THE PENN MUTUAL LIFE INSURANCE COMPANY
INDEPENDENCE SQUARE
PHILADELPHIA, PA 19172
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Group Contract Number:
Issued To:
Date of Issue:
Effective Date:
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The Penn Mutual Life Insurance Company will make annuity payments and other
payments as set forth in this contract.
This contract is delivered in and is subject to the laws of .
VALUES AND PAYMENTS UNDER THIS CONTRACT WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Executed by The Penn Mutual Life Insurance Company at its Home Office in
Philadelphia, Pennsylvania on the date of issue.
/s/ Xxxxx X. Xxxxxx /s/Xxxxxx X. Xxxxxxxx
Chairman of the Board
Secretary and Chief Executive Officer
Group Variable and Fixed
Annuity Contract - Flexible
Purchase Payments - Participating
GDI-385
Page 1
Table of Contents
Page
Section I - Specification................................................Page 3
Section II - Definitions.................................................Page 3
Section III - Purchase Payments..........................................Page 4
Section IV - Variable Account Provisions.................................Page 4
Section V - Fixed Account Provisions....................................Page 13
Section VI - Payment on Death..........................................Page 18
Section VII - Transfer From Variable to Fixed Account...................Page 19
Section VIII - Transfer From Fixed to Variable Account..................Page 19
Section IX - Transfer From Another Annuity Contract.....................Page 20
Section X - Withdrawal..................................................Page 20
Section XI - Miscellaneous..............................................Page 22
Page 2
Section I - SPECIFICATIONS
THE SEPARATE ACCOUNT
Penn Mutual Variable Annuity Account III
ELIGIBLE MUTUAL FUNDS
Penn Series Equity Fund
Penn Series Aggressive Capital Appreciation Fund
Penn Series Aggressive High Yield Fund
DATE VARIABLE ACCOUNT ADMINISTRATION CHARGE IS DEDUCTED
May 1 each year.
Section II - DEFINITIONS
PARTICIPANT: An employee who has made application through
Contractholder to make Purchase Payments on behalf of the Participant
under this contract.
PARTICIPANT'S ENROLLMENT DATE: The date specified in the Certificate
issued to the Participant by Penn Mutual.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable Annuity
Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section IV.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section V.
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PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to a
Participant's Fixed Account, increased by interest credited and reduced
by amounts withdrawn or transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments to a Participant are
to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under this contract.
Section III - PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject to
the following provisions:
(a) The minimum Purchase Payment for any one Participant is $25.00
or such lower minimum as we may establish.
(b) The Participant will direct the allocation of Purchase
Payments to the Participant's Variable Account or the
Participant's Fixed Account, subject to the provisions of
Sections IV and V.
(c) Total Purchase Payments in a calendar year for a Participant
are limited as provided by Section 403(b) of the Internal
Revenue Code.
(d) Total Purchase Payment in a calendar year for a Participant
may not exceed $1,000,000 without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be made only through
the Contractholder.
(f) Purchase Payments will be credited to Participants' Variable
Accounts and Participants' Fixed Accounts in accordance with
information provided by Participant.
Section IV - VARIABLE ACCOUNT PROVISIONS
A. The Separate Account
THE SEPARATE ACCOUNT. The name of the Separate Account is
specified in Section I. We established the Separate Account
for this contract and other contracts we may issue. Xxxxxxx
credited to the Participant's Variable Account will be
allocated to the Separate Account.
Page 4
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section I.
For this and other contracts the Separate Account is divided
into investment accounts. There is an investment account for
each eligible mutual fund. For each investment account, there
is a subaccount for Qualified Plans and a subaccount for
Nonqualified Plans.
Each Participant may choose the investment account to which
amounts credited to the Participant's Variable Account are to
be allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each subaccount of each
investment account of the Separate Account are not chargeable
with liabilities arising out of any other business we may
conduct.
Upon notice to us, a Participant may transfer part or all the
value of the Accumulation Units or Annuity Units credited to
the Participant's Variable Account from one investment account
to another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as
all other investments, are subject to the limits and rules
applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitution may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
B. Charges and Deductions
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be
deducted each year on the date specified in Section I. It will
also be deducted when the Participant's Variable Account Value
is withdrawn in full if withdrawal is not on the date
specified in Section I. The charge will never increase. The
charge will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge
will never increase. On an annual basis it equals 0.5% of the
daily net asset value of the Separate Account. This
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charge is reflected in the Net Investment Factor set forth in
Subsection C of this Section IV.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this Section
IV.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Participant's
Variable Account Value or the present value of remaining
annuity payments (if applicable). The Contingent Deferred
Sales Charge is set forth in Section X.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account for each day the contract is
in force. Other charges will be deducted by cancelling
Accumulation Units or Annuity Units (if applicable) of a value
equal to the deduction. Cancellation of Accumulation Units
will be in the ratio of the Participant's interest in each
subaccount to the Participant's Variable Account Value.
C. Variable Accumulation Values
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
subaccount of each investment account of the Separate Account,
the number of a Participant's Accumulation Units is the sum of
Amounts allocated to the subaccount for the
Participant
divided by
The value of an Accumulation Unit for that subaccount
for the valuation period in which we received the
amount allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transaction, as
appropriate.
VALUE OF EACH ACCUMULATION UNIT. For each subaccount of each
investment account of the Separate Account, the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
Page 6
The value of an Accumulation Unit for the prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period.
Net Investment Factor. As used in this contract, Net
Investment Factor is an index used to measure the investment
performance of a subaccount from one valuation period to the
next. For any subaccount, the net investment factor for a
valuation period is found by dividing (a) by (b) and
subtracting (c):
Where (a) is
The net asset value per share of the mutual fund
held in the subaccount, as of the end of the
valuation period
plus
The per-share amount of any dividend or capital
gain distributions by the mutual fund if the
"exdividend" date occurs in the valuation period
plus or minus
A per-share charge or credit as we may determine,
as of the end of the valuation period, for tax
reserves;
Where (b) is
The net asset value per share of the mutual fund
held in the subaccount as of the end of the last
prior valuation period
plus or minus
The per-share charge or credit for tax reserves
as of the end of the last prior valuation period;
Where (c) is
The sum of the daily expense risk charge and the
daily mortality risk charge. On an annual basis,
the sum of such charges equals 1.30% of the daily
net asset value of the Separate Account.
Page 7
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is
the time as of which the mutual fund determines the net asset
value of its shares.
X. Xxxxxxxx Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Participant
will choose the Annuity Date in the application. The
Participant may change the Annuity Date up to 30 days prior to
the current Annuity Date.
VARIABLE ANNUITY OPTIONS. The Participant or the Participant's
surviving beneficiary may choose a variable annuity option up
to 30 days prior to the Annuity Date. An option not set forth
in the contract may be chosen if acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted from the Participant's Variable Account Value. The
net Participant's Variable Account Value as of the Annuity
Date will be applied to the annuity table for the option
chosen. The variable annuity tables show the amount of the
first payment for each $1,000 so applied, according to the age
at the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at 4%.
Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the subaccount or subaccounts chosen. The amount may change
from month to month. The amount of each subsequent payment is
the sum of the following amounts attributable to each
applicable subaccount
The number of Annuity Units for the subaccount
multiplied by
The value of an Annuity Unit for that subaccount for
the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a
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lump sum. Annuity payments will be made monthly; but if any
payment would be less than $50, we may change the frequency so
payments are at least $50 each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of units for
the subaccount of each investment account chosen by the
Participant is
The amount of the first variable annuity payment
attributable to that subaccount
divided by
The value of Annuity Unit for the subaccount as of
the Annuity Date.
The number is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period
in which we receive all requirements for the transfer, as
appropriate.
VALUE OF EACH ANNUITY UNIT. For each subaccount of each
investment account of the Separate Account the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
E. Variable Annuity Options
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be made for
the life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
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OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value
of the remaining payments to be made over the
specified or guaranteed period.
If a beneficiary dies while receiving annuity payments under
this Option 4, the present value will be paid in a lump sum to
the beneficiary's estate. The present value will be (a)
computed as of the valuation period in which due proof of
death is received at our designated service office, and (b)
commuted at the assumed investment rate of the annuity tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
X. Xxxxxxxx Annuity Option Tables
The following tables show the amount of the first monthly
income payment for each $1,000 of value applied under a
variable settlement option. "Age" as used in the tables means
an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date
of the first payment.
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CALENDAR YEAR OF BIRTH ADJUSTED AGE
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Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
Option 1 - Variable Annuity for Specified Number of Years
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Number of Years 5 6 7 8
Monthly Income - - - - 18.32 15.56 13.59 12.12
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Number of Years 9 10 11 12 13 14 15 16
Monthly Income 10.97 10.06 9.31 8.69 8.17 7.72 7.34 7.00
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Number of Years 17 18 19 20 21 22 23 24
Monthly Income 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35
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Number of Years 25 26 27 28 29 30
Monthly Income 5.22 5.10 5.00 4.90 4.80 4.72
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Option 2 - Variable Life Annuity and
Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
--- ------- ---------- ----------
50 4.59 4.56 4.47
51 4.65 4.62 4.52
52 4.72 4.69 4.57
53 4.80 4.76 4.63
54 4.87 4.83 4.69
55 4.96 4.91 4.75
56 5.05 4.99 4.81
57 5.14 5.07 4.87
58 5.24 5.16 4.93
59 5.34 5.25 5.00
60 5.45 5.35 5.07
61 5.56 5.45 5.14
62 5.69 5.56 5.20
63 5.82 5.68 5.27
64 5.96 5.80 5.34
65 6.11 5.93 5.41
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
70 7.08 6.71 5.71
71 7.33 6.89 5.76
72 7.60 7.08 5.81
73 7.90 7.28 5.84
74 8.22 7.48 5.88
75 8.57 7.68 5.90
76 8.95 7.89 5.92
77 9.37 8.10 5.94
78 9.82 8.30 5.96
79 10.32 8.50 5.97
80 10.86 8.69 5.98
81 11.46 8.88 5.98
82 12.11 9.04 5.99
83 12.82 9.20 5.99
84 13.59 9.33 6.00
85 14.43 9.45 6.00
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Option 4 - Variable Joint and Survivor Life Annuity
AGE 55 60 65 70 75 80 85 AGE
--- -- -- -- -- -- -- -- ---
50 4.25 4.34 4.41 4.46 4.51 4.54 4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
Section V - FIXED ACCOUNT PROVISIONS
A. Interest Options
Interest will be earned on each Participant's Fixed Account
Value from the date amounts are credited to the Participant's
Fixed Account to the date amounts are applied to an annuity
option, paid upon the death of the annuitant, transferred or
withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest
Option B, or Interest Option C. The Participant chooses the
interest options. The minimum initial amount for which an
Interest Option may be elected is $25.00 or such lower minimum
as we may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option A elections made in that
calendar quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will be
credited at the declared effective annual rate then applicable
to new Interest Option A elections, for successive twelve
month periods.
We will declare an effective annual interest rate under
Interest Option A which is not less than the published 52 week
United States Treasury Bill discount rate from the most recent
regularly scheduled auction held before the beginning of the
calendar quarter. If the auction program is discontinued, we
will substitute an index which in our opinion is comparable
and which is approved by the Insurance Department of the
jurisdiction in which this contract is delivered.
Page 13
The declared effective annual interest rate under Interest
Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end
of the calendar month in which the election is made.
Thereafter, interest will be credited on such amount for
successive calendar month periods at the declared effective
annual rate then applicable to new Interest Option B elections
made as of the beginning of each such calendar month.
The declared effective annual interest rate under Interest
Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option C elections made in that
calendar quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter, interest
will be credited at the declared effective annual rate then
applicable to new Interest Option C elections, for successive
thirty-six month periods.
The participant may change the interest option election or
withdraw or transfer any portion of an amount for which
Interest Option C is elected before the end of a period for
which a declared effective annual rate of interest is
guaranteed for such amount. However, in such event, the amount
withdrawn or transferred or the amount for which the interest
option election is changed will be reduced by a premature
transaction charge equal to 2 1/2% of such amount
The declared effective annual interest rate under Interest
Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
The Participant may change the interest option election
applicable to all or part of the Participant's Fixed Account
Value, subject to the provisions set forth below.
The Participant may change the election for an amount held
under Interest Option A only at the end of the period for
which a declared effective annual interest rate is guaranteed
for such amount.
The Participant may change the election for an amount held
under Interest Option B only at the end of a calendar month.
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The Participant may change the election for all or any part of
an amount held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount, subject to the Premature
transaction charge set forth in Interest Option C.
The minimum amount for which an interest option may be changed
is $250.
B. Fixed Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Participant
will choose the Annuity Date in the application. The
Participant may change the Annuity Date up to 30 days prior to
the current Annuity Date.
FIXED ANNUITY OPTIONS. The Participant or the Participant's
surviving beneficiary may choose a fixed annuity option up to
30 days prior to the Annuity Date. An option not set forth in
the contract may be chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will
be applied to the fixed annuity option chosen. If fixed
annuity payments begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1, 2, 3 and
4 will equal the monthly income under a comparable single
premium nonparticipating annuity available from us at the time
fixed annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under
Options 1, 2, 3 and 4 will equal 104% of the monthly income
under a comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments are to
begin. In no event will the monthly income be less than shown
in the Fixed Annuity Option Tables.
The guaranteed monthly income under Option 1 and 3 will be
based on interest at a rate of 3% per year compounded
annually. The guaranteed monthly income under Option 2 and 4
will be based on interest at a rate of 2 3/4% per year
compounded annually. Fixed Annuity Options 1, 2, 3 and 4 will
not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Fixed Annuity
payments will be made monthly. But if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
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C. Fixed Annuity Options
OPTION 1 - FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - FIXED LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either: (1) to have the payments
continue for the specified or guaranteed period, or (2) to
receive at any time in lump sum the present value of the
remaining payments to be made over the specified or guaranteed
period.
If a beneficiary dies while receiving annuity payments under
this option, the present value will be paid in a lump sum to
the beneficiary's estate.
The present value of payments under Option 1 will be based on
interest at a rate of 3% per year compounded annually. The
present value of the remaining payments during the guaranteed
period under Option 3 will be based on interest at a rate set
by us at the time payments are to begin.
PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Payments under all options
will be made to the Participant, except under Option 4. Under
Option 4, payments will be jointly payable while both
Annuitants are alive.
X. Xxxxx Xxxxxxx Option Tables
Amount of monthly income provided by each $1,000 applied under
an income option.
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Option 1 - Fixed Income for Specified Number of Years
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MONTHLY MONTHLY MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
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11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
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Option 2 - Fixed Life Annuity and
Option 3 - Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment.
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2 3 2 3
--- ------------------------ --- ---------------------------
Age of 20 Year 10 Year Age of 20 Year 10 Year
Option Life Guaranteed Guarantee Option Guaranteed Guaranteed
Annuitant Income Period d Period Annuitant Life Income Period Period
--------------------------------------------------------------------------------------------------------------------------
15 and under $2.90 $2.87 $2.88 35 3.33 3.30 3.31
16 2.91 2.88 2.89 36 3.36 3.33 3.34
17 2.92 2.89 2.90 37 3.40 3.36 3.38
18 2.94 2.91 2.92 38 3.43 3.40 3.41
19 2.96 2.93 2.94 39 3.47 3.43 3.45
20 2.97 2.94 2.95 40 3.51 3.47 3.49
21 2.99 2.96 2.97 41 3.55 3.51 3.53
22 3.01 2.98 2.99 42 3.59 3.55 3.57
23 3.03 3.00 3.01 43 3.64 3.59 3.62
24 3.05 3.02 3.03 44 3.69 3.63 3.67
25 3.07 3.04 3.05 45 3.74 3.68 3.72
26 3.09 3.06 3.07 46 3.79 3.72 3.77
27 3.11 3.08 3.09 47 3.85 3.77 3.83
28 3.14 3.11 3.12 48 3.91 3.82 3.88
29 3.16 3.13 3.14 49 3.97 3.88 3.94
30 3.18 3.15 3.16 50 $4.03 $3.83 $4.01
31 3.21 3.18 3.19 51 4.11 3.99 4.08
32 3.24 3.21 3.22 52 4.19 4.05 4.15
33 3.27 3.24 3.25 53 4.27 4.11 4.22
34 3.30 3.27 3.28 54 4.35 4.17 4.30
55 4.44 4.23 4.38 70 6.71 5.22 6.30
56 4.53 4.30 4.47 71 6.95 5.25 6.48
57 4.63 4.36 4.56 72 7.20 5.25 6.48
58 4.74 4.43 4.66 73 7.47 5.25 6.85
59 4.86 4.50 4.76 74 7.76 5.25 7.05
60 4.98 4.57 4.87 75 8.06 5.25 7.25
61 5.11 4.64 4.98 76 8.43 5.25 7.44
62 5.25 4.72 5.10 77 8.84 5.25 7.64
63 5.39 4.79 5.23 78 9.28 5.25 7.84
64 5.55 4.86 5.36 79 9.75 5.25 8.04
80 and 10.27 5.25 8.23
over
65 5.71 4.92 5.50
66 5.89 4.99 5.65
67 6.08 5.05 5.80
68 6.27 5.11 5.96
69 6.49 5.17 6.13
Page 17
Option 4 - Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
--------------------------------------------------------------------------------------------------------------------------
Age of
Second
Option
Annuitant Age of First Option Annuitant
50 55 60 65 70 75 60 85
--------------------------------------------------------------------------------------------------------------------------
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
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Section VI - PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Participant prior to the Annuity Date, we
will pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for
withdrawals and transfers, or
Page 18
(2) The sum of the Participant's Variable Account Value
and the Participant's Fixed Account Value for the
valuation period in which we receive such proof at
our designated service office.
If the beneficiary is not the decedent's spouse, the
beneficiary can choose an Annuity Option for death payments.
The Option must provide for payments over the beneficiary's
life or over a period not longer than the beneficiary's life
expectancy. Payments shall begin within one year after the
date of death. if payment is made in a lump sum, such payment
shall be made within five years after the date of death.
If the beneficiary is the decedent's surviving spouse, the
spouse shall be treated as the decedent for purposes of
contract death benefits.
Section VII - TRANSFER FROM VARIABLE TO FIXED ACCOUNT
A Participant may transfer all or part of the Participant's
Variable Account Value to the Participant's Fixed Account,
subject to the following provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made by a Participant
in a calendar year.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
Section VIII - TRANSFER FROM FIXED TO VARIABLE ACCOUNT
A Participant may transfer all or part of the Participant's
Fixed Account Value to the Participant's Variable Account,
subject to the following provisions:
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only
at the end of the period for which a declared effective annual
interest rate is guaranteed for such amount.
An amount held under Interest Option B may be transferred only
at the end of a calendar month.
All or any part of an amount held under Interest Option C may
be transferred before the end of the period for which a
declared effective annual interest rate is
Page 19
guaranteed for such amount, subject to the premature
transaction charge set forth in Interest Option C.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
Section IX - TRANSFER FROM ANOTHER ANNUITY CONTRACT
A Participant may, through the Contractholder, transfer to the
Participant's Variable or Fixed Accounts under this contract,
amounts held under another annuity contract purchased for the
Participant under the provisions of Section 403(b) of the
Internal Revenue Code.
Section X - WITHDRAWAL
A. WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Participant, the Participant may withdraw all or
part of the Participant's Variable Account Value and the
Participant's Fixed Account Value.
After the Annuity Date and the election of Variable Annuity
Option 1, the payee may withdraw the present value of the
variable annuity payments remaining to be made. The present
value will be (a) computed as of the valuation period in which
notice of the withdrawal is received at our designated service
office and (b) commuted at the assumed investment rate of the
Variable Annuity tables.
After the Annuity Date and the election of Xxxxx Xxxxxxx
Option 1. the payee may withdraw the present value of the
fixed annuity payments remaining to be made.
For full withdrawal of all the Participant's Variable and
Fixed Account Values, the Participant's Certificate must be
surrendered to our designated service office.
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of the Participant's Fixed
Account Value held under Interest Option C before the end of
the period for which a declared effective annual interest rate
is guaranteed for such amount will be subject to the premature
transaction charge set forth in Interest Option C. The total
of the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be more than
7% of the amount withdrawn.
Page 20
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal,
subject to the following provisions:
(1) If the Participant makes a total withdrawal of the
Participant's Fixed Account Value as a result of
termination of participation in this contract, the
amount received will never be less than the total of
all amounts allocated to the Participant's Fixed
Account, less prior transfers and withdrawals from
the Participant's Fixed Account.
(2) No charge will be made for withdrawal if the
Participant has provided due proof of disability.
Disability shall mean the inability, by reason of
medically determinable physical or mental impairment
which can be expected to result in death or be of
long-continued and indefinite duration, to engage in
the Participant's usual and customary occupation or
in any other substantial gainful activity for which
the Participant is reasonably suited by education,
training or experience.
(3) No charge will be made for a withdrawal after the
death of the Participant.
(4) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year
after the first Participant's Enrollment Year which
does not exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(5) No charge will be made for that portion of the first
withdrawal, made in the Participant's Eighth
Enrollment Year, which does not exceed 25% of the sum
of the Participant's Variable Account and Fixed
Account Values.
(6) No charge will be made for that portion of the first
withdrawal, made in the Participant's Ninth
Enrollment Year, which does not exceed 50% of the sum
of the Participant's Variable Account and Fixed
Account Values.
(7) No charge will be made for that portion of the first
withdrawal, made in the Participant's Tenth
Enrollment Year, which does not exceed 75% of the
Participant's Variable Account and Fixed Account
Values.
(8) No charge will be made for any withdrawal made after
the Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless the Participant directs
otherwise, partial withdrawals prior to the Annuity Date, and
related charges, will be deducted from the Participant's Fixed
and Variable Accounts in the following order
first from Interest Option B;
Page 21
next from Interest Option A;
then from each subaccount of each investment account of the
Separate Account in the ratio of the Participant's interest in
each subaccount to the Participant's Variable Account Value;
and
finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently
placed under that option.
Section XI - MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Participant in
the application, who is to receive:
(1) Payment on death of the Participant prior to the Annuity Date
or
(2) Guaranteed annuity payments, if any, on death of the Annuitant
on or after the Annuity Date.
The Participant may change the beneficiary while the Participant is
alive.
The estate or heirs of a beneficiary who dies before the Participant
have no rights under this contract. If no beneficiary survives the
Participant, payment will be made to the Participant's estate.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee is
misstated, any amount payable under this contract will be that amount
which the Purchase Payments paid would have purchased on the basis of
the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be
charged against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid
in full with the next payment due under this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of correct
age at any time. If any payment under this contract depends on the
payee being alive, we may require satisfactory proof of survival.
Page 22
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made within
seven days. However, we may defer a transfer, a withdrawal, the Annuity
Date or annuity payments, under the Variable Account Provisions of
Section IV if:
(1) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(2) Trading on the new York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical
to dispose of securities held in the Separate Account or to
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for
the protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance with
rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period, not exceeding six months, as we reasonably
determine that investment conditions are such that an orderly sale of
assets held as part of our general assets is not possible.
PARTICIPATING CONTRACT. This contract may participate in our divisible
surplus. Divisible surplus, if any, to be apportioned to this contract
shall be apportioned annually and will be allocated by us equitably
among all Participants. Divisible surplus so allocated will be credited
as Purchase Payments to the Participants' Variable and Fixed Accounts,
unless the Participant elects to have it paid in cash. No divisible
surplus is expected to be apportioned to this contract in the
foreseeable future.
APPLICATIONS ON BEHALF OF PARTICIPANTS. Purchase Payments made to Penn
Mutual on behalf of a Participant will be accepted under this contract
when an application on behalf of the Participant, satisfactory to Penn
Mutual, has been received and accepted by Penn Mutual.
Penn Mutual may decline at any time to accept applications on behalf of
proposed new Participants.
ASSIGNMENT AND OWNERSHIP. The Contractholder may not assign this
contract without the prior written consent of Penn Mutual.
Accounts established and maintained for a Participant are owned by the
Participant for his or her lifetime. The entire interest in a
Participant's Variable or Fixed Account is for the exclusive benefit of
the Participant. A Participant's Variable or Fixed Account is
Page 23
nontransferable and the entire interest of the Participant is
nonforfeitable in accordance with applicable provisions of the Internal
Revenue Code.
ENTIRE CONTRACT. This contract and the application therefore, a copy of
which is attached hereto and made a part hereof, constitute the entire
contract. All statements made in the application shall be deemed
representations and not warranties.
Only the President, a Vice President, the Secretary, the Chief Actuary,
an Actuary, or Associate Actuary may, on behalf of Penn Mutual, modify
or change the terms of this contract or waive any of its conditions. No
agent may modify or change the terms of this contract or waive any of
its conditions.
CERTIFICATES - TEN DAY RIGHT OF EXAMINE. Penn Mutual will furnish
certificates to Participants evidencing the interest of the Participant
in this contract and describing certain provisions of this contract.
The interest evidenced by a certificate may be cancelled by returning
the certificate within 10 days after it is received by the Participant.
It must be returned to Penn Mutual or the agent through whom it was
purchased. The interest will then be considered void as of its
inception. Any payment made on it will be refunded.
FAILURE TO ENFORCE NOT WAIVER. A waiver by a Participant or Penn Mutual
of the right to enforce any rights arising from a breach of this
contract will not constitute a waiver of any right arising from a
subsequent breach. The forbearance by a Participant or Penn Mutual to
enforce any right hereunder will not be considered a waiver of such
right.
AMENDMENT. To the extent necessary to comply with applicable law and
regulations, Penn Mutual reserves the right to change any or all of the
contract provisions at any time, including retroactive changes, without
the consent of Participants.
Changes in the Internal Revenue Code or in regulations or revenue
rulings thereunder may require amendments to this contract. In
accordance with the preceding paragraph, Penn Mutual may make such
amendments without the consent of Participants.
Participants will be informed of amendments when they are made.
DISCONTINUANCE. Upon giving Penn Mutual 90 days prior written notice,
the Contractholder may discontinue the contract with respect to new
Purchase Payments, provided, however, that the contract shall continue
in full force and effect in accordance with its terms with respect to
Purchase Payments made prior to discontinuance.
NOTICES, CHANGES AND CHOICES. To be effective, all notices, changes and
choices the Participant may make under the contract must be in writing,
signed and received by us at our designated service office. If
acceptable to us, notices, changes and choices relating to
Page 24
beneficiaries and ownership will take effect as of the date signed
unless we have already acted in reliance on the prior status. We are
not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of the contract prior
to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed
by law, payments are not subject to legal process for debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits required
under applicable laws and regulations of the jurisdiction in which this
contract is delivered.
The benefits provided under this contract from the Participant's Fixed
Account are increased by interest credited in excess of the guaranteed
minimums, if any.
PERIODIC REPORTS. At least once a year we will furnish each Participant
a report. It will set forth the current number of Accumulation Units or
Annuity Units, the value per Accumulation or Annuity Unit, the
Participant's Variable Account Value and the Participant's Fixed
Account Value. Each person with voting rights in the Separate Account
will be furnished reports required by the Investment Company Act of
1940.
Page 25
