EXHIBIT 99.4(a) Form of Individual Flexible Premium Variable Accumulation
Annuity Contract
[LOGO OF PACIFIC MUTUAL]
LIFE INSURANCE COMPANY
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
PACIFIC PORTFOLIOS
================================================================================
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
. Investment Experience Reflected in Benefits
. Variable and Fixed Accumulation Before Annuity Date; Variable and Fixed
Annuity Payments Thereafter
. Death Benefit Proceeds Payable Before Annuity Date
. Participating
Please read your contract carefully. This is a legal contract between you, the
Owner, and us, Pacific Mutual Life Insurance Company, a mutual company.
We agree to pay the benefits of this Contract according to its provisions.
The consideration for this Contract is the application for it, (copy or
confirmation is attached) and our receipt of the Purchase Payment(s).
Contract loan amount is less than 100% of contract value.
Benefits and values under this Contract may be on a variable basis. Amounts
directed into one or more of the Variable Investment Options will reflect the
investment experience of those investment options. These amounts may increase or
decrease, and are not guaranteed as to a dollar amount. The details of the
variable provisions begin on page 13.
Right to Cancel - You may return this Contract within 10 days after you receive
it. To do so, mail it to us at our Service Center or to the agent who sold it to
you. This Contract will then be deemed void from the beginning. No withdrawal
fee will be imposed, and we will refund your Contract Value, including any fees
and/or any charges for premium taxes and/or other taxes that were deducted from
that Contract Value.
Signed at our Home Office, 000 Xxxxxxx Xxxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Milfs
Chairman and Chief Executive Officer Secretary
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
TABLE OF CONTENTS
CONTRACT SPECIFICATIONS............................ 3
DEFINITIONS........................................ 4
GENERAL PROVISIONS................................. 7
PURCHASE PAYMENTS.................................. 9
Purchase Payment Allocation...................... 9
Minimum Investment Option Value.................. 9
THE FIXED OPTION................................... 10
GUARANTEED INTEREST OPTIONS........................ 11
Market Value Adjustments......................... 11
VARIABLE INVESTMENT OPTIONS........................ 13
Separate Account................................. 13
CONTRACT VALUE..................................... 14
Fixed Option Value............................... 14
GIO Value........................................ 14
Variable Account Value........................... 14
Loan Account Value............................... 15
CHARGES, FEES AND DEDUCTIONS....................... 16
Administrative Fee............................... 16
Annual Fee....................................... 16
Mortality and Expense Risk Charge................ 16
Premium Taxes.................................... 16
Transfer Fee..................................... 16
Withdrawal Fee................................... 16
Withdrawal Charge................................ 16
TRANSFERS.......................................... 18
WITHDRAWALS........................................ 18
Amount Available for Withdrawal.................. 18
Special Restrictions - Fixed Option.............. 19
Special Restrictions - GIOs...................... 19
CONTRACT LOANS..................................... 19
DEATH BENEFIT...................................... 20
Death of Annuitant............................... 20
Death of Owner................................... 20
Death of Owner Distribution Rules................ 21
Interest on Death Benefit Proceeds............... 22
BENEFICIARY........................................ 22
Adding or Changing Your Beneficiary.............. 22
ANNUITY BENEFITS................................... 23
Choice of Annuity Date........................... 23
Application of Contract Value.................... 23
Your Selections.................................. 23
Fixed and Variable Annuities..................... 23
Annuity Options.................................. 24
Default Annuity Date and Options................. 24
Amount of Payments............................... 25
Fixed Annuity Payments........................... 25
Variable Annuity Payments........................ 25
Periodic Payments................................ 26
Misstatement of Age or Sex....................... 26
ANNUITY OPTION TABLES.............................. 27
CONTRACT SPECIFICATIONS
Service Center: Send Forms and written requests to: Send Payments to:
Pacific Mutual Life Insurance Company Pacific Mutual Life Insurance Company
X.X. Xxx 0000 X.X. Xxx 000000
Xxxxxxxx, Xxxxxxxxxx 91109-7187 Xxxxxxxx, Xxxxxxxxxx 00000-0000
Toll-free number: 1-800-722-2333 (between 6:00 a.m. and 5:00 p.m., Pacific time)
Please use our toll-free number to present inquiries or obtain information
about your coverage and for us to provide assistance in resolving complaints.
Basic Contract -
Investment Options:
Variable Investment Options:
Money Market Multi-Strategy
High Yield Bond Equity
Managed Bond Bond and Income
Government Securities Equity Index
Aggressive Equity International
Growth LT Emerging Markets
Equity Income
Fixed Option
Guaranteed Interest Options with the following Guarantee Terms:
Three-Year
Six-Year
Ten-Year
Administrative Charge: 0.15%
Mortality and Expense Risk Charge: 1.25%
Annual Fee: $40 if Net Contract Value is less
than $50,000
Withdrawal Charge: Age of Premium
in contract years Charge Percent
1 7%
2 7%
3 6%
4 5%
5 3%
6 1%
7 and over 0%
Contract Number: Contract Date:
Owner(s):
Annuitant(s): Age Sex
Initial Purchase Payment: Annuity Start Date:
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DEFINITIONS
PM, WE, OUR and US - Pacific Mutual Life Insurance Company.
YOU and YOUR - The person or persons named as Owner(s) in the Contract
Specifications. If there are Joint Owners, you and your means both Joint Owners.
ACCOUNT VALUE - The amount of your Contract Value allocated to any one of the
Investment Options.
AGE - The Owner's or Annuitant's age, as applicable, at his or her last
birthday.
ANNUITANT - The person you name on whose life annuity payments may be
determined. An Annuitant's life may also be used to determine certain increases
in death benefits, and to determine the Annuity Date. If you designate Joint
Annuitants or a Contingent Annuitant, unless otherwise stated, "Annuitant" means
the sole surviving Annuitant. If your Contract is a Non-Qualified Contract, you
cannot change the Annuitant or change or add a Joint Annuitant. If your Contract
is a Qualified Contract, you may add a Joint Annuitant on the Annuity Date.
ANNUITY DATE ("ANNUITY START DATE") - The date shown in the Contract
Specifications, or the date you later elect, if any, for the start of annuity
payments if the Annuitant is still living and the Contract is in force; or if
earlier, the date that annuity payments actually begin.
ANNUITY OPTIONS - Income options available for a series of payments after your
Annuity Date.
BENEFICIARY - The person you name who may receive any death benefit proceeds
payable on the death of the Annuitant or any Owner prior to the Annuity Date; or
any remaining annuity benefits payable on the death of the Annuitant after the
Annuity Date. If no Beneficiary is named or the Beneficiary does not survive the
Annuitant, and the Annuitant dies, then the Owner's estate will have the rights
of the Beneficiary. If you are not the Annuitant and you die before the
Annuitant, and before the Annuity Date, any death benefit proceeds will be
payable to the surviving Joint Owner, if any; otherwise to the surviving
Contingent Owner, if any; otherwise, to the Beneficiary, if living; otherwise,
to the Owner's estate.
BUSINESS DAY - Any day on which the value of an amount invested in a Subaccount
is determined. If any transaction or event under this Contract is scheduled to
occur on a day that does not exist in a given calendar period, or on a day that
is not a Business Day, such transaction or event will be deemed to occur on the
next following Business Day, unless otherwise stated.
CODE - The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - The person, if any, you select who may become the
Annuitant if the Annuitant dies before your Annuity Date. You may add or change
your Contingent Annuitant prior to the Annuity Date provided the existing
Contingent Annuitant is not the sole surviving Annuitant. Any Contingent
Annuitant you name must not have attained age 86 as of your Contract Date or, if
you add or change a Contingent Annuitant, as of the date of the addition or
change.
CONTINGENT OWNER - The person, if any, you select who may succeed to your rights
as Owner of this Contract if all named Contract Owners die.
CONTRACT ANNIVERSARY - The same date, in each subsequent year, as your Contract
Date.
CONTRACT DATE - The date we issue your Contract, as shown in the Contract
Specifications. Contract Years, Contract Semiannual Periods, Contract Quarters
and Contract Months are measured from this date.
CONTRACT DEBT - As of the end of any Business Day, the principal amount you have
outstanding on any loan under this Contract, plus any accrued and unpaid
interest.
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CONTRACT VALUE - As of the end of any Business Day, your Variable Account Value,
plus your Fixed Option Value, your Guaranteed Interest Option Value, and any
Loan Account Value.
FIXED OPTION - Amounts allocated under your Contract to the Fixed Option are
held in our General Account and receive interest at rates declared periodically
(the "Guaranteed Interest Rate"), but not less than an annual rate of 3%.
FIXED OPTION VALUE - The aggregate amount of your Contract Value allocated to
the Fixed Option.
GENERAL ACCOUNT - Our General Account consists of all assets of PM, other than
those assets allocated to Separate Account A or to any of our other separate
accounts.
GUARANTEED INTEREST RATE - The interest rate guaranteed at the time of
allocation (or rollover) for the Guarantee Term on amounts allocated to the
Fixed Option or a Guaranteed Interest Option. All Guaranteed Interest Rates are
expressed as annual rates, and interest is accrued daily. This rate will not be
less than an annual rate of 3%.
GUARANTEED INTEREST OPTION ("GIO") - If you allocate all or part of your
Purchase Payments or Contract Value to one or more GIOs, such amounts are
subject to a particular Guaranteed Interest Rate for the Guarantee Term selected
for each GIO. GIO amounts are held in our General Account and are subject to a
Market Value Adjustment if converted to an annuity, withdrawn or transferred
prior to the end of the Guarantee Term. Each new allocation will receive the
Guaranteed Interest Rate then applicable to new allocations for the selected
Guarantee Term.
GUARANTEE TERM - The period during which the amount you allocate to the Fixed
Option or to a GIO earns a specified Guaranteed Interest Rate.
GIO VALUE - The aggregate amount of your Contract Value allocated to all GIOs.
GIO TERM VALUE - The aggregate amount under your Contract allocated to all GIOs
that have the same length Guarantee Term. The GIO Term Value is based on the
original Guarantee Term, not the time remaining in the Guarantee Term. We use
the GIO Term Value to determine the order in which GIOs will be accessed when
you make a withdrawal or transfer.
INVESTMENT OPTION - A Variable Account, Fixed Option, or GIO offered under the
Contract.
LOAN ACCOUNT VALUE - The amount, including any interest accrued, held in the
Loan Account to secure any Contract Debt.
MARKET VALUE ADJUSTMENT ("MVA") - The adjustment made to any amount you convert
to an annuity, withdraw or transfer from a GIO prior to the end of its Guarantee
Term. This adjustment reflects the impact of changes in applicable interest
rates between the time the Purchase Payment(s) and/or Contract Value is
allocated to a specific GIO and the time of that conversion, withdrawal or
transfer.
NET CONTRACT VALUE - Your Contract Value less any Contract Debt.
NON-NATURAL OWNER - A corporation or other entity which is a non-natural person,
unless the entity demonstrates to our satisfaction, or we otherwise determine in
our sole discretion, that the Contract should be treated for purposes of Code
Section 72(s), as owned by an individual (natural) person.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract.
OWNER - The person(s) who has (have) all rights under this Contract. If your
Contract names Joint Owners, Owner means both Joint Owners. Any named Owner must
not have attained age 86 as of your Contract Date. If your Contract allows you
to change or add Owners after the Contract is issued, any newly-named or added
Owners, including Joint and/or Contingent Owners, must be under the age of 86 at
the time of change or addition.
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PURCHASE PAYMENT (PREMIUM PAYMENT) - An amount paid to us by or on behalf of an
Owner as consideration for the benefits provided under this Contract.
QUALIFIED CONTRACT - A Contract that qualifies under the Code as an individual
retirement annuity ("XXX"), or a Contract purchased under a Qualified Plan that
qualifies for special tax treatment under the Code.
QUALIFIED PLAN - A retirement plan that receives favorable tax treatment under
Section 401, 403, 408, or 457 of the Code.
SEC - Securities and Exchange Commission.
SEPARATE ACCOUNT/SEPARATE ACCOUNT A - A Separate Account of PM registered as a
unit investment trust under the Investment Company Act of 1940.
SERVICE CENTER - PM's mailing address shown in the Contract Specifications. We
will notify you of any change in our mailing address.
SUBACCOUNT - An investment division of the Separate Account. Each Subaccount,
(a "Variable Investment Option" or "Variable Account") invests its assets in a
separate series or class of shares of a designated investment company.
SUBACCOUNT ANNUITY UNIT (ANNUITY UNITS) - Annuity Units are used to measure
variation in variable annuity payments. The amount of each variable annuity
payment (after the first payment) will vary with the value and number of your
Annuity Units in each Subaccount.
SUBACCOUNT UNIT - Subaccount Units are used to measure your Contract Value in
that Subaccount.
UNIT VALUE - The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). The Unit Value of
any Subaccount is subject to change on any Business Day. The fluctuations in
value reflect the investment results, and also reflect the daily deductions for
the mortality and expense risk charge and administrative fee. Changes in
Subaccount Annuity Unit Values also reflect an additional adjustment factor that
corrects for an assumed investment return of 5%. The Unit Value of a Subaccount
Unit and of a Subaccount Annuity Unit on any Business Day is measured at or
about 4:00 p.m. Eastern Time on each Business Day.
VARIABLE ACCOUNT (A "VARIABLE INVESTMENT OPTION") - A Subaccount of the Separate
Account or any separate account of PM, which is available under your Contract in
which assets of PM are segregated from assets in its General Account and other
separate accounts.
VARIABLE ACCOUNT VALUE - The aggregate amount of your Contract Value allocated
to the Variable Accounts.
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GENERAL PROVISIONS
REPORTS TO OWNERS - At least once per year, we will send you a report that will
show your Contract Value, any Purchase Payments received, loan repayments,
transfers, withdrawals, applicable withdrawal charges and/or other charges
and/or fees incurred since the last report, and any other information that may
be required.
PAYMENTS, INSTRUCTIONS AND REQUESTS - Unless this Contract provides otherwise,
all Purchase Payments, loan repayments, instructions and requests must be
received in proper form at our Service Center at its mailing address. (See
DEFINITIONS - SERVICE CENTER). Any subsequent Purchase Payments, loan repayments
and requests for loans, transfers or withdrawals we receive in proper form on
any Business Day usually will be processed the same Business Day unless the
transaction or event is scheduled to occur on another day.
Generally, all other instructions and requests normally will be effective as of
the end of the day next following the Business Day we receive them in proper
form, unless the event is scheduled to occur on another day. We may require that
you provide signature guarantees or other safeguards for any instruction,
request or other document you may send to our Service Center. You acknowledge
and agree that we will not be liable for any loss, liability, cost or expense of
any kind or character for acting on instructions or requests submitted to us
that we reasonably believe to be genuine, provided we follow our procedures.
ENTIRE CONTRACT - This document, the attached application or confirmation
thereof, any subsequent applications to change this Contract or confirmation
thereof, and any riders and endorsements, constitute the entire Contract, and
supersede any and all prior agreements, whether oral or written, about the terms
of this Contract and the application. All statements made in the application are
representations and not warranties.
CONTRACT MODIFICATIONS - Modifications to this Contract or any waiver of our
rights or requirements under this Contract can only be made if in writing by an
authorized officer of PM. This Contract is intended to qualify as an annuity
contract for Federal income tax purposes. To that end, the provisions of this
Contract are to be interpreted and administered to ensure or maintain such tax
qualification, notwithstanding any other provisions to the contrary. We reserve
the right to amend this Contract and/or our administrative procedures without
consent (except for the states of Michigan, Pennsylvania, South Carolina and
Washington) to reflect any clarifications that may be needed or are appropriate
to maintain its tax qualification or to conform this Contract to any applicable
changes in the tax qualification requirements.
BASIS OF VALUES - A detailed statement showing how values are determined has
been filed with the state insurance departments. All values and reserves are at
least equal to those required by the laws of the state in which this Contract is
issued.
CLAIMS OF CREDITORS - Your Contract Value and other benefits under this Contract
are exempt from the claims of creditors to the extent permitted by law.
REMOVAL OF BENEFICIARY OR CONTINGENT ANNUITANT - You may remove a Beneficiary
(other than an irrevocable Beneficiary) or a Contingent Annuitant from this
Contract by providing proper instructions to our Service Center.
OWNERSHIP - This Contract belongs to the Owner. The Owner is entitled to
exercise all rights available to the Owner under this Contract. If this Contract
is jointly owned, both Owners must join in any request to exercise these rights.
The Owner may exercise these rights under this Contract without the consent of
the Beneficiary (other than any irrevocable Beneficiary) or any other person,
except as otherwise required by law.
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ASSIGNMENT - You may assign all rights and benefits under this Contract before
the Annuity Date. We are not bound by any assignment until we have received
written notice satisfactory to us and we record the assignment. We are not
responsible for the validity of any assignment. If the Contract has been
absolutely assigned, the assignee becomes the Owner. You should consult with
your tax adviser before taking any action.
DELAY OF PAYMENTS - Generally, payments, transfers, or exchanges will be made
within seven days from receipt of the payment and/or request in a form
satisfactory to us. Payment of your withdrawal proceeds or transfers or
exchanges to or from a Variable Account may be delayed after receipt of your
withdrawal, transfer, or exchange request under certain circumstances. These
include:
. a closing of the New York Stock Exchange other than on a regular
holiday or weekend;
. a trading restriction by the SEC; or
. an emergency declared by the SEC.
We may delay payments or transfers from our General Account (which would include
payment of your withdrawal proceeds and transfers from the Fixed Option or any
GIO, loans, fixed annuity payments, and lump sum death benefit payments unless
state law requires otherwise) for up to six months after the requested effective
date of the transaction. Any amount delayed will, so long as it is held under
the Fixed Option or in any of the GIOs, continue to earn interest at the
Guaranteed Interest Rate(s) then in effect until the applicable Guaranteed Term
in effect has ended, and not less than 3% on an annual basis thereafter. If you
make any Purchase Payment by check, other than a cashier's check, we may delay
making payments to you until your check has cleared.
INCONTESTABILITY - We will not contest this Contract.
PROOF OF LIFE OR DEATH - Before we make a payment, we have the right to require
proof of the life or death of any person on whose life or death determines
whether, to whom, or how much we must pay any benefits under this Contract.
DIVIDENDS - The current dividend scale is zero and we do not expect dividends to
become payable. However, at the end of each Contract Year, we will determine
your dividend, if any; you may choose to have it paid in cash or added to your
Contract Value. If you do not make a choice, we will add it to your Contract
Value. We will allocate any dividend added to your Contract Value in accordance
with your most recent allocation instructions, unless you instruct us otherwise.
You should consult with your tax adviser before making any election.
WITHHOLDING TAXES - We reserve the right to withhold from all payments made or
deemed made under this Contract, any taxes required to be withheld by applicable
Federal or State law, unless the Owner or payee elects otherwise pursuant to
applicable withholding rules.
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PURCHASE PAYMENTS
PURCHASE PAYMENTS - This Contract will not be in force until we receive the
initial Purchase Payment. Your initial Purchase Payment is shown in the Contract
Specifications.
You may make additional Purchase Payments at any time before the Annuity Date,
while the Annuitant is living and this Contract is in force. Each additional
Purchase Payment must be at least $250 for Non-Qualified Contracts and $50 for
Qualified Contracts. We may limit the amount of any single Purchase Payment. You
must obtain our consent before making a Purchase Payment that will bring your
aggregate Purchase Payments over $500,000.
Purchase Payments are payable in U.S. dollars either at our Service Center or
through our agent. Checks should be made payable to Pacific Mutual Life
Insurance Company. If you make Purchase Payments by check other than a cashier's
check, your withdrawal proceeds and any refund under your Right to Cancel may be
delayed until your check has cleared. On request a receipt for the Purchase
Payment signed by an officer of PM will be provided after payment.
PURCHASE PAYMENT ALLOCATION - Prior to your Annuity Date, you may allocate all
or part of your Purchase Payments to one or more of the Investment Options
available to you. The Investment Options available to you on the Contract Date
are shown on your Contract Specifications page.
You may change your allocation by sending us proper instructions (see GENERAL
PROVISIONS: INSTRUCTIONS AND REQUESTS). We will allocate any Purchase Payment
according to your most recent allocation instructions. We may reject any
instruction or Purchase Payment that does not comply with our requirements.
ALLOCATIONS DURING THE RIGHT TO CANCEL PERIOD - We will allocate your initial
Purchase Payment in accordance with your most recent allocation instructions.
However, if we are required by state or Federal law to refund all Purchase
Payments according to the Right to Cancel provision, we will allocate the
portion of your initial Purchase Payment designated for Variable Investment
Options to the Money Market Portfolio, and the portions of your initial Purchase
Payment designated for the Fixed Option or the GIOs to those respective options.
Any subsequent Purchase Payments that are received before the end of the Right
to Cancel Period will be allocated in the same manner as the initial Purchase
Payment. Fifteen days after the Contract Date, we will transfer the Account
Value in the Money Market Portfolio to your Variable Investment Options in
accordance with your most recent allocation instructions.
MINIMUM INVESTMENT OPTION VALUE - We reserve the right to require that, as a
result of any allocation to an Investment Option, any transfer, or any partial
withdrawal, your remaining Account Value in any Investment Option must meet a
minimum Account Value amount. We also reserve the right to transfer any
remaining Account Value that does not meet such minimum amount to your other
Investment Options on a prorata basis relative to your most recent allocation
instructions for those Investment Options.
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THE FIXED OPTION
We credit interest at the Guaranteed Interest Rate(s) during each Guarantee Term
on the amount of Purchase Payments and/or Contract Value that you allocate or
transfer to, or roll over in, the Fixed Option, as described below.
Account Values under the Fixed Option are held in our General Account. Subject
to applicable law, we have sole discretion over the investment of our General
Account assets.
We will credit your Contract with a Guaranteed Interest Rate for a Guarantee
Term of up to one year on that portion of your Purchase Payment and/or Contract
Value allocated to the Fixed Option, while the Annuitant is living and this
Contract is in force, and prior to the Annuity Date. We will credit the
Guaranteed Interest Rate in effect on the Business Day that the allocation
and/or transfer is effective for an initial Guarantee Term that ends at the end
of that Contract Year.
At the end of an initial Guarantee Term and each succeeding Guarantee Term, we
will roll over your Fixed Option Value attributed to that Guarantee Term to a
new Guarantee Term of one year, unless you instruct us otherwise. We will credit
the Guaranteed Interest Rate in effect at the time of the roll over on the
amount of the Fixed Option Value rolled over until the end of such Guarantee
Term.
We will stop crediting interest on that portion of your Fixed Option Value you
withdraw, transfer (including transfers to the Loan Account), or convert to an
Annuity Option, including any: fees for withdrawals or transfers; withdrawal
charges; annual fee; and charges for premium taxes and/or other taxes. We do so
as of the end of the Business Day any such transaction is effective.
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GUARANTEED INTEREST OPTIONS
For each GIO you elect, we will credit interest at a specified Guaranteed
Interest Rate during each Guarantee Term on the amount of Purchase Payments
and/or Contract Value you allocate or transfer to, or roll over in, the GIO, as
described below. Each allocation to a GIO must be at least $500.
Account Values under the GIOs are held in our General Account. Subject to
applicable law, we have sole discretion over the investment of our General
Account assets.
Account Values in the GIOs are not available for transfer to the Loan Account as
collateral for Contract loans.
Each GIO has a specified Guarantee Term. The Guarantee Terms available on the
Contract Date are shown on the Contract Specifications page. When you allocate
any portion of your Purchase Payment(s) and/or Contract Value to one or more of
these options, we will credit interest at the Guaranteed Interest Rate then in
effect on the Business Day that the allocation and/or transfer is effective.
That rate will apply for the Guarantee Term you choose, while the Annuitant is
living and this Contract is in force, and prior to the Annuity Date.
At the end of the Guarantee Term for each GIO, unless you instruct us otherwise,
we will roll over the Account Value of such GIO into a new GIO with the same
length Guarantee Term and at the then applicable Guaranteed Interest Rate.
However, if the last day of this new Guarantee Term would occur after your
Annuity Date, we will substitute the longest offered Guarantee Term that ends
prior to your Annuity Date. If there is no Guarantee Term that ends prior to
your Annuity Date, we will roll over the Account Value of that GIO into the
Fixed Option at its then current Guaranteed Interest Rate for new allocations.
During the first thirty (30) days of that new Guarantee Term, you may instruct
us to allocate all or a portion of your Account Value that was rolled over, to a
new GIO with a different Guarantee Term, and/or to any Variable Account or
Fixed Option, or withdraw or convert to an Annuity Option. We will effect such
transaction as of the day we receive your request. On such transactions during
this thirty (30) day period, we will waive any MVAs and/or transfer fees. Any
other applicable charges and/or withdrawal fees will apply. Any subsequent
change to such instructions will be subject to the provisions of the WITHDRAWALS
and TRANSFERS sections of this Contract.
We will stop crediting interest on that portion of your GIO Value you withdraw,
transfer, or convert to an Annuity Option, including any: fees for withdrawals
and/or transfers, withdrawal charge, annual fee, MVA, and charge for premium
taxes and/or other taxes. We do so as of the end of the Business Day any such
transaction is effective.
MARKET VALUE ADJUSTMENT (MVA) - Any amounts transferred or withdrawn from any
GIO, including any amounts withdrawn to convert to an Annuity Option, prior to
the completion of its Guarantee Term, except as cited above, will first be
adjusted by subtracting an MVA. The MVA is separately determined for each GIO
and may be positive or negative. Each MVA is equal to:
W x [(J - I) x (N/12)] where:
(W) is the amount to be converted, withdrawn, or transferred from the
GIO;
(J) is the Guaranteed Interest Rate that would apply, as of the date of
the conversion, withdrawal or transfer, to a newly-issued GIO with a
Guarantee Term equal to the number of years remaining in the Guarantee
Term of the GIO from which the conversion, withdrawal or transfer is to
be made, plus 0.25% (For this purpose, the "years remaining" will be
rounded up to the next higher number of whole years. If a Guaranteed
Interest Rate is required for a Guarantee Term not currently offered,
the Guaranteed Interest Rate will be based on linear interpolation
between the Guaranteed Interest Rates for the currently offered
Guarantee Terms, if possible. Otherwise, we will determine a substitute
Guaranteed Interest Rate that will be no less favorable to you than the
then most recent U.S. Treasury Yield for a maturity closest to the
"years remaining", plus 1.0%);
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(I) is the Guaranteed Interest Rate applicable to the GIO; and
(N) is the number of complete months remaining in the Guarantee Term.
Each MVA will never exceed, in the positive or negative direction, the excess
interest earned on the GIO from which the withdrawal, transfer or conversion to
any Annuity Option is to be made. For this purpose, excess interest is defined
as the dollar amount of interest earned during the current Guarantee Term in
excess of 3% per annum.
The MVA is applied prior to the deduction of any applicable fees for withdrawals
and/or transfers, withdrawal charge, fees, or charge for premium taxes and/or
other taxes.
We will not apply the MVA to amounts withdrawn to pay any:
. annual fees, transaction fees;
. death benefits; or
. withdrawals (full or partial) after the first Contract Anniversary, if
the Annuitant has been diagnosed with a medically determinable condition
that results in a life expectancy of twelve (12) months or less, subject
to medical evidence satisfactory to us.
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VARIABLE INVESTMENT OPTIONS
The Variable Investment Options consist of Subaccounts of the Separate Account.
The available Subaccounts as of the Contract Date are shown in the Contract
Specifications.
SEPARATE ACCOUNT - We established and maintain the Separate Account under the
laws of California. Any income, gains or losses (whether or not realized) from
the assets of each Variable Account are credited or charged against such
Variable Account without regard to our other income, gains or losses. Assets may
be put in our Separate Account to support this Contract and other variable
annuity contracts. Assets may be put in our Separate Account for other purposes,
but not to support contracts other than variable annuity contracts. The assets
of our Separate Account are our property. The portion of the Separate Account
assets equal to the reserves and other Contract liabilities with respect to each
Variable Account will not be chargeable with liabilities arising out of any
other business we conduct. We may transfer assets of a separate account in
excess of the reserves and other liabilities with respect to its Variable
Account to another separate account or to our General Account. All obligations
arising under the Contract are our general corporate obligations. We do not hold
ourselves out to be trustees of the Separate Account assets.
We reserve the right, subject to compliance with the law then in effect, and
after any required regulatory approval, to:
. cease offering any Subaccount;
. add or change designated investment companies or their portfolios, or
other investment vehicles;
. add, delete or make substitutions for the securities and other assets
that are held or purchased by the Separate Account or any Variable
Account;
. permit conversion or exchanges between portfolios and/or classes of
contracts on the basis of Owners' requests;
. add, remove or combine Variable Accounts;
. combine the assets of any Variable Account with any other Separate
Account of PM or of any of its affiliates;
. register or deregister Separate Account A or any Variable Account under
the Investment Company Act of 1940 (the "1940 Act");
. operate any Variable Account as a managed investment company under the
1940 Act, or any other form permitted by law;
. run any Variable Account under the direction of a committee, board, or
other group;
. restrict or eliminate any voting rights of Owners with respect to any
Variable Account or other persons who have voting rights as to any
Variable Account;
. make any changes required by the 1940 Act or other federal securities
laws;
. make any changes necessary to maintain the status of the Contracts as
annuities under the Code;
. make other changes required under federal or state law relating to
annuities;
. suspend or discontinue sale of the Contracts; and
. comply with law.
If any of these changes result in a material change in the underlying
investments of a Variable Account, we will notify you of such change.
We will not change the investment policy of the Separate Account without
following the filing and other procedures of the Insurance Commissioner in the
State of California nor without following the filing and other procedures
established by insurance regulators of the state of issue. Unless required by
law or regulation, an investment policy may not be changed without our consent.
From time to time we may make other Investment Options available to you. Any new
Investment Option may invest in portfolios of the designated investment company,
other designated investment companies or their portfolios, or in other
investment vehicles. New Investment Options will be made available to existing
Owners at our discretion. We will provide you with written notice of all
material details, including investment objectives and charges. We will comply
with the filing or other procedures established by applicable state insurance
regulators, to the extent required by applicable law.
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CONTRACT VALUE
Your Contract Value on any Business Day is the sum of:
. your Fixed Option Value on that day;
. plus your GIO Value on that day;
. plus your Variable Account Value on that day;
. plus your Loan Account Value on that day.
We generally determine values at or about 4:00 p.m., Eastern time, on each day
that the New York Stock Exchange is open, provided our administrative offices
are also open on that day.
FIXED OPTION VALUE - Your Fixed Option Value on any Business Day is your Fixed
Option Value on the prior Business Day increased by any additions to your Fixed
Option on that day as a result of any:
. interest;
. Purchase Payments received by us and allocated to the Fixed Option;
. transfers to the Fixed Option, including transfers from the Loan
Account; and
decreased by any deductions from the Fixed Option on that day as a result of
any:
. transfers, including transfers to the Loan Account;
. withdrawals, including any withdrawal charges;
. amounts converted to an Annuity Option;
. charge for premium taxes and/or other taxes;
. fees for withdrawals and/or transfers; and
. annual fee.
GIO VALUE - Your GIO Value on any Business Day is your GIO Value as of the prior
Business Day, increased by any additions to your GIOs on that day as a result of
any:
. interest;
. Purchase Payments received by us and allocated to a new GIO; and
. transfers allocated to a new GIO;
and decreased by any deductions from your GIOs on that day as a result of any:
. transfers from your GIOs;
. withdrawals and withdrawal charges from your GIOs;
. amounts converted to an Annuity Option;
. MVAs;
. charge for premium taxes and/or other taxes;
. fees for withdrawals and/or transfers; and
. annual fee.
For more detailed information see GUARANTEED INTEREST OPTIONS.
VARIABLE ACCOUNT VALUE - Your Variable Account Value on any Business Day is the
sum of your Subaccount Values on that day.
Subaccount Value - Each Subaccount Value on any Business Day is the number of
Subaccount Units in that Subaccount that are credited to your Contract on that
day multiplied by the Unit Value of the Subaccount on that day.
We credit your Contract with Subaccount Units for a Subaccount as a result of
any portion of your Purchase Payments received by us and allocated to that
Subaccount; and any transfers of your Contract Value to that Subaccount,
including transfers from the Loan Account.
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We debit your Contract with Subaccount Units for a Subaccount as a result of any
deductions from the Subaccount, including those caused by any:
. withdrawals;
. transfers (including transfers to the Loan Account);
. amounts converted to an Annuity Option;
. fees for transfers and/or withdrawals;
. withdrawal charges;
. charge for premium taxes and/or other taxes; and
. annual fee.
The number of Subaccount Units we debit or credit to your Contract in connection
with a transaction is equal to the amount of the transaction applicable to that
Subaccount divided by that Subaccount's Unit Value on that day. The number of
your Subaccount Units in a Subaccount will change only if we debit or credit
Subaccount Units for the transactions above. The number of Subaccount Units will
not change because of subsequent changes in the Subaccount Unit Value.
Subaccount Unit Value - The initial Unit Value of each Subaccount was $10 on the
Business Day the Subaccount began operations. At the end of each subsequent
Business Day, the Unit Value for each Subaccount is equal to (Y) times (Z)
where:
(Y) is the Unit Value for that Subaccount as of the end of the prior Business
Day; and
(Z) is the Net Investment Factor for that Subaccount for the period (a
"valuation period") between the prior Business Day and that Business Day.
Net Investment Factor - Each Subaccount's Net Investment Factor for any
valuation period is equal to ( A / B ) - C where:
(A) is the net result of:
(a) the net asset value per share of the corresponding Portfolio shares
held by the Subaccount as of the end of that valuation period;
(b) plus the per share amount of any dividend or capital gain
distributions made during that valuation period on the Portfolio
shares held by the Subaccount;
(c) plus or minus any per share charge or credit for any income taxes,
other taxes, or amounts set aside during that valuation period as a
reserve for any income and/or any other taxes for which we determine
to have resulted from the operations of the Subaccount or Contract,
and/or any taxes attributable, directly or indirectly, to Purchase
Payments;
(B) is the net asset value per share of the Portfolio shares held by the
Subaccount as of the end of the prior valuation period; and
(C) is a factor that we assess against the Subaccount's net assets held by
each Subaccount for the mortality and expense risk charge and the
administrative fee during that valuation period.
LOAN ACCOUNT VALUE - For those Qualified Contracts that permit loans, your Loan
Account Value as of the end of any Business Day is your Loan Account Value on
the prior Business Day, increased by any:
. interest; and
. Contract Value loaned on that day;
and decreased by any:
. loan principal repaid on that day; and
. earned interest transferred from the Loan Account on that day.
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CHARGES, FEES AND DEDUCTIONS
ADMINISTRATIVE FEE - We charge an administrative fee against assets held in your
Variable Investment Option(s). This fee is assessed daily at the annual rate
which is shown in the Contract Specifications. This fee is guaranteed not to
increase.
ANNUAL FEE - We charge an annual fee which is shown in the Contract
Specifications on each Contract Anniversary prior to your Annuity Date against
your Contract Value, and at the time you make a full withdrawal, if your Net
Contract Value is less than $50,000 on that date. This fee is guaranteed not to
increase.
We will deduct the annual fee, if any, from each Investment Option on a prorata
basis relative to your Account Value in each Investment Option. Any annual fee
we deduct from a Subaccount will reduce the number of Subaccount Units credited
to your Contract.
No annual fee is charged when you annuitize or on payment of any death benefit
proceeds.
MORTALITY AND EXPENSE RISK CHARGE ("RISK CHARGE") - We impose a Risk Charge
against assets held in your Variable Investment Option(s). This charge is
assessed daily at the annual rate which is shown in the Contract Specifications.
The Risk Charge compensates us for the risks we assume that mortality and
expenses will vary from those we assumed. This charge is guaranteed not to
increase.
PREMIUM TAXES - From your Contract Value, we will deduct a charge for any taxes
we pay that are attributable to Purchase Payments or withdrawals. Such taxes may
include, but are not limited to: any federal, state or local premium taxes; and
any federal, state or local income, excise, business or any other type of tax
(or component thereof), measured by or based upon, directly or indirectly, the
amount of Purchase Payments we receive from you. We will normally deduct this
charge when you annuitize, however, we may impose this charge: on any
withdrawal; at the time any death benefit is paid; when the taxes are incurred;
or when we pay the taxes. We may base this charge on: the Contract Value; the
amount of the transaction; the aggregate amount of Purchase Payments we receive
under your Contract; or any other amount that, in our sole discretion, we deem
appropriate.
Other Taxes - We reserve the right to charge the Separate Account and/or deduct
from your Contract Value a charge for any federal, state or local taxes we pay
that are or become attributable to the Separate Account or Contract, including,
but not limited to, income taxes attributable to our operation of the Separate
Account or to our operations with respect to the Contract, or taxes
attributable, directly or indirectly, to Purchase Payments or payments we make
under this Contract.
TRANSFER FEE - We reserve the right to impose a transfer fee of $15 on each
transfer made in excess of fifteen transfers in any Contract Year. For this
purpose, we will treat each transfer request as a single transfer, regardless of
the number of Investment Options from which or to which portions of Account
Values are transferred. We will deduct any transfer fee we impose from your
Contract Value on a prorata basis relative to your Account Value in each
Investment Option immediately after the transfer.
WITHDRAWAL FEE - We reserve the right to impose a withdrawal fee of $15 on each
partial withdrawal made in excess of fifteen withdrawals in any Contract Year.
We will deduct from your Contract Value, on a prorata basis relative to your
Account Value in each Investment Option immediately after the withdrawal, any
such fee we impose on a partial withdrawal. For this purpose, we will treat each
withdrawal request as a single withdrawal, regardless of the number of
Investment Options or Guarantee Terms from which portions of Account Values are
withdrawn.
CONTINGENT DEFERRED SALES CHARGE ("WITHDRAWAL CHARGE") - Purchase Payments are
subject to a withdrawal charge which is shown in the Contract Specifications.
This charge may apply to amounts you withdraw under your Contract prior to your
Annuity Date, depending on the length of time each Purchase Payment has been
allocated to your Contract and on the amount you withdraw. We will not apply
the withdrawal charge on:
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. death benefit proceeds, except as provided under the DEATH OF OWNER
provisions for certain non-natural Owners;
. Contract Values converted to an Annuity Option;
. withdrawals by Contract Owners to meet the minimum distribution rules
for Qualified Contracts as they apply to amounts held under the
Contract; or
. withdrawals (full or partial), after the first Contract Anniversary, if
the Annuitant has been diagnosed with a medically determinable condition
that results in a life expectancy of twelve (12) months or less, subject
to medical evidence satisfactory to us.
Amount of Withdrawal Charge - The amount of a withdrawal charge depends on how
long your Purchase Payments are held under this Contract. Each Purchase Payment
you make is considered to have a certain "age," depending on the length of time
since that Purchase Payment was effective. A Purchase Payment is "age one" from
the day it was effective until your next Contract Anniversary and increases in
"age" on that and each succeeding Contract Anniversary. When you withdraw an
amount, the "age" of any Purchase Payment(s) you withdraw determines the
level(s) of withdrawal charge as shown in the Contract Specifications. We
calculate your withdrawal charge by assuming that your Earnings are withdrawn
first, followed by amounts attributed to Purchase Payments with the "oldest"
Purchase Payment withdrawn first. The withdrawal charge will be deducted
proportionately from each Investment Option selected for withdrawal.
Free Withdrawals - During a Contract Year, you may withdraw free of withdrawal
charge amounts up to the sum of your Earnings plus your "Eligible Purchase
Payments". Eligible Purchase Payments include 10% of all remaining Purchase
Payments at the beginning of a Contract Year that have an "age" of less than
seven years, plus 10% of any Purchase Payments received by us during that
Contract Year, plus 100% of all remaining Purchase Payments that have an age of
seven years or more.
Earnings - FOR THE PURPOSE OF CALCULATING THE WITHDRAWAL CHARGE, as of the end
of any Business Day, your Earnings equal your Contract Value less your aggregate
Purchase Payments which are reduced by withdrawals of prior Purchase Payments.
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TRANSFERS
You may make transfers under this Contract subject to certain restrictions (see
TRANSFER AND WITHDRAWAL RESTRICTIONS) and any applicable fees (see CHARGES, FEES
AND DEDUCTIONS).
By providing a proper transfer request (see GENERAL PROVISIONS - PAYMENTS,
INSTRUCTIONS AND REQUESTS), you may request transfer of part or all of your
Contract Value, less Loan Account Value, in any Investment Option among other
Investment Options while your Annuitant is living and prior to the Annuity Date.
Transfers from the GIOs are subject to a Market Value Adjustment (see GUARANTEED
INTEREST OPTIONS). Transfer requests to a GIO will be applied as an allocation
to a new GIO, subject to any minimum allocation requirements.
If your transfer causes your remaining Account Value in any Investment Option
immediately after such transfer to be less than any minimum amount we may
establish, we may transfer such remaining Account Value to your other Investment
Options on a prorata basis relative to your most recent allocation instructions.
We may reject any transfer request. We also reserve the right to limit the size
of transfers, to limit the number and frequency of transfers, to restrict
transfers, and to suspend the right to transfer.
Transfers between Investment Options will normally be effective as of the end of
the Business Day on which we receive a proper transfer request. If your
Contract was issued in a state that requires a refund of premium, no transfers
will be allowed until 15 days after your Contract Date.
WITHDRAWALS
You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract, while the Annuitant is living and your
Contract is in force; however, no partial withdrawals are allowed within 30 days
of your Contract Date. If you make a full withdrawal, we require return of your
Contract or a signed Lost Contract Affidavit with your proper request. You may
choose to withdraw from any specific Investment Option(s), or from all
Investment Options proportionately. If you do not specify, we will make the
withdrawal from your Investment Options on a prorata basis relative to your
Account Value in each. Each partial withdrawal must be for $500 or more.
Withdrawals from the Fixed Option and the GIOs are subject to certain additional
restrictions described below.
If your partial withdrawal causes your Net Contract Value to be less than $1,000
immediately after the withdrawal, we may terminate your Contract and send you
the withdrawal proceeds. If your partial withdrawal causes your Account Value
remaining in any Investment Option to be less than any minimum amount we may
establish, we reserve the right to transfer such remaining Account Value to your
other Investment Options on a prorata basis relative to your most recent
allocation instructions.
AMOUNT AVAILABLE FOR WITHDRAWAL - The amount available for withdrawal is your
Net Contract Value as of the end of the Business Day on which your withdrawal
request is effective, less any:
. annual fee;
. withdrawal fee;
. withdrawal charge;
. MVA; and
. charge for premium taxes and/or other taxes.
The amount we send to you (your "withdrawal proceeds") will also reflect any
required or requested federal and/or state income tax withholding.
If you make a full withdrawal, this Contract will end; we will have no further
obligations under this Contract.
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TRANSFER AND WITHDRAWAL RESTRICTIONS
SPECIAL RESTRICTIONS ON WITHDRAWALS OR TRANSFERS FROM THE FIXED OPTION - After
the first Contract Anniversary, you may, within thirty (30) days from your
Contract Anniversary, withdraw or transfer up to one-third (33-1/3%) of your
Fixed Option Value. In consecutive Contract Years, however, you may withdraw or
transfer one-third of your Fixed Option Value at the beginning of the first
year, one-half (50%) of your remaining Fixed Option Value at the beginning of
the second year, and up to the entire amount (100%) of your remaining Fixed
Option Value at the beginning of the third year.
SPECIAL RESTRICTIONS ON WITHDRAWALS AND TRANSFERS FROM THE GIOS - You may make
unlimited transfers or withdrawals from your GIOs during any Contract Year,
except that we reserve the right to impose a transaction fee as described in
CHARGES, FEES AND DEDUCTIONS. However, each transfer and/or withdrawal from any
GIO is subject to a Market Value Adjustment if such transaction occurs prior to
the end of that GIOs respective Guarantee Term, unless such transfer or
withdrawal is made within the thirty (30) days following the end of the
Guarantee Term (see GUARANTEED INTEREST OPTIONS ). You may specify a Guarantee
Term from which your withdrawal or transfer is to occur. We will deduct such
withdrawal or transfer first from the oldest GIO within that GIO Term Value and
then from the next oldest GIO in succeeding order, as needed. If you do not
specify a Guarantee Term, we will deduct the amount of the withdrawal or
transfer from your Contract Value in proportion to your GIO Term Values,
beginning with the oldest GIO within each GIO Term Value.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under Code Section 401 or 403
and your Qualified Plan permits, you may request a loan of a portion of your
Contract Value after your first Contract Year and before your Annuity Date. If
your Contract is a Non-Qualified Contract, or if your Qualified Plan does not
permit loans, loans under this Contract will not be available to you.
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DEATH BENEFIT
A death benefit may be payable on proof of the death of the Annuitant or any
Owner before the Annuity Date, while this Contract is in force.
The proceeds of any death benefit payable will be payable upon receipt, in
proper form, of proof of death and instruction regarding payment of death
benefit proceeds. Such proceeds will equal the amount of the death benefit
reduced by any charges for premium taxes and/or other taxes and any Contract
Debt. These proceeds will be payable in a lump sum, as an Annuity Option under
this Contract or towards the purchase of any annuity option we then offer, or in
accordance with the Code (see DEATH OF OWNER DISTRIBUTION RULES). Any such
Annuity Option is subject to all restrictions and requirements as are other
annuities offered under this Contract.
DEATH BENEFIT AMOUNT - The Death Benefit Amount as of any Business Day prior to
your Annuity Date is equal to the greater of: (a) your Contract Value as of that
day; or (b) your aggregate Purchase Payments reduced by (i) an amount for each
withdrawal that has occurred, which is calculated by multiplying the aggregate
Purchase Payments received prior to each withdrawal by the ratio of the amount
of the withdrawal, including any withdrawal charge, to your Contract Value
immediately prior to the withdrawal; and (ii) any applicable charges, fees,
and/or MVAs deductions on or before that day.
GUARANTEED MINIMUM DEATH BENEFIT ("GMDB") AMOUNT - The GMDB Amount will be
calculated only when a death benefit becomes payable as a result of the death of
the sole Annuitant, and is determined as follows: First, we calculate what the
Death Benefit Amount would have been as of your sixth Contract Anniversary and
each subsequent Contract Anniversary that occurs while the Annuitant is living
and before the Annuitant reaches his or her 76th birthday (each of these
Contract Anniversaries is a "Milestone Date"). We then adjust the Death Benefit
Amount for each Milestone Date by: (i) adding the aggregate amount of any
Purchase Payments received by us since that Milestone Date; (ii) subtracting an
amount for each withdrawal that has occurred since that Milestone date, which is
calculated by multiplying the Death Benefit Amount by the ratio of the amount of
each withdrawal that has occurred since that Milestone Date, including any
withdrawal charge, to the Contract Value immediately prior to the withdrawal;
and (iii) subtracting the aggregate amount of any previous charges, fees, MVAs,
and/or taxes, since that Milestone Date.
The highest of these adjusted Death Benefit Amounts as of the Notice Date is
your GMDB Amount. The "Notice Date" is the day on which we receive, in proper
form, proof of death and instructions satisfactory to us regarding payment of
death benefit proceeds.
DEATH OF ANNUITANT - If the Annuitant dies on or before your sixth Contract
Anniversary (your first Milestone Date), or dies after your first Milestone Date
and had reached his or her 76th birthday on or prior to your first Milestone
Date, the death benefit will be equal to your Death Benefit Amount as of the
Notice Date.
If the Annuitant dies after your first Milestone Date and had not yet reached
his or her 76th birthday as of your first Milestone Date, the death benefit will
be equal to the greater of the Death Benefit Amount or the GMDB Amount as of the
Notice Date. If an Annuitant dies before the Annuity Date, unless there is a
surviving Joint or Contingent Annuitant, we will pay the death benefit proceeds
to the Beneficiary, if living; otherwise to the Owner or the Owner's estate. If
an Annuitant dies and there is a surviving Joint Annuitant, the surviving Joint
Annuitant becomes the Annuitant. If there is no surviving Joint Annuitant and
there is a Contingent Annuitant, the Contingent Annuitant becomes the Annuitant.
Death benefit proceeds are payable only for the death of the sole surviving
Annuitant prior to the Annuity Date. If you are the Annuitant and you die, we
will determine the amount of any death benefit and the Beneficiary under the
Death of Annuitant provisions; and, if your Contract is a Non-Qualified
Contract, we will distribute any death benefit proceeds under the Death of Owner
Distribution Rules.
DEATH OF OWNER - If you are not the Annuitant, and you die before the Annuitant,
the amount of the death benefit will be equal to your Contract Value as of the
Notice Date.
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If you die while the Annuitant is living and prior to the Annuity Date, we will
pay the death benefit proceeds to the surviving Joint Owner, if any. If there is
no surviving Joint Owner and there is a Contingent Owner, we will pay the death
benefit proceeds to the surviving Contingent Owner, if any. If there is no
surviving Contingent Owner, the death benefit proceeds will be paid to the
Beneficiary, if living; otherwise to the Owner's estate. If you are not also the
Annuitant, then, in the event the deaths of the Owner and Annuitant are under
circumstances where it cannot be determined who died first, the Death Benefit
will be calculated under the DEATH OF ANNUITANT provision of this Contract and
payment will be made in accordance with the DEATH OF OWNER provisions of this
Contract.
If you are a non-natural Owner of a Contract other than a Contract issued under
a Qualified Plan as defined in Section 401 or 403 of the Code, the Primary
Annuitant will be treated as the Owner of the Contract for purposes of the DEATH
OF OWNER DISTRIBUTION RULES. If there is a change in the Primary Annuitant prior
to the Annuity Date, such change will be treated as the death of the Owner. The
amount of the death benefit will be (a) the Contract Value if the non-natural
Owner elects to maintain the Contract and reinvest the Contract Value into the
Contract in the same amount as immediately prior to the distribution, or (b) the
Contract Value less any annual fee, withdrawal fee, withdrawal charge, charge
for premium taxes and/or other taxes, and MVAs if the non-natural Owner elects a
cash distribution. The amount of the death benefit will be determined as of the
Business Day we receive, in proper form, the request to change the Primary
Annuitant and instructions regarding maintaining the Contract or cash
distribution.
If both you and the Annuitant(s) are non-natural persons, no death benefit will
be payable, and any distribution will be treated as a withdrawal and subject to
any applicable annual fee, withdrawal fee, withdrawal charge, charge for premium
taxes and/or other taxes, and MVAs.
DEATH OF OWNER DISTRIBUTION RULES - The following rules will determine when a
distribution must be made under this Contract. These rules do not affect our
determination of the amount of benefit payable or distribution proceeds. If
there is more than one Owner, these rules apply on the date on which the first
of these Joint Owners dies.
If the Owner dies before the Annuity Date, the beneficiary (as that term applies
with respect to an Owner's death) must receive:
. a lump sum payment; or
. elect to receive an annuity for life or over a period that does not
exceed the life expectancy of the beneficiary with annuity payments that
start within one year after the Owner's death.
Unless otherwise required by law, an election to receive an annuity (in lieu of
a lump sum payment) must be made within such time-frames as we may prescribe
from time to time, or the lump sum option will be deemed elected and we will
consider that deemed election as receipt of instruction regarding payment of
death benefit proceeds.
If the spouse of the deceased Owner is the sole surviving Beneficiary, or is the
sole surviving Joint or Contingent Owner, and has an unrestricted right to
receive all death benefit proceeds in one lump sum, the spouse may continue this
Contract as Owner rather than receive the death benefit proceeds, provided that
we receive instructions to continue the Contract within such time-frames as we
may prescribe from time to time.
If the Owner dies on or after the Annuity Date, but payments have not yet been
completed, then distributions of the remaining amounts payable under this
Contract must be made at least as rapidly as the rate that was being used at the
date of the Owner's death.
If the Owner is a Non-natural Owner, the rules set forth in these DEATH OF OWNER
DISTRIBUTION RULES apply in the event of the death or change of the Primary
Annuitant. Primary Annuitant means the individual, the events in the life of
whom are of primary importance in affecting the timing or amount of the payout
under the Contract.
This Contract incorporates all provisions of Code Section 72(s) and any
successor provision, as deemed necessary by us to qualify this Contract as an
annuity, including the requirement that if the owner dies before the Annuity
Date, any death benefit proceeds under this Contract shall be distributed within
five
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years of the owner's death (or such other period that we offer and that is
permitted under the Code or such shorter period as we may require).
These DEATH OF OWNER DISTRIBUTION RULES do not apply to Qualified Contracts
issued under Qualified Plans as defined in Section 401, 403 or 408 of the Code
or to an annuity that is a qualified funding asset as defined in Code Section
130(d) (but without regard to whether there is a qualified assignment).
INTEREST ON DEATH BENEFIT PROCEEDS - If payment of death benefit proceeds is
unduly delayed after the Notice Date, we will pay interest on the proceeds.
Interest will be paid at a rate of not less than 3% per year from the Notice
Date until the proceeds are paid or applied under an Annuity Option. If the law
in the state in which the Contract is issued requires payment of a greater
amount, we will pay that amount.
BENEFICIARY
Your Beneficiary is the person you name who may receive any death benefit
proceeds, or any remaining annuity payments after the Annuity Date, under your
Contract if the Annuitant or Owner dies. If you leave no surviving Beneficiary,
your estate may receive the death benefit proceeds under your Contract.
If the Beneficiary is a trustee, we will neither be responsible for verifying a
trustee's right to receive any death benefit proceeds payable, nor for how the
trustee disposes of any death benefit proceeds. If before payment of any death
benefit proceeds, we receive proper notice that the trust has been revoked or is
not in effect, then any death benefit proceeds payable will be paid to the
Owner's estate.
ADDING OR CHANGING YOUR BENEFICIARY - You may add, change, or remove any
Beneficiary, other than an irrevocable Beneficiary, subject to the terms of any
assignment, at any time prior to the death of the Annuitant or Owner, as
applicable, by sending us a request in proper form. However, if you have named
an irrevocable Beneficiary, you may not add any new Beneficiary, or remove or
change the irrevocable Beneficiary, without obtaining his or her written consent
in a form acceptable to us. You may remove any non-irrevocable Beneficiary
without obtaining the consent of the irrevocable Beneficiary. Qualified
Contracts may have additional restrictions on naming and changing Beneficiaries.
Any change or addition will take effect only when we receive all necessary
documents and record the change or addition.
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ANNUITY BENEFITS
CHOICE OF ANNUITY DATE - Your Annuity Date is shown in the Contract
Specifications. If you did not select an Annuity Date in your application for
this Contract, we assigned an Annuity Date based on the type of this Contract
and the Annuitant's Age (see DEFAULT ANNUITY DATE AND OPTIONS).
You may change your Annuity Date by providing proper notice to us at least ten
(10) Business Days prior to your current Annuity Date or new Annuity Date,
whichever is earlier. Your Annuity Date may not be earlier than your first
Contract Anniversary and must occur on or before the day the younger Annuitant
reaches his or her 95/th/ birthday, or earlier as required by state law or the
Code. You may be subject to additional restrictions under your Qualified Plan.
You should consult with your Qualified Plan administrator before you elect your
Annuity Date.
If you change your Annuity Date and that date is before the end of the Guarantee
Term for an existing GIO, that GIO may be subject to an MVA on the new Annuity
Date (see GUARANTEED INTEREST OPTIONS - MARKET VALUE ADJUSTMENTS (MVAS)).
APPLICATION OF CONTRACT VALUE - Prior to the Annuity Date, you may elect to
convert all or part of your Net Contract Value, less any applicable MVA, and any
charge for premium taxes and/or other taxes, to any currently offered Annuity
Option. You may also elect a full withdrawal (subject to the terms of the
withdrawal provisions) in lieu of annuity payments under an Annuity Option.
Before we make any full withdrawal, we require return of this Contract (or a
signed Lost Contract Affidavit) to us. The aggregate net amount you convert must
be at least $10,000; otherwise, we reserve the right to pay a single amount
equal to your withdrawal proceeds (see AMOUNT AVAILABLE FOR WITHDRAWALS).
If you convert only a portion of your Net Contract Value on your Annuity Date,
you may, at that time, elect not to have the remainder of your Net Contract
Value distributed, but instead to continue your Contract with that remaining
Contract Value. This option may or may not be available, or may be available
only for certain types of Contracts. If this option is available and you elect
it, you would choose a second Annuity Date for such Contract Value; all
references in this Contract to your Annuity Start Date (or Annuity Date) would,
with regard to such Contract Value, be deemed to refer to that second Annuity
Date. You should call your tax adviser for more information if you desire this
option.
YOUR SELECTIONS - Prior to the Annuity Date, you may make three selections
about the annuity payments. First, you may choose whether you want those
payments to be a fixed-dollar amount or a variable-dollar amount, or both.
Second, you may choose the form of annuity payments (Annuity Option). Third, you
may choose to have annuity payments made monthly, quarterly, semiannually, or
annually.
The first annuity payment on the Annuity Date will be sent on the day following
the Annuity Date and must be at least $250. We may reduce your payment frequency
if the first annuity payment is less than $250. If you elect annuity payments
for a Period Certain Only, we also reserve the right to reduce the Period
Certain to meet the $250 minimum first payment. After the Annuity Date, you may
not change the Annuity Option, or surrender the Contract for payment of amounts
converted into a variable annuity and/or fixed annuity.
FIXED AND VARIABLE ANNUITIES - You may choose a fixed annuity (with fixed-dollar
payments), a variable annuity (with variable-dollar payments), or you may choose
a combination of both. If you select a variable annuity, you may choose any
Subaccounts for your annuity. If you select a variable annuity, on your Annuity
Date, we will transfer that portion of your Net Contract Value that you indicate
to the Subaccount(s) you choose. We will apply the net amount you convert to a
fixed annuity and/or a variable annuity (and in this instance, to each
Subaccount), based on your relative Account Value in each Investment Option on
the Annuity Date. Any net amount you convert to a fixed annuity will be held in
our General Account (but not under the Fixed Option or GIOs).
23
Each periodic payment under the fixed annuity will be equal to the amount of
your first fixed annuity payment (unless you elect a joint and survivor life
annuity with reduced survivor payments). The amount of each variable annuity
periodic payment will vary with the investment results of the Subaccount(s) you
select. After the Annuity Date, you may exchange the Annuity Units in any
Subaccount(s) for Annuity Units in any other Subaccount(s) up to four times in
any twelve month period. We reserve the right to limit the Subaccounts
available, to change the number and frequency of exchanges, and to change the
number of Subaccounts you may choose.
In choosing an Annuity Option, you must submit your Option request to us in
proper form.
ANNUITY OPTIONS - The following forms of annuity payments are available under
this Contract. Additional options may become available in the future:
Option 1: Life Only. Periodic payments are made to the designated payee during
the Annuitant's lifetime. Payments stop when the Annuitant dies.
Option 2: Life with Period Certain. Periodic payments are made to the
designated payee during the Annuitant's lifetime, with payments
guaranteed for a specified period. You may choose to have payments
guaranteed from 5 through 30 years (in full years only). If the
Annuitant dies before the guaranteed payments are completed, we pay
the Beneficiary the remainder of the guaranteed payments.
Option 3: Joint and Survivor Life. Periodic payments are made during the
lifetime of the Primary Annuitant. After the death of the Primary
Annuitant, periodic payments are based on the life of the secondary
Annuitant named in the election if and so long as such secondary
Annuitant lives. Payments made based on the life of the secondary
Annuitant may be in installments equal to 50%, 66-2/3% or 100% (as
specified in the election) of the original payment amount payable
during the lifetime of the Primary Annuitant. If you elect a reduced
payment based on the life of the secondary Annuitant, fixed annuity
payments will be equal to 50% or 66-2/3% of the original fixed
payment payable during the lifetime of the Primary Annuitant;
variable annuity payments will be determined using 50% or 66-2/3%,
as applicable, of the number of Annuity Units for each Subaccount
credited to the Contract. Payments stop when both Annuitants have
died.
Option 4: Period Certain Only. Periodic payments are made over a specified
period. You may choose to have payments continue from 5 through 30
years (in full years only). If the Annuitant dies before the
guaranteed payments are completed, we pay to the Beneficiary the
remainder of the guaranteed payments.
DEFAULT ANNUITY DATE AND OPTIONS - If you did not choose an Annuity Date when
you submitted your application for this Contract, your Annuity Date is the
Annuitant's 95/th/ birthday. If there are Joint Annuitants, the Annuity Date
will be based on the younger Annuitant's birthday, unless otherwise required by
law.
If you do not elect an Annuity Option, your Net Contract Value, less any
applicable MVA, and any charge for premium taxes and/or other taxes, when
converted, will, subject to our minimum requirements, be converted as follows:
. the net amount from your Fixed Option Value and your GIO Value will be
converted to a fixed annuity and held in our General Account, and
. the net amount from your Variable Account Value will be applied to a
variable annuity and applied to the Subaccounts in proportion to your
Account Value in each Subaccount on the Annuity Date.
24
If this is a Non-Qualified Contract, or a Qualified Contract and you are not
married, your Annuity Option will be Life with 10 Year Period Certain. If this
is a Qualified Contract and you are married, your Annuity Option will be Joint
and Survivor Life, with survivor payments of 50%, and your spouse will
automatically be named as the secondary Annuitant. If you do not elect your
frequency of payments, we will make payments based on our most frequent schedule
that results in an initial annuity payment of at least $250.
AMOUNT OF PAYMENTS - The first annuity payment amount depends on the form of
annuity, the payment frequency you select, and whether you select a fixed
annuity and/or a variable annuity. If you do not choose the Period Certain Only
Option, the amount will depend on the Age of the Annuitant(s), the Annuity Date,
and the sex of the Annuitant(s), unless unisex factors apply.
FIXED ANNUITY PAYMENTS - The minimum guaranteed income purchased per $1,000 of
the net amount applied to a fixed annuity is based on an annual interest rate of
3% and the 1983a Mortality Table with the ages set back ten (10) years.
CONVERSION TO CURRENT RATES - The annuity payments made will be based on the
greater of:
. our current income factors in effect for this Contract on your Annuity
Date; or
. our guaranteed income factors.
The dollar amount of any payments after the first annuity payment is specified
during the annuity payment period according to the provisions of your elected
Annuity Option.
VARIABLE ANNUITY PAYMENTS - Your Subaccount Annuity Units. For each Subaccount,
we divide the amount of the initial variable annuity payment from each
Subaccount by the Annuity Unit Value for that Subaccount (the "Annuity Unit
Value") on the Annuity Date, to obtain the number of Annuity Units for that
Subaccount. The number of your Annuity Units in each Subaccount will not change
unless exchanges of Annuity Units are made (or if the Joint and Survivor Annuity
option is elected and the Primary Annuitant dies first), but the Annuity Unit
Value of those Annuity Units will vary.
Your Subsequent Variable Payments. The amount of each subsequent variable
annuity payment will be the sum of the amounts payable based on your Annuity
Units in each Subaccount. To determine the amount payable for each Subaccount,
we multiply the number of your Annuity Units in that Subaccount by their Annuity
Unit Value on the day in each payment period that corresponds to the Annuity
Date.
Annuity Unit Value - The initial Annuity Unit Value for each Subaccount was
arbitrarily set at $10 on the Business Day the Subaccount began operations. At
the end of each subsequent Business Day, the Annuity Unit Value for each
Subaccount is equal to (A x B) x C where:
(A) is the Subaccount's Annuity Unit Value for that Subaccount as of the end
of the prior Business Day;
(B) is the Net Investment Factor for that Subaccount for that valuation
period; and
(C) is an interest factor to offset the effect of the assumed interest rate
of 5% per year, which is built into the Annuity Option Tables.
We generally calculate the Annuity Unit Value of each Subaccount at or about
4:00 p.m., Eastern time, on each day the New York Stock Exchange is open,
provided our administrative offices are also open that day.
We guarantee that the amount of each subsequent annuity payment will not be
affected by variations in our expenses or in mortality experience.
25
PERIODIC PAYMENTS - The first payment under these Options will be determined on
the Annuity Date and will be made on the day following the Annuity Date. For a
Designated Beneficiary entitled to a death benefit due to the death of the
Annuitant, the first payment will be made on the first day of the calendar
month, or earlier at our option, next following the day we receive due proof of
the Annuitant's death and instructions regarding payment, (called the "Payment
Start Date"), and such other documentation as we may require. Subsequent
payments will be determined on the day in each payment period that corresponds
to the Payment Start Date and will be made on the following day.
MISSTATEMENT OF AGE OR SEX - We may require proof of the Annuitant's Age and sex
before starting annuity payments. If the Age or sex (or both) of the Annuitant
are incorrectly stated in this Contract, we will correct the amount payable to
equal the amount that the Net Contract Value, less any MVA and any charge for
premium taxes and/or other taxes, under this Contract would have purchased for
the Annuitant's correct Age and sex, if applicable. If we make the correction
after annuity payments have started, and we have made overpayments, we will
deduct the amount of the overpayment, with interest at 3% per year, from any
payments due then or later. If we have made underpayments, we will add the
amount, with interest at 3% a year, of the underpayments to the next payment we
make after we receive proof of the correct sex and/or date of birth.
26
ANNUITY OPTION TABLES
For the fixed annuity option and the initial variable annuity benefit, the
Tables below illustrate the minimum guaranteed monthly income purchased per
$1,000 of the net amount applied. The actuarial basis for the fixed annuity
option Tables is the 1983a Annuity Mortality Table with the ages set back ten
(10) years with interest at an annual rate of 3%. The Tables also illustrate the
minimum rates for the first monthly variable annuity payment per $1,000 of the
net amount applied to the variable annuity payment option. The rates for
variable annuity payments are based on interest at the annual rate of 5% and the
1983a Annuity Mortality Table with the ages set back ten (10) years. Subsequent
payments may be higher or lower than the first payment, based on the investment
performance of the Subaccount(s) you elect and whether you exchange Subaccount
Annuity Units.
These Tables provide for sex-distinct and unisex payment income factors for life
payment options. For some Qualified Plans and in some states, the use of sex-
distinct income factors are prohibited. For those Qualified Plans and in those
states, we use blended unisex income factors for life payment options, whether
the Annuitant is male or female.
We will provide rates for any payment frequency, interest rate, age or sex,
combinations thereof, and/or payout percentage or any annuity option, if
applicable, that we offer if they are not shown in the Tables that follow.
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OPTIONS 1 AND 2 - SINGLE LIFE ANNUITIES WITH GUARANTEED PAYMENTS FOR:
FIXED ANNUITY RATES
---------------------------------------------------------------------------------------------------------
MALE AT 3% FEMALE AT 3% UNISEX AT 3%
----------------------- ---------------------- -----------------------
AGE NONE 10 YR. 20 YR. NONE 10 YR. 20 YR. NONE 10 YR. 20 YR.
---------- ----- ------ ------ ----- ------ ------ ----- ------ ------
30 3.04 3.03 3.03 2.93 2.93 2.93 2.99 2.98 2.98
35 3.14 3.14 3.13 3.02 3.02 3.01 3.08 3.08 3.07
40 3.28 3.27 3.26 3.13 3.12 3.12 3.20 3.20 3.19
45 3.44 3.44 3.41 3.26 3.26 3.24 3.35 3.35 3.33
50 3.66 3.64 3.60 3.42 3.42 3.40 3.54 3.54 3.50
55 3.93 3.90 3.82 3.63 3.63 3.59 3.78 3.77 3.71
60 4.27 4.22 4.08 3.90 3.89 3.82 4.09 4.06 3.96
65 4.70 4.62 4.39 4.25 4.22 4.11 4.48 4.43 4.25
70 5.28 5.14 4.71 4.72 4.66 4.44 5.00 4.90 4.58
75 6.10 5.81 5.02 5.35 5.22 4.79 5.73 5.52 4.92
80 7.23 6.61 5.27 6.25 5.96 5.12 6.74 6.30 5.20
85 8.82 7.49 5.42 7.56 6.89 5.35 8.18 7.20 5.39
90 11.06 8.33 5.49 9.53 7.89 5.47 10.28 8.12 5.48
95 14.16 8.97 5.51 12.48 8.74 5.50 13.30 8.86 5.51
VARIABLE ANNUITY RATES
-------------------------------------------------------------------------------------------------------
MALE AT 5% FEMALE AT 5% UNISEX AT 5%
----------------------- ----------------------- ----------------------
XXXX 00XX. 00XX. NONE 00XX. 00XX. XXXX 00XX. 00XX.
----- ----- ----- ----- ----- ----- ----- ----- -----
30 4.38 4.37 4.36 4.29 4.29 4.29 4.34 4.33 4.33
35 4.46 4.46 4.44 4.36 4.35 4.35 4.41 4.41 4.40
40 4.57 4.56 4.54 4.44 4.44 4.42 4.51 4.50 4.49
45 4.71 4.70 4.67 4.55 4.54 4.52 4.63 4.62 4.60
50 4.91 4.89 4.82 4.69 4.68 4.65 4.80 4.78 4.74
55 5.16 5.12 5.02 4.87 4.86 4.81 5.02 4.99 4.92
60 5.48 5.41 5.24 5.12 5.09 5.01 5.30 5.26 5.13
65 5.89 5.79 5.51 5.44 5.40 5.26 5.67 5.60 5.39
70 6.46 6.28 5.80 5.89 5.80 5.55 6.18 6.05 5.68
75 7.27 6.91 6.08 6.51 6.34 5.87 6.89 6.64 5.98
80 8.41 7.68 6.29 7.39 7.05 6.16 7.90 7.38 6.23
85 10.02 8.52 6.43 8.72 7.93 6.37 9.36 8.24 6.40
90 12.29 9.30 6.49 10.71 8.88 6.47 11.49 9.10 6.48
95 15.42 9.90 6.51 13.70 9.68 6.50 14.55 9.80 6.51
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OPTION 3 - JOINT AND 50% SURVIVOR LIFE
PRIMARY ANNUITANT
MALE AGE
60 65 70 75 80 85
---------------- ----------------- ----------------- ----------------- ----------------- ----------------
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE
----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
60 3.91 5.12 4.13 5.34 4.39 5.60 4.69 5.92 5.02 6.30 5.38 6.73
FEMALE 65 3.99 5.19 4.25 5.43 4.54 5.73 4.88 6.09 5.26 6.51 5.67 6.98
AGE 70 4.06 5.25 4.36 5.53 4.70 5.87 5.10 6.27 5.55 6.75 6.03 7.29
75 4.12 5.31 4.46 5.62 4.85 6.00 5.32 6.47 5.86 7.03 6.45 7.66
80 4.17 5.36 4.54 5.70 4.98 6.13 5.54 6.67 6.18 7.33 6.91 8.08
85 4.21 5.40 4.60 5.77 5.09 6.24 5.72 6.86 6.49 7.63 7.40 8.54
PRIMARY ANNUITANT
UNISEX AGE
60 65 70 75 80 85
---------------- ----------------- ----------------- ----------------- ----------------- ----------------
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE
----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
60 3.84 5.05 4.07 5.27 4.34 5.54 4.65 5.86 5.00 6.24 5.39 6.69
UNISEX 65 3.90 5.10 4.17 5.35 4.47 5.65 4.83 6.01 5.23 6.44 5.68 6.94
AGE 70 3.96 5.15 4.25 5.43 4.60 5.76 5.02 6.17 5.49 6.66 6.03 7.24
75 4.00 5.19 4.32 5.49 4.72 5.87 5.20 6.34 5.76 6.91 6.41 7.58
80 4.03 5.23 4.38 5.55 4.81 5.96 5.36 6.49 6.02 7.15 6.81 7.96
85 4.05 5.25 4.42 5.59 4.88 6.04 5.49 6.62 6.25 7.38 7.20 8.33
OPTION 4 - PERIOD CERTAIN ONLY
MONTHLY MONTHLY MONTHLY MONTHLY
INCOME INCOME INCOME INCOME
----------------- ----------------- ---------------- -----------------
3% 5% 3% 5% 3% 5% 3% 5%
YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE
---------- ----- -------- ----- ----- -------- ----- ----- -------- ----- ----- --------
5 17.91 18.74 12 8.24 9.16 19 5.73 6.71 26 4.59 5.65
6 15.14 15.99 13 7.71 8.64 20 5.51 6.51 27 4.47 5.54
7 13.16 14.02 14 7.26 8.20 21 5.32 6.33 28 4.37 5.45
8 11.68 12.56 15 6.87 7.82 22 5.15 6.17 29 4.27 5.36
9 10.53 11.42 16 6.53 7.49 23 4.99 6.02 30 4.18 5.28
10 9.61 10.51 17 6.23 7.20 24 4.84 5.88
11 8.86 9.77 18 5.96 6.94 25 4.71 5.76
29
