EXHIBIT 99.4c
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NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
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RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
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NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Issue Date: See page 2A
/s/ Xxxxx Xxxxx
Secretary
If you die while this contract is in effect, we will pay the Death Benefit when
we receive written notice of your death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Contract No.: See page 2A
/s/ Xxxxxxx X. Xxxxx
President
APPROVED ______________________
INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
Page
Definitions..................................................................3
The Contract.................................................................5
Purchase Payments............................................................5
Reallocations of Contract Value..............................................6
Fixed Account................................................................7
Variable Account.............................................................8
Withdrawals.................................................................11
Annuity Benefits............................................................13
General Provisions..........................................................17
Payments at Death...........................................................19
Restrictions on Distributions...............................................19
Amendment and Disclaimer....................................................22
Termination.................................................................22
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA
PAGE(S).
CONTRACT DATA PAGE
INDIVIDUAL DEFERRED RETIREMENT ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment $15,000
Minimum Subsequent Payment(s) $5,000
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
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Total Allocation 100%
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF TOTAL/PARTIAL WITHDRAWAL CHARGE AS
WITHDRAWAL MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
0-1 6%
2-3 5%
4 4%
5 2%
6+ 0%
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: Xxxx Xxx
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
Section 1 DEFINITIONS
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ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT EARNINGS
On any Valuation Date, the Contract Value plus the aggregate Purchase Payments
withdrawn up to that date minus the aggregate Purchase Payments made up to that
date.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate account.
Section 1 DEFINITIONS (CONTINUED)
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OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
REQUIRED DISTRIBUTION DATE
April 1 of the year following the year in which you reach age 70 1/2, or later
if permitted by law or regulation.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange closes on each
day on which the New York Stock Exchange is open for business except federal and
other holidays and days on which we open for business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
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A. THE CONTRACT
The entire contract is the contract (Form No. 13002 12-94), the Contract Data
Page(s); any application(s); and attached endorsements. Unless fraudulent, all
statements made by or on behalf of anyone covered by this contract are
representations and not warranties. Only statements found in the attached
application(s) may be used to cancel this contract or as our defense if we
refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
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A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office.
Subject to Section 3C, you may make Purchase Payments at any time before the
Start Date while the contract is in force. The initial Purchase Payment must
equal or exceed the minimum as shown on the Contract Data Page(s). On a
nondiscriminatory basis, we may choose not to accept an additional Purchase
Payment if it is less than $5,000, or if the additional Purchase Payment plus
the Contract Value at the next Valuation Date exceeds $1,000,000.
B. TRANSFERS AND ROLLOVERS
Purchase Payments that are transfers or rollovers will only be accepted from:
1. Rollover contributions described in Sections 402(c), 403(a)(4),
403(b)(8), and 408(d)(3) of the Code; or
2. Xxxxxxx transferred from another individual retirement account or annuity
("IRA").
C. PURCHASE PAYMENT LIMITS
Except in the case of transfer or rollover contributions described in Section 3B
or a contribution made in accordance with the terms of a Simplified Employee
Pension ("SEP") as described in Section 408(k) of the Code, Purchase Payments
made to this contract may not exceed $2,000 for any taxable year.
We will accept SEP Purchase Payments from any employer even if you are age
seventy-and-one-half (70 1/2) or older, and we will accept Purchase Payments
made for a nonworking spouse who is under age 70 1/2 at the end of a tax year,
even if the working spouse is age 70 1/2 or older. No other Purchase Payments
may be made on your behalf for the tax year in which you reach age 70 1/2 and
thereafter.
Section 3 PURCHASE PAYMENTS (CONTINUED)
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D. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
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A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we a charge of
up to $25 for each reallocation on Contract Value, to limit the number of
reallocations you can make, to establish minimum and maximum amounts for
reallocations, and to relocate entire Contract Value remaining in a Sub-Account
or either Account in the event that a reallocation request would bring such
remaining Contract Value below a specified amount. Allocation of Purchase
Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value may be reallocated at any
time to Fixed Account B or to the Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
Section 4 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
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4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied purchase
annuity payouts, the remaining Contract as described above for periods prior to
the Start Date.
Section 5 FIXED ACCOUNT
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A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive our Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and Account Contract Value
using the daily interest rates.
Section 5 FIXED ACCOUNT (CONTINUED)
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There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase
partial annuity payouts and Annual Contract Charges applied to the Fixed
Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
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A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable, Account, but these
assets are held separately from our other assets and are not part of our General
Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the selected
Sub-Accounts are invested. We do not the investment performance of the Funds.
You bear the full investment risk for amounts applied to the selected
Sub-Accounts.
Section 6 VARIABLE ACCOUNT (CONTINUED)
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C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the current Valuation Period;
Section 6 VARIABLE ACCOUNT (CONTINUED)
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b. Plus the per share amount of any dividend or capital gain distri-
butions made on the Fund shares held in the Sub-Account during the
current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations
of the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the last prior Valuation Period;
b. Plus a per share credit or minus a per share charge for any
reserved for the last prior Valuation Period which we determine to
have resulted from the investment operations of the Sub-Account
and to be applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge, and the Administrative Charge, adjusted for the number of
days in the period, which are shown on an annual basis on the Contract
Data Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge in included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new SubAccounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
Section 6 VARIABLE ACCOUNT (CONTINUED)
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8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
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A. GENERAL
If permitted by law, you may request a full or partial withdrawal by sending us
a written request. We reserve the right to deduct applicable premium taxes and
other state or federal taxes from the Contract Value on the date the withdrawal
is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of of our receipt of
your written request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. ORDER OF WITHDRAWAL
For purposes of calculating Withdrawal Charges, withdrawals will be taken first
from Purchase Payments on a first-in, first-out basis, then from Contract
Earnings as of the Valuation Date next following our receipt of your request.
C. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn Allocable to Purchase Payments
X
Withdrawal Charge Percentage(s)
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be of the
withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
D. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus Withdrawal Charge
minus Annual Contract Charge
Section 7 WITHDRAWALS (CONTINUED)
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We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 13, and we have no further obligation.
E. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7F.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7F. Following a partial
withdrawal, the remaining Contract Value must be at least $1,000.
Withdrawal Charges, and any applicable taxes will not be included in the amount
payable to you.
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
F. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is the greater of:
1. Ten percent (10%) of the unloaned Contract Value; or
2. The remaining Purchase Payments which are no longer subject to a
Withdrawal Charge.
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7C. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7C.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Sections 7D and 7E.
G. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
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A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
The following options are available for annuity payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
Section 8 ANNUITY BENEFITS (CONTINUED)
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C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different payment
schedule. We reserve the right to change the frequency of either Fixed or
Variable Annuity Payouts so that each payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the terms of
the fixed Annuity Payout.
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout selected is
shown in the Annuity Payout Tables on pages 16 and 17 for each $1,000 of
Contract Value applied, based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
Section 8 ANNUITY BENEFITS (CONTINUED)
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If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contract into Annuity Units at the
Unit Value on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date. The number of Annuity Units of each Sub-Account
remains constant, as long as an annuity payout remains in force and allocation
among the Sub-Accounts has not changed. Reallocations among Sub-Accounts is
governed by Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
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ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income
for Each $1,000 of Contract Value
FIXED PERIOD IN MONTHS
AGE NONE 120
--- ---- ---
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.90 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semiannual, or quarterly installments
may be selected.
Amounts for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
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ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
JOINT PAYEE'S AGE
PAYEE'S AGE
45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
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A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force; and
2. We have the written consent of each irrevocable Beneficiary.
If there is more than one Beneficiary, we pay them in equal shares unless you
have requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you, we will pay your
estate.
If a Beneficiary survives you, but dies before receiving his/her full share, we
pay his/her share in the following order, unless you requested otherwise in
writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
C. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
D. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 13.
Section 9 GENERAL PROVISIONS (CONTINUED)
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E. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
F. MISSTATEMENT OF AGE
If your age is misstated, the Required Distribution Date and/or Start Date will
be adjusted to reflect the true age.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
G. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
H. NONTRANSFERABLE
This contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or security for the performance of an obligation
or for any other purpose, to any person or entity other than us.
I. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
J. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
K. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
L. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
M. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value.
Section 10 PAYMENTS AT DEATH
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A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If you die on or before the first day of the month following your 80th
birthday, as of the Death Benefit Valuation Date the greatest of:
(a) The Contract Value; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
and the amount of previously deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts since
that anniversary, less the amount of previously deducted Annual
Contract Charges since that anniversary.
2. If you die after the first day of the month following your 80th birthday,
the Contract Value on the Death Benefit Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or a payout
permitted by IRC Section 408(b)(3) and of which we approve.
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8 and which is permitted by IRC Sections 401(a)(9),
408(b)(3), and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS
--------------------------------------------------------------------------------
A. GENERAL
This section restricts how distributions may be made under the contact both
before and after your death. It refers to IRC Sections 401(a)(9) and 403(b)(3),
and the regulations thereunder, including the incidental death benefit
provisions of Treasury Regulation Section 4.10(a)(9)-2, all of which are
incorporated herein by reference. This section modifies any other provision in
the contract to the contrary.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
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B. REQUIRED DISTRIBUTIONS WHILE LIVING
You must elect payments under Section 7, Section 8, or a combination of both
that commence on or before the Required Distribution Date and are payable in
substantially equal amounts, no less frequently than annually. Your entire
interest in the contract must be distributed in the following manner:
1. In one lump sum;
2. Over your life;
3. Over your life and the life of your Beneficiary;
4. Over a period certain not exceeding your life expectancy; or
5. Over the joint and last survivor expectancy of you and your Beneficiary.
Payments must be nonincreasing or may increase only as provided in Q & A F-3 of
Treasury Regulation Section 1.401(a)(9)-1. If your entire interest is to be
distributed in other than one lump sum, then the amount to be distributed each
year (commencing with the Required Distribution Date and each year thereafter)
shall be determined in accordance with IRC Section 408(b)(3) and the regulations
thereunder.
C. REQUIRED DISTRIBUTION UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
--------------------------------------------------------------------------------
If you die before distribution has commenced, or distribution has commenced for
only a portion of your interest, the Death Benefit must be distributed no law
than December 31 of the calendar year in which the fifth anniversary of your
death occurs. However, proceeds which are payable to a Beneficiary who is a
natural person may be distributed in substantially equal installments over his
or her lifetime or a period certain not exceeding the life expectancy of the
Beneficiary provided such distribution commences not later than December 31 of
the calendar year following the calendar year in which your death occurred.
If the sole Beneficiary is your surviving spouse, he or she may elect no later
than December 31 of the calendar year in which the fifth anniversary of your
death occurs to receive equal or substantially equal payments over his or her
life expectancy commencing at any date prior to the date on which you would have
attained age 70 1/2. Alternatively, your surviving spouse may continue the
contract as Owner.
Payments shall be calculated in accordance with IRC Section 408(b)(3) and the
regulations thereunder.
For the purpose of this requirement, any amount paid to your child should be
treated as if it had been paid to your surviving spouse if the remainder of the
interest becomes payable to the surviving spouse when the child reaches the age
of majority.
If you die before the Required Distribution Date, no additional Purchase
Payments will be accepted under this Contract after your death unless the sole
Beneficiary is your surviving spouse.
D. MINIMUM INCIDENTAL DEATH BENEFIT REQUIREMENT
If your spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the present value of the amount
available for distribution is paid within your life expectancy and that such
method of distribution complies with the requirements of IRC Sections 401(a)(9),
408(b)(3) and the regulations thereunder.
E. LIFE EXPECTANCY
For purposes of this Section, life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treasury Regulation Section 1.72-9 in accordance with IRC Section
408(b)(3) and the regulations thereunder. In the case of distributions under
Section 11B, your life expectancy or, if applicable, the joint and the last
survivor expectancy of you and your Beneficiary, will be initially determined on
the basis of attained ages in the year you reach age 70 1/2. In the case of
distributions under Section 11C, life expectancy shall be initially determined
on the basis of the Beneficiary's attained age in the age in the year
distributions are required to commence. Unless you (or your spouse) elects
otherwise prior to the date distributions are required to commence, your fife
expectancy and, if applicable, your spouse's life expectancy shall be
recalculated annually based on attained ages in the year for which the required
distribution is being determined. The life expectancy of a nonspouse beneficiary
shall not be recalculated.
In the case of a distribution other than in the form of life income or joint
life income, the annual distribution required to be made by the Required
Distribution Date is for the calendar year in which you reach age 70 1/2. Annual
payments for subsequent years, including the year in which the Required
Distribution Date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the annuity value as of the
close of business on December 31 of the preceding year, divided by the
applicable life expectancy or joint and last survivor expectancy.
F. MINIMUM DISTRIBUTION REQUIREMENTS OF MULTIPLE IRAs
You or your Beneficiary may satisfy the minimum distribution requirements under
IRC Section 408(b)(3) by receiving a distribution from one IRA that is equal to
the amount required to satisfy the minimum distribution requirements for two or
more IRAs. For this purpose, the Owner of two or more IRAs may use the
"alternative method" described in Notice 88-38, 1988-1 C.B.524, to satisfy the
minimum distribution requirements described above.
Section 12 AMENDMENT AND DISCLAIMER
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A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, loan, distribution or transfer
under the contact complies with the provisions, terms and conditions of
each plan or with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 13 TERMINATION
--------------------------------------------------------------------------------
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date; or
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date.
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to you or, if you request, to another IRA.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company.
This Endorsement is a part of the contract to which it is attached.
"IRS Rules" are defined as the minimum distribution rules of IRC Section
401(a)(9) and applicable regulations. IRC Section 401(a)(9) describes minimum
distribution requirements for Contract Owners.
The following is added to the contract:
On the Required Distribution Date, we will waive the Withdrawal Charge on cash
withdrawals made to comply with IRS Rules, subject to the following:
1. The maximum amount available for withdrawal within a twelve (12) month
period without a Withdrawal Charge under all provisions of the contract,
including this Endorsement, will not be less than the amount needed for
this contract to comply with IRS Rules.
2. The waiver applies only to cash withdrawals needed for this contract to
meet IRS Rules. If individuals with other contracts withdraw an amount
needed for the combined contracts to meet IRS Rules, we will waive the
Withdrawal Charge only on the amount needed for this contract to meet IRS
Rules.
3. If IRS Rules change from those in effect on the date this Endorsement is
made a part of this contract, we have the right to change or withdraw
this Endorsement.
We will calculate the cash withdrawal needed for this contract to meet
IRS Rules. We guarantee the calculation will meet IRS Rules subject to
the accuracy of the data given to us.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of this contract.
/s/ Xxxxx Xxxxx
Secretary
IRS MINIMUM DISTRIBUTION ENDORSEMENT
INDIVIDUAL DEFERRED
RETIREMENT
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY
PAYOUTS
--------------------------------------------------------------------------------
NOTICE
To make Purchase Payments, make a claim, or exercise your rights under this
contract, please write or call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(000) 000-0000
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
