Xxxxxxx Xxxxxxx
XX-0123456
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
A Stock Company
Home Office: 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxx Xxxx 00000
Servicing Office: 0000 Xxxxx Xxxxxxx Xxxxxx, P. 0. Box 7866,
Fort Xxxxx, IN 46802 1-888-868-2583
VARIABLE ANNUITY CONTRACT
Lincoln Life & Annuity Company of New York (the Company) agrees to provide the
benefits and other rights described in this Contract in accordance with its
terms.
RIGHT TO EXAMINE CONTRACT. Within 10 days after this contract is first received
(60 days after its receipt for a contract issued in replacement of another
contract), it may be cancelled for any reason without penalty (e.g., no
withdrawal charges will be deducted) by delivering or mailing it to our
Servicing Office. Upon cancellation, the Company will return any premium
payments paid under the Fixed Account of the contract and/or the value of any
payments made to the Variable Account on the appropriate Valuation Date as
follows: if the contract is personally delivered to the Company's Servicing
Office or authorized representative, such Valuation Date will be the date of
delivery. If the contract is mailed to the Company's Servicing Office, such
Valuation Date will be the date the contract is mailed.
The contract is governed by the laws of the State of New York; it is issued and
accepted subject to the terms set forth on this page and on the following pages
which are made a part of this contract. In consideration of the application for
it, and the Premium Payment(s) as provided this contract is executed by the
Company as of its Date of Issue.
/s/ Xxxxxx X. Xxxxxxx
PRESIDENT
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS AND
TRANSFERS. PAYMENTS MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH
BECOMES EFFECTIVE AT THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE
"ANNUITY BENEFIT" PROVISIONS AND UNDER THE "PENALTY-FREE ANNUITIZATION"
PROVISION ARE NOT SUBJECT TO THE MARKET VALUE ADJUSTMENT. PAYMENTS MADE UNDER
THE "DEATH BENEFIT" PROVISIONS ARE NOT SUBJECT TO ANY MARKET VALUE ADJUSTMENT.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. WITH THE CONTRACT ASSET CHARGES OF 1.40%, THE SMALLEST ANNUAL
RATE OF INVESTMENT RETURN WHICH WOULD HAVE TO BE EARNED ON THE ASSETS OF THE
SEPARATE ACCOUNT SO THAT THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT
DECREASE IS 5.40%.
USE OF CONTRACT. This contract is available for retirement and deferred
compensation plans, some of which may qualify for special tax treatment under
various sections of the Internal Revenue Code.
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NONPARTICIPATING
THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY.
AN426NY
TABLE OF CONTENTS
Page
CONTRACT SPECIFICATIONS 3
DEFINITIONS 4
PREMIUM PAYMENT PROVISIONS 5
Premium Payments
Allocation of Premium Payments
Annuity Account Continuation
Minimum Value Requirements
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS 6
Owner
Rights of Owner
Transfer of Ownership
Assignment
Beneficiary
Change of Beneficiary
FIXED AND VARIABLE ACCOUNTS PROVISIONS 7
Fixed Account and Sub-Accounts
Variable Account and Sub-Accounts
Investment Risk
Investments of the Variable Account Sub-Accounts
Substituted Securities
CONTRACT VALUES DURING
ACCUMULATION PERIOD PROVISIONS 8
Part A - Fixed Account Value
Guaranteed Periods
Guaranteed Interest Rates
Fixed Accumulation Value
Minimum Surrender Value
Part B - Variable Account Value
Acquisition and Redemption of Variable Accumulation Units
Variable Accumulation Unit Value
Variable Accumulation Value
Net Investment Factor
Part C - General
Annuity Account
Transfer Privilege
Transfer Fee
CASH WITHDRAWALS, WITHDRAWAL CHARGES
AND MARKET VALUE ADJUSTMENT PROVISIONS 11
Cash Withdrawals
Withdrawal Charges
Market Value Adjustment
AN426NY
PENALTY-FREE WITHDRAWALS, TRANSFERS
AND ANNUITIZATION PROVISIONS 12
Penalty-Free Partial Withdrawals or Transfers
Full or Partial Withdrawals and Transfers at the End of a Guaranteed
Period
Waiver of Withdrawal Charge and Market Value Adjustment on Death or
Annuity Date
Penalty-Free Surrender on Disability
Penalty-Free Annuitization
BENEFIT PROVISIONS 13
Annuity Benefit
Annuity Date
Election and Effective Date of Election with Respect to Annuity Benefit
Determination of Amount
Income Payment Benefits
Death Benefits
Election and Effective Date of Election with Respect to Death Benefit
Payment of Death Benefit
Amount of Death Benefit
Section 72(s)
SETTLEMENT OPTIONS 15
GENERAL PROVISIONS 18
The Contract
Modification of Contract
Non-Participation
Loans
Determination of Values
Endorsement of Income Payments
Misstatement of Age and/or Sex
Claims of Creditors
Periodic Reports
AN426NY
CONTRACT SPECIFICATIONS
CONTRACT NUMBER XX-0123456 DATE OF ISSUE 04/01/1999
ANNUITANT Xxxxxxx Xxxxxxx ANNUITY DATE APRIL 1, 2067
AGE AT ISSUE 35
FORM BENEFIT INITIAL PREMIUM PAYMENT
-------------------------------------------------------------------------------------------------------
AN426NY FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY $50,000
WITH FIXED AND VARIABLE ACCOUNTS
INITIAL PREMIUM PAYMENT ALLOCATION PERCENTAGE
FIXED ACCOUNT - SUB-ACCOUNTS
GUARANTEED MINIMUM INTEREST RATE: 3.00%
PERCENTAGE ADJUSTMENT TO INDEX RATE "B': 0.25%
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [1 YEAR/ 5.00%] 25%
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [3 YEARS/] %
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [5 YEARS/] %
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [7 YEARS/] %
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [10 YEARS/] %
DOLLAR COST AVERAGING FIXED ACCOUNT
INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [6 MONTHS]/[4.00%]
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
[AIM CAPITAL APPRECIATION FUND] %
[AIM V. I. GROWTH FUND] 25%
[AIM V. I. VALUE FUND] %
[AIM V. I. INTERNATIONAL EQUITY FUND] %
[ALLIANCE PREMIER GROWTH PORTFOLIO - CLASS B] %
[ALLIANCE GROWTH AND INCOME PORTFOLIO - CLASS B] %
[ALLIANCE GROWTH PORTFOLIO - CLASS B] %
[ALLIANCE TECHNOLOGY PORTFOLIO - CLASS B] %
[BT INSURANCE TRUST EQUITY 500 INDEX FUND] %
[AVIS GLOBAL SMALL CAPITALIZATION FUND - CLASS 2] %
[AVIS GROWTH FUND - CLASS 2] %
[AVIS INTERNATIONAL FUND - CLASS 2] %
[AVIS GROWTH AND INCOME FUND - CLASS 2] %
[DELAWARE PREMIUM AGGRESSIVE GROWTH SERIES] %
[DELAWARE PREMIUM GROWTH AND INCOME SERIES] %
[DELAWARE REIT SERIES] %
(DELAWARE SMALL CAP VALUE SERIES] %
[DELAWARE TREND SERIES] %
[DELAWARE EMERGING MARKETS SERIES] %
[DELAWARE DELCHESTER SERIES] %
[FIDELITY VIP EQUITY-INCOME PORTFOLIO] %
[FIDELITY VIP GROWTH PORTFOLIO] %
[FIDELITY VIP OVERSEAS PORTFOLIO] %
[FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO] 25%
[FRANKLIN SMALL CAP INVESTMENTS FUND - CLASS 2] %
[FRANKLIN MUTUAL SHARES INVESTMENTS FUND - CLASS 2] %
[LIBERTY TRUST NEWPORT TIGER FUND] %
[LINCOLN NATIONAL BOND FUND] %
[LINCOLN NATIONAL MONEY MARKET FUND] %
[MFS VARIABLE TRUST EMERGING GROWTH SERIES] 25%
[MFS VARIABLE TRUST RESEARCH SERIES] %
[MFS VARIABLE TRUST TOTAL RETURN SERIES] %
[MFS VARIABLE TRUST UTILITIES SERIES] %
[XXXXXXXXX GLOBAL GROWTH FUND) %
[XXXXXXXXX INTERNATIONAL FUND) %
TOTAL 100%
AN426NY Page 3
Limitations on transfers from fixed accounts (other than dollar cost
averaging Fixed Account: in each contract year, an Owner is allowed to make
one or more transfers from each Fixed Account Sub-account, and the amount(s)
transferred in aggregate may not exceed more than 15% of the then current
value of the Fixed Account applicable Sub-account(s).
THIS CONTRACT IS FOR USE WITH "LNY ACCOUNT N FOR VARIABLE ANNUITIES".
OWNER: Xxxxxxx Xxxxxxx
BENEFICIARY: The person(s) designated by the Owner and recorded by the
Company
MINIMUM SUBSEQUENT PREMIUM PAYMENTS:
$2,000 PER FIXED ACCOUNT GUARANTEED PERIOD
$ 100 PER VARIABLE ACCOUNT SUB-ACCOUNT
SCHEDULE OF CHARGES AND FEES
Withdrawal Charges: The Withdrawal charges applicable under this contract are as
follows.
Withdrawal Charge Number of
Against Premium Contract Anniversaries
Payment Withdrawn Since Premium Payment
----------------- ---------------------
6% 0
6% 1
5% 2
4% 3
3% 4
2% 5
1% 6
0% 7+
Each Subsequent Premium Payment will be subject to its own 7-year period.
Any Withdrawal from the Fixed Account prior to the end of a Guaranteed Period
may also be subject to a Market Value Adjustment as described on page 11 which
may increase, decrease, or have no effect on the applicable account value(s). A
Market Value Adjustment would not apply to a withdrawal effective at the end of
a Guaranteed Period.
Penalty-free Partial Withdrawal Charges: The Withdrawal charges are not
applicable to certain partial withdrawals of 15% or less of Premium Payments
annually (see page 12). Withdrawal charges and a Market Value Adjustment are not
applicable to annuitization of the contract at any time. Withdrawal charges and
a Market Value Adjustment are not applicable to payment of the Death Benefit.
(See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions.")
AN426NY Page 3.1
Asset Charges: The Company imposes a mortality and expense ("M&E") risk charge
and an administrative expense charge, each of which is calculated as a
percentage of asset value of each Variable Account Subaccount, to cover
mortality and expense risk and other administrative costs. The percentages
applied to asset value to determine these charges are the Daily M&E Rate and the
Daily Administrative Rate. These charges are deducted from each Variable Account
Sub-Account by reducing the Variable Accumulation Unit Value at the end of each
Valuation Period. The Daily M&E Rate is equal to the daily rate equivalent of
the annual rate of 1.25% and the Daily Administrative Rate is equal to the
daily rate equivalent of the annual rate of 0.15%.
In addition, Daily Fund Operating Expenses will be applied by each Fund as a
percent of the daily fund balance as set forth in the prospectus for the
applicable Fund(s).
Taxes: Premium tax equivalents (including any related retaliatory taxes), if
any, and any other taxes due under this contract will be deducted if applicable.
It is currently the Company's practice to deduct such taxes, if any, at the time
the Annuity Account Value, or any portion thereof, becomes payable. (Refer to
Definition of 'Annuity Account Value'.)
AN426NY Page 3.2
DEFINITIONS
ACCUMULATION PERIOD. The period from the Date of Issue to (a) the Annuity Date,
(b) the date on which the Death Benefit becomes payable, or (c) the date on
which the contract is surrendered or annuitized, whichever is earliest.
ANNUITANT(S). The person or persons on whose life the first Income Payment is to
be made upon the annuitization of the contract. The Annuitant(s) on the Date of
Issue is/are the person(s) designated in the Contract Specifications and will
remain the Annuitant(s) under the contract unless the Owner exercises the right
to change the Annuitant(s) as set forth in the "Rights of Owner" provision. If
prior to the Annuity Date, the Annuitant predeceases the Owner, the Owner will
then become the Annuitant until such time as the Owner exercises the right to
designate a new Annuitant as set forth in the "Rights of Owner" provision.
(Provided that the Owner is a natural person.) If joint Annuitants are named and
if one of the Annuitants predeceases the Owner prior to the Annuity Date, the
contract will thereupon become an annuity contract on the surviving Annuitant
until such time that the Owner exercises the right to designate another joint
Annuitant as set forth in the "Rights of Owner" provision. A request for change
of Annuitant(s) must be in writing to the Company at its Servicing Office; once
received by the Company, the change will be effective as of the date the request
was signed.
ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable
Accounts with respect to this contract.
ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of all
the then current values of the Fixed and Variable Accounts with respect to this
contract. Applicable premium taxes, if any, will be deducted when the Annuity
Account Value amount to be applied under the Annuity Benefit, Death Benefit,
Cash Withdrawals or PenaltyFree Withdrawal and Annuitization provisions is
determined.
ANNUITY DATE. The date on which Income Payments begin upon annuitization of the
contract.
THE COMPANY. Lincoln Life & Annuity Company of New York, issuer of the variable
annuity contract.
CONTRACT YEARS AND CONTRACT ANNIVERSARIES. All Contract Years and Contract
Anniversaries are 12 month periods measured from the Date of Issue.
DAILY M&E RATE. The rate applied by the Company as a percentage of each Variable
Account Sub-Account's asset value to determine the M&E charge for its assumption
of mortality and expense risks for a 24-hour period.
DATE OF ISSUE. The date on which the contract becomes effective. The Date of
Issue is shown in the Contract Specifications.
DUE PROOF OF DEATH. An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other written proof of death satisfactory to the
Company.
EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end.
FIXED ACCOUNT. The term 'Fixed Account' under this contract means all
Sub-Account(s) associated with Guaranteed Period(s) and Guaranteed Interest
Rate(s). Fixed Account assets are general assets of the Company and are
distinguishable from those allocated to a separate account of the Company.
FUND(S). The Variable Account Sub-Accounts in which Premium Payments, or
Transfers in accordance with the "Transfer Privilege" provision, may be
invested.
GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at
either an initial or subsequent Guaranteed Interest Rate will be credited to an
amount under a Fixed Account Sub-Account.
HOME OFFICE. The term 'Home Office' means Lincoln Life & Annuity Company of New
York, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, XX 00000.
AN426NY Page 4
IN WRITING. The term "in writing" means in a written form satisfactory to the
Company and received by the Company at its Servicing Office.
INCOME PAYMENTS. Income Payments are the amounts payable under this contract as
determined by the "Settlement Options" provisions of the contract.
OWNER. The person or entity designated in the Contract Specifications.
PAYOUT PERIOD. The period during which Income Payments are made under this
contract.
SEC. The Securities and Exchange Commission.
SERVICING OFFICE. The Servicing Office of Lincoln Life & Annuity Company of New
York is located at 0000 X. Xxxxxxx Xxxxxx, X. 0. Box 2348, Fort Xxxxx, Indiana
46801.
SUB-ACCOUNT. That portion of the Fixed Account associated with specific
Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the
Variable Account which invests in shares of a specific Fund.
VALUATION DATE. Any day on which the New York Stock Exchange ("NYSE") is open
for business, except a day during which trading on the NYSE is restricted or on
which an emergency exists as a result of which the valuation or disposal of
securities is not reasonably practicable.
VALUATION PERIOD. The period beginning immediately after the close of business
on a Valuation Date and ending at the close of business on the next Valuation
Date.
VARIABLE ACCOUNT. The term "Variable Account" under this contract means all
Sub-Account(s) associated with investments in the Fund(s). Variable Account
assets are separate account assets of the Company, the investment performance of
which is kept separate from that of the general assets of the Company and are
not chargeable with general liabilities of the Company.
VARIABLE ANNUITY UNITS. A unit of measure used in the calculation of the value
of the variable portion of the Annuity Account during the Payout Period.
VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the
value of the variable portion of the Annuity Account before the Payout Period.
PREMIUM PAYMENT PROVISIONS
PREMIUM PAYMENTS. Premium Payments are payable to the Company at its Servicing
Office or to an authorized agent of the Company. A Company receipt will be
furnished upon request. The Initial Premium Payment is the amount paid to the
Company as consideration for the benefits provided under the contract on the
Date of Issue. (The Dollar Cost Averaging Option may be utilized with the
Initial Premium Payment). Subsequent Premium Payments may be paid to the Company
from time to time after the Date of Issue and prior to the Annuity Date. No
premium payments after the Initial Premium Payment are required. The minimum
Initial Premium Payment is $1,500 for Non-qualified plans, and $1,000 for
Qualified plans. The minimum annual amount of subsequent Premium Payments is
$100 per Variable Account Sub-account, or $2,000 per Fixed Account Guaranteed
Period. The minimum payment at any one time must be at least $25 if transmitted
electronically; otherwise the minimum amount is $100. The Company reserves the
right to limit aggregate Premium Payments to $2 million. (The Dollar Cost
Averaging Option may be utilized with a Subsequent Premium Payment if it is
sufficient). All Premium Payments must meet the allocation requirements
specified under the "Allocation of Premium Payments" provision. The payment of
any amount under the contract which is derived, all or in part, from any Premium
Payments made by check or draft may be postponed until such check or draft has
been honored by the financial institution upon which it is drawn.
The Initial Premium Payment attributable to the contract is shown on the
Contract Specifications page.
AN426NY Page 5
ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Servicing
Office, each Premium Payment will be added to the Annuity Account established
under the contract. The Annuity Account is described under the "Annuity Account"
provision and is comprised of Fixed Account Sub-Account(s) and Variable Account
Sub-Account(s). The Initial Premium Payment will be allocated to one or more
such Sub-Accounts in accordance with the allocation percentages specified by the
Owner and shown in the Contract Specifications, provided such allocations to
Fixed and/or Variable Accounts conform to the Company's minimum deposit
requirements in effect as of the Date of Issue. (The Dollar Cost Averaging
Option may be utilized with the Initial Premium Payment).
Subsequent Premium Payments will be allocated as directed by the Owner. If no
direction is given, the allocation percentages will be that which has been most
recently directed for payments by the Owner. If a portion of the most recent
previous Premium Payment was allocated to the Fixed Account and the allocation
percentages when applied to a Subsequent Premium Payment does not produce an
amount which meets the Fixed Account minimum requirements, the Company will
promptly seek further instructions from the Owner regarding allocation of the
premium or otherwise return the applicable portion of such Premium Payment as
provided by law. (The Dollar Cost Averaging Option may be utilized with a
Subsequent Premium Payment if it is sufficient).
Each Premium Payment allocated to the Fixed Account is treated separately for
purposes of guaranteed interest rates, withdrawal charges, specified time
intervals, and guaranteed benefit dates.
DOLLAR COST AVERAGING. All or part of the Initial Premium Payment may be
allocated to the Dollar Cost Averaging Fixed Account or any other Sub-Account
made available for the purpose of Dollar Cost Averaging. Any amount so allocated
will be transferred from the Sub-Account used for Dollar Cost Averaging to the
designated variable Sub-Accounts in monthly installments over a period chosen by
the Owner. Transfers will occur on the same day each month until the end of the
chosen period or, if sooner, until the account value in the Sub-Account used for
Dollar Cost Averaging has been exhausted. Transfers from the Dollar Cost
Averaging Fixed Account are not subject to any Market Value Adjustment.
ANNUITY ACCOUNT CONTINUATION. The Annuity Account shall be continued
automatically in full force from the Date of Issue until the Annuity Date or
until the contract is surrendered or annuitized, the Death Benefit is paid, or
the Annuity Account Value no longer meets the requirements specified in the
"Minimum Value Requirements" provision, whichever occurs first.
MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made for three
consecutive years and the Annuity Account Value decreases to less than $2,000
during that period, or if any partial withdrawal decreases the Annuity Account
Value to less than $2,000, the Company reserves the right to cancel the contract
and pay to the Owner an adjusted value of the Annuity Account as would be
calculated under the "Determination of Amount" provision. The Company will,
however, provide at least 30 days advance notice to the Owner of its intended
action. During the notification period an additional Premium Payment may be made
to meet the minimum value requirements.
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
OWNER. The Owner on the Date of Issue will be the person designated in the
Contract Specifications. If no Owner is designated, the Annuitant(s) will be
the Owner.
RIGHTS OF OWNER. The Owner may exercise all rights and privileges under the
contract including the right to: (a) agree with the Company to any change in or
amendment to the contract, (b) transfer all rights and privileges to another
person, (c) change the Beneficiary, (d) change the Annuitant(s) any time prior
to the Annuity Date or name a new Annuitant if the Annuitant, or one of the
Annuitants named under a joint life annuity, predeceases the Owner, (e) name the
payee to whom Income Payments are to be directed, and (f) assign the contract.
All rights and privileges of the Owner may be exercised without the consent of
any designated transferee, or any Beneficiary if the Owner has reserved the
right to change the Beneficiary.
TRANSFER OF OWNERSHIP. The Owner may transfer all rights and privileges of
ownership. On the effective date of transfer, (a) the transferee will become the
Owner and will have all the rights and privileges of the Owner, and (b) the
amount of Death Benefit applicable under the contract will change as set forth
under the "Amount of Death Benefit" provision. The Owner may revoke any transfer
prior to its effective date.
AN426NY Page 6
Unless provided otherwise, a transfer will not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
A transfer of Ownership, or a revocation of transfer, must be in writing to the
Company at its Servicing Office. A transfer or a revocation will not take effect
until received in writing by the Company at its Servicing Office. When a
transfer or revocation has been so received, it will take effect as of the
effective date specified by the Owner. Any payment made or any action taken or
allowed by the Company before the transfer or the revocation is received will be
without prejudice to the Company.
ASSIGNMENT. The contract 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.
BENEFICIARY. The Beneficiary is the person who has the right to receive the
Death Benefit set forth in the contract and, for Non-Qualified Contracts, who is
the 'designated beneficiary' for purposes of Section 72(s) of the Internal
Revenue Code in the event of the Owner's death. The Beneficiary on the Date of
Issue will be the person designated in the Contract Specifications.
Unless provided otherwise, the interest of any Beneficiary who dies before
the Owner will vest in the Owner or the Owner's administrators or assigns.
CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A
request for change of Beneficiary must be in writing to the Company at its
Servicing Office. The request must be signed by the Owner. The request must also
be signed by the Beneficiary if the right to change the Beneficiary has not been
reserved to the Owner.
A change of Beneficiary will not take effect until received by the Company. When
a change of Beneficiary has been so received, whether or not the Owner is then
alive, it will take effect as of the date the request was signed. Any payment
made or any action taken or allowed by the Company before the change of
Beneficiary is received will be without prejudice to the Company.
Unless provided otherwise, the right to change any Beneficiary is reserved by
the Owner.
FIXED AND VARIABLE ACCOUNTS PROVISIONS
FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the
Company and are distinguishable from those allocated to a separate account of
the Company. Any portion of Premium Payments allocated by the Owner to a Fixed
Account Sub-Account will become part of the Fixed Account.
VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable
accumulation values, if any, under this contract relate is shown in the Contract
Specifications. It was established pursuant to a resolution of its Board of
Directors as a 'separate account' under governing law of New York, the Company's
state of domicile, and registered as a unit investment trust under the 1940 Act.
Under New York law, the Variable Account assets (except assets in excess of its
reserves and other contract liabilities) cannot be charged with the general
liabilities from any other business of the Company and the income, gains or
losses from the Variable Account assets are credited or charged against the
Variable Account without regard to the income, gains or losses of the Company.
The Variable Account assets are owned and controlled exclusively by the Company,
and the Company is not a trustee with respect to those assets.
The Variable Account is divided into Sub-Accounts. Each Variable Account
Sub-Account's assets are invested in shares of a particular Fund made available
as a funding vehicle under this contract. For each Variable Account Sub-Account,
the Company maintains Variable Accumulation Units whose values reflect the
investment performance of the Fund whose shares are held in that Sub-Account.
Subject to any vote by persons having the right under the 1940 Act to vote
thereon, the Company may elect to operate the Variable Account as a management
company rather than a unit investment trust under the 1940 Act, or, if
registration is no longer required, to deregister the Variable Account. In such
event, the Company may endorse this contract to reflect such change and any
necessary or appropriate action taken to effect the change. Any changes in
Variable Account investment policy shall have been approved by the New York
Superintendent of Insurance.
AN426NY Page 7
INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully
invested in the shares of the particular Fund purchased for that Sub-Account.
Each Variable Account Sub-Account's investment performance reflects the
investment performance of the Fund. Fund share values fluctuate, reflecting the
risks of changing economic conditions and the ability of a Fund's investment
advisor or sub-adviser to manage that Fund and anticipate changes in economic
conditions. As to the Variable Account assets, the Owner bears the entire
investment risk of gain or loss.
INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated to a
Variable Account Sub-Account will be used to purchase shares of a specific Fund.
The Funds available on the Date of Issue are shown in the Contract
Specifications; more may be subsequently added. The Fund is an open-end
management investment company registered under the Investment Company Act of
1940. Any and all distributions made by the Fund(s) will be reinvested to
purchase additional shares of that Fund at net asset value. Deductions from the
Variable Account Sub-Accounts will, in effect, be made by redeeming a number of
Fund shares at net asset value equal in total value to the amount to be
deducted. Assets of Variable Account Sub-Accounts will be fully invested in Fund
shares at all times.
SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always
be available for purchase or the Company may decide that further investment in
such Fund is no longer appropriate in view of the purposes of the Variable
Account, or in view of legal, regulatory or federal income tax restrictions. In
such event, shares of another registered openend investment company or unit
investment trust may be substituted both for Fund shares already purchased
and/or as the securities to be purchased in the future, provided that these
substitutions meet applicable Internal Revenue Service diversification
guidelines and have been approved by the Securities and Exchange Commission and
such other regulatory authorities as may be necessary. In the event of any
substitution pursuant to this provision, the Company may make appropriate
endorsement(s) to this contract to reflect the substitution. Any substitution
shall be subject to the approval of the Superintendent of Insurance of the State
of New York.
CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS
Any paid-up annuity, cash surrender value, or death benefits available under
this contract shall not be less than the minimum benefits required by the New
York Insurance Law.
PART A - FIXED ACCOUNT VALUE
GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by
the Owner and are shown in the Contract Specifications. The duration of the
Initial Guaranteed Period(s) will affect the Initial Guaranteed Interest
Rate(s). Any Premium Payment or the portion thereof (or amount transferred in
accordance with the "Transfer Privilege" provision described below) allocated to
a particular Guaranteed Period will earn interest at the specified Guaranteed
Interest Rate during the Guaranteed Period. Initial Guaranteed Periods begin on
the date a Premium Payment is accepted (or, in the case of a transfer, on the
effective date of the transfer) and end on the Expiration Date for each duration
selected.
Any portion of the Annuity Account Value comprising a particular Fixed Account
Sub-Account (including interest earned thereon) will be referred to in this
contract as the "Guaranteed Period Amount." As a result of renewals, Subsequent
Payments, and transfers of portions of the Annuity Account Value, Guaranteed
Amounts for Guaranteed Periods of the same duration may have different
Expiration Dates, and each Guaranteed Period Amount will be treated separately
for purposes of determining any Market Value Adjustment.
The Company will automatically notify the Owner in writing at least 15 but not
more than 45 days prior to the Expiration Date of a Guaranteed Period with
respect to a Fixed Account Sub-Account of the guaranteed period durations
available and the then currently quoted interest rates. A subsequent Guaranteed
Period of the same duration will begin automatically at the end of the previous
Guaranteed Period unless the Company receives, in writing at its Servicing
Office within the 60-day period immediately preceding the end of such Guaranteed
Period, an election by the Owner of a different Guaranteed Period from among
those being offered by the Company at such time, or instructions to transfer all
or a portion of the applicable Guaranteed Period Amount to one or more Fixed
Account or Variable Account Sub-Accounts in accordance with the 'Transfer
Privilege' provision.
GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed
Interest Rate that will be used to determine the interest with respect to a
Fixed Account Sub-Account for each Guaranteed Period at the beginning of the
Guaranteed Period. This rate will be guaranteed for the duration of the
applicable Guaranteed Period. The Initial or
AN426NY Page 8
Subsequent Guaranteed Interest Rate will never be less than 3% per year,
compounded annually. Subsequent Guaranteed Interest Rate(s) will also be
determined at the beginning of Guaranteed Period(s) and may be higher or lower
than the previous rate, but will never be less than 3% per year, compounded
annually. (See "Minimum Surrender Value" provision.) The Company will
automatically notify the Owner of the new Guaranteed Interest Rate as soon as
possible after the beginning of each subsequent Guaranteed Period.
FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at
its Servicing Office, all or that portion, if any, of the Premium Payment
which is allocated to the Fixed Account will be credited to the Fixed Account
and allocated to the Fixed Account Sub-Accounts selected by the Owner. The
Fixed Accumulation Value, if any, at any time, is equal to the sum of the
then current values of all Guaranteed Period Amounts with respect to this
contract.
MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for
a given contract year will be determined by: crediting an effective annual rate
of interest of 3.0% on the sum of the values of the Fixed Account Subaccounts
at the end of each Valuation Period during the Contract Year at a daily rate
adjusted for the number of days in each Valuation Period; less the applicable
withdrawal charge(s), any prior withdrawals or transfers out of the Fixed
Account, and premium taxes (if any).
PART B - VARIABLE ACCOUNT VALUE
ACQUISITION AND REDEMPTION OF VARIABLE ACCUMULATION UNITS. Any dollar amounts
allocated to a Variable Account Sub-Account shall be converted into Variable
Accumulation Units and credited to the Variable Account Sub-Account on a unit
basis. The number of Variable Accumulation Units into which a dollar amount
would be converted is calculated by dividing the dollar amount by the Variable
Accumulation Unit Value for the particular Sub-Account. Any redemption of units
from a Variable Account Sub-Account will be processed at the end of a Valuation
Period, including any units redeemed to fund a monthly deduction, and shall
result in the redemption and cancellation of Variable Accumulation Units having
an aggregate dollar value equal to the amount of such withdrawal.
VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value at the
beginning of the first Valuation Period of each Variable Account Sub-Account was
established at $10.00. The Variable Accumulation Unit value in any later
Valuation Period is equal to the net asset value per unit of the particular
Sub-Account as of the end of such Valuation Period.
VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity
Account, if any, for any Valuation Period is equal to the sum of the value of
all Variable Accumulation Units of each Variable Account Sub-Account credited to
the Variable Account with respect to this contract at the end of such Valuation
Period. The Variable Accumulation Value of each Variable Account Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Variable Account Sub-Account with respect to this contract at
the end of a Valuation Period, by the Variable Accumulation Unit Value of the
particular Variable Account Sub-Account for such Valuation Period.
NET INVESTMENT FACTOR. An index, calculated as described below, that provides a
measure of the investment performance of a Variable Account Sub-Account for each
Valuation Period. The Net Investment Factor is equal to
A+B-C minus E
-----
D
where:
A is the net asset value per unit of the Fund held in the Variable Account
Sub-Account (such net asset value being determined as described in the
prospectus for the Fund) as of the end of the Valuation Period;
B is the per unit amount of any dividend or other distribution payable with
respect to units held of record during the Valuation Period;
C is the per unit amount of any tax determined by the Company to be
attributable to the operation of the Variable Account Sub-Account during
such Valuation Period;
D is the net asset value of each unit of the Fund as of the close of
business on the Valuation Date immediately preceding the Valuation Period;
and
AN426NY Page 9
E is the sum of the Daily M&E Rate plus the Daily Administrative Rate,
multiplied by the number of 24-hour periods included in the Valuation
Period.
The Net Investment Factor may be 1.0 or may be greater or less than 1.0,
reflecting the possibility that the Variable Accumulation Unit Value of a
particular Variable Account Sub-Account may remain the same, increase or
decrease.
PART C - GENERAL
ANNUITY ACCOUNT. The Company will establish an Annuity Account under the
contract and will maintain the Annuity Account during the Accumulation Period.
The Annuity Account Value at any time equals the sum of all the then current
values of the Fixed and Variable Accounts with respect to this contract.
TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than
during the "Right to Examine Contract" period, the Owner may transfer all or
part of the Annuity Account Value to one or more of the Fixed or Variable
Account Sub-Accounts then available under the contract, subject to the
provisions set forth below. Transfer requests must be made in writing. Transfer
requests must be received at the Company's Servicing Office prior to the time of
day set forth in the prospectus, and provided the New York Stock Exchange is
open for business, in order to be processed as of the close of business on the
date the request is received; otherwise, the transfer will be processed on the
next business day the New York Stock Exchange is open for business.
Transfers involving Variable Account Sub-Accounts will reflect the purchase or
cancellation of Variable Accumulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable Account
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit Values of the applicable Variable Account Sub-Account
at the end of the Valuation Period for which the transfer is effective.
Transfers to a Fixed Account Sub-Account will result in a new Guaranteed Period
for the amount being transferred. Any such Guaranteed Period will begin on the
effective date of the transfer. The amount transferred into such Fixed Account
Sub-Account will earn interest at the Guaranteed Interest Rate declared by the
Company for that Guaranteed Period as of the effective date of the transfer.
Transfers shall be subject to the following conditions: (a) Not more than 12
transfers may be made per Contract Year (including the frequency limitation
shown in the Contract Specifications with respect to transfers from the Fixed
Account), unless otherwise authorized in writing by the Company. (b) No
withdrawal charge will be imposed on transferred amounts; however, transfers of
all or a portion out of a Fixed Account Sub-Account may be subject to the Market
Value Adjustment set forth below unless such transfer is made in accordance with
the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed
Period" provision. (c) The amount being transferred may not be less than $100
unless the entire value of the Fixed or Variable Account Sub-Account is being
transferred. (d) The amount being transferred may not exceed the Company's
maximum amount limit then in effect. (e) The amount transferred to any Fixed
Account Sub-Account may not be less than $2,000, or $100 to a Variable
Sub-Account. (f) Unless a transfer out of a Fixed Account Sub-Account is made in
accordance with the "Full or Partial Withdrawals and Transfers at the End of a
Guaranteed Period" provision, the amount transferred from each Fixed Account
Sub-Account during any Contract Year may not exceed the limits shown in the
Contract Specifications. (g) Any value remaining in a Fixed Account Sub-Account
may not be less than $2,000, or a Variable Account Sub-Account may not be less
than $50. (h) The Company reserves the right to defer transfers of amounts from
the Fixed Account for a period not to exceed six months from the date the
request for such transfer is received by the Company in writing at its Servicing
Office. (i) Transfers involving Variable Account Sub-Account(s) shall be subject
to such terms and conditions as may be imposed by the Funds.
TRANSFER FEE. The Company reserves the right to charge a fee up to $ 10 for each
transfer prior to the Annuity Date if there have been more than twelve transfers
made in the Contract Year.
AN426NY Page 10
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND
MARKET VALUE ADJUSTMENT PROVISIONS
CASH WITHDRAWALS. At any time before the Annuity Date, the Owner may elect to
receive a cash withdrawal payment from the Company by filing with the Company at
its Servicing Office a written election in such form as the Company may require.
Any such election shall specify the amount of the withdrawal and will be
effective on the date that it is received at the Company's Servicing Office. Any
cash withdrawal payment will be paid within seven days of the Company's receipt
of such request, except as the Company may be permitted to defer the payment of
amounts withdrawn from the Variable Account in accordance with the Investment
Company Act of 1940. The Company reserves the right to defer the payment of
amounts withdrawn from the Fixed Account for a period not to exceed six months
from the date written request for such withdrawal is received by the Company at
its Servicing Office. If payment from the Fixed Account is deferred for more
than 10 working days from the date the request is received, the Company will pay
annual interest on the amount deferred in accordance with the interest rate then
required by law from the date the Company receives the request.
The amount of the cash withdrawal payment may be for any amount not to exceed
the Annuity Account Value at the end of the Valuation Period during which the
election becomes effective, plus or minus any applicable Market Value
Adjustment, and less any applicable withdrawal charge and premium taxes. In the
case of a full surrender, the Annuity Account will be canceled and the contract
will terminate. A partial withdrawal will result in a decrease in the Annuity
Account Value by an amount with an aggregate dollar value equal to the dollar
amount of the cash withdrawal payment, plus or minus any applicable Market Value
Adjustment, any applicable withdrawal charge and premium taxes. This will also
result in a pro rata reduction in any Death Benefit payable under this Contract.
In the case of a partial withdrawal, the Owner must instruct the Company as to
the amounts to be withdrawn from each Fixed and/or Variable Account Sub-Account.
If not so instructed, the Company will effect such withdrawal from each Fixed
and/or Variable Sub-Account in proportion to the then current Sub-Account
values. Partial withdrawals cannot reduce any Fixed Account Sub-Account below
$2,000 or any Variable Account Sub-Account below $50. Such partial withdrawals
will be treated as a full surrender of that Sub-Account and the balance will be
transferred to the largest Variable Account Sub-Account, if any. Partial
withdrawals may not reduce the total Annuity Account Value below $1,000. (See
"Minimum Value Requirements" provision.) Such partial withdrawals may be treated
as a full surrender.
Cash withdrawals from a Variable Account Sub-Account will result in the
cancellation of Variable Accumulation Units attributable to the Annuity Account
with an aggregate value on the effective date of the withdrawal equal to the
total amount by which the Variable Account Sub-Account is reduced. The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Account at the end of the Valuation Period
during which the cash withdrawal is effective.
All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts,
except those specified otherwise under "Penalty-Free Withdrawals, Transfers and
Annuitization Provisions," will be subject to the Market Value Adjustment
described below.
WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be
assessed by the Company. The length of time between the Company acceptance of
the Premium Payment(s) and the receipt of a withdrawal request determines the
withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a Premium Payment previously accepted (or a portion thereof).
Premium Payments will be deemed to have been withdrawn in the order in which the
Premium Payments were received by the Company (i.e., oldest premium first).
After all Premium Payments have been deemed withdrawn, the Company will deem
further withdrawals to be from net investment results attributable to such
Premium Payments, if any. The schedule of withdrawal charges is set forth in the
"Schedule of Charges, Expenses and Fees." On withdrawal, any applicable Annuity
Account Fee and Market Value Adjustment will be deducted before application of
any withdrawal charge.
Withdrawal charges are deducted proportionately from the Fixed and/or Variable
Account Sub-Account(s) from which the withdrawal is to be made, provided such
Sub-Account(s) have sufficient account value(s) for making such deduction(s). If
any of the account value(s) of such Sub-Account(s), however, are insufficient,
its remaining withdrawal charges will be deducted on a pro rata basis from all
Fixed and/or Variable Account Sub-Accounts in proportion to the then-current
account value(s) of such Sub-Account(s).
AN426NY Page 11
See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions" for
situations in which a withdrawal charge is not imposed.
For the purpose of any qualified plan riders which may be attached to this
contract, the term 'Surrender Charge' wherever referenced therein, shall mean
'withdrawal charge' as set forth above.
MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer from a Fixed Account
Sub-Account, except those specified otherwise under the "Full or Partial
Withdrawals and Transfers at the End of a Guaranteed Period" provision, will be
increased or decreased by a Market Value Adjustment described in the following
paragraphs.
The amount of the Market Value Adjustment is calculated by multiplying the
dollar amount of such cash withdrawal or transfer by the following amount:
1 subtracted from the result of (1 + a) to the power of n divided by
(1 + b) to the power of n
where:
a = The yield rate for a Treasury security with time to maturity equal
to the Guaranteed Period, determined at the beginning of the
Guaranteed Period.
b = The yield rate for a Treasury security with time to maturity equal to
Guaranteed Period, determined at the time of transfer or withdrawal
plus (if yield rates 'a' and 'b' differ by more than 0.25%) 0.25%.
As used herein, 'The yield rate for a Treasury security' means the applicable
yield rate for United States Treasury Bonds, Notes or Bills as published in the
Wall Street Journal. If such yields are no longer published, the Company will
substitute an appropriate index of publicly traded obligations subject to
approval by the Superintendent of Insurance of the State of New York.
Straight-line interpolation is used for periods to maturity not quoted.
n = The number of years, including fractional years, remaining in the
Guaranteed Period (e.g. 1 year and 73 days = 1 + (73 divided by
365) = 1.2 years)
A positive Market Value Adjustment increases the cash withdrawal or transfer
while a negative Market Value Adjustment decreases the cash withdrawal or
transfer.
PENALTY-FREE WITHDRAWALS, TRANSFERS
AND ANNUITIZATION PROVISIONS
PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the
Owner may, during any Contract Year prior to the Annuity Date, withdraw up to
15% of the Premium Payment(s) or portion remaining thereof, without incurring
a withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a portion of a Premium Payment previously accepted. Premium
Payments will be deemed to be withdrawn in the order in which they were received
by the Company (i.e., the oldest premium first). Any such withdrawal from a
Fixed Account Sub-Account may be subject to a Market Value Adjustment unless the
withdrawal is made at the end of a Guaranteed Period as set forth below. The
Owner must specify from which Fixed and/or Variable Account Sub-Accounts the
withdrawal is to be made, otherwise the Company may effect such withdrawal on a
proportionate basis from all Fixed and/or Variable Account Sub-Accounts in which
the Annuity Account is invested.
Such partial withdrawals may be either taken as a lump sum or, upon consent of
the Company, paid in equal installments.
No withdrawal charge will be imposed on any withdrawal with respect to a Premium
Payment after the end of the seventh Contract Anniversary following the
Company's acceptance of that Premium Payment.
The Owner may also transfer amounts within the Annuity Account during the
Accumulation Period without the application of a withdrawal charge; however, any
transfers would be subject to any terms and conditions as may be imposed under
the "Transfer Privilege" provision.
AN426NY Page 12
FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No
Market Value Adjustment will be imposed on a full or partial withdrawal or
transfer made from a Fixed Account Sub-Account which becomes effective at the
end of the applicable initial or subsequent Guaranteed Period. In such event,
the Owner's proper request for withdrawal or transfer must be received at the
Company's Servicing Office within a 45-day period immediately preceding the end
of such Guaranteed Period.
WAIVER OF WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY
DATE. No withdrawal charge or Market Value Adjustment will be imposed upon
payments made under the Annuity Benefit or Death Benefit provisions of this
contract.
PENALTY-FREE SURRENDER ON DISABILITY. No withdrawal charge or Market Value
Adjustment will be imposed on a partial withdrawal or full surrender made as a
result of "permanent and total disability" of the Owner. Such disability must:
(i) prevent the Owner from engaging in any occupation for remuneration or
profit; (ii) have started prior to the 65th birthday of the Owner; and (iii)
have existed continuously for a period of at least 12 months. Written proof of
disability must be provided to the Company at its Servicing Office.
PENALTY-FREE ANNUITIZATION. At any time the Owner may request in writing payment
of the then current Annuity Account Value in accordance with any one of the
settlement options set forth in this contract. In such event, no withdrawal
charge or Market Value Adjustment will be imposed at the time such settlement is
made. Such annuitization will automatically result in a change in the Annuity
Date to the date Income Payments commence under the settlement option elected.
BENEFIT PROVISIONS
ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the
adjusted value of the Annuity Account (as set forth below) or apply it in
accordance with the settlement option(s) elected by the Owner. However, if the
amount to be applied under any settlement option is less than $5,000, or if the
first Income Payment payable in accordance with such option is less than $50,
the Company will pay the adjusted value in a single payment to the payee
designated by the Owner.
If the Owner dies on or after the Annuity Date and before the entire interest in
the Contract has been distributed, then the remaining portion of the Annuity
Account must be distributed to the Beneficiary at least as rapidly as under the
settlement option chosen. If the Beneficiary is the surviving spouse of the
Owner, then the beneficiary will be treated as the new Owner of the Contract.
ANNUITY DATE. The Annuity Date selected by each Owner is shown in the Contract
Specifications. The Annuity Date may be changed from time to time by the Owner
by notifying the Company in writing. The notice must be received at the
Company's Servicing Office at least 45 days prior to the Annuity Date then in
effect. The new Annuity Date selected must be at least 30 days after the
effective date of the change and not later than the Annuitant's 90th birthday
(if more than one annuitant is named, the 90th birthday of the oldest
annuitant).
After the Annuity Date, no change of a settlement option is permitted, no
payments may be requested under the "Cash Withdrawals" provision of the
contract, and no Death Benefit is payable under the contract except as otherwise
specified under the settlement option selected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT. During
the lifetime of the Owner and prior to the Annuity Date, the Owner may elect to
have the adjusted value of the Annuity Account applied on the Annuity Date under
one or more of the settlement options set forth in this contract, or under any
other settlement option as agreed to by the Company. The Owner may also change
any election, but any election or change of election must be received at the
Company's Servicing Office at least 45 days prior to the Annuity Date. The
election or change of election may be made by filing with the Company at its
Servicing Office written notice in such form as the Company may require. If no
such election is in effect on the 30th day prior to the Annuity Date, the
adjusted value of the Annuity Account will be applied under a Life Annuity with
120 months guaranteed.
In such situation, the portion of the adjusted value of the Annuity Account to
be applied for a Fixed Life Annuity under the Second Option and/or a Variable
Life Annuity under Option II will be determined on a pro rata basis from the
composition of the Annuity Account on the Annuity Date.
AN426NY Page 13
DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account will be
canceled and the adjusted value of the Annuity Account to be applied under the
settlement options provisions shall be equal to the Annuity Account Value for
the Valuation Period which ends immediately preceding the Annuity Date, minus
any applicable premium or similar tax. For the purposes of any qualified plan
riders which may be attached to this contract, the term 'Annuity Value,'
wherever referenced therein, shall mean the 'adjusted value of the Annuity
Account' as defined above.
INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity
Account as determined under the "Determination of Amount" provision may be
applied, as elected by the Owner, under one or more of the settlement options
set forth in the contract to effect: (a) a Fixed Income Payment Benefit or a
Variable Income Payment Benefit; or (b) a combination of the Fixed Income
Payment Benefit and the Variable Income Payment Benefit. If a combination Fixed
and Variable Income Payment Benefit is elected, the Owner may specify the amount
to be allocated to the Fixed Income Payment Benefit and the amount to be
allocated to the Variable Income Payment Benefit. Such election and allocation
may also be made by a Beneficiary to the extent provided in the "Election and
Effective Date of Election with Respect to Death Benefit Provision".
DEATH BENEFIT. If the Owner dies before the Annuity Date, the Company will pay
the Death Benefit to the Beneficiary upon receipt of due proof of the death of
the Owner in accordance with the "Payment of Death Benefit" provision. If there
is no designated Beneficiary living on the date of death of the Owner, the
Company will pay the Death Benefit, upon receipt of due proof of the death of
both the Owner and the designated Beneficiary, in one lump sum to the estate of
the Owner. If the death of the Owner occurs on or after the Annuity Date, no
death benefit will be payable under the contract except as may be provided under
the settlement option elected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During
the lifetime of the Annuitant and prior to the Annuity Date, the Owner may elect
one or more of the settlement options set forth in this contract to effect an
annuity for the Beneficiary as payee after the death of the Owner. This election
may be made or subsequently revoked by filing with the Company at its Servicing
Office a written election or revocation of an election in such form as required
by the Company.
Any election or revocation of an election of a method of settlement of the Death
Benefit will become effective on the date it is received by the Company at its
Servicing Office.
Unless otherwise specified in writing by the Owner, the Beneficiary may elect
(a) to receive the Death Benefit as a lump sum cash payment, in which event the
Annuity Account will be canceled, or (b) to have the Death Benefit applied under
one or more of the settlement options set forth under the contract. This
election may be made by filing with the Company a written request in a form as
required by the Company. Any written request for an election of a settlement
option for the Death Benefit by the Beneficiary will become effective on the
later of (a) the date the request is received by the Company at its Servicing
Office; or (b) the date due proof of the death of the Owner is received by the
Company at its Servicing Office. If a written request for a settlement option by
the Beneficiary is not received by the Company within 60 days following the date
due proof of the death of the Owner is received by the Company, the Beneficiary
shall be deemed to have elected a lump sum cash payment as of the last day of
the 60-day period.
Notwithstanding the above, the Owner or Beneficiary may only elect a settlement
option which provides for the distribution of the entire Death Benefit to the
Beneficiary within five years of the Owner's death unless: (a) the entire
interest in the contract is distributed over the life of the Beneficiary, with
distributions beginning within one year of the Owner's death; (b) the entire
interest in the contract is distributed over a period not extending beyond the
life expectancy of the Beneficiary, with distributions beginning within one year
of the Owner's death; or (c) the Beneficiary is the deceased Owner's spouse and
elects to continue the contract and become the new Owner, but in no event may
such an election be made under the contract more than once.
For purposes of Section 72(s) of the Internal Revenue Code, if any Owner is not
an individual, the death or change of any Annuitant is treated as the death of a
Owner, and if the Owner is grantor trust within the meaning of the Internal
Revenue Code, the death of the grantor of such trust is also treated as the
death of a Owner.
AN426NY Page 14
PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the
Beneficiary, payment will be made within 7 days of the date the election becomes
effective or is deemed to become effective, provided due proof of the death of
the Owner is received by the Company at its Servicing Office, except as the
Company may be permitted to defer any such payment of amounts derived from the
Variable Account in accordance with the Investment Company Act of 1940. If the
Death Benefit is to be paid in one sum to the estate of the deceased Owner,
payment will be made within 7 days of the date due proof of the death of the
Owner and/or Beneficiary is received by the Company at its Servicing Office,
except as the Company may be permitted to defer any such payment of amounts
derived from the Variable Account in accordance with the Investment Company Act
of 1940. If settlement under the settlement option provisions is elected, the
Income Payments will commence 30 days following the effective date or the deemed
effective date of the election and the Annuity Account will be maintained in
effect until such Income Payments commence.
AMOUNT OF DEATH BENEFIT. The Death Benefit is determined as of the effective
date or deemed effective date of the Death Benefit election and is equal to
the greatest of:(a) the Annuity Account Value for the Valuation Period during
which the Death Benefit election is effective or is deemed to become
effective (see Example 1 below); (b) the sum of all the Premium Payment(s)
made under the contract adjusted for any partial withdrawals (see Example 2
below); or (c) the highest Annuity Account Value ever attained on a Contract
Anniversary Date, occurring on or before the then Owner's 80th birthday (or
the Annuitant's 80th birthday in the case of a non-natural Owner), with
adjustments for any subsequent Premium Payments, partial withdrawals made
since such Contract Anniversary Date, provided that if there has been a
transfer of ownership, the highest Annuity Account Value must occur on a
Contract Anniversary Date after the date of such transfer of ownership.
Example 1: Example 2:
---------- ----------
Premium 280 Annuity Account Value
Annuity Account Value before Withdrawal 200
before Withdrawal 200 Highest AV 300
Partial Withdrawal 50 Partial Withdrawal 50
AV after Withdrawal 150 AV after Withdrawal 150
Death Benefit 210 Death Benefit 225
However, the Death Benefit on or after the then current Owner's 90th birthday
(if a natural person) is the greater of (a) the Annuity Account Value for the
Valuation Period during which the Death Benefit election is effective or is
deemed to become effective, or (b) the sum of all the Premium Payment(s) with
adjustments for any partial withdrawals made under the contract since the Date
of Issue.
SECTION 72(s). The provisions above will be interpreted so as to
comply with the requirements of Section 72(s) of the Internal Revenue Code.
SETTLEMENT OPTIONS
ANNUITY PAYMENTS
An election to receive payments under a Settlement Option must be made by the
Annuity Date.
If a Settlement Option is not chosen prior to the Annuity Date, payments will
commence to the Owner on the Annuity Date under the Settlement Option providing
a Life Annuity with annuity payments guaranteed for 10 years. 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 Annuity Date is set forth in each Contract. Upon written request by the
Owner and any Beneficiary who cannot be changed, the Annuity Date may be
deferred. However, the Annuity Date may not be deferred past the Annuitant's age
90. Purchase Payments may be made until the new Annuity Date.
CHOICE OF SETTLEMENT OPTION
By Owner
Prior to the Annuity Date, the Owner may choose or change any Option. For a 100%
fixed annuity payment, the Annuity Date must be at least thirty days prior to
the time Income Payments are to begin.
By Beneficiary
At the time proceeds are payable to a Beneficiary, a Beneficiary may choose or
change any Settlement 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.
AN426NY Page 15
A choice or change must be in writing to the Company at its Servicing Office.
Once Income Payments have begun, no surrender of the Annuity Account Value can
be made and the Annuitant(s) cannot be changed, nor can the settlement option be
changed.
SETTLEMENT 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 Variable 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 Date and (b) is the
product of the number of Variable 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 the Company.
At the time a Settlement Option is selected, the Owner may elect to have the
total 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.
At the time Income Payments commence, they will not be less than those that
would be provided by a specific amount for any single premium immediate annuity
contract offered by the Company at the time to the same class of annuitants. The
specific amount is the greater of the surrender value or 95% of the accumulation
value.
The amount of Income Payment will depend on the age and sex (except in cases
where unisex rates are required) of the Annuitant as of the Annuity Date. A
choice may be made to receive payments once each month, four times each year,
twice each year, or once each year. The Annuity Account Value used to effect
benefit payments will be calculated as of the Annuity Date.
Table 1 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 settlement option. The tables show the dollar amount of the
first monthly payment which can be purchased with each $1,000 of Annuity
Account Value, after deduction of any applicable premium taxes. Amounts shown
in Table 1 use an Individual Annuity Mortality Table on file with the New
York Superintendent of Insurance, with an assumed rate of return of 4% per
year.
Table 2 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 settlement option. The tables show the dollar amount of the guaranteed
monthly payments which can be purchased with each $1,000 of Annuity Account
Value, after deduction of any applicable premium taxes. Amounts shown in Table 2
use an Individual Annuity Mortality Table on file with the New York
Superintendent of Insurance, with an interest rate of 2.75% per year.
The minimum payment amounts shown for Joint and Survivor Annuities under both
Tables 1 and 2 are for Joint Ages; that is, for a male and a female both of the
same age. Minimum payment amounts for other age and sex combinations on Joint
and Survivor Annuities are available, but are not illustrated in Tables 1 and 2.
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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 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 Variable Annuity Unit value for that
Sub-account for the date each payment is due by a constant number of Variable
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 Variable Annuity Unit value for that Sub-account on
the Annuity Date. The total variable annuity payment will be the sum of the
payments attributable to each Sub-account.
The Variable Annuity Unit value for any Valuation Period for any Sub-account is
determined by multiplying the Variable 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
Variable Annuity Unit value is being determined.
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 the Company of the value of an Annuity Unit will be conclusive
upon the Owner and any Beneficiary.
The Company 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 nor by expenses actually
incurred, other than taxes on investment income.
After the Annuity 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 Sub-account will result in the
purchase of Variable Annuity Units in one Sub-account and the redemption of
Variable Annuity Units in the other Sub-account. Such a transfer will be
accomplished at relative Variable Annuity Unit values as of the Valuation Date
the transfer request is received. The valuation of Variable 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 Table 2.
PROOF OF AGE
Payment will be subject to proof of age that the Company will accept such as a
certified copy of a birth certificate.
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.
EVIDENCE OF SURVIVAL
The Company has the right to ask for proof that the person on whose life the
payment is based is alive when each payment is due.
CHANGE IN ANNUITY PAYMENT OPTION
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
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GENERAL PROVISIONS
THE CONTRACT. The contract and the application therefore constitute the entire
contract between the Company and the Owner.
Only the President, a Vice President, an Assistant Vice President, or a
Secretary, of the Company may make or modify this contract.
The Contract is executed at the Company's Home Office.
MODIFICATION OF CONTRACT. The Company reserves the right to modify this contract
to meet the requirements of applicable state and federal laws or regulations.
Any changes are subject to the prior approval of the New York Insurance
Department. The Company will notify the Owner in writing of any changes.
NON-PARTICIPATION. The contract is not entitled to share in surplus
distribution.
Loans. Loans are not permitted under this contract.
DETERMINATION OF VALUES. The method of determination by the Company of the Net
Investment Factor and the number and value of Accumulation Units and Annuity
Units shall be conclusive upon the Owner, and any Beneficiary or payee. Any
paid-up annuity, cash surrender or death benefits that may be available under a
contract will not be less than the minimum benefits required by any statute of
the state in which the is delivered.
ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment at the
Home Office by check. Each check must be personally endorsed by the
payee/Annuitant, or the Company may require that proof of the payee/Annuitant's
survival be furnished.
MISSTATEMENT OF AGE AND/OR SEX. If the age and/or sex of an Annuitant is
misstated, the amount payable under the contract will be adjusted to be the
amount of Income which the actual premium paid would have purchased for the
correct age and/or sex according to the Company's rates in effect on the Date of
Issue. Any overpayment by the Company, with interest at the rate of 6% per year,
compounded annually, will be charged against the payments to be made next
succeeding the adjustment. Any underpayment by the Company will be paid in a
lump sum, with interest at the rate of 6% per year, compounded annually.
CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under
this contract will be subject to the claims of creditors of any payee.
PERIODIC REPORTS. At least once each calendar year, the Company will furnish the
Owner a report as required by law showing the Annuity Account Value at the end
of the preceding year, all transactions during the year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Accumulation
Account, the applicable Accumulation Unit Value as of the date of the report and
the interest rate credited to the Fixed Account Sub-Account(s). The Company will
also send such statements reflecting transactions in the Annuity Account as may
be required by applicable laws, rules and regulations and any other information
required by the Superintendent of Insurance.
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ANNUITY PURCHASE RATE TABLE 1
-----------------------------
SEPARATE FILE; HARD COPY TO BE FAXED SEPARATELY
ANNUITY PURCHASE RATE TABLE 2
SEPARATE FILE, HARD COPY TO BE FAXED SEPARATELY
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
SYRACUSE, NEW YORK
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
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