SECURITY BENEFIT LIFE INSURANCE COMPANY
FOUNDED IN 1892/TOPEKA, KS
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application,
Security Benefit Life Insurance Company (the "Company") will pay the benefits of
this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 10 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS RECEIVED BY THE
COMPANY.
Signed for Security Benefit Life Insurance Company on the Contract Date.
XXXXX X. XXXXX XXXXXX X. XXXXXX
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Start Date or
termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Start Date according to the
Contract provisions.
* Annuity Payments begin on the Annuity Start Date using the method specified in
this Contract.
* This Contract is Participating.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, ARE BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
[SBL LOGO]
SECURITY BENEFIT LIFE INSURANCE COMPANY
A Member of The Security Benefit Group of Companies
P.O. Box 750497, Topeka, KS 66675-0497
000 XX Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0001
0-000-000-0000
Form V6026 (7-98) BP 602611
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Page
CONTRACT SPECIFICATIONS................................................ 3
DEFINITIONS............................................................ 4-6
GENERAL PROVISIONS..................................................... 6-8
The Contract......................................................... 6
Compliance........................................................... 6
Misstatement of Age and Sex.......................................... 7
Evidence of Survival................................................. 7
Incontestability..................................................... 7
Assignment........................................................... 7
Transfers...................... ..................................... 7
Claims of Creditors.................................................. 7
Nonforfeiture Values................................................. 7
Participation........................................................ 7
Statements........................................................... 8
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS........................ 8
Ownership............................................................ 8
Joint Ownership...................................................... 8
Annuitant............................................................ 8
Primary and Secondary Beneficiaries.................................. 8
Ownership and Beneficiary Changes.................................... 8
PURCHASE PAYMENT PROVISIONS............................................ 9
Flexible Purchase Payments........................................... 9
Purchase Payment Limitations......................................... 9
Purchase Payment Allocation.......................................... 9
Place of Payment..................................................... 9
CONTRACT VALUE AND EXPENSE PROVISIONS.................................. 9-11
Contract Value....................................................... 9
Separate Account Contract Value...................................... 9
Accumulation Unit Value.............................................. 9
Net Investment Factor................................................ 10
Determining Accumulation Units....................................... 10
Mortality and Expense Risk Charge.................................... 10
Premium Tax Expense.................................................. 10
Mutual Fund Expenses................................................. 11
WITHDRAWAL PROVISIONS.................................................. 11, 12
Withdrawals.......................................................... 11
Withdrawal Value..................................................... 11
Systematic Withdrawals............................................... 11
Date of Request...................................................... 11
Payment of Withdrawal Benefits....................................... 12
DEATH BENEFIT PROVISIONS............................................... 12-14
Death Benefit........................................................ 12, 13
Proof of Death....................................................... 13
Distribution Rules................................................... 13, 14
ANNUITY PAYMENT PROVISIONS............................................. 14-17
Annuity Start Date................................................... 14
Change of Annuity Start Date......................................... 14
Annuity Start Amount................................................. 14
Annuity Table........................................................ 14
Annuity Payments..................................................... 15
Change of Annuity Option............................................. 15
Variable Annuity Payments............................................ 15
Annuity Units........................................................ 15
Net Investment Factor................................................ 15, 16
Alternate Annuity Option Rates....................................... 16
Annuity Options...................................................... 16
ANNUITY TABLE.......................................................... 17
AMENDMENTS OR ENDORSEMENTS, if any
-2- BP 602611
--------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACT SPECIFICATIONS
--------------------------------------------------------------------------------
OWNER NAME: Xxxx X. Xxx CONTRACT NUMBER: Specimen
OWNER DATE OF BIRTH: 10-30-1953 CONTRACT DATE: 6-30-1997
JOINT OWNER NAME: Xxxx X. Xxx ISSUE DATE: 6-30-1997
JOINT OWNER DATE OF BIRTH: 7-18-1981 ANNUITY START DATE: 7-1-2025*
ANNUITANT NAME: Xxxxx X. Xxx PLAN: Non-Qualified
ANNUITANT DATE OF BIRTH: 5-13-1987 ASSIGNMENT: This policy may be assigned.
See Assignment Provision of your Policy.
ANNUITANT'S SEX: Female
PRIMARY BENEFICIARY NAME:
Xxxxx X. Xxx
--------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT............... $100,000
MINIMUM SUBSEQUENT PURCHASE PAYMENTS... $0
MINIMUM SYSTEMATIC WITHDRAWAL.......... $100
MORTALITY AND EXPENSE RISK CHARGE...... .65% Annually
ANNUITY OPTION......................... 10-Year Fixed Period Option*
SUBACCOUNTS:
PCG Aggressive Growth Subaccount
PCG Growth Subaccount
SIM Growth
SIM Conservative Growth
METHOD FOR DEDUCTIONS:
Deductions for Premium Taxes, will be made sequentially from the Contract
Value in descending order of the Subaccounts listed above. The value of each
account will be depleted before the next is charged.
* The Owner may select the Annuity Start Date and the Annuity Option. If no
Annuity Start Date or Annuity Option is selected by the Owner, they will be
assigned automatically.
V6026 A (7-98) -3- SBL200
--------------------------------------------------------------------------------
DEFINITIONS
--------------------------------------------------------------------------------
ACCOUNT
An Account is one of the Subaccounts.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute the
Separate Account Contract Value prior to the Annuity Start Date. It is also
used to compute the Variable Annuity Payments for Annuity Options 2 and 3.
ANNUITANT
The Annuitant is the person named by the Owner on whose life the Annuity
Payments depend for Annuity Option 1. The Annuitant receives Annuity Payments
under this Contract. Please see "Annuitant" provisions on page 8.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making
Annuity Payments. The Annuity Option is set prior to the Annuity Start Date.
Please see "Annuity Options" on page 16.
ANNUITY START DATE
The Annuity Start Date is the date on which Annuity Payments are scheduled to
begin. This date may be changed by the Owner. The Annuity Start Date is shown
on Page 3. Please see "Annuity Start Date" on page 14.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute Variable Annuity
Payments for Annuity Option 1.
COMPANY
The Company is Security Benefit Life Insurance Company, P.O. Box 750497,
Topeka, Kansas 66675-0497.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is shown
on page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will
be the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
The Designated Beneficiary receives a death benefit upon the death of the
Owner prior to the Annuity Start Date. Please see "Ownership, Annuitant, and
Beneficiary Provisions" on page 8 and "Death Benefit Provisions" on pages 12
and 13.
HOME OFFICE
The address of the Company's Home Office is Security Benefit Life Insurance
Company, P.O. Box 750497, Topeka, Kansas 66675-0497.
ISSUE DATE
The Issue Date is the date the Company uses to determine the date the
Contract becomes incontestable. The Issue Date is shown on Page 3. Please see
"Incontestability" on page 7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see
"Joint Ownership" provisions on page 8.
V6026B (7-98) -4- BP 602621
--------------------------------------------------------------------------------
DEFINITIONS (Continued)
--------------------------------------------------------------------------------
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or
corporation.
OWNER
The Owner is the person who possesses all rights under the Contract. The
Owner is named on page 3. Please see "Ownership" provisions on page 8.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental entity will be
charged against this Contract. When Premium Tax is assessed after the
Purchase Payment is applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the
Contract.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good
order at its Home Office, P.O. Box 750497, Topeka, Kansas 66675-0497.
SEPARATE ACCOUNT
Variable Annuity Account X (the "Separate Account") is a separate account
established and maintained by the Company under Kansas law. The Separate
Account is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a Unit Investment Trust. It was established
by the Company to support variable annuity contracts. The Company owns the
assets of the Separate Account and maintains them apart from the assets of
its general account and its other separate accounts. The assets held in the
Separate Account equal to the reserves and other Contract liabilities with
respect to the Separate Account may not be charged with liabilities arising
from any other business the Company may conduct.
Income and realized and unrealized gains and losses from assets in the
Separate Account are credited to, or charged against, the Separate Account
without regard to the income, gains or losses from the Company's general
account or its other separate accounts. The Separate Account is divided into
Subaccounts shown on page 3. Income and realized and unrealized gains and
losses from assets in each Subaccount are credited to, or charged against,
the Subaccount without regard to income, gains or losses in the other
Subaccounts. The Company has the right to transfer to its general account any
assets of the Separate Account that are in excess of the reserves and other
Contract liabilities with respect to the Separate Account. The value of the
assets in the Separate Account on each Valuation Date are determined at the
end of each Valuation Date.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net asset value of all
shares of the underlying mutual fund held by the Subaccount; plus (2) any
cash or other assets; less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
mutual funds. Each Subaccount may invest its assets in a separate class or
series of a designated mutual fund or funds. The Subaccounts are shown on
page 3. Subject to the regulatory requirements then in force, the Company
reserves the right to:
-5- BP 602621
--------------------------------------------------------------------------------
DEFINITIONS (CONTINUED)
--------------------------------------------------------------------------------
SUBACCOUNTS (CONTINUED)
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or
purchased by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other Separate Accounts
of the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account or other persons who have voting rights as to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account
or a Subaccount, the Company will notify the Owner of the change. The Company
will not change the investment policy of any Subaccount in any material
respect without complying with the filing and other procedures of the
insurance regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange and the Company's
Home Office are open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one Valuation Date to the
next Valuation Date.
--------------------------------------------------------------------------------
GENERAL PROVISIONS
--------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company consists of this
Contract, the attached Application, and any Amendments, Endorsements or
Riders to the Contract. All statements made in the Application will, in the
absence of fraud, as ruled by a court of competent jurisdiction, be deemed
representations and not warranties. The Company will use no statement made by
or on behalf of the Owner or the Annuitant to void this Contract unless it is
in the written Application. Any change in the Contract can be made only with
the written consent of the President, a Vice President, or the Secretary of
the Company.
The Purchase Payment(s) and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall
be limited to a return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
statute, rule or regulation. This includes, but is not limited to,
requirements for annuity contracts under the Internal Revenue Code or the
laws of any state. The Company will provide the Owner with a copy of any such
change and will also file such a change with the insurance regulatory
officials of the state in which the Contract is delivered.
V6026B (7-98) -6- BP 602621
--------------------------------------------------------------------------------
GENERAL PROVISIONS (CONTINUED)
--------------------------------------------------------------------------------
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, payments shall be
adjusted, when allowed by law, to the amount which would have been provided
for the correct age or sex. Proof of the age of an Annuitant may be required
at any time, in a form suitable to the Company. If payments have already
commenced and the misstatement has caused an underpayment, the full amount
due will be paid with the next scheduled payment. If the misstatement has
caused an overpayment, the amount due will be deducted from one or more
future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee being alive on a
given date, proof that the payee is living may be required by the Company.
Such proof must be in a form accepted by the Company, and may be required
prior to making the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Issue Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if the Contract may be assigned. If it may be
assigned, no Assignment under this Contract is binding unless Received by the
Company in writing. The Company assumes no responsibility for the validity,
legality, or tax status of any Assignment. The Assignment will be subject to
any payment made or other action taken by the Company before the Assignment
is Received by the Company. Once filed, the rights of the Owner, Annuitant
and Beneficiary are subject to the Assignment. Any claim is subject to proof
of interest of the assignee.
TRANSFERS
The Owner may Transfer Contract Value among Subaccounts subject to the
following.
Transfers are not allowed within 30 days of the Annuity Start Date. The
Company reserves the right to: (1) limit the amount that may be subject to
Transfer to $1,000,000 per Transfer without Home Office approval; (2) limit
the number of Transfers allowed each Contract Year to 14; and (3) suspend
Transfers.
The Company will effect a Transfer to or from a Subaccount on the basis of
Accumulation Unit Value (or Annuity Unit Value) determined at the end of the
Valuation Period in which the Transfer is effected.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Values will at least
equal the minimum required by law.
PARTICIPATION
The Contract is Participating, however, the Company does not expect dividends
to become payable on this Contract. At the end of each Contract Year the
Company will determine the Contract's dividend, if any. The Owner may choose
to have it: (1) added to the Contract Value; or (2) paid in cash. If no
choice is made, any dividend will be added to the Contract Value.
-7- BP 602621
--------------------------------------------------------------------------------
GENERAL PROVISIONS (Continued)
--------------------------------------------------------------------------------
STATEMENTS
At least once each Contract Year the Owner shall be sent a statement
including the current Contract Value and any other information required by
law. The Owner may send a written request for a statement at other intervals.
The Company may charge a reasonable fee for such statements.
--------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
--------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may
be exercised only by the Owner. If the purchaser names someone other than
himself or herself as Owner, the purchaser has no rights in the Contract. No
Owner may be older than age 90 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with
rights of survivorship. When an Owner and Joint Owner have been named, the
Company will honor only requests for changes and the exercise of other
Ownership rights made by both the Owner and Joint Owner. When a Joint Owner
is named, all references to "Owner" throughout this Contract should be
construed to mean both the Owner and Joint Owner, except for the "Statements"
provision on page 8 and the "Death Benefit Provisions" on pages 12 and 13.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant prior to
the Annuity Start Date. The request for this change must be made in writing
and Received by the Company at least 30 days prior to the Annuity Start Date.
No Annuitant may be named who is more than 95 years old on the Contract Date.
When the Annuitant dies prior to the Annuity Start Date, the Owner must name
a new Annuitant within 30 days or, if sooner, by the Annuity Start Date,
except where the Owner is a Nonnatural Person. If a new Annuitant is not
named, the Owner becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary is named on page 3. The Owner may change any
Beneficiary as described in "Ownership and Beneficiary Changes" below. If the
Primary Beneficiary dies prior to the Owner, the Secondary Beneficiary
becomes the Primary Beneficiary. Unless the Owner directs otherwise, when
there are two or more Primary Beneficiaries, they will receive equal shares.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new
Owner, a new Primary Beneficiary or a new Secondary Beneficiary. Any new
choice of Owner, Primary Beneficiary or Secondary Beneficiary will revoke any
prior choice. Any change must be made in writing and recorded at the Home
Office. The change will become effective as of the date the written request
is signed, whether or not the Owner is living at the time the change is
recorded. A new choice of Primary Beneficiary or Secondary Beneficiary will
not apply to any payment made or action taken by the Company prior to the
time it was recorded. The Company may require the Contract be returned so
these changes may be made.
V6026B (7-98) -8- BP 602621
--------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
--------------------------------------------------------------------------------
FLEXIBLE PURCHASE PAYMENTS
The Contract becomes in force when the initial Purchase Payment is applied.
The Owner is not required to continue Purchase Payments in the amount or
frequency originally planned. The Owner may: (1) increase or decrease the
amount of Purchase Payments, subject to any Contract limits; or (2) change
the frequency of Purchase Payments. A change in frequency or amount of
Purchase Payments does not require a written request.
PURCHASE PAYMENT LIMITATIONS
Cumulative Purchase Payments under the Contract in excess of $5,000,000 will
not be accepted without prior approval by the Company.
PURCHASE PAYMENT ALLOCATION
Purchase Payments will be allocated among the Subaccounts according to the
Owner's instructions in the Application or more recent instructions, if any.
The allocations must be whole percentage amounts and must total 100%. The
Owner may change the allocations by written notice to the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company at
its Home Office. Purchase Payments after the initial Purchase Payment are
applied as of the end of the Valuation Period during which they are Received
by the Company.
--------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
--------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is equal to the Separate Account
Contract Value. At any time after the first Contract Year and before the
Annuity Start Date, the Company reserves the right to pay to the Owner the
Contract Value as a lump sum if it is below $5,000.
SEPARATE ACCOUNT CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value is the sum of the
then current value of the Accumulation Units allocated to each Subaccount for
this Contract.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Subaccount was set at $10. The
Accumulation Unit Value for any subsequent Valuation Date is equal to (1)
times (2) where:
1. is the Accumulation Unit Value determined on the immediately preceding
Valuation Date; and
2. is the Net Investment Factor on the Valuation Date with respect to which
the Accumulation Unit Value is being determined.
-9- BP 602621
--------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
--------------------------------------------------------------------------------
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount as of the end of any Valuation
Period is determined by dividing (1) by (2) and subtracting (3) from the
result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Separate
Account or the Subaccounts; operations of the Company with respect to
the Contract; or the payment of premiums or acquisition costs under
the Contract.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as of the end of the prior Valuation Period.
3. is a daily factor representing the Mortality and Expense Risk Charge
which is deducted from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and
losses from each Subaccount are credited to or charged against the
Subaccounts without regard to the gains or losses in the Company or other
Subaccounts.
The Accumulation Unit Value may increase or decrease from one Valuation
Period to the next.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under this
Contract is found by dividing: (1) the amount allocated to the Subaccount; by
(2) the Accumulation Unit Value for the Subaccount at the end of the
Valuation Period during which the amount is applied under the Contract. The
number of Accumulation Units allocated to a Subaccount under the Contract
will not change as a result of investment experience. Events that change the
number of Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Transferred into or out of the Subaccount;
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page
3. This charge will be computed and deducted from each Subaccount on each
Valuation Date. This charge is factored into the Accumulation Unit and
Annuity Unit Values on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any applicable Premium Taxes will be allocated as described on
page 3.
V6026B (7-98) -10- BP 602621
--------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
--------------------------------------------------------------------------------
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each underlying fund reflects the deduction of any investment
advisory and administration fees and other expenses of the fund. These fees
and expenses are not deducted from the assets of a Subaccount, but are paid
by the underlying funds. The Owner indirectly bears a pro rata share of such
fees and expenses. An underlying fund's fees and expenses are not specified
or fixed under the terms of this Contract.
--------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
--------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Withdrawal Value or partial Withdrawal of Separate
Account Contract Value is allowed at any time. This provision is subject to
any federal or state Withdrawal restrictions. Upon the Owner's request for a
full Withdrawal, the Company will pay the Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must apply: (a) while this Contract is in force; and (b) prior
to the Annuity Start Date of Option 1.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account.
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract Value; less (2)
any Premium Taxes due or paid by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions from the Contract
in substantially equal amounts prior to the Annuity Start Date. In order to
start Systematic Withdrawals, the Owner must make the request in writing. The
Minimum Systematic Withdrawal is shown on page 3. The Owner must choose the
type of payment and its frequency. The Systematic Withdrawal request must
state the allocations for deducting the Withdrawals from each Account. The
payment type may be: (1) a percentage of Contract Value; (2) a specified
dollar amount; (3) all earnings in the Contract; (4) over a fixed period of
time; or (5) based upon the life expectancy of the Owner or the Owner and a
Beneficiary. The payment frequency may be: (1) monthly; (2) quarterly; (3)
semiannually; or (4) annually. Systematic Withdrawals may be stopped or
changed by the Owner upon proper written request Received by the Company at
least 30 days in advance. The Company reserves the right to stop, modify,
suspend or charge a fee for Systematic Withdrawals at any time.
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Contract Value on
the basis of Accumulation Unit Value determined at the end of the Valuation
Period in which all the required information is Received by the Company.
-11- BP 602621
--------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
--------------------------------------------------------------------------------
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend a Transfer or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits to protect owners of securities.
Rules and regulations of the Securities and Exchange Commission will govern
as to whether the conditions set forth above exist.
--------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
--------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Start Date, a Death Benefit will be
paid to the Designated Beneficiary when due Proof of Death and instructions
regarding payment are Received by the Company. If an Owner is a Nonnatural
Person, then the Death Benefit will be paid in the event of the death of the
Annuitant or any joint Owner that is a natural person prior to the Annuity
Start Date. Further, if an Owner is a Nonnatural Person, the amount of the
death benefit is based on the age of the Annuitant or any joint Owner that is
a natural person on the Issue Date. The death benefit proceeds will be the
Death Benefit described herein reduced by any uncollected Premium Taxes.
If the age of each Owner was 75 or younger on the Issue Date, the Death
Benefit will be the greatest of: (1) the Contract Value on the date due Proof
of Death and instructions regarding payment are Received by the Company, less
any Premium Taxes due or paid by the Company; or (2) the Guaranteed Death
Benefit described below.
The Guaranteed Death Benefit is the sum of all Purchase Payments paid under
the Contract reduced, as described below, for each partial withdrawal. The
Guaranteed Death Benefit after each partial withdrawal is calculated
according to the following formula:
A x B/C = D
where A is equal to the Guaranteed Death Benefit immediately prior to the
partial withdrawal, B is equal to the Contract Value immediately after the
partial withdrawal, and C is equal to the Contract Value immediately prior to
the partial withdrawal.
V6026B (7-98) -12- BP 602621
--------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (CONTINUED)
--------------------------------------------------------------------------------
DEATH BENEFIT (Continued)
If the age of any Owner on the Issue Date was 76 or older, or if due proof of
death (regardless of the age of any Owner on the Issue Date) and instructions
regarding payment are not Received by the Company within six months of the
date of the Owner's death, the Death Benefit will be: (1) the Contract Value
on the date due Proof of Death and instructions regarding payment are
Received by the Company; less (2) any Premium Taxes due or paid by the
Company.
If a lump sum payment is requested, the payment will be made in accordance
with any laws and regulations that govern the payment of Death Benefits.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
The entire Death Benefit with any interest shall be paid within 5 years after
the death of any Owner, except as provided below. In the event that the
Designated Beneficiary elects an Annuity Option, the length of time for the
payment period may be longer than 5 years if: (1) the Designated Beneficiary
is a natural person; (2) the Death Benefit is paid out under Annuity Options
1 through 3; (3) payments are made over a period that does not exceed the
life or life expectancy of the Designated Beneficiary; and (4) Annuity
Payments begin within one year of the death of the Owner. If the deceased
Owner's spouse is the sole Designated Beneficiary, the spouse shall become
the sole Owner of the Contract. He or she may elect to: (1) keep the Contract
in force until the sooner of their own death or the Annuity Start Date; or
(2) receive the Death Benefit.
If any Owner dies after the Annuity Start Date, Annuity Payments shall
continue to be paid at least as rapidly as under the method of payment being
used as of the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This
Contract is deemed to incorporate any provision of Section 72(s) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision. This Contract is also deemed to incorporate any other provision of
the Code deemed necessary by the Company, in its sole judgment, to qualify
this Contract as an annuity. The application of the distribution rules will
be made in accordance with Code section 72(s), or any successor provision, as
interpreted by the Company in its sole judgment.
-13- BP 602621
--------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
--------------------------------------------------------------------------------
DISTRIBUTION RULES (Continued)
The foregoing distribution rules do not apply to a Contract which is: (1)
provided under a plan described in Code Section 401(a); (2) described in Code
section 403(b); (3) an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise exempt from the
Code section 72(s) distribution rules.
--------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
--------------------------------------------------------------------------------
ANNUITY START DATE
The Owner may choose the Annuity Start Date at the time of application. If no
Annuity Start Date is chosen, the Company will use the oldest Annuitant's
ninety-fifth birthday. The Annuity Start Date may not be deferred beyond the
oldest Annuitant's ninety-fifth birthday.
The Annuity Start Date is the date the first payment will be made to the
Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY START DATE
The Owner may change the Annuity Start Date. A request for the change must be
made in writing. The written request must be Received by the Company at least
30 days prior to the new Annuity Start Date as well as 30 days prior to the
previous Annuity Start Date.
ANNUITY START AMOUNT
The Annuity Start Amount is applied to one or more of the Annuity Options
listed on page 16. The Annuity Start Amount is: (1) the Contract Value on the
Annuity Start Date; less (2) any Premium Taxes due or paid by the Company.
ANNUITY TABLE
Annuity Table A shows the guaranteed minimum amount of monthly Annuity
Payment per $1,000 of Annuity Start Amount for Annuity Option 1 that applies
to the first Variable Annuity Payment. The amount of each Annuity Payment for
Annuity Option 1 depends on the Annuitant's sex and age on the Annuity Start
Date.
Table A assumes 1900 as the year of birth of the annuitant. To use Table A
for an Annuitant born after 1900, the actual age is reduced by 0.1
(one-tenth) of a year for each year the year of birth exceeds 1900. For an
annuitant with a birth year prior to 1900, the actual age is increased in a
like manner. The actual age (in completed months) reduced or increased
becomes the "adjusted age of the Annuitant". The guaranteed payout rate is
then found by interpolating the Annuitant's adjusted age between the ages
shown. Table A is based on the 1983 Table "A" mortality table and an interest
rate of 3.5% per year. On request the Company will furnish the amount of
monthly Annuity Payment per $1,000 applied for any ages not shown.
Annuity Payments for Options 2 through 4 are computed without reference to
the Annuity Tables.
V6026B (7-98) -14- BP 602621
--------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
--------------------------------------------------------------------------------
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose any Annuity
Option provided by this Contract or any other Annuity Option to which the
Company agrees. The Owner may choose an Annuity Option by written request.
This request must be Received by the Company at least 30 days prior to the
Annuity Start Date. Several Annuity Options are listed on page 16. No Annuity
Option can be selected that requires the Company to make periodic payments of
less than $100.00. If no Annuity Option is chosen prior to the Annuity Start
Date, the Company will use the 10-Year Fixed Period Option. Each Annuity
Option allows for making Annuity Payments annually, semiannually, quarterly
or monthly.
CHANGE OF ANNUITY OPTION
Prior to the Annuity Start Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Start Date.
VARIABLE ANNUITY PAYMENTS
All Annuity Options provided under this Contract are Variable and either the
payment amount or payment length, depending on the option chosen, will
fluctuate with the performance of the underlying investments. The amount
shown on the Tables is the guaranteed minimum first Annuity Payment, based on
the assumed interest rate of 3.5% for Annuity Option 1. The amount of each
Annuity Payment after the first for this option is computed by means of
Annuity Units.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first Annuity Payment by
the Annuity Unit Value for the selected Subaccount on the Annuity Start Date.
The number of Annuity Units for the Subaccount then remains constant, unless
a Transfer of Annuity Units is made. After the first Annuity Payment, the
dollar amount of each subsequent Annuity Payment is equal to the number of
Annuity Units times the Annuity Unit Value for the Subaccount on the due date
of the Annuity Payment.
The Annuity Unit Value for each Subaccount was first set at $1.00. The
Annuity Unit Value for any subsequent Valuation Date is equal to (a) times
(b) times (c), where:
(a) is the Annuity Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the day;
(c) is a factor used to adjust for an assumed interest rate of 3.5% per year
used to determine the Annuity Payment amounts. The assumed interest rate
is reflected in the Annuity Tables.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount at the end of any Valuation
Period is determined by dividing (1) by (2) and subtracting (3) from the
result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
-15- BP 602621
--------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
--------------------------------------------------------------------------------
NET INVESTMENT FACTOR (Continued)
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge which is
deducted from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and
losses from each Subaccount are credited or charged against the Subaccount
without regard to the gains or losses in the Company or other Subaccounts.
ALTERNATE ANNUITY OPTIONS AND RATES
The Company may, at the time of election of an Annuity Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
Other Annuity Options may be available upon request at the discretion of the
Company.
ANNUITY OPTIONS
OPTION 1
LIFE WITH 25 YEARS CERTAIN: This option provides payments for the life of the
Annuitant with 25 years certain. Payments will be made to the end of this
period certain even if the Annuitant dies prior to the end of the period. If
the Annuitant dies before receiving all the payments during the fixed period.
If the Annuitant dies before receiving all the payments during the fixed
period, the remaining payments will be made to the Designated Beneficiary.
Table A shows some of the guaranteed rates for this option.
OPTION 2
FIXED PERIOD OPTION: This option provides payments for a fixed number of
years between 5 and 20. The amount of the payments will vary as a result of
the investment performance of the Subaccounts chosen. If all the Annuitants
die before receiving the fixed number of payments, any remaining payments
will be made to the Designated Beneficiary.
OPTION 3
FIXED PAYMENT OPTION: This option provides a fixed payment amount. This
amount is paid until the amount applied is paid. The number of payments will
vary as a result of the investment performance of the Subaccounts chosen. If
all the Annuitants die before receiving all the payments, any remaining
payments will be made to the Designated Beneficiary.
OPTION 4
AGE RECALCULATION OPTION: This option for payments based upon the Annuitant's
life expectancy, or the joint life expectancies of the Annuitant and a
beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each year. The
payments are computed by reference to actuarial tables prescribed by the
Treasury Secretary. Payments are made until the amount applied is exhausted.
The number of payments will vary as a result of the investment performance of
the Subaccounts chosen. If all the Annuitants die before receiving the
remaining payments, such payments will be made to the Designated Beneficiary.
V6026B (7-98) -16- BP 602621
ANNUITY TABLE
--------------------------------------------------------------------------------
TABLE A
SETTLEMENT OPTION ONE
MINIMUM INITIAL MONTHLY INSTALLMENT PER $1,000 OF AMOUNT APPLIED
Adjusted Option One
Age Year Fixed Period Ends
of Annuitant 25
----------------------------------------
MALE
55 4.47
56 4.51
57 4.55
58 4.60
59 4.63
60 4.67
61 4.71
62 4.74
63 4.77
64 4.80
65 4.82
66 4.85
67 4.87
68 4.88
69 4.90
70 4.91
71 4.92
72 4.93
73 4.94
74 4.95
75 4.95
FEMALE
55 4.28
56 4.33
57 4.38
58 4.42
59 4.47
60 4.52
61 4.57
62 4.61
63 4.65
64 4.69
65 4.73
66 4.77
67 4.80
68 4.83
69 4.85
70 4.87
71 4.89
72 4.91
73 4.92
74 4.93
75 4.94
Values not shown will be provided upon request. Annual, semiannual, or
quarterly installments can be determined by multiplying the monthly installments
by 11.812853, 5.9572227, and 2.9914196 respectively.
-17- BP 602621
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Start Date
or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Start Date according to
the Contract provisions.
* Annuity Payments begin on the Annuity Start Date using the method as
specified in this Contract.
* This Contract is Participating.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, ARE BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
[SBL LOGO]
SECURITY BENEFIT LIFE INSURANCE COMPANY
A Member of The Security Benefit Group of Companies
P.O. Box 750497, Topeka, KS 66675-0497
000 XX Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0001
0-000-000-0000
BP 602614
