RENEWAL OPTION:
ESTATE ENHANCEMENT BENEFIT RIDER
The Renewal Option: Estate Enhancement Benefit Rider is made a part of the
Contract to which it is attached (this Contract).
As used in this form: (1) the Renewal Option: Estate Enhancement Benefit Rider
will be referred to as "this Rider"; (2) the Estate Enhancement Benefit provided
by this Rider will be referred to as the Death Benefit; and (3) the Renewal
Amount will mean the account value of this Contract as of the date this Rider
becomes effective.
The Death Benefit provided by this Rider is only in effect: (1) for Non-
Qualified Contracts and Contracts sold as Individual Retirement Annuities (IRA
and Xxxx XXX) under Code Section 408(b) or 408A of the Internal Revenue Code of
1986, as amended; and (2) for Contracts where the Owner, pre-designated Joint
Owner (if applicable) and Annuitant are all under the age of 76 on the effective
date of this Rider.
This Rider is only in effect and is only applicable: (1) if the Owner of this
Contract has elected to add this Rider to this Contract; and (2) if the LNL Home
Office has approved the addition of this Rider to this Contract. This Rider
will become effective on the Valuation Date at the end of the Valuation Period
during which the addition of this Rider to this Contract is approved by the LNL
Home Office. This Rider may only be elected one time.
Right to Examine Rider. Within 10 days after the date this Rider is first
received, it may be cancelled for any reason by delivering or mailing it to the
Home Office of LNL. Upon cancellation, LNL will waive the new Contingent
Deferred Sales Charges imposed under the terms of this Rider and will re-impose
the prior Contingent Deferred Sales Charges, if any, which were waived under the
terms of this Rider. The Owner assumes all investment risk attributable to the
Variable Account during this 10 day Right to Examine Rider period.
This Rider replaces, where applicable, the "Rider" Form 25923, the "Increased
Guaranteed Minimum Death Benefit" rider Form DBA-2, the "Enhanced Guaranteed
Minimum Death Benefit (EGMDB)" rider Form DBA-4 1/97, the "Enhanced Guaranteed
Minimum Death Benefit (EGMDB) Amendment" Form DBA-4A 11/98, and the "Enhanced
Guaranteed Minimum Death Benefit (EGMDB) Amendment" Form DBA-4B 06/99 which may
have been attached to this Contract.
The following language shall replace the sixth paragraph of Section 1.04 (NET
INVESTMENT RATE AND NET INVESTMENT FACTOR) of this Contract:
The Net Investment Rate for each sub-account is equal to the Gross Investment
Rate of the Fund minus a daily charge at an annual rate of [1.70%] for each
day of the Valuation Period, plus or minus an adjustment for any taxes
attributable to the operation of the Variable Account. This charge consists
of [1.60%] for mortality and distribution expense risks and [.10%] for
administrative expenses (see Section 2.10).
The following provision shall be added to ARTICLE 1 (PURCHASE PAYMENTS) of this
Contract:
1.09 RENEWAL OPTION
The following shall occur on the Valuation Date the election of this Rider
becomes effective:
1) For purposes of Section 2.11 (Surrender Option) of this Contract, the
Renewal Amount will be considered a Purchase Payment and will be subject
to a new Contingent Deferred Sales Charge according to the terms of this
Contract.
2) Contingent Deferred Sales Charges, if any, will be waived on all Purchase
Payments made to this Contract before the effective date of this Rider.
The following language shall be added after the last sentence of the By Owner
provision in Section 2.02 (CHOICE OF ANNUITY PAYMENT OPTION) of this Contract:
In addition, before annuity payments commence the Owner may select an Annuity
Payment Option as a method of paying the Death Benefit to a Beneficiary.
The following provision shall replace Section 2.13 (DEATH OF ANNUITANT) of this
Contract in its entirety:
2.13 DEATH BENEFIT
DEATH BEFORE COMMENCEMENT OF ANNUITY PAYMENTS
Entitlement to Death Benefit
LNL will pay a Death Benefit for Contracts where the Owner has elected this
Rider. LNL will pay the Death Benefit upon the death of the Annuitant, the
Owner or the Joint Owner (if there are two or more Joint Owners, this means
the Joint Owner pre-designated for payment of the Death Benefit). The Death
Benefit will be paid if LNL is in receipt of: (1) proof, satisfactory to LNL,
of the death; (2) written authorization for payment; and (3) all required
claim forms, fully completed.
Proof of death may be: 1) a certified copy of the death certificate; 2) a
certified copy of a decree of a court of competent jurisdiction as to the
findings of death; or 3) any other proof of death acceptable to LNL.
Upon the death of the Annuitant, the Death Benefit will be paid to the
Beneficiary in accordance with the terms of Article 3.
Upon the death of the sole Owner, LNL will pay a Death Benefit to the
Contingent Owner, if any; otherwise, to the Annuitant.
If there is an Owner and no more than one Joint Owner, upon the death of
either the Owner or the Joint Owner, LNL will pay a Death Benefit to the
surviving Owner or Joint Owner.
If there is an Owner and two or more Joint Owners, the Owner may pre-
designate one of the Joint Owners upon whose death LNL will pay a Death
Benefit. If the Owner has not pre-designated a Joint Owner, in writing to
LNL, the youngest Joint Owner will be the pre-designated Joint Owner. Upon
the death of either the Owner or the pre-designated Joint Owner, LNL will pay
a Death Benefit to the surviving Owner and/or any Joint Owner(s) equally.
Upon the death of a Joint Owner who was NOT the pre-designated Joint Owner,
LNL will pay the cash surrender value to the surviving Owner and any
surviving Joint Owner(s) equally.
If the deceased Owner or Joint Owner is also the Annuitant, then the death
will be treated as the death of the Annuitant and will be subject to the
provisions of this Rider regarding death of the Annuitant.
Determination of Death Benefit Amount
The Death Benefit is equal to the greatest of the following four amounts:
1) The account value of this Contract on the Valuation Date the Death
Benefit is approved by the LNL Home Office for payment.
2) The Renewal Amount plus the sum of all Purchase Payments made to this
Contract after the effective date of this Rider and minus all
withdrawals, partial annuitizations and premium tax (if any) made,
effected or incurred on or after the effective date of this Rider.
3) The highest account value at the time of fund valuation on any Contract
Date anniversary following the effective date of this Rider prior to the
81/st/ birthday of the deceased individual (Owner, pre-designated Joint
Owner if applicable, or Annuitant) and prior to the date of death of the
individual (Owner, pre-designated Joint Owner, or Annuitant) for whom a
death claim is approved by the LNL Home Office for payment. If the
Enhanced Guaranteed Minimum Death Benefit was in effect prior to the
effective date of this Rider, then the highest account value will be
calculated from the effective date of the Enhanced Guaranteed Minimum
Death Benefit previously provided by this Contract. The highest account
value is adjusted for certain transactions. It is increased by Purchase
Payments (other than the Renewal Amount) made on or after that Contract
Date anniversary on which the highest account value is obtained. It is
decreased by partial withdrawals, partial annuitizations and premium tax
(if any) made, effected or incurred on or after such Contract Date
anniversary on which the highest account value is obtained.
4) The account value of this Contract on the Valuation Date the Death
Benefit is approved by the LNL Home Office for payment plus an amount
equal to the result of the Enhancement Rate multiplied times the lesser
of: (1) the Contract Earnings; or (2) the Covered Earnings Limit. The
Enhancement Rate, Contract Earnings and Covered Earnings Limit are
described below:
Age of oldest Owner, pre-designated Joint Owner or
Annuitant on date when this Rider became effective
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Ages [0-69] Ages [70-75] Ages [76+]
Enhancement Rate equals: [40.0%] [25.0%] [0.0%]
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Contract Earnings equals:
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1) the account value of this Contract as of the date of death of the
individual (Owner, pre-designated Joint Owner, or Annuitant) for whom a
death claim is approved by the LNL Home office; minus
2) the Renewal Amount; minus
3) each Purchase Payment that is made to this Contract on or after the
effective date of this Rider and prior to the date of death of the
individual (Owner, pre-designated Joint Owner, or Annuitant) for whom a
death claim is approved by the LNL Home Office; plus
4) the amount by which each withdrawal made:
a) on or after the effective date of this Rider; and
b) prior to the date of death of the individual (Owner, pre-designated
Joint Owner, or Annuitant) for whom a death claim is approved by the
LNL Home Office;
exceeded the Contract Earnings immediately prior to the withdrawal.
Covered Earnings Limit equals [200%] of:
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1) the Renewal Amount; plus
2) each Purchase Payment that is made to this Contract on or after the
effective date of this Rider and prior to both the date of death of the
individual (Owner, pre-designated Joint Owner, or Annuitant) for whom a
death claim is approved by the LNL Home Office and the Contract
anniversary immediately preceding the 76th birthday of the oldest of the
Owner, pre-designated Joint Owner (if applicable) or Annuitant; minus
3) the amount by which each withdrawal made :
a) on or after the effective date of this Rider; and
b) prior to the date of death of the individual (Owner, pre-designated
Joint Owner, or Annuitant) for whom a death claim is approved by the
LNL Home Office;
exceeded the Contract Earnings immediately prior to the withdrawal.
If the recipient of the Death Benefit is the surviving spouse of the deceased
person, the surviving spouse may elect to receive the Death Benefit by
continuing this Contract as the sole Owner and having paid into this Contract
the excess, if any, of the Death Benefit over the account value of this Contract
on the date the Death Benefit is approved by the LNL Home Office for payment. If
the surviving spouse elects to continue this Contract as the sole Owner, this
Rider will continue in effect for this Contract and provide a subsequent Death
Benefit, but with the following three changes:
1) The Enhancement Rate used to calculate a subsequent Death Benefit will be
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determined by the age of the older of the surviving spouse or the Annuitant
on the date the original Death Benefit was approved for payment.
2) The Contract Earnings for a subsequent Death Benefit will equal:
-----------------
a) the account value of this Contract as of the date of death of the
individual (Owner or Annuitant) for whom a death claim for a subsequent
Death Benefit is approved by the LNL Home Office; minus
b) the original Death Benefit; minus
c) each Purchase Payment that is made to this Contract on or after the date
the original Death Benefit was approved for payment and prior to the date
of death of the individual (Owner or Annuitant) for whom a death claim for
a subsequent Death Benefit is approved by the LNL Home Office; plus
d) the amount by which each withdrawal made:
1) on or after the date the original Death Benefit was approved for
payment; and
2) prior to the date of death of the individual (Owner or Annuitant) for
whom a death claim for a subsequent Death Benefit is approved by the
LNL Home Office; exceeded the Contract Earnings immediately prior to
the withdrawal.
3) The Covered Earnings Limit will equal [200%] of:
----------------------
a) the original Death Benefit; plus
b) each Purchase Payment that is made to this Contract on or after the date
the original Death Benefit was approved for payment and prior to both the
date of death of the individual (Owner or Annuitant) for whom a death
claim for a
subsequent Death Benefit is approved by the LNL Home Office and the
Contract anniversary immediately preceding the 76th birthday of the
older of the surviving spouse or the Annuitant; minus
c) the amount by which each withdrawal made:
1) on or after the date the original Death Benefit was approved for
payment; and
2) prior to the date of death of the individual (Owner or
Annuitant) for whom a death claim for a subsequent Death Benefit
is approved by the LNL Home Office; exceeded the Contract
Earnings immediately prior to the withdrawal.
The Death Benefit will not be paid upon the death of any Owner, pre-
designated Joint Owner or Annuitant who has been changed after the
effective date of this Rider, unless such change is a result of the
surviving spouse continuing this Contract as the sole Owner. This Rider
will terminate upon the occurrence of any of the following: (1) payment of
the original Death Benefit, unless this Contract is continued by the
surviving spouse as the sole Owner in which case this Rider will terminate
upon payment of the subsequent Death Benefit; or (2) annuitization of this
Contract; or (3) termination of this Contract.
Payment of Amounts upon Death.
If the Owner is a corporation or other non-individual (non-natural person),
the death of the Annuitant will be treated as the death of the Owner.
The proceeds (either the Death Benefit or the cash surrender value) payable
on the first death of the Owner or any Joint Owner, or payable upon the
death of the spouse who continues this Contract, will be distributed as
follows:
1) the proceeds must be completely distributed within five years of the
Owner's (or Joint Owner's) date of death; or
2) the recipient of the proceeds may elect, within the one year period
after the Owner's (or Joint Owner's) date of death, to receive the
proceeds in substantially equal installments over the life of such
recipient or over a period not extending beyond the life expectancy of
such recipient; provided that such distributions begin not later than
one year after the Owner's (or Joint Owner's) date of death.
The Death Benefit payable on the death of the Annuitant will be distributed
to the designated Beneficiary in either the form of a lump sum or an
Annuity Payment Option. An Annuity Payment Option must be selected within
60 days after LNL approves the death claim (see the Entitlement to Death
Benefit provision).
If a lump sum settlement is elected, the proceeds will be mailed within
seven days of approval by LNL of the claim. This payment may be postponed
as permitted by the Investment Company Act of 1940.
Notwithstanding any provision of this Contract to the contrary, no payment
of proceeds provided under this Contract will be allowed that does not
satisfy the requirements of Code Section 72(s) or 401(a)(9) as applicable,
as amended from time to time.
All payments will be subject to the laws and regulations governing death
benefits.
DEATH ON OR AFTER THE COMMENCEMENT OF ANNUITY PAYMENTS
The Death Benefit described in Section 2.13 is no longer applicable and
will terminate upon the commencement of Annuity Payments.
If upon the death of the Annuitant (or both Joint Annuitants when
applicable) any Annuity Payments remain under the Annuity Payment Option
selected, they will be paid to the Beneficiary as provided by that Annuity
Payment Option.
The following language shall replace part (3) of Section 2.14 (WAIVER OF
CONTINGENT DEFERRED SALES CHARGES) of this Contract:
(3) a surrender of this Contract as a result of the payment of the Death
Benefit upon the death of the Annuitant, the Owner, or the Joint Owner
(if there are two or more Joint Owners, this means the Joint Owner pre-
designated for payment of the Death Benefit as defined in Section 2.13);
The following language shall be added at the end of Section 2.14 (WAIVER OF
CONTINGENT DEFERRED SALES CHARGES) of this Contract:
(5) Purchase Payments made to this Contract prior to the effective date of
this Rider; (6) annuitization of this Contract.
The following provision shall replace Section 4.02 (CONTROL) of this Contract in
its entirety:
4.02 CONTROL
The Owner is the person (or entity) who has the ability to exercise all
rights and privileges within this Contract.
If a Joint Owner(s) is named in the application, the Owner and any Joint
Owner shall be treated as having equal and undivided interests in this
Contract. The Owner and any Joint Owner, independent of the other, may
exercise any ownership rights in this Contract.
A Contingent Owner cannot exercise any ownership rights in this Contract
while the Contract Owner or any Joint Owner is alive.
The Lincoln National Life Insurance Company
Xxxxx X. Xxxxxx, Vice President
