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[LOGO]
WESTERN-SOUTHERN LIFE
WESTERN-SOUTHERN LIFE ASSURANCE COMPANY
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Agrees to provide the benefits and rights set out on this and the pages that
follow which are a part of the Contract. They are provided as consideration for
the application and purchase payment(s) for the Contract.
The Contract, the attached application, and any amendments, riders or
endorsements make up the entire Contract. The Contract does not take effect
until the Contract Date and until we have received the initial purchase
payment.
TEN DAY FREE LOOK. PLEASE EXAMINE THE CONTRACT. IF YOU ARE NOT SATISFIED, YOU
MAY CANCEL THE CONTRACT BY RETURNING IT TO US AT OUR SPECIAL MARKETS SERVICE
CENTER LISTED ON PAGE 3 WITHIN 10 DAYS AFTER YOU RECEIVE IT. WE WILL REFUND THE
CONTRACT VALUE COMPUTED AT THE END OF THE VALUATION PERIOD DURING WHICH THE
CONTRACT WAS RECEIVED, PLUS ANY PREMIUM TAX DEDUCTED FROM THE PURCHASE PAYMENT,
WITHIN 7 DAYS OF OUR RECEIPT OF THE CONTRACT.
This Annuity Contract is a legal contract between the Contract Owner and the
Company.
READ YOUR CONTRACT CAREFULLY
ALL VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. THESE VALUES MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT.
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Issued by a Stock Company
Home Office: 000 Xxxxxxxx, Xxxxxxxxxx, Xxxx 00000
FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY
Income Payable at Income Date
Death Benefit Prior to Income Date
Non-Participating
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CONTENTS
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APPLICATION AND SPECIFICATION PAGE . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
OWNER, ANNUITANT, BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . 5
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Transfer of Ownership . . . . . . . . . . . . . . . . . . . . . . . . 5
Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ACCUMULATION PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . 6
Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Variable Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dollar Cost Averaging . . . . . . . . . . . . . . . . . . . . . . . . 8
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SURRENDER AND WITHDRAWAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 9
General Surrender Provisions. . . . . . . . . . . . . . . . . . . . . 9
Partial Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . 9
Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Free Withdrawal Amount. . . . . . . . . . . . . . . . . . . . . . . . 9
Systematic Withdrawal Plan. . . . . . . . . . . . . . . . . . . . . . 9
Reduction of Surrender Charge . . . . . . . . . . . . . . . . . . . . 10
Delay in Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DEATH BENEFIT OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Standard Death Benefit Option . . . . . . . . . . . . . . . . . . . . 10
Annual Step-Up Death Benefit Option . . . . . . . . . . . . . . . . . 11
6% Accumulating Death Benefit Option. . . . . . . . . . . . . . . . . 11
CONTRACT CHARGES AND DEDUCTIONS. . . . . . . . . . . . . . . . . . . . . . 11
Contract Maintenance Charge . . . . . . . . . . . . . . . . . . . . . 11
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . 12
Contract Administration Charge. . . . . . . . . . . . . . . . . . . . 12
Premium Tax Deductions. . . . . . . . . . . . . . . . . . . . . . . . 12
Surrender Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DEATH PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Death of Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Death of Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Priority Of Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 13
INCOME PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Income Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Form of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Choice of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Lump Sum Removal of Value Applied
under a Payment Option (Commutation) . . . . . . . . . . . . . . . . 14
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . 15
General Payment Option Terms. . . . . . . . . . . . . . . . . . . . . 15
INCOME PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Option 1 - Payments for a Fixed Period. . . . . . . . . . . . . . . . 15
Option 2 - Payments for Life - Guaranteed Period. . . . . . . . . . . 15
Option 3 - Payments for a Fixed Amount. . . . . . . . . . . . . . . . 16
Option 4 - Life Annuity - No Guaranteed Period. . . . . . . . . . . . 16
Option 5 - Joint and Survivor . . . . . . . . . . . . . . . . . . . . 17
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Statements In Application . . . . . . . . . . . . . . . . . . . . . . 17
Modification Of Contract. . . . . . . . . . . . . . . . . . . . . . . 17
Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Incorrect Age Or Sex. . . . . . . . . . . . . . . . . . . . . . . . . 17
Place Of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Submission Of Contract. . . . . . . . . . . . . . . . . . . . . . . . 17
Creditors' Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Proof Of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Non-Participating . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2
CONTRACT SPECIFICATIONS
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Owner(s): [XXXX XXX] Region Number: [980-001-0001]
Annuitant(s): XXXX XXX Annuitant's
Birthdate: 09-25-61
Contract Number: W 12345678 Contract Date: 10-01-97
Initial Purchase
Payment: $10,000 Income Date: [10-01-26]
Death Benefit
Option: [STANDARD]
Western-Southern Life Assurance Company
Special Markets Service Center
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx 00000-0000
ALLOCATION OF INITIAL PURCHASE PAYMENT (percentages must be in whole numbers not
less than 5% and must total 100%):
VARIABLE ACCOUNT SUB-ACCOUNTS: FIXED ACCOUNT: [50%]
Emerging Growth Sub-Account
International Equity Sub-Account
Growth & Income Sub-Account
Balanced Sub-Account [30%]
Income Opportunity Sub-Account
Bond Sub-Account [20%]
Standby Income Sub-Account
FIXED ACCOUNT INITIAL INTEREST RATE: [5.5%] (Effective Annual Rate) [10-01-97]
through [09-30-98.] The interest rate credited to subsequent purchase payments
allocated to the Fixed Account will be the current rate in effect on the date
the payment is received. It will be guaranteed for one year from the date of
receipt of payment and will never be less than 3%.
3
* * * DEFINITIONS
"THE COMPANY", "WE", "OUR" AND "US", is Western-Southern Life Assurance Company.
"ACCUMULATION UNIT" is an accounting unit of measure used to calculate the
Variable Account Value prior to the Income Date.
"ANNUITANT" is the person designated by the Owner to be the measuring life
in determining the amount of each payment and the period of time payments
will be paid under one of the Income Payment Options; see Annuitant provision
on page 5.
"BENEFICIARY" is the person designated by the Owner to receive the death
benefits if the Owner dies prior to the Income Date; see Beneficiary
provision of page 5.
"CONTINGENT ANNUITANT" is the person designated by the Owner to become the
Annuitant if the Annuitant dies before the Income Date; see Annuitant provision
of page 5.
"CONTRACT VALUE" is the sum of the Variable Account Value and the Fixed Account
Value.
"CONTRACT YEAR" is a year starting with the Contract Date indicated on page 3 or
with a Contract Anniversary. A "Contract Anniversary" is the same day and month
as the Contract Date in each subsequent year.
"DOLLAR COST AVERAGING" is an option under this Contract for the automatic
transfer of specified dollar amounts, earnings or specified percentages from the
Fixed Account or from the Standby Income Sub-Account to other Sub-Accounts on a
monthly or quarterly basis, as directed by the Owner; see Dollar Cost Averaging
provision on page 8.
"FIXED ACCOUNT" is an option under this Contract where purchase payments are
allocated to the general account of the Company at a guaranteed interest rate.
"INCOME DATE" is the date annuity payments begin. The Income Date is shown on
page 3 and can be changed by written notice to us.
"OWNER" is the person, persons or entity having all rights under the Contract
unless otherwise provided. If there are Joint Owners they own the Contract
equally with a right of survivorship.
"PORTFOLIO" is an investment portfolio of an open-end management investment
company registered under the Investment Company Act of 1940.
"QUALIFIED CONTRACTS" are Contracts purchased in connection with a plan that
qualifies under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.
"SUB-ACCOUNT" is a division of the Variable Account which invests in a
Portfolio. Purchase payments allocated to the Variable Account are further
allocated to one or more of these Sub-Accounts, as designated by the Owner.
"SURRENDER VALUE" is the Contract Value less any surrender charge and less any
applicable Contract Maintenance Charge.
"VALUATION DATE" is each day on which valuation of the Variable Account
Sub-Accounts is required by applicable law, including every day that the
New York Stock Exchange is open.
"VALUATION PERIOD" is the period of time beginning at the close of a Valuation
Date and ending at the close of the next succeeding Valuation Date.
"VARIABLE ACCOUNT" is an option under this Contract where purchase payments are
allocated to a separate investment account of the Company.
"YOU" AND "YOUR" refer to the Owner or Owners if there are Joint Owners; see
Owner provision on page 5.
4
* * * OWNER, ANNUITANT, BENEFICIARY
OWNER
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You are the Owner of the Contract. You are also the Annuitant unless you name
another person as Annuitant as shown in the Contract Specifications on page 3.
You will receive the annuity payments under the Contract if the Annuitant is
living on the Income Date. You also have all other rights under the Contract
unless provided otherwise. The Contract may be owned by two persons as joint
Owners. In this case, both joint Owners must consent to any withdrawals,
surrenders or changes to the Contract or beneficiary.
TRANSFER OF OWNERSHIP
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During the Annuitant's lifetime you may transfer the ownership of the Contract
(unless it is a Qualified Contract) by written notice satisfactory to us. The
transfer will not take effect until our records show that we have received the
notice. A change in ownership may affect the amount of the death benefit. If
you transfer ownership to a new Owner who is more than 75 years old at the time
of the transfer, the death benefit will be limited to that provided under the
Standard Death Benefit Option (see Death Benefit Options on page 10). Such
change in ownership may be subject to state and federal income and/or gift
taxes. We are not responsible for the tax consequences resulting from a
transfer of ownership.
ANNUITANT
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The Annuitant is the person designated by the Owner to be the measuring life in
determining the amount of each payment and the period of time payments will be
paid under one of the Income Payment Options. This means that you, as Owner,
will receive annuity payments if the Annuitant is living on the Income Date and
for as long as the Annuitant remains living. You may also name a contingent
Annuitant. This person will become the Annuitant upon the Annuitant's death,
but only if the Annuitant dies before the Income Date. You may change the
Annuitant or contingent Annuitant after the Contract begins but before the
Income Date by written notice to us, and you may name a new Annuitant if the
Annuitant dies before the Income Date and there is no contingent Annuitant; see
the Death of Annuitant provision on page 13.
BENEFICIARY
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The Beneficiary is the person you name to receive the death benefits if you die
prior to the Income Date. You may change the Beneficiary at any time by written
notice satisfactory to us. However, the change will not take effect until our
records show that we have received the notice.
* * * ACCUMULATION PROVISIONS
PURCHASE PAYMENTS
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The initial purchase payment may not be less than $10,000. For Qualified
Contracts, the minimum initial purchase payment is $1,000. However, monthly
purchase payments of not less than $50 will be permitted for Qualified Contracts
if payments are made under an automatic or scheduled installment plan. If no
purchase payments have been received for 2 full years, and both (a) the total
purchase payments less any partial withdrawals, and (b) the Contract Value, are
less than $2,000, the Company will, after 14 days written notice to you,
terminate this Contract and pay you the Surrender Value.
Subsequent purchase payments must be at least $100 (at least $50 if made under
an automatic or scheduled installment plan), and may be made at any time.
The total of all purchase payments under this Contract may not exceed $500,000
without prior approval of the Company.
5
ALLOCATION OF PURCHASE PAYMENTS
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You elect to have purchase payments allocated to the Fixed Account and/or one or
more Sub-Accounts of the Variable Account. Each allocation must be in whole
percentages of at least 5%. The sum of the allocation percentages must equal
100%.
The allocation of the initial purchase payment is set forth on page 3.
Additional purchase payments will be allocated in the same manner as your
initial purchase payment unless changed by written request. All purchase
payments received after a change in allocation will be invested in the same
manner as your most recent allocation unless you instruct otherwise in writing.
FIXED ACCOUNT
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The Fixed Account is an option under this Contract where purchase payments are
allocated to the general account of the Company at a guaranteed interest rate.
FIXED ACCOUNT VALUE
The Fixed Account Value is equal to:
The sum of all purchase payments allocated to the Fixed Account; plus
Any Variable Account Value transferred to the Fixed Account; plus
Interest credited to the Fixed Account; less
Any amounts transferred from the Fixed Account to the Variable Account; less
Any amounts withdrawn for charges, deductions or surrenders as provided in
this Contract.
INTEREST CREDITED
The Company will credit interest to each purchase payment allocated to the Fixed
Account at the interest rate in effect when such purchase payment was received.
That interest rate will be guaranteed for one year from the date of receipt. At
the end of that year and at the end of each successive one year period, the
Company will declare a new interest rate applicable for that purchase payment
which will be guaranteed for the following year. The effective annual interest
rate will never be less than 3%.
The Company will credit interest on amounts transferred to the Fixed Account
from the Variable Account in the manner stated above as of the date of transfer.
VARIABLE ACCOUNT
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The Variable Account is an option under this Contract where purchase payments
are allocated to a separate investment account of the Company. Assets of the
Variable Account are the property of the Company and will be used to provide
values and benefits under this Contract and similar contracts. The Variable
Account may not be charged with liabilities arising out of any other business
the Company may conduct. However, the account will be charged for charges,
deductions and surrenders as provided in this Contract.
VARIABLE ACCOUNT VALUE
The Variable Account Value is equal to the current value of all Accumulation
Units in Sub-Accounts to which Contract Value is allocated.
SUB-ACCOUNT
The Variable Account is divided into Sub-Accounts, each of which invests in a
Portfolio. Purchase payments are allocated to one or more of these Sub-Accounts
as designated by you.
6
The Company may from time to time make additional Sub-Accounts available.
These Sub-Accounts will invest in investment portfolios that the Company
deems suitable for the Contracts. The Company also has the right to eliminate
Sub-Accounts from the Variable Account, to combine two or more Sub-Accounts,
or to substitute a new Portfolio or similar investment option for the
Portfolio in which a Sub-Account invests. A substitution may become necessary
if, in the Company's judgment, the Portfolio or other investment option no
longer suits the purposes of the Contracts. This may happen due to
unsatisfactory investment performance, a change in laws or regulations, a
change in a Portfolio's investment objectives or restrictions, because the
Portfolio is no longer available for investments, or for some other reason.
The Company will obtain prior approval from the SEC to the extent required
and any other required approvals before making such a change or substitution.
ACCUMULATION UNITS
The Company will use amounts allocated or transferred to a Sub-Account to buy
Accumulation Units. The number of Accumulation Units is determined by
dividing the amount allocated or transferred to the Sub-Account by the
Accumulation Unit Value for the Sub-Account for the Valuation Period during
which the purchase payment was received or the transfer was made.
The Accumulation Unit Value for each Sub-Account was arbitrarily set at $10
when the first Portfolio interest was purchased by the Sub-Account. The
Accumulation Unit Value for any subsequent Valuation Period is equal to:
The Accumulation Unit Value for the Sub-Account for the immediately
preceding Valuation Period; multiplied by
The Net Investment Factor for the Sub-Account for such subsequent
Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than one; therefore, the
Accumulation Unit Value may increase or decrease.
For all Sub-Accounts (except the Growth & Income Sub-Account and the Bond
Sub-Account), the Net Investment Factor for each Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and subtracting (c)
from the result, where
(a) is:
(1) the net asset value per share of the corresponding Portfolio at
the end of the current Valuation Period, plus
(2) the per share amount of a dividend or capital gain distribution
made by the Portfolio on shares held in the Sub-Account if the
"ex-dividend" date occurs during the current Valuation Period,
plus or minus
(3) a per share charge or credit for any taxes reserved, which is
determined by the Company to have resulted from the investment
operations of the Sub-Account during the current Valuation
Period; and
(b) is:
the net asset value per share of the corresponding Portfolio at
the end of the immediately preceding Valuation Period; and
(c) is:
a factor representing the charges deducted from the Sub-Account
on a daily basis for the daily portion of the annual Mortality
and Expense Risk Charge (1.20% to 1.40%, depending on the death
benefit option chosen; see Death Benefit Options) and the
annual Contract Administration Charge (0.15%).
7
For the Growth & Income Sub-Account and the Bond Sub-Account, the Net
Investment Factor for any Valuation Period is equal to one plus the net
result of (a) divided by (b) where:
(a) is the accrued gain or loss in the Sub-Account for the Valuation
Period, including investment income, capital gains and losses, adjusted
by:
(1) a charge to the Sub-Account on a daily basis representing the
portion of the annual Mortality and Expense Risk Charge (1.20%
to 1.40%, depending on the death benefit option chosen; see
Death Benefit Options) and the annual Contract Administration
Charge (0.15%) that is allocable to the Sub-Account for the
Valuation Period, and
(2) a charge or credit to the Sub-Account for any tax charge or tax
credit determined by the Company to have resulted from the
investment operations of the Sub-Account during the Valuation
Period; and
(b) is the value of the Sub-Account as of the close of the immediately
preceding Valuation Period.
DOLLAR COST AVERAGING
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You may request in writing, at any time prior to the Income Date, that the
Company automatically transfer specified dollar amounts, earnings or
specified percentages from the Fixed Account or from the Standby Income
Sub-Account to other Sub-Accounts on the monthly or quarterly anniversary of
the Contract Date. You must select this automatic transfer, known as "Dollar
Cost Averaging", for a period of at least 12 months. The minimum Dollar Cost
Averaging transfer is $200, with a minimum allocation per Sub-Account of 5%
of the total amount transferred. Dollar Cost Averaging is available only if
the Contract Value is at least $10,000. Dollar Cost Averaging will terminate
when any of the following occurs: (1) the number of designated transfers has
been completed; (2) the portion of the Contract Value in the Fixed Account
or in the Standby Income Sub-Account is insufficient to complete the next
scheduled transfer; (3) the Contract Owner requests termination in writing;
or (4) the Contract is terminated. There is no charge at this time for Dollar
Cost Averaging, but the Company reserves the right to charge a fee for this
service. The Company also reserves the right to terminate Dollar Cost
Averaging, on a prospective basis, upon 30 days' written notice to you.
TRANSFERS
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You may transfer all or a portion of the Contract Value among the
Sub-Accounts and the Fixed Account. A transfer request must be in writing
unless telephone transfer authorization has been received and approved by the
Company. Transfers must be in amounts not less than $250 and may be made:
among Sub-Accounts once every thirty days;
from one or more Sub-Accounts to the Fixed Account once per Contract
Year; and
from the Fixed Account to one or more Sub-Accounts once per Contract
Year, restricted to a maximum of 25% of the Fixed Account Value.
When transferring Contract Value to more than one Sub-Account, not less than
5% of the total amount being transferred can be directed to each such
Sub-Account.
We may at any time revoke or modify the transfer provisions. Any change will
be confirmed in writing to you.
8
*** SURRENDER AND WITHDRAWAL PROVISIONS
GENERAL SURRENDER PROVISIONS
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The Owner may withdraw part or surrender all of the Contract Value at any
time this Contract is in force and prior to the Income Date, subject to the
conditions set forth below. The withdrawal or surrender will be effective on
the Valuation Date on or next following the date we receive your request at
our Special Markets Service Center. The Company is not responsible for the
tax consequences of any withdrawals or surrender.
PARTIAL WITHDRAWALS
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You may request in writing to withdraw part of the Contract Value in amounts
not less than $250. Your request must be received before the Income Date. The
Contract Value may not be reduced to below $2,000 by a partial withdrawal. If
you request a partial withdrawal which would reduce the Contract Value to
below $2,000, the Company will notify you that you may either: (1) Surrender
the Contract in its entirety; or (2) withdraw a lesser amount such that the
remaining Contract Value is at least $2,000. If we do not receive further
instructions from you within 7 days, we will terminate the Contract and pay
the total Surrender Value to you in a lump sum. The amount withdrawn from the
Contract Value will include any applicable surrender charge.
The Company will process the withdrawals, unless instructed otherwise, by
liquidating, on a pro rata basis, Accumulation Units from all Sub-Accounts in
which Contract Value is allocated and value from the Fixed Account.
SURRENDER
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The Surrender Value is the Contract Value less: (1) any applicable surrender
charge; and (2) any applicable Contract Maintenance Charge.
When you send us a written request for surrender of the full Contract Value,
along with the Contract, the Company will pay you the Surrender Value, less
any applicable premium tax (see Premium Tax Deductions provision on page 12).
FREE WITHDRAWAL AMOUNT
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You may withdraw each Contract Year, without a surrender charge, an amount
equal to 10% of the Contract Value as of the date of withdrawal. This free
withdrawal privilege is non-cumulative and available each Contract Year. For
the purpose of calculating surrender charges, free withdrawal amounts are
deemed to be withdrawn on a first-in, first-out basis from purchase payments
not already withdrawn which were made less than eight years prior to the date
of surrender or withdrawal.
SYSTEMATIC WITHDRAWAL PLAN
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You may elect in writing on a form provided by the Company to take systematic
withdrawals by withdrawing a specified dollar amount of at least $100 on a
monthly, quarterly, semi-annual, or annual basis. The Company will process
the withdrawals by liquidating, on a pro rata basis, Accumulation Units from
all Sub-Accounts in which Contract Value is allocated and value from the
Fixed Account. If systematic withdrawals of a specified dollar amount exceed
10% of the Contract Value in any year, a surrender charge may apply in
accordance with the Surrender Charge section.
Systematic withdrawals of future earnings only may be elected, with no
specified dollar amount, in which cash no surrender charges will apply. If
earnings during the period are less than $25, however, no withdrawal will be
processed.
You may discontinue systematic withdrawals at any time by notifying the
Company in writing. The Company reserves the right to discontinue offering
systematic withdrawals upon 30 days' written notice to you; however, any such
discontinuation would not affect a systematic withdrawal plan already
commenced. The Company also reserves the right to assess a processing fee for
this plan.
9
REDUCTION OF SURRENDER CHARGE
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The surrender charge may be reduced or eliminated for annuity contracts sold
to a trustee, employer or similar entity pursuant to a retirement plan or
otherwise when contracts are sold to a group of individuals such that the
Company saves sales expenses. The decision to reduce or eliminate the
surrender charge will be made exclusively by the Company.
DELAY IN PAYMENT
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Payment of a surrender or withdrawal from the Variable Account will be made
within seven days. The Company has the right to suspend or delay calculation
or payment of any surrender or withdrawal from the Variable Account for any of
the following reasons:
1. The New York Stock Exchange is closed other than for
customary weekend and holiday closings; or
2. Trading on the New York Stock Exchange is restricted; or
3. An emergency exists as a result of which disposal of the
securities is not reasonably practicable or it is not
reasonably practicable to fairly determined the value
of the net assets of the Variable Account; or
4. The Securities and Exchange Commission, by order, permits
postponement of payments for the protection of
security holders; or
5. The request for surrender or withdrawal is not made in writing
or is not in good order.
Rules and regulations of the Securities and Exchange Commission will govern
as to whether the conditions set forth in numbers 2 and 3 above exist.
The Company further reserves the right to delay withdrawal of the Fixed
Account Value for up to six months in those states where applicable law
requires the Company to reserve such right, or when the request is not in
good order.
*** DEATH BENEFIT OPTIONS
There are three death benefit options from which you may select prior to
issue of the Contract. The death benefit option may not be changed after the
contract is issued, except in certain cases of a transfer of ownership to a new
Owner who is more than 75 years old at the time of such transfer (see
Transfer of Ownership on page 5). The death benefit options available are: the
Standard Death Benefit, the Annual Step-Up Death Benefit, and the 6%
Accumulating Death Benefit.
Except as provided below with regard to the Standard Death Benefit Option,
regardless of the option selected, the death benefit will equal the greatest
of (1) the Contract Value on the date both due proof of death and death
benefit payment instructions are received by us, (2) the sum of all purchase
payments less any amounts previously withdrawn, and (3) the amount provided by
the selected death benefit option. Except for the Standard Death Benefit
option, an additional mortality risk charge will be assessed as described in
the Contract Charges and Deductions section of the Contract. The death
benefit options are as follows:
STANDARD DEATH BENEFIT OPTION
-------------------------------------------------------------------------------
If you do not select one of the other two death benefit options, or if you
select one of the other options and subsequently transfer ownership of the
Contract to a new Owner who is more than 75 years old at the time of such
transfer, the Standard Death Benefit Option will be the death benefit option
that is in effect. The Standard Death Benefit is equal to the greater of
(1) the Contract Value and (2) total purchase payments less any of amounts
previously withdrawn; provided that if the Owner is age 86 or older when this
Contract is issued, the death benefit will equal the Contract Value.
10
ANNUAL STEP-UP DEATH BENEFIT OPTION
-------------------------------------------------------------------------------
The Annual Step-Up Death Benefit equals the greatest Adjusted Contract Value
for each Contract Anniversary prior to or immediately after the Owner's 80th
birthday, calculated as of the benefit determination date. The Adjusted
Contract Value for a Contract Anniversary as of the benefit determination
date is the Contract Value as of such Contract Anniversary plus any additional
purchase payments less an amount for partial withdrawals between such Contract
Anniversary and the benefit determination date, including any activity on the
benefit determination date. The reduction for partial withdrawals is in the
same proportion that the Contract Value was reduced on the date of the
withdrawal. At issue of the Contract, the Contract Value is considered to be
the initial purchase payment received. The benefit determination date is the
date we receive proof of death and an election of payment option or lump sum
payment satisfactory to us.
6% ACCUMULATING DEATH BENEFIT OPTION
-------------------------------------------------------------------------------
This death benefit equals the Accumulated Death Benefit, defined as follows:
The Accumulated Death Benefit is initially set to equal the initial purchase
payment on the Contract Date. On any subsequent Valuation Date, the
Accumulated Death Benefit is increased by (1) interest on the Accumulated
Death Benefit for the current Valuation Period calculated at the Death
Benefit Accumulation Rate and (2) any additional purchase payments made
during the current Valuation Period and decreased by (3) any partial
withdrawals made during the current Valuation Period. The Accumulated Death
Benefit will continue to accumulate as described until reaching the Maximum
Accumulated Death Benefit.
The Death Benefit Accumulation Rate is defined as a weighted average rate
based upon the allocation of Contract Value to the Fixed Account and the
various Sub-Accounts as of the preceding Valuation Date. It is equal to the
equivalent over the Valuation Period of a 6% annual rate except for any
amounts allocated to the Fixed Account, the Standby Income Sub-Account, or
the Bond Sub-Account; for amounts allocated to the Fixed Account or these
Sub-Accounts the rate used in averaging is the lesser of the rate at which
such account accumulated over the Valuation Period and the equivalent over
the Valuation Period of a 6% annual rate.
The Maximum Accumulated Death Benefit (MADB) is initially equal to two times
the initial purchase payment on the Contract Date. MADB is increased by two
times any additional purchase payments as of the date such payment is
received. MADB is reduced as of the effective date of any partial withdrawal
(1) by the amount of such partial withdrawal representing earnings (where
earnings are defined as the excess of Contract Value over total aggregate
purchase payments less partial withdrawals) and then (2) in proportion to the
reduction in Contract Value for any partial withdrawals taken from purchase
payments. The proportional reduction in MADB is measured against the
Contract Value after all earnings have been withdrawn.
*** CONTRACT CHARGES AND DEDUCTIONS
The following Contract charges may be imposed and are designed to reimburse
the Company for expenses incurred that relate to the Contract. The Company
guarantees that these charges will not increase, with the exception of the
premium tax deduction.
CONTRACT MAINTENANCE CHARGE
-------------------------------------------------------------------------------
On each Contract Anniversary prior to the Income Date we will deduct a
Contract Maintenance Charge. The charge will also be deducted on any date that
is not a Contract Anniversary on which you fully surrender the Contract or on
the Income Date. The Contract Maintenance Charge for the first 10 Contract
Years is $40. After the 10th Contract Anniversary, the Contract Maintenance
Charge is the lesser of (a) $40, and (b) .14% of the Contract Value. The
Contract Maintenance Charge will be waived if the Contract Value is equal to
or greater than $50,000.
11
MORTALITY AND EXPENSE RISK CHARGE
-------------------------------------------------------------------------------
On each Valuation Date we will deduct from the Accumulation Unit Value a
Mortality and Expense Risk Charge equal to a percentage of such value that is
the daily equivalent of an effective annual rate. The effective annual rate
depends on the death benefit option in effect. If the Standard Death Benefit
Option is in effect, the charge is equal to an effective annual rate of 1.20%
of the assets in the respective Sub-Accounts. The mortality risk portion
equals .85% and .35% represents the expense risk portion. If one of the other
death benefit options is in effect, the charge is equal to an effective annual
rate of 1.30% for the Annual Step-Up Option (the mortality risk portion
being .95%) or 1.40% for the 6% Accumulating Option (the mortality risk
portion being 1.05%).
We deduct the mortality risk charge because of our promise to pay a death
benefit prior to the Income Date and our obligation to make annuity payments
regardless of how long the Annuitant lives. We assess the expense risk charge
to defray amounts deducted for administrative expenses which may be
insufficient to cover the actual costs.
CONTRACT ADMINISTRATION CHARGE
-------------------------------------------------------------------------------
On each Valuation Date we will deduct from the Accumulation Unit Value a
Contract Administration Charge equal to a percentage of such value that is the
daily equivalent of an effective annual rate of .15%.
PREMIUM TAX DEDUCTIONS
-------------------------------------------------------------------------------
Certain states or other governmental entities impose premium taxes. Some
states assess the tax at the time purchase payments are made, and others assess
at the time annuity payments begin. We will pay the premium tax at the time
imposed by applicable law. We reserve the right to deduct the applicable tax
from the Contract Value, however, at the time the tax is paid, upon surrender
or partial withdrawals, when the death benefit is paid or on the Income Date.
SURRENDER CHARGE
-------------------------------------------------------------------------------
If part or all of the Contract Value is withdrawn or surrendered at any time,
or if annuity payments begin within the first seven Contract Years, a
surrender charge will be deducted except as described below. The surrender
charge is assessed on each purchase payment and is based upon the number of
Contract Years since the purchase payment was received. For the purpose of
calculating any surrender charge (except if in connection with a systematic
withdrawal of future earnings only), purchase payments will be deemed to be
withdrawn first and in the order they were received before any amounts in
excess of purchase payments are withdrawn from the Contract Value. (Note - for
tax purposes, withdrawals may be treated differently.)
The applicable surrender charge percentages are: 8% in the first year
following receipt of each purchase payment, 7% in year 2, 6% in year 3, 5%
in year 4, 4% in year 5, 2% in year 6, 1% in year 7 and 0% thereafter. The
surrender charge will be waived if at least two years after the Contract
Date, payments begin under one of the Income Payment Options. Such a plan
must have payments which will be made for at least five years.
In any event, the surrender charge will be no more than 8% of the lesser of:
(1) the total of all purchase payments made within 84 months prior to the date
of the request for surrender or withdrawal; or (2) the amount surrendered,
withdrawn or annuitized.
12
*** DEATH PROVISIONS
DEATH OF OWNER
-------------------------------------------------------------------------------
If the Contract is owned by a sole Owner who dies prior to the Income Date,
the Beneficiary will be paid the death benefit. The sole Owner's estate will
be the Beneficiary if no Beneficiary designation is in effect, or if the
designated Beneficiary has predeceased the Owner. If the Contract is owned by
joint Owners and one of them dies prior to the Income Date, the surviving
Owner will be considered the designated Beneficiary. This supersedes any
previous Beneficiary designation. If there are joint Owners, the age of the
Owner that died will determine the amount payable under the applicable death
benefit. If joint Owners die simultaneously or under circumstances such that
it cannot be determined which Owner died first, the age of the younger Owner
will determine the amount payable under the applicable death benefit. Any
death benefit will be paid to the Beneficiary either in one sum or under one
of the Income Payment Options of this Contract.
If the Owner is a trust and a beneficial owner of the trust has been
designated Beneficiary, the beneficial owner will be treated as the Owner of
the Contract solely for the purpose of determining how the death benefit
provisions of the Contract apply. If a beneficial owner is changed or added
after the Contract Date, this will be treated as a change of Owner for
purposes of determining the death benefit. If no beneficial owner has been
designated, the amount payable under the applicable death benefit will be
determined by the age of the Annuitant at issue and the Annuitant will be
treated as the Owner for the purpose of the death benefit provisions.
Payments must be completed by December 31st of the fifth calendar year
immediately following the year of the Owner's death, except that, if the
Beneficiary is a natural person and so elects, the payments may be made 1)
over the life of the Beneficiary; or 2) according to a fixed schedule which
does not extend beyond the life expectancy of the Beneficiary; provided that
payments begin within one year from the date of the Owner's death.
If the Beneficiary is the legal spouse of the deceased Owner, the Beneficiary
may elect to succeed to such rights in this Contract as the Owner held upon
his or her death. If the Beneficiary succeeds to these rights, the death
benefit will not be paid upon the death of the Owner, and the Contract will
remain in force and the Beneficiary will be the Owner.
If an Owner dies on or after the Income Date, any payments that remain to be
made must be made at least as rapidly as under the Income Payment Option in
effect on the date of the Owner's death.
DEATH OF ANNUITANT
-------------------------------------------------------------------------------
If the Annuitant dies prior to the Income Date, and a contingent Annuitant
has been named, the contingent Annuitant becomes the Annuitant (unless the
Annuitant is deemed to be the Owner as provided above, in which case the
death benefit becomes payable). If there is no contingent Annuitant when the
Annuitant dies prior to the Income Date, the Owner will become the Annuitant.
The Owner may designate a new Annuitant within 60 days of the death of the
Annuitant.
If there is no contingent Annuitant when the Annuitant dies prior to the
Income Date and the Annuitant is deemed to be the Owner as provided above,
the Beneficiary will be paid the death benefit then due. The Beneficiary will
be as provided in the Beneficiary designation then in effect. If no Beneficiary
designation is in effect, or if there is no designated Beneficiary living, the
Owner will be the Beneficiary.
PRIORITY OF BENEFICIARIES
-------------------------------------------------------------------------------
You may designate the Beneficiaries as primary or contingent to indicate the
order in which they will receive any death benefit payable. If you name two or
more Beneficiaries of the same class, they will share equally unless you
state how they are to share. If you identify a Beneficiary as a relative, we
will interpret that to mean a relative of the Owner unless you state that the
relationship is to another person.
13
Any death benefit will be paid to the primary Beneficiaries who are living
when payment is due. If there are no living primary Beneficiaries, payment
will be made to the contingent Beneficiaries who are living when payment is
due. If all Beneficiaries have predeceased the Owner, the death benefit will
be paid to the Owner's estate.
Any beneficiary who dies within 10 days after the Owner's death will not be
entitled to any benefits payable on such a death unless that beneficiary is
living when we receive due proof of the Owner's death.
*** INCOME PROVISIONS
INCOME DATE
-------------------------------------------------------------------------------
On the Income Date, we will start annuity payments under an Income Payment
Option or we will pay the Surrender Value, less any premium tax, in a single
sum. The Income Date is the Contract Anniversary on or following the
Annuitant's 80th birthday or the 10th Contract Anniversary, if later, unless
otherwise indicated on page 3. The Income Date can be changed by sending a
written request to us. The new date will go into effect when we receive the
request. Your written request must be received by us at least 31 days prior
to the existing Income Date.
Annuity payments will be paid to the Owner unless you designate another payee.
You may change the payee at any time by written notice to us. Such notice
must be received at our Home Office at least 31 days prior to a payment due
date for the change to be effective on such date. An executor, administrator,
trustee, corporation, partnership or association other than the Owner may not
be a payee without our approval. A payee designation is automatically revoked
by the death of the designated payee.
FORM OF PAYMENT
-------------------------------------------------------------------------------
The minimum Surrender Value that may be applied under an Income Payment
Option is $1,000. The amount of income shall be determined by applying the
Surrender Value, less any premium tax, as of the Income Date to that Income
Payment Option.
If prior to the Income Date no Income Payment Option has been chosen, the
Owner will be deemed to have chosen Option 2 - Payments for Life, with
monthly payments for 10 years, continuing thereafter during the life of:
1. the Annuitant; or
2. if the Annuitant is no longer living on the Income Date, the
contingent Annuitant, if a valid contingent Annuitant has
been named; or
3. if neither the Annuitant nor a valid contingent Annuitant is
living on the Income Date, the Owner.
CHOICE OF OPTION
-------------------------------------------------------------------------------
Choice of an option may be made by the Owner by written notice to us on or
prior to the Income Date while the Annuitant is living. See Income Payment
Options on page 15.
Equivalent payments for monthly, quarterly, semi-annual or annual intervals
may be chosen. The options are described in terms of monthly payments. We
will quote the amount of the other payments upon request.
We may issue a document stating the terms of the option.
LUMP SUM REMOVAL OF VALUE APPLIED UNDER A PAYMENT OPTION (COMMUTATION)
-------------------------------------------------------------------------------
The Owner, or the Beneficiary if the Owner is no longer living, may take lump
sum payments from the remaining proceeds placed under Income Payment Options
1 or 3, though no more than four transactions may be made during any calendar
year. No lump sum removal of value may be made under Options 2, 4 or 5.
14
ADDITIONAL INTEREST
-------------------------------------------------------------------------------
We guarantee interest under all Income Payment Options at a minimum rate of
3% a year. We may increase the interest rate above the minimum on these
options. Payments under these options will be based on the interest rate in
effect on the due date of the first payment.
GENERAL PAYMENT OPTION TERMS
-------------------------------------------------------------------------------
If the Surrender Value, less any premium taxes, to be placed under an Income
Payment Option is less than $1,000, we will pay that amount in one sum. If
any payments would be less than $50, we will change the frequency to provide
payments of at least $50.
If the Surrender Value, less any premium taxes, is assigned on the Income
Date, we will pay the assignee's share in one sum and place only the balance
under the option. After the Income Date neither the payments nor the
remaining value may be assigned or encumbered.
The schedule of payments under any operational Income Payment Option may not
be extended upon the death of the Owner.
*** INCOME PAYMENT OPTIONS
In lieu of a lump sum settlement, all or part of the Surrender Value, less
any premium taxes, may be applied under an Income Payment Option. When value
is applied under an Income Payment Option, all other rights and benefits
under this Contract shall cease.
In addition to the following options, other payment options may be available.
OPTION 1 - PAYMENTS FOR A FIXED PERIOD
-------------------------------------------------------------------------------
Equal monthly payments shall be made for a stated number of years, which you
select from the table below. The monthly payment will not be less than those
shown in the Fixed Period Table.
----------------------------------------------------------------------
FIXED PERIOD MINIMUM INCOME TABLE*
MONTHLY PAYMENTS FOR EACH $1,000 APPLIED
----------------------------------------------------------------------
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF INSTALL- OF INSTALL- OF INSTALL-
YEARS MENTS YEARS MENTS YEARS MENTS
----------------------------------------------------------------------
1 $84.47 11 $8.86 21 $5.32
2 42.86 12 8.24 22 5.15
3 28.99 13 7.71 23 4.99
4 22.06 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
----------------------------------------------------------------------
*VALUES ARE BASED ON COMPOUND INTEREST AT 3% A YEAR.
OPTION 2 - PAYMENTS FOR LIFE - GUARANTEED PERIOD
-------------------------------------------------------------------------------
Equal monthly payments shall be made for any guaranteed period chosen and
thereafter during the life of the Annuitant. The amount of each monthly
payment depends on the Annuitants age and sex on the date of first payment
and on any guaranteed period chosen. We may require proof to our satisfaction
of such age. We may require like proof that such person is alive on the date
any payment is due. The guaranteed period may be 10 or 20 years.
15
OPTIONS 2 AND 4
----------------------------------------------------------------------------------------------------------
ONE LIFE MINIMUM INCOME TABLE*
MONTHLY PAYMENTS FOR EACH $1,000 APPLIED
----------------------------------------------------------------------------------------------------------
AGE AGE
OF LIFE LIFE LIFE OF LIFE LIFE LIFE
PAYEE NO YEARS 10 YEARS 20 YEARS PAYEE NO YEARS 10 YEARS 20 YEARS
LAST CERTAIN CERTAIN CERTAIN LAST CERTAIN CERTAIN CERTAIN
BIRTH ------------- ------------- ------------- BIRTH ------------- ------------- -------------
DAY MALE FEMALE MALE FEMALE MALE FEMALE DAY MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------------------
15 and under $2.85 $2.77 $2.84 $2.77 $2.84 $2.76 50 $4.08 $3.72 $4.04 $3.71 $3.92 $3.66
16 2.86 2.78 2.86 2.78 2.85 2.78 51 4.15 3.78 4.11 3.77 3.98 3.71
17 2.87 2.79 2.87 2.79 2.87 2.79 52 4.23 3.85 4.18 3.83 4.04 3.76
18 2.89 2.80 2.89 2.80 2.88 2.80 53 4.32 3.91 4.26 3.89 4.10 3.82
19 2.91 2.82 2.90 2.82 2.90 2.81 54 4.41 3.98 4.35 3.96 4.16 3.87
20 2.92 2.83 2.92 2.83 2.91 2.83 55 4.50 4.06 4.43 4.03 4.23 3.93
21 2.94 2.84 2.94 2.84 2.93 2.84 56 4.60 4.14 4.53 4.10 4.29 4.00
22 2.96 2.86 2.96 2.86 2.95 2.85 57 4.71 4.22 4.62 4.18 4.36 4.06
23 2.98 2.87 2.97 2.87 2.97 2.87 58 4.82 4.31 4.73 4.27 4.43 4.13
24 3.00 2.89 2.99 2.89 2.99 2.88 59 4.95 4.41 4.83 4.36 4.50 4.20
25 3.02 2.91 3.02 2.90 3.01 2.90 60 5.08 4.51 4.95 4.45 4.57 4.27
26 3.04 2.92 3.04 2.92 3.03 2.92 61 5.22 4.62 5.07 4.55 4.64 4.34
27 3.06 2.94 3.06 2.94 3.05 2.94 62 5.37 4.73 5.20 4.66 4.71 4.42
28 3.09 2.96 3.08 2.96 3.07 2.95 63 5.53 4.86 5.33 4.77 4.78 4.49
29 3.11 2.98 3.11 2.98 3.10 2.97 64 5.70 4.99 5.47 4.89 4.84 4.57
30 3.14 3.00 3.14 3.00 3.12 2.99 65 5.89 5.13 5.62 5.01 4.91 4.64
31 3.17 3.02 3.16 3.02 3.15 3.01 66 6.08 5.28 5.77 5.15 4.97 4.72
32 3.20 3.05 3.19 3.04 3.18 3.04 67 6.29 5.45 5.93 5.29 5.04 4.80
33 3.23 3.07 3.22 3.07 3.21 3.06 68 6.52 5.62 6.09 5.44 5.09 4.87
34 3.26 3.09 3.26 3.09 3.24 3.08 69 6.76 5.82 6.26 5.59 5.15 4.94
35 3.29 3.12 3.29 3.12 3.27 3.11 70 7.02 6.02 6.43 5.76 5.20 5.01
36 3.33 3.15 3.32 3.15 3.30 3.13 71 7.30 6.25 6.61 5.93 5.24 5.08
37 3.37 3.18 3.36 3.17 3.33 3.16 72 7.59 6.49 6.79 6.11 5.29 5.14
38 3.41 3.21 3.40 3.20 3.37 3.19 73 7.91 6.75 6.97 6.30 5.32 5.20
39 3.45 3.24 3.44 3.24 3.41 3.22 74 8.25 7.04 7.16 6.50 5.36 5.25
40 3.50 3.27 3.48 3.27 3.45 3.25 75 8.62 7.35 7.34 6.70 5.39 5.30
41 3.54 3.31 3.53 3.30 3.49 3.29 76 9.02 7.68 7.53 6.91 5.41 5.34
42 3.59 3.35 3.58 3.34 3.53 3.32 77 9.44 8.05 7.71 7.12 5.43 5.37
43 3.64 3.39 3.63 3.38 3.57 3.36 78 9.90 8.44 7.89 7.33 5.45 5.40
44 3.70 3.43 3.68 3.42 3.62 3.39 79 10.38 8.88 8.06 7.54 5.47 5.43
45 3.75 3.47 3.73 3.46 3.66 3.43 80 10.91 9.35 8.23 7.75 5.48 5.54
46 3.81 3.52 3.79 3.51 3.71 3.47 81 11.47 9.86 8.39 7.95 5.49 5.47
47 3.87 3.56 3.85 3.55 3.76 3.52 82 12.06 10.41 8.53 8.15 5.50 5.48
48 3.94 3.61 3.91 3.60 3.81 3.56 83 12.69 11.01 8.67 8.33 5.50 5.49
49 4.01 3.67 3.97 3.65 3.87 3.61 84 13.37 11.66 8.80 8.50 5.51 5.50
85 and 14.08 12.37 8.92 8.66 5.51 5.50
over
----------------------------------------------------------------------------------------------------------
*Values are based on the "1983 Table a" adjusted for age
last birthday, with compound interest at 3% a year.
OPTION 3 -- PAYMENTS OF A FIXED AMOUNT
-------------------------------------------------------------------------------
Equal monthly payments of a fixed amount shall be made until the value
applied under this option, with interest credited on the unused balance, is
exhausted. The amount chosen must be at least $5 per month for each $1,000 of
proceeds placed under this option. The last payment will be for the balance
only. Payments may not be for more than 30 years.
OPTION 4 -- LIFE ANNUITY -- NO GUARANTEED PERIOD
-------------------------------------------------------------------------------
Equal monthly payments will be made during the life of the Annuitant. The
amount of each monthly payment depends on the Annuitant's sex and age on the
date of first payment. We may require proof to our satisfaction of such age
and we may require proof that such person is alive on the date any payment is
due. THERE IS NO GUARANTEED PERIOD. THIS MEANS THAT WHEN THE ANNUITANT DIES
NO FURTHER PAYMENTS WILL BE MADE, EVEN IF ONLY ONE PAYMENT HAS BEEN MADE.
16
OPTION 5 -- JOINT AND SURVIVOR
-------------------------------------------------------------------------------
Equal monthly payments shall be made during the lifetimes of two designated
persons. Upon the death of either, payments will continue to the survivor or
may be reduced to a preselected percentage (75%, 66 2/3%, or 50%) of the
original payment. Payments will cease upon the death of the survivor. The
amount of each monthly payment depends on the ages and sexes of both persons
on the date of first payment, and the preselected percentage for continuing
payments. We may require proof to our satisfaction of their ages. We may
require like proof that any designated person is alive on the date any
payment based upon the life of such person is due.
* * * GENERAL PROVISIONS
STATEMENTS
-------------------------------------------------------------------------------
At least once each Contract Year prior to the Income Date, we will mail a
statement to you at your last address known to us. This statement shall
include the Fixed Account Value and the Variable Account Value. The
information in this statement shall be as of the date not more than 4 months
prior to the date it is mailed. We will also send you confirmations of
transactions under the Contract, such as purchase payments, transfers and
withdrawals and, at least semi-annually, a report of the investments held in
the Sub-Accounts and any other information required by applicable law or
regulations.
STATEMENTS IN APPLICATION
-------------------------------------------------------------------------------
All statements made in the application are considered to be representations
and not warranties. No statement will be used in defense of a claim unless it
is in the application.
MODIFICATION OF CONTRACT
-------------------------------------------------------------------------------
Any change in the Contract or waiver of its provisions must be in writing and
signed by our Chairman, President or Secretary. No other person can change or
waive any of its provisions.
INCONTESTABILITY
-------------------------------------------------------------------------------
The Contract will be incontestable after it has been in force during the
Owner's lifetime for two years from the Contract Date.
INCORRECT AGE OR SEX
-------------------------------------------------------------------------------
If the age or sex of the Owner and/or Annuitant has been misstated, we will
adjust all benefits to those that the purchase payment(s) for the Contract
would have purchased for the correct age and sex. Any overpayments we make
will be charged with compound interest against subsequent payments. Any
amounts we owe as a result of underpayments will be paid with compound
interest upon receipt of notice of the underpayment. The rate will be the
rate we use to determine the number or amount of the payments.
PLACE OF PAYMENT
-------------------------------------------------------------------------------
We will make all payments due under the Contract at our Home Office.
SUBMISSION OF CONTRACT
-------------------------------------------------------------------------------
We may ask you to relinquish the Contract or send it to us for endorsement
before we make any payment. Failure to have you relinquish the Contract or to
note payment on it does not indicate that we have not made payment.
17
CREDITORS' CLAIMS
-------------------------------------------------------------------------------
All payments under the Contract will be exempt from the claims of creditors
and legal process to the extent permitted by law. No payment will be
transferred, assigned or withdrawn before it becomes payable unless we agree.
PROOF OF FACTS
-------------------------------------------------------------------------------
We may ask any person claiming the right to payments for proof satisfactory
to us of such person's right to payment. Any payment we make relying on that
proof discharges us from any obligation to make that payment to another
person. We will require proof of date of birth of the person(s) on whose life
(or lives) payments are based.
NON-PARTICIPATING
-------------------------------------------------------------------------------
This Contract does not participate in surplus earnings of the Company.
18
