EXHIBIT 4(A)(1)
SOUTHLAND LIFE INSURANCE COMPANY
(A TEXAS CORPORATION)
0000 XXXXXX XXXXX XXXX, X. X. XXXXXXX, XX 00000-0000
A STOCK COMPANY - ESTABLISHED 1908
[Xxxx X. Xxx] [310000004]
AGREEMENT BY SOUTHLAND LIFE INSURANCE COMPANY
Southland Life Insurance Company will pay the benefits described in this
Contract in accordance with the terms of this Contract.
PLEASE READ YOUR CONTRACT CAREFULLY.
This Contract is a legal contract between the Contract Owner and the Company.
FREE LOOK PERIOD
You have the right to examine and return this Contract within ten days after
your receipt. It may be returned by delivering or mailing it to us at our
Customer Service Center. It will then be void from the beginning. Within seven
days after receipt of the Contract at our Customer Service Center, we will
refund the Accumulation Value, in addition to any charges deducted, as of the
date of receipt. If required by state law, we will refund your Purchase
Payment.
This Contract is signed for Southland Life Insurance Company by
/s/ Signature Illegible /s/ Signature Illegible
President Secretary
THIS CONTRACT IS A FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND VARIABLE
ANNUITY CONTRACT.
Annuity Payments and other values provided by this Contract, when based on the
investment experience of Southland Separate Account A1 are variable. These
values may increase or decrease based on investment experience and are not
guaranteed as to fixed dollar amount. Annuity Payments begin as of the Annuity
Date. Purchase Payments are flexible and may be made until the earlier of the
Annuity Date or the maximum age shown in the Schedule. The Enhanced Death
Benefit will be paid if the Owner dies prior to the Annuity Date.
CUSTOMER SERVICE CENTER
[P.O. BOX 173789
XXXXXX, XX 00000-0000
TOLL-FREE NUMBER (000) 000-0000]
Form 15208-95
1
TABLE OF CONTENTS
CONTRACT SCHEDULE......................................... 4
Allocation of Initial Purchase Payment.......... 5
Contract Expense Provisions..................... 6
Guaranteed Interest Rate........................ 7
Enhanced Death Benefit Accumulation Rate........ 7
DEFINITIONS............................................... 8
OWNERS, ANNUITANTS AND BENEFICIARIES...................... 11
Owners and Death of Owners...................... 11
Annuitants and Death of Annuitants.............. 11
Beneficiaries and Death of Beneficiaries........ 11
Required Distributions.......................... 12
PURCHASE PAYMENTS......................................... 12
Purchase Payment Allocation..................... 13
VARIABLE ACCOUNT.......................................... 13
GUARANTEED INTEREST ACCOUNT............................... 14
ACCUMULATION VALUES....................................... 14
Accumulation Unit Value......................... 14
Accumulation Experience Factor.................. 15
Subaccount Accumulation Value................... 15
Guaranteed Interest Account Accumulation Value.. 16
TRANSFERS................................................. 16
Transfers and Excess Transfers.................. 16
Transfers from the Guaranteed Interest Account.. 17
Excess Transfer Charge.......................... 17
Dollar Cost Averaging Facility.................. 17
Automatic Rebalancing........................... 18
WITHDRAWALS............................................... 18
Demand Withdrawal Option........................ 18
Withdrawal Transaction Charge................... 19
Systematic Withdrawal Program................... 19
XXX Income Program.............................. 20
SURRENDERS................................................ 20
DEATH BENEFIT............................................. 20
Death Benefit Prior to the Annuity Date......... 20
Enhanced Death Benefit.......................... 20
Form 15208-95
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TABLE OF CONTENTS (cont.)
ANNUITY PAYMENTS.......................................... 21
Election and Changes of Annuity Date............ 21
Election and Changes of Annuity Payment Option.. 21
Annuity Payment Options - General............... 22
Variable Annuity Payments....................... 22
Fixed Annuity Payment........................... 23
Combination Annuity Payments.................... 23
Annuity Payment Options......................... 23
Commuting....................................... 24
Excess Interest................................. 24
Minimum Amounts................................. 24
Income Protection............................... 25
Payments Other than Monthly..................... 25
GENERAL CONTRACT PROVISIONS............................... 25
The Contract.................................... 25
Conformity with Montana Statutes................ 25
Age............................................. 25
Procedures...................................... 25
Deferral of Payment............................. 26
Tax Qualifications.............................. 26
Contract Changes................................ 26
Collateral Assignment........................... 26
Incontestability................................ 26
Misstatement of Age............................. 26
Periodic Reports................................ 26
Basis of Computations........................... 27
Taxes........................................... 27
Non Participating............................... 27
Customer Service Center......................... 27
ANNUITY PAYMENTS OPTIONS TABLES........................... 28
Form 15208-95
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CONTRACT SCHEDULE
OWNER: XXXX XXX AGE AND SEX: 35, MALE
---------------------------------------------------------------
ANNUITANT: XXXX XXX AGE AND SEX: 35, MALE
---------------------------------------------------------------
CONTRACT DATE: JULY 1, 1995 CONTRACT NUMBER: 310000004
---------------------------------------------------------------
ANNUITY DATE: AUGUST 1, 2027
---------------------------------------------------------------
INITIAL PURCHASE PAYMENT: $25,000.00
---------------------------------------------------------------
MINIMUM FOR EACH SUBSEQUENT $ 500.00
PURCHASE PAYMENT:
---------------------------------------------------------------
MAXIMUM CUMULATIVE PURCHASE $1,500,000
PAYMENT:
---------------------------------------------------------------
MAXIMUM OWNER'S AGE TO WHICH 86
PURCHASE PAYMENTS MAY BE MADE:
---------------------------------------------------------------
CUSTOMER SERVICE CENTER: CUSTOMER SERVICE CENTER
X.X. XXX 000000
XXXXXX, XX 00000-0000
---------------------------------------------------------------
Form 15208-95
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CONTRACT SCHEDULE (CONT.)
ALLOCATION OF INITIAL PURCHASE PAYMENT
[Xxxxx American Small Capitalization Subaccount] 0%
[Xxxxx American Growth Subaccount] 0%
[Xxxxx American MidCap Growth Subaccount] 10%
[Xxxxx American Leveraged AllCap Subaccount] 0%
[INVESCO Industrial Income Subaccount] 10%
[INVESCO Utilities Subaccount] 0%
[Janus Growth Subaccount] 5%
[Janus Agressive Growth Subaccount] 15%
[Janus Worldwide Growth Subaccount] 0%
[Janus International Growth Subaccount] 0%
[Janus Balanced Subaccount] 0%
[Janus Short-Term Bond Subaccount] 0%
[Fidelity VIP Money Market Subaccount] 0%
[Fidelity VIP High IncomeSubaccount] 0%
[Fidelity VIP Equity-Income Subaccount] 0%
[Fidelity VIP Growth Subaccount] 0%
[Fidelity VIP Overseas Subaccount] 20%
[Fidelity VIP II Investment Grade Bond Subaccount] 15%
[Fidelity VIP II Asset Manager Subaccount] 15%
[Fidelity VIP II Index 500 Subaccount] 0%
[Fidelity VIP II Contrafund Subaccount] 0%
Guaranteed Interest Account 10%
If you elect to invest in a particular investment option, at least 1% of your
Purchase Payment must be allocated to that option. All percentage allocations
must be in whole numbers.
Form 15208-95
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CONTRACT SCHEDULE (CONT.)
CONTRACT EXPENSE PROVISIONS
OWNER TRANSACTION EXPENSES (Deducted from the Accumulation Value)
1. Excess Transfer Charges: Refer to the Transfer section for details.
2. Withdrawal Charges: Refer to the Withdrawal section for details.
3. Surrender Charge: This charge is deducted upon Surrender or Withdrawal of
Purchase Payments held less than five full Contract Years since the
Contract Anniversary at the end of the Contract Year in which the Purchase
Payment was made. It is calculated as a percentage of the Purchase
Payments withdrawn or surrendered. The percentage is based on the number
of Contract Anniversaries since the Contract Year in which each Purchase
Payment was made.
CONTRACT ANNIVERSARIES SINCE 0 1 2 3 4 5 6 and
PURCHASE PAYMENT WAS MADE: more
--------------------------------------------------------------
PERCENTAGE: 7% 6% 5% 4% 3% 2% 0%
--------------------------------------------------------------
ANNUAL ADMINISTRATIVE CHARGE (Deducted from the Variable Account Accumulation
Value)
This charge is based on the Purchase Payments paid. If aggregate Purchase
Payments received less aggregate Withdrawals (including any Withdrawal charges
and Surrender charges arising from such Withdrawals) are:
less than $100,000: $30.00 per year
$100,000 or more: $ 0.00 per year
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of assets in each Subaccount)
Mortality And Expense Risk Charge Prior To The Annuity Date: 1.37%
Mortality And Expense Risk Charge During The Annuity Period: 1.25%
Asset-Based Administrative Charge: 0.15%
Form 15208-95
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CONTRACT SCHEDULE (CONT.)
GUARANTEED INTEREST RATE
Guaranteed Interest Rate for the Guaranteed Interest Account: 3.00% per year
ENHANCED DEATH BENEFIT ACCUMULATION RATE
Up to Attained Age 75: 4.00% per year
After Attained Age 75: 0.00% per year
Form 15208-95
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DEFINITIONS
ACCUMULATION UNIT: An Accumulation Unit is a unit of measure used to calculate
Variable Account Accumulation Value.
ACCUMULATION VALUE: The Accumulation Value is the total value under a Contract.
It is the sum of the Variable Account Accumulation Value and the Guaranteed
Interest Account Accumulation Value.
ANNUITANT: The Annuitant(s) is the person or persons whose life (or lives)
determines the Annuity Payments payable under the Contract and who receives
payments during the Annuity Period. The maximum number of joint Annuitants is
two and provisions referring to the death of an Annuitant mean the death of the
last surviving Annuitant.
ANNUITY DATE: The Annuity Date is the date as of which, if the Annuitant is
still living, the Accumulation Value (less previously undeducted taxes) is
applied under an Annuity Payment Option and Annuity Payments begin.
ANNUITY PAYMENT: An Annuity Payment is one of a number of periodic payments
made by the Company to the Annuitant under a Contract.
ANNUITY PAYMENT OPTION: An Annuity Payment Option specifies the form that
Annuity Payments take or the type of payments. Various Annuity Payment Options
are offered under the Contract.
ANNUITY PERIOD: The Annuity Period is the period after the Annuity Date when
Annuity Payments are made.
ANNUITY UNIT: An Annuity Unit is a unit of measure used to calculate variable
Annuity Payments.
BENCHMARK RATE OF RETURN: The Benchmark Rate of Return is an annual rate of
return used by the Company to determine the amount of variable Annuity Payments
by assuming (among other things) that Subaccounts supporting variable Annuity
Payments will have a net annual investment return over the anticipated Annuity
Period equal to that rate of return.
BENEFICIARY: The Beneficiary is the person designated by the Owner to receive
the Death Benefit, upon the death of the Owner prior to the Annuity Date.
CASH SURRENDER VALUE: The Cash Surrender Value is the Accumulation Value, less
any applicable Surrender charges, premium taxes not previously deducted, and the
annual administrative charge.
CODE: The Code is the Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY: The Contract Anniversary is the same date in each
Contract Year as the Contract Date.
CONTRACT DATE: The Contract Date is the date that the Contract is issued. It
is set forth on the Contract Schedule and is used to determine Contract Years
and Contract Anniversaries.
CONTRACT YEAR: A Contract Year is a twelve-month period beginning on the
Contract Date or on a Contract Anniversary.
Form 15208-95
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CUSTOMER SERVICE CENTER: The Customer Service Center is the Company's offices
at X.X. Xxx 000000, Xxxxxx, XX 00000-0000. For overnight delivery, the address
is 0000 Xxxx Xxxxxxx Xxxx -0X0, Xxxxxxxxx, XX 00000.
DEATH BENEFIT: The amount payable to the Beneficiary upon death of the Owner
prior to the Annuity Date.
DEMAND WITHDRAWAL: A withdrawal of Cash Surrender Value made at the Owner's
request.
DUE PROOF OF DEATH: Due Proof of Death is proof of death satisfactory to the
Company. Such proof may consist of the following if acceptable to the Company:
(a) A certified copy of the death record;
(b) A certified copy of a court decree reciting a finding of death; or
(c) Any other proof satisfactory to the Company.
FREE LOOK PERIOD: The Free Look Period is the period during which you may
return the Contract and receive a refund.
GENERAL ACCOUNT: The General Account is the assets of the Company other than
those allocated to the Variable Account or any other separate account of the
Company.
GUARANTEED INTEREST ACCOUNT ACCUMULATION VALUE: The Guaranteed Interest Account
Accumulation Value is the value under a Contract in the Guaranteed Interest
Account.
GUARANTEED INTEREST ACCOUNT: The Guaranteed Interest Account is an allocation
option under the Contract supported by the Company's General Account. It is not
part of nor dependent upon the investment performance of the Variable Account.
XXX CONTRACT: A Contract issued as an Individual Retirement Annuity in
connection with sections 408(a) and (b) of the Code.
OWNER: The Owner is the person(s) who owns the Contract and who is entitled to
exercise all rights and privileges provided in the Contract.
PORTFOLIO: A Portfolio is an investment portfolio (sometimes called a series or
a fund) of an open-end management investment company listed in the prospectus or
any other open-end management investment company or unit investment trust in
which a Subaccount invests.
PURCHASE PAYMENT: A payment or payments made by the Owner to purchase the
benefits provided by the Contract.
SEC: The SEC is the U.S. Securities and Exchange Commission.
SUBACCOUNT: A Subaccount is a subdivision of the Variable Account, the assets
of which are invested in a corresponding Portfolio.
SUBACCOUNT ACCUMULATION VALUE: The Subaccount Accumulation Value is the value
under a Contract in a particular Subaccount.
SURRENDER: The termination of the Contract by payment of the Cash Surrender
Value.
VALUATION DAY: For each Subaccount, a Valuation Day is each day on which the
New York Stock Exchange ("NYSE") and Southland's Customer Service Center are
both open for business, except for a day that a Subaccount's corresponding
Portfolio does not value its shares.
Form 15208-95
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VALUATION PERIOD: A Valuation Period is a period that starts at 4:00 p.m.
eastern time on one Valuation Day and ends at 4:00 p.m. eastern time on the next
succeeding Valuation Day.
VARIABLE ACCOUNT: The Variable Account is Southland Separate Account A1.
VARIABLE ACCOUNT ACCUMULATION VALUE: The Variable Account Accumulation Value is
the value under a Contract in the Variable Account. It is the sum of the
Subaccount Accumulation Values.
WE, US, OUR AND THE COMPANY: We, us, our and the Company refer to Southland
Life Insurance Company.
WRITTEN NOTICE: A written notice or request in a form satisfactory to the
Company which is signed by the Owner and received at the Customer Service
Center.
YOU AND YOUR: You and your refer to the Owner of this Contract.
Form 15208-95
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OWNERS, ANNUITANTS, AND BENEFICIARIES
OWNERS AND DEATH OF OWNERS
The original Owner of this Contract is the person named as the Owner in the
application. Consistent with the terms of any Beneficiary designation and any
assignment, the Owner may, prior to the Annuity Date:
1. Assign this Contract or Surrender it in whole or in part;
2. Amend or change this Contract with the consent of the Company;
3. Exercise any right and receive any benefit; or
4. Change the ownership.
Subject to the applicable provisions of the Required Distributions section, if
the Owner (or Deemed Owner as defined in the Required Distributions section)
dies prior to the Annuity Date, and:
1. If the deceased Owner's spouse is the joint Owner, then the spouse
becomes the new Owner and no Death Benefit is payable; or
2. If the Owner's spouse is the Beneficiary, then the spouse may elect to
become the Owner (in which case there is no Death Benefit payable) by so
electing within 60 days of the death; if there is no such election, the
Death Benefit is payable to the Beneficiary; or
3. If the Owner's spouse is not the joint Owner or the Beneficiary, then the
Death Benefit is payable to the Beneficiary.
ANNUITANTS AND DEATH OF ANNUITANTS
The original Annuitant and any contingent Annuitant are named in the
application. The Annuitant will receive the Annuity Payments of the Contract
if, on the Annuity Date, the Annuitant is living. You may name a new Annuitant
prior to the Annuity Date. Any Annuitant or contingent Annuitant must be
younger than age 86 when named. Any Annuitant or contingent Annuitant that is
not an individual may not be named without our consent.
If the Annuitant dies before the Annuity Date, and a contingent Annuitant has
been named, the contingent Annuitant becomes the Annuitant. If no contingent
Annuitant has been named, you must designate a new Annuitant. If no designation
is made within 30 days of the Annuitant's death, the Owner will become the
Annuitant.
If any Owner is not an individual, the death of the Annuitant will be treated as
the death of the Owner.
Upon the death of the Annuitant after the Annuity Date, any remaining payments
will be continued to any contingent Annuitant. Upon the death of both the
Annuitant and any contingent Annuitant, any remaining payments will be paid to
the estate of the last to die of the Annuitant and contingent Annuitant.
Payments may be made in one sum if the Owner's election allows. See the Annuity
Payments section.
BENEFICIARIES AND DEATH OF BENEFICIARIES
The original Beneficiary and any contingent Beneficiaries are named in the
application. Surviving contingent Beneficiaries are paid the Death Benefit only
if no Beneficiary survives. If more than one Beneficiary in a class survives,
they will share the Death Benefit equally, unless the Owner's designation
provides otherwise. If there is no designated Beneficiary or contingent
Beneficiary surviving, we will pay the Death Benefit to the Owner's estate. We
will pay the Death Benefit in accordance with the most recent Beneficiary
designation on file. The Owner may name a new Beneficiary unless an irrevocable
Beneficiary has been named. When an irrevocable Beneficiary has been designated,
the Owner and the irrevocable Beneficiary must act together to make any
Beneficiary changes.
REQUIRED DISTRIBUTIONS
Form 15208-95
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The following required distribution rules shall apply if and to the extent
required under section 72(s) of the Code:
1. Subject to the alternative election or spousal beneficiary provisions in
subsection (2) or (3) below,
a) If an Owner dies on or after the Annuity Date and before the entire
interest in this Contract has been distributed, the remaining portion
of such interest shall be distributed at least as rapidly as under the
method of distribution being used as of the date of such death;
b) If an Owner dies before the Annuity Date, the entire interest in
this Contract will be distributed within five years after such death;
and
c) If any Owner is not an individual, then for purposes of this
subsection (1), the primary Annuitant under this Contract shall be
treated as the Owner (the "Deemed Owner"), and any change in the
primary Annuitant shall be treated as the death of the Owner. The
primary Annuitant is the individual, the events in the life of whom
are of primary importance in affecting the timing or amount of the
payment under the Contract.
2. If any portion of the interest of an Owner (or a Deemed Owner) in
subsection (1) is payable to or for the benefit of a designated
beneficiary, and such beneficiary elects to have such portion distributed
under an Annuity Payment Option over a period that: (A) does not extend
beyond such beneficiary's life or life expectancy and (B) starts within
one year after such death, or such later date as Treasury Regulation may
proscribe (a "Qualifying Distribution Period"); then for purposes of
satisfying the requirements of subsection (1), such portion shall be
treated as distributed entirely on the date such periodic distributions
begin. Such beneficiary may elect any Annuity Payment Option for a
Qualifying Distribution Period, subject to any restrictions imposed by
any regulations under section 72(s) of the Code.
3. If any portion of the interest of an Owner (or a Deemed Owner) described
in subsection (1) is payable to or for the benefit of such Owner's
spouse, or is co-owned by such spouse, then such spouse shall be treated
as the Owner of such portion for purposes of the requirements of
subsection (1).
PURCHASE PAYMENTS
This Contract will not be issued until the initial Purchase Payment shown on the
Schedule is received by us and accepted at our Customer Service Center. The
initial Purchase Payment is due on the issue date. A receipt will be furnished
upon request. Any subsequent Purchase Payments may be made at any time prior to
the Annuity Date subject to our requirements at the time the Purchase Payment is
made. We reserve the right to modify the requirements. The requirements in
effect on the issue date are shown on the Schedule. No benefit associated with
any Purchase Payment will be provided until the Purchase Payment is accepted by
us at our Customer Service Center.
We reserve the right to refuse to accept additional Purchase Payments at any
time for any reason.
PURCHASE PAYMENT ALLOCATION
The initial Purchase Payment will be allocated to the Subaccounts and to the
Guaranteed Interest Account as you directed in the application and as indicated
on the Schedule. Any Purchase Payments made thereafter will be allocated to
each Subaccount and/or the Guaranteed Interest Account in the same proportion
that each of your Subaccount Accumulation Values and Guaranteed Interest Account
Accumulation Value bears to your Accumulation Value as of the date we accept
that additional Purchase Payment at our Customer Service Center. You may
designate a different allocation with respect to any Purchase Payment by sending
us Written Notice with the Purchase Payment.
In states where we are required to refund Purchase Payments during the Free Look
Period, that portion of the initial Purchase Payment to be allocated to any
Subaccount is allocated to the Fidelity VIP Money Market Subaccount for a period
of 15 days from the date that the Contract is mailed from the Customer
Form 15208-95
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Service Center. At the expiration of this period, such portion of the Purchase
Payment, as adjusted to reflect the investment performance of the Fidelity VIP
Money Market Subaccount during this period, is then allocated to the Subaccounts
as described above.
VARIABLE ACCOUNT
The Variable Account is an account established by us pursuant to the laws of the
State of Texas, to separate the assets funding the variable benefits for the
class of Contracts to which this Contract belongs from the other assets of the
Company.
The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"). All income, gains and losses,
realized or unrealized, from assets allocated to the Variable Account are
credited to or charged against the Variable Account without regard to other
income, gains or losses of the Company. The assets of the Variable Account are
our property, but are separate from our General Account and any other separate
account maintained by us. That portion of the assets of the Variable Account
which is equal to the reserves and other Contract liabilities with respect to
the Variable Account is not chargeable with liabilities arising out of any other
business we may conduct. We have the right to transfer to our General Account
any assets of the Variable Account that are in excess of such reserves and other
liabilities.
The Variable Account is divided into Subaccounts, each of which invests in a
corresponding Portfolio designed to meet the objectives of the Subaccount. The
current Subaccounts are shown on the Schedule. We may, from time to time,
subject to review by the SEC and other regulatory authorities:
(1) Make additional subaccounts available to such classes of Contracts as we
may determine. These subaccounts will invest in portfolios we find
suitable for the Contract;
(2) Eliminate Subaccounts from the Variable Account, combine two or more
Subaccounts or substitute a new portfolio for the Portfolio in which a
Subaccount invests;
(3) Transfer assets of the Variable Account, which we determine to be
associated with the class of contracts to which your Contract belongs, to
another variable account;
(4) Withdraw the Variable Account from registration under the 1940 Act;
(5) Operate the Variable Account as an investment management company under
the 1940 Act or in any other form permitted by law;
(6) Cause one or more Subaccounts to invest in new portfolios;
(7) Create new separate accounts or combine separate accounts, including the
Variable Account;
(8) Restrict or eliminate any voting rights as to the Variable Account, as
permitted by applicable laws and regulations; and
(9) Make any changes required by the 1940 Act or the rules or regulations
thereunder or other applicable laws or regulations.
GUARANTEED INTEREST ACCOUNT
The Guaranteed Interest Account is another account to which you may allocate
Purchase Payments or make transfers. We pay a declared interest rate on all
amounts that you have in the Guaranteed Interest Account. Interest is credited
at the guaranteed annual effective interest rate shown on the Schedule or may be
credited at a higher rate. If declared, Southland will determine such higher
interest rates at the
Form 15208-95
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beginning of a twelve-month period, and such rates shall apply to all amounts in
the Guaranteed Interest Account throughout that twelve-month period.
ACCUMULATION VALUES
ACCUMULATION UNIT VALUE
Purchase Payments allocated to a Subaccount or amounts transferred to a
Subaccount are converted into Accumulation Units. For any Subaccount, the
number of Accumulation Units credited is determined by dividing the dollar
amount directed to the Subaccount by the value of the Accumulation Unit for that
Subaccount for the Valuation Period on which the Purchase Payment is received or
the transfer is effective. In this manner, an increase in Subaccount
Accumulation Value under a Contract occurs by the addition of Accumulation Units
of that Subaccount.
The Accumulation Unit Value for each Subaccount was arbitrarily set initially at
$10 when the Subaccount was established. Thereafter, for any Subaccount, the
Accumulation Unit Value for a Valuation Period equals the Accumulation Unit
Value for the preceding Valuation Period multiplied by the "Accumulation
Experience Factor" (defined below) for the current Valuation Period.
Decreases in Subaccount Accumulation Value under a Contract are effected by the
cancellation of an appropriate number of Accumulation Units of a Subaccount.
Therefore, Surrenders, withdrawals, transfers out of a Subaccount, payment of a
Death Benefit, the application of the Accumulation Value to an Annuity Payment
Option and the deduction of the annual administrative charge all result in the
cancellation of an appropriate number of Accumulation Units of one or more
Subaccounts. Accumulation Units are cancelled as of the end of the Valuation
Period in which the Company received notice of or instructions regarding the
event.
Form 15208-95
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ACCUMULATION EXPERIENCE FACTOR
For each Subaccount of the Variable Account, the Accumulation Experience Factor
reflects the investment experience of the Portfolio in which that Subaccount
invests and the charges assessed against that Subaccount for a Valuation Period.
The Accumulation Experience Factor is calculated by dividing (1) by (2) and
subtracting (3) from the result, where:
(1) is the result of:
a. the net asset value per share of the Portfolio held in the Subaccount,
determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gains distributions
made by the Portfolio held in the Subaccount, if the "ex-dividend"
date occurs during the current Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for, which is
determined by the Company to have resulted from the operations of the
Subaccount.
(2) is the net asset value per share of the Portfolio held in the
Subaccount, determined at the end of the last prior Valuation Period.
(3) is the daily factor representing the mortality and expense risk charge
and the administrative charge deducted from the Subaccount adjusted for
the number of days in the Valuation Period.
SUBACCOUNT ACCUMULATION VALUE
The Subaccount Accumulation Value as of the Contract Date is equal to the amount
of the initial Purchase Payment allocated to that Subaccount.
On subsequent Valuation Days, the Subaccount Accumulation Value equals:
1. The number of Accumulation Units in that Subaccount as of the end of the
preceding Valuation Period multiplied by that Subaccount's Accumulation
Unit value for the current Valuation Period; plus
2. Any additional Purchase Payments allocated to that Subaccount during the
current Valuation Period; plus
3. Any Accumulation Value transferred to such Subaccount during the current
Valuation Period; minus
4. Any Accumulation Value transferred from such Subaccount during the
current Valuation Period; minus
5. Any excess transfer charge allocated to such Subaccount during the
current Valuation Period; minus
6. Any Withdrawals (and any withdrawal transaction charges and Surrender
charges arising from such withdrawals) allocated to that Subaccount
during the current Valuation Period; minus
7. The portion of the annual administrative charge applicable to that
Subaccount if a Contract Anniversary occurs during the Valuation Period.
The annual administrative charge is deducted proportionately from your
Subaccount Accumulation Values immediately prior to the deduction.
GUARANTEED INTEREST ACCOUNT ACCUMULATION VALUE
Form 15208-95
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The Guaranteed Interest Account Accumulation Value as of the Contract Date is
equal to the amount of the initial Purchase Payment allocated to the Guaranteed
Interest Account.
On subsequent Valuation Days, the Guaranteed Interest Account Accumulation Value
equals:
1. The Guaranteed Interest Account Accumulation Value as of the end of the
preceding Valuation Period plus any interest earned during the current
Valuation Period; plus
2. Any additional Purchase Payments allocated to the Guaranteed Interest
Account during the current Valuation Period; plus
3. Any Accumulation Value transferred to the Guaranteed Interest Account
during the current Valuation Period; minus
4. Any Accumulation Value transferred from the Guaranteed Interest Account
during the current Valuation Period; minus
5. Any excess transfer charge allocated to the Guaranteed Interest Account
during the current Valuation Period; minus
6. Any withdrawals (and any withdrawal transaction charges and Surrender
charges) allocated to the Guaranteed Interest Account during the current
Valuation Period.
TRANSFERS
After the Free Look Period, the Accumulation Value in each Subaccount or the
Guaranteed Interest Account may be transferred, upon written request, to any
other Subaccount or the Guaranteed Interest Account subject to the limitations
on transfers involving the Guaranteed Interest Account as detailed in the
following section. The number of free transfers permitted in any one Contract
Year without an excess transfer charge, the total number of transfers permitted
and the excess transfer charge are shown in the table below. Any transfers made
due to the operation of Dollar Cost Averaging or Automatic Rebalancing will not
count toward the limit on the number of transfers allowed free of charge. The
minimum amount that may be transferred from each Subaccount or the Guaranteed
Interest Account is the lesser of $100 or the Accumulation Value of that
Subaccount or the Guaranteed Interest Account.
The table below summarizes the number of transfers available and the associated
charges during any Contract Year.
TRANSFERS AND EXCESS TRANSFERS
PRIOR TO ANNUITY DATE ANNUITY PERIOD
-------------------------------------------------------------------------------
FREE TRANSFERS 12 4
-------------------------------------------------------------------------------
TOTAL NUMBER OF TRANSFERS Unlimited 4
PERMITTED
-------------------------------------------------------------------------------
EXCESS TRANSFER CHARGE $25 for each transfer in excess of Not Applicable
12 during any Contract Year
-------------------------------------------------------------------------------
We reserve the right to limit the number of transfers per Contract Year to
twelve and to limit, modify or eliminate the transfer privilege.
Form 15208-95
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TRANSFERS FROM THE GUARANTEED INTEREST ACCOUNT
Once during the first 30 days of each Contract Year, you may transfer amounts
from the Guaranteed Interest Account. Transfer requests received within 30 days
prior to the Contract Anniversary will be deemed requests to transfer on the
Contract Anniversary. A request to transfer from the Guaranteed Interest
Account that is received on the Contract Anniversary or during the next 30 days
will be processed if it is the first such transfer received during the 30-day
period. Transfer requests received at any other time will not be processed.
The maximum transfer amount from the Guaranteed Interest Account in any Contract
Year is the greatest of:
1. 25% of the Guaranteed Interest Account Accumulation Value immediately
prior to the transfer;
2. $100; or
3. the sum of the amounts that were transferred out of and withdrawn from
the Guaranteed Interest Account in the prior Contract Year. (For purposes
of calculating this sum, all withdrawals, including those made under the
Systematic Withdrawal Program are included.)
EXCESS TRANSFER CHARGE
If you exceed the number of free transfers allowed, you will be assessed an
excess transfer charge as shown in the above table. This charge will be
deducted proportionately from your Subaccount Accumulation Values and your
Guaranteed Interest Account Accumulation Value immediately prior to the
deduction.
DOLLAR COST AVERAGING
Prior to the Annuity Date, if you have at least $10,000 of Accumulation Value in
either the [Fidelity VIP Money Market] Subaccount or the [Janus Short-Term Bond]
Subaccount, you may choose to transfer a specified dollar amount each month from
one of these Subaccounts and have a percentage of that amount transferred to
other Subaccounts of the Variable Account ("Dollar Cost Averaging"). You may
elect the Dollar Cost Averaging transfer option at any time prior to the Annuity
Date by Written Notice.
The minimum amount that you may elect to transfer each month is $100. The
maximum amount that you may transfer is equal to the Subaccount Accumulation
Value (when the election is made) of the Subaccount from which the transfer is
taken divided by twelve.
The percentages to be transferred to the other Subaccounts must be designated in
whole numbers. No specific dollar designation may be made to the Subaccounts.
If you elect to transfer to a particular Subaccount, the minimum percentage that
may be transferred to that Subaccount is 1% of the total amount transferred.
The transfer date will be the same calendar day each month as the Contract Date.
If this calendar day is not a Valuation Day, the next Valuation Day will be
used. If, on any transfer date, the Accumulation Value in the selected
Subaccount is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred, and this option will end.
Dollar Cost Averaging will end as of the Valuation Day immediately preceding the
Annuity Date.
You may change the transfer amount or the Subaccount to which transfers are to
be made once each Contract Year. You may cancel this election by Written Notice
at least seven days before the next transfer date. Any transfer under this
option will not be included for purposes of computing the excess transfer
charge.
AUTOMATIC REBALANCING
Form 15208-95
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You may choose to automatically transfer, on a quarterly basis, between and
among specified Subaccounts, in order to achieve a particular percentage
allocation among such Subaccounts ("Automatic Rebalancing"). Percentage
allocations must be in whole numbers. Once elected, Automatic Rebalancing
transfers begin on the first Valuation Day of the next calendar quarter (or, if
later, the next calendar quarter after expiration of the Free Look Period).
Automatic Rebalancing transfers do not count as one of the 12 free transfers
available during any Contract Year.
You may change your Automatic Rebalancing allocations at any time. Such
allocation changes will take effect as of the Valuation Day that we receive your
instructions. You may stop Automatic Rebalancing at least seven calendar days
before the first Valuation Day in a new calendar quarter.
If Automatic Rebalancing is elected at the same time as Dollar Cost Averaging or
when Dollar Cost Averaging is in effect, Automatic Rebalancing will be postponed
until the first Valuation Day in the calendar quarter following the termination
of Dollar Cost Averaging.
WITHDRAWALS
After the Free Look Period and prior to the Annuity Date, you may by written
request withdraw all or part of the Cash Surrender Value of this Contract. A
withdrawal may incur withdrawal transaction charges and may incur Surrender
charges. Withdrawals may be subject to a 10% penalty tax.
In no case will you be allowed to withdraw more than your Cash Surrender Value.
A withdrawal will result in a decrease in the Accumulation Value of this
Contract as described in the Accumulation Values section above.
There are three withdrawal options available:
1. "Demand Withdrawal Option";
2. "Systematic Withdrawal Program"; and
3. "XXX Income Program".
DEMAND WITHDRAWAL OPTION
After the Free Look Period and prior to the Annuity Date, you may make a Demand
Withdrawal. The minimum Demand Withdrawal amount is $100. The maximum Demand
Withdrawal amount is the Cash Surrender Value minus $500. If the amount of
Demand Withdrawal you specify exceeds the maximum, the amount of the withdrawal
will automatically be lowered to the maximum.
Demand Withdrawals are deemed to be withdrawn in the following order:
1. Accumulation Value in excess of aggregate Purchase Payments;
2. Purchase Payments held more than five full Contract Years since the
Contract Anniversary immediately following the end of the Contract Year
in which the Purchase Payment was made;
Form 15208-95
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3. The amount by which 15% of the Accumulation Value as of the last Contract
Anniversary, minus any withdrawals (including any withdrawal transaction
charges and Surrender charges arising from such withdrawals) already made
during the Contract Year, which are not considered withdrawals of
Purchase Payments, exceeds earnings, if any;
4. Purchase Payments held less than five full Contract Years since the
Contract Anniversary at the end of the Contract Year in which the
Purchase Payment was made, withdrawn on a first-in, first-out basis.
Unless you specify otherwise, the amount of the withdrawal will be taken from
each Subaccount and the Guaranteed Interest Account in which you are invested in
the same proportion that the amount of Accumulation Value in that Subaccount or
the Guaranteed Interest Account bears to the total Accumulation Value
immediately prior to the withdrawal. You may not withdraw from the Guaranteed
Interest Account an amount that is greater than the total withdrawal amount
requested multiplied by the ratio of the Guaranteed Interest Account
Accumulation Value to the total Accumulation Value immediately prior to the
withdrawal.
WITHDRAWAL TRANSACTION CHARGE
After the Free Look Period and prior to the Annuity Date, you may make one
Demand Withdrawal each Contract Year without a withdrawal transaction charge.
If you take more than one Demand Withdrawal in a Contract Year, we will impose a
withdrawal transaction charge. This charge is equal to the lesser of $25 or 2%
of the amount withdrawn.
SYSTEMATIC WITHDRAWAL PROGRAM
You may elect this option by Written Notice at any time prior to the Annuity
Date. You may choose to receive systematic withdrawals on a monthly or
quarterly basis from the Accumulation Value ("Systematic Withdrawal Program").
Withdrawals will be deducted proportionately from your Subaccount Accumulation
Values and your Guaranteed Interest Account Accumulation Value immediately prior
to the withdrawal. The withdrawals under this option may not start sooner than
one month after the Contract Date. You may select the day of the month when the
withdrawals will be made. If no day is selected, the withdrawals will be made
on the same day of the month as the Contract Date. If this day is not a
Valuation Day, the withdrawal will be made on the next Valuation Day. You may
select a dollar amount or a percentage amount for your withdrawal subject to the
following maximums:
MONTHLY 1.25% of the Accumulation Value on the date of withdrawal
QUARTERLY 3.75% of the Accumulation Value on the date of withdrawal
Except as described in the following sections, payments may not be less than
$100.
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage listed above, the amount
withdrawn will be reduced to equal such percentage. If a percentage amount is
selected that exceeds the maximum applicable percentage listed above, the amount
withdrawn will be reduced to equal such percentage. In either case, if the
amount to be withdrawn is then less than $100, the withdrawal will be made and
systematic withdrawals will be ended.
If systematic withdrawals are ended due to an insufficient Accumulation Value,
any remaining Cash Surrender Value will be paid to you. This will result in the
termination of the Contract.
You may change the amount or percentage of your systematic withdrawals once each
Contract Year. You may cancel your election at any time by Written Notice at
least seven days prior to the next scheduled withdrawal date.
If a Demand Withdrawal is made during a Contract Year when the Systematic
Withdrawal Program is in effect, the remaining payments to be made under the
Systematic Withdrawal Program for that Contract Year will be considered Demand
Withdrawals for purposes of calculating withdrawal transaction charges
Form 15208-95
19
and any applicable Surrender charges. Otherwise, systematic withdrawals will not
be assessed a Surrender Charge. However, the amount available for systematic
withdrawals is never greater than the Cash Surrender Value.
XXX INCOME PROGRAM
If you have an XXX Contract, we will send you withdrawals to accommodate IRS
required minimum distribution rules. These withdrawals will begin automatically
if the minimum distributions are not otherwise satisfied.
SURRENDERS
You may Surrender this Contract for its Cash Surrender Value at any time prior
to the Annuity Date. The Surrender charge shown on the Schedule will be
deducted upon Surrender. The Surrender charge is applicable only to the
Surrender of Purchase Payments held less than five full Contract Years since the
Contract Anniversary at the end of the Contract Year in which the Purchase
Payment was made.
Surrenders may be subject to a 10% penalty tax.
No Surrender may be made on or after the Annuity Date or with respect to any
amounts applied to an Annuity Option.
DEATH BENEFIT
DEATH BENEFIT PRIOR TO THE ANNUITY DATE
Upon the death of an Owner prior to the Annuity Date, any Enhanced Death
Benefit (as defined below) will be paid according to the provisions in the
Owners and Death of Owners and the Required Distributions sections. We will pay
the Enhanced Death Benefit in one lump sum unless the Beneficiary elects an
Annuity Payment Option within 60 days of our receiving Due Proof of Death. If a
one sum payment is made, it will be paid within seven days of determination of
the amount of the payment unless we are authorized by appropriate regulatory
authorities to defer payment. If the Enhanced Death Benefit is paid under an
Annuity Payment Option, the Beneficiary becomes the Annuitant and the contingent
Beneficiary becomes the contingent Annuitant. The available Annuity Payment
Options are described in the Annuity Payment Option section. Contact our
Customer Service Center or your agent for more information.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit is calculated as of the Valuation Day on which we
receive Due Proof of Death and all information necessary to process the Death
Benefit claim. The Enhanced Death Benefit is the greatest of the following
amounts:
1. Purchase Payments made, less withdrawals (and charges associated with
such withdrawals) accumulated at the Enhanced Death Benefit Accumulation
Rate shown in the Schedule, up to a maximum of two times (A - B), where A
= the sum of all Purchase Payments, and B = the sum of all withdrawals
(and charges associated with such withdrawals)
2. The Accumulation Value.
3. The Step-Up Benefit (as defined below), plus Purchase Payments made, less
withdrawals (and charges associated with such withdrawals) since the last
Step-Up Anniversary (as defined below).
Form 15208-95
20
The Step-Up Benefit at issue is the initial Purchase Payment. As of
each Step-Up Anniversary, the then current Accumulation Value is compared
to the prior Step-Up Benefit increased by Purchase Payments made, less
withdrawals (and charges associated with such withdrawals) since the last
Step-Up Anniversary. The greater of these becomes the new Step-Up
Benefit.
The Step-Up Anniversaries are every 6th Contract Anniversary for the
duration of the Contract (i.e., the 6th, 12th, 18th, etc.).
The amount payable to the Beneficiary is the Enhanced Death Benefit as
calculated above minus any taxes incurred but not deducted.
ANNUITY PAYMENTS
ELECTION AND CHANGES OF ANNUITY DATE
The Annuity Date may be elected on your application, but may not be earlier than
the second Contract Anniversary. If no Annuity Date is elected in the
application, the Annuity Date will be the first day of the month following the
Annuitant's 85th birthday or on the first day of the month following the tenth
Contract Anniversary, whichever occurs later. You may change the Annuity Date
at any time prior to 60 days prior to the Annuity Date currently elected by
Written Notice.
ELECTION AND CHANGES OF ANNUITY PAYMENT OPTION
The Owner elects the Annuity Payment Option. Once elected, the Owner may change
the Annuity Payment Option at any time prior to the Annuity Date. In selecting
an Annuity Payment Option, the Owner must determine whether the payments will be
variable or fixed in amount. If variable, the Owner must determine from which
Subaccounts variable Annuity Payments are to be made. The Owner may select a
combination of fixed and variable payments as described below. If the Owner has
not chosen an Annuity Payment Option and if the Annuitant is living on the
Annuity Date, then:
1. Any Guaranteed Interest Account Accumulation Value will be applied to
purchase fixed Annuity Payments and proceeds from each Subaccount
Accumulation Value will be applied to purchase variable Annuity Payments
from each such Subaccount; and
2. The Annuity Payment Option will be Annuity Payment Option II (with a
Benchmark Rate of Return of 3% for any variable Annuity Payments) with a
designated period of 20 years.
The Owner must specifically elect that the Annuitant have the right to commute
payments as provided in the Commuting section.
Any Death Benefit proceeds to be applied under an Annuity Option will be
allocated to the Subaccounts and/or the Guaranteed Interest Account as
instructed by the Beneficiary.
ANNUITY PAYMENT OPTIONS - GENERAL
The Annuity Payment Option becomes effective on the Annuity Date. The Annuity
Payment Option utilizes the Accumulation Value under the Contract on the Annuity
Date, less the amount of any taxes incurred by the Company but not yet
deducted, to activate the Annuity Payment Option selected by the Owner. If such
taxes are deducted at this time, the taxes will be deducted proportionately from
your Subaccount Accumulation Values and your Guaranteed Interest Account
Accumulation Value immediately prior to the deduction.
VARIABLE ANNUITY PAYMENTS
Form 15208-95
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Variable Annuity Payments are Annuity Payments that:
1. Are not pre-determined or guaranteed as to dollar amount; and
2. Vary in amount with the investment experience of the Subaccount(s) which
you select.
The dollar amount of an initial variable Annuity Payment attributable to a
Subaccount is determined from the attached Annuity Payment Option Tables using
that portion of the Accumulation Value applied to that Subaccount as of the
Annuity Date. Each Table reflects a different Annuity Payment Option, including
the selection of either a 3% or 5% Benchmark Rate of Return.
The dollar amount of each subsequent variable Annuity Payment attributable to a
Subaccount is determined by multiplying the number of Annuity Units of that
Subaccount credited under a Contract by the Annuity Unit value for that
Subaccount for the Valuation Period as of which the Annuity Payment is made.
The number of Annuity Units of a Subaccount credited under a Contract is
determined by dividing the dollar amount of the initial variable Annuity Payment
attributable to that Subaccount by the Annuity Unit value for that Subaccount
for the Valuation Period ending on the Annuity Date or during which the Annuity
Date falls. The number of Annuity Units attributable to each Subaccount under a
Contract remains fixed unless there is an exchange of Annuity Units, as provided
below.
ANNUITY UNIT VALUE
The Annuity Unit value of each Subaccount for any Valuation Period is calculated
by dividing (2) by (3), and then multiplying the result by (1), where:
(1) is the Annuity Unit value for the immediately preceding Valuation
Period;
(2) is the Annuity Experience Factor for the current Valuation Period; and
(3) is a special factor designed to compensate for the Benchmark Rate of
Return of 3% or 5% (as applicable) built into the Table used to compute
the first variable Annuity Payment.
BENCHMARK RATE OF RETURN
You must elect either a 3% or 5% Benchmark Rate of Return. Your election may not
be changed after the Annuity Date. Electing the 5% Benchmark Rate of Return
would mean a higher initial payment but more slowly rising or more rapidly
falling subsequent payments if actual investment experience varied from 5%. The
3% Benchmark Rate of Return assumption would have the opposite effect. If the
actual annual rate of return is 3% or 5%, the Annuity Payments will be level if
you elected either the 3% or 5% respectively.
EXCHANGE OF ANNUITY UNITS
The Annuitant may exchange the dollar value of all or a portion of the Annuity
Units in a Subaccount for an equivalent dollar amount of Annuity Units of
another Subaccount. The limit on exchanges of Annuity Units is shown in the
table in the Transfer section. After the exchanges, the number of Annuity
Units in the Subaccount from which you are transferring will be reduced by the
number of Annuity Units exchanged. The number of Annuity Units in the
Subaccount to which the exchange is made will be increased by the number of
Annuity Units acquired in the exchange.
FIXED ANNUITY PAYMENTS
Fixed Annuity Payments are Annuity Payments which remain fixed as to dollar
amount throughout the Annuity Period. As of the Annuity Date, any Subaccount
Accumulation Value applied to purchase fixed Annuity Payments will be allocated
to the Guaranteed Interest Account. The fixed Annuity Payment will be that
amount shown in the attached Tables. If the fixed Annuity Payment is credited
at an interest rate
Form 15208-95
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above the guaranteed minimum rate, the dollar amount of each
payment will be greater than the guaranteed dollar amount for the time period
that the higher rate is declared.
COMBINATION ANNUITY PAYMENTS
Combination Annuity Payments are Annuity Payments where a portion of the payment
is variable and a portion of the payment is fixed as to dollar amount. If a
combination Annuity Payment is elected, at least 25% of the proceeds must be
allocated to each elected option. As of the Annuity Date, we will allocate
proceeds between the Guaranteed Interest Account and the Subaccounts to meet the
proportions selected. Any amount of Accumulation Value to be transferred to or
from the Guaranteed Interest Account will be allocated among the Subaccounts in
which you are invested in the same proportion that each Subaccount Accumulation
Value bears to your Variable Account Accumulation Value. Once a combination
Annuity Payment is selected, the Annuitant may subsequently increase the
allocation to a fixed Annuity Payment, but may not increase the allocation to a
variable Annuity Payment.
ANNUITY PAYMENT OPTIONS
Under each Annuity Payment Option, the payment period is elected from one of the
following:
OPTION I. PAYMENTS FOR A DESIGNATED PERIOD. Payments will be made in 1, 2, 4,
or 12 installments per year as elected for a designated period, which may be 5
to 30 years. If the Annuitant dies before the end of the designated period,
payments will be continued to the contingent Annuitant (or to the Annuitant's
estate, if no contingent Annuitant has been named) until the end of the
designated period. If variable Annuity Payments are elected, the dollar amount
of each payment will vary, based on the Annuity Unit value(s) of the
Subaccount(s) selected. Variable Annuity Payments may only be elected if prior
to the Annuity Date, the Owner has made an irrevocable election to give the
Annuitant the right to commute any remaining designated period installments
under this option. If fixed Annuity Payments are elected, the dollar amount of
each payment will depend upon the designated period elected and will be equal
unless one or more payments are based on an interest rate in excess of the
guaranteed minimum rate. The amount of the first monthly payment for each
$1,000 of proceeds applied is shown in Annuity Payment Option Table I.
OPTION II. LIFE INCOME WITH PAYMENTS FOR A DESIGNATED PERIOD. Payments will be
made in 1, 2, 4, or 12 installments per year throughout the Annuitant's
lifetime, or if longer, for a period of 5, 10, 15, or 20 years as elected. If
the Annuitant dies before the end of the designated period, payments will be
continued to the contingent Annuitant (or to the Annuitant's estate, if no
contingent Annuitant has been named) until the end of the designated period.
The amount of each payment will depend upon the Annuitant's age at the time the
first payment is due and the designated period elected. If variable Annuity
Payments are elected, the dollar amount of each payment will vary based on the
Annuity Unit value(s) of the selected Subaccount(s). If fixed Annuity Payments
are elected, the dollar amount will be equal unless one or more payments are
based on an interest rate in excess of the guaranteed minimum rate. The amount
of the first monthly payout for each $1,000 of proceeds applied is shown in
Annuity Payment Option Table II. This option is only available for ages shown in
these Tables.
OPTION III. JOINT AND LAST SURVIVOR. Payments will be made in 1, 2, 4, or 12
installments per year as elected while both Annuitants are living. Upon the
death of one Annuitant, the survivor's Annuity Payment will be paid throughout
the lifetime of the surviving Annuitant. If variable Annuity Payments are
elected, the number of Annuity Units supporting each payment will be level while
both Annuitants are living and upon the death of one Annuitant will be reduced
to 2/3rds of the number of Annuity Units supporting each payment while both
Annuitants were living. The dollar amounts of each payment will vary based on
the Annuity Unit Value(s) of the selected Subaccount(s). If fixed Annuity
Payments are elected, the dollar amount of each payment will be level while both
Annuitants are living and upon the death of one Annuitant will be reduced to
2/3rds of the installment dollar amount while both Annuitants were living.
OPTION IV. OTHER. Payments will be made in any other manner as agreed upon in
writing between you or the Beneficiary and us.
Form 15208-95
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If you have elected to have payments made less frequently than monthly, the
payment amount is adjusted according to the factors in Payments Other Than
Monthly section.
COMMUTING
If the Owner elects, the Annuitant may commute remaining designated period
payments under Annuity Payment Option I. If the election allows, the contingent
Annuitant may commute remaining designated period payments after the death of
the Annuitant under Annuity Payment Options I or II. If no contingent Annuitant
is named, any remaining designated period payments after the death of the
Annuitant may be commuted by the estate. Any computation shall be at the
appropriate Benchmark Rate of Return.
EXCESS INTEREST
We may declare that fixed Annuity Payments will be computed based on an interest
rate above the guaranteed minimum rate. We guarantee that any higher rate, once
declared effective, will remain in effect for a 12-month period.
MINIMUM AMOUNTS
The minimum amount that may be applied under any Annuity Payment Option is
$2,000. If the proceeds to be applied are less than $2,000, or, if Annuity
Payments are ever less than $20, we may change the frequency of Annuity Payments
to result in payments of at least that amount or require a one sum payment, in
which case the Contract would be terminated.
INCOME PROTECTION
Unless elected by the Owner, an Annuitant or contingent Annuitant does not have
the right to commute, assign, transfer to a third party or encumber amounts held
or future Annuity Payments to become payable pursuant to this Contract. To the
extent provided by law, such proceeds and Annuity Payments are not subject to
any Annuitant's debts, contracts, or engagements.
PAYMENTS OTHER THAN MONTHLY
Tables at the end of the Contract show initial monthly payments for Annuity
Payment Options I and II. To arrive at annual, semiannual, or quarterly
payments, multiply the appropriate figures by 11.839, 5.963, or 2.993
respectively for a Guaranteed Interest Rate or Benchmark Rate of Return of 3%,
and, by 11.736, 5.939 or 2.988 respectively if the Benchmark Rate of Return is
5%. Factors for other designated periods or for other options that may be
provided by mutual agreement will be provided upon reasonable request.
GENERAL CONTRACT PROVISIONS
THE CONTRACT
This Contract, the application, riders and endorsements, make up the entire
Contract between you and us. A copy of the initial application will be attached
to this Contract at issue. In the absence of fraud, all statements made in an
application will be considered representations and not warranties. No statement
will be used to void this Contract or to deny a claim unless it is contained in
the application.
CONFORMITY WITH MONTANA STATUTES
The provisions of this Contract conform to the minimum requirements of Montana
law and control over any conflicting statutes of any state in which an insured
resides on or after the effective date of such insured's coverage.
Form 15208-95
24
AGE
The Owner's Age is shown on the Schedule. This is defined as the Owner's Age as
of last birthday on the Contract Date. The Annuitant's attained age on any date
for which age is to be determined is the Annuitant's age as of last birthday.
PROCEDURES
We must receive any election, designation, assignment or any other change
request you make in writing, except those specified on the application. We may
require a return of this Contract for any Contract change or for paying its Cash
Surrender Value. Any change will not affect payments made or action taken by us
before the change is recorded at our Customer Service Center.
In the event of the Owner's death before the Annuity Date, we should be informed
as soon as possible. Claim procedure instructions will be sent to your
Beneficiary immediately. We require a certified copy of the death certificate
and may require proof of the Owner's Age. We may require the Beneficiary and
the Owner's next of kin to sign authorizations as part of due proof.
25
DEFERRAL OF PAYMENT
Withdrawals or other payments from the Variable Account will usually be made
within seven days of receipt of the request at our Customer Service Center.
However, we may be permitted to defer such payment for any of the following
reasons:
1. When the NYSE is closed for trading for other than usual weekends or
holidays, or trading on the NYSE is otherwise restricted;
2. When an emergency exists as determined by the SEC; or
3. When the SEC permits a delay for protection of Contract Owners.
We may defer up to six months the payment of any withdrawal or other payments
from the Guaranteed Interest Account.
TAX QUALIFICATIONS
This Contract is intended to qualify as an annuity contract under the Code. To
that end, all terms and provisions of the Contract shall be interpreted to
ensure or maintain such qualification, notwithstanding any other provisions to
the contrary. Payments and distributions under this Contract shall be made in
the time and manner necessary to maintain such qualification under the
applicable provisions of the Code in existence at the time this Contract is
issued. We reserve the right to amend this Contract, to reflect any
clarifications or changes that may be needed or are appropriate, or to conform
it to any applicable changes in the tax requirements. Such changes will apply
uniformly to all Contracts that are affected. We will send you written notice
of any such changes.
CONTRACT CHANGES
Only the President, a Vice President, or the Secretary of the Company has
authority to agree on behalf of the Company to any alteration of this Contract
or to any waiver of the right or requirements of the company.
COLLATERAL ASSIGNMENT
The Owner may assign this Contract as collateral security upon Written Notice to
us. Once it is recorded with us, the rights of the Owner and Beneficiary are
subject to the assignment. It is your responsibility to make sure the
assignment is valid.
INCONTESTABILITY
We will not contest the statements in an application for this Contract after the
Contract Date.
MISSTATEMENT OF AGE
If the Age has been misstated in an application, the amounts payable or benefits
provided by this Contract will be those that the Purchase Payments made would
have purchased at the actual Age.
PERIODIC REPORTS
Prior to the Annuity Date, we will send you a report within thirty days after
the end of each calendar quarter. This report will show the then current
Subaccount and Guaranteed Interest Account Accumulation Values, total
Accumulation Value, Cash Surrender Value, Enhanced Death Benefit and activity
under the Contract since the last report. During the Annuity Period, we will
send you a report within thirty days after the end of each calendar year showing
any information required by law. The reports will also include any other
information that may be required by the insurance supervisory official of the
jurisdiction in which this Contract is delivered.
Form 15208-95
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BASIS OF COMPUTATIONS
Any paid-up annuity Cash Surrender Values or Death Benefits that may be
available under this Contract are not less than the minimums required on the
Contract Date by the state in which this Contract was delivered. A detailed
statement of the method of computation of Accumulation Values under this
Contract has been filed with the insurance department of the state in which the
application was signed, if requested by that state.
TAXES
Taxes relating to this Contract paid by us to any governmental entity will be
deducted from the Purchase Payments or Accumulation Value. We will, at our sole
discretion, determine when taxes have resulted from: the investment experience
of the Subaccounts; receipt by us of the Purchase Payments; Surrenders or
withdrawals; or the start of an Annuity Option. We may, in our sole discretion,
pay taxes when incurred and deduct that amount from the Accumulation Value at a
later date. Payment at an earlier date does not waive any right we may have to
deduct amounts at this later date. We will deduct any withholding taxes
required by applicable law.
NON PARTICIPATING
This Contract does not participate in our surplus earnings.
CUSTOMER SERVICE CENTER
Our Customer Service Center is at the address shown in the Schedule. Unless you
are otherwise notified:
1. All requests and payments should be sent to us at our Customer Service
Center; and
2. All transactions are effective as of the date the required information is
accepted at our Customer Service Center.
Form 15208-95
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ANNUITY PAYMENT OPTION TABLES
OPTION I TABLE
(Benchmark Rate of Return or Guaranteed Interest Rate is 3% - Per $1,000 of
Proceeds)
--------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installments
--------------------------------------------------------------
5 $17.92 20 $5.53
6 15.16 21 5.34
7 13.18 22 5.17
8 11.70 23 5.01
9 10.55 24 4.86
10 9.63 25 4.73
11 8.86 26 4.61
12 8.26 27 4.50
13 7.73 28 4.39
14 7.28 29 4.30
15 6.89 30 4.21
16 6.55
17 6.25
18 5.98
19 5.75
--------------------------------------------------------------
Form 15208-95
28
OPTION I TABLE - VARIABLE ANNUITY ONLY
(Benchmark Rate of Return is 5% - Per $1,000 of Proceeds)
--------------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installments
---------------------------------------------------------------------
5 $18.79 20 $6.57
6 16.04 21 6.39
7 14.08 22 6.23
8 12.61 23 6.08
9 11.47 24 5.94
10 10.56 25 5.82
11 9.82 26 5.71
12 9.21 27 5.61
13 8.69 28 5.51
14 8.25 29 5.43
15 7.88 30 5.35
16 7.55
17 7.26
18 7.00
19 6.77
-------------------------------------------------------------------------------
Form 15208-95
29
OPTION II TABLE
(Benchmark Rate of Return or Guaranteed Interest Rate is 3% - Per $1,000 of
Proceeds)
-----------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday Monthly Installment Last Birthday Monthly Installment
when First When First
Installment is Installment is
Payable Payable
-----------------------------------------------------------------------------------------------------------------------------
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------
20 2.98 2.98 2.97 2.97 45 3.75 3.74 3.72 3.69
21 2.99 2.99 2.99 2.99 46 3.81 3.79 3.77 3.73
22 3.01 3.01 3.01 3.01 47 3.86 3.85 3.82 3.78
23 3.03 3.03 3.03 3.02 48 3.92 3.91 3.88 3.83
24 3.05 3.05 3.05 3.04 49 3.98 3.96 3.93 3.88
25 3.07 3.07 3.07 3.06 50 4.05 4.03 3.99 3.93
26 3.09 3.09 3.09 3.09 51 4.11 4.09 4.05 3.99
27 3.12 3.12 3.11 3.11 52 4.19 4.16 4.11 4.04
28 3.14 3.14 3.14 3.13 53 4.26 4.23 4.18 4.10
29 3.17 3.16 3.16 3.15 54 4.34 4.31 4.25 4.16
30 3.19 3.19 3.18 3.18 55 4.42 4.39 4.32 4.22
31 3.22 3.22 3.21 3.20 56 4.51 4.47 4.40 4.29
32 3.25 3.24 3.24 3.23 57 4.60 4.56 4.47 4.35
33 3.27 3.27 3.27 3.26 58 4.70 4.65 4.56 4.42
34 3.31 3.30 3.30 3.29 59 4.81 4.75 4.64 4.48
35 3.34 3.33 3.33 3.32 60 4.92 4.85 4.73 4.55
36 3.37 3.37 3.36 3.35 61 5.04 4.96 4.82 4.62
37 3.41 3.40 3.39 3.38 62 5.16 5.07 4.91 4.69
38 3.44 3.44 3.41 3.41 63 5.30 5.19 5.01 4.75
39 3.48 3.48 3.47 3.45 64 5.44 5.32 5.11 4.82
40 3.52 3.52 3.50 3.49 65 5.59 5.45 5.21 4.89
41 3.56 3.56 3.54 3.52 66 5.75 5.59 5.32 4.95
42 3.61 3.60 3.59 3.56 67 5.92 5.73 5.42 5.01
43 3.66 3.65 3.63 3.60 68 6.10 5.89 5.53 5.07
44 3.70 3.69 3.67 3.65 69 6.29 6.04 5.63 5.13
-----------------------------------------------------------------------------------------------------------------------------
Form 15208-95
30
OPTION II TABLE
(Benchmark Rate of Return or Guaranteed Interest Rate is 3% - Per $1,000 of
Proceeds)
-----------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday Last Birthday
when First Monthly Installment When First Monthly Installment
Installment is Installment is
Payable Payable
-----------------------------------------------------------------------------------------------------------------------------
5 Years 10 15 20 5 Years 10 15 20
Unisex Certain Years Years Years Unisex Certain Years Years Years
Certain Certain Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------
70 6.50 6.21 5.74 5.18 85 11.33 8.78 6.78 5.51
71 6.72 6.38 5.84 5.23 86 11.75 8.90 6.80 5.51
72 6.95 6.55 5.95 5.27 87 12.16 9.01 6.82 5.51
73 7.20 6.73 6.04 5.31 88 12.58 9.11 6.83 5.51
74 7.46 6.91 6.14 5.35 89 12.98 9.20 6.84 5.51
75 7.74 7.10 6.23 5.38 90 13.39 9.27 6.85 5.51
76 8.03 7.29 6.31 5.40 91 13.78 9.34 6.86 5.51
77 8.34 7.47 6.39 5.43 92 14.16 9.40 6.86 5.51
78 8.67 7.66 6.46 5.45 93 14.52 9.44 6.87 5.51
79 9.01 7.84 6.53 5.46 94 14.88 9.49 6.87 5.51
80 9.37 8.02 6.59 5.47 95 15.22 9.52 6.87 5.51
81 9.74 8.19 6.64 5.48
82 10.12 8.35 6.68 5.49
83 10.52 8.51 6.72 5.50
84 10.92 8.65 6.75 5.50
-----------------------------------------------------------------------------------------------------------------------------
Form 15208-95
31
OPTION II TABLE - VARIABLE ANNUITY ONLY
(Benchmark Rate of Return is 5% - Per $1,000 of Proceeds)
-----------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday Last Birthday
when First Monthly Installment when First Monthly Installment
Installment is Installment is
Payable Payable
-----------------------------------------------------------------------------------------------------------------------------
5 Years 10 15 20 5 Years 10 15 20
Unisex Certain Years Years Years Unisex Certain Years Years Years
Certain Certain Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------
15 4.27 4.27 4.27 4.27 40 4.77 4.76 4.75 4.72
16 4.28 4.28 4.28 4.28 41 4.81 4.80 4.78 4.75
17 4.29 4.29 4.29 4.29 42 4.85 4.84 4.82 4.79
18 4.31 4.30 4.30 4.30 43 4.89 4.88 4.85 4.82
19 4.32 4.32 4.31 4.31 44 4.94 4.92 4.89 4.86
20 4.33 4.33 4.32 4.32 45 4.98 4.97 4.93 4.89
21 4.34 4.34 4.34 4.33 46 5.03 5.01 4.98 4.93
22 4.36 4.35 4.35 4.34 47 5.08 5.06 5.02 4.97
23 4.37 4.37 4.36 4.36 48 5.14 5.11 5.07 5.02
24 4.39 4.38 4.38 4.37 49 5.19 5.16 5.12 5.06
25 4.40 4.40 4.39 4.39 50 5.25 5.22 5.17 5.10
26 4.42 4.41 4.41 4.40 51 5.31 5.28 5.23 5.15
27 4.44 4.43 4.43 4.42 52 5.38 5.34 5.28 5.20
28 4.45 4.45 4.44 4.44 53 5.45 5.41 5.34 5.25
29 4.47 4.47 4.46 4.46 54 5.52 5.48 5.40 5.30
30 4.49 4.49 4.48 4.47 55 5.60 5.55 5.47 5.36
31 4.52 4.51 4.50 4.49 56 5.69 5.63 5.54 5.41
32 4.54 4.53 4.53 4.52 57 5.78 5.71 5.61 5.47
33 4.56 4.56 4.55 4.54 58 5.87 5.80 5.68 5.53
34 4.59 4.58 4.57 4.56 59 5.97 5.89 5.76 5.58
35 4.61 4.61 4.60 4.58 60 6.08 5.99 5.84 5.64
36 4.64 4.64 4.63 4.61 61 6.19 6.09 5.92 5.70
37 4.67 4.67 4.65 4.64 62 6.32 6.20 6.01 5.77
38 4.71 4.70 4.68 4.66 63 6.45 6.31 6.10 5.83
39 4.74 4.73 4.71 4.69 64 6.59 6.43 6.19 5.89
-----------------------------------------------------------------------------------------------------------------------------
Form 15208-95
32
OPTION II TABLE - VARIABLE ANNUITY ONLY
(Benchmark Rate of Return is 5% - Per $1,000 of Proceeds)
Age of Annuitant Age of Annuitant
Last Birthday Last Birthday
When First Monthly Installment When First Monthly Installment
Installment is Installment is
Payable Payable
-----------------------------------------------------------------------------------------------------------------------------
5 Years 10 15 20 5 Years 10 15 20
Unisex Certain Years Years Years Unisex Certain Years Years Years
Certain Certain Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------
65 6.73 6.56 6.28 5.94 85 12.39 9.72 7.73 6.51
66 6.89 6.69 6.38 6.00 86 12.80 9.83 7.75 6.51
67 7.06 6.83 6.48 6.06 87 13.20 9.94 7.77 6.51
68 7.24 6.97 6.57 6.11 88 13.60 10.03 7.78 6.51
69 7.43 7.12 6.67 6.16 89 13.99 10.11 7.79 6.51
70 7.63 7.28 6.77 6.21 90 14.38 10.18 7.80 6.51
71 7.85 7.44 6.86 6.25 91 14.75 10.24 7.81 6.51
72 8.08 7.60 6.96 6.29 92 15.12 10.30 7.81 6.51
73 8.32 7.78 7.05 6.33 93 15.47 10.34 7.81 6.51
74 8.58 7.95 7.14 6.36 94 15.80 10.38 7.82 6.51
75 8.86 8.13 7.22 6.39 95 16.13 10.42 7.82 6.51
76 9.15 8.30 7.30 6.41
77 9.45 8.48 7.37 6.43
78 9.78 8.66 7.44 6.45
79 10.11 8.83 7.50 6.46
80 10.47 9.00 7.55 6.47
81 10.83 9.16 7.60 6.48
82 11.21 9.31 7.64 6.49
83 11.60 9.46 7.67 6.50
84 11.99 9.59 7.70 6.50
-----------------------------------------------------------------------------------------------------------------------------
Form 15208-95
33
THIS CONTRACT IS A FLEXIBLE PREMIUM DEFERRED
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT.
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THESE VALUES MAY
INCREASE OR DECREASE BASED ON INVESTMENT EXPERIENCE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. ANNUITY PAYMENTS BEGIN AS OF THE ANNUITY DATE. PURCHASE
PAYMENTS ARE FLEXIBLE AND MAY BE MADE UNTIL THE EARLIER OF THE ANNUITY DATE OR
THE MAXIMUM AGE SHOWN IN THE SCHEDULE. THE ENHANCED DEATH BENEFIT WILL BE PAID
IF THE OWNER DIES PRIOR TO THE ANNUITY DATE.
SOUTHLAND LIFE INSURANCE COMPANY
A Stock Company
--------------------------------------------------------------------------------
Form 15208-95
34
