ENDORSEMENT
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ANNUITY LOAN PROVISIONS
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LOAN ENDORSEMENT
This endorsement is attached to and made part of your Contract as of its
Issue Date or, if later, the date shown below. Notwithstanding any other
provision of the Contract to the contrary, the following provisions shall
apply.
GENERAL PROVISIONS
Prior to the Annuity Start Date, the Company shall lend an amount applied
for to the Owner subject to the limitations, interest rates, and repayment
procedures set forth herein and in the loan agreement between the Owner and
the Company. Any loan applied for must be for a minimum of $1,000. Only two
loans shall be permitted per Contract Year. All loans must be repaid as
specified herein before the Annuity Start Date. Except for loans that
qualify under the Code for a longer repayment period, as determined by the
Company, all loans must be repaid within five years of approval. All loan
repayments must be scheduled to be paid in equal amounts on the same day of
each month or quarter. For monthly repayments the first scheduled repayment
may not be later than 30 days after the date of approval of the loan
application by the Company. For quarterly repayments the first scheduled
repayment may not be later than 90 days after the date of approval of the
loan application by the Company. Before a loan is permitted a written
application and loan agreement on a form acceptable to the Company must be
Received by the Company. The Company may postpone final approval or
disapproval of a loan for up to six months after the application for a loan
is received.
TAX CONSEQUENCES
The Company makes no representations or guarantees as to the tax
consequences of a loan to the Owner. The Owner should consult his or her
tax counsel for specific advice.
MAXIMUM LOAN AMOUNT
The maximum loan amount for all contracts combined, is generally equal to
the lesser of: (1) $50,000 reduced by the excess of: (a) the highest
outstanding loan balance within the preceding 12-month period ending on the
day before the date the loan is made; over (b) the outstanding loan balance
on the date the loan is made; or (2) 50% of your Contract Value or $10,000,
whichever is greater. However, you may not borrow an amount which exceeds
your Contract Value less the amount needed as security as described below.
If you have loans outstanding pursuant to other qualified plans, the amount
you may borrow may be further restricted under the Code.
LOAN ACCOUNT, AND INTEREST EARNED ON LOAN ACCOUNT
When your loan is approved, the Company will transfer to an account within
the Fixed Account, referred to as the Loan Account, an amount equal to the
loan amount. Amounts allocated to the Loan Account earn the Guaranteed Rate
specified in the Contract. In addition, 10% of the loaned amount will be
held in the Fixed Account as security for the loan. Amounts acting as
security will earn the Current Rate.
LOAN INTEREST RATE
The Owner must pay interest on the outstanding loan balance. Interest shall
accrue on the loan balance from the effective date of any loan. The loan
interest rate shall be the Guaranteed Rate plus 2.5%
V 6850 (10-97) NON-ERISA SP 685021
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ANNUITY LOAN PROVISIONS (CONTINUED)
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LOAN PAYMENTS
Each loan payment must be labeled as such. If not labeled as a loan
payment, amounts received by the Company will be treated as Purchase
Payments. Each loan payment will reduce the Loan Account by the amount the
payment reduces the outstanding loan balance. The amount held as security
will also be reduced by each loan payment so that the security is again
equal to 10% of the outstanding loan balance immediately after the loan
payment is made. Amounts which are no longer needed in the Loan Account
will be transferred to the Fixed Account and/or the Subaccounts in
accordance with current allocation instructions for purchase payments.
However, amounts which are no longer needed as security will NOT
automatically be allocated in accordance with purchase payment
instructions. The loan may be repaid in full at any time, in which event,
the Loan Account and the amount held as security shall be reduced to $0.
FAILURE TO MAKE PAYMENTS
If any required loan payment is not paid, within 30 days of the due date
for loans with a monthly repayment schedule or within 90 days of the due
date for loans with a quarterly repayment schedule, the TOTAL OUTSTANDING
LOAN BALANCE will be deemed to be in default. The entire loan balance, with
any accrued interest, will be reported to the Internal Revenue Service
("IRS") on Form 1099-R for the year the default occurred. Once a loan has
gone into default, regularly scheduled payments will not be accepted.
However, the principal plus accrued interest may be paid in full at any
time. Notwithstanding any other provision of the Contract or this
endorsement to the contrary, no new loans will be allowed when there is a
loan in default.
Interest will continue to accrue on a loan in default. You may pay accrued
interest each year when notified by SBL. If such interest is not paid by
December 31st of each year, it will be added to the outstanding balance of
the loan and will be reported to the IRS on Form 1099-R. Contract Value
equal to the amount of the accrued interest will be transferred to the Loan
Account. Contract Value held in the Fixed Account as security for the loan
will also be increased so that the security is again equal to 10% of the
outstanding loan. If a loan continues to be in default when you attain age
59 1/2, the total outstanding balance will be deducted from your Contract
Value. The contract will be automatically terminated if the outstanding
loan balance on a loan in default equals or exceeds the amount for which
the Contract may be surrendered. The proceeds from the Contract will be
used to repay the debt and any applicable surrender or withdrawal charges.
WITHDRAWAL VALUE AND DEATH BENEFIT
If the Contract is surrendered, or if a death benefit becomes payable, the
amount otherwise receivable will be reduced by the amount of the
outstanding loan, plus any accrued interest. In addition, no partial
withdrawal request will be processed which would result in the withdrawal
of Contract Value from the Loan Account.
SECURITY BENEFIT LIFE INSURANCE COMPANY
XXXXX X. XXXXX
Secretary
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Endorsement Effective Date
(If Other Than Issue Date)
NON-ERISA SP 685021
