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[SECURITY LIFE INSURANCE
FIRST LOGO] COMPANY
P.O. BOX 92193
LOS ANGELES, CALIFORNIA 90009
This is a group annuity contract issued to the owner upon the company's
acceptance of the application. When issued, the contract is a legal agreement
between the owner and the company. To be covered under the contract, a person
must complete an enrollment form and arrange for purchase payments to be made.
Each person so enrolled is called a participant. A certificate will be issued to
each participant.
The company agrees to pay an annuity to the annuitant. An annuity is a series of
payments. Unless another choice is made, payments will be made monthly starting
on the normal annuity date. The payments will continue for the annuitant's
lifetime, but not for less than 120 months. Other payment options may be
elected.
If the annuitant dies before the annuity date, a settlement will be made in
accordance with the Settlement on Death provision. The company may require proof
that any payee is living on the date a payment is due.
All terms on this and the following pages are a part of this contract.
ALL PAYMENTS AND VALUES UNDER THIS CONTRACT WHICH ARE BASED ON INVESTMENT IN THE
SEPARATE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GROUP CONTRACT OWNER: CONTRACT NUMBER:
CONTRACT DATE:
Issued for Delivery In, and Subject to the Laws of the State of:
/s/ Xxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxx
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President Secretary
Signed for the company at its home office, on the contract date.
GROUP FLEXIBLE PAYMENT ANNUITY
PROVIDING FIXED AND VARIABLE BENEFITS
10 YEAR CERTAIN LIFE ANNUITY
STARTING ON THE ANNUITY DATE
NON-PARTICIPATING
NO DIVIDENDS
SPECIMEN
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TABLE OF CONTENTS
PAGE
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INTRODUCTION 1
Contract Schedule 1
CONTRACT SPECIFICATIONS 3
Plan 3
Guaranteed Minimum Interest Rates 3
Statements of Account 3
General Account Excess Interest 3
Communications 3
Rescission 3
DESCRIPTION OF CERTAIN TERMS USED IN THIS CONTRACT 4
GENERAL TERMS 5
The Contract 5
Non-Participating 5
Change of Contract 5
Termination of Contract 5
Incontestability 5
Ownership and Assignment 5
Designation of Beneficiary 5
Data Provided to the Company 5
Misstatement of Age or Sex 5
The Separate Account 6
Substitution of Fund Shares 6
PARTICIPANT'S ACCOUNT PROVISIONS 6
Purchase Payments 6
Transfer Payments 6
Participant's Account 6
Crediting Accumulation Units 6
Accumulation Units 6
Splitting Units 6
VALUATION AND NONFORFEITURE PROVISIONS 7
Annuity Value 7
Accumulated Payment 7
Cash Value 7
Cash Surrender 7
Administrative Fee 7
Partial Surrenders 8
Deferral of Payment 8
Premium Taxes 8
Minimum Benefits 8
Conversion Between Series 8
Adjustment of General Account Annuity Value for Transfers 9
SETTLEMENT 10
Settlement of Participant's Account 10
Normal Form of Settlement 10
Optional Annuity Date and Optional Settlement 10
Alternate Fixed Annuity Income Rates 10
Alternate Assumed Investment Rates 10
Minimum Amount to Payee 10
SETTLEMENT ON DEATH 11
Settlement on Death Before the Annuity Date 11
Settlement on Death of Payee 11
ANNUITY INCOME OPTIONS 12
Other Forms of Annuity Income Payments 12
METHOD OF CALCULATING ANNUITY INCOME PAYMENTS 12
Determination of Monthly Guaranteed Minimum Fixed Annuity Dollar Payments 12
Determination of Monthly Variable Annuity Payment for First Year 12
Number of Annuity Units 12
Determination of Monthly Variable Annuity Payments for the Second and Subsequent Years 13
Separate Account Annuity Unit Values 13
ANNUITY TABLES 13
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CONTRACT SPECIFICATIONS
PLAN
The plan is the deferred compensation plan established by the group
contractholder for its employees. A copy of the plan has been made available to
each participant, and a copy is maintained with the group contract at the
address of the group contractholder.
The mutual funds into which the assets of the separate account may be invested
are Series of the Security First Trust: Growth and Income Series, Bond Series
and Money Market Series; the X. Xxxx Price Growth Stock Fund, Inc.; the X. Xxxx
Price Prime Reserve Fund, Inc. and any other investment companies as may be
named in the Certificate.
GUARANTEED MINIMUM INTEREST RATES
The minimum interest rates applicable to the general account accumulation units
produced by purchase payments and transfer payments will be stated in each
participant's certificate, but will not be less than 4%.
STATEMENTS OF ACCOUNT
Prior to the annuity date, statements of account will be provided for each
participant as of the end of each quarter in which a transaction occurred, but
in no event less often than once each year.
GENERAL ACCOUNT EXCESS INTEREST
The company may declare and credit excess interest applicable to general account
accumulation units at its discretion. Declaration of excess interest is not
guaranteed.
COMMUNICATIONS
Write to the company at its home office or administrative office shown below:
SECURITY FIRST LIFE INSURANCE COMPANY
P.O. BOX 92193
LOS ANGELES, CALIFORNIA 90009
RESCISSION
Any participant's certificate may be rescinded at any time before annuity
payments begin to the participant. When the company receives a proper notice
accompanied by the certificate, it will rescind the certificate. The company
will then refund:
- 100% of all purchase payments credited to the participant's account
in the general account less any partial surrenders.
- Any transfer payments credited to the participant's account in the
general account less any partial surrenders from those transfer
payments, and
- The current value of the separate account accumulation units
credited to the participant's account.
Any refund of transfer payments from another contract issued by the company and
credited to the general account will not exceed the purchase payments which
provided that transfer payment. In no event will such refund be less than the
cash value of the participant's account.
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DESCRIPTION OF CERTAIN TERMS USED IN THIS CONTRACT
ANNUITANT - The person who is to receive annuity payments and who is identified
as the participant.
ANNUITY - A series of income payments made to the annuitant for a defined period
of time.
ANNUITY DATE - The date the series of income payments begins under the
certificate.
BENEFICIARY - The person named on the enrollment form who has the right to
receive settlement on the death of the participant.
CERTIFICATE - The form given to each participant that describes his or her
rights in the group contract.
CERTIFICATE DATE - The date a participant's certificate is issued.
CERTIFICATE YEAR - A twelve month period starting on the date the certificate is
issued and on each anniversary.
COMPANY - SECURITY FIRST LIFE INSURANCE COMPANY
CONTRACT - The legal agreement between the owner and the company covering rights
of the entire group.
DUE PROOF OF DEATH - A certified death certificate, an attending physician's
statement, a decree of a court of competent jurisdiction as to the finding of
death, or such other documents as the company may at its option accept.
FIXED ANNUITY - An annuity which provides guaranteed level payments.
FUND - Any registered management investment company (mutual fund) specified in
the plan, in which the assets of the separate account may be invested.
GENERAL ACCOUNT - Assets of the company, except those in the separate account or
segregated asset accounts.
NORMAL ANNUITY DATE - The first day of the month coincident with or next
following the anniversary of the certificate date nearest the annuitant's 75th
birthday.
PARTICIPANT - An eligible person who has submitted a completed enrollment form
to the company and to whom a certificate is issued.
PARTICIPANTS ACCOUNT - The sum of the values of the accumulation units credited
to a participant.
PAYEE - Any person receiving payment of benefits under the contract.
PURCHASE PAYMENT - Any amount received by the company for a participant that is
not a transfer payment.
SEPARATE ACCOUNT - A segregated asset account established by the company under
the Delaware Insurance Code. The income or losses of the separate account are
free from any other liabilities of the company's other business. The separate
account is registered as a unit trust investment company under the Investment
Company Act of 1940.
SERIES - The accumulation unit values and annuity unit values maintained
separately for the general account and for each fund whose securities are owned
by the separate account.
TRANSFER PAYMENT - Any amount received by the company for a participant which is
transferred into this contract from a tax-deferred annuity contract, or any
payment that is not in accordance with the schedule of payments elected by the
participant.
VALUATION DATE - The business date (on which the NYSE is open for trading) on
which the annuity unit values are calculated. Currently, the last business day
of each week.
VALUATION PERIOD - The time from one valuation date to the next.
VARIABLE ANNUITY - An annuity whose payments vary annually according to the net
investment results of a series.
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GENERAL TERMS
THE CONTRACT
The group contract is this document and the application. Only an officer of the
company can change the contract or waive any of the company's rights. These
changes must be made in writing. Any contract terms referring to "filing" or
"receipt" of documents means filing or receipt at the company's office shown on
page 3.
NON-PARTICIPATING
This contract does not share in the earnings of the company.
CHANGE OF CONTRACT
The owner and the company may change the contract by mutual agreement at
any time. No such change may affect any participant's account where his or her
interest is nonforfeitable, without the written consent of that participant.
Changes must be made in writing. Any changes must comply with the state laws
where the contract is delivered. The company, by itself, may change only the
following contract terms:
- Terms which apply to participants enrolling after the effective
date of the change.
- Terms which apply to any transfer payment accepted by the company
after the effective date of the change.
- Terms which apply to the excess of any purchase payment received in
a certificate year over the purchase payments received in the first
certificate year for certificates issued before the effective date
of the change.
- Terms wnich may be necessary to make the contract conform to any
federal or state law, regulation or ruling.
TERMINATION OF CONTRACT
This contract will terminate when the company has fulfilled all its obligations.
INCONTESTABILITY
After two years from the contract date, the company cannot void this contract
due to any misstatements on the application.
OWNERSHIP AND ASSIGNMENT
This contract belongs to the group contract owner. A participant may exercise
ownership rights affecting his or her account only if the participant's interest
in that account is nonforfeitable. In the absence of such nonforfeitable
participant's interest, individual certificates will be issued only at the
request of the group contract owner. A participant's contract rights are
subjectto the rights of any irrevocable beneficiary.
The company will honor any assignment of rights in this contract only after it
is received in writing by the company. The company is not responsible for the
validity of the assignment. If this contract is issued to purchase annuities for
individuals under Sections 401, 403(b) or 408 of the Code, the contract may
not be assigned to anyone except the company.
DESIGNATION OF BENEFICIARY
The participant may name and change the beneficiary. The request must be in
writing and made before the participant dies. No change will take effect unless
it is received. When received, the request will take effect as of the date
signed, subject to payment or other action taken by the company before it was
received. An irrevocable beneficiary must agree to any such change.
DATA PROVIDED TO THE COMPANY
The company may request the owner and participant to provide data needed to
administer the contract. Such data must be provided upon request. The data must
be in a form satisfactory to the company.
MISSTATEMENT OF AGE OR SEX
The age or sex of a payee may affect the amount of annuity payments made under a
certificate. If either is misstated, future payments under that certificate will
be adjusted.
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THE SEPARATE ACCOUNT
The separate account was established by the company in 1981 under Delaware law.
It is registered under the Investment Company Act of 1940 (the "Act"). Its
assets are invested only in shares of one or more mutual funds as stated in the
plan. The separate account will vote its fund shares according to instructions
received from owners and participants who have units in the separate account
series of that fund. Each such person will receive all reports and material of
the funds in which they own series units, and forms in order to instruct the
separate account how to vote.
SUBSTITUTION OF FUND SHARES
The separate account may not change the fund shares of a series unless approved
by a vote of a majority of the units entitled to vote and as provided by the
Act. The separate account may buy other securities for other series or contract,
or convert units from one series or contract to another, if requested by a
participant.
PARTICIPANT'S ACCOUNT PROVISIONS
PURCHASE PAYMENTS
This is a group flexible payment deferred annuity contract. A certificate will
be issued upon approval of each completed enrollment form. Any form required
under the plan must be submitted to the company. Purchase payments for any
participant must be at least $20 each and $240 annually.
TRANSFER PAYMENTS
The company will provide evidence of the guaranteed benefits provided by each
transfer payment.
PARTICIPANT'S ACCOUNT
The company will establish a participant's account for each person who becomes a
participant. A participant's account consists of accumulation units provided by
purchase payments and transfer payments made for the participant. The value of a
participant's account is the sum of the values of those accumulation units.
CREDITING ACCUMULATION UNITS
Each purchase payment or transfer payment will be applied to provide
accumulation units in the general account. The number of general account
accumulation units is determined by dividing the payment, less any premium taxes
deducted, by the general account accumulation unit value on the day the company
receives the payment.
ACCUMULATION UNITS
General account accumulation unit values will be determined using interest rates
not less than the minimum rates shown in the participant's certificate
The separate account accumulation unit value for each series was first set at
$5. This value is determined each business day. It is equal to the value of the
prior day multiplied by a net investment factor. The net investment factor is:
(a) the net asset value of a fund share at the close of business plus the per
share amount of any fund distributions less taxes (per share), divided by (b)
the net asset value of a share at the close of the prior business day. less (c)
the actuarial risk fee factor of 0.0000244 for each calendar day from the prior
business day to the current business day.
SPLITTING UNITS
The company may split the value of any units in the best interest of the owner,
participants, annuitants and the company. If split, strict equity will be
preserves. Such split will have no major effect upon the benefits or provisions
of this contract.
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VALUATION AND NONFORFEITURE PROVISIONS
ANNUITY VALUE
The annuity value of a participant's account is the amount that can be applied
to any annuity income option in this contract. It is based on the following:
- The purchase payments and any transfer payments
- Less amounts applied to any prior annuity income option
- Less any amounts transferred to the separate account
- Plus interest at the annuity value rates
- Plus the value of any separate account units
- Less premium taxes, if any
- Less administrative fees
- Less any partial surrenders.
ACCUMULATED PAYMENT
The accumulated payment of a participant's account is the value used to
calculate the cash value in the general account. It is based on the following:
- The purchase payments and any transfer payments
- Less amounts applied to any prior annuity income option
- Less any amounts transferred to the separate account
- Plus interest at the accumulated payment rates
- Less premium taxes, if any
- Less any partial surrenders.
CASH VALUE
The cash value of a participant's account is:
- A percentage of the accumulated payment
- Plus the value of any separate account units
- Less the administrative fees.
The percentage is determined by the calendar year in which the purchase payments
or transfer payments were received by the company. The percentage of the
accumulated payment included in the cash value calculation is:
- 93% for payments received in the calendar year of surrender
- 94% for payments received in the calendar year before the surrender
- 95% for payments received in the second calendar year before the
surrender
- 96% for payments received in the third calendar year before the
surrender
- 97% for payments received in the fourth calendar year before the
surrender
- 100% for all earlier payments.
The cash value may not be less than the amount available on rescission.
CASH SURRENDER
A participant's account may be surrendered for its cash value before the annuity
data. Requests for surrender must be in writing. If the participant has a
nonforfeitable interest in his or her account, such request must be signed by
the participant. The cash value will not be paid until the certificate is
returned.
ADMINISTRATIVE FEE
At the end of each certificate year and at the time of full surrender, the
participant's account values will be reduced by an administrative fee of not
more than $27.50 plus $2.50 for each series of units in the participant's
account. The deduction is made by cancelling a number of accumulation units
equal in value to the administrative fee. The fee will be prorated between
series in a participant's account on the basis of their relative values as of
the date of the deduction.
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PARTIAL SURRENDERS
Partial surrenders from a participant's account may be made before the annuity
date. Requests for partial surrenders must be in writing. if the participant has
a nonforfeitable interest in his or her account, such request must be signed by
the participant. No partial surrender will be made that would result in any
series having a value. after the surrender, of less than $200.
When a partial surrender is made from a separate account series, the number of
accumulation units in that series will be reduced by the number of units equal
in value to the partial surrender, plus $10.
When a partial surrender is made from the general account series, the number of
accumulation units in that series will be reduced by the number of units equal
in value to the amount withdrawn plus $10, both divided by the applicable
percentage factor as shown in the cash value provision. Such general account
units will be cancelled on a first-in. first-out basis. A proportionate amount
will be deducted from the annuity value.
DEFERRAL OF PAYMENT
Payments of full or partial surrenders from a separate account series may be
suspended under the following conditions:
- During any period in which the New York Stock Exchange is closed
(other than customary weekend or holiday closing) or;
- When the Securities and Exchange Commission determines that trading
on such exchange is restricted or that an emergency exists: and, as
a result, the separate account may not reasonably dispose of its
securities or fairly value its assets; or
- For such other periods as the Securities and Exchange Commission
may by order direct for the protection of variable contractholders
and participant').
Payments of full or partial surrenders from the general account series may be
deferred for a period of not more than six months from the date written request
is received. Interest will continue to be credited during the deferral period.
The interest rate's) will be the same as if the surrender had not been
requested.
PREMIUM TAXES
Any tax payable by the company based on any purchase payment or transfer payment
may be deducted from that payment before any other calculations are made. Any
tax payable by the company based on values applied under an annuity income
option may be deducted from the value applied.
MINIMUM BENEFITS
The value of a paid-up annuity, cash surrender, or settlement on death under
this contract will not be less than the minimum required by the state laws where
the contract is delivered.
CONVERSION BETWEEN SERIES
The allocation of a participant's account among series may be changed by written
election. Such election must specify the total value of the accumulation units
to be transferred or that annuity units are to be transferred, and the series to
be decreased and the series to be increased by the conversion. If the
participant has nonforfeitable interest in his or her account, such request must
be signed by the participant.
An election to convert from one series to any other series will result in a $10
charge. This charge will be made against the participant's account at the time
the election becomes effective.
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Upon receipt of an election to convert accumulation units from one separate
account caries to another, the company will transfer the value on the first
valuation date after receipt of the election. No such transfer of accumulation
units may take place after the second valuation date before the annuity date. A
conversion from a separate account series to the general account series may be
made only on the second valuation date preceding the annuity date. Such election
must be made within 30 days before that valuation date. No election will be
effective if the amount to be transferred would be less than $1,000.
After receiving an election to decrease the general account series, the company
will within 30 days convert general account accumulation units by transferring
the value of those units to the separate account as follows:
(a) Up to 93% of all purchase payments and transfer payments received with
or following a valid election may be transferred to the separate account
within 30 days after they are credited to the general account. Each amount
transferred must be at least $20.
(b) Up to 48% of the value of accumulation units provided by purchase and
transfer payments received prior to the election may be transferred to the
separate account. Such transfers will be in equal monthly installments over
not less than 48 months, beginning within 30 days of the date of the
election. These monthly installment transfers may not be less than $50. No
monthly installments may be made from units provided by purchase or
transfer payments that have been subject to any prior conversion election.
(c) The number of general account accumulation units to be cancelled will
be determined by the partial surrenders provision. The $10 charge otherwise
applicable to partial surrenders will not be made.
(d) At the time a transfer is made, the company may cancel general account
accumulation units equal in value to a portion of the premium taxes, if
any, payable by the company on a like amount of purchase payment
corresponding to the total general account accumulation units cancelled.
The portion of such taxes deducted is the full amount reduced by 10% for
each complete 12 month period since receipt of the purchase payment subject
to the transfer. No such deduction will be made if such taxes were
previously deducted from the participant's account.
Installment transfer will continue until the earliest of:
(a) The annuity date.
(b) The completion of a schedule of installments, and
(c) The date an election to terminate the transfers is received.
If an election is made to terminate installment transfers before the end of the
schedule, such installment transfers may be resumed only with the consent of the
company.
Upon receipt of an election to convert annuity units from one separate account
series to another, the company will transfer the value of all such annuity units
on the first valuation date after receipt of the election. General account
annuity units may not be converted after annuity income begins.
ADJUSTMENTS OF GENERAL ACCOUNT ANNUITY VALUE FOR TRANSFERS
If a conversion of units has been made from the general account to the separate
account, such conversion will be treated as a partial surrender. However, the
company will subsequently recompute the participant's general account annuity
value so that the reduction required for the partial surrender used to convert
units will equal the amount transferred. Provided, however, that the deduction,
if any, provided for in (d) of the Conversion Between Series provision will not
be restored. The recomputation will take place on a proportionate basis whenever
any portion of the annuity value of the separate account accumulation units and
the general account accumulation units provided by conversion from the separate
account are applied under any of the annuity income options.
If separate account accumulation units have been cancelled from the
participant's account (other than administrative fees or as a result of transfer
to the general account in order to provide annuity income commencing within 30
days of the transfer), the recomputation of the general account annuity value
will reflect the proportion of the amounts previously surrendered from the
separate account relative to the total value of the separate account at the time
of such surrenders.
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SETTLEMENT
SETTLEMENT OF PARTICIPANT'S ACCOUNT
Settlement of the participant's account means any of the following:
- The start of annuity income payments to the annuitant.
- The issuance of a supplementary certificate to the beneficiary for
payment of annuity income.
- A payment of the cash value in a lump sum.
The amount applied under an annuity income option is the annuity value. The
first payment under any annuity option will be made on the annuity date. Proof
of age is required before payments start under options one, two, three, or four.
NORMAL FORM OF SETTLEMENT
The participant must be living on the date the annuity payments are to begin.
Unless another choice is made, the company will pay the annuitant a series of
payments under option 2, a life annuity with 120 months payments certain.
General account accumulation units will provide a fixed annuity. Separate
account accumulation units will be applied to provide a variable annuity.
Payments will begin on the normal annuity date.
OPTIONAL ANNUITY DATE AND OPTIONAL SETTLEMENT
Before annuity payments begin, an optional annuity date or a different annuity
income option may be elected, if not prohibited by the plan. The optional
annuity date may be the first day of any month not later than the normal annuity
date. The election must be made at least 31 days before the optional annuity
date. Any of the annuity income options may be elected. The annuity value on the
optional annuity date will be applied.
ALTERNATE ANNUITY INCOME RATES
If settlement is made under any annuity income option, payment will be based on
the larger of the following:
- The company's then current alternate settlement option rates for
this contract.
- The fixed annuity income rates in the annuity tables included in
this contract, based on adjusted age.
Once annuity income payments begin, they will not be changed because of later
rate changes by the company.
ALTERNATE ASSUMED INVESTMENT RATES
If allowed by the laws of the state in which this contract is issued, a
participant may elect variable annuity benefits determined on an assumed
investment rate of 3.50%, 5%, or 6% in lieu of the 4.25% contract rate.
MINIMUM AMOUNT TO PAYEE
Any annuity income option payment must be at least $50 from each series included
in the payment. If any payment from any series is less than $50, the company may
change the payment interval so that payments are greater than $50 from that
series.
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SETTLEMENT ON DEATH
SETTLEMENT ON DEATH BEFORE THE ANNUITY DATE
If the participant dies before the annuity date and the beneficiary is the
participant's spouse, the spouse shall be deemed to be the participant and
succeeds to all the contract rights that relate to the contract.
If the participant dies before the annuity date and the beneficiary is not the
spouse of the participant, the beneficiary may elect:
1. To receive annuity income under Annuity Income Options One, Two or
Five. Election of an income option is subject to the following
conditions:
a. Election must begin within one year of the participant's
death;
b. The guaranteed period under Option Two or the designated
period under Option Five may not be longer than the
beneficiary's life expectancy under the applicable tables
specified by the Internal Revenue Service.
c. The annuity value as of the date of the first income payment
will be applied.
OR
2. To receive a lump sum settlement equal to the larger of the
following:
a. The cash value on the date the payment is made; or
b. The purchase payment less amounts already applied to produce
annuity income, and less any prior partial surrender.
In any event, distribution under the lump sum option above must be made within
5 years of the death of the participant.
If the participant dies before his or her 65th birthday, the lump sum will not
be less than the sum of:
a. The purchase payments, plus
b. The minimum death benefit provided by any transfer payment, less
c. Any partial surrenders.
The minimum death benefit provided by a transfer payment from another eligible
contract issued by the company will be the payments made to such eligible
contracts which provide the transfer payment.
It the participant has not elected otherwise, if there is more than one named
beneficiary living at the time of the participant's death, each will share the
proceeds equally.
If the participant outlives all beneficiaries, the proceeds will be paid to the
participant's estate in a lump sum.
No beneficiary will have the right to assign, anticipate or commute any future
payments under any of the options, except as provided in the election or by law.
The rights to the proceeds with pass as if the participant outlived the
beneficiary if:
a. The beneficiary dies at the same time as the participant; or
b. The beneficiary dies within 15 days of the participant's death and
prior to the date due proof of the participant's death is received.
SETTLEMENT ON DEATH OF PAYEE
Upon the death of a payee, any remaining payments certain under options Two,
Three, or Five will be paid to the named beneficiary. If no beneficiary is alive
at the payee's death, the payee's estate will receive a lump sum payment. This
lump sum will be the present value of the remaining payments certain at the
payee's death. The present value will be computed on the basis of the interest
rate used to compute the benefits. If as the result of a payee's death, variable
life annuity payments are being continued to a beneficiary, that beneficiary may
elect at any time to receive in a lump sum the present value of the remaining
number to payments certain.
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ANNUITY INCOME OPTIONS
Except as may be limited by the Settlement on Death provision, the annuity value
can be applied to these annuity income options:
OPTION ONE - LIFE ANNUITY
A series of annuity income payments made monthly during the payee's life. THE
PAYMENTS WILL STOP WITH THE LAST PAYMENT DUE BEFORE THE DEATH OF THE PAYEE. NO
FURTHER PAYMENTS WILL BE MADE AFTER THE DEATH OF THE PAYEE.
OPTION TWO - LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN
A series of annuity income payments made monthly for the guaranteed period
elected and thereafter during the payee's life. The guaranteed period may be
120, 180, or 240 months. If the payee dies before the guaranteed number of
payments are made, the remaining guaranteed payments will be paid to the
beneficiary.
OPTION THREE - INSTALLMENT REFUND LIFE ANNUITY
A series of annuity income payments made monthly during the payee's life. If the
payee dies before receiving the "minimum number" of payments, payments will
continue to the beneficiary. The "minimum number" of payments is equal to the
amount applied under this option divided by the first monthly payment. Any
payments made after the death of the payee will stop when the company has paid
out a total number of payments equal to the "minimum number" of payments.
OPTION FOUR - JOINT AND LAST SURVIVOR ANNUITY
A series of annuity income payments made monthly during the lifetime of both of
two payees. If one of the payees dies, the payments will continue to the other.
The payments will end with the last payment due before the death of the
remaining payee.
OPTION FIVE - DESIGNATED PERIOD ANNUITY - FIXED DOLLAR ONLY
A series as of annuity income payments made monthly for a period of years. Any
number of years from 5 through 30 may be chosen. Payments will be made to the
payee or beneficiary even if the payee dies. Payments will stop at the end of
the period selected.
Monthly payments for 3 years may be elected under this option for a participant
who is age 60 or over on the annuity date, or who has submitted evidence of
election to begin payments under the employer's retirement program.
OTHER FORMS OF ANNUITY INCOME PAYMENTS
The company may pay the settlement amount in any other manner agreeable to both
parties.
METHOD OF CALCULATING ANNUITY INCOME PAYMENTS
DETERMINATION OF MONTHLY GUARANTEED MINIMUM FIXED DOLLAR ANNUITY PAYMENTS
To determine the amount of a fixed annuity payment from Table 1, 2 or 3; (a)
determine the adjusted age of payee using the adjusted age table, (b) divide the
general account's annuity value by $1,000, (c) multiply the factor from the
Table for the annuity option elected, using the adjusted age, by the result of
(b).
DETERMINATION OF MONTHLY VARIABLE ANNUITY PAYMENT FOR THE FIRST YEAR
Variable annuity payment amounts will be determined at the annuity date, and
will remain the same for one year from that date. Amounts may vary each year
thereafter.
The monthly payment for the first year is determined by: (a) dividing the
separate account annuity value by $1,000, (b) multiplying the result from (a) by
the annuity premium rate shown in column 1 of Table 4 or 5 for the option
elected for the sex and adjusted age of payee, (c) multiplying the result of (b)
by the monthly payment factor in column 2 of Table 4 or 5. If there are values
in more than one series, determine the monthly payment for each series as above.
NUMBER OF ANNUITY UNITS
The number of annuity units for any series is determined by dividing the first
year monthly payment by the separate account annuity value for that series for
the valuation period that includes the settlement date. The number of annuity
units thus determined will not change.
12
70
DETERMINATION OF MONTHLY VARIABLE ANNUITY PAYMENTS
FOR THE SECOND AND SUBSEQUENT YEARS
The amounts of the second and subsequent years' monthly variable annuity
payments are not predetermined, and may change from year to year, based on the
variations in the annuity unit value. The annuity unit value varies with the
variations of net investment results above and below the assumed investment
rate.
As of each anniversary of the settlement date, the company will determine the
amount of monthly payments for each series for the year then beginning. It will
be determined by multiplying the number of separate account annuity units for
that series by the annuity unit value for the same series for the valuation
period in which the first payment for that year is due.
The company guarantees that the amount of each variable annuity payment will not
be affected by variations in the mortality experience of payees nor by expenses
incurred by the company in the administration of such benefits.
SEPARATE ACCOUNT ANNUITY UNIT VALUES
The separate account annuity unit value for each series was originally
established at $5. This value for any subsequent valuation period is determined
for each series by (a) multiplying the annuity value of the series for the
immediately preceding valuation period by (b) the annuity change factor for the
second preceding valuation period.
The annuity change factor for any valuation period is determined for each series
by dividing (a) the accumulation unit value at the end of the valuation period
by (b) the accumulation unit value at the end of the previous valuation period,
and multiplying the result by (c) the interest neutralization factor. For weekly
valuation periods and a 4 1/4% assumed net investment rate, the interest
neutralization factor is 0.999-999.
ANNUITY TABLES
Tables 1 and 2 show the guaranteed minimum monthly payment under the fixed
annuity income options.The amount shown for each option is for $1,000 of annuity
value applied. Under options one through four, the amount of payment is based on
the sex(es), and adjusted age(s) of the payee(s) at the time the first payment
is due.
Table 1 is based on the 1971 Individual Annuity Mortality Table assuming births
in 1915 or prior and an interest rate of 4% per year. The age of payees born
after 1915 must be adjusted using the following Table. Adjusted ages for payees
born after 1995 are available from the company. The payee's actual age will be
based on the birthday nearest the time the first payment is due.
CALENDAR YEAR OF BIRTH ADJUSTED AGE
---------------------- ------------------
1915 or Prior Actual Age
1916 - 1935 Actual Age Minus 1
1936 - 1955 Actual Age Minus 2
1956 - 1975 Actual Age Minus 3
1976 - 1995 Actual Age Minus 4
THESE AGE ADJUSTMENTS APPLY ONLY TO THE TABLES SHOWN ON THE NEXT PAGES. THESE
AGE ADJUSTMENTS DO NOT APPLY TO ANY OTHER ANNUITY INCOME RATES UNLESS SO
SPECIFIED BY THE COMPANY.
Table 2 is based on 4% interest, except for designated periods of less than 10
years, where the interest rate is 3% per year. Tables 3 and 4 show the factors
used to determine variable annuity income payments based on a 4 1/4% assumed
investment rate. They are based on the Modified Select Security Annuity
Mortality Table projected to the year 2000 on projection scale C (modified) and
41/4% interest, reduced for the first 10 years of any period certain by 1%.
Rates and factors for other investment rates will be provided upon request.
Any payee who is over age 85 at the date annuity payments are due will be
considered as actual age 85 on that date.
SF224FL-13
13
71
ANNUITY PURCHASE RATES
TABLE 1 GUARANTEED DOLLAR AMOUNT OF MONTHLY
PAYMENT WHICH IS PURCHASED WITH EACH $1,000 APPLIED
LIFE ANNUITIES--FIXED DOLLAR
SINGLE LIFE ANNUITIES JOINT AND FULL TO SURVIVOR
------------------------------------------------------------------------------- --------------------------
No 120 180 240 Adjusted
Adjusted Period Months Months Months Installment Joint Monthly
Age Certain Certain Certain Certain Refund Age Payment
--------- -------- -------- --------- -------- ----------- --------- --------
60 $ 6.20 $ 5.96 $ 5.00 $ 5.36 $ 5.71 60 $ 4.99
61 6.35 6.06 5.78 5.42 5.83 61 5.08
62 6.51 6.21 5.87 5.48 5.95 62 5.18
63 6.69 6.34 5.97 5.53 6.07 63 5.29
64 6.87 6.48 6.06 5.59 6.20 64 5.40
65 7.07 6.82 6.16 6.54 6.34 65 5.53
66 7.28 6.77 6.26 6.00 6.40 66 5.66
67 7.51 6.93 6.35 6.73 6.65 67 5.80
68 7.75 7.00 6.45 6.78 6.81 68 5.96
69 8.01 7.26 6.54 6.81 6.99 69 6.12
70 8.30 7.43 6.63 6.85 7.18 70 6.31
71 8.60 7.60 6.72 6.88 7.38 71 6.50
72 8.93 7.78 6.80 6.91 7.59 72 6.71
73 9.26 7.93 6.88 6.83 7.82 73 6.94
74 9.67 8.14 6.95 6.95 8.08 74 7.19
75 10.08 8.32 7.02 6.97 8.31 75 7.46
Any payee who is over age 85 at the date annuity payments are due will be
--
considered as actual age 85 on that date.
--
Monthly payments for ages not shown will be furnished by the Company on request.
TABLE 2
DESIGNATED PERIOD ANNUITIES -- FIXED DOLLAR
Years of Amount of Years of Amount of Years of Amount of
Payments Monthly Payment Payments Monthly Payment Payments Monthly Payment
-------- --------------- -------- ---------------- -------- ---------------
5 $ 17.91 14 $ 7.72 23 $ 5.49
6 15.14 15 7.54 24 5.35
7 13.16 16 7.00 25 5.22
8 11.68 17 6.71 26 5.10
9 10.53 18 6.44 27 5.00
10 10.06 19 6.21 28 4.90
11 9.31 20 6.00 29 4.80
12 8.69 21 5.81 30 4.72
13 8.17 22 5.54
SF224FL-15
15
72
ANNUITY PREMIUM RATES PER $1,000 CF VALUE APPLIED (COLUMN (1)) AND
MONTHLY PAYMENT FACTORS (COLUMN (2))
TABLE 3
SINGLE LIFE ANNUITIES--VARIABLE
MONTHLY PAYMENTS CERTAIN
------------------------------------------------------------------------------------
ADJUSTED NONE 120 180 240
AGE OF ----------------- ----------------- ------------------ -----------------
PAYEE (1) (2) (1) (2) (1) (2) (1) (2)
--------- ------ ------ ------ ------ ------- ------ ------ ------
60 62.596 .08946 61.992 .08713 60.305 .06611 58.126 .08539
61 63.710 .08975 63.123 .08723 61.294 .08614 58.873 .08538
62 64.922 .09003 64.340 .08730 62.333 .08614 59.628 .08535
63 66.252 .09028 65.653 .08736 63.424 .08613 60.387 .08532
64 67.715 .09049 67.068 .08739 64.564 .08611 61.142 .08527
65 69.298 .09072 68.578 .08741 65.743 .08607 61.884 .08523
66 71.005 .09101 70.199 .08742 66.959 .08603 62.606 .08518
67 72.817 .09107 71.905 .0874X 68.191 .08599 63.294 .08513
68 74.732 .09180 73.692 .08747 69.430 .08595 63.941 .08508
69 76.751 .09231 75.557 .08751 70.665 .08590 64.539 .08503
70 78.880 .09290 77.496 .08755 71.886 .08586 65.082 .08499
71 81.010 .09372 79.469 .08763 73.069 .08583 65.563 .08495
72 83.231 .09465 81.498 .08770 74.214 .08579 65.984 .08491
73 85.539 .09570 83.575 .08777 78.309 .08574 66.347 .08487
74 87.982 .09683 85.701 .08781 76.345 .08568 66.657 .08483
75 90.293 .09833 87.805 .08788 77.293 .08563 66.912 .08480
TABLE 4
JOINT AND FULL TO SURVIVOR--VARIABLE
ADJUSTED NO PAYMENTS CERTAIN
AGE OF --------------------
BOTH PAYEES (1) (2)
----------------------------- --------- ------
60 57.810 .08526
61 58.742 .08535
62 59.741 .08545
63 60.817 .08554
64 61.976 .08564
65 63.220 .08575
66 64.548 .08594
67 65.961 .08616
68 67.460 .08643
69 69.049 .08674
70 70.732 .08711
71 72.468 .08758
72 74.294 .08813
73 76.208 .08875
74 78.229 .08943
75 80.243 .09032
Any payee who is over age 85 at the date annuity payments are due will be
--
considered as actual age 85 on that date. Factors for adjusted ages not shown
--
will be furnished by the Company on request.
16
73
[SECURITY LIFE INSURANCE
FIRST LOGO] COMPANY
SECURITY FIRST
LIFE INSURANCE COMPANY
1300 Delaware Trust Building
P.O. Box 25130
Wilmington, Delaware 19899
GROUP FLEXIBLE PAYMENT ANNUITY
PROVIDING FIXED AND VARIABLE BENEFITS
10 YEAR CERTAIN LIFE ANNUITY
STARTING ON THE ANNUITY DATE
NON-PARTICIPATING
NO DIVIDENDS
74
[SECURITY LIFE INSURANCE
FIRST LOGO] COMPANY
LIMITATIONS ON DISTRIBUTIONS AND PLAN AMENDMENT
In accordance with the Plan and Sections 403(b) (11) and (12) of the Internal
Revenue Code of 1986 (the "Code") and pursuant to Section 2.03 of the Contract,
the following amendments are made to the Contract effective as of December 31,
1988:
The Contract is amended by adding the following:
Limitations on Distributions. Notwithstanding anything in the Contract to
----------------------------
the contrary, and except as provided below, a participant shall not be entitled
to receive a distribution under the Contract (whether as annuity payments or a
surrender) on amounts attributable to purchase payments made pursuant to a
salary reduction agreement (as defined under Section 403(g)(3)(C) of the Code)
except under the following circumstances:
1. The participant has attained age 59-1/2;
2. The participant separates from service with the employer through
which the purchase payments were made;
3. The participant dies or becomes disabled (as defined in Section
72(m)(7) of the Code); or,
4. In the case of a hardship (as defined in Section 403(b)(11) of the
Code).
In the event of a distribution based on hardship, amounts distributed may not
include income earned on purchase payments.
These limitations shall not apply to the distribution of that portion of a
participant's account which is attributable to assets held as of December
31,1988. No distribution based on hardship will be permitted unless all amounts
excluded from these limitations have been distributed. Further, loans made to a
participant under the Contract may not be repaid by deduction from that portion
of the participant's account which is subject to these distribution limitations.
All references in this to sections of the Code shall include any successor or
substitute provisions therefore and to any regulations issued thereunder.
The Plan under the Contract is amended by adding the following:
All employees of an employer may elect to have the employer make contributions
of more than $200 pursuant to a salary reduction agreement if any employee of
the employer may elect to make contributions pursuant to such agreement, except
as otherwise permitted in Section 403(b)(l2) of the Code.
/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
President
SF 89-01-05
75
[SECURITY LIFE INSURANCE
FIRST LOGO] COMPANY
CONTRACT LOAN ENDORSEMENT Effective as of September 1, 1988 or the effective
date of the contract, whichever is later, the
contract is amended to add the following:
DEFINITION For purposes of this endorsement only,
the term "accumulated payment value," unless
otherwise modified, is defined as follows: The
surrender value of the participant's account
without any reduction for surrender charges.
LOAN Unless otherwise restricted by the Plan or
the terms of the contract, a participant may,
prior to the annuity date, obtain a loan from the
Company of up to an amount equal to 50% of the
accumulated payment value of a participant's
account. However, the loan amount cannot exceed
the accumulated payment value of a participant's
interest in the general account. The amount of the
loan may not be less than $2,500. The maximum loan
amount is $50,000 less the highest outstanding
loan balance during the one year period ending on
the date the new loan is made. No more than one
loan may be outstanding at any one time. A loan
will be made upon the Company's acceptance of a
written loan application from the participant and
the assignment to the Company of the value of the
participant's certificate as the sole security for
the loan.
FEE A loan setup fee of up to $50.00 will be
charged for each loan. This amount will be
deducted from the loan proceeds.
INTEREST RATES The outstanding balance of the loan
will bear interest at an effective rate of 6.5%
per annum. During the term of a loan, a portion of
the accumulated payment value of the participant's
interest in the general account equal to the
outstanding balance of the loan (and a
proportionate part of the annuity value) will earn
interest at the rate of 4% per annum. In
determining these values, a participant's purchase
payments will be applied in the order of their
receipt by the Company.
TERM The term of a loan will be 5 years unless the
proceeds of the loan are to be used to purchase a
principal residence of a participant, in which
event the term will be 15 years. Notwithstanding
the above, the term of the loan may not extend
beyond the earliest of the certificate's normal
annuity date, the settlement of the participant's
account, settlement as a result of the
participant's death, or any date provided for such
loans by future Federal income tax laws, rules or
regulations. The Company reserves the right to
require repayment of the loan plus accrued
interest before processing a request for a partial
surrender, partial annuitization or settlement of
the account.
REPAYMENTS Repayments will be based on level
amortization and will be due quarterly. Any loan
repayments received will be applied first to the
accrued interest and then to the outstanding
balance of the loan. Repayments of principal will
be credited to the participant's account as new
purchase payments and payments directed to the
general account will earn interest from the date
of receipt at the then guaranteed interest rates
in effect for new purchase payments. If any
repayment is not received when due, an amount will
be deducted from the participant's account. This
amount will be deducted in accordance with the
contract's partial surrender provisions and will
be sufficient to pay the amount due and any
applicable charges, fees and income tax
withholding. Full or accelerated loan repayment
may be made at any time on or after the first loan
anniversary.
Any amounts received in partial or full repayment
of the outstanding balance of a loan may not be
surrendered for a period of 30 days after receipt
of such payment.
COMPANY RIGHTS The Company reserves the right to
defer the granting of a loan for a period
permitted by law, but not more than six (6) months
from receipt of the application. The Company
reserves the right, in its discretion, to suspend,
modify or terminate the granting of loans at any
time. Such action will not affect outstanding
loans.
/s/ Xxxx X. Xxxxxx
----------------------------------
President
