SECURITY BENEFIT LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration of the Purchase Payments and the attached Application,
Security Benefit Life Insurance Company (the "Company") will pay the
benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ THE CONTRACT CAREFULLY. It is a legal Contract between the
Owner and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE
MAY RETURN IT TO THE COMPANY WITHIN 10 DAYS FROM THE DATE OF RECEIPT. IT
MAY BE RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED,
THIS CONTRACT SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY
WILL REFUND ANY PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT
AND WILL REFUND SEPARATE ACCOUNT VALUE AS OF THE DATE THE RETURNED POLICY
IS RECEIVED BY THE COMPANY.
Signed for Security Benefit Life Insurance Company on the Contract Date.
[XXXXX X. XXXXX] [XXXXXX X. XXXXXX]
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Payout
Date or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date according
to the Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the method
specified in this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. (SEE "ACCOUNT
VALUE AND EXPENSE PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
[SBL LOGO]
SECURITY BENEFIT LIFE INSURANCE COMPANY
A Member of The Security Benefit Group of Companies
000 XX Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000
0-000-000-0000 for Customer Service
V6021 (R8-98)
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TABLE OF CONTENTS
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Page
CONTRACT SPECIFICATIONS............................... 3
DEFINITIONS........................................... 4-7
GENERAL PROVISIONS.................................... 7-10
The Contract..................................... 7, 8
Compliance....................................... 8
Misstatement of Age and Sex...................... 8
Evidence of Survival............................. 8
Incontestability................................. 8
Assignment....................................... 8
Exchanges........................................ 8, 9
Limits on Exchanges.............................. 10
Claims of Creditors.............................. 10
Nonforfeiture Values............................. 10
Participation.................................... 10
Statements....................................... 10
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS....... 10,11
Ownership........................................ 10
Joint Ownership.................................. 11
Annuitant........................................ 11
Primary and Secondary Beneficiaries.............. 11
Ownership and Beneficiary Changes................ 11
PURCHASE PAYMENT PROVISIONS........................... 12
Flexible Purchase Payments....................... 12
Purchase Payment Limitations..................... 12
Purchase Payment Allocation...................... 12
Place of Payment................................. 12
ACCOUNT VALUE AND EXPENSE PROVISIONS.................. 12-15
Account Value.................................... 12
Fixed Account Value.............................. 12
Fixed Account Interest Crediting................. 13
Separate Account Value........................... 13
Accumulation Unit Value.......................... 13
Net Investment Factor............................ 14
Determining Accumulation Units................... 14
Mortality and Expense Risk Charge................ 14
Premium Tax Expense.............................. 14
Mutual Fund Expenses............................. 15
WITHDRAWAL PROVISIONS................................. 15-17
Withdrawals...................................... 15,16
Withdrawal Value................................. 16
Withdrawal Charge................................ 16
Payment Adjustment............................... 16,17
Date of Request.................................. 17
Systematic Withdrawals........................... 17
Payment of Withdrawal Benefits................... 17
DEATH BENEFIT PROVISIONS.............................. 18,19
Death Benefit.................................... 18
Proof of Death................................... 19
Distribution Rules............................... 19
ANNUITY PAYMENT PROVISIONS............................ 20-26
Annuity Payout Date.............................. 20
Change of Annuity Payout Date.................... 20
Annuity Options.................................. 20-23
Payment Adjustment Upon Death of Joint
Annuitant........................................ 23
Annuity Payout Amount............................ 24
Fixed Annuity Payments........................... 24
Variable Annuity Payments........................ 24
Annuity Tables................................... 24
Annuity Payments................................. 25
Payment Units.................................... 25,26
Payment Unit Value............................... 26
AMENDMENTS OR ENDORSEMENTS, if any
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CONTRACT SPECIFICATIONS
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OWNER NAME: Xxxx X. Xxx CONTRACT NUMBER: Specimen
JOINT OWNER NAME: Xxxx X. Xxx CONTRACT DATE: 6-30-2023
ANNUITANT NAME: Xxxx X. Xxx ANNUITY PAYOUT DATE: 7-1-2023
ANNUITANT DATE OF BIRTH: 10-30-1953 LIQUIDITY PERIOD EXPIRATION
DATE: 6-30-2028
ANNUITANT GENDER: Male PERIOD CERTAIN EXPIRATION
DATE: 6-30-2038
PRIMARY BENEFICIARY PLAN: IRA
NAME: Xxxxx X. Xxx
SECONDARY BENEFICIARY ASSIGNMENT:This policy may not be
NAME: Xxxx X. Xxx, Xx. assigned. See Assignment Provision
of your Policy.
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INITIAL PURCHASE PAYMENT......................$10,000
MINIMUM SUBSEQUENT PURCHASE PAYMENTS $1,000 or $200 through an
PAYMENTS......................................automatic investment program
MINIMUM SYSTEMATIC WITHDRAWAL.................$100
MORTALITY AND EXPENSE RISK CHARGE.............0.55% Annually (1.40% Annually for
Option 9)
WITHDRAWAL CHARGE (OPTION 9 ONLY).............
Year of Withdrawal from Annuity Payout Date* 1 2 3 4 5
Withdrawal Charge ----------------------------------
5% 4% 3% 2% 1%
*Withdrawals under Option 9 are available
only during the Liquidity Period
GUARANTEED RATE...............................3%
ANNUITY OPTION................................Life Income with Liquidity
(Option 9)
PERIOD CERTAIN 15 Years
JOINT & SURVIVOR PERCENTAGE 100%
FLOOR PAYMENT $450
BASIS OF ANNUITY TABLES.......................1983(a) Mortality Table with
mortality improvement using
Projection Scale G
ASSUMED INTEREST RATE.........................3.5% Annually
SEPARATE ACCOUNT..............................X. Xxxx Price Variable Annuity
Account
SUBACCOUNT:
Prime Reserve Subaccount (Not available under Option 9); Limited-Term Bond
Subaccount; Personal Strategy Balanced Subaccount; Equity Income Subaccount;
Mid-Cap Growth Subaccount; International Stock Subaccount; New America Growth
Subaccount.
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Account Value in the Subaccounts and the Fixed Account.
The Annuity Payout Date and Annuity Option are assigned automatically and may
be changed by the Owner prior to the Annuity Payout Date. See "Change of
Annuity Payout Date" and "Annuity Options."
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DEFINITIONS
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ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute Separate
Account Value. It is also used to compute the Variable Annuity Payments for
Annuity Options 5 through 7.
ANNUITANT
An Annuitant is a person on whose life the Annuity Payments depend for Annuity
Options 1 through 4 and 9. The Annuitant receives Annuity Payments under this
Contract. Please see "Annuitant" provisions on page 11.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making
Annuity Payments. The Annuity Option is set prior to the Annuity Payout Date.
ANNUITY PAYMENTS
Annuity Payments are payments made according to the provisions of the Annuity
Option selected. Annuity Payments begin on the Annuity Payout Date and are
made on the same date of each month on a monthly, quarterly, semiannual or
annual basis. Please see "Annuity Payment Provisions" on pages 20 through 27.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity Payments begin. This date
may be changed by the Owner. The Annuity Payout Date is set forth on page 3.
Please see "Annuity Payout Date" on page 20.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and the Fixed Account
prior to the Annuity Payout Date. Such Exchanges are made automatically on a
periodic basis by the Company at the written request of the Owner. The Company
reserves the right to discontinue, modify or suspend Automatic Exchanges.
COMPANY
The Company is Security Benefit Life Insurance Company, 000 XX Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxx 00000-0000.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is set
forth on page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on Fixed Account Value
at a rate that exceeds the Guaranteed Rate set forth on page 3. The Company
will declare the rate of Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will be
the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
The Designated Beneficiary receives a death benefit upon the death of the
Owner prior to the Annuity Payout Date.
Under certain Xxxxxxx Options, the Designated Beneficiary receives a death
benefit upon the death of the Annuitant(s). Please see "Ownership, Annuitant
and Beneficiary Provisions" on page 11, "Death Benefit Provisions" on pages 18
through 20 and "Annuity Options" on pages 21 through 24.
EXCHANGE
An Exchange is an Exchange of Account Value or Payment Units of one Subaccount
for the equivalent dollar amount of Account Value or Payment Units of another
Subaccount(s). An Exchange also includes Exchanges of Account Value among the
Subaccounts and the Fixed Account.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account. The Company
manages the general account and guarantees that it will credit interest on
Fixed Account Value at an annual rate at least equal to the Guaranteed Rate.
This Rate is set forth on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods of one or more
years, referred to as Guarantee Periods. The Company may offer Guarantee
Periods of different durations.
The Guarantee Period that applies to any Fixed Account Value:
(1) starts on the date that such Account Value is allocated to the Fixed
Account pursuant to:
(a) a Purchase Payment Received by the Company; or
(b) an Exchange to the Fixed Account; and
(2) ends on the last day of the same month in the year in which the Guarantee
Period expires.
When any Guarantee Period expires, a new Guarantee Period shall start for such
Account Value on the date that follows such expiration date. Such new period
shall end on the immediately preceding date in the year in which the Guarantee
Period expires. For example, assuming a one-year Guarantee Period, Account
Value exchanged to the Fixed Account on June 1 would have a Guarantee Period
starting on that date and ending on June 30 of the following year. A new
Guarantee Period for such Account Value would start on July 1 of that year and
end on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is Security Benefit Life Insurance
Company, 000 XX Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000-0000.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see "Joint
Ownership" provisions on page 11.
LIQUIDITY PERIOD
Under Option 9, the Liquidity Period is the period of time during which the
Owner may withdraw Account Value. The Liquidity Period begins on the Annuity
Payout Date and ends on the Valuation Date preceding the 61st Annuity Payment.
The Liquidity Period Expiration Date is set forth on page 3.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or
corporation.
NONQUALIFIED CONTRACT
A Contract that is not a Qualified Contract.
OWNER
The Owner is the person who has all rights under the Contract. The Owner is
named on page 3. Please see "Ownership" provisions on page 11.
PAYMENT UNIT
The Payment Unit is a unit of measure used to compute Variable Annuity
Payments for Annuity Options 1 through 4, 8 and 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other entity will be charged against
this Contract. When Premium Tax is assessed after the Purchase Payment is
applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the
Contract.
QUALIFIED CONTRACT
A Contract issued in connection with a plan qualified under Section 401, 403,
408 or a similar provision of the Internal Revenue Code.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good
order at its Home Office, 000 XX Xxxxxxxx, Xxxxxx, Xxxxxx 00000-0000.
SEPARATE ACCOUNT
The Separate Account set forth on page 3 is a separate account established and
maintained by the Company under Kansas law. The Separate Account is registered
with the Securities and Exchange Commission (SEC) under the Investment Company
Act of 1940 as a Unit Investment Trust. It was established by the Company to
support variable annuity contracts. The Company owns the assets of the
Separate Account and maintains them apart from the assets of its general
account and its other separate accounts. The assets held in the Separate
Account equal to the reserves and other contract liabilities with respect to
the Separate Account may not be charged with liabilities arising from any
other business the Company may conduct.
Income and realized and unrealized gains and losses from assets in the
Separate Account are credited to, or charged against, the Separate Account
without regard to the income, gains or losses from the Company's general
account or its other separate accounts. The Separate Account is divided into
Subaccounts set forth on page 3. Income and realized and unrealized gains and
losses from assets in each Subaccount are credited to, or charged against, the
Subaccount without regard to income, gains or losses in the other Subaccounts.
The Company has the right to transfer to its general account any assets of the
Separate Account that are in excess of the reserves and other contract
liabilities with respect to the Separate Account. The value of the assets in
the Separate Account on each Valuation Date is determined as of the end of
each Valuation Date.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
mutual funds. Each Subaccount may invest its assets in a separate class or
series of a designated mutual fund or funds. The Subaccounts are set forth on
page 3. Subject to the regulatory requirements then in force, the Company
reserves the right to:
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or purchased
by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other separate accounts of
the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account or
a Subaccount, the Company will notify the Owner of the change. The Company
will not change the investment policy of any Subaccount in any material
respect without complying with the filing and other procedures of the
insurance regulators of the state of issue.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to:
(1) the net asset value of all shares of the underlying mutual fund held by
the Subaccount; plus
(2) any cash or other assets of the Subaccount; less
(3) all liabilities of the Subaccount.
VALUATION DATE
A Valuation Date is each day that both the New York Stock Exchange and the
Company's Home Office are open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from the close of one Valuation
Date to the close of the next Valuation Date.
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GENERAL PROVISIONS
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THE CONTRACT
The entire Contract between the Owner and the Company consists of:
(1) this Contract;
(2) the attached Application; and
(3) any Amendments, Endorsements or Riders to the Contract.
All statements made in the Application will, in the absence of fraud, as ruled
by a court of competent jurisdiction, be deemed representations and not
warranties. The Company will use no statement made by or on behalf of any
Owner or Annuitant to void this Contract unless it is in the written
Application. Any change in the Contract can be made only with the written
consent of the President, a Vice President, or the Secretary of the Company.
The Purchase Payment and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall
be limited to a return of the Purchase Payments.
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
law. This includes, but is not limited to: (1) requirements for annuity
contracts under the Internal Revenue Code; or (2) the laws of any state. The
Company will provide the Owner with a copy of any such change and also will
file such a change with the insurance regulatory officials of the state in
which the Contract is delivered.
MISSTATEMENT OF AGE AND SEX
If the age or sex of any Annuitant has been misstated, Annuity Payments shall
be adjusted, when allowed by law, to the amount which would have been payable
based upon the correct age or sex. Proof of the age of an Annuitant may be
required at any time, in a form acceptable to the Company. If Annuity Payments
have already commenced and the misstatement has caused an underpayment, the
full amount due will be paid with the next scheduled Annuity Payment. If the
misstatement has caused an overpayment, the amount due will be deducted from
one or more future Annuity Payments.
EVIDENCE OF SURVIVAL
When any Annuity Payments under this Contract depend on the Annuitant being
alive on a given date, proof that the Annuitant is living may be required by
the Company. Such proof must be in a form acceptable to the Company, and may
be required prior to making the Annuity Payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Contract Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be assigned. If so, no
Assignment under this Contract is binding unless Received by the Company in
writing. The Company assumes no responsibility for the validity, legality, or
tax status of any Assignment. The Assignment will be subject to any payment
made or other action taken by the Company before the Assignment is Received by
the Company. Once filed, the rights of the Owner, Annuitant and Beneficiary
are subject to the Assignment. Any claim is subject to proof of interest of
the assignee.
EXCHANGES
Certain Exchanges of Account Value or Payment Units are permitted under the
Contract. An Owner may make only six Exchanges per Contract Year. Automatic
Exchanges are not included in the six Exchanges allowed per Contract Year.
Annuity Payments after an Exchange will reflect the new allocation of Account
Value or Payment Units among the Subaccounts and the Fixed Account.
An Exchange may be effected by submitting a written request to the Company or
by any other means permitted by the Company. The Company will effect an
Exchange to or from a Subaccount on the basis of Accumulation Unit Value (or,
if applicable, Payment Unit Value) as of the close of the Valuation Period in
which all information required to make the Exchange is Received by the
Company.
Prior to the Annuity Payout Date, Account Value may be Exchanged among the
Subaccounts and the Fixed Account.
Account Value may be Exchanged from the Fixed Account only:
(1) during the calendar month in which the applicable Guarantee Period
expires; and
(2) pursuant to an Automatic Exchange.
Exchanges of Fixed Account Value shall be made:
(1) first from Fixed Account Value for which the Guarantee Period expires
during the calendar month in which the Exchange is effected;
(2) then in the order that starts with Fixed Account Value which has the
longest amount of time before its Guarantee Period expires; and
(3) ends with that which has the least amount of time before its Guarantee
Period expires.
Annuity Options 1 through 4 and 8 provide for fixed payments (a "Fixed
Annuity") or payments that vary according to the performance of the
Subaccounts (a "Variable Annuity"). If a Variable Annuity under one of Annuity
Options 1 through 4 or 8 is elected, the Owner may Exchange Payment Units only
among the Subaccounts.
Annuity Options 5 through 7 provide for:
(1) a Fixed Annuity;
(2) a Variable Annuity; or
(3) a combination Fixed and Variable Annuity.
Account Value may be Exchanged among the Subaccounts and the Fixed Account
under Annuity Options 5 through 7. Account Value may be Exchanged from the
Fixed Account only during the calendar month in which the applicable Guarantee
Period expires.
Annuity Option 9 provides for a Variable Annuity. Account Value may be
Exchanged among the Subaccounts during the Liquidity Period under Option 9.
After the Liquidity Period, Payment Units may be Exchanged among the
Subaccounts. An Owner's Exchange of Account Value under Option 9 will
automatically effect a corresponding Exchange of Payment Units. Exchanges
under Option 9 do not affect the amount of Annuity Payments until such amount
is reset as discussed under "Payment Units" on pages 26 and 27.
LIMITS ON EXCHANGES
The Company reserves the right to:
(1) limit the amount of Account Value that may be subject to Exchanges;
(2) limit the amount of Account Value remaining in an Account after an
Exchange;
(3) waive or limit the number of Exchanges allowed each Contract Year;
(4) impose conditions on the right to Exchange; and
(5) suspend Exchanges.
Exchanges of Account Value must be at least $500 or, if less, the remaining
balance in the Fixed Account or a Subaccount.
The Company reserves the right to delay Exchanges from the Fixed Account for
up to 6 months as required by most states. The Company will inform the Owner
if there will be a delay.
CLAIMS OF CREDITORS
The Account Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Amounts will at least
equal the minimum required by law.
PARTICIPATION
The Company may pay dividends on some of its contracts. The Company, however,
does not expect dividends to become payable on this Contract. At the end of
each Contract Year the Company will determine the Contract's dividend, if any.
The Owner may choose to have it: (1) added to the Account Value; or (2) paid
in cash. If no choice is made, any dividend will be added to Account Value.
STATEMENTS
At least once each Contract Year the Owner shall be sent a statement including
any current Account Value and any other information required by law. The Owner
may send a written request for a statement at other intervals. The Company may
charge a reasonable fee for statements at such other intervals.
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OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
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OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may
be exercised only by the Owner. If the purchaser names someone other than
himself or herself as Owner, the purchaser has no rights in the Contract. No
Owner may be older than age 85 on the Contract Date. Upon the Owner's death,
all rights and privileges under the Contract may be exercised by: (1) the
Designated Beneficiary if death occurs prior to the Annuity Payout Date; or
(2) the Annuitant(s) if death occurs on or after the Annuity Payout Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with
rights of survivorship. When an Owner and Joint Owner have been named, the
Company will honor only requests for changes and the exercise of other
Ownership rights made by both the Owner and Joint Owner. When a Joint Owner is
named, all references to "Owner" throughout this Contract should be construed
to mean both the Owner and Joint Owner, except for the "Statements" provision
on page 10 and the "Death Benefit Provisions" on pages 18 through 20. Joint
Owners are permitted only if the Contract is a Nonqualified Contract.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant or any
Joint Annuitant only prior to the Annuity Payout Date. The request for this
change must be made in writing and Received by the Company at least 30 days
prior to the Annuity Payout Date. No Annuitant may be named who is more than
85 years old on the Contract Date. When the Annuitant dies prior to the
Annuity Payout Date, the Owner must name a new Annuitant within 30 days or, if
sooner, by the Annuity Payout Date, except where the Owner is a Nonnatural
Person. If a new Annuitant is not named, the Owner becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are named on page 3. The
Owner may change any Beneficiary as described in "Ownership and Beneficiary
Changes" below. If the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary. Unless the Owner
directs otherwise, when there are two or more Primary Beneficiaries, they will
receive equal shares. The Owner may designate a permanent Beneficiary whose
rights under the Contract may not be changed without his or her written
consent.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new
Owner, a new Primary Beneficiary or a new Secondary Beneficiary. Any new
choice of Owner, Primary Beneficiary or Secondary Beneficiary will revoke any
prior choice. Any change must be made in writing and recorded at the Home
Office. The change will become effective as of the date the written request is
signed, whether or not the Owner is living at the time the change is recorded.
A new choice of Primary Beneficiary or Secondary Beneficiary will not apply to
any payment made or action taken by the Company prior to the time it was
recorded. The Company may require the Contract be returned so these changes
may be made.
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PURCHASE PAYMENT PROVISIONS
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FLEXIBLE PURCHASE PAYMENTS
The Contract begins on the Contract Date when the initial Purchase Payment is
applied under the Contract. The Owner is not required to continue Purchase
Payments in the amount or frequency originally planned. The Owner may: (1)
increase or decrease the amount of Purchase Payments, subject to any Contract
or administrative limits; or (2) change the frequency of Purchase Payments. A
change in frequency or amount of Purchase Payments does not require a written
request.
PURCHASE PAYMENT LIMITATIONS
Total Purchase Payments to the Contract may not be greater than $1,000,000
without prior approval by the Company. The minimum subsequent Purchase Payment
amount is set forth on page 3.
PURCHASE PAYMENT ALLOCATION
Purchase Payments may be allocated among the Subaccounts and the Fixed
Account. The allocation to each Account must be a whole percentage. No less
than 5 percent of the Purchase Payment may be allocated to any Account. The
Owner may change the allocation of Purchase Payments by submitting a written
request to the Company or by other means permitted by the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company at its
Home Office. Purchase Payments after the first Purchase Payment are applied as
of the end of the Valuation Period during which they are Received by the
Company.
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ACCOUNT VALUE AND EXPENSE PROVISIONS
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ACCOUNT VALUE
Account Value is determined on each Valuation Date: (1) prior to the Annuity
Payout Date; and (2) after the Annuity Payout Date for Options 5 through 7 and
for Option 9 during the Liquidity Period. Account Value is the sum of: (1) the
Separate Account Value; and (2) the Fixed Account Value. At any time after the
first Contract Year and prior to the Annuity Payout Date, the Company reserves
the right to pay to the Owner the Account Value as a lump sum if it is below
$2,000.
FIXED ACCOUNT VALUE
On any Valuation Date, the Fixed Account Value is equal to any part of the
First Purchase Payment allocated under the Contract to the Fixed Account:
PLUS
1. any other Purchase Payment allocated under the Contract to the Fixed
Account;
2. any Exchanges from the Separate Account to the Fixed Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate Account;
3. any Premium Taxes; and
4. any Fixed Account Value which is applied to any of Annuity Options 1
through 4, 8 or 9; and
5. any Annuity Payments made under Annuity Options 5 through 7.
FIXED ACCOUNT INTEREST CREDITING
The Company shall credit interest on Fixed Account Value at an annual rate at
least equal to the Guaranteed Rate set forth on page 3. Also, the Company may
in its sole judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared, shall be fixed
during the Guarantee Period. Fixed Account Value shall earn Current Interest
during each Guarantee Period at the rate, if any, declared by the Company on
the first day of the Guarantee Period.
The Company may credit Current Interest on Account Value that was allocated or
exchanged to the Fixed Account during one period at a different rate than
amounts allocated or exchanged to the Fixed Account in another period. Also,
the Company may credit Current Interest on Fixed Account Value at different
rates based upon the length of the Guarantee Period. Therefore, at any time,
portions of Fixed Account Value may be earning Current Interest at different
rates based upon the period during which such portions were allocated or
exchanged to the Fixed Account and the length of the Guarantee Period.
SEPARATE ACCOUNT VALUE
On any Valuation Date, the Separate Account Value is the sum of the then
current value of the Accumulation Units allocated to each Subaccount for this
Contract. The number of Accumulation Units initially allocated to each
Subaccount is determined by dividing: (1) the portion of the first Purchase
Payment allocated to the Subaccount on the Contract Date; by (2) the
Accumulation Unit Value on the Contract Date.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Series was set at $10. The
Accumulation Unit Value for any subsequent Valuation Date is equal to (1)
multiplied by (2) where:
1. is the Accumulation Unit Value determined on the immediately preceding
Valuation Date; and
2. is the Net Investment Factor on the Valuation Date with respect to which
the Accumulation Unit Value is being determined.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount as of the end of any Valuation
Period is found by dividing (1) by (2) and subtracting (3) from the result,
where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Separate
Account or Subaccount; the operations of the Company with respect to
the Contract; or the payment of premium or acquisition costs under the
Contract.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a daily factor representing the Mortality and Expense Risk charge
deducted from the Separate Account.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under the Contract
will not change as a result of investment experience. Events that change the
number of Accumulation Units are:
1. Purchase Payments applied to the Subaccount;
2. Account Value Exchanged into or out of the Subaccount;
3. Withdrawals deducted from the Subaccount;
4. Annuity Payments from the Subaccount under Options 5 through 7 and 9;
5. Any amounts deducted from the Subaccount to increase the amount of the
Annuity Payments under Option 9 to the amount of the Floor Payment;
6. Separate Account Value applied to any of Annuity Options 1 through 4 or
8; and
7. Premium Taxes deducted from the Subaccount.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page 3.
This charge will be computed and deducted from each Subaccount on each
Valuation Date. This charge is factored into the Accumulation Unit and Payment
Unit Values on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any Premium Taxes will be deducted as described on page 3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each such fund reflects the deduction of any investment advisory fees
and other expenses of the fund. These fees and expenses are not deducted from
the assets of a Subaccount, but are paid by the funds. The Owner indirectly
bears a pro rata share of such fees and expenses. A fund's fees and expenses
are not specified or fixed under the terms of this Contract.
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WITHDRAWAL PROVISIONS
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WITHDRAWALS
Prior to the Annuity Payout Date, a full Withdrawal of Account Value or
Partial Withdrawal of Separate Account Value is permitted. Partial Withdrawals
of Fixed Account Value are restricted as described below. On or after the
Annuity Payout Date, the Owner may withdraw Account Value if one of Options 5
through 7 has been elected. The Owner also may withdraw Account Value during
the Liquidity Period under Option 9. Under these options, a full Withdrawal of
Account Value or full or partial Withdrawal of Separate Account Value is
allowed. Partial Withdrawals of Fixed Account Value are restricted as
described below. This provision is subject to any federal or state Withdrawal
restrictions.
A partial Withdrawal of Fixed Account Value may be made only: (1) during the
calendar month in which the applicable Guarantee Period expires; and (2) once
per Contract Year in an amount up to the greater of $5,000 or 10 percent of
the Fixed Account Value at the time of the partial Withdrawal. Systematic
Withdrawals are permitted prior to the Annuity Payout Date.
The Owner also may withdraw the present value of future Annuity Payments
commuted at the Assumed Interest Rate if a Variable Annuity under Option 8 has
been elected.
Upon the Owner's request for a full Withdrawal, the Company will pay the
Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions:
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must request a Withdrawal while this Contract is in force.
3. The amount Withdrawn must be at least $500.00 except when terminating the
Contract.
4. For Option 9, the request for Withdrawal must be Received by the Company
prior to the Liquidity Period Expiration Date set forth on page 3.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account. Withdrawals of Fixed Account Value shall be
made:
(1) first from Fixed Account Value for which the Guarantee Period expires
during the calendar month in which the Withdrawal is effected;
(2) then in the order that starts with Fixed Account Value which has the
longest amount of time before its Guarantee Period expires; and
(3) ends with that which has the least amount of time before its Guarantee
Period expires.
WITHDRAWAL VALUE
The Withdrawal Value as of any Valuation Date will be:
(1) the Account Value (or for Option 8, the present value of future Annuity
Payments commuted at the Assumed Interest Rate); less
(2) any Premium Taxes due or paid by the Company; and
(3) for Option 9, the Withdrawal Charge set forth on page 3.
If Account Value after any partial Withdrawal is $2,000 or less, or with
respect to Option 8, Annuity Payments would be less than $100, the Company
reserves the right to treat such partial Withdrawal as a full Withdrawal.
WITHDRAWAL CHARGE
If part or all of the Account Value is Withdrawn under Option 9, a Withdrawal
Charge is applied at the time of Withdrawal. The amount of the charge is based
on the year in which the Withdrawal is made measured from the Annuity Payout
Date. See the Withdrawal Charge set forth on page 3. The Withdrawal Charge is
applied to the amount of the Withdrawal and is deducted from Account Value
allocated to the Subaccounts in the same proportion as the Withdrawal is
allocated.
PAYMENT ADJUSTMENT
Upon a partial Withdrawal during the Liquidity Period under Option 9, the
Company will adjust the amount of the Annuity Payment and Floor Payment as
follows. The Company will reduce the amount of the Annuity Payment and Floor
Payment by a percentage determined by dividing the amount of the Withdrawal,
including the amount of the Withdrawal Charge, by Account Value on the date of
the Withdrawal. The number of Payment Units used to compute each Annuity
Payment will be reduced by the same percentage.:
An example of a payment adjustment is set forth below:
SUBACCOUNTS FROM ACCOUNT VALUE WITHDRAWAL AMOUNT
WHICH ANNUITY ON DATE OF (INCLUDING WITHDRAWAL PERCENTAGE
PAYMENT IS MADE WITHDRAWAL CHARGES) REDUCTION
Equity Income $95,000 $0 0%
International Stock $25,000 $15,000 60%
Total $120,000 $15,000 12.5%
SUBACCOUNTS FROM PRIOR TO PARTIAL WITHDRAWAL AFTER PARTIAL WITHDRAWAL
WHICH ANNUITY --------------------------- ----------------------------
PAYMENT IS MADE ANNUITY PAYMENT FLOOR ANNUITY PAYMENT FLOOR
PAYMENT UNITS PAYMENT PAYMENT UNITS PAYMENT(1)
Equity Income(2) $300 29.7914 N/A $300 29.7914 N/A
International Stock(3) $100 9.7847 N/A $40 3.9139 N/A
Total $400 $304 $340 $266
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Value on the basis of
Accumulation Unit Value determined as of the end of the Valuation Period in
which all the required information is Received by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic distributions from the Contract in
substantially equal amounts prior to the Annuity Payout Date. In order to
start Systematic Withdrawals, the Owner must make the request in writing. The
Minimum Systematic Withdrawal is set forth on page 3. The Owner must choose
the type of payment.
The payment type may be:
(1) a percentage of Account Value;
(2) a specified dollar amount;
(3) all earnings in the Contract; or
(4) based upon the life expectancy of the Owner or the Owner and a
beneficiary.
The payment frequency may be: (1) monthly; (2) quarterly; (3) semiannually; or
(4) annually.
Systematic Withdrawals of Fixed Account Value must provide for payment over a
period of not less than 36 months. Systematic Withdrawals may be stopped by
the Owner upon proper written request Received by the Company at least 30 days
in advance. The Company reserves the right to stop, modify or suspend
Systematic Withdrawals.
--------------------------------
1 The Floor Payment is reduced by 12.5%, the percentage by which the
partial Withdrawal reduced Account Value.
2 The Annuity Payment and Payment Units allocated to this Subaccount are
not reduced in this example, because no amount is withdrawn from Account
Value allocated to the Equity Income Subaccount.
3 The Annuity Payment and Payment Units are reduced by 60%, the percentage
by which the partial Withdrawal reduced Account Value allocated to the
International Stock Subaccount.
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend an Exchange or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account; or
4. during any other period when the SEC, by order, so permits to protect
owners of securities.
Rules and regulations of the SEC will govern as to whether the conditions set
forth above exist.
The Company further reserves the right to delay payment of a Withdrawal from
the Fixed Account for up to six months as required by most states. The Company
will notify the Owner if there will be a delay.
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DEATH BENEFIT PROVISIONS
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DEATH BENEFIT
If any Owner dies prior the Annuity Payout Date, a Death Benefit will be paid
to the Designated Beneficiary when due Proof of Death and payment instructions
are Received by the Company. If an Owner is a Nonnatural Person, the Death
Benefit will be paid in the event of the death of the Annuitant or any Joint
Owner that is a natural person prior to the Annuity Payout Date. Further, if
an Owner is a Nonnatural Person, the amount of the death benefit is based on
the age of the Annuitant or any Joint Owner that is a natural person on the
Contract Date.
If the age of each Owner was 75 or younger on the Contract Date, the Death
Benefit will be the greatest of:
(1) all Purchase Payments, less any Premium Taxes due or paid by the Company
and less all partial Withdrawals;
(2) the Account Value on the date due Proof of Death and payment instructions
are Received by the Company, less any Premium Taxes due or paid by the
Company; or
(3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary that is both an
exact multiple of five and occurs prior to the oldest Owner reaching age
76; plus
2. any Purchase Payments received since the applicable fifth Contract
Anniversary; less
3. any reductions caused by Withdrawals since the applicable fifth Contract
Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Contract Date was 76 or older, the Death
Benefit will be: (1) the Account Value on the date due Proof of Death and
payment instructions are Received by the Company; less (2) any Premium Taxes
due or paid by the Company.
If a lump sum payment is requested, the payment will be made in accordance
with any laws that govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date that both Proof of
Death and payment instructions are Received by the Company in good order.
In the event of any Owner's death on or after the Annuity Payout Date, the
Death Benefit will be determined under the terms of the Annuity Option. Any
Death Benefit will be paid to the Designated Beneficiary when due proof of
death and payment instructions are Received by the Company.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
In the event of an Owner's death prior to the Annuity Payout Date, the entire
Death Benefit shall be paid within 5 years after the death of the Owner. In
the event that the Designated Beneficiary elects an Annuity Option, the length
of time for the payment period may be longer than 5 years if:
(1) the Designated Beneficiary is a natural person;
(2) the Death Benefit is paid out under one of Annuity Options 1 through 9;
(3) payments are made over a period that does not exceed the life or life
expectancy of the Designated Beneficiary; and
(4) Annuity Payments begin within one year of the death of the Owner.
If the deceased Owner's spouse is the sole Designated Beneficiary, the spouse
shall become the sole Owner of the contract. He or she may elect to: (1) keep
the Contract in force until the sooner of the spouse's death or the Annuity
Payout Date; or (2) receive the Death Benefit.
If any Owner dies on or after the Annuity Payout Date, Annuity Payments shall
continue to be paid at least as rapidly as under the method of payment being
used as of the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This
Contract is deemed to incorporate any provision of Section 72(s) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision. This Contract is also deemed to incorporate any other provision of
the Code deemed necessary by the Company, in its sole judgment, to qualify
this Contract as an annuity. The application of the distribution rules will be
made in accordance with Code section 72(s), or any successor provision, as
interpreted by the Company in its sole judgment.
The foregoing distribution rules do not apply to a Contract which is:
(1) provided under a plan described in Code section 401(a);
(2) described in Code section 403(b);
(3) an individual retirement annuity or provided under an individual
retirement account or annuity; or
(4) otherwise exempt from the Code section 72(s) distribution rules.
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ANNUITY PAYMENT PROVISIONS
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ANNUITY PAYOUT DATE
The Annuity Payout Date is the date as of which the first Annuity Payment is
computed under one of the Annuity Options. The Owner may elect the Annuity
Payout Date at the time of application. If no Annuity Payout Date is chosen,
the Company will use the later of: (1) the oldest Annuitant's seventieth
birthday; or (2) the tenth Contract Anniversary. The Annuity Payout Date must
be prior to the oldest Annuitant's ninetieth birthday.
CHANGE OF ANNUITY PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for the change must be
made in writing. The written request must be Received by the Company at least
30 days prior to the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY OPTIONS
The Contract provides for Annuity Payments to be made under one of nine
Annuity Options. The Annuity Option is set forth on page 3. Options 1 through
4 and 9 generally provide for payments to be made during the life of the
Annuitant or Joint Annuitants. Under Options 5 through 8, payments are made to
the Annuitant and in the event of the Annuitant's death, to the Designated
Beneficiary.
Options 1 through 4 are available as either a Fixed or Variable Annuity Option
9 is available only as a Variable Annuity. Options 5 through 7 are also
available as a combination of Fixed and Variable Annuity. The Annuity Options
are described below.
Prior to the Annuity Payout Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Payout Date.
OPTION 1
LIFE INCOME OPTION: This option provides Annuity Payments for the life of the
Annuitant. Upon the Annuitant's death, no further Annuity Payments will be
made.
OPTION 2
LIFE INCOME WITH PERIOD CERTAIN OPTION: This option provides Annuity Payments
for the life of the Annuitant. A fixed period of 5, 10, 15 or 20 years may be
chosen. Annuity Payments will be made to the end of this period even if the
Annuitant dies prior to the end of the period. If the Annuitant dies before
receiving all the Annuity Payments during the fixed period, the remaining
Annuity Payments will be made to the Designated Beneficiary. Upon the
Annuitant's death after the period certain, no further Annuity Payments will
be made.
OPTION 3
LIFE INCOME WITH INSTALLMENT OR UNIT REFUND OPTION: This option provides
Annuity Payments for the life of the Annuitant, with a period certain
determined by dividing the Annuity Payout Amount (as defined on page 25) by
the amount of the first Annuity Payment. A fixed number of Annuity Payments
will be made even if the Annuitant dies. If the Annuitant dies before
receiving the fixed number of Annuity Payments, any remaining Annuity Payments
will be made to the Designated Beneficiary. If the Annuitant dies after
receiving the fixed number of Annuity Payments, no further Annuity Payments
will be made.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides Annuity Payments for the
lives of the Annuitant and Joint Annuitant. Annuity Payments will be made as
long as either is living. Upon the death of one Annuitant, Annuity Payments
continue to the surviving Joint Annuitant at the same or a reduced level of
75%, 66 2/3% or 50% of Annuity Payments, as elected by the Owner. With respect
to Fixed Annuity Payments, the amount of the Annuity Payment, and, with
respect to Variable Annuity Payments, the number of Annuity Units used to
determine the Annuity Payment, is reduced as of the first Annuity Payment
following the Annuitant's death. The percentage elected is set forth on page
3. In the event of the death of one Annuitant, the surviving Joint Annuitant
has the right to exercise all rights under the Contract, including the right
to make Exchanges and Beneficiary changes. Upon the death of the last
Annuitant, no further Annuity Payments will be made.
OPTION 5
FIXED PERIOD OPTION: This option provides Annuity Payments for a fixed number
of years between 5 and 20. If the Account Value is held in the Fixed Account,
then the amount of the Annuity Payments will vary as a result of the interest
rate (as adjusted periodically) credited on Fixed Account Value. This rate is
guaranteed to be no less than the Guaranteed Rate set forth on page 3. The
amount of each Fixed Annuity Payment is determined by dividing Fixed Account
Value on the Annuity Payment date by the number of remaining Annuity Payments.
If the Account Value is held in the Separate Account, then the amount of the
Annuity Payments will vary as a result of the investment performance of the
Subaccounts chosen. The amount of each Variable Annuity Payment is determined
by multiplying the Accumulation Unit Value on the Annuity Payment date by the
result of dividing total Accumulation Units by the number of remaining Annuity
Payments. If the Annuitant dies before receiving the fixed number of Annuity
Payments, any remaining Annuity Payments will be made to the Designated
Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides for Annuity Payments of a fixed
amount selected by the Owner. This amount is paid until Account Value is
exhausted. If the Account Value is held in the Fixed Account, then the number
of Annuity Payments will vary as a result of the interest rate (as adjusted
periodically) credited on Fixed Account Value. This rate is guaranteed to be
no less than the Guaranteed Rate set forth on page 3. If the Account Value is
held in the Separate Account, then the number of Annuity Payments will vary as
a result of the investment performance of the Subaccounts chosen. If the
Annuitant dies before receiving all of the Annuity Payments, any remaining
Annuity Payments will be made to the Designated Beneficiary. This Option is
available only for Nonqualified Contracts.
OPTION 7
AGE RECALCULATION OPTION: This option provides for Annuity Payments based upon
the Annuitant's life expectancy, or the joint life expectancy of the Annuitant
and a beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age) each year. The Annuity Payments are
computed by reference to actuarial tables prescribed by the Treasury Secretary
and in accordance with Section 401(a)(9) of the Internal Revenue Code and
rules and regulations thereunder. Annuity Payments are made until Account
Value is exhausted. If the Account Value is held in the Fixed Account, then
the amount of the Annuity Payments will vary as a result of the interest rate
(as adjusted periodically) credited on Fixed Account Value. This rate is
guaranteed to be not less than the Guaranteed Rate set forth on page 3. If the
Account Value is held in the Separate Account, then the amount of the Annuity
Payments will vary as a result of the investment performance of the
Subaccounts chosen. If the Annuitant dies before receiving the remaining
Annuity Payments, Account Value will be paid to the Designated Beneficiary.
OPTION 8
PERIOD CERTAIN OPTION: This option provides Annuity Payments for a fixed
period of 5, 10, 15 or 20 years. Annuity Payments will be made until the end
of this period. If the Annuitant dies prior to the end of the period, the
remaining Annuity Payments will be made to the Designated Beneficiary.
OPTION 9
LIFE INCOME WITH LIQUIDITY OPTION: This option provides monthly Annuity
Payments for the life of the Annuitant or the lives of the Annuitant and a
Joint Annuitant with a period certain of 15 years (or less in certain
instances where the period certain would exceed the life expectancy of the
Annuitant or joint life expectancy of the Joint Annuitants). Annuity Payments
under this option are guaranteed never to be less than 80 percent of the
initial Annuity Payment ("Floor Payment"); provided that the Floor Payment is
adjusted in the event of a Withdrawal. See "Withdrawal Provisions" on pages 15
through 18. The amount of the Annuity Payment will remain level for 12 month
intervals and will reset on each anniversary of the Annuity Payout Date as
discussed under "Payment Units," on pages 26 and 27. Annuity Payments during
the Liquidity Period are paid from Account Value and reduce the amount of
Account Value available for Withdrawal.
If Account Value allocated to a Subaccount from which Annuity Payments are
being made will be reduced to $0 by the current Annuity Payment, the Annuity
Payment will be adjusted as of the date of that payment. The amount of any
shortfall in the affected Subaccount will be deducted from the first of the
Subaccounts set forth on page 3 that has Account Value. Until the next reset
of the Annuity Payment, Annuity Payments will be made from the Subaccounts
that have Account Value in the same proportion as Account Value is allocated
among the Subaccounts on the date of the payment adjustment. Payment Units
also will be adjusted as of that date to reflect the proportion of Account
Value allocated to the Subaccounts.
If there are Joint Annuitants, upon the death of one Annuitant, Annuity
Payments continue to the surviving Joint Annuitant at the same or a reduced
level of 75%, 66 2/3% or 50% of Annuity Payments as elected by the Owner. The
percentage elected is set forth on page 3. The number of Payment Units used to
determine each Annuity Payment is reduced as of: (1) the Annuity Payment due
on the Period Certain Expiration Date; or (2) if later, the first Annuity
Payment following the death of the Joint Annuitant. If such death occurs
during the Liquidity Period, the Annuity Payment may be increased as discussed
under "Payment Adjustment Upon Death of Joint Annuitant" below.
In the event of the death of the Annuitant or, in the case of Joint
Annuitants, the last Annuitant, prior to the Period Certain Expiration Date, a
death benefit will be paid as follows. In the event of death during the
Liquidity Period, the death benefit is the Account Value as of the date due
proof of death and payment instructions are Received by the Company. In the
event of death during the period beginning at the close of the Liquidity
Period and ending on the Period Certain Expiration Date, the Designated
Beneficiary may elect the death benefit as follows: (1) the present value of
the remaining guaranteed Annuity Payments as of the date due proof of death
and payment instructions are Received by the Company, commuted at the Assumed
Interest Rate, and paid in a lump sum; or (2) the remaining guaranteed Annuity
Payments paid to the Designated Beneficiary on a monthly basis until the
Period Certain Expiration Date.
PAYMENT ADJUSTMENT UPON DEATH OF JOINT ANNUITANT
Under Option 9, if a Joint Annuitant dies during the Liquidity Period, the
amount of the Annuity Payment to the surviving Joint Annuitant may be
increased beginning on the date of the 61st Annuity Payment. The determination
of whether to increase the amount of the Annuity Payment is made as of the
date of the 61st Annuity Payment, as follows. An amount equal to the present
value of future Annuity Payments based on the joint lives of the Annuitants,
commuted at the Assumed Interest Rate, is divided by $1,000, and the result is
multiplied by an amount determined by reference to the Annuity Table for
Option 2 with a ten year period certain based upon the surviving Joint
Annuitant's age and sex (unless unisex rates apply). If the amount of the
Annuity Payment as determined above is greater than the Annuity Payment
calculated as of the date of the 61st Annuity Payment, the Annuity Payment
will be increased as of the date of the 61st Annuity Payment to that amount
and the Floor Payment and number of Payment Units will be increased
proportionately.
ANNUITY PAYOUT AMOUNT
The Annuity Payout Amount is used to calculate Annuity Payments under Annuity
Options 1 through 4, 8 and 9. The Annuity Payout Amount is:
(1) Account Value on the Annuity Payout Date; less
(2) any Premium Taxes due or paid by the Company; less
(3) for Fixed Annuity Payments, an amount equal to 1.8% of Account Value on
the Annuity Payout Date.
Annuity Payout Amount allocated to the Fixed Account is applied to purchase a
Fixed Annuity and that allocated to the Subaccounts is applied to purchase a
Variable Annuity. The Annuity Payout Amount is divided by $1,000, and the
result is multiplied by the applicable amount in the Annuity Tables to
determine the minimum guaranteed monthly Annuity Payment with respect to a
Fixed Annuity or the first monthly Annuity Payment with respect to a Variable
Annuity.
FIXED ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amount set forth in the Annuity
Tables, as adjusted for the rate of interest credited by the Company, is the
amount of each monthly Annuity Payment for Annuity Options 1 through 4 and 8.
For Options 5 through 7, Fixed Annuity Payments are based on Account Value.
VARIABLE ANNUITY PAYMENTS
With respect to Variable Annuity Payments, the amount set forth in the Annuity
Tables, as adjusted for the Assumed Interest Rate, is the amount of the FIRST
monthly Annuity Payment for Annuity Options 1 through 4, 8 and 9. The amount
of each Annuity Payment after the first for these options is computed by means
of Payment Units as set forth on pages 26 and 27. For Options 5 through 7,
Variable Annuity Payments are based on Account Value. Variable Annuity
Payments will fluctuate with the performance of the Subaccount(s).
ANNUITY TABLES
The amounts set forth in the Annuity Tables for Annuity Options 1 through 4
and 9 depend on the sex (unless unisex rates apply) and age of the Annuitant
or the Joint Annuitants on the Annuity Payout Date. The Annuity Tables are
modified to reflect (1) the Assumed Interest Rate for Variable Annuity
Payments; or (2) the rate of interest in effect on the Contract Date for Fixed
Annuity Payments. The rate of interest for Fixed Annuity Payments is
guaranteed to be no less than the Guaranteed Rate set forth on page 3. The
Annuity Tables contain the amount of monthly Annuity Payment per $1,000 of
Annuity Payout Amount. The Annuity Tables state values for the exact ages
shown. The values will be interpolated based on the exact age(s) of the
Annuitant or Joint Annuitants on the Annuity Payout Date. The basis of the
Annuity Tables for Options 1 through 4 and 9 and the Assumed Interest Rate are
set forth on page 3. The Annuity Tables for Option 8 are determined without
reference to the age or sex of the Annuitant and are based upon the Assumed
Interest Rate. Annuity Payments for Options 5 through 7 are computed without
reference to the Annuity Tables. The Annuity Tables are used in accordance
with generally accepted actuarial principles.
ANNUITY PAYMENTS
No Annuity Option can be selected that requires the Company to make Annuity
Payments of less than $100.00; provided that there is no minimum Annuity
Payment under Option 9. Each Annuity Option allows for making Annuity Payments
annually, semiannually, quarterly or monthly, except Option 9 for which
Annuity Payments are made monthly. Annuity Payments due on a date other than a
Valuation Date, are paid as of the end of the next following Valuation Date.
PAYMENT UNITS
On the Annuity Payout Date, the amount of the first Variable Annuity Payment
is divided by the Payment Unit Value as of that date to determine the number
of Payment Units to be used in calculating subsequent Annuity Payments. If the
Annuity Payout Amount was allocated to more than one Subaccount, the first
Variable Annuity Payment will be allocated to each Subaccount in the
percentage corresponding to the Annuity Payout Amount allocation. The number
of Payment Units for each Subaccount is then found by dividing the amount of
the first Variable Annuity Payment allocated to that Subaccount by the Payment
Unit Value for the Subaccount on the Annuity Payout Date. The number of
Payment Units for the Subaccount then remains constant, unless an Exchange of
Payment Units or a Withdrawal is made. After the first Variable Annuity
Payment, the dollar amount of each subsequent Annuity Payment is equal to the
sum of the payment amount determined for each Subaccount. The payment amount
for each Subaccount is equal to the number of Payment Units allocated to that
Subaccount multiplied by the Payment Unit Value on the date of the Annuity
Payment. For Option 9, the amount of each Annuity Payment is calculated as
described above; provided that the amount of the Annuity Payment is reset only
once each year on the 12-month anniversary of the Annuity Payout Date.
An example of a Variable Annuity Payment calculation for a male, age 60 is as
follows:
Annuity Payout Amount = $100,000 $100,000
-------- = 100
$1,000
Amount determined by reference in 1998 to Annuity
Table for a male, age 60 under Option 9 $4.78
First Variable Annuity Payment 100 x $4.78 = $478
FIRST VARIABLE PAYMENT UNIT NUMBER OF PAYMENT
PURCHASE ANNUITY VALUE ON UNITS USED TO
PAYMENT PAYMENT ANNUITY DETERMINE
SUBACCOUNT ALLOCATION ALLOCATION PAYOUT DATE SUBSEQUENT PAYMENTS
Equity Income 50% $239.00 / $1.51 = 158.2781
International 50% $239.00 / $1.02 = 234.3137
Stock
An example of an annual reset under Option 9 of the Annuity Payment amount
using the assumptions above is as follows:
PAYMENT DATE PAYMENT AMOUNT
Annuity Payout Date 2/15 $478
3/15 $478
4/15 $478
5/15 $478
6/15 $478
7/15 $478
8/15 $478
9/15 $478
10/15 $478
11/15 $478
12/15 $478
1/15 $478
Annual Reset 2/15 $510.98
PAYMENT PAYMENT UNIT VALUE NEW ANNUITY
SUBACCOUNT UNITS ON ANNUAL RESET DATE PAYMENT AMOUNT
Equity Income 158.2781 x $1.60 = $253.24
International Stock 234.3137 x $1.10 = $257.74
-------
$510.98
PAYMENT UNIT VALUE
The Payment Unit Value for each Subaccount was first set at $1.00. The Payment
Unit Value for any subsequent Valuation Date is equal to (a) times (b) times
(c), where:
(a) is the Payment Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the day;
(c)is a factor used to adjust for the Assumed Interest Rate set forth on
page 3 which is used to determine Variable Annuity Payment amounts.
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
* Purchase Payments may be made until the earlier of the Annuity
Payout Date or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date
according to the Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the
method specified in this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. (SEE "ACCOUNT
VALUE AND EXPENSE PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
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SECURITY BENEFIT LIFE INSURANCE COMPANY
A Member of The Security Benefit Group of Companies
000 XX Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000
