ING USA SINGLE PREMIUM IMMEDIATE
ANNUITY AND LIFE FIXED AND VARIABLE ANNUITY
INSURANCE COMPANY CONTRACT
ING USA is a stock company domiciled in Iowa
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Annuitant Owner
[XXXXXX X. XXX] [XXXX X. XXX]
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Initial Premium Annuity Option Contract Date
[$10,000] [20-YEAR PERIOD CERTAIN] [JANUARY 1, 2004]
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Separate Account(s) Contract Number
[SEPARATE ACCOUNT B] [123456]
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This is a legal Contract between its Owner and us. Please read it carefully. We,
our or us refers to ING USA Annuity and Life Insurance Company.
If this Contract is in force and the Annuitant is living, we will make the Fixed
Annuity Payments or Variable Annuity Payments, or a combination thereof, under
the Annuity Option elected by you beginning on the First Annuity Payment Date
shown in the Schedule.
All payments and values, when based on the investment experience of the variable
separate account, may increase or decrease in dollar amount, depending on the
contract's investment results. Amounts withdrawn from any portion of the
contract representing fixed payments may be subject to a market value
adjustment, the operation of which may cause such amounts to increase or
decrease.
RIGHT TO EXAMINE THIS CONTRACT: You may return this contract to us or the agent
through whom you purchased it within 10 days after you receive it. If so
returned, we will treat the contract as though it were never issued. Upon
receipt we will promptly refund the premium paid, plus any charges we have
deducted, plus any increase or minus any decrease in the value of amounts
allocated to the separate account as of the date the returned contract is
received by us.
Secretary:
Customer Service Center Xxxxx Xxxxxxx Xxxxxxx
[X.X. Xxx 0000 Xxx Xxxxxx, XX 00000-0000
0-000-000-0000] President:
Xxxxx Xxxxxx
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SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CONTRACT - NO DIVIDENDS
Non-participating. Investment results reflected in values.
IU-IA-3000
CONTRACT CONTENTS
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SCHEDULE OF BENEFITS...........................................3
IMPORTANT TERMS................................................4
GENERAL PROVISIONS.............................................6
The Contract
The Owner
The Beneficiary
Change of Owner or Beneficiary
Single Premium Payment
Premium Taxes
Market Value Adjustments
DEATH BENEFIT PROVISIONS.......................................8
Death of Contract Owner Prior to the First Annuity
Payment Date
Spousal Continuation upon Death of owner
Death After the First Annuity Payment Date
Death of Annuitant
Death of Contract Owner
How to Claim Payments to Beneficiary
VARIABLE ANNUITY PROVISIONS....................................9
The Variable Separate Account
Variable Separate Account Divisions
Changes Within the Variable Separate Account
Variable Annuity Payments
Annuity Unit Value
Net Return Factor
Deductions from the Variable Separate Account Divisions
Mortality and Expense Risk Charges and Administrative
Expenses
Redemption Fees
Your Right to Make Allocation Changes
OTHER IMPORTANT
INFORMATION...............................................12
Sending Notice to Us
Reports to Owner
Assignment - Using this Contract as Collateral Security
Contract Changes - Applicable Tax Law
Misstatement of Age or Sex
Non-Participating
Contestability
Authority to Make Agreements
Required Note on Our Computations
Payments We May Defer
Surrender/Loan Value
Copies of any additional Riders and Endorsements are at the back of this
Contract.
THE SCHEDULE
The Schedule gives specific facts about this Contract and its coverage. Please
refer to the Schedule while reading this Contract.
IU-IA-3000 2
SCHEDULE OF BENEFITS
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Annuitant Owner
[XXXXXX X. XXX] [XXXXXX X. XXX]
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Annuitant's Issue Age Annuitant's Sex Owner's Issue Age
[55] [MALE] [55]
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Premium Annuity Option Residence Status
[$10,000] [20-YEAR PERIOD CERTAIN] [IOWA]
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Contract Date First Annuity Payment Date Payment Mode
[JANUARY 1, 2004] [FEBRUARY 1, 2004] [MONTHLY]
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Separate Account(s)
[SEPARATE ACCOUNT B]
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ANNUITY OPTION: [ 20 -YEAR PERIOD CERTAIN ANNUITY]
Annuity payments will begin on the First Annuity Payment Date shown above if the
Annuitant is then living and continue until the Number of Guaranteed Payments
shown below has been made.
All Annuity Payments Will be Made On a [Variable and Fixed] Basis
Number of Guaranteed Payments: [240]
[Fixed Annuity Payment: [$1039.24] Fixed Annuity Payment Rate: [1.5%]
[Increasing Fixed Annuity Payment Option: Under this option, the Fixed Annuity
Payment shown above will increase annually by [1%], compounded annually. ]
[Initial] Estimated Variable Annuity Payment: [$2239.02]
Variable annuity payments are not guaranteed and will fluctuate according to the
investment experience of the Divisions of the Variable Separate Account as
elected by you.]
[Variable Annuity Assumed Interest Rate: [3.0%]
OPTIONAL RIDERS [Guaranteed Minimum Income Rider (GMIR)
GMIR Payment: [$ 2015.12]
GMIR Factor: [90%] of the Initial Estimated Variable Annuity Payment
Maximum GMIR Charge: [0.005535]% deducted daily (equivalent to an annual
rate of [2.00%])]
GMIR Period: [5 years] beginning on the Contract Date.]
[VARIABLE SEPARATE ACCOUNT DIVISIONS ELECTED BY YOU Your Premium has been
invested as follows:
Variable Separate Account Divisions Percentage of Premium Payment
[Pioneer Mid-Cap Value [50%
Fidelity VIP Growth Portfolio] 50%]
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Total 100%
IU-IA-3000 3A
SCHEDULE OF BENEFITS (Continued)
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[RIGHT TO WITHDRAW OPTION
You have the right to take withdrawals under the Contract. To take a withdrawal,
you must provide written notice satisfactory to us at our Customer Service
Center. For withdrawals from any portion of the Contract representing Fixed
Annuity Payments, if applicable, only one withdrawal may be made per Contract
Year and no withdrawals may be made before the later of (a) the end of the first
Certificate Year; or (b) the First Annuity Payment Date. We may collect a
Surrender Charge for early withdrawals and any redemption fees imposed by the
mutual fund or other investment company as a result of the transaction. The
Surrender Charge, if any, will be calculated using the Surrender Charge Schedule
shown below.
Our approval is needed if, after a Partial Withdrawal, any remaining Annuity
Payments would be less than [$50] monthly or [$250] annually for all other
modes. After a Partial Withdrawal, any portion of Guaranteed Payments withdrawn
will reduce remaining Guaranteed Payments proportionately.
[Amount Available for Withdrawal - Fixed Annuity
The amount available for withdrawal from any portion of the Contract
representing Fixed Annuity Payments is equal to the present value of any
remaining Fixed Annuity Guaranteed Payments determined by using the Fixed
Annuity Payment Rate as of the Valuation Date immediately following the date we
receive your written request, adjusted by any Market Value Adjustment, less any
applicable Surrender Charge. ]
[Amount Available for Withdrawal - Variable Annuity
The amount available for withdrawal from any portion of the Contract
representing Variable Annuity Payments is equal to the present value of any
remaining Variable Annuity Guaranteed Payments determined by using the Variable
Annuity Assumed Interest Rate shown in the Schedule as of the Valuation Date
immediately following the date we receive your written request, less any
applicable Surrender Charge and redemption fees.]
SURRENDER CHARGE SCHEDULE
A Surrender Charge may be imposed as a percentage of the amount withdrawn in the
event a full or partial withdrawal is taken under the Right to Withdraw Option.
The percentage imposed at time of withdrawal depends on the number of complete
years that have elapsed since the Contract Date as follows:
[Complete Years Elapsed Since Contract Date: [0 1 2 3 4 5 6 7+
--------------------------------------------- --- --- --- --- --- --- --- ---
Surrender Charges (Variable Payments): 7% 6% 5% 4% 3% 2% 1% 0%]]
[Complete Years Elapsed Since Contract Date: [0 1 2 3 4 5 6 7+
-------------------------------------------- --- --- --- --- --- --- --- ---
Surrender Charges (Fixed Payments): NA* 6% 5% 4% 3% 2% 1% 0%]
*No withdrawals are allowed from Fixed Annuity Payments during the first
Contract Year]]
[FLEXIBLE PERIOD OPTION
Beginning on the second Contract Anniversary and each Contract Anniversary
thereafter, you may elect to change the duration of your Guaranteed Payments or
convert your Annuity Option shown in the Schedule to a Life Income Annuity
provided:
(1) The Contract is issued as a Period Certain Annuity (with no Life
contingency);
(2) There are Guaranteed Payments remaining under the Contract;
(3) You have the right to make withdrawals under the Contract, as shown in the
Schedule; and
(4) No optional Guaranteed Minimum Income Rider is attached and made a part of
this Contract, in which case this option may not be exercised while such
Rider is in effect.
IU-IA-3000 3A CONT'D
SCHEDULE OF BENEFITS (Continued)
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To exercise this Option, you must provide us your written request satisfactory
to us at our Customer Service Center at least 30 days prior to any Contract
Anniversary after the first. The change will take effect on the Contract
Anniversary immediately following the date we receive your written request ("the
FPO Effective Date").
Any change to the duration of your Annuity Payments must meet the following
conditions:
(1) The period during which remaining Guaranteed Payments are to be made
must be at least 5 years in duration;
(2) any decrease in the period in which remaining Guaranteed Payments are
to be made must result in no less than a total period of 10 years from
the Contract Date; and
(3) any increase in the period in which remaining Guaranteed Payments are
to be made must not exceed the earlier of:
(i) in the case of a Contract issued as a qualified plan, the
Annuitant(s) remaining life expectancy; otherwise, 50 years (30
years for Fixed Annuity Payments) from the Contract Date; or
(ii) age 100.
Our approval is needed if, after a Partial Withdrawal, any remaining Annuity
Payments would be less than [$50] monthly or [$250] annually for all other
modes. If you elect to convert your Annuity Payment option to Life Income
Annuity, you may not exercise this Option again.
The withdrawal value used to calculate the new Annuity Payments is equal to: .
(1) Under the Fixed Annuity portion of the Contract, the present value of
any remaining Fixed Annuity Guaranteed Payments determined by using
the Fixed Annuity Payment Rate, adjusted by any Market Value
Adjustment, as of the FPO Effective Date; and
(2) Under the Variable Annuity portion of the Contract, the present value
of any remaining Variable Annuity Guaranteed Payments determined by
using the Assumed Interest Rate as of the FPO Effective Date.
No Surrender Charges will apply in calculating the withdrawal value under this
option.
[DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS
Mortality and Expense Risk Charge - We deduct a charge of not more than
[0.004141%] from the Net Rate of Return on a daily basis (equivalent to an
annual maximum rate of [1.50%]) for mortality and expense risks.
Asset-Based Administrative Charge - We deduct a charge of not more than
[0.000686%] from the Net Rate of Return on a daily basis [equivalent to an
annual maximum rate of [0.25%] to compensate us for a portion of our ongoing
administrative expenses.
Redemption Fees - We may deduct the amount of any redemption fees imposed by a
mutual fund or other investment company in which the Separate Account Divisions
invest as a result of any full or partial withdrawals, reallocations or other
transactions directed by you.
EXCESS ALLOCATION CHARGE
[$25.] Any charge will be deducted from the Annuity Payment next following the
date of any excess allocation change(s). ]
IU-IA-3000 3A CONT'D
IMPORTANT TERMS
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ANNUITANT - The person designated by you to be the measuring life in determining
Annuity Payments and whose death may result in payment of any death
proceeds. The Annuitant must be a natural person. You are the Annuitant
unless another Annuitant has been named by you and is shown in the
Schedule.
ANNUITY - a periodic payment to begin at a specified or contingent date and to
continue for a fixed period (the Period Certain) and/or for the duration of
a designated life or lives.
ANNUITY OPTION - The option selected by you and shown in the Schedule that
determines the form and amount of Annuity Payments.
ANNUITY PAYMENT - The periodic payment you, or the Payee if different, receive
on either a variable basis or fixed basis, or a combination thereof, as
elected by you.
ANNUITY UNIT - the measure for valuing a Variable Annuity on and after the First
Annuity Payment Date. The dollar value of each unit fluctuates with the
experience of the Variable Separate Account Divisions available for
investment under the Contract.
ASSUMED INTEREST RATE - The rate selected by you which is used to calculate the
Variable Annuity Payments under the Contract and to determine withdrawal
values, as appropriate. The Assumed Interest Rate is shown in the Schedule.
BENEFICIARY - The person designated by you to receive death proceeds in the case
of the Annuitant's death (or joint Annuitant's death if applicable) if
there is no surviving Owner or joint Owner.
BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for trading,
or any day on which the Securities and Exchange Commission ("SEC") requires
that mutual funds, unit investment trusts or other investment portfolios be
valued, excluding federal holidays,
CONTRACT ANNIVERSARY - The anniversary of the Contract Date.
CONTRACT DATE - The date we received your premium and upon which we begin
determining the Contract values. This date is used to determine Contract
months, processing dates, years, and anniversaries.
CONTRACT YEAR - the period between Contract Anniversaries.
CONTRACTHOLDER - The entity to whom the group contract is issued.
ESTIMATED VARIABLE ANNUITY PAYMENT - The estimated periodic payments you
receive, if so elected by you, under a Variable Annuity which, when based
on the experience of a separate account, are not guaranteed and will
fluctuate according to the investment experience of the Variable Separate
Account Divisions elected by you. The estimated Variable Annuity Payment,
if any, is shown in the Schedule.
FIXEDANNUITY - An Annuity with benefit payments which are fixed and will not
fluctuate during the payment period.
FIXEDANNUITY PAYMENT - The fixed periodic payment you receive, if so elected by
you, under a Fixed Annuity. Such payments, if any, are supported by the
General Account and are shown in the Schedule.
FIXEDANNUITY PAYMENT RATE - The rate used to calculate the Fixed Annuity
Payments, if any, under the Contract and to determine withdrawal values, as
appropriate. The initial Fixed Annuity Payment Rate is shown in the
Schedule. This rate may change if any Flexible Period Option is exercised.
FIRST ANNUITY PAYMENT DATE - the date on which the first annuity periodic
payment is paid.
GENERAL ACCOUNT - An account which contains all of our other assets other than
those held in our Separate Account. It is used to support Fixed Annuity
Payments.
IU-IA-3000 4
IMPORTANT TERMS (continued)
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GUARANTEED PAYMENT - A periodic payment that is due whether or not the
Annuitant, or Joint Annuitant if applicable, is living on date the
Guaranteed Payment is due.
ISSUEAGE -The age of the Owner, or that of the Annuitant if different, on his
or her birthday nearest the Contract Date.
JOINTLIFE INCOME ANNUITY - An Annuity issued on the lives of two individuals
for which payments are based on whether or not at least one of the
Annuitants is living on the date the Annuity Payment is due. Payments cease
at the death of both Annuitants.
JOINTLIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity issued on the lives
of two individuals with Guaranteed Payments that continue for a specified
period of time without being dependent upon the survival of the Annuitant
or joint Annuitant and continue thereafter in whole or in part as long as
at least one of the Annuitants is living.
LIFE INCOME ANNUITY - An Annuity for which payments are based soley on whether
or not the Annuitant is living on the date the Annuity Payment is due.
Payments cease at the Annuitant's death.
LIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments
that continue for a specified period of time and continue thereafter as
long as the Annuitant is living.
MARKET VALUE ADJUSTMENT - A positive or negative adjustment applied (a) to any
portion of Fixed Annuity Guaranteed Payments withdrawn; or (b) to determine
the withdrawal value under Flexible Period Option, if applicable.
NET RATE OF RETURN - The Net Rate of Return is equal to:
(1) The value of the shares of the Division at the end of a Valuation Date;
minus
(2) The value of shares of the Division at the start of the Valuation Date;
plus or minus
(3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by
(4) The value of shares of the Division at the start of the Valuation Date;
minus
(5) The daily Asset Based Administrative Charges and Mortality and Expense Risk
Charges described in the Schedule for each day in the Valuation Period.
A Net Rate of Return may be more or less than 0%. The value of a share in a
Division is equal to the net assets of the Division divided by the number
of shares outstanding. Refer to the Variable Annuity Provisions of this
Contract for additional information.
OWNER- You are the Owner of this Contract. You have the rights and options
described in this Contract. "You" and "Your" refer to the Owner.
PAYEE- The person designated by you to receive the Annuity Payments under the
Contract. You are the Payee, unless you name someone else. If the Payee
dies before all payments have been made under the Contract, the contingent
Payee will become the Payee. If there no contingent Payee, you will become
the Payee.
PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a
specified period of time without being dependent upon the survival of the
Annuitant.
VALUATION DATE - The day at the end of a Valuation Period when each Division is
valued.
VALUATION PERIOD - Each business day together with any non-business days before
it.
VARIABLE ANNUITY - an Annuity with payments that fluctuate based on the net
investment experience of the divisions of the Variable Separate Account.
VARIABLE SEPARATE ACCOUNT DIVISION - Under a Variable Annuity, an investment
option available in the Variable Separate Account. Any Variable Separate
Account Divisions elected by you for the allocation of some or all of your
Premium Payment are shown in the Schedule.
IU-IA-3000 5
GENERAL PROVISIONS
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THE CONTRACT
This is a legal Contract between you and us. We provide benefits as stated in
this Contract. In return, you supply us with the single Premium Payment required
to put this Contract in effect. This Contract, together with any attached Riders
or Endorsements, constitutes the entire Contract. Riders and Endorsements add
provisions or change the terms of the basic Contract. Riders and Endorsements
added to comply with applicable tax law do not require your consent, but are
subject to regulatory approval.
THE OWNER
You are the Owner of this Contract. You are also the Annuitant unless another
Annuitant has been named by you and is shown in the Schedule. You have the
rights and options described in this Contract. One or more people may own this
Contract. The sole Owner's estate will be the Beneficiary if no Beneficiary
designation is in effect, or if the designated Beneficiary has predeceased the
Owner. In the case of a joint Owner dying prior to the First Annuity Payment
Date, the surviving Owner(s) will be deemed to be the Beneficiary(ies) and any
other Beneficiary(ies) of record will be treated as the contingent
Beneficiary(ies). See Death Benefit Provisions for more information.
THE BENEFICIARY
The Beneficiary will receive any remaining Guaranteed Payments due under this
Contract at the death of the Annuitant, and joint Annuitant if applicable, if
there is no surviving Owner or joint Owner. We pay any remaining Guaranteed
Payments to the primary Beneficiary. If the primary Beneficiary dies before the
Annuitant, any remaining Guaranteed Payments are paid to the contingent
Beneficiary, if any. If there is no contingent Beneficiary, we pay any remaining
Guaranteed Payments to the Owner, if living, otherwise to the Owner's estate or
legal successors. One or more persons may be named as primary Beneficiary or
contingent Beneficiary. In the case of more than one Beneficiary, we will assume
any remaining Guaranteed Payments are to be paid in equal shares to the
surviving Beneficiaries. You may specify other than equal shares. See Death
Benefit Provisions for more information.
CHANGE OF OWNER OR BENEFICIARY
During the Annuitant's lifetime and while this Contract is in effect you can
transfer ownership of this Contract. To make a Change of Owner, you must send us
written notice of the change in a form satisfactory to us. If there are joint
Owners, both must agree to the change. The change will take effect as of the day
the notice is signed. The change will not affect any payment made or action
taken by us before recording the change at our Customer Service Center.
You also have the right to change Beneficiaries, unless you designate the
primary Beneficiary as irrevocable. When an irrevocable Beneficiary has been
designated, you and the irrevocable Beneficiary may have to act together to
exercise the rights and options under this Contract.
When naming or changing the Beneficiary(ies), you may specify the form of any
remaining Guaranteed Payments as described under the Death Benefit Provision of
this Contract. We will honor the specified form of payment to the extent
permitted under Section 72(s) of the Internal Revenue Code or the equivalent
provisions of the U.S. Treasury Department rules for qualified plans.
IU-IA-3000 6
GENERAL PROVISIONS(continued)
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SINGLE PREMIUM PAYMENT
This is a single premium annuity. However, the single premium may be paid in one
lump sum or in installments anytime prior to the First Annuity Payment Date. Any
such planned installments must be identified at the time the Contract is issued
and be received by us at our Customer Service Center prior to the First Annuity
Payment Date. You may allocate your Premium Payment to Fixed Annuity Payments,
Variable Annuity Payments, or a combination thereof. The amount of the premium
applied to this Contract will be the initial premium received as shown in the
Schedule, minus a deduction for Premium Taxes, if any. If any subsequent
payments are received after the Contract Date, but before the First Annuity
Payment Date, the initial calculation of Fixed Annuity Payments will be
considered an estimate until the First Annuity Payment Date. We may defer
acceptance of or return any subsequent Premium Payments received before the
First Annuity Payment Date.
PREMIUM TAXES
We deduct the amount of any premium or other state and local taxes levied by any
state or governmental entity when such taxes are incurred.
MARKET VALUE ADJUSTMENTS
A Market Value Adjustment will be applied to any portion of a Fixed Annuity
Payment withdrawn to determine the withdrawal value under the Contract. The
Market Value Adjustment is determined by multiplying the amount withdrawn by the
following factor:
1 + I N/365
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1 + J + .0050 - 1
The applicable maturity for Index Rate I is the certain period divided by 2
rounded up to the nearest whole number and the applicable maturity for Index
Rate J is the remaining certain period divided by 2 rounded up to the nearest
whole number. The calendar month of Index Rate determination for Index Rate I is
the month the Contract was issued or the month of the most recent change (if
any) under the Flexible Period Option. The calendar month of Index Rate
determination for Index Rate J is the month the transaction is effective. N is
equal to the number of days remaining in the certain period, divided by 2.
Index Rate
The Index Rate is the average of the Ask Yields for the U.S. Treasury Strips as
reported by a national quoting service for the applicable maturity. The average
is based on the period from the 22nd day of the calendar month two months prior
to the calendar month of Index Rate determination to the 21st day of the
calendar month immediately prior to the month of determination. The applicable
maturity date for these U.S. Treasury Strips is derived from the length of the
Period Certain ("certain period"). If the Ask Yields are no longer available,
the Index Rate will be determined using a suitable replacement method subject to
any required regulatory approval. We currently set the Index Rate once each
calendar month. However, we reserve the right to set the Index Rate more
frequently than monthly, but in no event will such Index Rate be based on a
period less than 28 days.
Market Value Adjustments will be applied as follows:
(1) The Market Value Adjustment will be applied to the amount withdrawn before
deduction of any applicable Surrender Charge.
(2) The Market Value Adjustment will be calculated on the total amount that
must be withdrawn in order to provide the amount requested
IU-IA-3000 7
DEATH BENEFIT PROVISIONS
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DEATH OF OWNER PRIOR TO THE FIRST ANNUITY PAYMENT DATE
If you die prior to the First Annuity Payment Date, the entire interest in the
Contract must be distributed within five years of the date of death, or payments
may be made over a period not extending beyond the life expectancy of the
Beneficiary, provided such payments begin not later than one year after the date
of death. The "entire interest" means the Premium Paid plus any increase or
minus any decrease in the value of amounts allocated to the Separate Account as
of the date we receive due proof of death.
Spousal Continuation upon Death of Owner
If, at the death of the Owner (who is not also the Annuitant), the surviving
spouse of the deceased Owner is the Beneficiary, then such surviving spouse may
elect to continue the Contract as their own pursuant to Internal Revenue Code
Section 72(s) or the equivalent provisions of the U.S. Treasury Department rules
for qualified plans. However, on the death of the surviving spouse, this
provision may not be used again.
DEATH AFTER THE FIRST ANNUITY PAYMENT DATE
Death of Annuitant
If the Annuitant, and Joint Annuitant if applicable, dies and there is no
surviving Owner or joint Owner, any remaining Guaranteed Payments will be paid
to the Beneficiary in the form specified in the Schedule upon receipt of due
proof of the Annuitant's death at our Customer Service Center. Such payments
will be paid at least as rapidly as under the method of distribution then in
effect. In all events, distributions under the Contract must be made as required
by applicable law.
If this Contract is issued as a Life with Period Certain Annuity, within six
months of such death, the Beneficiary may elect to receive the withdrawal value
of any remaining Guaranteed Payments in a lump sum. If this Contract is issued
as a Period Certain Annuity or if you have the right to make withdrawals under
the Contract as shown in the Schedule, the Beneficiary may elect to receive the
withdrawal value of any remaining Guaranteed Payments in a lump sum at any time.
The withdrawal value under this provision is equal to:
(a) Under the Fixed Annuity portion of the Contract, if applicable, the present
value of any remaining Fixed Annuity Guaranteed Payments determined by
using the Fixed Annuity Payment Rate as of the Valuation Date immediately
following the date we receive due proof of the Annuitant's death, adjusted
by any Market Value Adjustment; and
(b) Under the Variable Annuity portion of the Contract, if applicable, the
present value of any remaining Variable Annuity Guaranteed Payments
determined by using the Assumed Interest Rate as of the Valuation Date
immediately following the date we receive due proof of the Annuitant's
death.
No Surrender Charges will apply in calculating the withdrawal value under this
provision. To take the withdrawal value of any remaining Variable and/or Fixed
Annuity Guaranteed Payments, as applicable, you must provide us with your
written request satisfactory to us at our Customer Service Center.
Death of Owner
If you die and you are not the Annuitant, payments will continue to the Payee in
the form specified in the Schedule. If no Payee designated by you survives you,
payments will be made to your estate. Such payments will be paid at least as
rapidly as under the method of distribution then in effect.
How to Claim Payments to Beneficiary
We must receive proof of the Annuitant's death (and Joint Annuitant's death if
applicable) at our Customer Service Center before we will make any remaining
payments to the Beneficiary. We will calculate any proceeds payable as of the
date we receive due proof of death. The Beneficiary should contact our Customer
Service Center for instructions
IU-IA-3000 8
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VARIABLE ANNUITY PROVISIONS
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THE VARIABLE SEPARATE ACCOUNT
The Variable Annuity Payments under this Contract, if any, are provided through
investments which may be made in our Separate Account (the "Account"), a unit
investment trust Separate Account, organized in and governed by the laws of the
State of Iowa, our state of Domicile. The Account is divided into Divisions,
each of which is available for investment under this Contract. The Account is
kept separate from our General Account and any other Separate Accounts we may
have. It is used to support Variable Annuity Contracts and may be used for other
purposes permitted by applicable laws and regulations. We own the assets in the
Separate Account. Assets equal to the reserves and other liabilities of the
account will not be charged with liabilities that arise from any other business
we conduct; but, we may transfer to our General Account assets which exceed the
reserves and other liabilities of the Variable Separate Account. Income and
realized and unrealized gains or losses from assets in the Variable Separate
Account are credited to or charged against the Account without regard to other
income, gains or losses in our other investment accounts.
The Variable Separate Account will invest in mutual funds, unit investment
trusts and other investment portfolios which we determine to be suitable for
this Contract's purposes. The Variable Separate Account is treated as a unit
investment trust under Federal securities laws. It is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940. The Variable Separate Account is also governed by state law as described
above.
Variable Separate Account Divisions
A unit investment trust Separate Account is divided into Divisions, each
investing in a designated investment portfolio. The Divisions and the investment
portfolios designated may be managed by a separate investment adviser. Such
adviser may be registered under the Investment Advisers Act of 1940.
Changes within the Variable Separate Account
We may, from time to time, make additional Variable Separate Account Divisions
available to you. These Divisions will invest in investment portfolios we find
suitable for the group contract. We also have the right to eliminate Divisions
from a Variable Separate Account, to combine two or more Divisions or to
substitute a new portfolio for the portfolio in which a Division invests. A
substitution may become necessary if, in our judgment, a portfolio or Division
no longer suits the purpose of the group contract. This may happen due to a
change in laws or regulations, a change in a portfolio's investment objectives
or restrictions, because the portfolio or Division is no longer available for
investment, or for some other reason. We will obtain any required regulatory
approvals before making such a substitution
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Separate Account which we determine to be associated with
the class of contracts to which the group contract belongs, to another Variable
Separate Account or Division.
When permitted by law, we reserve the right to:
(1) deregister a Variable Separate Account under the Investment Company Act
of 1940;
(2) operate a Variable Separate Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit investment
trust;
(3) operate a Variable Separate Account as a unit investment trust under
the Investment Company Act of 1940, if it is operating as a managed
Variable Separate Account;
(4) restrict or eliminate any voting rights of Owners, or other persons who
have voting rights to a Variable Separate Account; and
(5) combine a Variable Separate Account with other Variable Separate
Accounts.
IU-IA-3000 9
VARIABLE ANNUITY PROVISIONS (Continued)
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VARIABLE ANNUITY PAYMENTS
If Variable Annuity Payments are chosen, the initial payment for the option
chosen reflects the Variable Annuity Assumed Interest Rate shown in the
Schedule. Thereafter, the Divisions of the Variable Separate Account must earn
the Assumed Interest Rate shown in the Schedule plus enough to cover any
deductions stated in the Contract if future Annuity Payments are to remain
level. If earnings exceed this amount, Variable Annuity Payments will increase;
if earnings are less than this amount, Variable Annuity Payments will decrease.
Annuity Units
The Number of Annuity Units is equal to the portion of the first Estimated
Variable Annuity Payment allocated to each Division divided by the appropriate
Annuity Unit Value on the Valuation Date. Thereafter, the number of Annuity
Units remains unchanged except when you make an allocation change. Each Variable
Annuity Payment is equal to the sum of the products of each Annuity Unit Value
on the Valuation Date for that payment multiplied by the appropriate number of
Annuity Units for each Division.
Annuity Unit Value
On any Valuation Date, an Annuity Unit Value is equal to: (1) The Annuity Unit
Value on the previous Valuation Day; multiplied by (2) The Annuity Net Return
Factor(s) for the Valuation Date; multiplied by (3) A Factor to reflect the
Assumed Interest Rate shown in the Schedule
The Annuity Unit Value and Annuity Payment amount may go up or down due to
investment gain or loss.
Net Return Factor
The Net Return Factor(s) is(are) used to compute all Variable Annuity Payments
for any Division in the Variable Separate Account. The Net Return Factor for
each Division is equal to 1.0000 plus the Net Rate of Return.
The Net Rate of Return is equal to:
(1) The value of the shares of the Division at the end of a Valuation Date;
minus
(2) The value of shares of the Division at the start of the Valuation
Date; plus or minus
(3) Taxes (or reserves for taxes) on the Separate Account
(if any); divided by
(4) The value of shares of the Division at the start of the
Valuation Date; minus
(6) The daily Asset Based Administrative Charges and
Mortality and Expense Risk Charges described in the
Schedule for each day in the Valuation Period.
A Net Rate of Return may be more or less than 0%. The value of a share in a
Division is equal to the net assets of the Division divided by the number of
shares outstanding.
Annuity Payments shall not be changed due to mortality or expense results.
DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS
Mortality and Expense Risk Charges and Administrative Expenses
We deduct a charge from the Net Rate of Return on a daily basis for mortality
and expense risks and to compensate us for a portion of our ongoing
administrative expenses. The maximum charges for these expenses as of the
Contract Date are shown in the Schedule, but we may charge less than the
maximum.
IU-IA-3000 10
VARIABLE ANNUITY PROVISIONS (Continued)
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REDEMPTION FEES
We may deduct the amount of any redemption fees imposed by a mutual fund or
other investment company in which the Separate Account Divisions invest as a
result of any full or partial withdrawals, reallocations or other transactions
directed by you
YOUR RIGHT TO MAKE ALLOCATION CHANGES
You may make allocation changes among the available Divisions of the Variable
Separate Account after the end of the Right to Examine period. Allocation
changes in excess of twelve in any Contract Year are subject to an Excess
Allocation Charge as shown in the Schedule. Any charge will be deducted from the
Annuity Payment next following the date of any excess allocation change(s). To
make an allocation change, you must provide us with satisfactory notice at our
Customer Service Center. The change will take effect when we receive the notice.
We will monitor transfer activity and will restrict transfers that constitute
Frequent Trading. Our current definition of Frequent Trading is more than one
purchase and sale of the same underlying fund within a 30-day period. We may
modify our general standard, or the standard as it may apply to a particular
fund, at any time without prior notice, if required by the underlying fund(s) in
which Separate Account Divisions invest and/or by state or federal regulatory
requirements, or based on our business judgement. We will notify you in writing
within 30 days of such modification.
IU-IA-3000 11
OTHER IMPORTANT INFORMATION
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SENDING NOTICE TO US
Whenever written notice is required, send it to our Customer Service Center. The
address of our Customer Service Center is shown on the cover page. Please
include your Contract number in all correspondence.
REPORTS TO OWNER
We will send you a report at least once during each Contract Year. The report
will show the Annuity Unit values as of the end of the Contract Year. The report
will also show the allocation of the Annuity Unit values as of such date and the
amounts, if any, deducted from or added to the Annuity Unit value since the last
report. The report will also include any information that may be currently
required by the insurance supervisory official of the jurisdiction in which the
Contract is delivered. We will also send you copies of any shareholder reports
of the portfolios in which the Divisions of the Variable Separate Account
invest, as well as any other reports, notices or documents required by law to be
furnished to Owners.
ASSIGNMENT - USING THIS CONTRACT AS COLLATERAL SECURITY
You may assign this Contract as collateral security for a loan or other
obligation. This does not change the ownership. Your rights and any
Beneficiary's right are subject to the terms of the assignment. The
Beneficiary's rights may be subordinate to those of an assignee unless the
Beneficiary was designated as an irrevocable Beneficiary prior to the
assignment. To make or release an assignment, we must receive written notice
satisfactory to us, at our Customer Service Center. We are not responsible for
the validity of any assignment.
CONTRACT CHANGES - APPLICABLE TAX LAW
We reserve the right to make changes in this Contract or its Riders to the
extent necessary to continue to qualify this Contract as an annuity. Any such
changes will apply uniformly to all Contracts that are affected. You will be
given advance written notice of such changes.
MISSTATEMENT OF AGE OR SEX
If an age or sex has been misstated, the amounts payable or benefits provided by
this Contract will be those that the Premium Payment made would have bought at
the correct age or sex.
NON-PARTICIPATING
This Contract does not participate in our divisible surplus.
CONTESTABILITY
This Contract is incontestable from its date of issue.
IU-IA-3000 12
OTHER IMPORTANT INFORMATION (Continued)
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AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by one of our officers. No other
person, including an insurance agent or broker, has the authority to:
(1) change any of this Contract's terms;
(2) extend the time for Premium Payments; or
(3) make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS
We have filed a detailed statement of our computations with the insurance
supervisory official in the jurisdiction where this Contract is delivered. The
values are not less than those required by the law of that state or
jurisdiction. Any benefit provided by an attached optional benefit rider will
not increase these values unless otherwise stated in that rider.
PAYMENTS WE MAY DEFER
We may not be able to determine the value of the assets in the Variable
Separate Account because:
(1) The NYSE is closed for trading;
(2) the SEC determines that a state of emergency exists;
(3) an order or pronouncement of the SEC permits a delay for the protection of
Owners; or
(4) the check used to pay the premium has not cleared through the banking
system. This may take up to 15 days.
During such times, as to amounts allocated to the Variable Separate Account, we
may delay:
(1) determination and payment of any death benefit if death occurs before the
First Annuity Payment Date;
(2) allocation changes among the available Divisions of the Variable Separate
Account; or
(3) making a Variable Annuity Payment.
SURRENDER/LOAN VALUE
Except as provided in the Right to Examine provision, this Contract has no loan
or surrender value.
IU-IA-3000 13
SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CONTRACT - NO DIVIDENDS
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Non-participating. Investment results reflected in Variable Annuity Payments.
IU-IA-3000
