Xxxxxxx Xxxxxxx
XX-0123456
LINCOLN NATIONAL
LIFE INSURANCE CO.
------------------
A part of LINCOLN NATIONAL CORPORATION
ANNUITY CONTRACT
Flexible Premium Deferred Variable Annuity or Variable and Fixed Annuity
Benefit Payment Options
Nonparticipating
The Lincoln National Life Insurance Company (LNL) agrees to provide the benefits
and other rights described in this Contract in accordance with the terms of this
Contract.
NOTICE OF 10-DAY RIGHT TO EXAMINE CONTRACT. Within 10 days after this Contract
is first received, it may be cancelled for any reason without penalty (e.g., no
contingent deferred sales charge will be deducted) by delivering or mailing it
to the Home Office of LNL. Upon cancellation, LNL will return the value of any
payments made to the Variable Account and/or any Purchase Payment paid under the
fixed portion of the Contract.
All payments and values provided by this Contract, when based on investment
experience of a separate account, are variable and are not guaranteed as to
fixed dollar amount. See pages 5 and 10.
Signed for The Lincoln National Life Insurance Company at its Home Office in
Fort Xxxxx, Indiana.
/s/ Xxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Xxx X. Xxxxxx, President Xxxxx X. Xxxxxx, Vice President
Table of Contents
Article Page
1 Definitions................................................ 4
2 Purchase Payments, Options and Benefits.................... 5
3 Annuity Payment Option Benefits............................ 9
4 Beneficiary................................................ 11
5 General Provisions......................................... 12
6 Annuity Purchase Rates Under a Variable Payment Option..... 13
7 Annuity Purchase Rates Under A Fixed Payment Option........ 14
8 Guaranteed Values for Fixed Allocations.................... 15
CONTRACT DATA
Contract Number XX-0123456
Annuitant Xxxxxxx Xxxxxxx
Age at Issue 35
Contract Date April 1, 1989
Purchase Payment $1,500.00
Purchase Payment Frequency Monthly
Maturity Date April 1, 2039
Owner
Xxxxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Beneficiary Designation
PLEASE REFER TO THE CLIENT INFORMATION PROFILE FOR BENEFICIARY DESIGNATION.
VARIABLE ACCOUNT
There are currently eleven Sub-accounts in the Variable Account available to the
Owner. The Owner may direct Purchase Payments under the Contract to any of the
available Sub-accounts, subject to limitations. The amounts allocated to each
Sub-account will be invested at net asset value in the shares of one of the
Funds of the American Variable Insurance Series (Series). The Funds are:
1. Growth Fund
2. International Fund
3. Global Growth Fund
4. Growth-income Fund
5. Asset Allocation Fund
6. High-Yield Bond Fund
7. Bond Fund
8. U.S. Government/AAA-Rated Securities Fund
9. Cash Management Fund
10. Global Small Cap Fund
11. New World Fund
12. Other funds made available by LNL.
See Section 2.03 for provisions governing any limitations, substitution or
elimination of Funds.
Page 3
ARTICLE 1
DEFINITIONS
1.01
ACCOUNT or VARIABLE ACCOUNT -- The segregated investment account into which The
Lincoln National Life Insurance Company sets aside and invests the variable
assets attributable to this Variable Annuity Contract.
1.02
ACCUMULATION UNIT -- A unit of measure used to calculate the variable Contract
Value during the accumulation period.
1.03
ANNUITANT -- The person upon whose life the annuity benefit payments made after
the Annuity Commencement Date will be based.
1.04
ANNUITY COMMENCEMENT DATE -- The Valuation Date when the funds are withdrawn for
payment of annuity benefits under the Annuity Payment Option selected.
1.05
ANNUITY PAYMENT OPTION -- An optional form of payment of the annuity provided
for under this Contract.
1.06
ANNUITY UNIT -- A unit of measure used after the Annuity Commencement Date to
calculate the amount of variable annuity payments.
1.07
BENEFICIARY -- The person or entity designated by the Owner to receive the Death
Benefit, if any, payable upon the death of the Owner.
1.08
CODE -- The Internal Revenue Code (IRC) of 1986, as amended.
1.09
CONTINGENT DEFERRED SALES CHARGE (CDSC) -Charges assessed on premature surrender
of the Contract, calculated according to the Contract provisions.
1.10
CONTRACT -- The agreement, between LNL and the Owner, providing a variable
annuity.
1.11
CONTRACT VALUE -- The sum of the values of all the Accumulation Units
attributable to this Contract at a given time and the value of monies in the
Fixed Account.
1.12
CONTRACT YEAR -- The period from the anniversary of the date on your Contract
Data Page 3 to the anniversary of the Contract in the following year.
1.13
DEATH BENEFIT -- The amount payable to the Owner's designated Beneficiary upon
death of the Owner.
1.14
FUND -- Underlying investment options available in the Series.
1.15
FIXED ACCOUNT -- The fixed portion of this Contract which is invested in the
general account of LNL.
1.16
HOME OFFICE -- The principal office of LNL located at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxx Xxxxx, Xxxxxxx, 00000.
1.17
LNL -- The Lincoln National Life Insurance Company.
1.18
MATURITY DATE -- The date specified on Page 3 of this Contract.
1.19
OWNER -- The individual or entity who exercises rights of ownership under this
contract.
1.20
PURCHASE PAYMENTS -- Amounts paid into this Contract.
1.21
QUALIFIED PLAN -- A retirement plan qualified for special tax treatment under
the Internal Revenue Code of 1986, as amended, including Sections 401, 403, 408
and 457. All other plans are considered Non-Qualified.
1.22
SERIES -- American Variable Insurance Series, the mutual fund into which
Purchase Payments allocated to the Variable Account are invested.
Page 4
1.23
SUB-ACCOUNT -- That portion of the Variable Account which pertains to
investments in the Accumulation Units and Annuity Units of a particular Fund.
1.24
VALUATION DATE -- Close of the market of each day that the New York Stock
Exchange is open for business.
1.25
VALUATION PERIOD -- The period commencing at the close of business on a
particular Valuation Date and ending at the close of business on the next
succeeding Valuation Date.
ARTICLE 2
PURCHASE PAYMENTS, OPTIONS, AND BENEFITS
2.01 WHERE PAYABLE
All Purchase Payments must be made to LNL at its Home Office.
2.02 AMOUNT AND FREQUENCY
Purchase Payments are made in an amount and at the frequency shown on page 3.
The Owner may change the frequency or amount of Purchase Payments subject to
LNL's rules in effect at the time of the change.
The minimum initial Purchase Payment is $1,500 for Non-Qualified Plans and $300
for Qualified Plans. The minimum annual amount of subsequent Purchase Payments
is $300 for either Non-Qualified Plans or Qualified Plans. The minimum payment
to the Contract at any one time must be at least $25.00 if transmitted
electronically; otherwise the minimum amount is $100.00.
Purchase Payments may be made until the earliest of the Annuity Commencement
Date, the surrender of the Contract, Maturity Date or payment of any Death
Benefit.
2.03 VARIABLE ACCOUNT
Purchase Payments under the Contract may be allocated to the Lincoln National
Variable Annuity Account H (Variable Account) and/or to the Fixed Account of the
Contract. The Variable Account is for the exclusive benefit of persons entitled
to receive benefits under variable annuity contracts. The Variable Account will
not be charged with the liabilities arising from any other part of LNL's
business. The Owner may direct Purchase Payments under the Contract to any of
the available Sub-accounts subject to the following limitations. A minimum
payment to any one Sub-account must be at least $20. If the Owner elects to
direct Purchase Payments to a new Sub-account not previously selected, the
election must be in writing to LNL or by telephone transfer provided LNL has
received the appropriate authorization. The amounts allocated to each Sub-
account will be invested at net asset value in the shares of one of the Funds of
the American Variable Insurance Series (Series). The Funds are shown on Page 3
of the Contract.
LNL reserves the right to eliminate the shares of any Fund and substitute the
securities of a different Fund or investment company or mutual fund if the
shares of a Fund are no longer available for investment, or, if in the judgment
of LNL, further investment in any Fund should become inappropriate in view of
the purposes of the Contract. LNL may add a new Sub-account in order to invest
the assets of the Variable Account into a Fund. LNL shall give the Owner written
notice of the elimination and substitution of any Fund within fifteen days after
such substitution occurs.
LNL shall use each Purchase Payment allocated to the Variable Account by the
Owner to buy Accumulation Units in the Sub-account(s) selected by the Owner. The
number of Accumulation Units bought shall be determined by dividing the amount
directed to the Sub-account by the dollar value of an Accumulation Unit in such
Sub-account as of the point of the next valuation of such Sub-account
immediately following receipt of the Purchase Payment at the Home Office of LNL.
The number of Accumulation Units held for the Variable Account of an Owner shall
not be changed by any change in the dollar value of Accumulation Units in any
Sub-account.
2.04 VALUATION OF ACCUMULATION UNITS
The variable Contract Value of an Owner's Contract at any time prior to the
Annuity Commencement Date equals the sum of the values of the Accumulation Units
credited in the Variable Account under the Contract.
The value of a Sub-account is the number of units in the Sub-account multiplied
by the value of an Accumulation Unit in the sub-account.
Accumulation Units for each Sub-account are valued separately. Initially, the
value of an Accumulation Unit was set at $1.00. Thereafter, the value of an
Accumulation Unit in any Sub-account on any Valuation Date equals the value of
an Accumulation Unit in that Sub-account as of the immediately preceding
Valuation Date, multiplied by the "Net Investment Factor" of that Sub-account
for the current Valuation Period.
The Net Investment Factor is an index which measures the investment performance
of a Sub-account from one Valuation Period to the next. The Net Investment
Factor for any Sub-account for any Valu-
Page 5
ation Period is equal to (1) divided by (2) and subtracting (3) from the result,
where:
1. is the result of:
a. the net asset value per share of the Fund held in the Sub-account,
determined at the end of the current Valuation Date; plus
b. the per share amount of any dividend or capital gain distribution made
by the Fund in the Sub-account, if the "ex-dividend" date occurs
during the Valuation Period; plus or minus
c. per share charge or credit for any taxes re-served for;
2. is the net asset value per share of the Fund held in the Sub-account,
determined at the end of the prior Valuation Date;
3. is a daily factor representing the mortality and expense risk and
administrative charge deducted from the Sub-account adjusted for the number
of days in the Valuation Period. On an annual basis, this charge will not
exceed 1.40%. For any period in which the Enhanced Guaranteed Minimum Death
Benefit (see Section 2.12) is not in effect, this charge will not exceed
1.25% on an annual basis.
The Accumulation Unit value and Annuity Unit value may increase or decrease the
dollar value of benefits under the Contract. The dollar value of benefits will
not be adversely affected by expenses incurred by LN L.
2.05 FIXED ALLOCATIONS
Purchase Payments under the Contract may be allocated to the Variable Account
and/or to the Fixed Account of the Contract. A minimum allocation to the Fixed
Account must be at least $20.
2.06 CREDITING OF INTEREST ON FIXED ALLOCATIONS
Interest shall be credited daily on all Purchase Payments that are allocated to
the Fixed Account of this Contract.
Prior to: the Maturity Date; the Annuity Commencement Date; payment of any Death
Benefit; or surrender of this Contract; whichever occurs first, LNL guarantees
that it will credit interest on fixed allocations at an effective annual rate
not less than 3.0% during all years. A table of guaranteed values for the fixed
allocations may be found in Article 8.
LNL may credit interest at rates in excess of the guaranteed rates at any time.
2.07 AUTOMATIC NONFORFEITURE OPTION
In the event that Purchase Payments are stopped, this Contract will continue as
a paid-up Contract until the earlier of: the Maturity Date, surrender of the
Contract, payment of any Death Benefit, or the Annuity Commencement Date.
Purchase Payments may be resumed at any time prior to: the Maturity Date,
surrender of the Contract, payment of any Death Benefit, or the Annuity
Commencement Date. LNL reserves the right to surrender this Contract in
accordance with the terms set forth in the nonforfeiture law, applicable in your
state, for individual deferred annuities.
2.08 TRANSFERS
Prior to the earlier of: the Maturity Date; surrender of the Contract; payment
of any Death Benefit; or the Annuity Commencement Date, the Owner may direct a
transfer of assets from one Sub-account to another Sub-account or to the Fixed
Account of the Contract. The Owner may also direct a transfer of assets from the
Fixed Account of the Contract to one or more Sub-accounts of the Variable
Account, subject to the limitations described below. Such a transfer request
must be in writing or by telephone provided LNL has received the appropriate
authorization from the Owner. Amounts transferred to the Sub-account(s) will
purchase Accumulation Units as described in Section 2.03.
A transfer will result in the purchase of Accumulation Units in one Sub-account
and the redemption of Accumulation Units in the other Sub-account. Such a
transfer will be accomplished at relative Accumulation Unit values as of the
Valuation Date the transfer request is received. The valuation of Accumulation
Units is described in Section 2.04.
LNL reserves the right to impose a charge in the future for transfers between
Sub-accounts.
The minimum transfer amount is $300 or the entire amount in the Sub-
account/Fixed Account, whichever is less. If, after the transfer, the amount
remaining under this Contract in the Sub-account/Fixed Account from which the
transfer is taken is less than $300, the entire amount held in that Sub-
account/Fixed Account will be transferred with the transfer amount.
For transfers between Sub-accounts and from the Sub-account(s) to the Fixed
Account of the Contract, there are no restrictions on the maximum amount which
may be transferred. For transfers from the Fixed Account of the Contract to the
Variable Account, the sum of the percentages of fixed value transferred will be
limited to 25% in any 12 month period. Transfers cannot be made during the first
30 days after the Contract Date and no more than six transfers will be allowed
in any Contract Year. LNL reserves the right to waive any of these restrictions.
2.09 WITHDRAWAL OPTION
The Owner may withdraw a part of the surrender value of this Contract, subject
to the charges outlined under Surrender Option (see Section 2.10). The first
four partial withdrawals of Contract Value during a Contract Year will be free
of Contingent Deferred
Page 6
Sales Charges to the extent that the sum of the percentages of the Contract
Value withdrawn, where the percentages are based upon the Contract Value at the
time of the current withdrawal, does not exceed 10%. This 10% withdrawal
exemption from CDSC does not apply to a surrender of a Contract. Withdrawals
will be treated as "first in-first out (FIFO)" for purposes of calculating the
Contingent Deferred Sales Charge (see Section 2.11). Withdrawal will be
effective on the Valuation Date on which LNL receives a written request at its
Home Office.
The remaining value will be subject to the charges as provided under Surrender
Option (see Section 2.10). The request should specify from which Subaccount the
withdrawal will be made. If no Subaccount is specified, LNL will withdraw, on a
pro-rata basis from each Sub-account, the amount requested. Any cash payment
will be mailed from LNL's Home Office within seven days after the date of
withdrawal; however, LNL may be permitted to defer such payment under the
Investment Company Act of 1940, as in effect at the time such request of
withdrawal is received.
For purposes of this Section, the Fixed Account of the Contract is considered a
Sub-account.
The Withdrawal Option is not available after the Annuity Commencement Date.
The minimum withdrawal is $300- LNL reserves the right to surrender this
Contract if any withdrawal reduces the total Contract Value to a level in which
this Contract may be surrendered in accordance with the terms set forth in the
nonforfeiture law, applicable in your state, for individual deferred annuities.
LNL may surrender the Contract for its surrender value.
2.10 SURRENDER OPTION
The Owner may surrender this Contract for its surrender value. On surrender,
this Contract terminates. Surrender will be effective on the Valuation Date on
which LNL receives a written request at its Home Office. The surrender value
will be the total Contract Value on the Valuation Date, less a Contingent
Deferred Sales Charge.
Any cash payment will be mailed from LNL's Home Office within seven days after
the date of surrender; however, LNL may be permitted to defer such payment under
the Investment Company Act of 1940, as in effect at the time a request for
surrender is received in its Home Office.
The Surrender Option is not available after the Annuity Commencement Date.
2.11 CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge (CDSC) is calculated separately for each
Contract Year's Purchase chase Payments to which a charge applies. Charges are
applied as follows:
Number of complete CDSC as a percentage
Contract Years that of the surrendered
a Purchase Payment or withdrawn
has been invested Purchase Payments
Less than
2 Years 6%
At least
2 Years 5%
At least
3 Years 4%
At least
4 Years 3%
At least
5 Years 2%
At least
6 Years 1%
At least
7 + Years 0%
A CDSC will be waived under certain circumstances (see Section 2.14 for
details).
For purposes of calculating CDSC, LNL assumes that Purchase Payments are
withdrawn on a "first in-first out (FIFO)" basis, and that all Purchase Payments
are withdrawn before any earnings are withdrawn.
2.12 DEATH BENEFITS
Before the Annuity Commencement Date
Entitlement
If there is a single Owner, upon the death of the Owner LNL will pay a Death
Benefit to the designated Beneficiary(s). If the designated Beneficiary of the
Death Benefit is the surviving spouse of the deceased Owner, the designated
Beneficiary may elect to continue the Contract as the new Owner in lieu of
receiving the Death Benefit. If there are no designated Beneficiaries, LNL will
pay a Death Benefit to the Owner's estate. Upon the death of the designated
Beneficiary who continues the Contract as the new Owner, LNL will pay a Death
Benefit to the designated Beneficiary(s) named by the spouse as new Owner.
If there are Joint Owners, upon the death of the first Joint Owner, LNL will pay
a Death Benefit to the surviving Joint Owner. The surviving Joint Owner, as the
spouse of the deceased Joint Owner, may elect to continue the Contract as sole
Owner in lieu of receiving the Death Benefit. Upon the death of the Joint Owner
who continues the Contract, LNL will pay a Death Benefit to the designated
Beneficiary(s).
The Death Benefit will be paid if LNL is in receipt of: (1) proof, satisfactory
to LNL, of the death; (2) written authorization for payment; and (3) all claim
forms, fully completed.
Page 7
Due proof of death may be a certified copy of a death certificate, a certified
copy of the statement of death from the attending physician, a certified copy of
a decree of a court of competent jurisdiction as to the findings of death, or
any other proof of death acceptable to LNL.
All Death Benefit payments will be subject to the laws and regulations governing
death benefits.
Notwithstanding any provision of this Contract to the contrary, no payment of
Death Benefits provided under the Contract will be allowed that does not satisfy
the requirements of Code Section 72(s) or 401(a)(9) as applicable, as amended
from time to time.
Determination of Amounts
This Contract provides a Death Benefit equal to an Enhanced Guaranteed Minimum
Death Benefit (EGMDB) or the Guarantee of Principal.
The EGMDB is equal to the greater of:
a. the current Contract Value as of the date on which the death claim is
approved by LNL for payment; or
b. the highest Contract Value at the time of Fund valuation on any policy
anniversary date (including the inception date) on ages up to, and
including, the Owner's age 75. The highest Contract Value is increased by
Purchase Payments and is decreased by partial withdrawals, partial
annuitizations, and premium tax made, effected, or incurred subsequent to
such anniversary date on which the highest Contract Value is obtained.
The Guarantee of Principal is equal to the greater of:
a. the current Contract Value as of the date on which the death claim is
approved by LNL for payment; or
b. the sum of all Purchase Payments minus withdrawals, partial annuitizations,
and premium tax incurred.
The EGMDB will not be in effect if this Contract is issued to an Owner with an
attained age of 75 or greater at issue. Under these circumstances, there will be
no EGMDB provided and the Death Benefit is equal to the Guarantee of Principal.
The EGMDB will only be in effect, unless terminated by the Owner, for Non-
Qualified Contracts and Contracts sold as Individual Retirement Annuities (IRA)
under Code Section 408(b). For all other Contracts the EGMDB will not be in
effect and the Death Benefit is equal to the Guarantee of Principal.
Upon the death of the sole Owner, this Contract provides a Death Benefit of an
EGMDB, if still in effect. If the EGMDB was not available at issue of the
Contract or has been terminated at any time, then the Death Benefit will be
equal to the Guarantee of Principal.
If the designated Beneficiary, as the surviving spouse of the deceased Owner,
continues the Contract as the new Owner in lieu of receiving the Death Benefit,
then upon the death of the new Owner this Contract will provide a Death Benefit
of an EGMDB, if still in effect. If the EGMDB was not available at issue of the
Contract or has been terminated at any time, then the Death Benefit will be
equal to the Guarantee of Principal.
If there are Joint Owners, upon the death of the first Joint Owner, this
Contract will provide a Death Benefit of an EGMDB, if still in effect upon this
death, to the surviving Joint Owner. If the EGMDB was not available at issue of
the Contract or has been terminated at any time, this Contract will provide a
Death Benefit equal to the Guarantee of Principal to the surviving Joint Owner.
If the surviving Joint Owner, as the spouse of the deceased Joint Owner,
continues the Contract in lieu of receiving the Death Benefit, then the EGMDB,
if in effect at the time of the death of the first Joint Owner, will continue in
effect unless it has been terminated. Upon the death of the surviving Joint
Owner this Contract will provide a Death Benefit of the EGMDB, if still in
effect. If the EGMDB was not available at issue of the Contract or has been
terminated at any time, then the Death Benefit will be equal to the Guarantee of
Principal.
At any time prior to the Annuity Commencement Date, an Owner may choose to
terminate the EGMDB by giving written notice to LNL, and will then have no
EGMDB. The EGMDB will terminate on the next Valuation Date following receipt of
the written notice in the LNL Home Office and the Death Benefit will then be the
Guarantee of Principal. Termination of the EGMDB by the Owner will be permanent
and final.
If the Owner is a corporation or other non-individual (non-natural person), the
death of the Annuitant will be treated as the death of the Owner. The EGMDB, if
applicable, will apply on the death of the Annuitant only in this situation.
Payment of Amounts
The Death Benefit payable on the death of the Owner, or after the death of the
first Joint Owner, or upon the death of the spouse who continues the Contract,
will be distributed to the designated Beneficiary(s) as follows:
a. the Death Benefit must be completely distributed within five years of the
Owner's date of death; or
b. the designated Beneficiary may elect, within the one year period after the
Owner's date of death, to receive the Death Benefit in substantially equal
installments over the life of such designated Beneficiary or over a period
not extending beyond
Page 8
the life expectancy of such designated Beneficiary; provided that such
distributions begin not later than one year after the Owner's date of
death.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by LNL of the claim. This payment may be postponed as permitted
by the Investment Company Act of 1940.
On or After the Annuity Commencement Date
If the Owner dies on or after the Annuity Com-mencement Date, any remaining
benefits payable will continue to be distributed under the Annuity Payment
Option then in effect. All of the Owner's rights granted by the Contract will
pass to the Joint Owner, if any; otherwise to the Beneficiary.
If there is no named Beneficiary at the time of the Owner's death, then the
Owner's rights will pass to the Annuitant, if still living; otherwise to the
Joint Annuitant, if applicable. If no named Beneficiary, Annuitant, or Joint
Annuitant survives the Owner, any remaining annuity benefit payments will
continue to the Owner's estate.
2.13 DEATH OF ANNUITANT
Before the Annuity Commencement Date
If the Annuitant is also the Owner or a Joint Owner, then the Death Benefit paid
will be subject to the Contract provisions regarding death of the Owner. If the
surviving spouse of the Owner/Xxxxxxxxx assumes the Contract, the Contingent
Annuitant becomes the Annuitant. If no Contingent Annuitant is named, the
surviving spouse becomes the Annuitant.
If an Annuitant who is not the Owner or Joint Owner dies, then the Contingent
Annuitant, if any, becomes the Annuitant. If no Contingent Annuitant is named,
the Owner (or the younger of the Joint Owners) becomes the Annuitant.
On or After the Annuity Commencement Date
On receipt of due proof of death, as described in Section 2.12, of the Annuitant
or both Joint Annuitants, any remaining annuity benefit payments under the
Annuity Payment Option will be paid to the Owner if living; otherwise, to the
Beneficiary. If there is no Beneficiary, any remaining benefit payments will
continue to the Annuitant's estate.
2.14 WAIVER OF CONTINGENT DEFERRED SALES CHARGES
A surrender of this Contract or withdrawal of Contract Value prior to the
Annuity Commencement Date may be subject to a Contingent Deferred Sales Charge
as described in Sections 2.09 and 2.10, except that such charges do not apply
to: (1) the first four withdrawals of Contract Value during a Contract Year to
the extent that the sum of the percentages of the Contract Value withdrawn by
the first four withdrawals, where the percentages are based on the Contract
Value at the time of the current withdrawal, does not exceed 10% (this 10%
withdrawal exemption from CDSC does not apply to a surrender of a Contract); (2)
a surrender of the Contract as a result of "permanent and total disability of
the Owner as defined in section 22(e)(3) of the Internal Revenue Code subsequent
to the effective date of this Contract and prior to the 65th birthday of the
Owner; (3) a surrender of this Contract as a result of 90 days of continuous
confinement of the Owner, where the 90 day period begins subsequent to the
effective date of this Contract, in an accredited nursing home or equivalent
health care facility; (4) a surrender of this Contract as a result of the onset
of a terminal illness of the Owner subsequent to the effective date of this
Contract that results in a life expectancy of less than one year as determined
by a qualified professional medical practitioner; (5) a surrender of the
Contract as a result of the death of the Owner or a Joint Owner; (6)
annuitization.
The Contingent Deferred Sales Charge will only be waived if LNL is in receipt of
proof, satisfactory to LNL, of the exception.
If a non-natural person is the Owner of the Contract, the Annuitant will be
considered the Owner of the Contract for purposes of this Section 2.14.
ARTICLE 3
ANNUITY PAYMENT OPTION BENEFITS
3.01 ANNUITY PAYMENTS
An election to receive payments under an Annuity Payment Option must be made by
the Maturity Date.
If an Annuity Payment Option is not chosen prior to the Maturity Date, payments
will commence to the Owner on the Maturity Date under the Annuity Payment Option
providing a Life Annuity with annuity payments guaranteed for 10 years.
The Maturity Date is set forth on Page 3. Upon written request by the Owner and
any Beneficiary who cannot be changed, the Maturity Date may be deferred.
Purchase Payments may be made until the new Maturity Date.
3.02 CHOICE OF ANNUITY PAYMENT OPTION
By Owner
Prior to the Annuity Commencement Date, the Owner may choose or change any
Annuity Payment Option. For a 100% fixed annuity payment, the Annuity
Commencement Date must be at least thirty days prior to the time annuity
payments are to begin.
Page 9
By Beneficiary
At the time proceeds are payable to a Beneficiary, a Beneficiary may choose or
change any Annuity Payment Option that meets the requirements of Code Section
72(s) or 401(a)(9) if proceeds are available to the Beneficiary in a lump sum.
The Beneficiary then becomes the Annuitant.
A choice or change must be in writing to LNL.
After the Annuity Commencement Date, the Annuity Payment Option may not be
changed.
3.03 ANNUITY PAYMENT OPTIONS
a. Life Annuity / Life Annuity with Guaranteed Period --Payments will be made
for the lifetime of the Annuitant with no certain period, or life and a 10
year certain period, or life and a 20 year certain period.
b. Unit Refund Life Annuity -- Payments will be made for the lifetime of the
Annuitant with the guarantee that upon death a payment will be made of the
value of the number of Annuity Units equal to the excess, if any, of (a)
over (b) where (a) is the total amount applied under the option divided by
the Annuity Unit Value at the Annuity Commencement Date and (b) is the
product of the number of Annuity Units represented by each payment and the
number of payments paid prior to death.
C. Joint Life Annuity / Joint Life Annuity with Guaranteed Period -- Payments
will be made during the joint life of the Annuitant and a Joint Annuitant
of the Owner's choice. Payments will be made for life with no certain
period, or life and a 10 year certain period, or life and a 20 year certain
period. Payments continue for the life of the survivor at the death of the
Annuitant or Joint Annuitant.
d. Other options may be available as agreed upon in writing by LNL.
At the time an Annuity Payment Option is selected under the provisions of this
Contract, the Owner may elect to have the total Contract Value applied to
provide a variable annuity payment, a fixed annuity payment, or a combination
fixed and variable annuity payment. If no election is made, the value of the
Owner's Variable Account shall be used to provide a variable annuity payment,
and the value of the Owner's Fixed Account shall be used to provide a fixed
annuity payment.
The amount of annuity payment will depend on the age and sex (except in cases
where unisex rates are required) of the Annuitant as of the Annuity Commencement
Date. A choice may be made to receive payments once each month, four times each
year, twice each year, or once each year. The Contract Value and Annuity Unit
value used to effect benefit payments will be calculated as of the Annuity
Commencement Date. If any portion of the annuity payment will be on a variable
basis, the first payment will be made fourteen days after the Annuity
Commencement Date.
Article 6 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the first monthly payment under a
variable annuity payment option. The tables show the dollar amount of the first
monthly payment which can be purchased with each $1,000 of Contract Value, after
deduction of any applicable premium taxes. Amounts shown use the 1983 'a'
Individual Annuity Mortality Table, modified, with an assumed rate of return of
4% per year.
Article 7 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the monthly payments under a fixed
annuity payment option. The tables show the dollar amount of the guaranteed
monthly payments which can be purchased with each $1,000 of Contract Value,
after deduction of any applicable premium taxes.
Amounts shown use the 1983 'a' Individual Annuity Mortality Table, modified,
with an interest rate of 3.0% per year and a 2.0% expense load.
3.04 DETERMINATION OF THE AMOUNT OF VARIABLE ANNUITY PAYMENTS AFTER THE FIRST
PAYMENT
The first variable annuity payment is sub-divided into components each of which
represents the product of: (a) the percentage elected by the Contract Owner of a
specific Sub-account the performance of which will determine future variable
annuity payments, and (b) the entire first variable annuity payment. Each
variable annuity payment after the first payment attributable to a specific Sub-
account will be determined by multiplying the Annuity Unit value for that Sub-
account for the date each payment is due by a constant number of Annuity Units.
This constant number for each specific Sub-account is determined by dividing the
component of the first payment attributable to such Sub-account as described
above by the Annuity Unit value for that Sub-account on the Annuity Commencement
Date. The total variable annuity payment will be the sum of the payments
attributable to each Sub-account.
The Annuity Unit value for any Valuation Period for any Sub-account is
determined by multiplying the Annuity Unit value for the immediately preceding
Valuation Period by the product of (a) 0.9998926 raised to a power equal to the
number of days in the current Valuation Period and (b) the Net Investment Factor
of the Sub-account for the Valuation Period for which the Annuity Unit value is
being determined.
Page 10
The valuation of all assets in the Sub-account shall be determined in accordance
with the provisions of applicable laws, rules, and regulations. The method of
determination by LNL of the value of an Accumulation Unit and of an Annuity Unit
will be conclusive upon the Owner and any Beneficiary.
LNL guarantees that the dollar amount of each installment after the first shall
not be affected by variations in mortality experience from mortality assumptions
on which the first installment is based.
After the Annuity Commencement Date, if any portion of the annuity payment is a
variable annuity payment, the Owner may direct a transfer of assets from one
Sub-account to another Sub-account or to a fixed annuity payment. Such transfers
will be limited to three (3) times per Contract Year. Assets may not be
transferred from a fixed annuity payment to a variable annuity payment.
A transfer from one Sub-account to another Subaccount will result in the
purchase of Annuity Units in one Sub-account and the redemption of Annuity Units
in the other Sub-account. Such a transfer will be accomplished at relative
Annuity Unit values as of the Valuation Date the transfer request is received.
The valuation of Annuity Units is described above. A transfer from one Sub-
account to a fixed annuity payment will result in the redemption of Annuity
Units in one Sub-account and the purchase of a minimum fixed annuity payment
based on the tables in Article 7.
3.05 PROOF OF AGE
Payment will be subject to proof of age that LNL will accept such as a certified
copy of a birth certificate.
3.06 MINIMUM ANNUITY PAYMENT REQUIREMENTS
If the Annuity Payment Option chosen results in payments of less than $50 per
Sub-account, the frequency will be changed so that payments will be at least
$50.
For the purposes of this Section, the fixed annuity payment of the Contract is
considered a Sub-account.
3.07 EVIDENCE OF SURVIVAL
LNL has the right to ask for proof that the person on whose life the payment is
based is alive when each payment is due.
3.08 CHANGE IN ANNUITY PAYMENT OPTION
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
ARTICLE 4
BENEFICIARY
4.01 DESIGNATION
The Owner may designate a Beneficiary(s). If there is a single Owner, the
designated Beneficiary(s) will receive the Death Benefit proceeds upon the death
of the Owner.
If there are Joint Owners, upon the death of the first Joint Owner, the
surviving Joint Owner will receive the Death Benefit proceeds. The surviving
Joint Owner will be treated as the primary, designated Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
contingent beneficiary.
If the surviving Joint Owner, as spouse of the deceased Joint Owner, continues
the Contract as the sole Owner in lieu of receiving the Death Benefit proceeds,
then the designated Beneficiary(s) will receive the Death Benefit proceeds upon
the death of the surviving spouse.
Unless otherwise stated in the Beneficiary designation, if there is more than
one Beneficiary they are presumed to share equally.
4.02 CHANGE
The Owner may change any Beneficiary unless otherwise provided in the previous
designation.
A change of Beneficiary will revoke any previous designation.
A change may be made by filing a written request, in a form acceptable to LNL,
at its Home Office. The change will become effective upon receipt of the written
request by LNL at its Home Office.
LNL reserves the right to request the Contract for endorsement of the change.
4.03 DEATH OF BENEFICIARY
Unless otherwise provided in the Beneficiary designation, if any Beneficiary
dies before the Owner, that Beneficiary's interest will go to any other
Beneficiaries named, according to their respective interests. If there are no
Beneficiaries, the Beneficiary's interest will pass to a Contingent
Beneficiary(s), if any. Prior to the Annuity Commencement Date, if no
Beneficiary or Contingent Beneficiary survives the Owner, the Death Benefits
will be paid to the Owner's estate.
Once a Beneficiary is entitled to Death Benefits or other payments, the
Beneficiary may name his or her own Beneficiary(s) to receive any remaining
benefits due under the Contract, should the original Beneficiary die prior to
receipt of all benefits. If no Benefici-
Page 11
ary is named or the named Beneficiary predeceases the original Beneficiary, any
remaining benefits will continue to the original Beneficiary's estate. This
designation must be made to the LNL Home Office.
ARTICLE 5
GENERAL PROVISIONS
5.01 THE CONTRACT
The Contract and any riders attached constitute the entire Contract. Only the
President, a Vice President, the Secretary or an Assistant Secretary of LNL has
the power, on behalf of LNL, to change, modify, or waive any provisions of this
Contract.
LNL reserves the right to unilaterally change the Contract for the purpose of
keeping the Contract in compliance with federal or state law.
Any changes, modifications, or waivers must be in writing. No representative or
person other than the above named officers has authority to change or modify
this Contract or waive any of its provisions. All terms used in this Contract
will have their usual and customary meaning except when specifically defined.
5.02 OWNERSHIP
The Owner is the person who has the ability to exercise the rights within this
Contract.
The Owner may only name his or her spouse as a Joint Owner. Joint Owner(s) shall
be treated as having equal, undivided interests in the contract, including
rights of survivorship. Either Joint Owner, independently of the other, may
exercise any ownership rights in the Contract.
Prior to the Annuity Commencement Date, the Owner has the right to change the
Annuitant at any time by notifying LNL in writing of the change. The Annuitant
may not be changed in a Contract owned by a nonnatural person. The Owner may
also name a Contingent Annuitant by notifying LNL in writing. The Contingent
Annuitant designation is no longer applicable after the Annuity Commencement
Date.
5.03 ASSIGNMENTS
If this Contract is used with a Qualified Plan, the Contract will not be
transferable. It may not be sold, assigned, discounted or pledged as collateral
for a loan or as security for the performance of an obligation or for any other
purpose.
5.04 INCONTESTABILITY
This Contract will not be contested by LNL
5.05 MISSTATEMENT OF AGE AND/OR SEX
If the age and/or sex of the Annuitant has been misstated, the benefits
available under this Contract will be those which the Purchase Payments would
have purchased using the correct age and/or sex. Any underpayment already made
by LNL shall be made up immediately and any overpayments already made by LNL
shall be charged against the annuity payments failing due after the correction
is made.
5.06 NONPARTICIPATING
The Contract is nonparticipating and will not share in the surplus earnings of
LNL.
5.07 VOTING RIGHTS
The Owner shall have a right to vote at the meetings of the Series. Ownership of
this Contract shall not entitle any person to vote at any meeting of
shareholders of LNL. Votes attributable to the Contract shall be cast in
conformity with applicable law.
5.08 OWNERSHIP OF THE ASSETS
LNL shall have exclusive and absolute ownership and control of its assets,
including all assets in the Variable Account.
5.09 REPORTS
Prior to the Annuity Commencement Date, at least once each Contract Year LNL
shall mail a report to the Owner. The report shall be mailed to the last address
known to LNL. The report shall include a statement of the number of Accumulation
Units credited to the Variable Account under this Contract and the dollar value
of such units as well as a statement of the value of the Fixed Account of this
Contract. The information in the report shall be as of a date not more than two
months prior to the date of mailing the report. LNL shall also mail to the Owner
at least once in each Contract Year a report of the investments held in the Sub-
accounts under this Contract.
5.10 PREMIUM TAX
State and local government premium tax, if applicable, will be deducted from
Purchase Payments or Contract Value. This will be deducted when incurred by LNL
or at another time of LNL's choosing.
5.11 MAXIMUM ISSUE AGE
This Contract will not be issued to Owners over the age of 85. This also applies
to Joint Owners, if any.
Page 12
ARTICLE 6
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
--------------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
--------------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
--------------------------------------------------------------------------------
No 120 240
Period Months Months Cash
Age Certain Certain Certain Refund
--------------------------------------------------------------------------------
60 $4.78 $4.73 $4.56 $4.56
61 4.87 4.81 4.63 4.63
62 4.97 4.90 4.69 4.71
63 5.07 5.00 4.75 4.78
64 5.19 5.10 4.82 4.87
65 5.30 5.21 4.88 4.95
66 5.43 5.32 4.95 5.04
67 5.57 5.44 5.01 5.14
68 5.72 5.56 5.08 5.24
69 5.88 5.70 5.14 5.34
70 6.05 5.84 5.20 5.46
71 6.23 5.99 5.26 5.57
72 6.44 6.14 5.31 5.69
73 6.66 6.30 5.36 5.82
74 6.89 6.47 5.40 5.96
75 7.15 6.65 5.44 6.10
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
--------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
--------------------------------------------------------------------------------
Certain Period Certain Period
--------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
--------------------------------------------------------------------------------
$4.37 $4.37 $4.34 60 $4.78 $4.74 $4.57
4.44 4.44 4.40 61 4.88 4.82 4.63
4.52 4.51 4.46 62 4.97 4.91 4.69
4.60 4.59 4.53 63 5.08 5.00 4.76
4.68 4.68 4.60 64 5.19 5.10 4.82
4.77 4.77 4.67 65 5.31 5.21 4.88
4.87 4.86 4.74 66 5.44 5.32 4.95
4.98 4.96 4.82 67 5.57 5.44 5.01
5.09 5.07 4.89 68 5.72 5.56 5.08
5.21 5.19 4.96 69 5.87 5.69 5.14
5.34 5.31 5.04 70 6.04 5.83 5.20
5.47 5.44 5.11 71 6.22 5.97 5.25
5.62 5.58 5.18 72 6.42 6.12 5.31
5.78 5.73 5.24 73 6.62 6.28 5.36
5.96 5.88 5.30 74 6.85 6.44 5.40
6.14 6.05 5.36 75 7.09 6.61 5.44
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 1 1990-1999 - 6
1950-1959 2 ETC. ETC.
Page 13
ARTICLE 7
ANNUITY PURCHASE RATES UNDER A FIXED PAYMENT OPTION
----------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
----------------------------------------------------------------------
SINGLE LIFE ANNUITIES
----------------------------------------------------------------------
No 120 240
Period Months Months Cash
Age Certain Certain Certain Refund
----------------------------------------------------------------------
60 $4.42 $4.38 $4.22 $4.18
61 4.52 4.47 4.29 4.26
62 4.62 4.56 4.36 4.34
63 4.73 4.66 4.43 4.42
64 4.85 4.77 4.50 4.51
65 4.97 4.89 4.57 4.60
66 5.11 5.01 4.64 4.69
67 5.25 5.13 4.71 4.79
68 5.41 5.27 4.78 4.90
69 5.57 5.41 4.85 5.01
70 5.75 5.56 4.91 5.13
71 5.95 5.71 4.98 5.25
72 6.16 5.88 5.04 5.38
73 6.38 6.05 5.09 5.52
74 6.63 6.23 5.14 5.66
75 6.90 6.42 5.19 5.81
----------------------------------------------------------------------
--------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
--------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
--------------------------------------------------------------------------------
Certain Period Certain Period
--------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
--------------------------------------------------------------------------------
$4.01 $4.01 $3.98 60 $4.43 $4.38 $4.22
4.09 4.08 4.05 61 4.52 4.47 4.29
4.17 4.16 4.12 62 4.63 4.57 4.36
4.25 4.25 4.19 63 4.74 4.67 4.43
4.34 4.34 4.26 64 4.85 4.78 4.50
4.44 4.43 4.34 65 4.98 4.89 4.57
4.54 4.54 4.42 66 5.11 5.01 4.64
4.66 4.64 4.50 67 5.26 5.13 4.71
4.77 4.76 4.58 68 5.41 5.27 4.78
4.90 4.88 4.66 69 5.57 5.41 4.85
5.04 5.01 4.74 70 5.75 5.55 4.91
5.18 5.15 4.82 71 5.94 5.70 4.98
5.34 5.30 4.89 72 6.14 5.86 5.03
5.51 5.45 4.96 73 6.35 6.03 5.09
5.69 5.62 5.03 74 6.59 6.20 5.14
5.89 5.79 5.09 75 6.84 6.38 5.18
--------------------------------------------------------------------------------
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 1 1990-1999 - 6
1950-1959 2 ETC. ETC.
Page 14
ARTICLE 8
GUARANTEED ACCUMULATED VALUES AND SURRENDER VALUES
FOR FIXED ALLOCATIONS*
--------------------------------------- ---------------------------------
$1,000 Annual Contribution $100 Monthly Contribution
--------------------------------------- ---------------------------------
Guaranteed Guaranteed Guaranteed Guaranteed
End of Accumulated Surrender End of Accumulated Surrender
Year Value Value Year Value Value
--------------------------------------- ---------------------------------
1 $ 1,030.00 $ 970.00 1 $ 1,219.41 $ 1,147.41
2 2,090.90 1,970.90 2 2,475.41 2,331.41
3 3,183.63 3,013.63 3 3,769.08 3,565.08
4 4,309.14 4,099.14 4 5,101.56 4,849.56
5 5,468.41 5,228.41 5 6,474.02 6,186.02
6 6,662.46 6,402.46 6 7,887.66 7,575.66
7 7,892.34 7,622.34 7 9,343.70 9,019.70
8 9,159.11 8,889.11 8 10,843.42 10,519.42
9 10,463.88 10,193.88 9 12,388.14 12,064.14
10 11,807.80 11,537.80 10 13,979.19 13,655.19
11 13,192.03 12,922.03 11 15,617.98 15,293.98
12 14,617.79 14,347.79 12 17,305.93 16,981.93
13 16,086.32 15,816.32 13 19,044.52 18,720.52
14 17,598.91 17,328.91 14 20,835.27 20,511.27
15 19,156.88 18,886.88 15 22,679.74 22,355.74
16 20,761.59 20,491.59 16 24,579.54 24,255.54
17 22,414.44 22,144.44 17 26,536.34 26,212.34
18 24,116.87 23,846.87 18 28,551.84 28,227.84
19 25,870.37 25,600.37 19 30,627.81 30,303.81
20 27,676.49 27,406.49 20 32,766.06 32,442.06
21 29,536.78 29,266.78 21 34,968.45 34,644.45
22 31,452.88 31,182.88 22 37,236.91 36,912.91
23 33,426.47 33,156.47 23 39,573.43 39,249.43
24 35,459.26 35,189.26 24 41,980.05 41,656.05
25 37,553.04 37,283.04 25 44,458.86 44,134.86
26 39,709.63 39,439.63 26 47,012.04 46,688.04
27 41,930.92 41,660.92 27 49,641.81 49,317.81
28 44,218.85 43,948.85 28 52,350.48 52,026.48
29 46,575.42 46,305.42 29 55,140.41 54,816.41
30 49,002.68 48,732.68 30 58,014.03 57,690.03
31 51,502.76 51,232.76 31 60,973.86 60,649.86
32 54,077.84 53,807.84 32 64,022.49 63,698.49
33 56,730.18 56,460.18 33 67,162.58 66,838.58
34 59,462.08 59,192.08 34 70,396.87 70,072.87
35 62,275.94 62,005.94 35 73,728.18 73,404.18
36 65,174.22 64,904.22 36 77,159.44 76,835.44
37 68,159.45 67,889.45 37 80,693.64 80,369.64
38 71,234.23 70,964.23 38 84,333.86 84,009.86
39 74,401.26 74,131.26 39 88,083.29 87,759.29
40 77,663.30 77,393.30 40 91,945.20 91,621.20
41 81,023.20 80,753.20 41 95,922.96 95,598.96
42 84,483.89 84,213.89 42 100,020.07 99,696.07
43 88,048.41 87,778.41 43 104,240.08 103,916.08
44 91,719.86 91,449.86 44 108,586.69 108,262.69
45 95,501.46 95,231.46 45 113,063.71 112,739.71
--------------------------------------- ---------------------------------
* Guaranteed Accumulated Values and Guaranteed Surrender Values may be more or
less than shown in the table because of the variatil of the day of receipt of
the Purchase Payment at the Home Office from period to period and the crediting
of interest to the Annuitant' account on a daily basis. Values shown are based
upon contributions equally spaced with interest occurring at the beginning of
the year These values do not provide for premium tax, if any.
Page 15
ANNUITY
CONTRACT
Deferred Variable Annuity or Variable and Fixed Annuity
Benefit Payment Options
Nonparticipating
If you have any questions concerning
this Contract, please
contact your Lincoln National Life
representative or the Home Office of LNL.
THE LINCOLN NATIONAL
LIFE INSURANCE COMPANY
0000 Xxxxx Xxxxxxx Xxxxxx
P.O. Box 2348
Fort Xxxxx, Indiana 46801
000-000-0000
