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EXHIBIT 99.4(a)
Form of Individual Flexible Premium
Variable Accumulation Annuity Contract
(Draft)
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DRAFT
PACIFIC INNOVATIONS
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
o Investment Experience Reflected in Benefits
o Variable and Fixed Accumulation Before Annuity Date; Variable and Fixed
Annuity Payments Thereafter
o Death Benefit Proceeds Payable Before Annuity Date
o Participating
Please read your contract carefully. This is a legal contract between you, the
Owner, and us, Pacific Mutual Life Insurance Company, a mutual company.
We agree to pay the benefits of this Contract according to its provisions.
The consideration for this Contract is the application for it (copy or
confirmation is attached) and our receipt of the Purchase Payment(s).
CONTRACT LOAN AMOUNT IS LESS THAN 100% OF CONTRACT VALUE.
BENEFITS AND VALUES UNDER THIS CONTRACT MAY BE ON A VARIABLE BASIS. AMOUNTS
DIRECTED INTO ONE OR MORE OF THE VARIABLE INVESTMENT OPTIONS WILL REFLECT THE
INVESTMENT EXPERIENCE OF THOSE INVESTMENT OPTIONS. THESE AMOUNTS MAY INCREASE
OR DECREASE, AND ARE NOT GUARANTEED AS TO A DOLLAR AMOUNT. THE DETAILS OF THE
VARIABLE PROVISIONS BEGIN ON PAGE 10.
Right To Cancel - You may return this Contract within 10 days after you receive
it. To do so, mail it to us at our Service Center or to the agent who sold it
to you. This Contract will then be deemed void from the beginning. No
withdrawal fee will be imposed, and we will refund your [Contract Value,
including any fees and/or charges that were deducted from that Contract Value.]
[Purchase Payments.]
Signed at our Home Office, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000.
Chairman and Chief Executive Officer Secretary
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
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TABLE OF CONTENTS
CONTRACT SPECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PURCHASE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchase Payment Allocation . . . . . . . . . . . . . . . . . . . . 9
Allocations During the Right to Cancel Period . . . . . . . . . . . 9
Minimum Investment Option Value . . . . . . . . . . . . . . . . . . 9
THE FIXED OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
VARIABLE INVESTMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . .10
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . .10
CONTRACT VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Fixed Option Value . . . . . . . . . . . . . . . . . . . . . . . . .11
Variable Account Value . . . . . . . . . . . . . . . . . . . . . . .11
Loan Account Value . . . . . . . . . . . . . . . . . . . . . . . . .11
CHARGES, FEES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . .13
Administrative Fee . . . . . . . . . . . . . . . . . . . . . . . . .13
Annual Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . .13
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Transfer Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Withdrawal Fee . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Withdrawal Charge . . . . . . . . . . . . . . . . . . . . . . . . .13
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Amount Available for Withdrawal . . . . . . . . . . . . . . . . . .15
Special Restrictions - Fixed Option . . . . . . . . . . . . . . . .15
CONTRACT LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Death Benefit Amount . . . . . . . . . . . . . . . . . . . . . . . .16
Guaranteed Minimum Death Benefit . . . . . . . . . . . . . . . . . .16
Death of Annuitant . . . . . . . . . . . . . . . . . . . . . . . . .16
Death of Owner . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Death of Owner Distribution Rules . . . . . . . . . . . . . . . . .17
Interest on Death Benefit Proceeds . . . . . . . . . . . . . . . . .18
BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Adding or Changing Your Beneficiary . . . . . . . . . . . . . . . .18
ANNUITY BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Choice of Annuity Date . . . . . . . . . . . . . . . . . . . . . . .18
Application of Contract Value . . . . . . . . . . . . . . . . . . .18
Your Selections . . . . . . . . . . . . . . . . . . . . . . . . . .19
Xxxxx and Variable Annuities . . . . . . . . . . . . . . . . . . . .19
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . .19
Default Annuity Date and Options . . . . . . . . . . . . . . . . . .20
Amount of Payments . . . . . . . . . . . . . . . . . . . . . . . . .20
Fixed Annuity Payments . . . . . . . . . . . . . . . . . . . . . . .20
Conversion to Current Rates . . . . . . . . . . . . . . . . . . . .20
Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . .20
Periodic Payments . . . . . . . . . . . . . . . . . . . . . . . . .21
Misstatement of Age or Sex . . . . . . . . . . . . . . . . . . . . .21
ANNUITY OPTION TABLES . . . . . . . . . . . . . . . . . . . . . . . . . .22
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CONTRACT SPECIFICATIONS
SERVICE CENTER: SEND FORMS AND WRITTEN REQUESTS TO: SEND PAYMENTS TO:
Pacific Mutual Life Insurance Company Pacific Mutual Life Insurance Company
P.O. Box 7187 P.O. Box 100060
Pasadena, California 91109-7187 Pasadena, California 91189-0060
Toll-free number: 0-000-000-0000 (between 6:00 a.m. and 5:00 p.m., Pacific
time)
Please use our toll-free number to present inquiries or obtain information
about your coverage and for us to provide assistance in resolving complaints.
Basic Contract - NON-QUALIFIED
Investment Options:
Variable Investment Options:
[Money Market Subaccount Mid-Cap Equity Subaccount
Managed Bond Subaccount Aggressive Growth Subaccount
Capital Income Subaccount International Subaccount
Blue Chip Subaccount ]
Fixed Option
Administrative Charge: 0.15%
Mortality and Expense Risk Charge: 1.25%
Annual Fee: $30 if Net Contract Value is less
than $50,000
Withdrawal Charge: Age of Premium
in contract years Charge Percent
1 7%
2 6%
3 5%
4 3%
5 1%
6 and over 0%
Contract Number: Contract Date:
Owner(s):
Annuitant(s): Age Sex
Initial Purchase Payment: Annuity Start Date:
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DEFINITIONS
PM, WE, OUR and US - Pacific Mutual Life Insurance Company.
YOU and YOUR - The person or persons named as Owner(s) in the Contract
Specifications. If there are Joint Owners, you and your means both Joint
Owners.
ACCOUNT VALUE - The amount of your Contract Value allocated to any one of the
Investment Options.
AGE - The Owner's or Xxxxxxxxx's age, as applicable, at his or her last
birthday.
ANNUITANT - The person you name on whose life annuity payments may be
determined. An Annuitant's life may also be used to determine certain increases
in death benefits, and to determine the Annuity Date. If you designate Joint
Annuitants or a Contingent Annuitant, unless otherwise stated, "Annuitant"
means the sole surviving Annuitant. If your Contract is a Non-Qualified
Contract, you cannot change the Annuitant or change or add a Joint Annuitant.
If your Contract is a Qualified Contract, you may add a Joint Annuitant on the
Annuity Date.
ANNUITY DATE ("ANNUITY START DATE") - The date shown in the Contract
Specifications, or the date you later elect, if any, for the start of annuity
payments if the Annuitant is still living and the Contract is in force; or if
earlier, the date that annuity payments actually begin.
ANNUITY OPTIONS - Income options available for a series of payments after your
Annuity Date.
BENEFICIARY - The person you name who may receive any death benefit proceeds
payable on the death of the Annuitant or any Owner prior to the Annuity Date;
or any remaining annuity benefits payable on the death of the Annuitant after
the Annuity Date. If no Beneficiary is named or the Beneficiary does not
survive the Annuitant, and the Annuitant dies, then the Owner's estate will
have the rights of the Beneficiary. If you are not the Annuitant and you die
before the Annuitant, and before the Annuity Date, any death benefit proceeds
will be payable to the surviving Joint Owner, if any; otherwise to the
surviving Contingent Owner, if any; otherwise, to the Beneficiary, if living;
otherwise, to the Owner's estate.
BUSINESS DAY - Any day on which the value of an amount invested in a Subaccount
can be determined. If any transaction or event under this Contract is scheduled
to occur on a day that does not exist in a given calendar period, or on a day
that is not a Business Day, such transaction or event will be deemed to occur
on the next following Business Day, unless otherwise stated.
CODE - The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - The person, if any, you select who may become the
Annuitant if the Annuitant dies before your Annuity Date. You may add or
change your Contingent Annuitant prior to the Annuity Date provided the
existing Contingent Annuitant is not the sole surviving Annuitant. Any
Contingent Annuitant you name must not have attained age 86 as of your Contract
Date or, if you add or change a Contingent Annuitant, as of the date of the
addition or change.
CONTINGENT OWNER - The person, if any, you select who may succeed to your
rights as Owner of this Contract if all named Contract Owners die.
CONTRACT ANNIVERSARY - The same date, in each subsequent year, as your Contract
Date.
CONTRACT DATE - The date we issue your Contract, as shown in the Contract
Specifications. Contract Years, Contract Semiannual Periods, Contract Quarters
and Contract Months are measured from this date.
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CONTRACT DEBT - As of the end of any Business Day, the principal amount you
have outstanding on any loan under this Contract, plus any accrued and unpaid
interest.
CONTRACT VALUE - As of the end of any Business Day, your Variable Account
Value, plus your Fixed Option Value, and any Loan Account Value.
FIXED OPTION - Amounts allocated under your Contract to the Fixed Option are
held in our General Account and receive interest at rates declared periodically
(the "Guaranteed Interest Rate"), but not less than an annual rate of 3%.
FIXED OPTION VALUE - The aggregate amount of your Contract Value allocated to
the Fixed Option.
GENERAL ACCOUNT - Our General Account consists of all assets of PM, other than
those assets allocated to Separate Account B or to any of our other separate
accounts.
GUARANTEED INTEREST RATE - The interest rate guaranteed at the time of
allocation (or roll over) for the Guarantee Term on amounts allocated to the
Fixed Option. All Guaranteed Interest Rates are expressed as annual rates, and
interest is accrued daily. This rate will not be less than an annual rate of
3%.
GUARANTEE TERM - The period during which the amount you allocate to the Fixed
Option earns a specified Guaranteed Interest Rate. The maximum Guarantee Term
is up to one year. All Guarantee Terms end at midnight on the day prior to your
Contract Anniversary.
INVESTMENT OPTION - A Variable Account or Fixed Option offered under the
Contract.
LOAN ACCOUNT VALUE - The amount, including any interest accrued, held in the
Loan Account to secure any Contract Debt.
NET CONTRACT VALUE - Your Contract Value less any Contract Debt.
NON-NATURAL OWNER - A corporation or other entity which is a non-natural
person, unless the entity demonstrates to our satisfaction, or we otherwise
determine in our sole discretion, that the Contract should be treated, for
purposes of Section 72(s) of the Code, as owned by an individual (natural)
person.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract.
OWNER - The person(s) who has (have) all rights under this Contract. If your
Contract names Joint Owners, Owner means both Joint Owners. Any named Owner
must not have attained age 86 as of your Contract Date. If your Contract allows
you to change or add Owners after the Contract is issued, any newly-named or
added Owners, including Joint and/or Contingent Owners, must be under the age
of 86 at the time of change or addition.
PURCHASE PAYMENT (PREMIUM PAYMENT) - An amount paid to us by or on behalf of an
Owner as consideration for the benefits provided under this Contract.
QUALIFIED CONTRACT - A Contract that qualifies under the Code as an individual
retirement annuity ("IRA"), or a Contract purchased under a Qualified Plan that
qualifies for special tax treatment under the Code.
QUALIFIED PLAN - A retirement plan that receives favorable tax treatment under
Section 401, 403, 408, or 457 of the Code.
SEC - Securities and Exchange Commission.
SEPARATE ACCOUNT (SEPARATE ACCOUNT B) - A Separate Account of PM registered as
a unit investment trust under the Investment Company Act of 1940.
SERVICE CENTER - PM's mailing address shown in the Contract Specifications. We
will notify you of any change in our mailing address.
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SUBACCOUNT - An investment division of the Separate Account. Each Subaccount,
(a "Variable Investment Option" or "Variable Account") invests its assets in a
separate series or class of shares of a designated investment company.
SUBACCOUNT ANNUITY UNIT (ANNUITY UNITS) - Annuity Units are used to measure
variation in variable annuity payments. The amount of each variable annuity
payment (after the first payment) will vary with the value and number of your
Annuity Units in each Subaccount.
SUBACCOUNT UNIT - Subaccount Units are used to measure your Contract Value in
that Subaccount.
UNIT VALUE - The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). The Unit Value of
any Subaccount is subject to change on any Business Day. The fluctuations in
value reflect the investment results, and also reflect the daily deductions for
the mortality and expense risk charge and administrative fee. Changes in
Subaccount Annuity Unit Values also reflect an additional adjustment factor
that corrects for an assumed investment return of 5%. The Unit Value of a
Subaccount Unit and of a Subaccount Annuity Unit on any Business Day is
measured at or about 4:00 p.m. Eastern Time on each Business Day.
VARIABLE ACCOUNT (A "VARIABLE INVESTMENT OPTION") - A Subaccount of the
Separate Account or any separate account of PM which is available under your
Contract in which assets of PM are segregated from assets in its General
Account and other separate accounts.
VARIABLE ACCOUNT VALUE - The aggregate amount of your Contract Value allocated
to the Variable Accounts.
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GENERAL PROVISIONS
REPORTS TO OWNERS - At least once per year, we will send you a report that will
show your Contract Value, any Purchase Payments received, loan repayments,
transfers, withdrawals, applicable withdrawal charges and/or other charges
and/or fees incurred since the last report, and any other information that may
be required.
PAYMENTS, INSTRUCTIONS AND REQUESTS - Unless this Contract provides otherwise,
all Purchase Payments, loan repayments, instructions and requests must be
received in proper form at our Service Center at its mailing address. (See
DEFINITIONS - SERVICE CENTER). Any subsequent Purchase Payments, loan
repayments and requests for loans, transfers or withdrawals we receive in
proper form on any Business Day usually will be processed the same Business Day
unless the transaction or event is scheduled to occur on another day.
Generally, all other instructions and requests normally will be effective as of
the end of the day next following the Business Day we receive them in proper
form, unless the event is scheduled to occur on another day. We may require
that you provide signature guarantees or other safeguards for any instruction,
request or other document you may send to our Service Center. You acknowledge
and agree that we will not be liable for any loss, liability, cost or expense
of any kind or character for acting on instructions or requests submitted to us
that we reasonably believe to be genuine, provided we follow our procedures.
ENTIRE CONTRACT - This document, the attached application or confirmation
thereof, any subsequent applications to change this Contract or confirmation
thereof, and any riders and endorsements, constitute the entire Contract, and
supersede any and all prior agreements, whether oral or written, about the
terms of this Contract and the application. All statements made in the
application are representations and not warranties.
CONTRACT MODIFICATIONS - Modifications to this Contract or any waiver of our
rights or requirements under this Contract can only be made if in writing by an
authorized officer of PM. This Contract is intended to qualify as an annuity
contract for Federal income tax purposes. To that end, the provisions of this
Contract are to be interpreted and administered to ensure or maintain such tax
qualification, notwithstanding any other provisions to the contrary. Payments
and distributions under this Contract shall be made in a time and manner
necessary to maintain such qualification under the applicable provisions of the
Code. We reserve the right to amend this Contract and/or our administrative
procedures without consent (except for the states of Michigan, Pennsylvania,
South Carolina and Washington) to reflect any clarifications that may be needed
or are appropriate to maintain its tax qualification or to conform this
Contract to any applicable changes in the tax qualification requirements.
BASIS OF VALUES - A detailed statement showing how values are determined has
been filed with the state insurance departments. All values and reserves are at
least equal to those required by the laws of the state in which this Contract
is issued.
CLAIMS OF CREDITORS - Your Contract Value and other benefits under this
Contract are exempt from the claims of creditors to the extent permitted by
law.
REMOVAL OF BENEFICIARY OR CONTINGENT ANNUITANT - You may remove a Beneficiary
(other than an irrevocable Beneficiary) or a Contingent Annuitant from this
Contract by providing proper instructions to our Service Center.
OWNERSHIP - This Contract belongs to the Owner. The Owner is entitled to
exercise all rights available to the Owner under this Contract. If this
Contract is jointly owned, both Owners must join in any request to exercise
these rights. The Owner may exercise these rights under this Contract without
the consent of the Beneficiary (other than any irrevocable Beneficiary) or any
other person, except as otherwise required by law.
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ASSIGNMENT - You may assign all rights and benefits under this Contract before
the Annuity Date. We are not bound by any assignment until we have received
written notice satisfactory to us and we record the assignment. We are not
responsible for the validity of any assignment. If the Contract has been
absolutely assigned, the assignee becomes the Owner. You should consult with
your tax adviser before taking any action.
DELAY OF PAYMENTS - Generally, payments, transfers, or exchanges will be made
within seven days from receipt of the payment and/or request in a form
satisfactory to us. Payment of your withdrawal proceeds or transfers or
exchanges to or from a Variable Account may be delayed after receipt of your
withdrawal, transfer, or exchange request under certain circumstances. These
include:
o a closing of the New York Stock Exchange other than on a regular
holiday or weekend;
o a trading restriction by the SEC; or
o an emergency declared by the SEC.
We may delay payments or transfers from our General Account (which would
include payment of your withdrawal proceeds and transfers from the Fixed Option
or any loans, fixed annuity payments, and lump sum death benefit payments
unless state law requires otherwise) for up to six months after the requested
effective date of the transaction. Any amount delayed will, so long as it is
held under the Fixed Option, continue to earn interest at the Guaranteed
Interest Rate then in effect until the applicable Guaranteed Term in effect has
ended, and not less than 3% on an annual basis thereafter. If you make any
Purchase Payment by check, other than a cashier's check, we may delay making
payments to you until your check has cleared.
INCONTESTABILITY - We will not contest this Contract.
PROOF OF LIFE OR DEATH - Before we make a payment, we have the right to require
proof of the life or death of any person on whose life or death determines
whether, to whom, or how much we must pay any benefits under this Contract.
DIVIDENDS - The current dividend scale is zero and we do not expect dividends
to become payable. However, at the end of each Contract Year, we will determine
your dividend, if any; you may choose to have it paid in cash or added to your
Contract Value. If you do not make a choice, we will add it to your Contract
Value. We will allocate any dividend added to your Contract Value in accordance
with your most recent allocation instructions, unless you instruct us
otherwise. You should consult with your tax adviser before making any election.
WITHHOLDING TAXES - From all payments made under this Contract, we will
withhold any taxes required to be withheld by applicable Federal or State law,
unless the Owner or payee elects otherwise pursuant to applicable withholding
rules.
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PURCHASE PAYMENTS
PURCHASE PAYMENTS - This Contract will not be in force until we receive the
initial Purchase Payment. Your initial Purchase Payment is shown in the
Contract Specifications.
You may make additional Purchase Payments at any time before the Annuity Date,
while the Annuitant is living and this Contract is in force. Each additional
Purchase Payment must be at least $100 for Non-Qualified Contracts and $50 for
Qualified Contracts. We may limit the amount of any single Purchase Payment.
You must obtain our consent before making a Purchase Payment that will bring
your aggregate Purchase Payments over $500,000.
Purchase Payments are payable in U.S. dollars either at our Service Center or
through our agent. Checks should be made payable to Pacific Mutual Life
Insurance Company. If you make Purchase Payments by check other than a
cashier's check, your withdrawal proceeds and any refund under your Right to
Cancel may be delayed until your check has cleared. On request, a receipt for
the Purchase Payment signed by an officer of PM will be provided after payment.
PURCHASE PAYMENT ALLOCATION - Prior to your Annuity Date, you may allocate all
or part of your Purchase Payments to one or more of the Investment Options
available to you. The Investment Options available to you on the Contract Date
are shown on your Contract Specifications page. You may change your allocation
by sending us proper instructions (see GENERAL PROVISIONS: INSTRUCTIONS AND
REQUESTS). We will allocate any Purchase Payment according to your most recent
allocation instructions. We may reject any instruction or Purchase Payment that
does not comply with our requirements.
ALLOCATIONS DURING THE RIGHT TO CANCEL PERIOD - We will allocate your initial
Purchase Payment in accordance with your most recent allocation instructions.
However, if this Contract is issued in a state that requires us to refund all
Purchase Payments according to the Right to Cancel provision, we will allocate
the portion of your initial Purchase Payment designated for Variable Investment
Options to the Money Market Portfolio, and the portion of your initial Purchase
Payment designated for the Fixed Option to the Fixed Option. Any subsequent
Purchase Payments that are received before the Right to Cancel Transfer Date
will be allocated in the same manner as the initial Purchase Payment. On the
Right to Cancel Transfer Date, which occurs 15 days after your Contract is
issued, we will transfer the Account Value in the Money Market Portfolio to
your Variable Investment Options in accordance with your most recent allocation
instructions. We reserve the right to extend the Right to Cancel Transfer Date
by the number of days in excess of ten days that the issue state allows you to
return your Contract to us pursuant to your Right to Cancel right.
MINIMUM INVESTMENT OPTION VALUE - We reserve the right to require that, as a
result of any allocation to an Investment Option, any transfer, or any partial
withdrawal, your remaining Account Value in any Investment Option must meet a
minimum Account Value amount. We also reserve the right to transfer any
remaining Account Value that does not meet such minimum amount to your other
Investment Options on a prorata basis relative to your most recent allocation
instructions for those Investment Options.
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THE FIXED OPTION
We credit interest at the Guaranteed Interest Rate(s) on the amount of Purchase
Payments and/or Contract Value that you allocate or transfer to, or roll over
in, the Fixed Option, as described below.
Account Values under the Fixed Option are held in our General Account. Subject
to applicable law, we have sole discretion over the investment of our General
Account assets.
We will credit your Contract with a Guaranteed Interest Rate for up to one year
on that portion of your Purchase Payment and/or Contract Value allocated to the
Fixed Option, while the Annuitant is living and this Contract is in force, and
prior to the Annuity Date. We will credit the Guaranteed Interest Rate in
effect on the Business Day that the allocation and/or transfer is effective for
a Guarantee Term that ends at the end of that Contract Year.
At the end of any Guarantee Term, unless you instruct us otherwise, we will
roll over your Fixed Option Value attributed to that Guarantee Term to a new
Guarantee Term of up to one year. We will credit the Guaranteed Interest Rate
in effect at the time of the roll over on the amount of the Fixed Option Value
rolled over until the end of such Guarantee Term.
We will stop crediting interest on that portion of your Fixed Option Value you
withdraw, transfer (including transfers to the Loan Account), or convert to an
Annuity Option, including any: fees for withdrawals or transfers; withdrawal
charges; annual fee; and charges for premium taxes and/or other taxes. We do so
as of the end of the Business Day any such transaction is effective.
VARIABLE INVESTMENT OPTIONS
The Variable Investment Options consist of Subaccounts of the Separate Account.
The available Subaccounts as of the Contract Date are shown in the Contract
Specifications.
SEPARATE ACCOUNT - We established and maintain the Separate Account under the
laws of California. Any income, gains or losses (whether or not realized) from
the assets of each Variable Account are credited or charged against such
Variable Account without regard to our other income, gains or losses. Assets
may be put in our Separate Account to support this Contract and other variable
annuity contracts. Assets may be put in our Separate Account for other
purposes, but not to support contracts other than variable annuity contracts.
The assets of our Separate Account are our property. The portion of the
Separate Account assets equal to the reserves and other Contract liabilities
with respect to each Variable Account will not be chargeable with liabilities
arising out of any other business we conduct. We may transfer assets of a
separate account in excess of the reserves and other liabilities with respect
to that Variable Account to another separate account or to our General Account.
All obligations arising under the Contract are our general corporate
obligations. We do not hold ourselves out to be trustees of the Separate
Account assets.
We reserve the right, subject to compliance with the law then in effect, and
after any required regulatory approval, to:
o cease offering any Subaccount;
o add or change designated investment companies or their portfolios, or
other investment vehicles;
o add, delete or make substitutions for the securities and other assets
that are held or purchased by the Separate Account or any Variable
Account;
o permit conversion or exchanges between portfolios and/or classes of
contracts on the basis of Owners' requests;
o add, remove or combine Variable Accounts;
o combine the assets of any Variable Account with any other Separate
Account of PM or of any of its affiliates;
o register or deregister Separate Account B or any Variable Account under
the Investment Company Act of 1940 (the "1940 Act");
o operate any Variable Account as a managed investment company under the
1940 Act, or any other form permitted by law;
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o run any Variable Account under the direction of a committee, board, or
other group;
o restrict or eliminate any voting rights of Owners with respect to any
Variable Account or other persons who have voting rights as to any
Variable Account;
o make any changes required by the 1940 Act or other federal securities
laws;
o make any changes necessary to maintain the status of the Contracts as
annuities under the Code;
o make other changes required under federal or state law relating to
annuities;
o suspend or discontinue sale of the Contracts; and
o comply with law.
If any of these changes result in a material change in the underlying
investments of a Variable Account, we will notify you of such change.
We will not change the investment policy of the Separate Account without
following the filing and other procedures of the Insurance Commissioner in the
State of California nor without following the filing and other procedures
established by insurance regulators of the state of issue. Unless required by
law or regulation, an investment policy may not be changed without our consent.
From time to time we may make other Investment Options available to you. Any
new Investment Option may invest in portfolios of the designated investment
company, other designated investment companies or their portfolios, or in other
investment vehicles. New Investment Options will be made available to existing
Owners at our discretion. We will provide you with written notice of all
material details, including investment objectives and charges. We will comply
with the filing or other procedures established by applicable state insurance
regulators, to the extent required by applicable law.
CONTRACT VALUE
Your Contract Value on any Business Day is the sum of:
o your Fixed Option Value on that day;
o plus your Variable Account Value on that day;
o plus your Loan Account Value on that day.
We generally determine values as of 4:00 p.m., Eastern time, on each day that
the New York Stock Exchange is open, provided our administrative offices are
also open on that day.
FIXED OPTION VALUE - Your Fixed Option Value on any Business Day is your Fixed
Option Value on the prior Business Day increased by any additions to your Fixed
Option on that day as a result of any:
o interest;
o Purchase Payments received by us and allocated to the Fixed
Option;
o transfers to the Fixed Option, including transfers from the Loan
Account; and
decreased by any deductions from the Fixed Option on that day as a result of
any:
o transfers, including transfers to the Loan Account;
o withdrawals, including any withdrawal charges;
o amounts converted to an Annuity Option;
o charge for premium taxes and/or other taxes;
o fees for withdrawals and/or transfers; and
o annual fee.
VARIABLE ACCOUNT VALUE - Your Variable Account Value on any Business Day is the
sum of your Subaccount Values on that day.
Subaccount Value - Each Subaccount Value on any Business Day is the number of
Subaccount Units in that Subaccount that are credited to your Contract on that
day multiplied by the Unit Value of the Subaccount on that day.
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We credit your Contract with Subaccount Units for a Subaccount as a result of
any portion of your Purchase Payments received by us and allocated to that
Subaccount; and any transfers of your Contract Value to that Subaccount,
including transfers from the Loan Account.
We debit your Contract with Subaccount Units for a Subaccount as a result of
any deductions from the Subaccount, including those caused by any:
o withdrawals;
o transfers (including transfers to the Loan Account);
o amounts converted to an Annuity Option;
o fees for transfers and/or withdrawals;
o withdrawal charges;
o charge for premium taxes and/or other taxes; and
o annual fee.
The number of Subaccount Units we debit or credit to your Contract in
connection with a transaction is equal to the amount of the transaction
applicable to that Subaccount divided by that Subaccount's Unit Value on that
day. The number of your Subaccount Units in a Subaccount will change only if we
debit or credit Subaccount Units for the transactions above. The number of
Subaccount Units will not change because of subsequent changes in the
Subaccount Unit Value.
Subaccount Unit Value - The initial Unit Value of each Subaccount was $10 on
the Business Day the Subaccount began operations. At the end of each subsequent
Business Day, the Unit Value for each Subaccount is equal to (Y) times (Z)
where:
(Y) is the Unit Value for that Subaccount as of the end of the prior
Business Day; and
(Z) is the Net Investment Factor for that Subaccount for the period
(a "valuation period") between the prior Business Day and that Business
Day.
Net Investment Factor - Each Subaccount's Net Investment Factor for any
valuation period is equal to ( A / B ) - C where:
(A) is the net result of:
(a) the net asset value per share of the corresponding Portfolio
shares held by the Subaccount as of the end of that valuation
period;
(b) plus the per share amount of any dividend or capital gain
distributions made during that valuation period on the
Portfolio shares held by the Subaccount;
(c) plus or minus any per share charge or credit for any income
taxes, other taxes, or amounts set aside during that valuation
period as a reserve for any income and/or any other taxes for
which we determine to have resulted from the operations of the
Subaccount or Contract, and/or any taxes attributable,
directly or indirectly, to Purchase Payments;
(B) is the net asset value per share of the Fund shares held by the
Subaccount as of the end of the prior valuation period; and
(C) is a factor that we assess against the Subaccount's net assets held
by each Subaccount for the mortality and expense risk charge and the
administrative fee during that valuation period.
LOAN ACCOUNT VALUE - For those Qualified Contracts that permit loans, your Loan
Account Value as of the end of any Business Day is your Loan Account Value on
the prior Business Day, increased by any:
o interest; and
o Contract Value loaned on that day;
and decreased by any:
o loan principal repaid on that day; and
o earned interest transferred from the Loan Account on that day.
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CHARGES, FEES AND DEDUCTIONS
ADMINISTRATIVE FEE - We charge an administrative fee against assets held in
your Variable Investment Option(s). This fee is assessed daily at the annual
rate which is shown in the Contract Specifications. This fee is guaranteed not
to increase.
ANNUAL FEE - We charge an annual fee which is shown in the Contract
Specifications on each Contract Anniversary prior to your Annuity Date against
your Contract Value and at the time you make a full withdrawal, if your Net
Contract Value is less than $50,000 on that date. This fee is guaranteed not to
increase.
We will deduct the annual fee, if any, from each Investment Option on a prorata
basis relative to your Account Value in each Investment Option. Any annual fee
we deduct from a Subaccount will reduce the number of Subaccount Units credited
to your Contract.
No annual fee is charged when you annuitize or on payment of any death benefit
proceeds.
MORTALITY AND EXPENSE RISK CHARGE ("RISK CHARGE") - We impose a Risk Charge
against assets held in your Variable Investment Option(s). This charge is
assessed daily at the annual rate which is shown in the Contract
Specifications. The Risk Charge compensates us for the risks we assume that
mortality and expenses will vary from those we assumed. This charge is
guaranteed not to increase.
PREMIUM TAXES - From your Contract Value, we will deduct a charge for any taxes
we pay that are attributable to Purchase Payments or withdrawals. Such taxes
may include, but are not limited to: any federal, state or local premium taxes;
and any federal, state or local income, excise, business or any other type of
tax (or component thereof), measured by or based upon, directly or indirectly,
the amount of Purchase Payments we receive from you. We will normally deduct
this charge when you annuitize, however, we may impose this charge: on any
withdrawal; at the time any death benefit is paid; when the taxes are incurred;
or when we pay the taxes. We may base this charge on: the Contract Value; the
amount of the transaction; the aggregate amount of Purchase Payments we receive
under your Contract; or any other amount that, in our sole discretion, we deem
appropriate.
Other Taxes - We reserve the right to charge the Separate Account and/or deduct
from your Contract Value a charge for any federal, state or local taxes we pay
that are or become attributable to the Separate Account or Contract, including,
but not limited to, income taxes attributable to our operation of the Separate
Account or to our operations with respect to the Contract, or taxes
attributable, directly or indirectly, to Purchase Payments or payments we make
under the Contract.
TRANSFER FEE - We reserve the right to impose a transfer fee of $15 on each
transfer made in excess of fifteen transfers in any Contract Year. For this
purpose, we will treat each transfer request as a single transfer, regardless
of the number of Investment Options from which or to which portions of Account
Values are transferred. We will deduct any transfer fee we impose from your
Contract Value on a prorata basis relative to your Account Value in each
Investment Option immediately after the transfer.
WITHDRAWAL FEE - We reserve the right to impose a withdrawal fee of $15 on each
partial withdrawal made in excess of fifteen withdrawals in any Contract Year.
We will deduct from your Contract Value, on a prorata basis relative to your
Account Value in each Investment Option immediately after the withdrawal, any
such fee we impose on a partial withdrawal. For this purpose, we will treat
each withdrawal request as a single withdrawal, regardless of the number of
Investment Options or Guarantee Terms from which portions of Account Values are
withdrawn.
CONTINGENT DEFERRED SALES CHARGE ("WITHDRAWAL CHARGE") - Purchase Payments are
subject to a withdrawal charge which is shown in the Contract Specifications.
This charge may apply to amounts you withdraw under your Contract prior to your
Annuity Date, depending on the length of time each Purchase Payment has been
allocated to your Contract and on the amount you withdraw. We will not apply
the withdrawal charge on:
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o death benefit proceeds, except as provided under the DEATH OF OWNER
provisions for certain non-natural Owners;
o Contract Values converted to an Annuity Option;
o withdrawals by Contract Owners to meet the minimum distribution
rules for Qualified Contracts as they apply to amounts held under
the Contract; or
o withdrawals (full or partial), after the first Contract
Anniversary, if the Annuitant has been diagnosed with a medically
determinable condition that results in a life expectancy of twelve
(12) months or less, subject to medical evidence satisfactory
to us.
Amount of Withdrawal Charge - The amount of a withdrawal charge depends on how
long your Purchase Payments are held under this Contract. Each Purchase
Payment you make is considered to have a certain "age," depending on the length
of time since that Purchase Payment was effective. A Purchase Payment is "age
one" from the day it was effective until your next Contract Anniversary and
increases in "age" on that and each succeeding Contract Anniversary. When you
withdraw an amount, the "age" of any Purchase Payment(s) you withdraw
determines the level(s) of withdrawal charge as shown in the Contract
Specifications. We calculate your withdrawal charge by assuming that amounts
attributed to the "oldest" Purchase Payments are withdrawn first and earnings
are withdrawn last. We will not impose the withdrawal charge on withdrawals of
Purchase Payments held under your Contract more than five (5) years. The
withdrawal charge will be deducted proportionately from each Investment Option
selected for withdrawal.
Free Withdrawals - We will not impose a withdrawal charge on your withdrawals
to the extent that total withdrawals that are free of charge during the
Contract Year do not exceed 10% of the sum of your remaining Purchase Payments
at the beginning of the Contract Year that have been held under your Contract
for less than six years, plus any additional Purchase Payments applied to your
Contract during that Contract Year. Our calculations of the withdrawal charge
deduct this "free 10%" from your "oldest" remaining Purchase Payment(s) still
otherwise subject to the charge.
TRANSFERS
You may make transfers under this Contract subject to certain restrictions (see
TRANSFER AND WITHDRAWAL RESTRICTIONS) and any applicable fees (see CHARGES,
FEES AND DEDUCTIONS).
By providing a proper transfer request (see GENERAL PROVISIONS - PAYMENTS,
INSTRUCTIONS AND REQUESTS), you may request transfer of part or all of your
Contract Value, less Loan Account Value, in any Investment Option among other
Investment Options while your Annuitant is living and prior to the Annuity
Date.
If your transfer causes your remaining Account Value in any Investment Option
immediately after such transfer to be less than any minimum amount we may
establish, we may transfer such remaining Account Value to your other
Investment Options on a prorata basis relative to your most recent allocation
instructions. We may reject any transfer request. We also reserve the right to
limit the size of transfers, to limit the number and frequency of transfers, to
restrict transfers, and to suspend the right to transfer.
Transfers between Investment Options will normally be effective as of the end
of the Business Day on which we receive a proper transfer request.
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WITHDRAWALS
You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract, while the Annuitant is living and your
Contract is in force; however, no partial withdrawals are allowed within 30
days of your Contract Date. If you make a full withdrawal, we require return of
your Contract, or a signed Lost Contract Affidavit, with your proper request.
You may choose to withdraw from any specific Investment Option(s), or from all
Investment Options proportionately. If you do not specify, we will make the
withdrawal from your Investment Options on a prorata basis relative to your
Account Value in each. Each partial withdrawal must be for $500 or more.
Withdrawals from the Fixed Option are subject to certain additional
restrictions described below.
If your partial withdrawal causes your Net Contract Value to be less than
$1,000 immediately after the withdrawal, we may terminate your Contract and
send you the withdrawal proceeds. If your partial withdrawal causes your
Account Value remaining in any Investment Option to be less than any minimum
amount we may establish, we reserve the right to transfer such remaining
Account Value to your other Investment Options on a prorata basis relative to
your most recent allocation instructions.
AMOUNT AVAILABLE FOR WITHDRAWAL - The amount available for withdrawal is your
Net Contract Value as of the end of the Business Day on which your withdrawal
request is effective, less any:
o annual fee;
o withdrawal fee;
o withdrawal charge; and
o charge for premium taxes and/or other taxes.
The amount we send to you (your "withdrawal proceeds") will also reflect any
required or requested federal and/or state income tax withholding.
If you make a full withdrawal, this Contract will end; we will have no further
obligations under this Contract.
TRANSFER AND WITHDRAWAL RESTRICTIONS
SPECIAL RESTRICTIONS ON WITHDRAWALS OR TRANSFERS FROM THE FIXED OPTION - All
withdrawals from the Fixed Option must occur within 30 days after your Contract
Anniversary. After the first or subsequent Contract Anniversary, you may
withdraw or transfer up to one-half (50%) of your Fixed Option Value in any
Contract Year. However, if you withdraw or transfer 50% of your Fixed Option
Value in any Contract Year, you may withdraw or transfer the remaining Fixed
Option Value in the subsequent Contract Year.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under Code Section 401 or 403
and your Qualified Plan permits, you may request a loan of a portion of your
Contract Value after your first Contract Year and before your Annuity Date. If
your Contract is a Non-Qualified Contract, or if your Qualified Plan does not
permit loans, loans under this Contract will not be available to you.
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DEATH BENEFIT
A death benefit may be payable on proof of the death of the Annuitant or any
Owner before the Annuity Date, while this Contract is in force.
The proceeds of any death benefit payable will be payable upon receipt, in
proper form, of proof of death and instruction regarding payment of death
benefit proceeds. Such proceeds will equal the amount of the death benefit
reduced by any charge for premium taxes and/or other taxes and any Contract
Debt. These proceeds will be payable in a lump sum, as an Annuity Option under
this Contract or towards the purchase of any annuity option we then offer, or
in accordance with the Code (see DEATH OF OWNER DISTRIBUTION RULES). Any such
Annuity Option is subject to all restrictions and requirements as are other
annuities offered under this Contract.
DEATH BENEFIT AMOUNT - The Death Benefit Amount as of any Business Day prior to
your Annuity Date is equal to the greater of: (a) your Contract Value as of
that day; or (b) your aggregate Purchase Payments reduced by (i) an amount for
each withdrawal that has occurred, which is calculated by multiplying the
aggregate Purchase Payments received prior to each withdrawal by the ratio of
the amount of the withdrawal, including any withdrawal charge, to your Contract
Value immediately prior to the withdrawal; and (ii) any applicable charges
and/or fees on or before that day.
GUARANTEED MINIMUM DEATH BENEFIT ("GMDB") AMOUNT - The GMDB Amount will be
calculated only when a death benefit becomes payable as a result of the death
of the sole Annuitant, and is determined as follows: First, we calculate what
the Death Benefit Amount would have been as of the first Contract Anniversary
and each subsequent Contract Anniversary that occurs while the Annuitant is
living and before the Annuitant reaches his or her 81st birthday (each of these
Contract Anniversaries is a "Milestone Date"). We then adjust the Death Benefit
Amount for each Milestone Date by: (i) adding the aggregate amount of any
Purchase Payments received by us since that Milestone Date; (ii) subtracting an
amount for each withdrawal that has occurred since that Milestone date, which
is calculated by multiplying the Death Benefit Amount by the ratio of the
amount of each withdrawal that has occurred since that Milestone Date,
including any withdrawal charge, to the Contract Value immediately prior to the
withdrawal; and (iii) subtracting the aggregate amount of any previous charges,
fees, and/or taxes, since that Milestone Date.
The highest of these adjusted Death Benefit Amounts as of the Notice Date is
the GMDB Amount. The "Notice Date" is the day on which we receive, in proper
form, proof of death and instructions satisfactory to us regarding payment of
death benefit proceeds.
DEATH OF ANNUITANT - If the Annuitant dies on or before the first Contract
Anniversary (the first Milestone Date), or dies after the first Milestone Date
and had reached his or her 81st birthday on or prior to the first Milestone
Date, the death benefit will be equal to the Death Benefit Amount as of the
Notice Date.
If the Annuitant dies after the first Milestone Date and had not yet reached
his or her 81st birthday as of the first Milestone Date, the death benefit
will be equal to the greater of the Death Benefit Amount, or the GMDB Amount as
of the Notice Date. If an Annuitant dies before the Annuity Date, unless there
is a surviving Joint or Contingent Annuitant, we will pay the death benefit
proceeds to the Beneficiary, if living; otherwise to the Owner or the Owner's
estate. If an Annuitant dies and there is a surviving Joint Annuitant, the
surviving Joint Annuitant becomes the Annuitant. If there is no surviving Joint
Annuitant and there is a Contingent Annuitant, the Contingent Annuitant becomes
the Annuitant. Death benefit proceeds are payable only for the death of the
sole surviving Annuitant prior to the Annuity Date. If you are the Annuitant
and you die, we will determine the amount of any death benefit and the
Beneficiary under the Death of Annuitant provisions; and, if your Contract is a
Non-Qualified Contract, we will distribute any death benefit proceeds under the
Death of Owner Distribution Rules.
DEATH OF OWNER - If you are not the Annuitant, and you die before the
Annuitant, the amount of the death benefit will be equal to the Death Benefit
Amount as of the Notice Date. No GMDB Amount is payable upon the death of the
Owner.
If you die while the Annuitant is living and prior to the Annuity Date, we will
pay the death benefit proceeds to the surviving Joint Owner, if any. If there
is no surviving Joint Owner and there is a Contingent Owner,
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we will pay the death benefit proceeds to the surviving Contingent Owner, if
any. If there is no surviving Contingent Owner, the death benefit proceeds will
be paid to the Beneficiary, if living; otherwise to the Owner's estate. If you
are not also the Annuitant, then, in the event the deaths of the Owner and
Annuitant are under circumstances where it cannot be determined who died first,
the Death Benefit will be calculated under the DEATH OF ANNUITANT provision of
this Contract and payment will be made in accordance with the DEATH OF OWNER
provisions of this Contract.
If you are a non-natural Owner of a Contract other than a Contract issued under
a Qualified Plan as defined in Section 401 or 403 of the Code, the Primary
Annuitant will be treated as the Owner of the Contract for purposes of the
DEATH OF OWNER DISTRIBUTION RULES. If there is a change in the Primary
Annuitant prior to the Annuity Date, such change will be treated as the death
of the Owner. The amount of the death benefit will be (a) the Contract Value if
the non-natural Owner elects to maintain the Contract and reinvest the Contract
Value into the Contract in the same amount as immediately prior to the
distribution, or (b) the Contract Value less any annual fee, withdrawal fee,
withdrawal charge, and charge for premium taxes and/or other taxes, if the
non-natural Owner elects a cash distribution. The amount of the death benefit
will be determined as of the Business Day we receive, in proper form, the
request to change the Primary Annuitant and instructions regarding maintaining
the Contract or cash distribution.
If both you and the Annuitant(s) are non-natural persons, no death benefit will
be payable, and any distribution will be treated as a withdrawal and subject to
any applicable annual fee, withdrawal fee, withdrawal charge, and charge for
premium taxes and/or other taxes.
DEATH OF OWNER DISTRIBUTION RULES - The following rules will determine whether
a distribution must be made under this Contract. The rules do not affect our
determination of the amount of benefit payable or distribution proceeds. If
there is more than one Owner, these rules apply on the date on which the first
of these joint Owners dies.
If the Owner dies before the Annuity Date, any death benefit proceeds under
this Contract shall be distributed within five years after the Owner's death.
In order to satisfy this requirement, the beneficiary (as that term applies
with respect to an Owner's Death) must receive:
o a lump sum payment; or elect to receive
o an annuity for life or over a period that does not exceed the life
expectancy of the beneficiary with annuity payments that start
within one year after the Owner's death.
If an election to receive an annuity is not made within 60 days of our receipt
of proof in proper form of the Owner's death or, if earlier, 60 days (or
shorter period as we permit) prior to the first anniversary of the Owner's
death, the lump sum option will be deemed elected, unless otherwise required by
law.
If the lump sum option is deemed elected, we will consider that deemed election
as receipt of instruction regarding payment of death benefit proceeds.
If the spouse of the deceased Owner is the sole surviving Beneficiary, or is
the sole surviving Joint or Contingent Owner, and has an unrestricted right to
receive the death benefit proceeds in one lump sum, the spouse may continue
this Contract as Owner rather than receive the death benefit proceeds.
If the Owner dies on or after the Annuity Date, but payments have not yet been
completed, then distributions of the remaining amounts payable under this
Contract must be made at least as rapidly as the rate that was being used at
the date of death.
If the Owner is a Non-natural Owner, the rules set forth in these DEATH OF
OWNER DISTRIBUTION RULES apply in the event of the death or change of the
Primary Annuitant. Primary Annuitant means the individual, the events in the
life of whom are of primary importance in affecting the timing or amount of the
payout under the Contract.
The rules set forth in these DEATH OF OWNER DISTRIBUTION RULES are intended to
satisfy the distributions-at-death timing requirements of Section 72(s) of the
Code. This Contract is deemed to incorporate all provisions of Section 72(s) of
the Code, or any successor provision, as interpreted by us and deemed necessary
to qualify this Contract as an annuity. We reserve the right to amend this
Contract and/or
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change our administrative procedures without a signed request and to provide a
form of amendment (rider) to the Contract to satisfy any changes in these
requirements. These DEATH OF OWNER DISTRIBUTION RULES do not apply to Qualified
Contracts issued under Qualified Plans as defined in Section 401, 403 or 408 of
the Code or to an annuity that is a qualified funding asset as defined in Code
Section 130(d) but without regard to whether there is a qualified assignment.
INTEREST ON DEATH BENEFIT PROCEEDS - If payment of death benefit proceeds is
unduly delayed after the Notice Date, we will pay interest on the proceeds.
Interest will be paid at a rate of not less than 3% per year from the date we
receive due proof of death until the proceeds are paid or applied under an
Annuity Option. If the law in the state in which the Contract is issued
requires payment of a greater amount, we will pay that amount.
BENEFICIARY
Your Beneficiary is the person you name who may receive any death benefit
proceeds, or any remaining annuity payments after the Annuity Date, under your
Contract if the Annuitant or Owner dies. If you leave no surviving Beneficiary,
your estate may receive the death benefit proceeds under your Contract.
If the Beneficiary is a trustee, we will neither be responsible for verifying a
trustee's right to receive any death benefit proceeds payable, nor for how the
trustee disposes of any death benefit proceeds. If before payment of any death
benefit proceeds, we receive proper notice that the trust has been revoked or
is not in effect, then any death benefit proceeds payable will be paid to the
Owner's estate.
ADDING OR CHANGING YOUR BENEFICIARY - You may add, change, or remove any
Beneficiary, other than an irrevocable Beneficiary, subject to the terms of any
assignment, at any time prior to the death of the Annuitant or Owner, as
applicable, by sending us a request in proper form. However, if you have named
an irrevocable Beneficiary, you may not add any new Beneficiary, or remove or
change the irrevocable Beneficiary, without obtaining his or her written
consent in a form acceptable to us. You may remove any non-irrevocable
Beneficiary without obtaining the consent of the irrevocable Beneficiary.
Qualified Contracts may have additional restrictions on naming and changing
Beneficiaries. Any change or addition will take effect only when we receive all
necessary documents and record the change or addition.
ANNUITY BENEFITS
CHOICE OF ANNUITY DATE - Your Annuity Date is shown in the Contract
Specifications. If you did not select an Annuity Date in your application for
this Contract, we assigned an Annuity Date based on the type of this Contract
and the Annuitant's Age (see DEFAULT ANNUITY DATE AND OPTIONS).
You may change your Annuity Date by providing proper notice to us at least ten
(10) Business Days prior to your current Annuity Date or new Annuity Date,
whichever is earlier. Your Annuity Date may not be earlier than your first
Contract Anniversary and must occur on or before the day the younger Xxxxxxxxx
reaches his or her 95th birthday, or earlier as required by state law. For
certain trusts, the Annuity Date must occur before the Annuitant's 100th
birthday. To meet minimum distribution requirements under the Code, your
Annuity Date for a Qualified Contract may need to occur on or before April 1 of
the calendar year following the year in which your Annuitant (who is the
Qualified Plan participant) reaches his or her 70-1/2 birthday. You may be
subject to additional restrictions under your Qualified Plan. You should
consult with your Qualified Plan administrator before you elect your Annuity
Date.
APPLICATION OF CONTRACT VALUE - Prior to the Annuity Date, you may elect to
convert all or part of your Net Contract Value, less any applicable charge for
premium taxes and/or other taxes, to any currently offered Annuity Option. You
may also elect a full withdrawal (subject to the terms of the withdrawal
provisions) in lieu of annuity payments under an Annuity Option. Before we make
any full withdrawal, we require return of this Contract (or a signed Lost
Contract Affidavit) to us. The aggregate net amount you convert must be
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at least $5,000; otherwise, we reserve the right to pay a single amount equal to
your withdrawal proceeds (see AMOUNT AVAILABLE FOR WITHDRAWALS).
If you convert only a portion of your Net Contract Value on your Annuity Date,
you may, at that time, elect not to have the remainder of your Contract Value
distributed, but instead to continue your Contract with that remaining Net
Contract Value. This option may or may not be available, or may be available
only for certain types of Contracts. If this option is available and you elect
it, you would choose a second Annuity Date for such Contract Value; all
references in this Contract to your Annuity Start Date (or Annuity Date) would,
with regard to such Contract Value, be deemed to refer to that second Annuity
Date. You should call your tax adviser for more information if you desire this
option.
YOUR SELECTIONS - Prior to the Annuity Date, you may make three selections
about the annuity payments. First, you may choose whether you want those
payments to be a fixed-dollar amount or a variable-dollar amount, or both.
Second, you may choose the form of annuity payments (Annuity Option). Third,
you may choose to have annuity payments made monthly, quarterly, semiannually,
or annually.
The first annuity payment on the Annuity Date will be sent on the day following
the Annuity Date and must be at least $250. We may reduce your payment
frequency if the first annuity payment is less than $250. If you elect annuity
payments for a Period Certain Only, we also reserve the right to reduce the
Period Certain to meet the $250 minimum first payment. After the Annuity Date,
you may not change the Annuity Option, or surrender the Contract for payment of
amounts converted into a variable annuity and/or fixed annuity.
FIXED AND VARIABLE ANNUITIES - You may choose a fixed annuity (with
fixed-dollar payments), a variable annuity (with variable-dollar payments), or
you may choose a combination of both. If you select a variable annuity, you may
choose any Subaccounts for your annuity. If you select a variable annuity, on
your Annuity Date, we will transfer that portion of your Net Contract Value
that you indicate to the Subaccount(s) you choose. We will apply the net amount
you convert to a fixed annuity and/or a variable annuity (and in this instance,
to each Subaccount), based on your relative Account Value in each Investment
Option on the Annuity Date. Any net amount you convert to a fixed annuity will
be held in our General Account (but not under the Fixed Option).
Each periodic payment under the fixed annuity will be equal to the amount of
your first fixed annuity payment (unless you elect a joint and survivor life
annuity with reduced survivor payments). The amount of each variable annuity
periodic payment will vary with the investment results of the Subaccount(s) you
select. After the Annuity Date, you may exchange the Annuity Units in any
Subaccount(s) for Annuity Units in any other Subaccount(s) up to four times in
any twelve month period. We reserve the right to limit the Subaccounts
available, to change the number and frequency of exchanges, and to change the
number of Subaccounts you may choose.
In choosing an Annuity Option, you must submit your Option request to us in
proper form.
ANNUITY OPTIONS - The following forms of annuity payments are available under
this Contract. Additional options may become available in the future:
Option 1: Life Only. Periodic payments are made to the designated payee
during the Annuitant's lifetime. Payments stop when the Annuitant
dies.
Option 2: Life with Period Certain. Periodic payments are made to the
designated payee during the Annuitant's lifetime, with payments
guaranteed for a specified period. You may choose to have payments
guaranteed from 5 through 30 years (in full years only). If the
Annuitant dies before the guaranteed payments are completed, we pay
the Beneficiary the remainder of the guaranteed payments.
Option 3: Joint and Survivor Life. Periodic payments are made during the
lifetime of the Primary Annuitant. After the death of the Primary
Annuitant, periodic payments are based on the life of the secondary
Annuitant named in the election if and so long as such secondary
Annuitant lives. Payments made based on the life of the secondary
Annuitant may be in installments equal to 50%, 66-2/3% or 100% (as
specified in the election) of the original payment amount
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payable during the lifetime of the Primary Annuitant. If you elect
a reduced payment based on the life of the secondary Annuitant,
fixed annuity payments will be equal to 50% or 66-2/3% of the
original fixed payment payable during the lifetime of the Primary
Annuitant; variable annuity payments will be determined using 50%
or 66-2/3%, as applicable, of the number of Annuity Units for each
Subaccount credited to the Contract. Payments stop when both
Xxxxxxxxxx have died.
Option 4: Period Certain Only. Periodic payments are made over a specified
period. You may choose to have payments continue from 5 through 30
years (in full years only). If the Annuitant dies before the
guaranteed payments are completed, we pay to the Beneficiary the
remainder of the guaranteed payments.
DEFAULT ANNUITY DATE AND OPTIONS - If this is a Non-Qualified Contract and you
did not choose an Annuity Date when you submitted your application for this
Contract, your Annuity Date is the Annuitant's 95th birthday. If there are
Joint Annuitants, the Annuity Date will be based on the younger Xxxxxxxxx's
birthday, unless otherwise required by law. If this is a Qualified Contract and
you did not choose an Annuity Date, your Annuity Date is April 1 of the
calendar year following your Annuitant's 70-1/2th birthday; if there are Joint
Annuitants, the Annuity Date will be based on the birthday of the Annuitant who
is the Qualified Plan participant. If the Annuitant has attained age 70-1/2
when the Contract is issued, the Annuity Date is April 1 of the calendar year
following the first Contract Anniversary.
If you do not elect an Annuity Option, your Net Contract Value, less any
applicable charge for premium taxes and/or other taxes, when converted, will,
subject to our minimum requirements, be converted as follows:
o the net amount from your Fixed Option Value will be converted to a
fixed annuity and held in our General Account, and
o the net amount from your Variable Account Value will be applied to
a variable annuity and applied to the Subaccounts in proportion to
your Account Value in each Subaccount on the Annuity Date.
If this is a Non-Qualified Contract, or a Qualified Contract and you are not
married, your Annuity Option will be Life with 10 Year Period Certain. If this
is a Qualified Contract and you are married, your Annuity Option will be Joint
and Survivor Life, with survivor payments of 50%, and your spouse will
automatically be named as the secondary Annuitant. If you do not elect your
frequency of payments, we will make payments based on our most frequent
schedule that results in an initial annuity payment of at least $250.
AMOUNT OF PAYMENTS - The first annuity payment amount depends on the form of
annuity, the payment frequency you select, and whether you select a fixed
annuity and/or a variable annuity. If you do not choose the Period Certain Only
Option, the amount will depend on the Age of the Annuitant(s), the Annuity
Date, and the sex of the Annuitant(s), unless unisex factors apply.
FIXED ANNUITY PAYMENTS - The minimum guaranteed income purchased per $1,000 of
the net amount applied to a fixed annuity is based on an annual interest rate
of 3% and the 1983a Mortality Table with the ages set back ten (10) years.
CONVERSION TO CURRENT RATES - The annuity payments made will be based on the
greater of:
o our current income factors in effect for this Contract on your
Annuity Date; or
o our guaranteed income factors.
The dollar amount of any payments after the first annuity payment is specified
during the annuity payment period according to the provisions of your elected
Annuity Option.
VARIABLE ANNUITY PAYMENTS - Your Subaccount Annuity Units. For each Subaccount,
we divide the amount of the initial variable annuity payment from each
Subaccount by the Annuity Unit Value for that Subaccount (the "Annuity Unit
Value") on the Annuity Date, to obtain the number of Annuity Units for that
Subaccount. The number of your Annuity Units in each Subaccount will not change
unless exchanges of
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Annuity Units are made (or if the Joint and Survivor Annuity option is elected
and the Primary Annuitant dies first), but the Annuity Unit Value of those
Annuity Units will vary.
Your Subsequent Variable Payments. The amount of each subsequent variable
annuity payment will be the sum of the amounts payable based on your Annuity
Units in each Subaccount. To determine the amount payable for each Subaccount,
we multiply the number of your Annuity Units in that Subaccount by their
Annuity Unit Value on the day in each payment period that corresponds to the
Annuity Date.
Annuity Unit Value - The initial Annuity Unit Value for each Subaccount was
arbitrarily set at $10 on the Business Day the Subaccount began operations. At
the end of each subsequent Business Day, the Annuity Unit Value for each
Subaccount is equal to (A x B) x C where:
(A) is the Subaccount's Annuity Unit Value for that Subaccount as of the
end of the prior Business Day;
(B) is the Net Investment Factor for that Subaccount for that valuation
period; and
(C) is an interest factor to offset the effect of the assumed interest
rate of 5% per year, which is built into the Annuity Option Tables.
We generally calculate the Annuity Unit Value of each Subaccount at or about
4:00 p.m., Eastern time, on each day the New York Stock Exchange is open,
provided our administrative offices are also open that day.
We guarantee that the amount of each subsequent annuity payment will not be
affected by variations in our expenses or in mortality experience.
PERIODIC PAYMENTS - The first payment under these Options will be determined on
the Annuity Date and will be made on the day following the Annuity Date. For a
Designated Beneficiary entitled to a death benefit due to the death of the
Annuitant, the first payment will be made on the first day of the calendar
month, or earlier at our option, next following the day we receive due proof of
the Annuitant's death and instructions regarding payment, (called the "Payment
Start Date"), and such other documentation as we may require. Subsequent
payments will be determined on the day in each payment period that corresponds
to the Payment Start Date and will be made on the following day.
MISSTATEMENT OF AGE OR SEX - We may require proof of the Annuitant's Age and
sex before starting annuity payments. If the Age or sex (or both) of the
Annuitant are incorrectly stated in this Contract, we will correct the amount
payable to equal the amount that the Net Contract Value, less any charge for
premium taxes and/or other taxes, under this Contract would have purchased for
the Annuitant's correct Age and sex, if applicable. If we make the correction
after annuity payments have started, and we have made overpayments, we will
deduct the amount of the overpayment, with interest at 3% per year, from any
payments due then or later. If we have made underpayments, we will add the
amount, with interest at 3% a year, of the underpayments to the next payment we
make after we receive proof of the correct sex and/or date of birth.
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ANNUITY OPTION TABLES
For the fixed annuity option and the initial variable annuity benefit, the
Tables below illustrate the minimum guaranteed monthly income purchased per
$1,000 of the net amount applied. The actuarial basis for the fixed annuity
option Tables is the 1983a Annuity Mortality Table with the ages set back ten
(10) years with interest at an annual rate of 3%. The Tables also illustrate
the minimum rates for the first monthly variable annuity payment per $1,000 of
the net amount applied to the variable annuity payment option. The rates for
variable annuity payments are based on interest at the annual rate of 5% and
the 1983a Annuity Mortality Table with the ages set back ten (10) years.
Subsequent payments may be higher or lower than the first payment, based on the
investment performance of the Subaccount(s) you elect and whether you exchange
Subaccount Annuity Units.
These Tables provide for sex-distinct and unisex payment income factors for
life payment options. For some Qualified Plans and in some states, the use of
sex-distinct income factors are prohibited. For those Qualified Plans and in
those states, we use blended unisex income factors for life payment options,
whether the Annuitant is male or female.
We will provide rates for any payment frequency, interest rate, age or sex,
combinations thereof, and/or payout percentage or any annuity option, if
applicable, that we offer if they are not shown in the Tables that follow.
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OPTIONS 1 AND 2 - SINGLE LIFE ANNUITIES WITH GUARANTEED PAYMENTS FOR:
FIXED ANNUITY RATES
--------------------------------------------------------------------------------------------------------
MALE AT 3% FEMALE AT 3% UNISEX AT 3%
---------------------- ---------------------- ----------------------
AGE NONE 10 YR. 20 YR. NONE 10 YR. 20 YR. NONE 10 YR. 20 YR.
--- ---- ----- ----- ---- ----- ------ ---- ------ ------
30 3.04 3.03 3.03 2.93 2.93 2.93 2.99 2.98 2.98
35 3.14 3.14 3.13 3.02 3.02 3.01 3.08 3.08 3.07
40 3.28 3.27 3.26 3.13 3.12 3.12 3.20 3.20 3.19
45 3.44 3.44 3.41 3.26 3.26 3.24 3.35 3.35 3.33
50 3.66 3.64 3.60 3.42 3.42 3.40 3.54 3.54 3.50
55 3.93 3.90 3.82 3.63 3.63 3.59 3.78 3.77 3.71
60 4.27 4.22 4.08 3.90 3.89 3.82 4.09 4.06 3.96
65 4.70 4.62 4.39 4.25 4.22 4.11 4.48 4.43 4.25
70 5.28 5.14 4.71 4.72 4.66 4.44 5.00 4.90 4.58
75 6.10 5.81 5.02 5.35 5.22 4.79 5.73 5.52 4.92
80 7.23 6.61 5.27 6.25 5.96 5.12 6.74 6.30 5.20
85 8.82 7.49 5.42 7.56 6.89 5.35 8.18 7.20 5.39
90 11.06 8.33 5.49 9.53 7.89 5.47 10.28 8.12 5.48
95 14.16 8.97 5.51 12.48 8.74 5.50 13.30 8.86 5.51
VARIABLE ANNUITY RATES
--------------------------------------------------------------------------------------------------------
MALE AT 5% FEMALE AT 5% UNISEX AT 5%
---------------------- ---------------------- ----------------------
NONE 10 YR. 20 YR. NONE 10 YR. 20 YR. NONE 10 YR. 20 YR.
---- ----- ----- ---- ------ ------ ---- ----- -----
30 4.38 4.37 4.36 4.29 4.29 4.29 4.34 4.33 4.33
35 4.46 4.46 4.44 4.36 4.35 4.35 4.41 4.41 4.40
40 4.57 4.56 4.54 4.44 4.44 4.42 4.51 4.50 4.49
45 4.71 4.70 4.67 4.55 4.54 4.52 4.63 4.62 4.60
50 4.91 4.89 4.82 4.69 4.68 4.65 4.80 4.78 4.74
55 5.16 5.12 5.02 4.87 4.86 4.81 5.02 4.99 4.92
60 5.48 5.41 5.24 5.12 5.09 5.01 5.30 5.26 5.13
65 5.89 5.79 5.51 5.44 5.40 5.26 5.67 5.60 5.39
70 6.46 6.28 5.80 5.89 5.80 5.55 6.18 6.05 5.68
75 7.27 6.91 6.08 6.51 6.34 5.87 6.89 6.64 5.98
80 8.41 7.68 6.29 7.39 7.05 6.16 7.90 7.38 6.23
85 10.02 8.52 6.43 8.72 7.93 6.37 9.36 8.24 6.40
90 12.29 9.30 6.49 10.71 8.88 6.47 11.49 9.10 6.48
95 15.42 9.90 6.51 13.70 9.68 6.50 14.55 9.80 6.51
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OPTION 3 - JOINT AND SURVIVOR LIFE
PRIMARY ANNUITANT
MALE AGE
50% SURVIVOR
60 65 70 75 80 85
--------------------------------------------------------------------------------------------------------------
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE
----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
60 3.91 5.12 4.13 5.34 4.39 5.60 4.69 5.92 5.02 6.30 5.38 6.73
FEMALE 65 3.99 5.19 4.25 5.43 4.54 5.73 4.88 6.09 5.26 6.51 5.67 6.98
AGE 70 4.06 5.25 4.36 5.53 4.70 5.87 5.10 6.27 5.55 6.75 6.03 7.29
75 4.12 5.31 4.46 5.62 4.85 6.00 5.32 6.47 5.86 7.03 6.45 7.66
80 4.17 5.36 4.54 5.70 4.98 6.13 5.54 6.67 6.18 7.33 6.91 8.08
85 4.21 5.40 4.60 5.77 5.09 6.24 5.72 6.86 6.49 7.63 7.40 8.54
--------------------------------------------------------------------------------------------------------------
PRIMARY ANNUITANT
UNISEX AGE
50% SURVIVOR
60 65 70 75 80 85
--------------------------------------------------------------------------------------------------------------
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE
----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
60 3.84 5.05 4.07 5.27 4.34 5.54 4.65 5.86 5.00 6.24 5.39 6.69
UNISEX 65 3.90 5.10 4.17 5.35 4.47 5.65 4.83 6.01 5.23 6.44 5.68 6.94
AGE 70 3.96 5.15 4.25 5.43 4.60 5.76 5.02 6.17 5.49 6.66 6.03 7.24
75 4.00 5.19 4.32 5.49 4.72 5.87 5.20 6.34 5.76 6.91 6.41 7.58
80 4.03 5.23 4.38 5.55 4.81 5.96 5.36 6.49 6.02 7.15 6.81 7.96
85 4.05 5.25 4.42 5.59 4.88 6.04 5.49 6.62 6.25 7.38 7.20 8.33
--------------------------------------------------------------------------------------------------------------
OPTION 4 - PERIOD CERTAIN ONLY
MONTHLY MONTHLY MONTHLY MONTHLY
INCOME INCOME INCOME INCOME
--------------- --------------- --------------- ---------------
3% 5% 3% 5% 3% 5% 3% 5%
YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE
----- ----- -------- ----- ----- -------- ----- ----- -------- ----- ----- --------
5 17.91 18.74 12 8.24 9.16 19 5.73 6.71 26 4.59 5.65
6 15.14 15.99 13 7.71 8.64 20 5.51 6.51 27 4.47 5.54
7 13.16 14.02 14 7.26 8.20 21 5.32 6.33 28 4.37 5.45
8 11.68 12.56 15 6.87 7.82 22 5.15 6.17 29 4.27 5.36
9 10.53 11.42 16 6.53 7.49 23 4.99 6.02 30 4.18 5.28
10 9.61 10.51 17 6.23 7.20 24 4.84 5.88
11 8.86 9.77 18 5.96 6.94 25 4.71 5.76
--------------- --------------- --------------- ---------------
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