THE PENN MUTUAL LIFE INSURANCE COMPANY
INDEPENDENCE SQUARE
PHILADELPHIA, PA 19172
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Group Contract Number:
Issued To:
Date of Issue:
Effective Date:
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The Penn Mutual Life Insurance Company will make annuity payments and other
payments as set forth in this contract.
This contract is delivered in and is subject to the laws of
VALUES AND PAYMENTS UNDER THIS CONTRACT WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Executed by The Penn Mutual Life Insurance Company at its Home Office in
Philadelphia, Pennsylvania on the date of issue.
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxxx
Chairman of the Board
Secretary and Chief Executive Officer
Group Variable and Fixed
Annuity Contract - Flexible
Purchase Payments - Participating
GDI-1085
Table of Contents
Page
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Section I - Specification 3
Section II - Definitions 3
Section III - Purchase Payments 4
Section IV - Variable Account Provisions 5
Section V - Fixed Account Provisions 13
Section VI - Payment on Death 19
Section VII - Transfer From Variable to Fixed Account 20
Section VIII - Transfer From Fixed to Variable Account 20
Section IX - Withdrawal 20
Section X - Termination of Contract 22
Section XI - Miscellaneous 23
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Section I - SPECIFICATIONS
THE SEPARATE ACCOUNT
Penn Mutual Variable Annuity Account III
ELIGIBLE MUTUAL FUNDS
Penn Series Equity Fund
Penn Series Aggressive Capital Appreciation Fund
Penn Series Aggressive High Yield Fund
DATE VARIABLE ACCOUNT ADMINISTRATION CHARGE IS DEDUCTED
Each anniversary of the Participant's Enrollment Date
Section II - DEFINITIONS
OWNER: The Employer or the Trustees to whom this group contract is
issued. The Owner shall have all rights of ownership set forth under
this group contract.
PLAN: The qualified pension, profit sharing or deferred compensation
plan established under applicable provisions of the Internal Revenue
Code.
PARTICIPANT: The person on whose behalf Purchase Payments are made
under this group contract.
PARTICIPANT'S ENROLLMENT DATE: The date specified in the Certificate
issued by Penn Mutual to the Owner for each Participant.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable Annuity
Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section IV.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
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PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section V.
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to a
Participant's Fixed Account, increased by interest credited and reduced
by amounts withdrawn or transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments are to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under this group contract.
Section III - PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject to
the following provisions:
(a) The minimum Purchase Payment for any one Participant is $25.00
or such lower minimum as we may establish.
(b) The Owner will direct the allocation of Purchase Payments to a
Participant's Variable Account or a Participant's Fixed
Account, subject to the provisions of Sections IV and V.
(c) Total Purchase Payments in a calendar year for a Participant
are subject to the limits of the Sections of the Internal
Revenue Code which apply to Owner's Plan.
(d) Total Purchase Payment in a calendar year for a Participant
may not exceed $1,000,000 without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be made only by or
through the Owner.
(f) Purchase Payments will be credited to Participants' Variable
Accounts and Participants' Fixed Accounts in accordance with
information provided by the Owner.
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Section IV - VARIABLE ACCOUNT PROVISIONS
A. The Separate Account
THE SEPARATE ACCOUNT. The name of the Separate Account is set
forth in Section I. We established the Separate Account for
this contract and other contracts we may issue. Xxxxxxx
credited to the Participant's Variable Account will be
allocated to the Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section I.
For this and other contracts the Separate Account is divided
into investment accounts. There is an investment account for
each eligible mutual fund.
The Owner may choose the investment account to which amounts
credited to a Participant's Variable Account are to be
allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each investment account
of the Separate Account are not chargeable with liabilities
arising out of any other business we may conduct.
Upon notice to us, the Owner may transfer part or all the
value of the Accumulation Units or Annuity Units credited to a
Participant's Variable Account from one investment account to
another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as
all other investments, are subject to the limits and rules
applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitution may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
B. Charges and Deductions
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be
deducted each year on the date specified in Section I. It will
also be deducted when the Participant's Variable
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Account Value is withdrawn in full if withdrawal is not on the
date specified in Section I. The charge will never increase.
The charge will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge
will never increase. On an annual basis it equals 0.5% of the
daily net asset value of the Separate Account. This charge is
reflected in the Net Investment Factor set forth in Subsection
C of this Section IV.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this Section
IV.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Participant's
Variable Account Value or the present value of remaining
annuity payments (if applicable). The Contingent Deferred
Sales Charge is set forth in Section IX.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account for each day the contract is
in force. Other charges will be deducted by cancelling
Accumulation Units or Annuity Units (if applicable) of a value
equal to the deduction. Cancellation of Accumulation Units
will be in the ratio of the Participant's interest in each
investment account to the Participant's Variable Account
Value.
C. Variable Accumulation Values
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
investment account of the Separate Account, the number of a
Participant's Accumulation Units is the sum of
Amounts allocated to the investment account for the
Participant divided by
The value of an Accumulation Unit for the investment
account for the valuation period in which we received
the amount allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transaction, as
appropriate.
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VALUE OF ACCUMULATION UNIT. For each investment account of the
Separate Account, the value was arbitrarily set at $10 when
the investment account was established. The value may increase
or decrease from one valuation period to the next. For any
valuation period the value is
The value of an Accumulation Unit for the prior
valuation period multiplied by
The net investment factor for the investment account
for the valuation period.
NET INVESTMENT FACTOR. As used in this contract, net
investment factor is an index used to measure the investment
performance of an investment account from one valuation period
to the next. For any investment account, the net investment
factor for a valuation period is found by dividing (a) by (b)
and subtracting (c):
Where (a) is
The net asset value per share of the mutual
fund held in the investment account, as of
the end of the valuation period
plus
The per-share amount of any dividend or
capital gain distributions by the mutual
fund if the "exdividend" date occurs in the
valuation period
plus or minus
A per-share charge or credit as of the end
of the valuation period, for tax reserves,
if applicable;
Where (b) is
The net asset value per share of the mutual
fund held in the investment account as of
the end of the last prior valuation period
plus or minus
The per-share charge or credit for tax
reserves, if applicable, as of the end of
the last prior valuation period;
Where (c) is
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The sum of the daily expense risk charge and
the daily mortality risk charge. On an
annual basis, the sum of such charges equals
1.30% of the daily net asset value of the
Separate Account.
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is
the time as of which the mutual fund determines the net asset
value of its shares.
X. Xxxxxxxx Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Owner will
choose the Annuity Date in the application. The Owner may
change the Annuity Date up to 30 days prior to the current
Annuity Date.
VARIABLE ANNUITY OPTIONS. The Owner may choose a variable
annuity option up to 30 days prior to the Annuity Date. An
option not set forth in the contract may be chosen if
acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted from the Participant's Variable Account Value. The
net Participant's Variable Account Value as of the Annuity
Date will be applied to the annuity table for the option
chosen. The variable annuity tables show the amount of the
first payment for each $1,000 so applied, according to the age
at the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at 4%.
Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the investment account(s) chosen. The amount may change from
month to month. The amount of each subsequent payment is the
sum of the following amounts attributable to each applicable
investment account
The number of Annuity Units for the investment account
multiplied by The value of an Annuity Unit for the investment
account for the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
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MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Variable annuity
payments will be made monthly; but if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of a
Participant's Annuity Units for each investment account chosen
by the Owner is
The amount of the first variable annuity payment
attributable to that investment account
divided by
The value of an Annuity Unit for the investment
account as of the Annuity Date.
The number is fixed except for adjustments for investment
account transfers. Adjustments will be made as of the
valuation period in which we receive all requirements for the
transfer, as appropriate.
VALUE OF ANNUITY UNIT. For each investment account of the
Separate Account the value was arbitrarily set at $10 when the
investment account was established. The value may increase or
decrease from one valuation period to the next. For any
valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for the investment account
for the valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
E. Variable Annuity Options
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
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OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be made for
the life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value
of the remaining payments to be made over the
specified or guaranteed period.
If the beneficiary dies while receiving continued annuity
payments, the present value of remaining payments will be paid
in a lump sum to the beneficiary's estate. The present value
will be (a) computed as of the valuation period in which due
proof of death is received at our designated service office,
and (b) commuted at the assumed investment rate of the annuity
tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
X. Xxxxxxxx Annuity Option Tables
The following tables show the amount of the first monthly
income payment for each $1,000 of value applied under a
variable settlement option. "Age" as used in the tables means
an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date
of the first payment.
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CALENDAR YEAR OF BIRTH ADJUSTED AGE
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
Option 1 - Variable Annuity for Specified Number of Years
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Number of Years 5 6 7 8
Monthly Income -- -- -- 18.32 15.56 13.59 12.12
Number of Years 9 10 11 12 13 14 15 16
Monthly Income 10.97 10.06 9.31 8.69 8.17 7.72 7.34 7.00
Number of Years 17 18 19 20 21 22 23 24
Monthly Income 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35
Number of Years 25 26 27 28 29 30
Monthly Income 5.22 5.10 5.00 4.90 4.80 4.72
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Option 2 - Variable Life Annuity and
Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
--- ------- ---------- ----------
50 4.59 4.56 4.47
51 4.65 4.62 4.52
52 4.72 4.69 4.57
53 4.80 4.76 4.63
54 4.87 4.83 4.69
55 4.96 4.91 4.75
56 5.05 4.99 4.81
57 5.14 5.07 4.87
58 5.24 5.16 4.93
59 5.34 5.25 5.00
60 5.45 5.35 5.07
61 5.56 5.45 5.14
62 5.69 5.56 5.20
63 5.82 5.68 5.27
64 5.96 5.80 5.34
65 6.11 5.93 5.41
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
70 7.08 6.71 5.71
71 7.33 6.89 5.76
72 7.60 7.08 5.81
73 7.90 7.28 5.84
74 8.22 7.48 5.88
75 8.57 7.68 5.90
76 8.95 7.89 5.92
77 9.37 8.10 5.94
78 9.82 8.30 5.96
79 10.32 8.50 5.97
80 10.86 8.69 5.98
81 11.46 8.88 5.98
82 12.11 9.04 5.99
83 12.82 9.20 5.99
84 13.59 9.33 6.00
85 14.43 9.45 6.00
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Option 4 - Variable Joint and Survivor Life Annuity
AGE 55 60 65 70 75 80 85 AGE
--- -- -- -- -- -- -- -- ---
50 4.25 4.34 4.41 4.46 4.51 4.54 4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
Section V - FIXED ACCOUNT PROVISIONS
A. Interest Options
Interest will be earned on each Participant's Fixed Account
Value from the date amounts are credited to the Participant's
Fixed Account to the date amounts are applied to an annuity
option, paid upon the death of the annuitant, transferred or
withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest
Option B, or Interest Option C. The Owner chooses the interest
options. The minimum initial amount for which an Interest
Option may be elected is $25.00 or such lower minimum as we
may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option A elections made in that
calendar quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will be
credited at the declared effective annual rate then applicable
to new Interest Option A elections, for successive twelve
month periods.
We will declare an effective annual interest rate under
Interest Option A which is not less than the published 52 week
United States Treasury Bill discount rate from the most recent
regularly scheduled auction held before the beginning of the
calendar quarter. If the auction program is discontinued, we
will substitute an
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index which in our opinion is comparable and which is approved
by the Insurance Department of the jurisdiction in which this
contract is delivered.
The declared effective annual interest rate under Interest
Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end
of the calendar month in which the election is made.
Thereafter, interest will be credited on such amount for
successive calendar month periods at the declared effective
annual rate then applicable to new Interest Option B elections
made as of the beginning of each such calendar month.
The declared effective annual interest rate under Interest
Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option C elections made in that
calendar quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter, interest
will be credited at the declared effective annual rate then
applicable to new Interest Option C elections, for successive
thirty-six month periods.
The owner may change the interest option election or withdraw
or transfer any portion of an amount for which Interest Option
C is elected before the end of a period for which a declared
effective annual rate of interest is guaranteed for such
amount. However, in such event, the amount withdrawn or
transferred or the amount for which the interest option
election is changed will be reduced by a premature transaction
charge equal to 2 1/2% of such amount
The declared effective annual interest rate under Interest
Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
The Owner may change the interest option election applicable
to all or part of a Participant's Fixed Account Value, subject
to the provisions set forth below.
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The Owner may change the election for an amount held under
Interest Option A only at the end of the period for which a
declared effective annual interest rate is guaranteed for such
amount.
The Owner may change the election for an amount held under
Interest Option B only at the end of a calendar month.
The Owner may change the election for all or any part of an
amount held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount, subject to the Premature
transaction charge set forth in Interest Option C.
The minimum amount for which an interest option may be changed
is $250.
B. Fixed Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Owner will
choose the Annuity Date in the application. The Owner may
change the Annuity Date up to 30 days prior to the current
Annuity Date.
FIXED ANNUITY OPTIONS. The Owner may choose a fixed annuity
option up to 30 days prior to the Annuity Date. An option not
set forth in the contract may be chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will
be applied to the fixed annuity option chosen. If fixed
annuity payments begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1, 2, 3 and
4 will equal the monthly income under a comparable single
premium nonparticipating annuity available from us at the time
fixed annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under
Options 1, 2, 3 and 4 will equal 103% of the monthly income
under a comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments are to
begin. In no event will the monthly income be less than shown
in the Fixed Annuity Option Tables.
The guaranteed monthly income under Option 1 and 3 will be
based on interest at a rate of 3% per year compounded
annually. The guaranteed monthly income under Option 2 and 4
will be based on interest at a rate of 2 3/4% per year
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compounded annually. Fixed Annuity Options 1, 2, 3 and 4 will
not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Fixed Annuity
payments will be made monthly; but if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
C. Fixed Annuity Options
OPTION 1 - FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - FIXED LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either:
(1) to have the payments continue for the specified or
guaranteed period, or
(2) to receive at any time in lump sum the present value of
the remaining payments to be made over the specified or
guaranteed period.
If a beneficiary dies while receiving continued annuity
payments, the present value of remaining payments will be paid
in a lump sum to the beneficiary's estate. The present value
of remaining payments under Option 1 will be based on interest
at a rate of 3% per year compounded annually. The present
value of remaining payments during the guaranteed period under
Option 3 will be based on interest at a rate set by us at the
time payments are to begin.
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PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
X. Xxxxx Xxxxxxx Option Tables
Amount of monthly income provided by each $1,000 applied under
an income option.
Option 1 - Fixed Income for Specified Number of Years
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MONTHLY MONTHLY MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
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11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
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Option 2 - Fixed Life Annuity and
Option 3 - Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment.
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2 3 2 3
AGE OF --- --------------------------- AGE OF --- ---------------------------
OPTION 20 YEAR 10 YEAR OPTION 20 YEAR 10 YEAR
ANNUI- LIFE GUARANTEED GUARANTEED ANNUI- LIFE GUARANTEED GUARANTEED
TANT INCOME PERIOD PERIOD TANT INCOME PERIOD PERIOD
----------------------------------------------------------------------------------------------------------------------------
15 & under $2.90 $2.87 $2.88 35 3.33 3.30 3.31
16 2.91 2.88 2.89 36 3.36 3.33 3.34
17 2.92 2.89 2.90 37 3.40 3.36 3.38
18 2.94 2.91 2.92 38 3.43 3.40 3.41
19 2.96 2.93 2.94 39 3.47 3.43 3.45
20 2.97 2.94 2.95 40 3.51 3.47 3.49
21 2.99 2.96 2.97 41 3.55 3.51 3.53
22 3.01 2.98 2.99 42 3.59 3.55 3.57
23 3.03 3.00 3.01 43 3.64 3.59 3.62
24 3.05 3.02 3.03 44 3.69 3.63 3.67
25 3.07 3.04 3.05 45 3.74 3.68 3.72
26 3.09 3.06 3.07 46 3.79 3.72 3.77
27 3.11 3.08 3.09 47 3.85 3.77 3.83
28 3.14 3.11 3.12 48 3.91 3.82 3.88
29 3.16 3.13 3.14 49 3.97 3.88 3.94
30 3.18 3.15 3.16 50 $4.03 $3.83 $4.01
31 3.21 3.18 3.19 51 4.11 3.99 4.08
32 3.24 3.21 3.22 52 4.19 4.05 4.15
33 3.27 3.24 3.25 53 4.27 4.11 4.22
34 3.30 3.27 3.28 54 4.35 4.17 4.30
55 4.44 4.23 4.38 70 6.71 5.22 6.30
56 4.53 4.30 4.47 71 6.95 5.25 6.48
57 4.63 4.36 4.56 72 7.20 5.25 6.48
58 4.74 4.43 4.66 73 7.47 5.25 6.85
59 4.86 4.50 4.76 74 7.76 5.25 7.05
60 4.98 4.57 4.87 75 8.06 5.25 7.25
61 5.11 4.64 4.98 76 8.43 5.25 7.44
62 5.25 4.72 5.10 77 8.84 5.25 7.64
63 5.39 4.79 5.23 78 9.28 5.25 7.84
64 5.55 4.86 5.36 79 9.75 5.25 8.04
80 and 10.27 5.25 8.23
over
65 5.71 4.92 5.50
66 5.89 4.99 5.65
67 6.08 5.05 5.80
68 6.27 5.11 5.96
69 6.49 5.17 6.13
Page 18
Option 4 - Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
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AGE OF AGE OF FIRST OPTION ANNUITANT
SECOND OPTION
ANNUITANT 50 55 60 65 70 75 60 85
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45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
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Section VI - PAYMENT ON DEATH
A. DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Participant prior to the Annuity Date, we
will pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for
withdrawals and transfers, or
(2) The sum of the Participant's Variable Account Value
and the Participant's Fixed Account Value for the
valuation period in which we receive such proof at
our designated service office.
If the beneficiary is not the decedent's spouse, the
beneficiary can choose an Annuity Option for death
payments. The Option must provide for payments over
the beneficiary's life or over a period not longer
than the beneficiary's life expectancy. Payments
shall begin within one year after the date of death.
If payment is made in a lump sum, such payment shall
be made within five years after the date of death.
If the beneficiary is the decedent's surviving
spouse, the spouse shall be treated as the decedent
for purposes of contract death benefits.
B. DEATH AFTER THE ANNUITY DATE
If the Participant dies after the Annuity Date, the amount
payable, if any, will be according to the annuity option in
force as provided in Sections IV and V.
Page 19
Section VII - TRANSFER FROM VARIABLE TO FIXED ACCOUNT
The Owner may transfer all or part of a Participant's Variable Account
Value to a Participant's Fixed Account, subject to the following
provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made on behalf of a Participant
in a calendar year.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
Section VIII - TRANSFER FROM FIXED TO VARIABLE ACCOUNT
The Owner may transfer all or part of a Participant's Fixed Account
Value to a Participant's Variable Account, subject to the following
provisions:
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only at the
end of the period for which a declared effective annual interest rate
is guaranteed for such amount.
An amount held under Interest Option B may be transferred only at the
end of a calendar month.
All or any part of an amount held under Interest Option C may be
transferred before the end of the period for which a declared effective
annual interest rate is guaranteed for such amount, subject to the
premature transaction charge set forth in Interest Option C.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
Section IX - WITHDRAWAL
X. Xxxxxxxxxx. Prior to the earlier of the Annuity Date or the
death of the Participant, the Owner may withdraw all or part
of the Participant's Variable Account Value and the
Participant's Fixed Account Value.
Page 20
After the Annuity Date and the election of Variable Annuity
Option 1, the payee may withdraw the present value of the
variable annuity payments remaining to be made. The present
value will be (a) computed as of the valuation period in which
notice of the withdrawal is received at our designated service
office and (b) commuted at the assumed investment rate of the
Variable Annuity tables.
After the Annuity Date and the election of Fixed Annuity
Option 1, the payee may withdraw the present value of the
fixed annuity payments remaining to be made.
For full withdrawal of all a Participant's Variable and Fixed
Account Values, the Certificate must be surrendered to our
designated service office.
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of a Participant's Fixed Account
Value held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount will be subject to the premature
transaction charge set forth in Interest Option C. The total
of the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be more than
7% of the amount withdrawn.
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal,
subject to the following provisions:
(1) If the Owner makes a total withdrawal of a
Participant's Fixed Account Value as a result of
termination of participation in the Plan, the amount
received will never be less than the total of all
amounts allocated to the Participant's Fixed Account,
less prior transfers and withdrawals from the
Participant's Fixed Account.
(2) No charge will be made for withdrawal if the Owner
has provided due proof of the Participant's
disability. Disability shall mean the inability, by
reason of medically determinable physical or mental
impairment which can be expected to result in death
or be of long-continued and indefinite duration, to
engage in the Participant's usual and customary
occupation or in any other substantial gainful
activity for which the Participant is reasonably
suited by education, training or experience.
(3) No charge will be made for a withdrawal after the
death of the Participant.
Page 21
(4) No charge will be made for a withdrawal after the
Participant's Fifth Enrollment Year if the
Participant has attained at least 65 years of age.
(5) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year
after the first Participant's Enrollment Year which
does not exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(6) No charge will be made for that portion of the first
withdrawal, made in a Participant's Eighth Enrollment
Year, which does not exceed 25% of the sum of the
Participant's Variable Account and Fixed Account
Values.
(7) No charge will be made for that portion of the first
withdrawal, made in a Participant's Ninth Enrollment
Year, which does not exceed 50% of the sum of the
Participant's Variable Account and Fixed Account
Values.
(8) No charge will be made for that portion of the first
withdrawal, made in a Participant's Tenth Enrollment
Year, which does not exceed 75% of the Participant's
Variable Account and Fixed Account Values.
(9) No charge will be made for a withdrawal made after
the Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless the Owner directs otherwise,
partial withdrawals prior to the Annuity Date, and related
charges, will be deducted from the Participant's Fixed and
Variable Accounts in the following order
First from Interest Option B;
Next from Interest Option A;
Then from each investment account of the Separate Account in
the ratio of the Owner's interest in each investment account
to the Participant's Variable Account Value; and
Finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently
placed under that option.
Section X - TERMINATION OF CONTRACT
A. Termination by the Contractholder
Page 22
The Owner may terminate this group contract by giving at least
15 days advance written notice to Penn Mutual at its Home
Office.
B. Termination by Penn Mutual
Under one or more of the following conditions, Penn Mutual may
terminate this group contract on the last day of any month by
giving at least 15 days advance written notice to the owner:
(1) Penn Mutual does not receive acceptable evidence that
the Plan is qualified or that a representative acting
on behalf of the Plan has filed for qualification
under applicable sections of the Internal Revenue
Code within 2 years of the effective date of this
contract, or receives evidence or otherwise acquires
knowledge that the Plan has failed to qualify;
(2) Penn Mutual receives evidence or otherwise acquires
knowledge that the Plan has failed to remain
qualified; or
(3) the Plan is amended and Penn Mutual reasonably
determines such amendment to have an adverse affect
on its obligations under this group contract.
C. Effect of Termination
As of the date this group is terminated:
(1) no further payments will be accepted by Penn Mutual
and no further withdrawals or transfers may be made,
except as provided below, and
(2) the Variable Account Administration Charge will be
deducted from each Participant's Variable Account
Value.
Immediately following the date this group contract is terminated the
Owner will withdraw all Participants' Variable Account Value and all
Participants' Fixed Account Values. After deduction of applicable
premature transaction charges under Interest Option C, if any, and
Contingent Deferred Sales Charges, if any, the amounts withdrawn will
be paid to the Owner.
Section XI - MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Owner in the
application, who is to receive:
Page 23
(1) Payment on death of the Participant prior to the Annuity Date
or
(2) Guaranteed annuity payments, if any, on death of the Annuitant
on or after the Annuity Date.
The Owner may change the beneficiary while the Participant is alive.
The estate or heirs of a beneficiary who dies before the Participant
have no rights under this contract. If no beneficiary survives the
Participant, payment will be made to the Owner.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee is
misstated, any amount payable under this contract will be that amount
which the Purchase Payments paid would have purchased on the basis of
the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be
charged against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid
in full with the next payment due under this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of correct
age at any time. If any payment under this contract depends on the
payee being alive, we may require satisfactory proof of survival.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made within
seven days. However, we may defer a transfer, a withdrawal, the Annuity
Date or annuity payments, under the variable account provisions of
Section IV if:
(1) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical
to dispose of securities held in the Separate Account or to
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for
the protection of security holders.
Page 24
Conditions in (2) and (3) will be decided by, or in accordance with
rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period, not exceeding six months, as we reasonably
determine that investment conditions are such that an orderly sale of
assets held as part of our general assets is not possible.
PARTICIPATING CONTRACT. This contract may participate in our divisible
surplus. Divisible surplus, if any, to be apportioned to this contract
shall be apportioned annually and will be allocated by us equitably
among all Participants. Divisible surplus so allocated will be credited
as Purchase Payments to the Participants' Variable and Fixed Accounts,
unless the Owner elects to have it paid in cash. No divisible surplus
is expected to be apportioned to this contract in the foreseeable
future.
APPLICATIONS ON BEHALF OF PARTICIPANTS. Purchase Payments made to Penn
Mutual on behalf of a Participant will be accepted under this contract
when an application by the Owner on behalf of the Participant,
satisfactory to Penn Mutual, has been received and accepted by Penn
Mutual.
Penn Mutual may decline at any time to accept applications on behalf of
proposed new Participants.
ASSIGNMENT AND OWNERSHIP. The contractholder may not assign this
contract without the prior written consent of Penn Mutual. Accounts
established and maintained for Participant's are owned by the Owner.
ENTIRE CONTRACT. This contract and the application therefor, a copy of
which is attached hereto and made a part hereof, constitute the entire
contract. All statements made in the application shall be deemed
representations and not warranties.
Only the President, a Vice President, the Secretary, the Chief Actuary,
an Actuary, or Associate Actuary may, on behalf of Penn Mutual, modify
or change the terms of this contract or waive any of its conditions. No
agent may modify or change the terms of this contract or waive any of
its conditions.
CERTIFICATES - TEN DAY RIGHT TO EXAMINE. Penn Mutual will furnish
certificates to the Owner evidencing the interest of the Owner under
this contract and describing certain provisions of this contract.
The interest evidenced by a certificate may be cancelled by returning
the certificate within 10 days after it is received by the Owner. It
must be returned to Penn Mutual or the agent through whom it was
purchased. The interest will then be considered void as of its
inception. The Participant's Variable and Fixed Account Values will be
refunded.
Page 25
FAILURE TO ENFORCE NOT WAIVER. A waiver by the Owner or Penn Mutual of
the right to enforce any rights arising from a breach of this contract
will not constitute a waiver of any right arising from a subsequent
breach. The forbearance by the Owner or Penn Mutual to enforce any
right hereunder will not be considered a waiver of such right.
AMENDMENT. To the extent necessary to comply with applicable law and
regulations, Penn Mutual reserves the right to change any or all of the
contract provisions at any time, including retroactive changes, without
the consent of Participants.
Changes in the Internal Revenue Code or in regulations or revenue
rulings thereunder may require amendments to this contract. In
accordance with the preceding paragraph, Penn Mutual may make such
amendments without the consent of Participants.
The Owner will be informed of amendments when they are made.
NOTICES, CHANGES AND CHOICES. To be effective, all notices, changes and
choices the Owner may make under the contract must be in writing,
signed and received by us at our designated service office. If
acceptable to us, notices, changes and choices relating to
beneficiaries and ownership will take effect as of the date signed
unless we have already acted in reliance on the prior status. We are
not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of a Certificate prior
to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed
by law, payments are not subject to legal process for debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits required
under applicable laws and regulations of the jurisdiction in which this
contract is delivered.
The benefits provided under this contract from the Participant's Fixed
Account are increased by interest credited in excess of the guaranteed
minimums, if any.
PLAN DOCUMENTS. The Owner will furnish Penn Mutual with a certified
copy of the Plan and related trust agreement.
In the event of an amendment to the Plan or related trust agreement,
the Owner will furnish Penn Mutual with a certified copy of the
amendment within 30 days of such amendment.
Page 26
PERIODIC REPORTS. At least once a year we will furnish the Owner a
report for each Participant's Variable and Fixed Accounts. It will set
forth the current number of Accumulation Units or Annuity Units, the
value per Accumulation or Annuity Unit, the Participant's Variable
Account Value and the Participant's Fixed Account Value. All reports
required by the Investment Company Act of 1940 will be furnished.
Page 27
