for any valuation period for any subaccount is
determined by multiplying the annuity unit value for the immediately
20
preceding valuation period by the product of (a) 0.999866337 raised to a
power equal to the number of days in the current valuation period and (b)
the net investment factor of the subaccount for the valuation period for
which the annuity unit value is being determined.
6.08 The valuation of all assets in the subaccount will be determined in
accordance with the provisions of applicable laws, rules and regulations.
The method of determination by us of the value of an accumulation unit and
of an annuity unit will be conclusive upon the participant and any
recipient of a death benefit, if any.
6.09 We guarantee that the dollar amount of each installment after the first
will not be affected by variations in mortality experience from mortality
assumptions on which the first installment is based.
6.10 After the annuity commencement date, if any portion of the annuity payout
is a variable annuity payout, the participant may direct a transfer of
assets from one subaccount to another subaccount or to a fixed annuity
payout. These transfers will be limited to 3 times per contract year. A
fixed annuity payout may not be changed to a variable annuity payout.
A transfer from one subaccount to another subaccount will result in the
purchase of annuity units in one subaccount, and the redemption of annuity
units in the other subaccount. Such a transfer will be effected at annuity
unit values calculated at the end of the valuation period during which the
transfer request is received at our home office. The valuation of annuity
units is described in Section 3.09. A transfer from one subaccount to a
fixed annuity payout will result in the redemption of annuity units in one
subaccount and the purchase of a fixed annuity payout.
6.11 If the annuity option chosen results in annuity payouts of less than $50.00
per month, the frequency will be changed so that annuity payouts will be at
least $50.00.
6.12 A certificate will be issued to the annuitant showing the amount and terms
of the purchased annuity.
6.13 No annuity option may be assigned or attached, except, if applicable, those
benefits assigned or attached by a Qualified Domestic Relations Order under
section 414(p) of the code, or pursuant to a Federal Tax Levy under section
6331 of the code.
6.14 If we receive proof that a person receiving annuity payouts under this
contract is legally or mentally incompetent, the annuity payouts may be
made to any person deemed a legal representative by a court of competent
21
jurisdiction.
6.15 We will require satisfactory proof of each annuitant's age. If it is later
proven to us that the annuitant's age has been misstated, the annuity
payouts will be adjusted. Any underpayouts already made by us will be made
up immediately and any overpayouts already made by us will be charged
against the annuity payouts falling due after the adjustment.
6.16 The annuitant may name the beneficiary or contingent annuitant for any
purchased annuity option. The annuitant may change the beneficiary at any
time without the consent of the previous beneficiary unless the previous
designation provides otherwise. However, if the annuitant is married, the
annuitant's spouse must agree in writing to another person being named
beneficiary or contingent annuitant. The change is effective when written
notice is received by us. The annuity option or the contingent annuitant
may not be changed. The beneficiary or the contingent annuitant does not
have the right to name the beneficiary.
6.17 If the annuitant dies and there is no named beneficiary living at the time
of the annuitant's death, the annuitant's estate will be paid any remaining
guaranteed annuity payouts, under a period certain annuity option, in one
lump sum. If the named beneficiary is receiving guaranteed annuity payouts
and dies, the remaining annuity payouts will be paid in one lump sum to the
contingent beneficiary if living at the time of the beneficiary's death.
Payment will otherwise be made to the beneficiary's estate. Lump sum
annuity payouts will equal the discounted guaranteed payouts at the
interest rate then being credited under Section 3.05, compounded annually.
6.18 We may, at any time, require proof that any payee under this contract is
living when payout is contingent upon survival of that payee.
22
Article 7
Contract loan
Section
7.01 Prior to a participant's annuity commencement date, if permitted by the
plan, a participant may apply for a loan under this contract. We will
loan, upon written application and assignment of the account value equal to
the loan amount as security for the loan, a sum which will not be less than
$1,000.
7.02 The maximum loan amount is generally equal to 50% of the account value, not
to exceed a total of $50,000 on all outstanding loans to the participant
under all plans. However, if 50% of the total account value is less than
$10,000, the participant can borrow the account value minus restricted
dollars. The restricted dollars are a minimum of $300.00 plus any
Federal/State tax to be withheld, one year's contract loan interest and
CDSC on loan principal and loan interest. If there has been a loan in the
preceding 12 month period, the $50,000 maximum loan limit is reduced by the
excess of the highest outstanding balance of loans during the preceding 12
month period over the outstanding current loan balance.
7.03 The annual loan interest rate will be based on the loan interest rate
declared at the time the loan is established. The current loan interest
rate will be declared on a monthly basis and will be the Xxxxx'x Corporate
Bond Yield monthly average for the calendar month two months prior to the
date the loan rate is declared, rounded to the nearest .25%. If this
average is no longer made available, then the loan rate will be a
comparable rate acceptable to the regulatory authorities. During the
existence of a contract loan, the amount of the contract loan principal
will continue to earn interest as specified in Section 3.05. Minimum loan
payments of principal and interest must be paid in level payments and must
be paid no less often than quarterly. The minimum payment amount is
$80.00. The contract loan may be repaid in full at any time while this
contract is in force and prior to the annuity commencement date.
7.04 If the required loan payment is not paid in full within 90 days after the
date the payment is due, the total outstanding loan balance will be
determined to be in default and no additional loan payments will be
accepted. If the participant's December 31, 1988 grandfathered balance is
sufficient, the defaulted amount will be deducted from the account value
following the 90-day grace period. In addition, if allowed by the plan, any
amounts equal to employer purchase payments and earnings on those purchase
payments will be deducted from the account value following the 90-day grace
period. Any remaining defaulted amount will be deducted from the account
value when one of the following events
23
occur: the participant's termination of service with the employer,
attainment of age 59 1/2, disability, or death.
7.05 If we receive a request to withdraw the entire account value while there is
an outstanding loan, the account value will be reduced by the amount of the
outstanding loan plus loan interest due. Upon the death of the
participant, we will pay the beneficiary the account value less the
outstanding loan and loan interest due.
7.06 We will charge an amount as specified in the Contract Specifications,
each time a loan is established. The amount will be withdrawn from the
account value.
24
Article 8
Contract discontinuance
Section
8.01 You may discontinue this contract at any time by giving written notice to
us at our home office. The contract will be deemed discontinued on the
later of the valuation date you specify or the valuation date that the
written notice is received by us.
8.02 We may give you written notice that this contract is to be discontinued if
(a) Any charges billed to you have not been paid to us within 30 days or
(b) The plan does not qualify for special tax treatment under Sections
401(a), 403(a), 403(b), 414(d) or 457 of the code or (c) A modification in
this contract is necessary in order to comply with Federal or State
requirements, including ERISA, and you refuse to accept a substantially
similar contract offered by us that incorporates such modification or (d)
If we discontinue offering this contract to the public. Discontinuance
pursuant to (a), (b) or (c) of this Section will be effective as of a
valuation date specified by us, provided you are given at least 15 days
advance written notice in which to cure any remediable defaults.
Discontinuance pursuant to (d) will be effective as of a valuation date
specified by us, provided you are given at least 90 days advanced written
notice. Discontinuance by us supersedes any date established under Section
8.01.
8.03 As of the date this contract is discontinued under either Section 8.01 or
Section 8.02 above, no further purchase payments will be accepted.
However, transfers, withdrawals and loans will continue to be permitted, in
accordance with the terms of this contract.
We will send written notice to each participant's last known address
stating that the contract is discontinued.
8.04 The contract will terminate when there is no account value remaining under
this contract.
25
Article 9
General provisions
Section
9.01 This contract, together with your attached application and any riders or
endorsements, constitutes the entire contract between you and us.
9.02 We may rely on any action or information provided by you under the terms of
this contract and will be relieved and discharged from any further
liability to any party in acting at the direction and upon the authority of
you. All statements made by you shall be deemed representations and not
warranties.
9.03 Except as allowed by the plan or applicable law, neither this contract nor
the participant's interest in this contract may be transferred, sold,
assigned, discounted or pledged, either as collateral for a loan or as
security for the performance of an obligation or for any other purpose.
9.04 We have the right to amend this contract as follows:
. To maintain this contract under applicable local, State or Federal laws
or regulations;
. To change the annuity purchase rates in Articles 10 or 11 at any time
after the end of the fifth contract year. If a change is made under this
subsection, the revised rates will be guaranteed for 5 years. Any
modification of the rates in Article 10 or 11 will apply only to funds
attributable to purchase payments and interest on those purchase payments
after the date of modification.
9.05 We and you may also mutually agree to amend this contract. The consent of
any participant, annuitant or beneficiary is not required.
9.06 Any change to this contract must be in writing and signed by the President,
Vice President, Secretary or an Assistant Secretary of Lincoln Life.
9.07 This contract is subject to the incontestability laws of the state in which
it is delivered.
9.08 We are not liable to provide sufficient funds to provide the plan's
benefits.
9.09 No suit may be brought in relationship to this contract unless it is
brought within 3 years after the date on which the suit could have first
26
been brought. If this limitation is prohibited by the laws of the state by
which the contract is governed, this limitation shall be deemed to be
amended to agree with the minimum period of limitation permitted by those
laws.
9.10 The failure on our part to perform or insist upon the strict performance of
any provision or condition of the contract will neither constitute a waiver
of our rights to perform or require performance of such provision or
condition, nor stop us from exercising any other rights it may have
in such provision, condition, or otherwise in this contract or any plan.
9.11 If any provision of this contract is determined to be invalid, the
remainder of the provisions shall remain in full force and effect.
9.12 Federal, state and local government premium tax, if applicable, will be
deducted from either the purchase payment when received or at time of
withdrawal or annuitization.
9.13 A participant will receive an Active Life Certificate upon our receipt of a
duly completed participation enrollment form, except if this contract is
used to fund a 457 plan. If the participant chooses not to participate
under this contract, he/she may exercise a free-look right by sending a
written notice to us that he/she does not wish to participate under this
contract within 20 days after the date the certificate is received by the
participant. For purposes of determining the date on which the participant
has sent written notice, the postmark date will be used.
If a participant exercises his/her free-look right in accordance with the
foregoing procedure, we will refund the value of any purchase payments
allocated to the variable account and/or any purchase payment allocated to
the fixed account.
9.14 Any notice required by this contract must be delivered to us at: The
Lincoln National Life Insurance Company, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx
Xxxxx, XX 00000; and notices to you will be delivered to you at the
address shown on our records.
27
Article 10
Annuity purchase rates under a fixed annuity payout option
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
Single Life Annuities
No 120 240
Period Months Months Cash
Age Certain Certain Certain Refund
----- ------- ------- ------- ------
55 $4.01 $3.99 $3.91 $3.89
56 4.08 4.06 3.97 3.95
57 4.16 4.13 4.03 4.01
58 4.24 4.21 4.09 4.08
59 4.33 4.29 4.15 4.15
60 4.42 4.38 4.22 4.18
61 4.52 4.47 4.29 4.26
62 4.62 4.56 4.36 4.34
63 4.73 4.66 4.43 4.42
64 4.85 4.77 4.50 4.51
65 4.97 4.89 4.57 4.60
66 5.11 5.01 4.64 4.69
67 5.25 5.13 4.71 4.79
68 5.41 5.27 4.78 4.90
69 5.57 5.41 4.85 5.01
70 5.75 5.56 4.91 5.13
Joint and Survivor Annuities
Joint and Full to Survivor Joint and Two-Thirds Survivor
Certain Period Certain Period
120 240 Joint 120 240
None Months Months Age None Months Months
----- ------ ------ ----- ----- ------ ------
$3.69 $3.69 $3.68 55 $4.02 $4.00 $3.91
3.75 3.75 3.73 56 4.09 4.07 3.97
3.81 3.81 3.79 57 4.17 4.14 4.03
3.87 3.87 3.85 58 4.25 4.22 4.09
3.94 3.94 3.91 59 3.33 4.30 4.16
4.01 4.01 3.98 60 4.43 4.38 4.22
4.09 4.08 4.05 61 4.52 4.47 4.29
4.17 4.16 4.12 62 4.63 4.57 4.36
4.25 4.25 4.19 63 4.74 4.67 4.43
4.34 4.34 4.26 64 4.85 4.78 4.50
4.44 4.43 4.34 65 4.98 4.89 4.57
4.54 4.54 4.42 66 5.11 5.01 4.64
4.66 4.64 4.50 67 5.26 5.13 4.71
4.77 4.76 4.58 68 5.41 5.27 4.78
28
4.90 4.88 4.66 69 5.57 5.41 4.85
5.04 5.01 4.74 70 5.75 5.55 4.91
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
Before 1920 +2 1960-1969 -3
1920-1929 +1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ECT. ECT.
29
Article 11
Annuity purchase rates under a variable annuity payout option
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
Single Life Annuities
No 120 240
Period Months Months Cash
Age Certain Certain Certain Refund
------- ------- ------- ------- ------
55 $5.15 $5.12 $5.02 $5.04
56 5.22 5.19 5.07 5.10
57 5.29 5.25 5.12 5.16
58 5.37 5.32 5.18 5.22
59 5.45 5.40 5.24 5.29
60 5.54 5.48 5.29 5.36
61 5.63 5.56 5.35 5.43
62 5.73 5.65 5.42 5.51
63 5.84 5.75 5.48 5.59
64 5.95 5.85 5.54 5.68
65 6.07 5.96 5.60 5.78
66 6.21 6.07 5.67 5.88
67 6.35 6.19 5.73 5.98
68 6.50 6.32 5.79 6.09
69 6.66 6.45 5.85 6.21
70 6.84 6.60 5.91 6.34
Joint and Survivor Annuities
Joint and Full to Survivor Joint and Two-Thirds Survivor
Certain Period Certain Period
120 240 Joint 120 240
None Months Months Age None Months Months
---- ------ ------ ----- ---- ------ ------
$4.82 $4.82 $4.81 55 $5.16 $5.13 $5.03
4.87 4.87 4.85 56 5.23 5.19 5.08
4.92 4.92 4.90 57 5.30 5.26 5.13
4.98 4.98 4.96 58 5.38 5.33 5.18
5.04 5.04 5.01 59 5.46 5.41 5.24
5.11 5.10 5.07 60 5.54 5.49 5.30
5.18 5.17 5.13 61 5.64 5.57 5.36
5.25 5.25 5.19 62 5.74 5.66 5.42
5.33 5.32 5.26 63 5.84 5.75 5.48
5.42 5.41 5.32 64 5.96 5.86 5.54
5.51 5.50 5.39 65 6.08 5.96 5.61
5.60 5.59 5.46 66 6.21 6.07 5.67
5.71 5.70 5.54 67 6.35 6.19 5.73
5.82 5.80 5.61 68 6.50 6.32 5.79
30
5.95 5.92 5.68 69 6.66 6.45 5.85
6.08 6.05 5.75 70 6.83 6.59 5.91
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
Before 1920 +2 1960-1969 -3
1920-1929 +1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ECT. ECT.
31
