"DRAFT"
[LOGO]
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
-- Non-Participating
Please read your contract carefully. This is a legal contract between you, the
Owner, and us, Pacific Life & Annuity Insurance 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 11.
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. XXXXX
Chairman and Chief Executive Officer Secretary
The smallest gross annual rate of return needed for the dollar amount of the
variable annuity payments to not decrease is equal to the sum of the assumed
interest rate (AIR) of 5% and all product fees and charges. The fees and charges
would include the M & E charges of 1.25% and the Administrative Charge of 0.15%.
Thus, the total gross annual rate of return would be 6.40%.
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
DCA PLUS FIXED OPTION 10
VARIABLE INVESTMENT OPTIONS 11
Separate Account 11
CONTRACT VALUE 12
Fixed Option Value 12
DCA Plus Fixed Option Value 12
Variable Account Value 12
Loan Account Value 13
CHARGES, FEES AND DEDUCTIONS 14
Administrative Fee 14
Annual Fee 14
Mortality and Expense Risk Charge 14
Premium Taxes 14
Transfer Fee 14
Withdrawal Fee 14
Withdrawal Charge 14
TRANSFERS 16
WITHDRAWALS 16
Amount Available for Withdrawal 16
Special Restrictions - Fixed Option and DCA Plus Option 17
CONTRACT LOANS 17
DEATH BENEFIT 18
Death of Annuitant 18
Death of Owner 19
Death of Owner Distribution Rules 19
Interest on Death Benefit Proceeds 20
BENEFICIARY 20
Adding or Changing Your Beneficiary 20
ANNUITY BENEFITS 21
Choice of Annuity Date 21
Application of Contract Value 21
Your Selections 21
Fixed and Variable Annuities 21
Annuity Options 22
Default Annuity Date and Options 22
Amount of Payments 23
Fixed Annuity Payments 23
Variable Annuity Payments 23
Periodic Payments 24
Misstatement of Age or Sex 24
ANNUITY OPTION TABLES 25
2
CONTRACT SPECIFICATIONS
SERVICE CENTER: SEND FORMS AND WRITTEN REQUESTS TO: SEND PAYMENTS TO:
Pacific Life & Pacific Life &
Annuity Company Annuity Company
P.O. Box 7187 P.O. Box 100060
Pasadena, California Pasadena, California
91109-7187 91189-0060
Toll-free number: 0-000-000-0000 (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 - [LOBE]
Investment Options:
[FNDNAM01] [FNDNAM02]
[FNDNAM03] [FNDNAM04]
[FNDNAM05] [FNDNAM06]
[FNDNAM07] [FNDNAM08]
[FNDNAM09] [FNDNAM10]
[FNDNAM11] [FNDNAM12]
[FNDNAM13] [FNDNAM14]
[FNDNAM15] [FNDNAM16]
[FNDNAM17] [FNDNAM18]
[FNDNAM19] [FNDNAM20]
[FNDNAM21] [FNDNAM22]
[FNDNAM23] [FNDNAM24]
[FNDNAM25] [FNDNAM26]
[FNDNAM27] [FNDNAM28]
[FNDNAM29] [FNDNAM30]
[FNDNAM31] [FNDNAM32]
[FNDNAM33]
Administrative Charge: 0.15%
Mortality and Expense Risk Charge: 1.25%
Annual Fee: $30.00
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: [PNUM] Contract Date: [ISSDT]
Owner(s):
[O1NAM]
[O2NAM]
Annuitant(s): Age Sex
[A1NAM] [A1AGE] [A1SEX]
[A2NAM] [A2AGE] [A2SEX]
Initial Purchase Payment: [PAMT] Annuity Start Date: [ACD]
3
DEFINITIONS
PL&A, we, our and us - Pacific Life & Annuity 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 Xxxxxxxxx'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.
4
CONTRACT VALUE -- As of the end of any Business Day, your Variable Account
Value, plus your Fixed Option Value, your DCA Plus Fixed Option Value, and
any Loan Account Value.
DCA PLUS FIXED OPTION -- Amounts allocated under your contract to the DCA
Plus Fixed Option are held in our General Account and receive interest at
rates declared periodically (the "Guaranteed Interest Rate(s)"), but not less
than an annual rate of 3%.
DCA PLUS FIXED OPTION VALUE -- The aggregate of your contract value allocated
to the DCA Plus Fixed Option.
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 PL&A, 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 the DCA Plus Fixed 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%.
GUARANTEE TERM -- The period during which the amount you allocate to the
Fixed Option or the DCA Plus Fixed Option earns a specified Guaranteed
Interest Rate.
INVESTMENT OPTION -- A Variable Account, Fixed Option, or DCA Plus Fixed
Option offered under the Contract.
LOAN ACCOUNT VALUE -- The amount, including any interest accrued, held in the
Loan Account to secure any Contract Debt.
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.
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 ("IRA"), 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.
5
SEPARATE ACCOUNT/SEPARATE ACCOUNT A -- A Separate Account of PL&A registered
as a unit investment trust under the Investment Company Act of 1940.
SERVICE CENTER -- PL&A'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 PL&A, which is available under
your Contract in which assets of PL&A 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.
6
GENERAL PROVISIONS
REPORTS TO OWNERS -- At least once per year prior to the annuity date, 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, any subsequent
applications to change this Contract, 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 PL&A. 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 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 delivered.
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.
7
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, the DCA Plus Fixed Option, 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, 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.
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.
8
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 $1,000,000.
Purchase Payments are payable in U.S. dollars either at our Service Center or
through our agent. Checks should be made payable to Pacific Life & Annuity
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 PL&A 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 if your instructions are not clear and we
cannot determine your allocation instructions.
Prior to the Annuity Date you may allocate all or a part of a Purchase
Payment to the DCA Fixed Option if you have elected to transfer under the DCA
Plus program. Under the DCA Plus program you authorize the automatic transfer
of amounts at monthly intervals from the DCA Plus Fixed Option to one or more
Variable Investment Options. You may terminate DCA Plus at any time. Upon any
termination of DCA Plus, we will transfer any amounts remaining in the DCA
Plus Fixed Option to the Fixed Option, unless you instruct us to transfer
such amounts to other Investment Options. We reserve the right to change the
terms and conditions of the DCA Plus program at any time.
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 to that respective
option. 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 be at least $500. 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.
9
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.
THE DCA PLUS FIXED OPTION
Your initial Purchase Payment allocation to the DCA Plus Fixed Option will
begin a Guarantee Term of up to one year.
Prior to the Annuity Date, we will credit interest at the Guaranteed Interest
Rate(s) during the Guarantee Term on the amount of Purchase Payments that you
allocate to the DCA Plus Fixed Option, while the Annuitant is living and this
Contract is in force. Your DCA Plus Fixed Option value will be transferred
over the remainder of the existing DCA Plus Guarantee Term. We will credit
the Guaranteed Interest Rate in effect on the Business Day that the
allocation is effective until the Guarantee Term has expired.
Account Values under the DCA Plus Fixed Option are held in our General
Account. Subject to applicable law, we have sole discretion over the
investment of our General Account assets.
At the end of a Guarantee Term, the entire DCA Plus Fixed Option will have
been transferred to the Variable Investment Options. If requested, all or a
portion of additional Purchase Payments may be allocated to the DCA Plus
Fixed Option at the Guaranteed Interest rate then in effect.
We will stop crediting interest on that portion of your DCA Plus Fixed Option
Value that is withdrawn, transferred (including transfers to the Loan
Account), or converted to an Annuity Option, including any fees for
withdrawals or transfers; withdrawal charges; annual fee; and charges for any
premium taxes and/or other taxes. We do so as of the end of the Business Day
any such transaction is effective.
10
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 PL 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 delivery. 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.
11
CONTRACT VALUE
Your Contract Value on any Business Day is the sum of:
-- your Fixed Option 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.
DCA PLUS FIXED OPTION VALUE: Your DCA Plus Fixed Option Value on any Business
Day is your DCA Plus Fixed Option Value on the prior Business Day increased
by any additions to your DCA Plus Fixed Option on that day as a result of any:
-- interest;
-- Purchase Payments received by us and allocated to the DCA Plus Fixed
Option; and
decreased by any deductions from the DCA Plus Fixed Option on that day as a
result of any:
-- transfers, including transfers to the Loan Account;
-- withdrawals and withdrawal charges;
-- amounts converted to an Annuity Option;
-- charge for any premium taxes and/or other taxes;
-- fees for withdrawals and/or transfers; and
-- annual fee.
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.
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;
12
-- 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.
13
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:
14
-- 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.
15
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.
If your transfer causes your remaining Account Value in any Investment Option
immediately after such transfer to be less than $500, we may transfer such
remaining Account Value to your other Investment Options on a prorata basis
relative to your most recent allocation instructions. We reserve the right to
impose a transfer fee as described in the Transfer Fee provision.
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 delivered 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 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 $500, 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; 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.
16
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 TRANSFERS INTO THE DCA PLUS FIXED OPTION -- No
transfers may be made from any other Investment Option to the DCA Plus Fixed
Option
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.
17
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, and/or fees, deducted 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.
If death of the sole Annuitant occurs and the deceased was from the Ages 69
through 74 on the Contract Date, we will calculate what the Death Benefit
Amount would have been on the first Contract Anniversary following his or her
75th birthday (also a "Milestone Date"). We then adjust this Death Benefit
Amount by: (i) adding the aggregate amount of any Purchase Payments received
by us since that Milestone Date; and (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.
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 before the first Milestone Date,
the death benefit will be equal to your Death Benefit Amount as of the Notice
Date.
If the Annuitant dies on or after the 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
18
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.
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, 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.
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
19
before the Annuity Date, any death benefit proceeds under this Contract shall
be distributed within five 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.
20
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
Xxxxxxxxx reaches his or her 95th 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.
APPLICATION OF CONTRACT VALUE -- Prior to the Annuity Date, you may elect to
convert all or part of your Net Contract Value, 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 the DCA Plus Fixed Option).
21
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 Xxxxxxxxxx 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 95th birthday. If there are Joint Annuitants, the Annuity
Date will be based on the younger Xxxxxxxxx's birthday, unless otherwise
required by law.
If you do not elect an Annuity Option, your Net Contract Value, 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 or DCA Plus Fixed
Option 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.
22
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.
23
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, 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.
24
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.
Annuity benefits will not be less than those that would be provided by the
application of an amount to purchase any single consideration immediate
annuity offered by the Company at the time annuity payments commence.
25
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
Xxxxxxxx Xxxxxxx Rates
-----------------------------------------------------------------------------------------------------------
Male at 5% Female at 5% Unisex at 5%
---------------------- ---------------------- ----------------------
None 10 Yr. 20 Yr. None 10 Yr. 20 Yr. None 10 Yr. 20 Yr.
---- ----- ----- ---- ------ ------ ---- ----- -----
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
26
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
27
