THE PENN MUTUAL LIFE INSURANCE COMPANY
FOUNDED 1847
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Xxxxxxxxx Xxxxxxx Date
MAY 1, 2009
Contract Number Contract Date
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The Penn Mutual Life Insurance Company will make monthly annuity payments and
other payments as set forth in this contract.
This is a legal contract between you and us. Please read the contract carefully.
VALUES AND PAYMENTS TO YOU UNDER THIS CONTRACT VARY ACCORDING TO THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
TEN DAY RIGHT TO REVIEW CONTRACT: You may cancel this contract within ten days
after its receipt. Simply return or mail it to us or our agent. We will refund
the contract value.
/s/Xxxxxx X. Xxxxxxx /s/Xxxxxx X. Xxxxxxxx
General Counsel and Secretary Chairman and
Chief Executive Officer
INDIVIDUAL VARIABLE
ANNUITY CONTRACT--
FLEXIBLE PURCHASE PAYMENTS
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
DI-783-V
TABLE OF CONTENTS
PAGE
Section 1-- Contract Specifications 3
Section 2-- Endorsements 4
Section 3-- Definitions 5
Section 4-- Purchase Payments 5
Section 5-- Charges and Deductions 5
Section 6-- The Separate Account 6
Section 7-- Accumulation Values 7
Section 8-- Annuity Payments 8
Section 9-- Annuity Options 10
Section 10-- Annuity Option Tables 11
Section 11-- Payment on Death 13
Section 12-- Transfer To Or From Another Contract 13
Section 13-- Withdrawal 14
Section 14--Miscellaneous 15
SECTION 1 -- CONTRACT SPECIFICATIONS
ANNUITANT MAY 1, 2009 ANNUITY DATE
CONTRACT NUMBER APRIL 20, 1999 CONTRACT DATE
FIRST PURCHASE PAYMENT AGE OF ANNUITANT
---------------------- ----------------
$25,671.42 69
DATE CONTRACT ADMINISTRATION
THE SEPARATE ACCOUNT CHARGE IS DEDUCTED EACH YEAR
-------------------- ----------------------------
PENN MUTUAL VARIABLE ACCOUNT III APRIL 4
ELIGIBLE FUNDS
FIDELITY MANAGEMENT ICMI/XXXXXXXXX XXXXXXXX
Equity Income Emerging Growth
Growth
Asset Manager OPCAP ADVISORS
Index 500 Value Equity
Small Capitalization
INDEPENDENCE CAPITAL (ICMI)
Money Market X. XXXX PRICE
Quality Bond High Yield Bond
Growth Equity Flexibly Managed
VONTOBEL USA AMERICAN CENTURY
International Equity VP Capital Appreciation
XXXXXXXXX & XXXXXX XXXXXX XXXXXXX ASSET MANAGEMENT
Limited Maturity Bond Portfolio Emerging Markets Equity
Balanced
Partners
EXCEPT WITH THE CONSENT OF PENN MUTUAL, THERE CAN BE NO ALLOCATION OF PURCHASE
PAYMENTS AND TRANSFERS TO MORE THAN 17 OF THE FUNDS LISTED ABOVE OVER THE
DURATION OF THE CONTRACT.
DIVISIBLE SURPLUS APPORTIONED TO THIS CONTRACT, IF ANY, WILL BE APPLIED TO
PROVIDE ADDITIONAL ACCUMULATION UNITS OR ANNUITY UNITS UNLESS YOU ELECT TO
HAVE IT PAID IN CASH.
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SECTION 2 -- ENDORSEMENTS
Page 4
SECTION 3 -- DEFINITIONS
OWNER: The person entitled to exercise all rights under the
contract. In this contract, the word "you" means Owner.
PURCHASE PAYMENTS: The money you pay us for this contract.
ANNUITANT: The person during whose life annuity payments are
made.
ANNUITY DATE: The date on which annuity payments are to start.
ACCUMULATION UNIT: An index used to compute the contract value
prior to the annuity date.
ANNUITY UNIT: An index used to compute annuity payments.
CONTRACT VALUE: The value of all accumulation units credited
to the contract.
QUALIFIED PLAN: A retirement plan that receives special tax
treatment under Sections 401, 403, 404, 408 or any similar
provisions of the Internal Revenue Code.
NONQUALIFIED PLAN: A retirement plan other than a Qualified
Plan.
SECTION 4 -- PURCHASE PAYMENTS
FIRST PURCHASE PAYMENT. The first Purchase Payment must be
made prior to issue of the contract. The minimum first
Purchase Payment is $250 for Qualified Plans and $1,500 for
Nonqualified Plans, or such lower minimums as we may
establish.
SUBSEQUENT PURCHASE PAYMENT. Subsequent Purchase Payments may
be made at any time without prior notice to us. The minimum
subsequent Purchase Payment is $40 for Qualified Plans and
$300 for Nonqualified Plans, or such lower minimums as we may
establish. Subsequent Purchase Payments are not required to
keep this contract in force.
SECTION 5 -- CHARGES AND DEDUCTIONS
CONTRACT ADMINISTRATION CHARGE. This charge of $30 will be
deducted each year on the date specified in Section 1. It will
also be deducted when the Contract Value is withdrawn in full
if withdrawal is not on the date specified. The charge will
never increase. The charge will not be deducted on or after
the Annuity Date.
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EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the contract administration charge will
never increase. On an annual basis it equals 0.5% of the daily
net asset value of the Separate Account.
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.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Contract Value or
the present value of remaining annuity payments (if
applicable). See Section 13.
PREMIUM TAXES. Any premium taxes imposed by a state or other
government will be deducted when due.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account established under the contract 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. Unless you notify us
otherwise, cancellation of accumulation units will be in the
ratio of your interest in each subaccount to your Contract
Value.
SECTION 6 -- THE SEPARATE ACCOUNT
THE SEPARATE ACCOUNT. The name of the Separate Account is
specified in Section 1. It is a separate account of The Penn
Mutual Life Insurance Company. It is for this and other
contracts. Your Purchase Payments will be allocated to the
Separate Account.
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 1.
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.
You choose the investment account to which you want your
Purchase Payments 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.
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Upon notice to us, you may transfer part or all the value of
the Accumulation Units or Annuity Units credited under this
contract from one investment account to another. No more than
two 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.
SECTION 7 - ACCUMULATION VALUES
NUMBER OF ACCUMULATION UNITS. For each subaccount of each
investment account of the Separate Account, the number of your
Accumulation Units is the sum of
Each Purchase Payment allocated to the subaccount
divided by
The value of an Accumulation Unit for that subaccount
for the valuation period in which we received the
Purchase Payment.
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
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, 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):
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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. See Section
5. On an annual basis, the sum of such
charges equals 1.30% of the daily net asset
value of the Separate Account.
VALUATION PERIOD. As used in this contract, this is the
interval from one valuation time to the next valuation time.
Valuation time is the time as of which each mutual fund
determines the net asset value of its shares.
SECTION 8 -- 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. You choose the
Annuity Date in the application. You may change the Annuity
Date up to 30 days prior to the current Annuity Date.
Page 8
ANNUITY OPTIONS. You or your surviving beneficiary may choose
an 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. The net Contract Value as of the Annuity Date will
be applied to the annuity table for the option chosen. The
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 you have 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 Contract Value to be
applied at the Annuity Date is less than $2,000, we may pay
such amount in a 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 ANNUITY UNITS. The number of units for the
subaccount of each investment account you have chosen 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.
Page 9
VALUE OF EACH ANNUITY UNIT. For each subaccount of each
investment 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.
SECTION 9 -- ANNUITY OPTIONS
OPTION 1 - ANNUITY FOR SPECIFIED NUMBER OF YEARS. Payments
will be made for a specified number of years, which may not be
less than 5 or more than 30.
OPTION 2 - 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 - 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 - 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 will be (a)
computed as of
Page 10
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. Payments under all options
will be made to the Owner or to such person(s) designated by
the Owner, except under Option 4. Under Option 4, payments
will be jointly payable while both Annuitants are alive.
SECTION 10 -- 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:
CALENDAR YEAR OF BIRTH ADJUSTED AGE
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 -- ANNUITY FOR SPECIFIED NUMBER OF YEARS
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Number of Years 5 6 7 8 9 10 11 12 13 14 15
Monthly Income -- -- -- 18.32 15.56 13.59 12.12 10.97 10.06 9.31 8.69 8.17 7.72 7.34
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Number of Years 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Monthly Income $7.00 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35 5.22 5.10 5.00 4.90 4.80 4.72
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OPTION 2 -- LIFE ANNUITY AND OPTION 3 -- LIFE ANNUITY
WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
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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 -- JOINT AND SURVIVOR LIFE ANNUITY
AGE 55 60 65 70 75 80 85 AGE
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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 11 -- PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Annuitant 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 contract transfers, or
(2) The Contract Value for the valuation period in which we
receive such proof at our designated service office.
Payment will be in a lump sum or the beneficiary may choose an
Annuity Option under this contract. If we are issuing new
contracts on this form at the time of payment, the beneficiary
may elect to apply for a new contract and apply the payment as
a transfer to the new contract.
DEATH AFTER THE ANNUITY DATE. If the Annuitant dies after the
Annuity Date, the amount payable, if any, will be according to
the Annuity Option in force. See Section 9.
SECTION 12 -- TRANSFER TO OR FROM ANOTHER CONTRACT
TRANSFER TO ANOTHER ANNUITY CONTRACT
You may transfer all or part of your Contract Value to another
annuity contract issued to you by us which contains a
reciprocal transfer provision. The Owner, contingent owner,
Xxxxxxxxx and beneficiaries of the other annuity contract must
be the same as under this contract.
Transfer to a new contract for a Nonqualified Plan must be at
least $1,000 or such lower minimum as we may establish. Other
contract transfers must be at least $250.
Page 13
For partial transfers the remaining Contract Value for this
contract must be at least $250. For full transfers this
contract must be surrendered to our designated service office.
A request to transfer must be received by us and any other
applicable requirement must be met prior to the death of the
Annuitant. No more than two transfers may be made to another
annuity contract in a calendar year. No transfer may be made
after the thirtieth day before the Annuity Date.
TRANSFERS FROM ANOTHER ANNUITY CONTRACT
You may make transfers to this contract from another annuity
contract issued by us which provides for such transfers,
subject to the limits set forth in that contract.
SECTION 13 -- WITHDRAWAL
WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Annuitant, you may withdraw all or part of the
Contract Value. After the Annuity Date and the election of
Option 1 in Section 9, the payee may withdraw the present
value of the annuity payments remaining to be made. The
present value will be (a) computed as of 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 annuity tables.
For full withdrawal, this contract must be surrendered to our
designated service office. For partial withdrawals of the
Contract Value, the withdrawal must be at least $250. The
amount remaining under the contract must be at least $250.
CONTINGENT DEFERRED SALES CHARGES. This charge will be made at
withdrawal. It will be lesser of
(1) 5% of the sum of the Purchase Payments made within 7 years
prior to the date of the withdrawal, or
(2) 5% of the amount withdrawn.
The cumulative sum of such charges made within 7 years prior
to the day of withdrawal will never be more than 5% of the sum
of all Purchase Payments made during the same period.
No charge will be made for that portion of the first
withdrawal made in a contract year that does not exceed 10% of
the sum of all Purchase Payments which were made more than one
year prior to the date of withdrawal.
For purposes of this Section, if there has been a transfer
from another contract, the most recent Purchase Payments under
that contract shall be deemed to have been made under this
contract to the extent of the amount transferred.
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PAYMENT OF WITHDRAWALS. Unless you notify us otherwise,
partial withdrawals prior to the Annuity Date and related
charges will be deducted from each subaccount of each
investment account in the ratio of your interest in each
subaccount to your Contract Value. Withdrawals will be based
on values for the valuation period in which the notice, and
contract if required, are received at our designated service
office.
SECTION 14 --MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person who is to receive
(1) Payment on death of the Annuitant prior to the Annuity
Date or
(2) Guaranteed annuity payments, if any, on death of the
Annuitant on or after the Annuity Date.
You choose the beneficiary in the application. You may change
the beneficiary while the Annuitant is alive.
The estate or heirs of a beneficiary who dies before the
Annuitant have no rights under this contract. If no
beneficiary survives the Annuitant, payment will be made to
you or your estate.
OWNERSHIP OF CONTRACT. The Annuitant is the Owner unless
another owner is named in the application or an endorsement.
Only an Owner may name or change a contingent owner.
Upon notice to us you may assign the contract to a new Owner.
The assignment cancels a designation of contingent owner.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals will be made within seven days. However, we may
defer a transfer, a withdrawal, the Annuity Date or annuity
payments 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
Page 15
(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.
COLLATERAL ASSIGNMENT. Upon notice to us you may make a
collateral assignment. It does not change contract ownership.
RESTRICTIONS OF QUALIFIED PLANS. If the contract is issued
pursuant to a Qualified Plan, it may not be assigned, pledged
or transferred unless permitted by law.
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.
INCONTESTABILITY. No statement made by the applicant will void
the contract unless it is contained in the written application
attached to the contract. The contract will be incontestable
after it has been in force for 2 years from the Contract Date.
THE CONTRACT. The contract, any endorsements, and its attached
application are the entire contract. It is issued in
consideration of the application and your Purchase Payments.
Only our President, a Vice President, Actuary or Secretary may
change the contract. Any change must be in writing.
Page 16
At any time we may make such changes in this contract as are
required to make it conform with any law or regulation issued
by any government agency to which it is subject.
PARTICIPATING CONTRACT. The contract may participate in our
divisible surplus. Divisible surplus, if any, to be
apportioned to the contract shall be apportioned annually and
shall be paid in cash or applied to provide additional
accumulation units or annuity units under the contract. No
divisible surplus is expected to be apportioned to this
contract in the foreseeable future.
Divisible surplus apportioned to this contract, if any, will
be applied to provide additional accumulation units or annuity
units unless you elect to have it paid in cash.
DATES. Contract years and anniversaries are measured from the
Contract Date.
NOTICE, CHANGES AND CHOICES. To be effective, all notices,
changes and choices you 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 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.
PERIODIC REPORTS. At least once a year prior to the Annuity
Date, we will furnish you a report. It will set forth the
current number of Accumulation Units, the value per
Accumulation Unit and the total Contract Value. Each person
with voting rights in the Separate Account will be furnished
reports required by the Investment Company Act of 1940.
Page 17
ENDORSEMENT -- INDIVIDUAL VARIABLE ANNUITY CONTRACT -- FLEXIBLE
PURCHASE PAYMENTS
This contract is amended as follows:
1. The following endorsement which has or may have been added to this contract
is rescinded and replaced in its entirety by this endorsement:
Endorsement No. 1447-805.
2. The following provision is added to Section 4--Purchase Payments:
Total purchase payments in any calendar year may not exceed $1,000,000
without our consent.
3. The first three paragraphs in Section 5--Charges and Deductions are changed
to read as follows:
CONTRACT ADMINISTRATION CHARGE. This charge is the lesser of 2% of the
Contract Value at the end of the contract year or $30. It will be deducted
each year on the date specified in Section 1. It will also be deducted when
the Contract Value is withdrawn in full if withdrawal is not on the date
specified. The charge will never exceed $30. 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 contract administration charge will never exceed $30. On an annual
basis it equals 0.5% of the daily net asset value of the Separate Account.
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 0.75% of the daily net asset value of the Separate Account.
4. Section 11 -- Payment on Death is amended in its entirety to read as
follows:
SECTION 11 -- PAYMENT ON DEATH
Death payments described in this Section shall be payable upon the earlier
of:
(1) the death of the Annuitant, or
(2) the death of the Owner (other than the trustee of a Qualified Plan).
Page 18
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of death prior to
the Annuity Date, Penn Mutual will pay to the beneficiary the greatest of:
(1) The sum of all Purchase Payments, adjusted for withdrawals and contract
transfers.
(2) The Contract Value on the date of receipt of such proof of death, or
(3) The Contract Value as of the Contract Date or, if later, the most
recent seven year anniversary of the contract occurring before the
Owner's 81st birthday, increased by subsequent Purchase Payments and
transfers to the contract and reduced by subsequent withdrawals and
transfers from the contract.
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 surviving spouse
shall become the owner of this contract.
DEATH AFTER THE ANNUITY DATE. If death occurs after the Annuity Date, the
amount payable, if any, will be according to the annuity option in force.
5. The first paragraph in Section 8 -- Annuity Payments is changed to read as
follows:
ANNUITY DATE. Unless another Annuity Date was chosen in the application or
later written notification, the Annuity Date for Nonqualified Plans will be
the first day of the next month after the Annuitant's 85th birthday and for
Qualified Plans, the first day of April in the calendar year following the
year in which the Annuitant attained age 70 1/2. The Annuity Date must be
on the first day of a month. You may change the Annuity Date up to 30 days
before the current Annuity Date.
6. Section 13 -- Withdrawal is amended in its entirety to read as follows:
SECTION 13 -- WITHDRAWAL
WITHDRAWAL. Prior to the earlier of the Annuity Date or the first death to
occur of the Owner or the Annuitant, the Owner may withdraw all or part of
the Contract Value. After the Annuity Date if Option 1 in Section 9 is in
force, the payee may withdraw the present value of the annuity payments
remaining to be made.
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For full withdrawal, this contract must be surrendered to Penn Mutual. For
partial withdrawals of the Contract Value, the withdrawal must be at least
$250. The amount remaining under the contract must be at least $250.
CONTINGENT DEFERRED SALES CHARGE. This charge will be made at withdrawal.
It will be the lesser of:
(1) 5% of the sum of the Purchase Payments made within 7 years prior to the
date of the withdrawal, or
(2) 5% of the amount withdrawn in excess of the free withdrawal amount.
The cumulative sum of such charges made within 7 years prior to the date of
withdrawal will never be more than 5% of the sum of all Purchase Payments
made during the same period.
FREE WITHDRAWAL. The Owner may at any time withdraw all or any part of the
Contract Value free from Contingent Deferred Sales Charges if (i) the Owner
in a Nonqualified Plan, or the Annuitant in a Qualified Plan, is then
disabled as defined in Section 72(m)(7) of the Internal Revenue Code and as
applied under the Social Security Act, (ii) the disability began after the
Contract Date, and (iii) the disability had continued without interruption
for four months.
No charge will be made for that portion of the first withdrawal made in a
contract year which does not exceed 10% of the sum of all Purchase Payments
which were made one year or more prior to the date of withdrawal.
No charge will be made on the portion of the first withdrawal made in the
contract years set forth below which does not exceed the following
percentages of the Contract Value:
CONTRACT YEAR PERCENTAGE
------------- ----------
Eighth 25%
Ninth 50%
Tenth 75%
No contingent deferred sales charge will be applicable after this contract
has been in force for ten years.
For purposes of this Section, if there has been a transfer from another
contract, the most recent Purchase Payments under that contract shall be
deemed to have been made under this contract to the extent of the amount
transferred.
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PAYMENTS OF WITHDRAWALS. Unless you notify us otherwise, partial
withdrawals prior to the Annuity Date and related charges will be deducted
from each subaccount of each investment account in the ratio of your
interest in each subaccount to your Contract Value. Withdrawals will be
based on values for the valuation period in which the notice, and contract
if required, are received at our designated service office.
7. EFFECTIVE DATE
The effective date of this endorsement is the Contract Date unless a later
date is shown below.
Philadelphia, Pennsylvania The Penn Mutual Life Insurance Company
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Endorsement No. 1499-91 Assistant Vice President and Senior Actuary
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This contract provides valuable benefits. Please contact Penn Mutual or its
agent if you have questions about this contract.
Please notify Penn Mutual promptly of any change in address.
ANNUAL ELECTION -- Penn Mutual is a mutual life insurance company. It has no
stockholders. The Owner of this contract is a member of Penn Mutual while this
contract is in force during the life of the Annuitant before the Annuity Date
and before total withdrawal of the contract value. Members have the right to
vote in person or by proxy at the annual election of Trustees held at the Home
Office, Independence Square, Philadelphia, Pennsylvania, on the first Tuesday of
March. If more information is desired, it may be obtained from the Secretary.
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VALUES AND PAYMENTS TO YOU UNDER THIS CONTRACT VARY ACCORDING TO
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
INDIVIDUAL VARIABLE
ANNUITY CONTRACT--
FLEXIBLE PURCHASE PAYMENTS
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
