AMERICAN FOUNDATION LIFE INSURANCE COMPANY (000) 000-0000
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2801 Highway 280 South (A Stock Insurance Company)
Birmingham, Alabama 35223
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
(NON-PARTICIPATING)
American Foundation Life Insurance Company agrees to provide the benefits
described in this Contract.
THIS IS A VARIABLE ANNUITY CONTRACT
THE VALUE OF THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT, IS VARIABLE. IT WILL INCREASE AND DECREASE AS A RESULT OF
FLUCTUATIONS IN THE NET INVESTMENT FACTOR. NO MINIMUM CONTRACT VALUE IS
GUARANTEED FOR AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT.
YOU HAVE THE RIGHT TO RETURN THIS CONTRACT
You may cancel this Contract within thirty days after you receive it by
returning the Contract to our Administrative Office, or to the Agent who sold
the Contract, with a written request for cancellation. Return of this Contract
by mail is effective on being post-marked, properly addressed and postage
pre-paid. We will promptly return the Contract Value plus any charges deducted
from either Purchase Payments or the Contract Value. This amount may be more or
less than the Purchase Payments.
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxx
President Secretary
THIS IS A LEGAL CONTRACT
READ IT CAREFULLY
CONTRACT SPECIFICATIONS
FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
CONTRACT NUMBER EFFECTIVE DATE
OWNER ISSUE AGE OF OWNER
JOINT OWNER ISSUE AGE OF JOINT OWNER
ANNUITANT ISSUE AGE OF ANNUITANT
BENEFICIARY ANNUITY COMMENCEMENT DATE
As contained in our records
INITIAL PURCHASE PAYMENT:
TYPE OF PLAN: [ ] QUALIFIED [X] NON-QUALIFIED
ANNUAL CONTRACT MAINTENANCE FEE: {$30}
MORTALITY AND EXPENSE RISK CHARGE: {1.25%} per annum of the average daily
Variable Account Value in the Variable Account.
ADMINISTRATION CHARGE: {0.15%} per annum of the average daily Variable Account
Value in the Variable Account.
TRANSFER FEE: {$25} per transfer in excess of {12} in any Contract Year.
SURRENDER CHARGE: Full or partial surrenders may be subject to a Surrender
Charge. When applicable, the Surrender Charge will be determined according the
table below:
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NUMBER OF FULL YEARS ELAPSED BETWEEN SURRENDER CHARGE AS A PERCENTAGE OF
THE DATE OF RECEIPT OF THE PURCHASE PURCHASE PAYMENT WITHDRAWN
PAYMENT AND THE DATE OF SURRENDER IN A FULL YEAR
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
ALLOCATION OPTIONS AVAILABLE ON THE EFFECTIVE DATE:
XXXXXXX XXXXX/PIC
Growth and Income
International Equity
Global Income
CORE U.S. Equity
Small Cap Equity
Money Market
Capital Growth
XXXXXXX
Small Cap Growth
Balanced
MFS
Emerging Growth
Research
Growth with Income
Total Return
OPPENHEIMERFUNDS
Capital Appreciation
Growth
Growth & Income
Strategic Bond
AMERICAN FOUNDATION LIFE GUARANTEED ACCOUNTS
Fixed Account
DCA Fixed Account
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INDEX
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GENERAL PROVISIONS
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Modification of the Contract. . . . . . . . . . . . . . . . . . . . . . . 8
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Error in Age or Sex . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Receipt of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Protection of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Non-Participating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Minimum Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Application of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PARTIES TO THE CONTRACT
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PURCHASE PAYMENT
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . . . 11
No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
GUARANTEED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
VARIABLE ACCOUNT
General Description . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Sub-Accounts of the Variable Account. . . . . . . . . . . . . . . . . . . 12
Variable Account Value. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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FEES AND CHARGES
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . . . 14
Administration Charge . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Contract Maintenance Fee. . . . . . . . . . . . . . . . . . . . . . . . . 14
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SURRENDERS
Surrenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Suspension or Delay in Payment of Surrender . . . . . . . . . . . . . . . 15
DEATH OF OWNER OR ANNUITANT
Death of an Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Death of the Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . 16
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Suspension of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ANNUITY OPTIONS
Annuity Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . 17
Annuity Income Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annuity Option 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annuity Option 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annuity Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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DEFINITIONS
ACCUMULATION UNIT: A unit of measurement used to calculate the value of a
Sub-Account.
ADMINISTRATIVE OFFICE: 0000 Xxxxxxx 000 Xxxxx, Xxxxxxxxxx, Xxxxxxx, 00000.
AGE: The age on the birthday immediately prior to any date for which age is to
be determined.
ALLOCATION OPTION: Any account within the Guaranteed Account and any Sub-Account
of the Variable Account into which amounts may be allocated under this Contract.
ANNIVERSARY VALUE: At any time, the sum of: (1) the Contract Value on a Contract
Anniversary; plus, (2) all Purchase Payments made since that Contract
Anniversary; minus, (3) any partial surrenders (and any associated charges) made
since that Contract Anniversary. An Anniversary Value is determined for each
Contract Anniversary through the earlier of: (1) the deceased Owner's 80th
birthday; or, (2) the date of the deceased Owner's death.
ANNUITY COMMENCEMENT DATE: The date on which Annuity Income Payments are
determined. The initial Annuity Income Payment must be within one month of the
Annuity Commencement Date.
ANNUITY INCOME PAYMENT: Payments made by the Company that are determined on the
Annuity Commencement Date and are based on the annuity option selected.
ANNUITY PURCHASE VALUE: At any time prior to the Annuity Commencement Date, the
greater of: (1) Surrender Value; or (2) 95% of Contract Value (less applicable
premium tax).
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: American Foundation Life Insurance Company, also referred to as "we",
"us" and "our".
CONTRACT ANNIVERSARY: The same month and day as the Effective Date in each
subsequent year of the Contract.
CONTRACT VALUE: At any time, the sum of: (1) the Variable Account Value; and (2)
the Guaranteed Account Value.
CONTRACT YEAR: Any period of 12 months commencing with the Effective Date or any
Contract Anniversary.
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DCA FIXED ACCOUNT: The DCA Fixed Account is part of American Foundation Life's
general account and is not part of or dependent upon the investment performance
of the Variable Account. Only Purchase Payments may be allocated to the DCA
Fixed Account, which is available only for dollar cost averaging. No transfers
may be made from other Allocation Options into this account.
DEATH BENEFIT: The amount, if any, paid to a Beneficiary upon the death of an
Owner prior to the Annuity Commencement Date. Only one Death Benefit is payable
under this Contract even though the Contract may, in some circumstances,
continue beyond an Owner's death.
EFFECTIVE DATE: The date as of which your initial Purchase Payment is credited
under to this Contract and the date this Contract takes effect. Contract Years
are measured from the Effective Date.
FIXED ACCOUNT: The Fixed Account is part of American Foundation Life's general
account and is not part of or dependent upon the investment performance of the
Variable Account.
FUND: Any open-end management investment company or investment portfolio
thereof, or unit investment trust or series thereof, in which a corresponding
Sub-Account invests.
GUARANTEED ACCOUNT: The Fixed Account, DCA Fixed Account and any other account
that we may offer with interest rate guarantees.
GUARANTEED ACCOUNT VALUE: At any time prior to the Annuity Commencement Date,
the sum of: (1) Purchase Payments allocated to the Guaranteed Account; plus, (2)
Variable Account Value transferred into the Guaranteed Account; plus, (3)
interest credited to the Guaranteed Account; minus, (4) Contract Value
transferred out of the Guaranteed Account; minus, (5) the amount of any partial
surrenders removed from the Guaranteed Account, including any surrender charges
and applicable premium tax; minus, (6) fees deducted from the Guaranteed
Account.
INTEREST GUARANTEED PERIOD: The term for which an interest rate is guaranteed
for an Allocation Option within the Guaranteed Account.
MAXIMUM ANNIVERSARY VALUE: The greatest Anniversary Value attained.
NET ASSET VALUE PER SHARE: The value per share of any Fund as computed on any
Valuation Day.
NON-QUALIFIED CONTRACTS: Contracts which are not Qualified Contracts.
PURCHASE PAYMENT(S): Amount(s) paid by the Owner and accepted by the Company as
consideration for this Contract.
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QUALIFIED CONTRACTS: Contracts issued in connection with retirement plans that
receive favorable tax treatment under Sections 401, 403, 408 or 457 of the Code.
SUB-ACCOUNT: A separate division of the Variable Account. Each Sub-Account
invests in a corresponding Fund.
SUB-ACCOUNT VALUE: The Sub-Account Value is the value of an Accumulation Unit of
the Sub-Account for which the value is being determined multiplied by the number
of Accumulation Units of that Sub-Account attributable to this Contract.
SURRENDER VALUE: The amount available for a full surrender. It is equal to the
Contract Value minus any applicable surrender charge, contract maintenance fee
and premium tax.
VALUATION DAY: Each day on which the New York Stock Exchange is open for
business.
VALUATION PERIOD: The period which begins at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next Valuation Day.
VARIABLE ACCOUNT: Variable Annuity Account A of American Foundation, a separate
investment account of the Company.
VARIABLE ACCOUNT VALUE: The sum of all Sub-Account Values.
GENERAL PROVISIONS
ENTIRE CONTRACT - This Contract and its attachments, including the copy of your
Application and any endorsements, riders and amendments, constitute the entire
agreement between you and us. All statements in the Application shall be
considered representations and not warranties.
MODIFICATION OF THIS CONTRACT - No one is authorized to modify or waive any
term or provision of this Contract unless we agree to the modification or waiver
in writing and it is signed by our President, Vice-President or Secretary. We
reserve the right to change or modify the provisions of this Contract to conform
to any applicable laws, rules or regulations issued by a government agency, or
to assure continued qualification of the Contract as an annuity contract under
the Code. Where required, we will obtain all necessary approvals, including
that of the Owner.
INCONTESTABILITY - We will not contest the provisions of this Contract.
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ASSIGNMENT - You have the right to assign this Contract. We do not assume
responsibility for the assignment. Any claim made under an assignment is subject
to proof of the nature and extent of the assignee's interest prior to payment by
us.
NOTICE - All instructions and requests to change or assign this Contract must
be in writing in a form acceptable to us, and signed by the Owner(s). The
instruction, change or assignment will relate back to and take effect on the
date it was signed, except we will not be responsible for following any
instruction or making any change or assignment before we receive it.
ERROR IN AGE OR SEX - When a benefit of this Contract is contingent upon any
person's age or sex, we may require proof of such. We may suspend payments
until proof is provided. When we receive satisfactory proof, we will make the
payments which were due during the period of suspension.
If, after proof of age and sex is furnished it is determined that the
information in the Application was not correct, we will adjust any benefit under
this Contract to that which would be payable based upon the correct age and sex.
If we have underpaid a benefit because of the error, we will make up the
underpayment in a lump sum. If the error resulted in an overpayment, we will
deduct the amount of the overpayment from any current or future payment due
under the Contract. Underpayments and overpayments will bear interest at an
annual effective interest rate of 3%.
SETTLEMENT - Benefits due under this Contract are payable from our
Administrative Office. The Owner may apply the settlement proceeds to any
payout option we offer for such payments at the time the election is made.
Unless directed otherwise in writing, we will make payments according to the
Owner's instructions as contained in our records at the time the payment is
made. We shall be discharged from all liability to the extent of any partial
or full surrender, or Death Benefit paid, or payments made under any annuity
option.
RECEIPT OF PAYMENT: If any Owner, Annuitant, Beneficiary or Xxxxx is incapable
of giving a valid receipt for any payment, we may make such payment to whomever
has legally assumed his or her care and principal support. Any such payment
shall fully discharge us to the extent of that payment.
PROTECTION OF PROCEEDS: To the extent permitted by law and except as provided by
an assignment, no benefits payable under this Contract will be subject to the
claims of creditors of any payee.
PREMIUM TAXES: Premium taxes will be deducted, if applicable. Premium taxes may
be deducted from the Purchase Payment(s) when received, upon full or partial
surrender, from the Death Benefit, or from the Account Value before Annuity
Income Payments begin.
NON-PARTICIPATING - This Contract does not share in our surplus or profits, or
pay dividends.
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MINIMUM VALUES - The values available under the Contract are at least equal to
the minimum values required in the state where the Contract is delivered.
APPLICATION OF LAW - The provisions of the Contract are to be interpreted in
accordance with the laws of the state where the Contract is delivered and with
the Code and applicable regulations.
REPORTS: At least annually, we will send to you at the address contained in our
records a report showing the current Contract Value, Allocation Option values,
your current investment allocation and any other information required by law.
PARTIES TO THE CONTRACT
OWNER: The person or persons to whom this Contract is issued, also referred to
as "you" or "your". Two persons may own this Contract together; they are called
Joint Owners. The Owner, or the Joint Owners together, are entitled to exercise
all rights and privileges provided by this Contract.
BENEFICIARY - The person or persons entitled to receive the Death Benefit upon
the death of an Owner. Unless designated irrevocably, the Owner may change the
Beneficiary by written notice prior to the death of any Owner.
PRIMARY - The Primary Beneficiary is the surviving Joint Owner, if any. If
there is no surviving Joint Owner, the Primary Beneficiary is the person or
persons designated on the application or, if changed by the Owner, the
person or persons so named in our records.
CONTINGENT - The person or persons named to receive the death benefits if
the Primary Beneficiary is not living at the time of an Owner's death. If
no Beneficiary designation is in effect or if no Beneficiary is living at
the time of an Owner's death, the estate of the deceased Owner will be the
Beneficiary.
IRREVOCABLE - An irrevocable Beneficiary is one whose written consent is
needed before the Owner can change the Beneficiary designation or exercise
certain other rights.
ANNUITANT: Payments under this Contract may depend upon the continued survival
of a living person called an Annuitant. The Annuitant may be changed by written
notice prior to the Annuity Commencement Date. However, if any Owner is not an
individual the Annuitant may not be changed. The Owner is the Annuitant unless
another Annuitant is named.
PAYEE: The person or persons designated by the Owner to receive the Annuity
Income Payments from this Contract. The Annuitant is the Payee unless otherwise
designated.
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PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable at our Administrative Office.
They may be made by check payable to American Foundation Life Insurance Company
or by any other method we deem acceptable. Your initial Purchase Payment is
shown on the Contract Specifications page.
Subsequent Purchase Payments will be accepted by the Company. The minimum
subsequent Purchase Payment we will accept is {$250}. The maximum aggregate
Purchase Payment(s) we will accept without prior Administrative Office approval
is $1,000,000.
ALLOCATION OF PURCHASE PAYMENTS: We will allocate your Purchase Payments to the
Allocation Options according to your instructions as contained in our records at
the time the Purchase Payment is received at our Administrative Office. Your
initial allocation instructions are contained in the Application but may be
changed at any time by written notice. Allocations are to be made in whole
percentages and you may not allocate any one Purchase Payment to more than 10
Allocation Options.
NO DEFAULT: This Contract will not be in default if subsequent Purchase
Payments are not made.
GUARANTEED ACCOUNT
You may allocate some or all of your Purchase Payments and may transfer some or
all of your Contract Value to an account within the Guaranteed Account, except
that transfers may not be made into the DCA Fixed Account. Amounts allocated to
an account within the Guaranteed Account earn interest from the date the funds
are credited to the account. The interest rate we apply to Purchase Payments
and transfers will remain in effect for the Interest Guaranteed Period. The
Interest Guaranteed Period for the Fixed Account and the DCA Fixed Account is
one year.
After an Interest Guaranteed Period expires, a new Interest Guaranteed Period
will begin. The interest rate for the new Interest Guaranteed Period will be set
by us and may not be the same as the interest rate then in effect for Purchase
Payments or transfers allocated to that account.
We, in our sole discretion, establish interest rates from time to time for each
account in the Guaranteed Account, but will not declare a rate which is less
than an annual effective interest rate of 3.00%. For the purposes of interest
crediting, amounts deducted, transferred or withdrawn from the Guaranteed
Account will be separately accounted for on a "first-in, first-out" (FIFO)
basis.
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VARIABLE ACCOUNT
GENERAL DESCRIPTION: The variable benefits under the Contract are provided
through the Variable Annuity Account A of American Foundation, which is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. The portion of the assets of
Variable Annuity Account A equal to the reserves and other contract liabilities
with respect to the Variable Account are not chargeable with the liabilities
arising out of any other business we may conduct. The income, gains and losses,
both realized and unrealized, from the assets of Variable Annuity Account A
shall be credited to or charged against the Variable Account without regard to
any other income, gains or losses of the Company. We have the right to transfer
to our general account any assets of Variable Annuity Account A which are in
excess of such reserves and other liabilities.
SUB-ACCOUNTS OF THE VARIABLE ACCOUNT: Variable Annuity Account A of American
Foundation is divided into a series of Sub-Accounts. The Sub-Accounts
available on the effective date of this Contract are listed on the Contract
Specifications page. Each Sub-Account invests exclusively in shares of a
corresponding Fund. The income, dividends, and gains, if any, distributed
from the shares of a Fund will be reinvested by purchasing additional shares
of that Fund at its net asset value.
When permitted by law, we may:
(1) create new variable accounts;
(2) combine variable accounts, including Variable Annuity Account A of
American Foundation;
(3) add new Sub-Accounts to or remove existing Sub-Accounts from the
Variable Annuity Account A or combine Sub-Accounts;
(4) make new Sub-Accounts or other Sub-Accounts available to such classes
of the Contracts as we may determine;
(5) add new Funds or remove existing Funds;
(6) if shares of a Fund are no longer available for investment or if we
determine that investment in a Fund is no longer appropriate in light
of the purposes of Variable Annuity Account A, substitute a different
Fund for any existing Fund;
(7) deregister Variable Annuity Account A under the Investment Company Act
of 1940 if such registration is no longer required;
(8) operate Variable Annuity Account A as a management investment company
under the Investment Company Act of 1940 or as any other form
permitted by law; and
(9) make any changes to Variable Annuity Account A or its operations as
may be required by the Investment Company Act of 1940 or other
applicable law or regulations.
The investment policy of Variable Annuity Account A will not be changed without
obtaining all necessary regulatory approvals.
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The values and benefits of this Contract provided by the Variable Account depend
on the investment performance of the Funds in which the Sub-Accounts invests.
We do not guarantee the investment performance of the Funds. You bear the full
investment risk for amounts allocated or transferred to the Sub-Accounts.
VARIABLE ACCOUNT VALUE: Purchase Payments may be allocated among, and amounts
may be transferred to the various Sub-Accounts within the Variable Account.
This is done by converting the amount of the Purchase Payment or transfer into
Accumulation Units. The number of Accumulation Units is determined by dividing
the dollar amount directed to each Sub-Account by the value of the Accumulation
Unit for that Sub-Account on the Valuation Day on which the transaction occurs.
Transfers from a Sub-Account will result in the cancellation of the appropriate
number of Accumulation Units of that Sub-Account. The following events will
also result in the cancellation of an appropriate number of Accumulation Units
of a Sub-Account:
(1) a full or partial surrender;
(2) payment of the Death Benefit;
(3) the Annuity Commencement Date; and
(4) the deduction of the Annual Contract Maintenance Fee.
Accumulation Units will be canceled as of the end of the Valuation Period during
which the transaction occurs.
NET INVESTMENT FACTOR: The Accumulation Unit value for each Sub-Account on any
Valuation Day is determined by multiplying the Accumulation Unit value on the
prior Valuation Day by the Net Investment Factor for the Valuation Period. The
Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Period to the next. A Net Investment Factor is
determined for each Sub-Account for each Valuation Period. The Net Investment
Factor may be greater or less than one, so the value of an Accumulation Unit can
increase or decrease. The Net Investment Factor for any Sub-Account for any
Valuation Period is determined by dividing (1) by (2) and subtracting (3),
where:
(1) is the result of:
a. the Net Asset Value per share of the Fund held in the Sub-Account,
determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
made by the Funds held in the Sub-Account, if the "ex-dividend" date
occurs during the current Valuation Period; plus or minus
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c. a per share charge or credit for any taxes reserved for, which is
determined by the Company to have resulted from the investment
operations of the Sub-Account.
(2) is the Net Asset Value per share of the Fund held in the Sub-Account,
determined at the end of the last prior Valuation Period.
(3) is a factor representing the Mortality and Expense Risk Charge and the
Administration Charge for the number of days in the Valuation Period.
FEES AND CHARGES
MORTALITY AND EXPENSE RISK CHARGE: We will deduct a Mortality and Expense Risk
Charge to compensate the Company for assuming the mortality and expense risks
under this Contract. The Mortality and Expense Risk Charge is deducted only
from the Variable Account Value and is shown on the Contract Specifications
page.
ADMINISTRATION CHARGE: We will deduct an Administration Charge to reimburse the
Company for expenses incurred in the administration of the Contract and the
Variable Account. The Administration Charge is deducted only from the Variable
Account Value and is shown on the Contract Specifications page.
CONTRACT MAINTENANCE FEE: The Contract Maintenance Fee is shown on the Contract
Specifications page. It is deducted on each Contract Anniversary, and on any day
that the Contract is surrendered, if the surrender occurs on any day other than
the Contract Anniversary. The Contract Maintenance Fee will be deducted from
the Allocation Options in the same proportion as their values are to the
Contract Value. The Contract Maintenance Fee will be waived by the Company in
the event the Contract Value or the aggregate Purchase Payments reduced by
surrenders, withdrawals and associated surrender charges equals or exceeds
{$50,000} on the date the Contract Maintenance Fee is to be deducted.
TRANSFERS
Prior to the Annuity Commencement Date, you may, in a form acceptable to us,
instruct us to transfer amounts among the Allocation Options. You must transfer
at least {$100}, or if less, the entire amount in the Allocation Option each
time you make a transfer. If after the transfer, the amount remaining in any of
the Allocation Options from which the transfer is made is less than {$100} we
reserve the right to transfer the entire amount instead of the requested amount.
We also reserve the right to limit the number of transfers to no more than {12}
per year. For each additional transfer over {12} during each Contract Year, we
may charge a Transfer Fee which is indicated on the Contract Specifications
page. The Transfer Fee, if any, will be deducted from the amount being
transferred.
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Transfers involving a Guaranteed Account are subject to additional restrictions.
The maximum amount which may be transferred from the Fixed Account in any
Contract Year is the greater of (a) {$2,500}; or (b) {25% of the Fixed Account
Value}. Transfers into the DCA Fixed Account are not permitted. The DCA Fixed
Account is available only for dollar cost averaging, which is a systematic
transfer of funds. Any Purchase Payment allocated to the DCA Fixed Account
must include instructions regarding the amount and frequency of the dollar cost
averaging transfers, and the Allocation Option(s) into which the transfers are
to be made. If, for any reason, transfers from the DCA Fixed Account are
terminated, we will transfer any amount remaining in the DCA Fixed Account into
the Fixed Account unless you have otherwise instructed us how to allocate the
remaining amount.
We reserve the right, at any time and without prior notice, to terminate,
suspend or modify the transfer privileges described above.
SURRENDERS
SURRENDERS: Full or partial surrenders may be made any time prior to the Annuity
Commencement Date. The Surrender Value is the Contract Value less any surrender
charge, Contract Maintenance Fee, and applicable premium taxes. The Surrender
Charge percentage is shown on the Contract Specifications page. The surrender
charge will not apply to: (1) Purchase Payments that are no longer subject to
the surrender charge; (2) earnings credited to an Allocation Option; or (3)
payment of the Death Benefit.
The surrender charge applies to and is calculated separately for each Purchase
Payment. The Company assumes that Purchase Payments are withdrawn on a
"first-in first-out" (FIFO) basis, and that any earnings, (including earnings
attributable to previous Contract Years) are withdrawn before any Purchase
Payments. Surrenders will result in the cancellation of Accumulation Units from
a Sub-Account or a reduction of the Guaranteed Account value, as appropriate.
Surrenders will be made on a pro-rata basis from your Allocation Options unless
you specify, in writing, the amount(s) and Allocation Option(s) from which the
surrender is to be taken.
SUSPENSION OR DELAY IN PAYMENT OF SURRENDER: The Company has the right to
suspend or delay the date of payment of a partial or full surrender from the
Variable Account Value for any period:
1) when the New York Stock Exchange is closed; or
2) when trading on the New York Stock Exchange is restricted; or
3) when an emergency exists (as determined by the Securities & Exchange
Commission) as a result of which (a) the disposal of securities in the
Variable Account is not reasonably practicable; or (b) it is not
reasonably practicable to determine fairly the value of the net assets
of the Variable Account; or
4) when the Securities & Exchange Commission, by order, so permits for
the protection of security holders.
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The Company further reserves the right to delay payment of a partial or full
surrender from any Guaranteed Account for up to six months in those states where
permitted.
DEATH OF OWNER OR ANNUITANT
DEATH OF AN OWNER: If any Owner dies before the Annuity Commencement Date and
while this Contract is in force, the guaranteed Death Benefit will be paid to
the Beneficiary.
DEATH OF THE ANNUITANT: If the Annuitant is not an Owner and dies prior to the
Annuity Commencement Date, the Owner first named on the Application will become
the new Annuitant unless the Owner designates otherwise. If any Owner is not an
individual, the death of the Annuitant will be treated as the death of an Owner.
The Contract shall be interpreted to comply with the requirements of Section
72(s) of the Internal Revenue Code.
DEATH BENEFIT: The Death Benefit will be determined as of the end of the
Valuation Period during which due proof of death is received by us and will
depend upon the age of the deceased Owner on the date of death. If the Owner's
death occurs on, or before the deceased Owner's 90th birthday, the Death Benefit
will equal the greater of: (1) the Contract Value; or (2) aggregate Purchase
Payments made under the Contract reduced by any partial surrenders, withdrawals
and any associated surrender charges; or (3) the Maximum Anniversary Value. If
the Owner's death occurs after the deceased Owner's 90th birthday, the Death
Benefit will be equal to the Contract Value.
Only one Death Benefit is payable under this Contract, even though the Contract
may, in some circumstances, continue beyond the time of an Owner's death.
The Death Benefit may be taken in one sum immediately and the Contract will
terminate. If the Death Benefit is not taken immediately as a lump sum, then the
entire interest in the Contract must be distributed under one of the following
options:
(1) the entire interest must be distributed over the life of the
Beneficiary, or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within one year of the
Owner's death; or,
(2) the entire interest must be distributed within 5 years of the Owner's
death.
If the Beneficiary is the deceased Owner's spouse, the surviving spouse may
elect, in lieu of receiving the Death Benefit, to continue the Contract and
become the new Owner. The surviving spouse may select a new Beneficiary. Upon
this spouse's death, the Death Benefit will become payable and must then be
distributed to the new Beneficiary in one sum immediately or according to either
paragraph (1) or (2), above.
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If there is more than one Beneficiary, the foregoing provisions apply to each
Beneficiary individually.
If any Owner dies on or after the Annuity Commencement Date, the Beneficiary
will become the new Owner and remaining payments must be distributed at least as
rapidly as under the income option in effect at the time of the Owner's death.
SUSPENSION OF PAYMENT: Payment of a Death Benefit may be suspended or delayed
under the circumstances described in the provision "Suspension or Delay in
Payment of Surrender".
ANNUITY OPTIONS
ANNUITY COMMENCEMENT DATE: The Annuity Commencement Date may not be later than
the Annuitant's 90th birthday, unless allowed by the state in which this
Contract is delivered and approved by the Company. The Owner may change the
Annuity Commencement Date by written notice. The proposed Annuity Commencement
Date must be at least 30 days beyond the date the written request is received
by the Company.
ANNUITY INCOME PAYMENT: If the Annuitant is alive on the Annuity Commencement
Date and unless directed otherwise, the Company will apply the Annuity Purchase
Value to the annuity option elected. You may elect to have all or part of the
Annuity Purchase Value applied on the Annuity Commencement Date under one of the
annuity options described below. In the absence of an election, the Annuity
Purchase Value will be applied on the Annuity Commencement Date under Annuity
Option 1 - Payments for a 5 Year Certain Period. Selection of an annuity option
must be in writing and received by the Company at least 30 days prior to the
Annuity Commencement Date. Annuity options must comply with current Federal and
state statutes and Internal Revenue Service Regulations.
This Contract may not be surrendered after the Annuity Commencement Date.
ANNUITY OPTION 1 - PAYMENT FOR A CERTAIN PERIOD: Payments will be made for any
period of not less than 5 nor more than 30 years. The amount of each payment
depends on the total amount applied, the period selected and the monthly payment
rates we are using on the Annuity Commencement Date.
ANNUITY OPTION 2 - LIFE INCOME WITH PAYMENTS FOR A CERTAIN PERIOD: Payments are
based on the life of the named Annuitant. Payments will continue for the
lifetime of that person with payments guaranteed for a period of not more than
30 years. Payments stop at the end of the selected certain period or when the
named person dies, whichever is later.
MINIMUM AMOUNTS: We reserve the right to pay the total amount of this Contract
in one lump sum, if less than {$2,000}. If monthly payments are less than
{$20}, we may make payments quarterly, semi-annually, or annually at our option.
Page-17-
ANNUITY TABLES
OPTION 1 TABLE OPTION 2 TABLE
Payments for a Payments for Life, and Life Income with
Certain Period Payments for a Certain Period
LIFE WITH 10 YEARS
LIFE ONLY PERIOD CERTAIN
--------------- ------------------
MONTHLY AGE OF
YEARS PAYMENT ANNUITANT MALE FEMALE MALE FEMALE
----- ------- --------- ---- ------ ---- ------
5 17.91 60 4.77 4.25 4.68 4.21
10 9.61 65 5.46 4.78 5.28 4.70
15 6.87 70 6.44 5.53 6.03 5.36
20 5.51 75 7.79 6.63 6.90 6.21
25 4.71 80 9.70 8.26 7.81 7.22
30 4.18 85 & 12.38 10.70 8.60 8.20
over
These tables illustrate the minimum monthly payment rates for each $1,000
applied. The basis for these calculations is the 1983 Individual Annuitant
Mortality Table A projected 14 years with interest at 3% per annum. Minimum
monthly payment rates for ages and Certain Periods not shown will be calculated
on the same basis and may be obtained from us. To determine future minimum
monthly rates according to these tables, one year will be deducted from the
attained age of the Annuitant for every three completed years beyond the year
1997.
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING
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