REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
þ
Pre-Effective
Amendment No.
o
Post-Effective
Amendment No. 5
þ
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
þ
Amendment
No. 88
þ
(Check appropriate box or boxes)
SEPARATE ACCOUNT A
(Exact Name of Registrant)
PACIFIC LIFE & ANNUITY COMPANY
(Name of Depositor)
700 Newport Center Drive Newport Beach, California92660
(Address of Depositor’s Principal Executive Offices) (Zip Code)
(949) 219-3943 (Depositor’s Telephone Number, including Area Code)
Brandon J. Cage
Assistant Vice President
Pacific Life & Annuity Company
700 Newport Center Drive Newport Beach, California92660
(Name and address of agent for service)
60 days after filing pursuant to paragraph (a)(1) of Rule 485
o
on ___________, pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
o
This post-effective amendment designates a new date for a
previously filed post-effective amendment.
Title of securities being registered: Interests in the Separate
Account under Pacific Voyages individual flexible premium deferred
variable annuity contracts.
Filing fee: None
SEPARATE ACCOUNT A
FORM N-4
CROSS REFERENCE SHEET
PART A
Item No.
Prospectus Heading
1.
Cover Page
Cover Page
2.
Definitions
TERMS USED IN THIS PROSPECTUS
3.
Synopsis
AN OVERVIEW OF PACIFIC VOYAGES
4.
Condensed Financial Information
FINANCIAL HIGHLIGHTS; ADDITIONAL
INFORMATION — Financial
Statements;
5.
General Description of Registrant, Depositor
and
Portfolio Companies
AN OVERVIEW OF PACIFIC VOYAGES; PACIFIC LIFE &
ANNUITY COMPANY, PACIFIC
LIFE AND THE SEPARATE
ACCOUNT — Pacific Life &
Annuity Company (PL&A); —
Pacific Life, — Separate
Account A; YOUR INVESTMENT
OPTIONS — Your Variable
Investment Options;
ADDITIONAL INFORMATION —
Voting Rights
6.
Deductions
AN OVERVIEW OF PACIFIC VOYAGES;
CHARGES, FEES AND
DEDUCTIONS; WITHDRAWALS —
Optional Withdrawal; ADDITIONAL INFORMATION — Distribution Arrangements
7.
General Description of Variable Annuity
Contracts
AN OVERVIEW OF PACIFIC VOYAGES; PURCHASING YOUR
CONTRACT — How to Apply for
your Contract; HOW YOUR
INVESTMENTS ARE ALLOCATED;
ANNUITIZATION — Choosing
Your Annuity Option, — Your
Annuity Payments; DEATH BENEFITS AND OPTIONAL DEATH BENEFIT RIDERS — Death
Benefits; ADDITIONAL
INFORMATION — Voting Rights,
— Changes to Your Contract,
— Changes to All Contracts,
— Inquiries and Submitting
Forms and Requests, — Timing
of Payments and Transactions, — Replacement of Life Insurance or Annuities
8.
Annuity Period
ANNUITIZATION
9.
Death Benefit
DEATH BENEFITS AND
OPTIONAL DEATH BENEFIT RIDERS
10.
Purchases and Contract Value
AN OVERVIEW OF PACIFIC VOYAGES;
PURCHASING YOUR
CONTRACT; HOW YOUR
INVESTMENTS ARE ALLOCATED;
PACIFIC LIFE & ANNUITY
COMPANY, PACIFIC LIFE AND
THE SEPARATE ACCOUNT —
Pacific Life & Annuity
Company, Pacific Life; THE
GENERAL ACCOUNT —
Withdrawals and Transfers
11.
Redemptions
AN OVERVIEW OF PACIFIC VOYAGES; CHARGES, FEES AND
DEDUCTIONS; WITHDRAWALS;
ADDITIONAL INFORMATION —
Timing of Payments and
Transactions; THE GENERAL
ACCOUNT — Withdrawals and
Transfers
12.
Taxes
CHARGES, FEES AND DEDUCTIONS
— Premium Taxes;
WITHDRAWALS — Optional
Withdrawals, — Tax
Consequences of Withdrawals;
FEDERAL TAX STATUS
Supplement
dated September 15, 2008 to the Prospectus dated
May 1, 2008 for the
Pacific Voyages variable annuity contract issued by Pacific
Life & Annuity Company
Capitalized terms used in this supplement are defined in the
Prospectus referred to above unless otherwise defined herein.
“We,”“’us,” or “our” refer
to Pacific Life & Annuity Company; “you” or
“your” refer to the Contract Owner.
This supplement must be preceded or accompanied by the
Prospectus dated May 1, 2008, as supplemented. The changes
in this supplement are effective October 1, 2008 unless
otherwise noted below.
The
AN
OVERVIEW OF PACIFIC VOYAGES section is amended as
follows:
The Optional Riders—Optional Living Benefit Riders
subsection is amended to include the following:
At initial purchase and during the entire time that you own an
optional living benefit Rider, you must invest your entire
Contract Value in an asset allocation program or in Investment
Options we make available for these Riders. See the OTHER
OPTIONAL RIDERS—General Information—Investment
Allocation Requirements section in this supplement.
Automatic
Income Builder Rider
This optional Rider lets you, before the Annuity Date, withdraw
between 5% and 7% (depending on your age) of your Protected
Payment Base per year, lock in market gains, and provides the
potential to withdraw up to the Protected Payment Amount for
life. If you are older than
591/2
and if you delay taking withdrawals, this Rider also provides
the potential to receive a 0.10% increase in the withdrawal
percentage per year, which can increase the percentage that you
may withdraw each Contract year without reducing your Protected
Payment Base. Once a withdrawal is taken, regardless of your age
when the withdrawal occurred, the 0.10% increase in the
withdrawal percentage will no longer be applied. Any previously
added 0.10% increase in the withdrawal percentage will be locked
in and will remain a part of your total withdrawal percentage.
If your total withdrawals in a Contract Year exceed the annual
withdrawal amount allowed under the Rider, then the Protected
Payment Base may decrease and the amount you may withdraw in the
future under the Rider may be reduced.
Beginning with the first (1st) anniversary of the Rider
Effective Date or most recent Reset Date, whichever is later,
the Rider provides for Automatic Resets or Owner-Elected Resets
of the Protected Payment Base and Remaining Protected Balance to
an amount equal to 100% of the Contract Value. Any reset may
include an increase in the annual charge percentage (up to a
maximum of 1.50%) associated with the Rider. (Protected Payment
Base, Remaining Protected Balance, Automatic Reset,
Owner-Elected Resets and Reset Date are described in the
OTHER OPTIONAL RIDERS—Automatic Income Builder Rider
section in this supplement.)
This Rider is called the Guaranteed Withdrawal Benefit III
Rider in the Contract’s Rider.
Flexible
Lifetime Income Plus Rider (Single)
This optional Rider lets you, before the Annuity Date, withdraw
between 5% and 6% (depending on your age) of your Protected
Payment Base per year, lock in market gains, and provides the
potential to withdraw up to the Protected Payment Amount for
life. This Rider also provides an Annual Credit of 7% to your
Protected Payment Base and Remaining Protected Balance, for up
to a 10 year period (provided you do not take any
withdrawals during this period), which can increase the amount
you may withdraw in future years. The Annual Credit is not added
to your Contract Value. If your total withdrawals in a Contract
Year exceed the annual withdrawal amount allowed under the
Rider, then the Protected Payment Base may decrease and the
amount you may withdraw in the future under the Rider may be
reduced.
Beginning with the first (1st) anniversary of the Rider
Effective Date or most recent Reset Date, whichever is later,
the Rider provides for Automatic Resets or Owner-Elected Resets
of the Protected Payment Base and Remaining Protected Balance to
an amount equal to 100% of the Contract Value. Any reset may
include an increase in the annual charge percentage (up to a
maximum of 1.50%) associated with the Rider. (Protected Payment
Base, Remaining Protected Balance, Annual Credit, Automatic
Reset, Owner-Elected Reset and Reset Date are described in the
OTHER OPTIONAL RIDERS—Flexible Lifetime Income Plus
Rider (Single) section of this supplement.)
This Rider is called the Guaranteed Withdrawal Benefit Rider in
the Contract’s Rider.
Flexible
Lifetime Income Plus Rider (Joint)
This optional Rider lets you, before the Annuity Date, withdraw
between 5% and 6% (depending on your age) of your Protected
Payment Base per year, lock in market gains, and provides the
potential to withdraw up to the Protected Payment Amount, until
the Rider terminates. This Rider also provides an Annual Credit
of 7% to your Protected Payment Base and Remaining Protected
Balance, for up to a 10 year period (provided you do not
take any withdrawals during this period), which can increase the
amount you may withdraw in future years. The Annual Credit is
not added to your Contract Value. If your total withdrawals in a
Contract Year exceed the annual withdrawal amount allowed under
the Rider, then the Protected Payment Base may decrease and the
amount you may withdraw in the future under the Rider may be
reduced.
Beginning with the first (1st) anniversary of the Rider
Effective Date or most recent Reset Date, whichever is later,
the Rider provides for Automatic Resets or Owner-Elected Resets
of the Protected Payment Base and Remaining Protected Balance to
an amount equal to 100% of the Contract Value. Any reset may
include an increase in the annual charge percentage (up to a
maximum of 1.75%) associated with the Rider. (Protected Payment
Base, Remaining Protected Balance, Designated Lives, Annual
Credit, Automatic Reset, Owner-Elected Reset and Reset Date are
described in the OTHER OPTIONAL RIDERS—Flexible Lifetime
Income Plus Rider (Joint) section in this supplement.)
Changes to the Contract Owner, Annuitant
and/or
Beneficiary designations and changes in marital status may
adversely affect the benefits of this Rider (see the Flexible
Lifetime Income Plus Rider (Joint)—Ownership and
Beneficiary Changes subsection in this supplement.
This Rider is called the Joint Life Guaranteed Withdrawal
Benefit Rider in the Contract’s Rider.
The Periodic Expenses section is amended to include the
following:
Current Charge
Maximum Charge
Percentage
Percentage
• Automatic Income Builder Rider Charge*
0.85%
1.50%
• Flexible Lifetime Income Plus Rider Charge
(Single)**
0.85%
1.50%
• Flexible Lifetime Income Plus Rider Charge
(Joint)**
1.00%
1.75%
* If you buy the Automatic Income Builder Rider, the annual
charge is equal to the current charge percentage multiplied by
the Protected Payment Base. The Protected Payment Base is the
amount used to determine the allowable annual withdrawal amount
under the Rider. The Protected Payment Base is equal to the
initial Purchase Payment if purchased at Contract issue or is
equal to the Contract Value if the Rider is purchased on a
Contract Anniversary. For a complete explanation of the
Protected Payment Base, see the OTHER OPTIONAL
RIDERS—Automatic Income Builder Rider section of this
supplement. We deduct this charge proportionately from your
Investment Options on each Contract Anniversary following the
Effective Date of the Rider during the term of the Rider and
while the Rider is in effect, or if the Rider is terminated.
Under the terms and conditions of the Rider, the annual Charge
percentage may increase if an Automatic Reset or Owner-Elected
Reset occurs, but will never be more than the maximum charge
percentage. We will waive the annual Charge if the Rider
terminates as a result of the death of an Owner or sole
surviving Annuitant, upon full annuitization of your Contract or
after the Contract Value is zero. The annual charge is only
waived for the current Contract Year, even if death occurs in a
prior Contract Year.
** If you buy the Flexible Lifetime Income Plus Rider (Single or
Joint), the annual charge is equal to the current charge
percentage multiplied by the Protected Payment Base. The
Protected Payment Base is the amount used to determine the
allowable annual withdrawal amount under the Rider. The
Protected Payment Base is equal to the initial Purchase Payment
if purchased at Contract issue or is equal to the Contract Value
if the Rider is purchased on a Contract Anniversary. For a
complete explanation of the Protected Payment Base, see OTHER
OPTIONAL RIDERS—Flexible Lifetime Income Plus Rider (Single
or Joint) section of this supplement. We deduct this charge
proportionately from your Investment Options on each Contract
Anniversary following the Effective Date of the Rider during the
term of the Rider and while the Rider is in effect, or if the
Rider is terminated. Under the terms and conditions of the
Rider, the annual Charge percentage may increase if an Automatic
Reset or Owner-Elected Reset occurs, but will never be more than
the maximum charge percentage. Under the Single version, we will
waive the annual Charge if the Rider terminates as a result of
the death of an Owner or sole surviving Annuitant, upon full
annuitization of your Contract or after the Contract Value is
zero. Under the Joint version, we will waive the annual charge
if the Rider terminates as a result of the death of the
surviving Designated Life, upon full annuitization of the
Contract or after the Contract Value is zero. The annual charge
is only waived for the current Contract Year, even if death
occurs in a prior Contract Year.
Footnote 7 is replaced with the following:
Only one Flexible Lifetime Income Plus (Single), Flexible
Lifetime Income Plus (Joint), Foundation 10, Automatic
Income Builder, Flexible Lifetime Income (Single), or Flexible
Lifetime Income (Joint) Rider may be owned or in effect at the
same time. Only one GPA 3 or GPA 5 Rider may be owned
or in effect at the same time.
The Examples subsection is replaced with the
following:
The following examples are intended to help you compare the cost
of investing in your Contract with the cost of investing in
other variable annuity contracts. The maximum amounts reflected
below include the maximum periodic Contract expenses, Separate
Account annual expenses and the Portfolio with the highest fees
and expenses for the year ended December 31, 2007. The
maximum amounts also include the combination of optional Riders
whose cumulative maximum charge expenses totaled more than any
other optional Rider combination. The optional Riders included
are the SDBR, Flexible Lifetime Income Plus (Joint), GPA 3 and
GIA Plus Riders. The minimum amounts reflected below include the
minimum periodic Contract expenses, Separate Account annual
expenses and the Portfolio with the lowest fees and expenses for
the year ended December 31, 2007. The minimum amounts do
not include any optional Riders.
The examples assume that you invest $10,000 in the Contract for
the time periods indicated. They also assume that your
Investment has a 5% return each year and assumes the maximum and
minimum fees and expenses of all of the Investment Options
available. Although your actual costs may be higher or lower,
based on these assumptions, your maximum and minimum costs would
be:
•
If you surrendered your Contract:
1 Year
3 Years
5 Years
10 Years
Maximum†
$1,268
$2,486
$3,564
$6,816
Minimum†
$802
$1,072
$1,188
$2,003
•
If you annuitized your Contract:
1 Year
3 Years
5 Years
10 Years
Maximum†
$1,268
$1,946
$3,294
$6,816
Minimum†
$802
$532
$918
$2,003
•
If you did not surrender, nor annuitize, but left the money in
your Contract:
1 Year
3 Years
5 Years
10 Years
Maximum†
$638
$1,946
$3,294
$6,816
Minimum†
$172
$532
$918
$2,003
†
In calculating the examples above, we used the maximum and
minimum total operating expenses of all the Portfolios as shown
in the Fees And Expenses section of each
Fund Prospectus. For more information on fees and expenses,
see CHARGES, FEES AND DEDUCTIONS in the Prospectus, and
see each Fund Prospectus. See the FINANCIAL HIGHLIGHTS
section in the Prospectus for condensed financial
information about the Subaccounts.
The
HOW
YOUR INVESTMENTS ARE ALLOCATED section is amended to include
the following:
Custom
Model
The Custom Model program allows you, with the help of your
financial professional, to create your own asset allocation
model that will comply with the Investment Allocation
Requirements for certain optional living benefit Riders. (See
OTHER OPTIONAL RIDERS—General
Information—Investment Allocation Requirements.)
You will create your own model using the parameters listed below.
Parameters. To create your model, you may select
Investment Options from the 4 Groups (Groups A, B, C
and D) listed below. You must allocate at least 25% into
each of Groups A, B, and C. You may not allocate more than
15% into any one Investment Option within Group A, B, or C.
Group D is optional and you are not required to allocate
any part of your Purchase Payment or Contract Value to this
Group. If you choose to allocate your Purchase Payment or
Contract Value to Group D, you are allowed to allocate more than
15% to any one Investment Option within Group D. Allocation
percentages among the Groups must total 100%. The model you
create will be automatically rebalanced on a quarterly basis.
Example: Assume a $100,000 Purchase Payment.
Following the parameters and using the Investment Options listed
from the Groups below, you may allocate your Purchase Payment as
follows:
•
Group A—15% to Diversified Bond, 10% to Managed Bond and 5%
to Money Market,
•
Group B—15% to Focused 30, 10% to Small-Cap Index, 10% to
Mid-Cap Growth, 5% to Large-Cap Growth and 5% to Large-Cap
Value, and
•
Group C—10% to International Value, 10% to International
Large-Cap and 5% to Emerging Markets.
The total allocated is 100%: Group A = 30%,
Group B = 45% and Group C = 25%.
If you want to include all 4 groups when creating your
model, you could adjust your allocation percentages in
Groups A, B and C and allocate up to 25% to any combination
of the Investment Options in Group D. Keep in mind that you
may select any Investment Option within a Group and the
allocation percentages among the Groups must total 100%.
Group A - Fixed Income
Short Duration Bond
Money Market
Managed Bond
Floating Rate Loan
High Yield Bond
Inflation Managed
Diversified Bond
Group B - U.S. Equity
Small-Cap Growth
Diversified Research
Long/Short Large-Cap
Equity
Equity Index
American Funds
Growth-Income
Small-Cap Index
American Funds Growth
Large-Cap Value
Large-Cap Growth
Comstock
Growth LT
Small-Cap Value
Mid-Cap Growth
Focused 30
Multi-Strategy
Small-Cap Equity
Mid-Cap Equity
Main Street Core
Group C - International & Sectors
International Value
International Small-Cap
Technology
Health Sciences
International Large-Cap
Emerging Markets
Real Estate
Group D - Asset Allocation Investment Options
BlackRock Global
AllianceBernstein VPS
Franklin Templeton
Allocation V.I. Fund
Balanced Wealth
VIP Founding Funds
Strategy Portfolio
Allocation Fund
You may make transfers between Investment Options within a
particular Group or from one Group to another Group as long as
you follow the Custom Model parameters. Transfers made will be
subject to any transfer and market timing restrictions (See the
HOW YOUR INVESTMENTS ARE ALLOCATED—Transfers and
Market-timing Restrictions in the Prospectus). Subsequent
Purchase Payments will be allocated according to your current
model allocation instructions. Any withdrawals must be made on a
pro-rata basis from each of the Investment Options you selected
for your model.
You may terminate your participation in the Custom Model program
at any time. However, if you own an optional living benefit
rider and do not allocate your entire Contract Value to another
asset allocation model or Investment Options we make available
for the Riders, your Rider will terminate. If you allocate any
subsequent Purchase Payment or Contract Value inconsistent with
the Custom Model parameters, make transfers between Investment
Options outside the Custom Model parameters, or do not make a
withdrawal on a pro-rata basis, you will no longer be
participating in the Custom Model program and your Rider will
terminate. Work with your financial professional and consider
your options before making any Investment Option transfers. Any
changes in the allocation percentages due to market performance
will not be a violation of the program, since the model you
created will automatically be rebalanced on a quarterly basis.
We are under no contractual obligation to continue this program
and have the right to terminate or change the Custom Model
program at any time.
The
Transfers and Market-timing Restrictions—Transfers
subsection is amended to include the following:
Only 2 transfers in any calendar month may involve the BlackRock
Global Allocation V.I. Fund Class III Investment
Option.
The
CHARGES,
FEES AND DEDUCTIONS section is amended as
follows:
The
Optional Rider Charges section is amended to include the
following:
Automatic
Income Builder Rider Charge
If you purchase this Rider, we will deduct an annual charge for
the Rider from your Investment Options on a proportionate basis.
The current annual charge is 0.85% (not to exceed a maximum
annual charge percentage of 1.50%) multiplied by the Protected
Payment Base on the day the charge is deducted.
If this Rider terminates on a Contract Anniversary, the entire
annual charge for the prior Contract Year will be deducted from
the Contract Value on that Contract Anniversary. If the Rider
terminates prior to a Contract Anniversary, we will prorate the
annual charge based on the Protected Payment Base as of the day
the Rider terminates. Such prorated amount will be deducted from
the Contract Value on the earlier of the day the Contract
terminates or the Contract Anniversary following the day the
Rider terminates.
We will waive the annual charge if the Rider terminates as a
result of the death of an Owner or sole surviving Annuitant, or
full annuitization of the Contract or when the Contract Value is
zero. The annual charge is only waived for the current Contract
Year, even if death occurs in a prior Contract Year.
Change in Annual Charge—The annual charge percentage
may increase as a result of any Automatic Reset or Owner-Elected
Reset. The annual charge percentage will not exceed the annual
charge percentage then in effect for new issues of this same
rider or the maximum annual charge percentage of 1.50%. If an
Automatic Reset or Owner-Elected Reset never occurs, the annual
charge percentage established on the Rider Effective Date is
guaranteed not to change.
Flexible
Lifetime Income Plus Rider (Single) Charge
If you purchase this Rider, we will deduct an annual charge for
the Rider from your Investment Options on a proportionate basis.
The current annual charge is 0.85% (not to exceed a maximum
annual charge percentage of 1.50%) multiplied by the Protected
Payment Base on the day the charge is deducted.
If this Rider terminates on a Contract Anniversary, the entire
annual charge for the prior Contract Year will be deducted from
the Contract Value on that Contract Anniversary. If the Rider
terminates prior to a Contract Anniversary, we will prorate the
annual charge based on the Protected Payment Base as of the day
the Rider terminates. Such prorated amount will be deducted from
the Contract Value on the earlier of the day the Contract
terminates or the Contract Anniversary following the day the
Rider terminates.
We will waive the annual charge if the Rider terminates as a
result of the death of an Owner or sole surviving Annuitant,
upon full annuitization of the Contract or when the Contract
Value is zero. The annual charge is only waived for the current
Contract Year, even if death occurs in a prior Contract Year.
Change in Annual Charge—The annual charge percentage
may increase as a result of any Automatic Reset or Owner-Elected
Reset. The annual charge percentage will not exceed the annual
charge percentage then in effect for new issues of this same
rider or the maximum annual charge percentage of 1.50%. If an
Automatic Reset or Owner-Elected Reset never occurs, the annual
charge percentage established on the Rider Effective Date is
guaranteed not to change.
Flexible
Lifetime Income Plus Rider (Joint) Charge
If you purchase this Rider, we will deduct an annual charge for
the Rider from your Investment Options on a proportionate basis.
The current annual charge is 1.00% (not to exceed a maximum
annual charge percentage of 1.75%) multiplied by the Protected
Payment Base on the day the charge is deducted.
If this Rider terminates on a Contract Anniversary, the entire
annual charge for the prior Contract Year will be deducted from
the Contract Value on that Contract Anniversary. If the Rider
terminates prior to a Contract Anniversary, we will prorate the
annual charge based on the Protected Payment Base as of the day
the Rider terminates. Such prorated amount will be deducted from
the Contract Value on the earlier of the day the Contract
terminates or the Contract Anniversary following the day the
Rider terminates.
We will waive the annual charge if the Rider terminates as a
result of the death of the surviving Designated Life or upon
full annuitization of the Contract, or when the Contract Value
is zero. The annual charge is only waived for the current
Contract Year, even if death occurs in a prior Contract Year.
Change in Annual Charge—The annual charge percentage
may increase as a result of any Automatic Reset or Owner-Elected
Reset. The annual charge percentage will not exceed the annual
charge percentage then in effect for new issues of this same
rider or the maximum annual charge percentage of 1.75%. If an
Automatic Reset or Owner-Elected Reset never occurs, the annual
charge percentage established on the Rider Effective Date is
guaranteed not to change.
The
OTHER
OPTIONAL RIDERS section is changed as
follows:
The Investment Allocation Requirements subsection is
replaced with the following:
At initial purchase and during the entire time that you own an
optional living benefit Rider, you must allocate your entire
Contract Value to an asset allocation program or Investment
Options we make available for these Riders. You may allocate
your Contract Value according to the following requirements:
• 100% to one allowable Asset Allocation Model, OR
• 100% among allowable Investment Options.
You may also use the DCA Plus Program to transfer amounts to an
Asset Allocation Model or among the Investment Options listed
below. Currently, the allowable Asset Allocation Models and
Investment Options are as follows:
Franklin Templeton VIP Founding Funds Allocation Fund
Portfolio Optimization Model D
Portfolio Optimization Model E
Custom Model
You may transfer your entire Contract Value between an allowable
Asset Allocation Model and allowable Investment Options, between
allowable Asset Allocation Models or between allowable
Investment Options. Keep in mind that you must allocate your
entire Contract Value to either one allowable
Asset Allocation Model or among the allowable Investment
Options. If you do not allocate your entire Purchase
Payment or Contract Value according to the requirements above,
your Rider will terminate.
Allowable Asset Allocation Models—Portfolio
Optimization. You may transfer your entire Contract
Value to a different Portfolio Optimization Model without
affecting your Rider. However, if you change the allocation
percentages within the Portfolio Optimization Model you have
selected, you will no longer be participating in the Portfolio
Optimization program and your Rider will terminate. See the
HOW YOUR INVESTMENTS ARE ALLOCATED—Portfolio
Optimization section in the Prospectus for information about
the program.
Allowable Asset Allocation Models—Custom
Model. You may also make transfers between the
Investment Options available under the Custom Model program as
long as you follow the Custom Model parameters. However, if you
make transfers or change the allocation percentages within your
Custom Model and they do not comply with the Custom Model
parameters, you will no longer be participating in the Custom
Model program and your Rider will terminate. See the HOW YOUR
INVESTMENTS ARE ALLOCATED—Custom Model section of this
supplement for information about the program.
Allowable Investment Options. You may allocate your
entire Contract Value among any of the allowable Investment
Options listed in the table above.
By adding an optional living benefit Rider to your Contract, you
agree to the above referenced investment allocation requirements
for the entire period that you own a Rider. These requirements
may limit the number of Investment Options that are otherwise
available to you under your Contract. We reserve the right to
add, remove or change allowable asset allocation programs or
allowable Investment Options at any time. We may make such a
change due to a fund reorganization, fund substitution, or when
we believe a change is necessary to protect our ability to
provide the guarantees under these riders. If such a change is
required, we will provide you with reasonable notice (generally
90 calendar days unless we are required to give less notice)
prior to the effective date of such change to allow you to
reallocate your Contract Value to maintain your rider benefits.
If you do not reallocate your Contract Value your rider will
terminate.
We will send you written notice in the event any transaction
made by you will involuntarily cause the Rider to terminate for
failure to invest according to the Investment Allocation
Requirements. However, you will have 30 calendar days after
the date of our written notice (“30 day period”),
to instruct us to take appropriate corrective action to continue
participation in an allowable asset allocation program or
allowable Investment Options to continue the Rider.
The Multiple Rider Ownership subsection is replaced with
the following:
Only one Flexible Lifetime Income Plus (Single), Flexible
Lifetime Income Plus (Joint), Foundation 10, Automatic
Income Builder, Flexible Lifetime Income (Single), or Flexible
Lifetime Income (Joint) Rider may be owned or in effect at the
same time. Only one GPA 3 or GPA 5 Rider may be owned
or in effect at the same time.
All references to rider exchanges concerning the riders
listed in the table below are replaced with the
following:
Withdrawal
Benefit Rider Exchanges
Subject to availability, you may elect to exchange among the
following withdrawal benefit Riders:
FROM
TO
WHEN
Flexible Lifetime Income Rider (Single)
Flexible Lifetime Income (Joint)
Flexible Lifetime Income Plus (Single or Joint)
On any Contract Anniversary.
Foundation 10
Automatic Income Builder
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
Flexible Lifetime Income Rider (Joint)
Flexible Lifetime Income (Single)
Flexible Lifetime Income Plus (Single or Joint)
On any Contract Anniversary.
Foundation 10
Automatic Income Builder
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
Foundation 10 Rider
Flexible Lifetime Income (Single or Joint)
Flexible Lifetime Income Plus (Single or Joint)
Automatic Income Builder
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
Flexible Lifetime Income Plus Rider (Single)
Flexible Lifetime Income Plus (Joint)
On any Contract Anniversary.
Foundation 10
Automatic Income Builder
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
Flexible Lifetime Income Plus Rider (Joint)
Flexible Lifetime Income Plus (Single)
On any Contract Anniversary.
Foundation 10
Automatic Income Builder
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
Automatic Income Builder Rider
Foundation 10
Flexible Lifetime Income (Single or Joint)
Flexible Lifetime Income Plus (Single or Joint)
On any Contract Anniversary beginning with 5th Contract
Anniversary measured from the Contract issue date.
When you elect an exchange, you are terminating your existing
Rider and purchasing a new Rider. The Initial Protected Payment
Base and Remaining Protected Balance under the new Rider will be
equal to the Contract Value on that Contract Anniversary.
Generally, if your Contract Value is lower than the Protected
Payment Base under your existing Rider, your election to
exchange from one rider to another may result in a reduction in
the Protected Payment Base, Remaining Protected Balance,
Protected Payment Amount and any Annual Credit that may be
applied. In other words, your existing protected balances will
not carryover to the new Rider. If you elect an exchange, you
will be subject to the charge for the new Rider in effect at the
time of the exchange. No more than one exchange may be elected
each Contract Year.
The
following withdrawal benefit riders are added:
Automatic
Income Builder Rider
Purchasing
the Automatic Income Builder Rider
You may purchase this optional Rider on the Contract Date or on
any Contract Anniversary (if available) if the age of each
Annuitant is 85 years or younger on the date of purchase
and you allocate your entire Contract Value according to the
Investment Allocation Requirements.
Automatic
Income Builder Rider Terms
Annual RMD Amount—The amount required to be
distributed each Calendar Year for purposes of satisfying the
minimum distribution requirements of Code Section 401(a)(9)
(”Section 401(a)(9)”) and related Code provisions
in effect as of the Rider Effective Date.
Protected Payment Amount—The maximum amount that can
be withdrawn under this Rider without reducing the Protected
Payment Base.
If the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner) is
age 591/2
or older when the first withdrawal was taken or the most recent
reset, whichever is later, the Protected Payment Amount on any
day after the Rider Effective Date is equal to the withdrawal
percentage multiplied by the Protected Payment Base as of that
day, less cumulative withdrawals during the Contract Year.
If the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner) is younger than
age 591/2
when the first withdrawal was taken or the most recent reset,
whichever is later, the Protected Payment Amount on any day
after the Rider Effective Date is equal to the lesser of:
•
the withdrawal percentage multiplied by the Protected Payment
Base as of that day, less cumulative withdrawals during that
Contract Year, or
•
the Remaining Protected Balance as of that day.
The Protected Payment Amount will never be less than zero.
Protected Payment Base—An amount used to determine
the Protected Payment Amount. The Protected Payment Base will
never be less than zero and will remain unchanged except as
otherwise described under the provisions of this Rider.
Remaining Protected Balance—The amount available for
future withdrawals made under this Rider. The Remaining
Protected Balance will never be less than zero.
Reset Date—Any Contract Anniversary after the Rider
Effective Date on which an Automatic Reset or an Owner-Elected
Reset occurs.
Rider Effective Date—The date the guarantees and
charges for the Rider become effective. If the Rider is
purchased within 60 days of the Contract Date, the Rider
Effective Date is the Contract Date. If the Rider is purchased
within 60 days of a Contract Anniversary, the Rider
Effective Date is the date of that Contract Anniversary.
Initial Values—The initial Protected Payment Base
and Remaining Protected Balance amounts are equal to:
•
initial Purchase Payment, if the Rider Effective Date is on the
Contract Date, or
•
Contract Value, if the Rider Effective Date is on a Contract
Anniversary.
The initial Protected Payment Amount on the Rider Effective Date
is equal to the applicable withdrawal percentage (based on the
Owner’s age at the time of purchase) multiplied by the
Protected Payment Base.
How the
Automatic Income Builder Works
On any day, this Rider guarantees you can withdraw up to the
Protected Payment Amount, regardless of market performance,
until the Rider terminates. Withdrawals up to the Protected
Payment Amount may continue after the Remaining Protected
Balance is reduced to zero (0) if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner)
was age
591/2
or older when the first withdrawal was taken after the Rider
Effective Date or the most recent Reset Date, whichever is
later. If you are older than
591/2
and if you delay taking withdrawals, this Rider
also provides the potential to receive a 0.10% increase in the
withdrawal percentage per year, which can increase the
percentage that you may withdraw each Contract Year without
reducing your Protected Payment Base.
In addition, beginning with the first (1st) anniversary of the
Rider Effective Date or most recent Reset Date, whichever is
later, the Rider provides for Automatic Annual Resets or
Owner-Elected Resets of the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value.
The Protected Payment Base and Remaining Protected Balance may
change over time. An Automatic Reset or Owner-Elected Reset will
increase or decrease the Protected Payment Base and Remaining
Protected Balance depending on the Contract Value on the Reset
Date. A withdrawal that is less than or equal to the Protected
Payment Amount will reduce the Remaining Protected Balance by
the amount of the withdrawal and will not change the Protected
Payment Base. For withdrawals that are greater than the
Protected Payment Amount, see the Withdrawal of Protected
Payment Amount subsection.
For purposes of this Rider, the term “withdrawal”
includes any applicable withdrawal charges. Amounts withdrawn
under this Rider will reduce the Contract Value by the amount
withdrawn and will be subject to the same conditions,
limitations, restrictions and all other fees, charges and
deductions, if applicable, as withdrawals otherwise made under
the provisions of the Contract. Withdrawals under this Rider are
not annuity payouts. Annuity payouts generally receive a more
favorable tax treatment than other withdrawals.
If your Contract is a Qualified Contract, including a TSA/403(b)
Contract, you are subject to restrictions on withdrawals you may
take prior to a triggering event and you should consult your tax
or legal advisor prior to purchasing this optional guarantee,
the primary benefit of which is guaranteeing withdrawals. For
additional information regarding withdrawals and triggering
events, see the FEDERAL TAX ISSUES—IRAs and Qualified
Plans section in the Prospectus.
Withdrawal
Percentage
On or prior to the date of the first withdrawal (measured from
the later of the Rider Effective Date or most recent Reset Date)
the withdrawal percentage is determined as follows based on the
oldest Designated Life’s age (or youngest Annuitant in the
case of a Non-Natural Owner):
Age
Withdrawal Percentage
Before
591/2
5.0%
591/2 - 69
5.0%
70 - 84
6.0%
85 and older
7.0%
If the first withdrawal (measured from the later of the Rider
Effective Date or most recent Reset Date) is taken on or
after
age 591/2,
the withdrawal percentage will automatically increase according
to the table above based on age as of the most recent Contract
Anniversary.
If the first withdrawal (measured from the later of the Rider
Effective Date or most recent Reset Date) is taken prior
to
age 591/2,
the withdrawal percentage will be 5.0% until the Remaining
Protected Balance is depleted and will remain unchanged unless a
Reset occurs. Once a Reset occurs, the withdrawal percentage
will be the withdrawal percentage that corresponds to the age at
the time of the first withdrawal following such Reset.
There is an opportunity for an increase in the withdrawal
percentage. The withdrawal percentage in the table above will
increase by 0.10% for each Rider year a withdrawal is not taken
beginning on the later of the Contract Anniversary following the
Owner’s
age 591/2
or the Rider Effective Date. In addition, the increase in the
withdrawal percentage will still be included as you reach a new
age band (for example, if you have already taken a withdrawal
and at age 69 your withdrawal percentage is 5.4%, then your
withdrawal percentage would be 6.4% the Contract Anniversary
immediately after you turn 70). However, once a withdrawal is
taken, regardless of the Owner’s age when the withdrawal is
taken, no further increase in the withdrawal percentage will be
available and eligibility for the increase cannot be reinstated
with a Reset.
The withdrawal percentage, including any 0.10% increase, will
not be reduced as a result of a reset.
Withdrawal
of Protected Payment Amount
While this Rider is in effect, you may withdraw up to the
Protected Payment Amount without reducing the Protected Payment
Base, regardless of market performance, until the Rider
terminates. Any portion of the Protected Payment Amount not
withdrawn during a Contract Year may not be carried over to the
next Contract Year.
If a withdrawal does not exceed the Protected Payment Amount
immediately prior to that withdrawal, the Protected Payment Base
will remain unchanged. Immediately following the withdrawal the
Remaining Protected Balance will decrease by the withdrawal
amount.
Withdrawals Exceeding the Protected Payment
Amount. If a withdrawal (except an RMD withdrawal)
exceeds the Protected Payment Amount immediately prior to that
withdrawal, we will (immediately following the excess
withdrawal) reduce the Protected Payment Base on a proportionate
basis for the amount in excess of the Protected Payment Amount.
We will reduce the Remaining Protected Balance either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount. (See
Sample Calculations—Example #4 for a
numerical example of the adjustments to the Protected Payment
Base, Remaining Protected Balance and Protected Payment Amount
as a result of an excess withdrawal)
The amount available for withdrawal under the Contract must be
sufficient to support any withdrawal that would otherwise exceed
the Protected Payment Amount.
For information regarding taxation of withdrawals, see the
FEDERAL TAX ISSUES section in the Prospectus.
Required
Minimum Distributions
No adjustment will be made to the Protected Payment Base as a
result of a withdrawal that exceeds the Protected Payment Amount
immediately prior to the withdrawal, provided:
•
such withdrawal (an “RMD Withdrawal”) is for purposes
of satisfying the minimum distribution requirements of
Section 401(a)(9) and related Code provisions in effect at
that time,
•
you have authorized us to calculate and make periodic
distribution of the Annual RMD Amount for the Calendar Year
required based on the payment frequency you have chosen,
•
the Annual RMD Amount is based on this Contract only, and
•
only RMD withdrawals are made from the Contract during the
Contract Year.
Immediately following an RMD Withdrawal, the Remaining Protected
Balance will decrease by the RMD withdrawal amount.
See the FEDERAL TAX ISSUES—Qualified
Contracts—Required Minimum Distributions section
in the Prospectus.
Depletion
of Contract Value
If a withdrawal (including an RMD withdrawal) does not exceed
the Protected Payment Amount immediately prior to the withdrawal
and reduces the Contract Value to zero, the following will apply:
•
if the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner):
•
was younger than
age 591/2
when the first withdrawal was taken under the Rider, after the
Rider Effective Date or the most recent Reset Date, whichever is
later, the Protected Payment Amount will be paid each year until
the Remaining Protected Balance is reduced to zero, or
•
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later, the Protected Payment Amount will be paid
each year until the day of the first death of an Owner or the
date of death of the sole surviving Annuitant.
•
the Protected Payment Amount payments will be paid under a
series of pre-authorized withdrawals under a payment frequency
as elected by the Owner, but no less frequently than annually,
•
no additional Purchase Payments will be accepted under the
Contract,
•
any Remaining Protected Balance will not be available for
payment in a lump sum and will not be applied to provide
payments under an Annuity Option,
•
the Contract will cease to provide any death benefit, and
•
any payments made to you of the Remaining Protected Balance may
be taxable to you as ordinary income, and if you are under the
age of
591/2,
may be subject to an additional 10% federal tax penalty.
If the Owner or sole surviving Annuitant dies and the Contract
Value is zero as of the date of death, there is no death
benefit, however, any Remaining Protected Balance will be paid
to the Beneficiary under a series of pre-authorized withdrawals
and payment frequency (at least annually) then in effect at the
time of the Owner’s or sole surviving Annuitant’s
death. If, however, the Remaining Protected Balance would be
paid over a period that exceeds the life expectancy of the
Beneficiary, the pre-authorized withdrawal amount will be
adjusted so that the withdrawal payments will be paid over a
period that does not exceed the Beneficiary’s life
expectancy.
Depletion
of Remaining Protected Balance
If a withdrawal (including an RMD Withdrawal) reduces the
Remaining Protected Balance to zero and Contract Value remains,
the following will apply:
If the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner):
•
was younger than
age 591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later, this Rider will terminate, or
•
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later, you may elect to withdraw up to the
Protected Payment Amount each year until the day of the first
death of an Owner or the date of death of the sole surviving
Annuitant. If an Automatic or Owner-Elected Reset occurs, the
Remaining Protected Balance will be reinstated to an amount
equal to the Contract Value as of that Contract Anniversary.
Before your Remaining Protected Balance is zero, if you took
your first withdrawal before
591/2
and you would like to be eligible for lifetime payments under
the Rider, an Automatic or Owner-Elected Reset must occur
after
age 591/2.
See the Reset of Protected Payment Base and Remaining
Protected Balance subsection of this Rider. If you are
younger than
591/2
when the Remaining Protected Balance is zero and Contract Value
remains, the Rider will terminate and there is no opportunity
for a Reset.
If a withdrawal (except an RMD withdrawal) made from the
Contract exceeds the Protected Payment Amount, the Protected
Payment Base will be reduced according to the Withdrawals
Exceeding the Protected Payment Amount subsection.
Any death benefit proceeds to be paid to the Beneficiary from
remaining Contract Value will be paid according to the Death
Benefit provisions of the Contract.
Reset of
Protected Payment Base and Remaining Protected Balance
Regardless of which reset option is used, on and after each
Reset Date, the provisions of this Rider shall apply in the same
manner as they applied when the Rider was originally issued,
except that eligibility for the increase in the withdrawal
percentage cannot be reinstated with a Reset once a withdrawal
is taken. The limitations and restrictions on Purchase Payments
and withdrawals, the deduction of annual Charges and any future
reset options available on and after the Reset Date, will again
apply and will be measured from that Reset Date. A reset occurs
when the Protected Payment Base and Remaining Protected Balance
are reset to an amount equal to the Contract Value as of the
Reset Date.
Automatic Reset. On each Contract Anniversary while
this Rider is in effect and before the Annuity Date, we will
automatically reset the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value, if the Protected Payment Base is less than the Contract
Value on that Contract Anniversary. The annual charge percentage
may change as a result of any Automatic Reset (See the
CHARGES, FEES AND DEDUCTIONS—Optional Rider Charges
section in this supplement).
Automatic Reset—Opt-Out Election. If you are
within 60 days after a Contract Anniversary on which an
Automatic Reset is effective, you have the option to reinstate
the Protected Payment Base, Remaining Protected Balance,
Protected Payment Amount and annual charge percentage to their
respective amounts immediately before the Automatic Reset. Any
future Automatic Resets will continue in effect in accordance
with the Automatic Reset paragraph above. If you elect
this option, your opt-out election must be received, in a form
satisfactory to us, at our Service Center within the same
60 day period after the Contract Anniversary on which the
reset is effective.
Automatic Reset—Future Participation. You may
elect not to participate in future Automatic Resets at any time.
Your election must be received, in a form satisfactory to us, at
our Service Center, while this Rider is in effect and before the
Annuity Date. Such election will be effective for future
Contract Anniversaries. If you previously elected not to
participate in Automatic Resets, you may re-elect to participate
in future Automatic Resets at any time. Your election to resume
participation must be received, in a form satisfactory to us, at
our Service Center while this Rider is in effect and before the
Annuity Date. Such election will be effective for future
Contract Anniversaries as described in the Automatic Reset
paragraph above.
Owner-Elected Resets (Non-Automatic). You may, on
any Contract Anniversary, elect to reset the Remaining Protected
Balance and Protected Payment Base to an amount equal to 100% of
the Contract Value. An Owner-Elected Reset may be elected while
Automatic Resets are in effect. The annual charge percentage may
change as a result of this reset.
If you elect this option, your election must be received, in a
form satisfactory to us, at our Service Center within
60 days after the Contract Anniversary on which the reset
is effective. The reset will be based on the Contract Value as
of that Contract Anniversary. Your election of this option
may result in a reduction in the Protected Payment Base,
Remaining Protected Balance and Protected Payment Amount.
Generally, the reduction will occur when your Contract Value is
less than the Protected Payment Base as of the Contract
Anniversary you elected the reset. We will provide you with
written confirmation of your election.
Subsequent
Purchase Payments
If we receive additional Purchase Payments after the Rider
Effective Date, we will increase the Protected Payment Base and
Remaining Protected Balance by the amount of the Purchase
Payments. However, for purposes of this Rider, we reserve the
right to restrict additional Purchase Payments that result in a
total of all Purchase Payments received on or after the later of
the first (1st) Contract Anniversary or most recent Reset Date
to exceed $100,000 without our prior approval. This provision
only applies if the Contract to which this Rider is attached
permits Purchase Payments after the first (1st) Contract
Anniversary, measured from the Contract Date.
Annuitization
If you annuitize the Contract at the maximum Annuity Date
specified in your Contract and this Rider is still in effect at
the time of your election and a Life Only annuity option is
chosen, the annuity payments will be equal to the greater of:
•
the Life Only annual payment amount based on the terms of your
Contract, or
•
the Protected Payment Amount in effect at the maximum Annuity
Date.
If you annuitize the Contract at any time prior to the maximum
Annuity Date specified in your Contract, your annuity payments
will be determined in accordance with the terms of your
Contract. The Protected Payment Base, Remaining Protected
Balance and Protected Payment Amount under this Rider will not
be used in determining any annuity payments.
The annuity payments described in this subsection are available
to you even if your first withdrawal was taken prior to age
591/2
and no Resets have occurred.
Continuation
of Rider if Surviving Spouse Continues Contract
If the Owner dies while this Rider is in effect and if the
surviving spouse of the deceased Owner elects to continue the
Contract in accordance with its terms, the surviving spouse may
continue to take withdrawals of the Protected Payment Amount
under this Rider, until the Remaining Protected Balance is
reduced to zero. If the Remaining Protected Balance is zero when
the Owner dies, this Rider will terminate.
The surviving spouse may elect any of the reset options
available under this Rider for subsequent Contract
Anniversaries. If a reset takes place then the provisions of
this Rider will continue in full force and in effect for the
surviving spouse. The withdrawal percentage will be determined
based on the age of the surviving spouse and the new withdrawal
percentage may be higher or lower than what the withdrawal
percentage was prior to death. In addition, if the surviving
spouse is
591/2
when a reset occurs, the surviving spouse may take withdrawals
of the Protected Payment Amount (based on the new Protected
Payment Base and withdrawal percentage) for life.
Any 0.10% increase to the withdrawal percentage previously added
will apply but no further increases to the withdrawal percentage
will be added.
The surviving spouse may elect to receive any death benefit
proceeds instead of continuing the Contract and Rider (see the
DEATH BENEFITS AND OPTIONAL DEATH BENEFIT RIDERS —
Death Benefits section in the Prospectus).
Termination
You cannot request a termination of the Rider. Except as
otherwise provided below, the Rider will automatically terminate
on the earliest of:
•
the day any portion of the Contract Value is no longer allocated
according to the Investment Allocation Requirements,
•
the day the Remaining Protected Balance is reduced to zero if
the oldest Owner (or youngest Annuitant, in the case of an Owner
who is a Non-Natural Owner), was younger than
591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later,
•
the date of the first death of an Owner or the date of death of
the sole surviving Annuitant (except as provided under the
Continuation of Rider if Surviving Spouse Continues Contract
subsection),
•
for Contracts with a Non-Natural Owner, the date of the first
death of an Annuitant, including Primary, Joint and Contingent
Annuitants,
•
the day the Contract is terminated in accordance with the
provisions of the Contract,
•
the day we are notified of a change in ownership of the Contract
to a non-spouse Owner if the Contract is Non-Qualified
(excluding changes in ownership to or from certain trusts),
•
the day you exchange this Rider for another withdrawal benefit
Rider,
•
the Annuity Date (see the Annuitization subsection for
additional information), or
•
the day the Contract Value is reduced to zero as a result of a
withdrawal (except an RMD withdrawal) that exceeds the Protected
Payment Amount.
The Rider will not terminate the day the Remaining Protected
Balance is reduced to zero if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner)
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later.
The Rider and the Contract will not terminate the day the
Contract Value is zero and you begin taking pre-authorized
withdrawals of the Protected Payment Amount. In this case, the
Rider and the Contract will terminate:
•
the day the Remaining Protected Balance is reduced to zero if
the oldest Owner (or youngest Annuitant, in the case of an Owner
who is Non-Natural Owner), was younger than
591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later, or
•
the date of the first death of an Owner or the date of death of
the sole surviving Annuitant if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner)
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later.
If this Rider is terminated as a result of having any portion of
the Contract Value no longer allocated according to the
Investment Allocation Requirements, you must wait until a
Contract Anniversary that is at least one (1) year from the
Effective Date of termination before this Rider may be purchased
again (if available).
The examples provided are based on certain hypothetical
assumptions and are for example purposes only. Where Contract
Value is reflected, the examples assume a 7% return after
deduction for optional rider expenses and Separate Account
expenses (7% net return), unless otherwise noted below. The
examples have been provided to assist in understanding the
benefits provided by this Rider and to demonstrate how Purchase
Payments received and withdrawals made from the Contract prior
to the Annuity Date affect the values and benefits under this
Rider over an extended period of time. The examples are not
intended to serve as projections of future investment returns
nor are they a reflection of how your Contract will actually
perform.
Example #1 —
Setting of Initial Values.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Owner’s age on Rider Effective Date = 68
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Base
Amount
Balance
1
$100,000
$100,000
$100,000
$5,000
$100,000
On the Rider Effective Date, the initial values are set as
follows:
•
Protected Payment Base = Initial Purchase Payment =
$100,000
Protected Payment Amount = Withdrawal percentage multiplied
by the Protected Payment Base = 5% × $100,000 = $5,000
Example #2 —
Subsequent Purchase Payments.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Owner’s age on Rider Effective Date = 68
•
A subsequent Purchase Payment of $100,000 is received during
Contract Years 1 and 2.
•
No withdrawals taken.
•
Automatic reset at Beginning of Contract Years 2 and 3.
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Base
Amount
Balance
1
$100,000
$
100,000
$
100,000
$
5,000
$
100,000
Activity
$100,000
$
200,000
$
200,000
$
10,000
$
200,000
2
Prior to Automatic Reset
$
207,000
$
200,000
$
10,200
$
200,000
2
After Automatic Reset
$
207,000
$
207,000
$
10,557
$
207,000
Activity
$100,000
$
307,000
$
307,000
$
15,657
$
307,000
3
Prior to Automatic Reset
$
321,490
$
307,000
$
19,034
$
307,000
3
After Automatic Reset
$
321,490
$
321,490
$
19,932
$
321,490
Immediately after the $100,000 subsequent Purchase Payment
during Contract Year 1, the Protected Payment Base and Remaining
Protected Balance are increased by the Purchase Payment amount
to $200,000 ($100,000 + $100,000). The Protected Payment Amount
after the Purchase Payment is equal to $10,000 (5.0% of the
Protected Payment Base after the Purchase Payment).
Since no withdrawal occurred prior to the Contract Anniversary
at the Beginning of Contract Year 2, the withdrawal percentage
is increased to 5.1%. Additionally, because at the Beginning of
Contract Year 2, the Protected Payment Base was less than the
Contract Value on that Contract Anniversary (see balances at
Beginning of Contract Year 2 – Prior to Automatic
Reset), an automatic reset occurred which resets the
Protected Payment Base and Remaining Protected Balance to an
amount equal to 100% of the Contract Value (see balances at
Beginning of Contract Year 2 – After Automatic
Reset). As a result, the Protected Payment Amount is equal
to $10,557 (5.1% of the reset Protected Payment Base).
Immediately after the $100,000 subsequent Purchase Payment
during Contract Year 2, the Protected Payment Base and Remaining
Protected Balance are increased by the Purchase Payment amount
to $307,000 ($207,000 + $100,000). The Protected Payment Amount
after the Purchase Payment is equal to $15,657 (5.1% of the
Protected Payment Base after the Purchase Payment.
Since the Owner reached age 70 and no withdrawal occurred
prior to the Contract Anniversary at the Beginning of Contract
Year 3, the withdrawal percentage is increased to 6.2%.
Additionally, because at the Beginning of Contract Year 3, the
Protected Payment Base was less than the Contract Value on that
Contract Anniversary (see balances at Beginning of Contract
Year 3 – Prior to Automatic Reset), an automatic
reset occurred which resets the Protected Payment Base and
Remaining Protected Balance to an amount equal to 100% of the
Contract Value (see balances at Beginning of Contract Year
3 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $19,932 (6.2% of the reset
Protected Payment Base).
In addition to Purchase Payments, the Contract Value is further
subject to increases
and/or
decreases during each Contract Year as a result of additional
amounts credited, charges, fees and other deductions, and
increases
and/or
decreases in the investment performance of the Variable Account.
Example #3 —
Withdrawals Not Exceeding Protected Payment Amount.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Owner’s age on Rider Effective Date = 68
•
A subsequent Purchase Payment of $100,000 is received during
Contract Years 1 and 2.
•
A withdrawal equal to or less than the Protected Payment
Amount is taken during Contract Years 3 and 5.
•
Automatic reset at Beginning of Contract Years 2, 3, 4, 5 and
6.
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Base
Amount
Balance
1
$100,000
$100,000
$100,000
$5,000
$100,000
Activity
$100,000
$200,000
$200,000
$10,000
$200,000
2
Prior to Automatic Reset
$207,000
$200,000
$10,200
$200,000
2
After Automatic Reset
$207,000
$207,000
$10,557
$207,000
Activity
$100,000
$307,000
$307,000
$15,657
$307,000
3
Prior to Automatic Reset
$321,490
$307,000
$19,034
$307,000
3
After Automatic Reset
$321,490
$321,490
$19,932
$321,490
Activity
$19,932
$324,062
$321,490
$0
$301,558
4
Prior to Automatic Reset
$324,062
$321,490
$19,932
$301,558
4
After Automatic Reset
$324,062
$324,062
$20,092
$324,062
5
Prior to Automatic Reset
$346,746
$324,062
$20,092
$324,062
5
After Automatic Reset
$346,746
$346,746
$21,498
$346,746
Activity
$21,498
$349,520
$346,746
$0
$325,248
6
Prior to Automatic Reset
$349,520
$346,746
$21,498
$325,248
6
After Automatic Reset
$349,520
$349,520
$21,670
$349,520
For an explanation of the values and activities at the start of
and during Contract Years 1 and 2, refer to Examples #1
and #2.
Since the Owner reached age 70 and no withdrawal occurred
prior to the Contract Anniversary at the Beginning of Contract
Year 3, the withdrawal percentage is increased to 6.2%.
Additionally, because at the Beginning of Contract Year 3, the
Protected Payment Base was less than the Contract Value on that
Contract Anniversary (see balances at Beginning of Contract
Year 3 – Prior to Automatic Reset), an automatic
reset occurred which resets the Protected Payment Base and
Remaining Protected Balance to an amount equal to 100% of the
Contract Value (see balances at Beginning of Contract Year
3 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $19,932 (6.2% of the reset
Protected Payment Base).
As the withdrawal during Contract Year 3 did not exceed
the Protected Payment Amount immediately prior to the withdrawal
($19,932):
(a) the Protected Payment Base remains unchanged; and
(b) the Remaining Protected Balance is reduced by the
amount of the withdrawal to $301,558
($321,490 − $19,932).
Since a withdrawal occurred during Contract Year 3, the
withdrawal percentage will no longer increase as a result of
delaying withdrawals.
Because at the Beginning of Contract Year 4, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
4 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
4 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $20,092 (6.2% of the reset
Protected Payment Base).
Because at the Beginning of Contract Year 5, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
5 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
5 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $21,498 (6.2% of the reset
Protected Payment Base).
As the withdrawal during Contract Year 5 did not exceed
the Protected Payment Amount immediately prior to the withdrawal
($21,498):
(c) the Protected Payment Base remains unchanged; and
(d) the Remaining Protected Balance is reduced by the
amount of the withdrawal to $325,248
($346,746 − $21,498).
Because at the Beginning of Contract Year 6, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
6 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
6 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $21,670 (6.2% of the reset
Protected Payment Base).
Example #4 —
Withdrawals Exceeding Protected Payment Amount.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Owner’s age on Rider Effective Date = 68
•
A subsequent Purchase Payment of $100,000 is received during
Contract Years 1 and 2.
•
A withdrawal greater than the Protected Payment Amount is
taken during Contract Years 3 and 5.
•
Automatic resets at Beginning of Contract Years 2, 3, 4, 5
and 6.
Beginning
Contract
Protected
Protected
Remaining
of Contract
Purchase
Value
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Base
Amount
Balance
1
$100,000
$100,000
$100,000
$5,000
$100,000
Activity
$100,000
$200,000
$200,000
$10,000
$200,000
2
Prior to Automatic Reset
$207,000
$200,000
$10,200
$200,000
2
After Automatic Reset
$207,000
$207,000
$10,557
$207,000
Activity
$100,000
$307,000
$307,000
$15,657
$307,000
3
Prior to Automatic Reset
$321,490
$307,000
$19,034
$307,000
3
After Automatic Reset
$321,490
$321,490
$19,932
$321,490
Activity
$30,000
$313,994
$311,491
$0
$291,490
4
Prior to Automatic Reset
$313,994
$311,491
$19,313
$291,490
4
After Automatic Reset
$313,994
$313,994
$19,468
$313,994
5
Prior to Automatic Reset
$335,974
$313,994
$19,468
$313,994
5
After Automatic Reset
$335,974
$335,974
$20,830
$335,974
Activity
$100,000
$259,492
$257,423
$0
$235,974
6
Prior to Automatic Reset
$259,492
$257,423
$15,961
$235,974
6
After Automatic Reset
$259,492
$259,492
$16,089
$259,492
For an explanation of the values and activities at the start of
and during Contract Years 1 and 2, refer to Examples #1
and #2.
Since the Owner reached age 70 and no withdrawal occurred
prior to the Contract Anniversary at the Beginning of Contract
Year 3, the withdrawal percentage is increased to 6.2%.
Additionally, because at the Beginning of Contract Year 3, the
Protected Payment Base was less than the Contract Value on that
Contract Anniversary (see balances at Beginning of Contract
Year 3 – Prior to Automatic Reset), an automatic
reset occurred which resets the Protected Payment Base and
Remaining Protected Balance to an amount equal to 100% of the
Contract Value (see balances at Beginning of Contract Year
3 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $19,932 (6.2% of the reset
Protected Payment Base).
As the withdrawal during Contract Year 3 exceeded the
Protected Payment Amount immediately prior to the withdrawal
($19,932), the Protected Payment Base is reduced to $311,491 and
the Remaining Protected Balance is reduced to $291,490. The
reduction in the Protected Payment Base and the Remaining
Protected Balance is calculated as follows:
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $10,068 (Total withdrawal amount – Protected
Payment Amount; $30,000 − $19,932=$10,068).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value –
Protected Payment Amount). Numerically, the ratio is 3.11%
($10,068
¸
($343,994 − $19,932); $10,068
¸
$324,062 = 0.0311 or 3.11%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$311,491 (Protected Payment Base × (1-ratio); $321,490
× (1-3.11%); $321,490 × 96.89% = $311,491.
Fourth, determine the new Remaining Protected Balance.
The Remaining Protected Balance is reduced either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount.
To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $292,179 (Remaining Protected Balance –
Protected Payment Amount) × (1-ratio);
($321,490 − $19,932)
× (1-3.11%);
$301,558 × 96.89% = $292,179).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $291,490 (Remaining Protected Balance –
total withdrawal amount; $321,490 − $30,000 =
$291,490).
Therefore, since $291,490 (total withdrawal amount method) is
less than $292,179 (proportionate method) the new Remaining
Protected Balance is $291,490.
Since a withdrawal occurred during Contract Year 3, the
withdrawal percentage will no longer increase as a result of
delaying withdrawals.
Because at the Beginning of Contract Year 4, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
4 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
4 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $19,468 (6.2% of the reset
Protected Payment Base).
Because at the Beginning of Contract Year 5, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
5 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
5 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $20,830 (6.2% of the reset
Protected Payment Base).
As the withdrawal during Contract Year 5 exceeded the
Protected Payment Amount immediately prior to the withdrawal
($20,830), the Protected Payment Base is reduced to $257,423 and
the Remaining Protected Balance is reduced to $235,974. The
reduction in the Protected Payment Base and the Remaining
Protected Balance is calculated as follows:
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $79,170 (Total withdrawal amount – Protected
Payment Amount; $100,000 −
$20,830 = $79,170).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value –
Protected Payment Amount). Numerically, the ratio is 23.38%
($79,170
¸
($359,492 − $20,830); $79,170
¸
$338,662 = 0.2338 or 23.38%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$257,423 (Protected Payment Base × (1-ratio); $335,974
× (1-23.38%); $335,974 × 76.62% = $257,423.
Fourth, determine the new Remaining Protected Balance.
The Remaining Protected Balance is reduced either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount.
To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $241,463 (Remaining Protected Balance –
Protected Payment Amount) × (1-ratio);
($335,974 − $20,830) × (1-23.38%); $315,144
× 76.62% = $241,463).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $235,974 (Remaining Protected Balance –
total withdrawal amount; $335,974 −
$100,000 = $235,974).
Therefore, since $235,974 (total withdrawal amount method) is
less than $241,463 (proportionate method) the new Remaining
Protected Balance is $235,974.
Because at the Beginning of Contract Year 6, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
6 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
6 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $16,089 (6.2% of the reset
Protected Payment Base).
Example #5 —
RMD Withdrawals.
The effect of cumulative RMD Withdrawals during the Contract
Year that exceed the Protected Payment Amount established for
that Contract Year and its effect on the Protected Payment Base
and Remaining Protected Balance. The Annual RMD Amount is based
on the entire interest of your Contract as of the previous
year-end.
This table assumes quarterly withdrawals of only the Annual
RMD Amount during the Contract Year. The calculated Annual RMD
amount for the Calendar Year is $7,500 and the Contract
Anniversary is May 1 of each year.
Annual
Protected
Protected
Remaining
Activity
RMD
Non-RMD
RMD
Payment
Payment
Protected
Date
Withdrawal
Withdrawal
Amount
Base
Amount
Balance
05/01/2006 Contract
Anniversary
$0
$100,000
$5,000
$100,000
01/01/2007
$7,500
03/15/2007
$1,875
$100,000
$3,125
$98,125
05/01/2007 Contract
Anniversary
$100,000
$5,000
$98,125
06/15/2007
$1,875
$100,000
$3,125
$96,250
09/15/2007
$1,875
$100,000
$1,250
$94,375
12/15/2007
$1,875
$100,000
$0
$92,500
01/01/2008
$8,000
03/15/2008
$2,000
$100,000
$0
$90,500
05/01/2008 Contract
Anniversary
$100,000
$5,000
$90,500
Because all withdrawals during the Contract Year were RMD
Withdrawals, there is no adjustment to the Protected Payment
Base for exceeding the Protected Payment Amount. The only effect
is a reduction in the Remaining Protected Balance equal to the
amount of each withdrawal. In addition, the Protected Payment
Amount is reduced by the amount of each withdrawal until the
Protected Payment Amount is zero.
This chart assumes quarterly withdrawals of the Annual RMD
Amount and other non-RMD Withdrawals during the Contract Year.
The calculated Annual RMD amount and Contract Anniversary are
the same as above.
Annual
Protected
Protected
Remaining
Activity
RMD
Non-RMD
RMD
Payment
Payment
Protected
Date
Withdrawal
Withdrawal
Amount
Base
Amount
Balance
05/01/2006 Contract
Anniversary
$0
$100,000
$5,000
$100,000
01/01/2007
$7,500
03/15/2007
$1,875
$100,000
$3,125
$98,125
04/01/2007
$2,000
$100,000
$1,125
$96,125
05/01/2007 Contract
Anniversary
$100,000
$5,000
$96,125
06/15/2007
$1,875
$100,000
$3,125
$94,250
09/15/2007
$1,875
$100,000
$1,250
$92,375
11/15/2007
$4,000
$96,900
$0
$88,300
On 3/15/07
there was an RMD Withdrawal of $1,875 and on
4/1/07 a
non-RMD Withdrawal of $2,000. Because the total withdrawals
during the Contract Year
(5/1/06
through
4/30/07) did
not exceed the Protected Payment Amount of $5,000 there was no
adjustment to the Protected Payment Base. The only effect is a
reduction in the Remaining Protected Balance and the Protected
Payment Amount equal to the amount of each withdrawal. On
5/1/07, the
Protected Payment Amount was re-calculated (5% of the Protected
Payment Base) as of that Contract Anniversary.
On 11/15/07,
there was a Non-RMD Withdrawal ($4,000) that caused the
cumulative withdrawals during the Contract Year ($7,750) to
exceed the Protected Payment Amount ($5,000). As the withdrawal
during exceeded the Protected Payment Amount immediately prior
to the withdrawal ($1,250), and assuming the Contract Value was
$90,000 immediately prior to the withdrawal, the Protected
Payment Base is reduced to $96,900 and the Remaining Protected
Balance is reduced to $88,300.
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $2,750 (Total withdrawal amount – Protected
Payment Amount; $4,000 − $1,250 = $2,750).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value –
Protected Payment Amount). Numerically, the ratio is 3.10%
($2,750
¸
($90,000 − $1,250); $2,750
¸
$88,750 = 0.0310 or 3.10%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$96,900 (Protected Payment Base x (1-ratio); $100,000 ×
(1-3.10%); $100,000 × 96.90% = $96,900.
Fourth, determine the new Remaining Protected Balance.
The Remaining Protected Balance is reduced either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount.
To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $88,300 (Remaining Protected Balance –
Protected Payment Amount) x (1-ratio); ($92,375 −
$1,250) × (1-3.10%); $91,125 ×
96.90% = $88,300).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $88,375 (Remaining Protected Balance –
total withdrawal amount; $92,375 −
$4,000 = $88,375).
Therefore, since $88,300 (proportionate method) is less than
$88,375 (total withdrawal amount method) the new Remaining
Protected Balance is $88,300.
Example #6 —
Lifetime Income.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Owner’s age on Rider Effective Date = 65
•
No subsequent Purchase Payments are received.
•
Withdrawals, are taken each Contract Year:
•
Equal to 5% of the Protected Payment Base in Contract Years
1-5
(age 65-69)
•
Equal to 6% of the Protected Payment Base in Contract Years
6-20
(age 70-84)
•
Equal to 7% of the Protected Payment Base in Contract Years
21-35
(age 85-99)
•
No automatic reset or Owner-elected reset is assumed during
the life of the Rider.
•
Assumes 3% net return
Protected
Protected
Remaining
Contract
End of Year
Payment
Payment
Protected
Year
Withdrawal
Contract Value
Base
Amount
Balance
1
$5,000
$98,000
$100,000
$5,000
$95,000
2
$5,000
$95,944
$100,000
$5,000
$90,000
3
$5,000
$93,818
$100,000
$5,000
$85,000
4
$5,000
$91,633
$100,000
$5,000
$80,000
5
$5,000
$89,382
$100,000
$5,000
$75,000
6
$6,000
$86,063
$100,000
$6,000
$69,000
7
$6,000
$82,645
$100,000
$6,000
$63,000
8
$6,000
$79,124
$100,000
$6,000
$57,000
9
$6,000
$75,498
$100,000
$6,000
$51,000
10
$6,000
$71,763
$100,000
$6,000
$45,000
11
$6,000
$67,916
$100,000
$6,000
$39,000
12
$6,000
$63,953
$100,000
$6,000
$33,000
13
$6,000
$59,872
$100,000
$6,000
$27,000
14
$6,000
$55,668
$100,000
$6,000
$21,000
15
$6,000
$51,338
$100,000
$6,000
$15,000
16
$6,000
$46,878
$100,000
$6,000
$9,000
17
$6,000
$42,285
$100,000
$6,000
$3,000
18
$6,000
$37,553
$100,000
$6,000
$0,000
19
$6,000
$32,680
$100,000
$6,000
$0
20
$6,000
$27,660
$100,000
$6,000
$0
21
$7,000
$21,490
$100,000
$7,000
$0
22
$7,000
$15,135
$100,000
$7,000
$0
23
$7,000
$8,589
$100,000
$7,000
$0
24
$7,000
$1,847
$100,000
$7,000
$0
25
$7,000
$0
$100,000
$7,000
$0
26
$7,000
$0
$100,000
$7,000
$0
27
$7,000
$0
$100,000
$7,000
$0
28
$7,000
$0
$100,000
$7,000
$0
29
$7,000
$0
$100,000
$7,000
$0
30
$7,000
$0
$100,000
$7,000
$0
31
$7,000
$0
$100,000
$7,000
$0
32
$7,000
$0
$100,000
$7,000
$0
33
$7,000
$0
$100,000
$7,000
$0
34
$7,000
$0
$100,000
$7,000
$0
35
$7,000
$0
$100,000
$7,000
$0
On the Rider Effective Date, the initial values are set as
follows:
•
Protected Payment Base = Initial Purchase
Payment = $100,000
Protected Payment Amount = 5% of Protected Payment
Base = $5,000
Because the amount of each withdrawal does not exceed the
Protected Payment Amount immediately prior to the withdrawal:
(a) the Protected Payment Base remains unchanged; and
(b) the Remaining Protected Balance is reduced by the
amount of each withdrawal.
Since a withdrawal occurred during Contract Year 1, no increases
are added to the withdrawal percentage due to delaying
withdrawals.
Since it was assumed that the Owner was
age 591/2
or older when the first withdrawal was taken, withdrawals of 5%,
6% and 7% of the Protected Payment Base, respectively, will
continue to be paid each year (even after the Contract Value and
Remaining Protected Balance have been reduced to zero) until the
day of the first death of an Owner or the date of death of the
sole surviving Annuitant, whichever occurs first.
Flexible
Lifetime Income Plus Rider (Single)
Purchasing
the Flexible Lifetime Income Plus Rider (Single)
You may purchase this optional Rider on the Contract Date or on
any Contract Anniversary (if available) if the age of each
Annuitant is 85 years or younger on the date of purchase
and you allocate your entire Contract Value according to the
Investment Allocation Requirements.
Flexible
Lifetime Income Plus Rider (Single) Terms
Annual RMD Amount—The amount required to be
distributed each Calendar Year for purposes of satisfying the
minimum distribution requirements of Code Section 401(a)(9)
(“Section 401(a)(9)”) and related Code provisions
in effect as of the Rider Effective Date.
Protected Payment Amount—The maximum amount that can
be withdrawn under this Rider without reducing the Protected
Payment Base.
If the oldest Owner is
age 591/2
or older (or youngest Annuitant, in the case of an Owner who is
a Non-Natural Owner) when the first withdrawal was taken or the
most recent reset, whichever is later, the Protected Payment
Amount on any day after the Rider Effective Date is equal to the
withdrawal percentage multiplied by the Protected Payment Base
as of that day, less cumulative withdrawals during the Contract
Year.
If the oldest Owner is younger than
age 591/2
(or youngest Annuitant, in the case of an Owner who is a
Non-Natural Owner) when the first withdrawal was taken or the
most recent reset, whichever is later, the Protected Payment
Amount on any day after the Rider Effective Date is equal to the
lesser of:
•
the withdrawal percentage multiplied by the Protected Payment
Base as of that day, less cumulative withdrawals during that
Contract Year, or
•
the Remaining Protected Balance as of that day.
The Protected Payment Amount will never be less than zero.
Protected Payment Base—An amount used to determine
the Protected Payment Amount. The Protected Payment Base will
never be less than zero and will remain unchanged except as
otherwise described under the provisions of this Rider.
Remaining Protected Balance—The amount available for
future withdrawals made under this Rider. The Remaining
Protected Balance will never be less than zero.
Annual Credit—An amount added to the Protected
Payment Base and Remaining Protected Balance.
Reset Date—Any Contract Anniversary after the Rider
Effective Date on which an Automatic Reset or an Owner-Elected
Reset occurs.
Rider Effective Date—The date the guarantees and
charges for the Rider become effective. If the Rider is
purchased within 60 days of the Contract Date, the Rider
Effective Date is the Contract Date. If the Rider is purchased
within 60 days of a Contract Anniversary, the Rider
Effective Date is the date of that Contract Anniversary.
Initial Values—The initial Protected Payment Base
and Remaining Protected Balance amounts are equal to:
•
initial Purchase Payment, if the Rider Effective Date is on the
Contract Date, or
•
Contract Value, if the Rider Effective Date is on a Contract
Anniversary.
The initial Protected Payment Amount on the Rider Effective Date
is equal to the applicable withdrawal percentage (based on the
Owner’s age at the time of purchase) multiplied by the
Protected Payment Base.
How the
Flexible Lifetime Income Plus Rider (Single) Works
On any day, this Rider guarantees you can withdraw up to the
Protected Payment Amount each contract year, regardless of
market performance, until the Rider terminates. Withdrawals up
to the Protected Payment Amount may continue after the Remaining
Protected Balance is reduced to zero (0) if the oldest
Owner (or youngest Annuitant, in the case of an Owner who is a
Non-Natural Owner) was
age 591/2
or older when the first withdrawal was taken after the Rider
Effective Date or the most recent Reset Date, whichever is
later. This Rider also provides for an amount (an ”Annual
Credit”) to be added to the Protected Payment Base and
Remaining Protected Balance.
In addition, beginning with the first (1st) anniversary of the
Rider Effective Date or most recent Reset Date, whichever is
later, the Rider provides for Automatic Annual Resets or
Owner-Elected Resets of the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value.
If applicable, an Annual Credit is added to the Protected
Payment Base and Remaining Protected Balance prior to any
Automatic Reset. If the Contract Value as of that Contract
Anniversary is greater than the Protected Payment Base (which
includes the Annual Credit amount), then the Protected Payment
Base and Remaining Protected Balance will be automatically reset
to equal the Contract Value.
The Protected Payment Base and Remaining Protected Balance may
change over time. The addition of an Annual Credit will increase
the Protected Payment Base and the Remaining Protected Balance
by the amount of the Annual Credit. An Automatic Reset or
Owner-Elected Reset will increase or decrease the Protected
Payment Base and Remaining Protected Balance depending on the
Contract Value on the Reset Date. A withdrawal that is less than
or equal to the Protected Payment Amount will reduce the
Remaining Protected Balance by the amount of the withdrawal and
will not change the Protected Payment Base. For withdrawals that
are greater than the Protected Payment Amount, see the
Withdrawal of Protected Payment Amount subsection.
For purposes of this Rider, the term “withdrawal”
includes any applicable withdrawal charges. Amounts withdrawn
under this Rider will reduce the Contract Value by the amount
withdrawn and will be subject to the same conditions,
limitations, restrictions and all other fees, charges and
deductions, if applicable, as withdrawals otherwise made under
the provisions of the Contract. Withdrawals under this Rider are
not annuity payouts. Annuity payouts generally receive a more
favorable tax treatment than other withdrawals.
If your Contract is a Qualified Contract, including a TSA/403(b)
Contract, you are subject to restrictions on withdrawals you may
take prior to a triggering event and you should consult your tax
or legal advisor prior to purchasing this optional guarantee,
the primary benefit of which is guaranteeing withdrawals. For
additional information regarding withdrawals and triggering
events, see the FEDERAL TAX ISSUES—IRAs and Qualified
Plans section in the Prospectus.
Withdrawal
Percentage
The withdrawal percentage is determined according to the table
below based on the oldest Owner’s age (or youngest
Annuitant in the case of a Non-Natural Owner) at rider effective
date or the most recent Reset Date, whichever is later. The
withdrawal percentages are as follows:
Age
Withdrawal Percentage
Before
591/2
5.0%
591/2 –
74
5.0%
75 and older
6.0%
If you purchase the Rider before you reach 75 years of age,
a Reset is required to receive the higher withdrawal percentage
once you are 75 years of age.
Withdrawal
of Protected Payment Amount
While this Rider is in effect, you may withdraw up to the
Protected Payment Amount without reducing the Protected Payment
Base, regardless of market performance, until the Rider
terminates. Any portion of the Protected Payment Amount not
withdrawn during a Contract Year may not be carried over to the
next Contract Year.
If a withdrawal does not exceed the Protected Payment Amount
immediately prior to that withdrawal, the Protected Payment Base
will remain unchanged. The Remaining Protected Balance will
decrease by the withdrawal amount immediately following the
withdrawal.
Withdrawals Exceeding the Protected Payment
Amount. If a withdrawal exceeds the Protected Payment
Amount immediately prior to that withdrawal, we will
(immediately following the excess withdrawal) reduce the
Protected Payment Base on a proportionate basis for the amount
in excess of the Protected Payment Amount. We will reduce the
Remaining Protected Balance either on a proportionate basis or
by the total withdrawal amount, whichever results in the lower
Remaining Protected Balance amount. (See Flexible Lifetime
Income Plus Rider (Single and Joint) Sample
Calculations—Example #4 for a numerical
example of the adjustments to the Protected Payment Base,
Remaining Protected Balance and Protected Payment Amount as a
result of an excess withdrawal)
The amount available for withdrawal under the Contract must be
sufficient to support any withdrawal that would otherwise exceed
the Protected Payment Amount.
For information regarding taxation of withdrawals, see the
FEDERAL TAX ISSUES section in this Prospectus.
Required
Minimum Distributions
No adjustment will be made to the Protected Payment Base as a
result of a withdrawal that exceeds the Protected Payment Amount
immediately prior to the withdrawal, provided:
•
such withdrawal (an “RMD Withdrawal”) is for purposes
of satisfying the minimum distribution requirements of
Section 401(a)(9) and related Code provisions in effect at
that time,
•
you have authorized us to calculate and make periodic
distribution of the Annual RMD Amount for the Calendar Year
required based on the payment frequency you have chosen,
•
the Annual RMD Amount is based on this Contract only, and
•
only RMD withdrawals are made from the Contract during the
Contract Year.
Immediately following an RMD Withdrawal, the Remaining Protected
Balance will decrease by the RMD Withdrawal amount.
See the FEDERAL TAX ISSUES—Qualified
Contracts—General Rules—Required Minimum
Distributions section in the Prospectus.
Depletion
of Contract Value
If a withdrawal (including an RMD withdrawal) does not exceed
the Protected Payment Amount immediately prior to the withdrawal
and reduces the Contract Value to zero, the following will apply:
•
if the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner):
•
was younger than
age 591/2
when the first withdrawal was taken under the Rider, after the
Rider Effective Date or the most recent Reset Date, whichever is
later, the Protected Payment Amount will be paid each year until
the Remaining Protected Balance is reduced to zero, or
•
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later, the Protected Payment Amount will be paid
each year until the day of the first death of an Owner or the
date of death of the sole surviving Annuitant.
•
the Protected Payment Amount will be paid under a series of
pre-authorized withdrawals under a payment frequency as elected
by the Owner, but no less frequently than annually,
•
no additional Purchase Payments will be accepted under the
Contract,
•
any Remaining Protected Balance will not be available for
payment in a lump sum and will not be applied to provide
payments under an Annuity Option,
•
the Contract will cease to provide any death benefit, and
•
any payments made to you of the Remaining Protected Balance may
be taxable to you as ordinary income, and if you are under the
age of
591/2,
may be subject to an additional 10% federal tax penalty.
If the Owner or sole surviving Annuitant dies and the Contract
Value is zero as of the date of death, there is no death
benefit, however, any Remaining Protected Balance will be paid
to the Beneficiary under a series of pre-authorized withdrawals
and payment frequency (at least annually) then in effect at the
time of the Owner’s or sole surviving Annuitant’s
death. If, however, the Remaining Protected Balance would be
paid over a period that exceeds the life expectancy of the
Beneficiary, the pre-authorized withdrawal amount will be
adjusted so that the withdrawal payments will be paid over a
period that does not exceed the Beneficiary’s life
expectancy.
Depletion
of Remaining Protected Balance
If a withdrawal (including an RMD Withdrawal) reduced the
Remaining Protected Balance to zero and Contract Value remains,
the following will apply:
If the oldest Owner (or youngest Annuitant, in the case of an
Owner who is a Non-Natural Owner):
•
was younger than
age 591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later, this Rider will terminate, or
•
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later, you may elect to withdraw up to the
Protected Payment Amount each year until the day of the first
death of an Owner or the date of death of the sole surviving
Annuitant. If an Automatic or Owner-Elected Reset occurs, the
Remaining Protected Balance will be reinstated to an amount
equal to the Contract Value as of that Contract Anniversary.
Before your Remaining Protected Balance is zero, if you took
your first withdrawal before
591/2
and you would like to be eligible for lifetime payments under
the Rider, an Automatic or Owner-Elected Reset must occur on
or after
age 591/2.
See the Reset of Protected Payment Base and Remaining
Protected Balance subsection of this Rider. If you are
younger than
591/2
when the Remaining Protected Balance is zero and Contract Value
remains, the Rider will terminate and there is no opportunity
for a Reset.
If a withdrawal (except an RMD withdrawal) made from the
Contract exceeds the Protected Payment Amount, the withdrawal
will be treated as an excess withdrawal and the Protected
Payment Base will be reduced according to the Withdrawals
Exceeding the Protected Payment Amount subsection.
Any death benefit proceeds to be paid to the Beneficiary from
remaining Contract Value will be paid according to the Death
Benefit provisions of the Contract.
Annual
Credit
On each Contract Anniversary after the Rider Effective Date, an
Annual Credit will be added to the Protected Payment Base and
Remaining Protected Balance, as of that Contract Anniversary, if:
•
no withdrawals have occurred after the Rider Effective Date or
the most recent Reset Date, whichever is later, and
•
that Contract Anniversary is within the first 10 Contract
Anniversaries, measured from the Rider Effective Date or the
most recent Reset Date, whichever is later.
The Annual Credit is equal to 7% of the total of:
•
the Remaining Protected Balance on the Rider Effective Date or
the most recent Reset Date, whichever is later, and
•
the cumulative Purchase Payments received after the Rider
Effective Date or most recent Reset Date, whichever is later,
as of the Contract Anniversary on which the Annual Credit is
added.
Once a withdrawal has occurred, no Annual Credit will be
added to the Protected Payment Base and Remaining Protected
Balance on any Contract Anniversary following the withdrawal,
unless an Automatic Reset or Owner Elected Reset occurs. If such
a Reset occurs, your eligibility for the Annual Credit will be
reinstated as of the Reset Date.
Annual Credits will not increase your cost basis and, when
distributed, may be recognizable as taxable ordinary income. The
Annual Credit is not added to your Contract Value.
Reset of
Protected Payment Base and Remaining Protected Balance
Regardless of which reset option is used, on and after each
Reset Date, the provisions of this Rider shall apply in the same
manner as they applied when the Rider was originally issued.
Eligibility for any Annual Credit, the limitations and
restrictions on Purchase Payments and withdrawals, the deduction
of annual Charges and any future reset options available on and
after the Reset Date, will again apply and will be measured from
that Reset Date. A reset occurs when the Protected Payment Base
and Remaining Protected Balance are reset to an amount equal to
the Contract Value as of the Reset Date.
Automatic Reset. On each Contract Anniversary while
this Rider is in effect and before the Annuity Date and after
any annual credit is applied, we will automatically reset the
Protected Payment Base and Remaining Protected Balance to an
amount equal to 100% of the Contract Value, if the Protected
Payment Base, after any Annual Credit is applied, is less than
the Contract Value on that Contract Anniversary. The annual
charge percentage may change as a result of any Automatic Reset
(See the CHARGES, FEES AND DEDUCTIONS—Optional Rider
Charges section in this supplement).
Automatic Reset—Opt-Out Election. If you are
within 60 days after a Contract Anniversary on which an
Automatic Reset is effective, you have the option to reinstate
the Protected Payment Base, Remaining Protected Balance,
Protected Payment Amount and annual charge percentage to their
respective amounts immediately before the Automatic Reset. Any
future Automatic Resets will continue in effect in accordance
with the Automatic Reset paragraph above.
If you elect this option, your opt-out election must be
received, in a form satisfactory to us, at our Service Center
within the same 60 day period after the Contract
Anniversary on which the reset is effective.
Automatic Reset—Future Participation. You may
elect not to participate in future Automatic Resets at any time.
Your election must be received, in a form satisfactory to us, at
our Service Center, while this Rider is in effect and before the
Annuity Date. Such election will be effective for future
Contract Anniversaries.
If you previously elected not to participate in Automatic
Resets, you may re-elect to participate in future Automatic
Resets at any time. Your election to resume participation must
be received, in a form satisfactory to us, at our Service Center
while this Rider is in effect and before the Annuity Date. Such
election will be effective for future Contract Anniversaries as
described in the Automatic Reset paragraph above.
Owner-Elected Resets (Non-Automatic). You may, on
any Contract Anniversary, elect to reset the Remaining Protected
Balance and Protected Payment Base to an amount equal to 100% of
the Contract Value. An Owner-Elected Reset may be elected while
Automatic Resets are in effect. The annual charge percentage may
change as a result of this reset.
If you elect this option, your election must be received, in a
form satisfactory to us, at our Service Center within
60 days after the Contract Anniversary on which the reset
is effective. The reset will be based on the Contract Value as
of that Contract Anniversary. Your election of this option
may result in a reduction in the Protected Payment Base,
Remaining Protected Balance, Protected Payment Amount and any
Annual Credit that may be applied. Generally, the reduction
will occur when your Contract Value is less than the Protected
Payment Base as of the Contract Anniversary you elected the
reset. You are strongly advised to work with your investment
professional prior to electing an Owner-Elected Reset. We
will provide you with written confirmation of your election.
Subsequent
Purchase Payments
If we receive additional Purchase Payments after the Rider
Effective Date, we will increase the Protected Payment Base and
Remaining Protected Balance by the amount of the Purchase
Payments. However, for purposes of this Rider, we reserve the
right to restrict additional Purchase Payments that result in a
total of all Purchase Payments received on or after the later of
the first (1st) Contract Anniversary or most recent Reset Date
to exceed $100,000 without our prior approval. This provision
only applies if the Contract to which this Rider is attached,
permits Purchase Payments after the first (1st) Contract
Anniversary, measured from the Contract Date.
Annuitization
If you annuitize the Contract at the maximum Annuity Date
specified in your Contract and this Rider is still in effect at
the time of your election and a Life Only annuity option is
chosen, the annuity payments will be equal to the greater of:
•
the Life Only annual payment amount based on the terms of your
Contract, or
•
the Protected Payment Amount in effect at the maximum Annuity
Date.
If you annuitize the Contract at any time prior to the maximum
Annuity Date specified in your Contract, your annuity payments
will be determined in accordance with the terms of your
Contract. The Protected Payment Base, Remaining Protected
Balance and Protected Payment Amount under this Rider will not
be used in determining any annuity payments.
The annuity payments described in this subsection are available
to you even if your first withdrawal was taken prior to age
591/2
and no Resets have occurred.
Continuation
of Rider if Surviving Spouse Continues Contract
If the Owner dies while this Rider is in effect and if the
surviving spouse of the deceased Owner elects to continue the
Contract in accordance with its terms, the surviving spouse may
continue to take withdrawals of the Protected Payment Amount
under this Rider, until the Remaining Protected Balance is
reduced to zero. If the Remaining Protected Balance is zero when
the Owner dies, this Rider will terminate.
The surviving spouse may elect any of the reset options
available under this Rider for subsequent Contract
Anniversaries. If an election to reset is made, whether by an
Automatic Reset or an Owner-Elected Reset, then the provisions
of this Rider will continue in full force and in effect for the
surviving spouse. The withdrawal percentage will be determined
based on the age of the surviving spouse and the new withdrawal
percentage may be higher or lower than what the withdrawal
percentage was prior to death. In addition, if the surviving
spouse is
591/2
when reset occurs, the surviving spouse may take withdrawals of
the Protected Payment Amount (based on the new Protected Payment
Base and withdrawal percentage) for life.
The surviving spouse may elect to receive any death benefit
proceeds instead of continuing the Contract and Rider (see the
DEATH BENEFITS AND OPTIONAL DEATH BENEFIT RIDERS —
Death Benefits section in the Prospectus).
Termination
You cannot request a termination of the Rider. Except as
otherwise provided below, the Rider will automatically terminate
on the earliest of:
•
the day any portion of the Contract Value is no longer allocated
according the Investment Allocation Requirements,
•
the day the Remaining Protected Balance is reduced to zero if
the oldest Owner (or youngest Annuitant, in the case of an Owner
who is a Non-Natural Owner), was younger than
591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later,
•
the date of the first death of an Owner or the date of death of
the sole surviving Annuitant (except as provided under the
Continuation of Rider if Surviving Spouse Continues Contract
subsection),
•
for Contracts with a Non-Natural Owner, the date of the first
death of an Annuitant, including Primary, Joint and Contingent
Annuitants,
•
the day the Contract is terminated in accordance with the
provisions of the Contract,
•
the day we are notified of a change in ownership of the Contract
to a non-spouse Owner if the Contract is Non-Qualified
(excluding changes in ownership to or from certain trusts),
•
the day you exchange this Rider for another withdrawal benefit
Rider,
•
the Annuity Date (see the Annuitization subsection for
additional information), or
•
the day the Contract Value is reduced to zero as a result of a
withdrawal (except an RMD withdrawal) that exceeds the Protected
Payment Amount.
The Rider will not terminate the day the Remaining Protected
Balance is reduced to zero if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner)
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later.
The Rider and the Contract will not terminate the day the
Contract Value is zero and you begin taking pre-authorized
withdrawals of the Protected Payment Amount. In this case, the
Rider and the Contract will terminate:
•
the day the Remaining Protected Balance is reduced to zero if
the oldest Owner (or youngest Annuitant, in the case of an Owner
who is Non-Natural Owner), was younger than
591/2
when the first withdrawal was taken under the Rider after the
Rider Effective Date or the most recent Reset Date, whichever is
later, or
•
the date of the first death of an Owner or the date of death of
the sole surviving Annuitant if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner)
was
age 591/2
or older when the first withdrawal was taken under the Rider
after the Rider Effective Date or the most recent Reset Date,
whichever is later.
Flexible
Lifetime Income Plus Rider (Joint)
Purchasing
the Flexible Lifetime Income Plus Rider (Joint)
You may purchase this optional Rider on the Contract Date or on
any Contract Anniversary (if available) you meet the following
eligibility requirements:
•
the Contract is issued as a:
•
Non-Qualified Contract (this Rider is not available if the Owner
is a trust or other entity), or
•
Qualified Contract under Code Section 408(a), 408(k), 408A,
408(p) or 403(b), except for Inherited IRAs and Inherited TSAs,
•
you allocate your entire Contract Value according to the
Investment Allocation Requirements,
•
both Designated Lives must be at least
age 591/2
and not older than age 85 on the Rider Effective Date,
•
the Contract must be structured so that upon the death of one
Designated Life, the surviving Designated Life may retain or
assume ownership of the Contract, and
•
any Annuitant must be a Designated Life.
For purposes of meeting the eligibility requirements, Designated
Lives must be any one of the following:
•
a sole Owner with the Owner’s Spouse designated as the sole
primary Beneficiary,
•
Joint Owners, where the Owners are each other’s
Spouses, or
•
if the Contract is issued as a custodial owned IRA or TSA, the
beneficial owner must be the Annuitant and the Annuitant’s
Spouse must be designated as the sole primary Beneficiary under
the Contract. The custodian, under a custodial owned IRA or TSA,
for the benefit of the beneficial owner, may be designated as
sole primary beneficiary provided that the Spouse of the
beneficial owner is the sole primary beneficiary of the
custodial account.
If this Rider is added on a Contract Anniversary, naming your
Spouse as the Beneficiary to meet eligibility requirement will
not be considered a change of Annuitant on the Contract.
Flexible
Lifetime Income Plus Rider (Joint) Terms
Annual RMD Amount—The amount required to be
distributed each Calendar Year for purposes of satisfying the
minimum distribution requirements of Code Section 401(a)(9)
(“Section 401(a)(9)”) and related Code provisions
in effect as of the Rider Effective Date.
Designated Lives (each a “Designated
Life”)—Designated Lives must be natural persons
who are each other’s spouses on the Rider Effective Date.
Designated Lives will remain unchanged while this Rider is in
effect.
To be eligible for lifetime benefits, a Designated Life must:
•
be the Owner (or the Annuitant, in the case of a custodial owned
IRA or TSA),
•
remain the Spouse of the other Designated Life and be the first
in line of succession, as determined under the Contract, for
payment of any death benefit.
Protected Payment Amount—The maximum amount that can
be withdrawn under this Rider without reducing the Protected
Payment Base. The Protected Payment Amount on any day after the
Rider Effective Date is equal to the withdrawal percentage
multiplied by the Protected Payment Base as of that day, less
cumulative withdrawals during that Contract Year. The Protected
Payment Amount will never be less than zero.
Protected Payment Base—An amount used to determine
the Protected Payment Amount. The Protected Payment Base will
never be less than zero and will remain unchanged except as
otherwise described under the provisions of this Rider.
Remaining Protected Balance—The amount available for
future withdrawals made under this Rider. The Remaining
Protected Balance will never be less than zero.
Annual Credit—An amount added to the Protected
Payment Base and Remaining Protected Balance.
Rider Effective Date—The date the guarantees and
charges for the Rider become effective. If the Rider is
purchased within 60 days of the Contract Date, the Rider
Effective Date is the Contract Date. If the Rider is purchased
within 60 days of a Contract Anniversary, the Rider
Effective Date is the date of that Contract Anniversary.
Reset Date—Any Contract Anniversary after the Rider
Effective Date on which an Automatic Reset or an Owner-Elected
Reset occurs.
Initial Values—The initial Protected Payment Base
and Remaining Protected Balance amounts are equal to:
•
initial Purchase Payment, if the Rider Effective Date is on the
Contract Date, or
•
Contract Value, if the Rider Effective Date is on a Contract
Anniversary.
The initial Protected Payment Amount on the Rider Effective Date
is equal to the applicable withdrawal percentage (based on the
youngest Owner’s age at the time of purchase) multiplied by
the Protected Payment Base.
Spouse—The Owner’s spouse who is treated as the
Owner’s spouse pursuant to federal law.
Surviving Spouse—The surviving spouse of a deceased
Owner.
How the
Flexible Lifetime Income Plus Rider (Joint) Works
On any day, this Rider guarantees you can withdraw up to the
Protected Payment Amount, regardless of market performance,
until the Rider terminates. This Rider also provides for an
amount (an “Annual Credit”) to be added to the
Protected Payment Base and Remaining Protected Balance.
In addition, on each Contract Anniversary while this Rider is in
effect and before the Annuity Date, the Rider provides for
Automatic Annual Resets or Owner-Elected Resets of the Protected
Payment Base and Remaining Protected Balance to an amount equal
to 100% of the Contract Value.
If applicable, an Annual Credit is added to the Protected
Payment Base and Remaining Protected Balance prior to any
Automatic Reset. If the Contract Value as of that Contract
Anniversary is greater than the Protected Payment Base (which
includes the Annual Credit amount), then the Protected Payment
Base and Remaining Protected Balance will be automatically reset
to equal the Contract Value.
The Protected Payment Base and Remaining Protected Balance may
change over time. The addition of an Annual Credit will increase
the Protected Payment Base and the Remaining Protected Balance
by the amount of the Annual Credit. An Automatic Reset or
Owner-Elected Reset will increase or decrease the Protected
Payment Base and Remaining Protected Balance depending on the
Contract Value on the Reset Date. A withdrawal that is less than
or equal to the Protected Payment Amount will reduce the
Remaining Protected Balance by the amount of the withdrawal and
will not change the Protected Payment Base. For withdrawals that
are greater than the Protected Payment Amount, see the
Withdrawal of Protected Payment Amount subsection.
For purposes of this Rider, the term “withdrawal”
includes any applicable withdrawal charges. Amounts withdrawn
under this Rider will reduce the Contract Value by the amount
withdrawn and will be subject to the same conditions,
limitations, restrictions and all other fees, charges and
deductions, if applicable, as withdrawals otherwise made under
the provisions of the Contract. Withdrawals under this Rider are
not annuity payouts. Annuity payouts generally receive a more
favorable tax treatment than other withdrawals.
If your Contract is a Qualified Contract, including a TSA/403(b)
Contract, you are subject to restrictions on withdrawals you may
take prior to a triggering event and you should consult your tax
or legal advisor prior to purchasing this optional guarantee,
the primary benefit of which is guaranteeing withdrawals. For
additional information regarding withdrawals and triggering
events, see the FEDERAL TAX ISSUES—IRAs and Qualified
Plans section in the Prospectus.
Withdrawal
Percentage
The withdrawal percentage is determined according to the table
below based on youngest Owner’s age at Rider Effective Date
or the most recent Reset Date, whichever is later. The
withdrawal percentages are as follows:
Age
Withdrawal Percentage
591/2 - 74
5.0
%
75 and older
6.0
%
Withdrawal
of Protected Payment Amount
While this Rider is in effect, you may withdraw up to the
Protected Payment Amount without reducing the Protected Payment
Base, regardless of market performance, until the Rider
terminates. Any portion of the Protected Payment Amount not
withdrawn during a Contract Year may not be carried over to the
next Contract Year.
If a withdrawal does not exceed the Protected Payment Amount
immediately prior to that withdrawal, the Protected Payment Base
will remain unchanged. Immediately following the withdrawal, the
Remaining Protected Balance will decrease by the withdrawal
amount.
Withdrawals Exceeding the Protected Payment
Amount. If a withdrawal (except an RMD withdrawal)
exceeds the Protected Payment Amount immediately prior to that
withdrawal, we will (immediately following the excess
withdrawal) reduce the Protected Payment Base on a proportionate
basis for the amount in excess of the Protected Payment Amount.
We will reduce the Remaining Protected Balance either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount. (See
Flexible Lifetime Income Plus Rider (Single and Joint) Sample
Calculations—Example #4 for a numerical
example of the adjustments to the Protected Payment Base,
Remaining Protected Balance and Protected Payment Amount as a
result of an excess withdrawal).
The amount available for withdrawal under the Contract must be
sufficient to support any withdrawal that would otherwise exceed
the Protected Payment Amount.
For information regarding taxation of withdrawals, see the
FEDERAL TAX ISSUES section in the Prospectus.
Required
Minimum Distributions
No adjustment will be made to the Protected Payment Base as a
result of a withdrawal that exceeds the Protected Payment Amount
immediately prior to the withdrawal, provided:
•
such withdrawal (an “RMD Withdrawal”) is for purposes
of satisfying the minimum distribution requirements of
Section 401(a)(9) and related Code provisions in effect at
that time,
•
you have authorized us to calculate and make periodic
distribution of the Annual RMD Amount for the Calendar Year
required based on the payment frequency you have chosen,
•
the Annual RMD Amount is based on this Contract only, and
•
only RMD withdrawals are made from the Contract during the
Contract Year.
Immediately following an RMD withdrawal, the Remaining Protected
Balance will decrease by the RMD withdrawal amount.
See the FEDERAL TAX ISSUES—Qualified
Contracts—General Rules—Required Minimum
Distributions section in the Prospectus.
Depletion
of Contract Value
If a withdrawal (including an RMD withdrawal) does not exceed
the Protected Payment Amount immediately prior to the withdrawal
and reduces the Contract Value to zero, the following will apply:
•
the Protected Payment Amount will be paid each year until the
death of all Designated Lives eligible for lifetime benefits,
•
the payments of the Protected Payment Amount will be paid under
a series of pre-authorized withdrawals under a payment frequency
as elected by the Owner, but no less frequently than annually,
•
no additional Purchase Payments will be accepted under the
Contract,
•
any Remaining Protected Balance will not be available for
payment in a lump sum and will not be applied to provide
payments under an Annuity Option,
•
the Contract will cease to provide any death benefit, and
•
any payments made to you of the Remaining Protected Balance may
be taxable to you as ordinary income.
If the surviving Designated Life eligible for lifetime benefits
dies and the Contract Value is zero as of the date of death,
there is no death benefit, however, any Remaining Protected
Balance will be paid to the Beneficiary under a series of pre-
authorized withdrawals and payment frequency (at least annually)
then in effect at the time of the death of the surviving
Designated Life eligible for lifetime benefits. If, however, the
Remaining Protected Balance would be paid over a period that
exceeds the life expectancy of the Beneficiary, the
pre-authorized withdrawal amount will be adjusted so that the
withdrawal payments will be paid over a period that does not
exceed the Beneficiary’s life expectancy.
Depletion
of Remaining Protected Balance
If a withdrawal (including an RMD Withdrawal) reduced the
Remaining Protected Balance to zero and Contract Value remains,
the following will apply:
•
if a withdrawal (except an RMD withdrawal) made from the
Contract exceeds the Protected Payment Amount, the withdrawal
will be treated as an excess withdrawal and the Protected
Payment Base will be reduced according to the Withdrawals
Exceeding the Protected Payment Amount subsection, and
•
any death benefit proceeds to be paid to the Beneficiary from
remaining Contract Value will be paid according to the Death
Benefit provisions of the Contract.
Annual
Credit
On each Contract Anniversary after the Rider Effective Date, an
Annual Credit will be added to the Protected Payment Base and
Remaining Protected Balance, as of that Contract Anniversary, if:
•
no withdrawals have occurred after the Rider Effective Date or
the most recent Reset Date, whichever is later, and
•
that Contract Anniversary is within the first 10 Contract
Anniversaries, measured from the Rider Effective Date or the
most recent Reset Date, whichever is later.
The Annual Credit is equal to 7% of the total of:
•
the Remaining Protected Balance on the Rider Effective Date or
the most recent Reset Date, whichever is later, and
•
the cumulative Purchase Payments received after the Rider
Effective Date or most recent Reset Date, whichever is later,
as of the Contract Anniversary on which the Annual Credit is
added.
Once a withdrawal has occurred, no Annual Credit will be
added to the Protected Payment Base and Remaining Protected
Balance on any Contract Anniversary following the withdrawal,
unless an Automatic Reset or Owner-Elected Reset occurs. If such
a Reset occurs, your eligibility for the Annual Credit will be
reinstated as of the Reset Date.
Annual Credits will not increase your cost basis and, when
distributed, may be recognizable as taxable ordinary income. The
Annual Credit is not added to your Contract Value.
Reset of
Protected Payment Base and Remaining Protected Balance
Regardless of which reset option is used, on and after each
Reset Date, the provisions of this Rider shall apply in the same
manner as they applied when the Rider was originally issued.
Eligibility for any Annual Credit, the limitations and
restrictions on Purchase Payments and withdrawals, the deduction
of annual Charges and any future reset options available on and
after the Reset Date, will again apply and will be measured from
that Reset Date. A reset occurs when the Protected Payment Base
and Remaining Protected Balance are reset to an amount equal to
the Contract Value as of the Reset Date.
Automatic Reset. On each Contract Anniversary while
this Rider is in effect and before the Annuity Date and after
any Annual Credit is applied, we will automatically reset the
Protected Payment Base and Remaining Protected Balance to an
amount equal to 100% of the Contract Value, if the Protected
Payment Base, after any Annual Credit is applied, is less than
the Contract Value on that Contract Anniversary. The annual
charge percentage may change as a result of any Automatic Reset
(See the CHARGES, FEES AND DEDUCTIONS—Optional Rider
Charges section in this supplement).
Automatic Reset—Opt-Out Election. If you are
within 60 days after a Contract Anniversary on which an
Automatic Reset is effective, you have the option to reinstate
the Protected Payment Base, Remaining Protected Balance,
Protected Payment Amount and annual charge percentage to their
respective amounts immediately before the Automatic Reset. Any
future Automatic Resets will continue in effect in accordance
with the Automatic Reset paragraph above.
If you elect this option, your opt-out election must be
received, in a form satisfactory to us, at our Service Center
within the same 60 day period after the Contract
Anniversary on which the reset is effective.
Automatic Reset—Future Participation. You may
elect not to participate in future Automatic Resets at any time.
Your election must be received, in a form satisfactory to us, at
our Service Center, while this Rider is in effect and before the
Annuity Date. Such election will be effective for future
Contract Anniversaries.
If you previously elected not to participate in Automatic
Resets, you may re-elect to participate in future Automatic
Resets at any time. Your election to resume participation must
be received, in a form satisfactory to us, at our Service Center
while this Rider is in effect and before the Annuity Date. Such
election will be effective for future Contract Anniversaries as
described in the Automatic Reset paragraph above.
Owner-Elected Resets (Non-Automatic). You may, on
any Contract Anniversary, elect to reset the Remaining Protected
Balance and Protected Payment Base to an amount equal to 100% of
the Contract Value. An Owner-Elected Reset may be elected while
Automatic Resets are in effect. The annual charge percentage may
change as a result of this reset.
If you elect this option, your election must be received, in a
form satisfactory to us, at our Service Center within
60 days after the Contract Anniversary on which the reset
is effective. The reset will be based on the Contract Value as
of that Contract Anniversary. Your election of this option
may result in a reduction in the Protected Payment Base,
Remaining Protected Balance, Protected Payment Amount and any
Annual Credit that may be applied. Generally, the reduction
will occur when your Contract Value is less than the Protected
Payment Base as of the Contract Anniversary you elected the
reset. You are strongly advised to work with your investment
professional prior to electing an Owner-Elected Reset. We
will provide you with written confirmation of your election.
Subsequent
Purchase Payments
If we receive additional Purchase Payments after the Rider
Effective Date, we will increase the Protected Payment Base and
Remaining Protected Balance by the amount of the Purchase
Payments. However, for purposes of this Rider, we reserve the
right to restrict additional Purchase Payments that result in a
total of all Purchase Payments received on or after the later of
the first (1st) Contract Anniversary or most recent Reset Date
to exceed $100,000 without our prior approval. This provision
only applies if the Contract to which this Rider is attached,
permits Purchase Payments after the first (1st) Contract
Anniversary, measured from the Contract Date.
Annuitization
If you annuitize the Contract at the maximum Annuity Date
specified in your Contract and this Rider is still in effect at
the time of your election and a Life Only annuity option is
chosen, the annuity payments will be equal to the greater of:
•
the Life Only annual payment amount based on the terms of your
Contract, or
•
Protected Payment Amount in effect at the maximum Annuity Date.
If you annuitize the Contract at any time prior to the maximum
Annuity Date specified in your Contract, your annuity payments
will be determined in accordance with the terms of your
Contract. The Protected Payment Base, Remaining Protected
Balance and Protected Payment Amount under this Rider will not
be used in determining any annuity payments.
Continuation
of Rider if Surviving Spouse Continues Contract
If the Owner dies while this Rider is in effect and if the
Surviving Spouse (who is also a Designated Life eligible for
lifetime benefits) elects to continue the Contract in accordance
with its terms, the Surviving Spouse may continue to take
withdrawals of the Protected Payment Amount under this Rider,
until the Rider terminates.
The Surviving Spouse may elect any of the reset options
available under this Rider for subsequent Contract
Anniversaries. If a reset takes place, whether by an Automatic
Reset or an Owner-Elected reset, the withdrawal percentage may
change and will be determined based on the age of the Surviving
Spouse. However, the withdrawal percentage will never be lower
than the withdrawal percentage in effect at the time of death.
The Surviving Spouse may elect to receive any death benefit
proceeds instead of continuing the Contract and Rider (see the
DEATH BENEFITS AND OPTIONAL DEATH BENEFIT RIDERS —
Death Benefits section in the Prospectus).
Ownership
and Beneficiary Changes
Changes to the Contract Owner, Annuitant
and/or
Beneficiary designations and changes in marital status,
including a dissolution of marriage, may adversely affect the
benefits of this Rider. A particular change may make a
Designated Life ineligible to receive lifetime income benefits
under this Rider. As a result, the Rider may remain in effect
and you may pay for benefits that you will not receive. You
are strongly advised to work with your investment professional
and consider your options prior to making any Owner, Annuitant
and/or
Beneficiary changes to your Contract.
Termination
You cannot request a termination of the
Rider. Except as otherwise provided below, the Rider
will automatically terminate on the earliest of:
•
the day any portion of the Contract Value is no longer allocated
according to the Investment Allocation Requirements,
•
the day of death of all Designated Lives eligible for lifetime
benefits,
•
upon the death of the first Designated Life, if a death benefit
is payable and a Surviving Spouse who chooses to continue the
Contract is not a Designated Life eligible for lifetime benefits,
•
upon the death of the first Designated Life, if a death benefit
is payable and the Contract is not continued by a Surviving
Spouse who is a Designated Life eligible for lifetime benefits,
•
if both Designated Lives are Joint Owners and there is a change
in marital status, the Rider will terminate upon the death of
the first Designated Life who is a Contract Owner,
•
the day the Contract is terminated in accordance with the
provisions of the Contract,
•
the day that neither Designated Life is an Owner (or Annuitant,
in the case of a custodial owned IRA or TSA),
•
the day you exchange this Rider for another withdrawal benefit
Rider,
•
the Annuity Date (see the Annuitization subsection for
additional information), or
•
the day that the Contract is reduced to zero as a result of a
withdrawal (except an RMD withdrawal) that exceeds the Protected
Payment Amount.
The Rider and the Contract will not terminate the day of death
of:
•
all Designated Lives eligible for lifetime benefits, or
•
the first Designated life who is a Contract Owner if both
Designated Lives are Joint Owners and there is a change in
marital status,
if, at the time of these events, the Contract Value is zero
and we are making pre-authorized withdrawals of the Protected
Payment Amount. In this case, the Rider will terminate when the
Remaining Protected Balance is zero.
Flexible
Lifetime Income Plus Rider (Single and Joint) Sample
Calculations:
The examples provided are based on certain hypothetical
assumptions and are for example purposes only. Where Contract
Value is reflected, the examples assume a 7% return after
deduction for optional rider expenses and Separate Account
expenses (7% net return), unless otherwise noted below. The
examples have been provided to assist in understanding the
benefits provided by this Rider and to demonstrate how Purchase
Payments received and withdrawals made from the Contract prior
to the Annuity Date affect the values and benefits under this
Rider over an extended period of time. The examples are not
intended to serve as projections of future investment returns
nor are they a reflection of how your Contract will actually
perform.
Example #1 —
Setting of Initial Values.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Youngest Owner’s Age = 74 on the Contract Date
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Annual
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Credit
Base
Amount
Balance
1
$100,000
$100,000
$0
$100,000
$5,000
$100,000
On the Rider Effective Date, the initial values are set as
follows:
•
Protected Payment Base = Initial Purchase Payment =
$100,000
Protected Payment Amount = 5% of Protected Payment Base =
$5,000
Example #2 —
Subsequent Purchase Payments.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Youngest Owner’s Age = 74 on the Contract Date
•
A subsequent Purchase Payment of $100,000 is received during
Contract Year 1.
•
No withdrawals taken.
•
No automatic resets or Owner-elected resets.
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Annual
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Credit
Base
Amount
Balance
1
$100,000
$100,000
$0
$100,000
$5,000
$100,000
Activity
$100,000
$200,000
$200,000
$10,000
$200,000
2
$207,000
$14,000
$214,000
$10,700
$214,000
Immediately after the $100,000 subsequent Purchase Payment
during Contract Year 1, the Protected Payment Base and Remaining
Protected Balance are increased by the Purchase Payment amount
to $200,000 ($100,000 + $100,000). The Protected Payment Amount
after the Purchase Payment is equal to $10,000 (5% of the
Protected Payment Base after the Purchase Payment since there
were no withdrawals during that Contract Year).
Since no withdrawal occurred prior to the Contract Anniversary
at the Beginning of Contract Year 2, an annual credit of $14,000
(7% of the initial Remaining Protected Balance plus cumulative
Purchase Payments received after the Rider Effective Date) is
applied to the Protected Payment Base and Remaining Protected
Balance on that Contract Anniversary, increasing both to
$214,000. As a result, the Protected Payment Amount on that
Contract Anniversary is equal to $10,700 (5% of the Protected
Payment Base on that Contract Anniversary).
In addition to Purchase Payments, the Contract Value is further
subject to increases
and/or
decreases during each Contract Year as a result of additional
amounts credited, charges, fees and other deductions, and
increases
and/or
decreases in the investment performance of the Variable Account.
Example #3 —
Withdrawals Not Exceeding Protected Payment Amount.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Youngest Owner’s Age = 74 on the Contract Date
•
A subsequent Purchase Payment of $100,000 is received during
Contract Year 1.
•
A withdrawal equal to or less than the Protected Payment
Amount is taken during Contract Years 2, 3 and 4.
•
Automatic resets at Beginning of Contract Years 4 and 5.
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Annual
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Credit
Base
Amount
Balance
1
$100,000
$100,000
$0
$100,000
$5,000
$100,000
Activity
$100,000
$200,000
$200,000
$10,000
$200,000
2
$207,000
$14,000
$214,000
$10,700
$214,000
Activity
$10,700
$210,790
$214,000
$0
$203,300
3
$210,790
$0
$214,000
$10,700
$203,300
Activity
$10,700
$214,845
$214,000
$0
$192,600
4
(Prior to Automatic Reset)
$214,845
$0
$214,000
$10,700
$192,600
4
(After Automatic Reset)
$214,845
$0
$214,845
$12,890
$214,845
Activity
$12,890
$216,994
$214,845
$0
$201,955
5
(Prior to Automatic Reset)
$216,994
$0
$214,845
$12,890
$201,955
5
(After Automatic Reset)
$216,994
$0
$216,994
$13,019
$216,994
For an explanation of the values and activities at the start of
and during Contract Year 1, refer to Examples #1 and
#2.
As the withdrawal during Contract Year 2 did not exceed
the Protected Payment Amount immediately prior to the withdrawal
($10,700):
(e) the Protected Payment Base remains unchanged; and
(f) the Remaining Protected Balance is reduced by the
amount of the withdrawal to $203,300
($214,000 −$10,700).
As the withdrawal during Contract Year 3 did not exceed
the Protected Payment Amount immediately prior to the withdrawal
($10,700):
(g) the Protected Payment Base remains unchanged; and
(h) the Remaining Protected Balance is reduced by the
amount of the withdrawal to $192,600
($203,300 −$10,700).
(h) the Remaining Protected Balance is reduced by the
amount of the withdrawal to $192,600
($203,300 −$10,700).
Because at the Beginning of Contract Year 4, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
4 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
4 – After Automatic Reset). Additionally, the
reset took place after the Owner reached age 75. As a
result, the Protected Payment Amount is equal to $12,890 (6% of
the reset Protected Payment Base).
As the withdrawal during Contract Year 4 did not exceed
the Protected Payment Amount immediately prior to the withdrawal
($12,890):
(i) the Protected Payment Base remains unchanged; and the
Remaining Protected Balance is reduced by the amount of the
withdrawal to $201,955 ($214,845 −$12,890).
Because at the Beginning of Contract Year 5, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
5 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
5 – After Automatic Reset). As a result, the
Protected Payment Amount is equal to $13,019 (6% of the reset
Protected Payment Base).
Since withdrawals occurred during Contract Years 2, 3 and 4,
annual credits are not applied to the Protected Payment Base and
Remaining Protected Balance on any Contract Anniversary
following the withdrawal. Since a reset occurred at the
beginning of Contract Year 5, eligibility for the annual credit
will again apply.
Example #4 —
Withdrawals Exceeding Protected Payment Amount.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
Youngest Owner’s Age = 74 on the Contract Date
•
A subsequent Purchase Payment of $100,000 is received during
Contract Year 1.
•
A withdrawal greater than the Protected Payment Amount is
taken during Contract Year 2.
•
Automatic reset at Beginning of Contract Year 4.
Beginning
Protected
Protected
Remaining
of Contract
Purchase
Contract Value
Annual
Payment
Payment
Protected
Year
Payment
Withdrawal
after Activity
Credit
Base
Amount
Balance
1
$100,000
$100,000
$0
$100,000
$5,000
$100,000
Activity
$100,000
$200,000
$200,000
$10,000
$200,000
2
$207,000
$14,000
$214,000
$10,700
$214,000
Activity
$15,000
$206,490
$209,634
$0
$199,000
3
$206,490
$0
$209,634
$10,481
$199,000
4
(Prior to Automatic Reset)
$220,944
$0
$209,634
$10,481
$199,000
4
(After Automatic Reset)
$220,944
$0
$220,944
$13,256
$220,944
For an explanation of the values and activities at the start of
and during Contract Year 1, refer to Examples #1 and
#2.
Because the $15,000 withdrawal during Contract Year 2
exceeds the Protected Payment Amount immediately prior to
the withdrawal ($15,000 > $10,700), the Protected Payment
Base and Remaining Protected Balance immediately after the
withdrawal are reduced.
The Values shown below are based on the following assumptions
immediately before the excess withdrawal:
No withdrawals were taken prior to the excess withdrawal
A withdrawal of $15,000 was taken, which exceeds the Protected
Payment Amount of $10,700 for the Contract Year. The Protected
Payment Base and Remaining Protected Balance will be reduced
based on the following calculation:
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $4,300 (Total withdrawal amount − Protected
Payment Amount; $15,000 − $10,700 = $4,300).
Second, determine the ratio for the proportionate reduction.
The ratio is the excess withdrawal amount determined above
divided by (Contract Value − Protected Payment
Amount). Numerically, the ratio is 2.04% ($4,300
¸
($221,490 − $10,700); $4,300
¸
$210,790 = 0.0204 or 2.04%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$209,634 (Protected Payment Base × (1-ratio); $214,000
× (1-2.04%); $214,000 × 97.96% = $209,634.
Fourth, determine the new Remaining Protected Balance.
The Remaining Protected Balance is reduced either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance
amount. To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $199,152 (Remaining Protected Balance −
Protected Payment Amount) × (1-ratio);
($214,000 − $10,700) × (1-2.04%); $203,300
× 97.96% = $199,152).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $199,000 (Remaining Protected Balance −
total withdrawal amount; $214,000 − $15,000 =
$199,000).
Therefore, since $199,000 (total withdrawal amount method) is
less than $199,152 (proportionate method) the new Remaining
Protected Balance is $199,000.
The Protected Payment Amount immediately after the withdrawal is
equal to $0 (5% of the Protected Payment Base after the
withdrawal (5% of $209,634 = $10,481), less cumulative
withdrawals during that Contract Year ($15,000), but not less
than zero).
Because at the Beginning of Contract Year 4, the Protected
Payment Base was less than the Contract Value on that Contract
Anniversary (see balances at Beginning of Contract Year
4 – Prior to Automatic Reset), an automatic reset
occurred which resets the Protected Payment Base and Remaining
Protected Balance to an amount equal to 100% of the Contract
Value (see balances at Beginning of Contract Year
4 – After Automatic Reset). Additionally, the
reset took place after the Owner reached age 75. As a
result, the Protected Payment Amount is equal to $13,256 (6% of
the reset Protected Payment Base).
Since withdrawals occurred during Contract Year 2, annual
credits are not applied to the Protected Payment Base and
Remaining Protected Balance on any Contract Anniversary
following the withdrawal. Since a reset occurred at the
beginning of Contract Year 4, eligibility for the annual credit
will again apply.
Example #5 —
RMD Withdrawals.
The effect of cumulative RMD Withdrawals during the Contract
Year that exceed the Protected Payment Amount established for
that Contract Year and its effect on the Protected Payment Base
and Remaining Protected Balance. The Annual RMD Amount is based
on the entire interest of your Contract as of the previous
year-end. This table assumes quarterly withdrawals of only the
Annual RMD Amount during the Contract Year. The calculated
Annual RMD amount for the Calendar Year is $7,500 and the
Contract Anniversary is May 1 of each year.
This table assumes quarterly withdrawals of only the Annual
RMD Amount during the Contract Year. The calculated Annual RMD
amount for the Calendar Year is $7,500 and the Contract
Anniversary is May 1 of each year.
Annual
Protected
Protected
Remaining
Activity
RMD
Non-RMD
RMD
Payment
Payment
Protected
Date
Withdrawal
Withdrawal
Amount
Base
Amount
Balance
05/01/2006
$100,000
$5,000
$100,000
Contract
Anniversary
01/01/2007
$7,500
03/15/2007
$1,875
$100,000
$3,125
$98,125
05/01/2007
$100,000
$5,000
$98,125
Contract
Anniversary
06/15/2007
$1,875
$100,000
$3,125
$96,250
09/15/2007
$1,875
$100,000
$1,250
$94,375
12/15/2007
$1,875
$100,000
$0
$92,500
01/01/2008
$8,000
03/15/2008
$2,000
$100,000
$0
$90,500
05/01/2008
$100,000
$5,000
$90,500
Contract
Anniversary
Because all withdrawals during the Contract Year were RMD
Withdrawals, there is no adjustment to the Protected Payment
Base for exceeding the Protected Payment Amount. The only effect
is a reduction in the Remaining Protected
Balance equal to the amount of each withdrawal. In addition, the
Protected Payment Amount is reduced by the amount of each
withdrawal until the Protected Payment Amount is zero.
This chart assumes quarterly withdrawals of the Annual RMD
Amount and other non-RMD Withdrawals during the Contract Year.
The calculated Annual RMD amount and Contract Anniversary are
the same as above.
Annual
Protected
Protected
Remaining
Activity
RMD
Non-RMD
RMD
Payment
Payment
Protected
Date
Withdrawal
Withdrawal
Amount
Base
Amount
Balance
05/01/2006
$0
$100,000
$5,000
$100,000
Contract
Anniversary
01/01/2007
$7,500
03/15/2007
$1,875
$100,000
$3,125
$98,125
04/01/2007
$2,000
$100,000
$1,125
$96,125
05/01/2007
$100,000
$5,000
$96,125
Contract
Anniversary
06/15/2007
$1,875
$100,000
$3,125
$94,250
09/15/2007
$1,875
$100,000
$1,250
$92,375
11/15/2007
$4,000
$96,900
$0
$88,300
On 3/15/07
there was an RMD Withdrawal of $1,875 and on
4/1/07 a
non-RMD Withdrawal of $2,000. Because the total withdrawals
during the Contract Year
(5/1/06
through
4/30/07) did
not exceed the Protected Payment Amount of $5,000 there was no
adjustment to the Protected Payment Base. The only effect is a
reduction in the Remaining Protected Balance and the Protected
Payment Amount equal to the amount of each withdrawal. On
5/1/07, the
Protected Payment Amount was re-calculated (5% of the Protected
Payment Base) as of that Contract Anniversary.
On 11/15/07,
there was a Non-RMD Withdrawal ($4,000) that caused the
cumulative withdrawals during the Contract Year ($7,750) to
exceed the Protected Payment Amount ($5,000). As the withdrawal
during exceeded the Protected Payment Amount immediately prior
to the withdrawal ($1,250), and assuming the Contract Value was
$90,000 immediately prior to the withdrawal, the Protected
Payment Base is reduced to $96,900 and the Remaining Protected
Balance is reduced to $88,300. The Protected Payment Base and
Remaining Protected Balance will be reduced based on the
following calculation:
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $2,750 (Total withdrawal amount − Protected
Payment Amount; $4,000 − $1,250=$2,750).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value −
Protected Payment Amount). Numerically, the ratio is 3.10%
($2,750
¸
($90,000 − $1,250); $2,750
¸
$88,750 = 0.0310 or 3.10%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$96,900 (Protected Payment Base × (1-ratio); $100,000
× (1-3.10%); $100,000 × 96.90% = $96,900.
Fourth, determine the new Remaining Protected Balance.
The Remaining Protected Balance is reduced either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount. To
determine the proportionate reduction, the Remaining Protected
Balance is reduced by the Protected Payment Amount multiplied by
1 less the ratio determined above. Numerically, after the
proportionate reduction, the Remaining Protected Balance is
$88,300 (Remaining Protected Balance − Protected
Payment Amount) × (1-ratio); ($92,375 − $1,250)
× (1-3.10%);
$91,125 × 96.90% = $88,300).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $88,375 (Remaining Protected Balance −
total withdrawal amount; $92,375 − $4,000 = $88,375).
Therefore, since $88,300 (proportionate method) is less than
$88,375 (total withdrawal amount method) the new Remaining
Protected Balance is $88,300.
Example #6 —
Lifetime Income.
This
example applies to the Flexible Lifetime Income Plus Rider
(Single) only.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
Owner is
age 59 1/2
or older when the first withdrawal was taken
•
Withdrawals, each equal to 5% of the Protected Payment Base
are taken each Contract Year.
•
No automatic reset or Owner-elected reset is assumed during
the life of the Rider.
•
Assumes 3% net return
Protected
Protected
Remaining
Contract
End of Year
Annual
Payment
Payment
Protected
Year
Withdrawal
Contract Value
Credit
Base
Amount
Balance
1
$5,000
$96,489
$0
$100,000
$5,000
$95,000
2
$5,000
$94,384
$0
$100,000
$5,000
$90,000
3
$5,000
$92,215
$0
$100,000
$5,000
$85,000
4
$5,000
$89,982
$0
$100,000
$5,000
$80,000
5
$5,000
$87,681
$0
$100,000
$5,000
$75,000
6
$5,000
$85,311
$0
$100,000
$5,000
$70,000
7
$5,000
$82,871
$0
$100,000
$5,000
$65,000
8
$5,000
$80,357
$0
$100,000
$5,000
$60,000
9
$5,000
$77,768
$0
$100,000
$5,000
$55,000
10
$5,000
$75,101
$0
$100,000
$5,000
$50,000
11
$5,000
$72,354
$0
$100,000
$5,000
$45,000
12
$5,000
$69,524
$0
$100,000
$5,000
$40,000
13
$5,000
$66,610
$0
$100,000
$5,000
$35,000
14
$5,000
$63,608
$0
$100,000
$5,000
$30,000
15
$5,000
$60,517
$0
$100,000
$5,000
$25,000
16
$5,000
$57,332
$0
$100,000
$5,000
$20,000
17
$5,000
$54,052
$0
$100,000
$5,000
$15,000
18
$5,000
$50,674
$0
$100,000
$5,000
$10,000
19
$5,000
$47,194
$0
$100,000
$5,000
$5,000
20
$5,000
$43,610
$0
$100,000
$5,000
$0
21
$5,000
$39,918
$0
$100,000
$5,000
$0
22
$5,000
$36,115
$0
$100,000
$5,000
$0
23
$5,000
$32,199
$0
$100,000
$5,000
$0
24
$5,000
$28,165
$0
$100,000
$5,000
$0
25
$5,000
$24,010
$0
$100,000
$5,000
$0
26
$5,000
$19,730
$0
$100,000
$5,000
$0
27
$5,000
$15,322
$0
$100,000
$5,000
$0
28
$5,000
$10,782
$0
$100,000
$5,000
$0
29
$5,000
$6,105
$0
$100,000
$5,000
$0
30
$5,000
$1,288
$0
$100,000
$5,000
$0
31
$5,000
$0
$0
$100,000
$5,000
$0
32
$5,000
$0
$0
$100,000
$5,000
$0
33
$5,000
$0
$0
$100,000
$5,000
$0
34
$5,000
$0
$0
$100,000
$5,000
$0
On the Rider Effective Date, the initial values are set as
follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Because the amount of each withdrawal does not exceed the
Protected Payment Amount immediately prior to the withdrawal
($5,000): (a) the Protected Payment Base remains unchanged;
and (b) the Remaining Protected Balance is reduced by the
amount of each withdrawal.
Since a withdrawal occurred during Contract Year 1, no annual
credit will be applied to the Protected Payment Base and
Remaining Protected Balance on any Contract Anniversary
following the withdrawal. Since it was assumed that the Owner
was
age 591/2
or older when the first withdrawal was taken, withdrawals of 5%
of the Protected Payment Base will continue to be paid each year
(even after the Contract Value and Remaining Protected Balance
have been reduced to zero) until the day of the first death of
an Owner or the date of death of the sole surviving Annuitant,
whichever occurs first.
Example #7 —
Lifetime Income.
This example applies to the Flexible Lifetime Income Plus
Rider (Joint) Only.
The values shown below are based on the following
assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
Withdrawals, each equal to 5% of the Protected Payment Base
are taken each Contract Year.
•
No automatic reset or Owner-elected reset is assumed during
the life of the Rider.
•
All Designated Lives remain eligible for lifetime income
benefits while the Rider is in effect.
•
Assumes 3% net return
End of Year
Annual
Protected
Protected Payment
Remaining Protected
Contract Year
Withdrawal
Contract Value
Credit
Payment Base
Amount
Balance
1
$5,000
$96,489
$0
$100,000
$5,000
$95,000
2
$5,000
$94,384
$0
$100,000
$5,000
$90,000
3
$5,000
$92,215
$0
$100,000
$5,000
$85,000
4
$5,000
$89,982
$0
$100,000
$5,000
$80,000
5
$5,000
$87,681
$0
$100,000
$5,000
$75,000
6
$5,000
$85,311
$0
$100,000
$5,000
$70,000
7
$5,000
$82,871
$0
$100,000
$5,000
$65,000
8
$5,000
$80,357
$0
$100,000
$5,000
$60,000
9
$5,000
$77,768
$0
$100,000
$5,000
$55,000
10
$5,000
$75,101
$0
$100,000
$5,000
$50,000
11
$5,000
$72,354
$0
$100,000
$5,000
$45,000
12
$5,000
$69,524
$0
$100,000
$5,000
$40,000
13
$5,000
$66,610
$0
$100,000
$5,000
$35,000
Activity (Death of first
Designated Life) 14
$5,000
$63,608
$0
$100,000
$5,000
$30,000
15
$5,000
$60,517
$0
$100,000
$5,000
$25,000
16
$5,000
$57,332
$0
$100,000
$5,000
$20,000
17
$5,000
$54,052
$0
$100,000
$5,000
$15,000
18
$5,000
$50,674
$0
$100,000
$5,000
$10,000
19
$5,000
$47,194
$0
$100,000
$5,000
$5,000
20
$5,000
$43,610
$0
$100,000
$5,000
$0
21
$5,000
$39,918
$0
$100,000
$5,000
$0
22
$5,000
$36,115
$0
$100,000
$5,000
$0
23
$5,000
$32,199
$0
$100,000
$5,000
$0
24
$5,000
$28,165
$0
$100,000
$5,000
$0
25
$5,000
$24,010
$0
$100,000
$5,000
$0
26
$5,000
$19,730
$0
$100,000
$5,000
$0
27
$5,000
$15,322
$0
$100,000
$5,000
$0
28
$5,000
$10,782
$0
$100,000
$5,000
$0
29
$5,000
$6,105
$0
$100,000
$5,000
$0
30
$5,000
$1,288
$0
$100,000
$5,000
$0
31
$5,000
$0
$0
$100,000
$5,000
$0
32
$5,000
$0
$0
$100,000
$5,000
$0
33
$5,000
$0
$0
$100,000
$5,000
$0
34
$5,000
$0
$0
$100,000
$5,000
$0
On the Rider Effective Date, the initial values are set as
follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Because the amount of each withdrawal does not exceed the
Protected Payment Amount immediately prior to the withdrawal
($5,000): (a) the Protected Payment Base remains unchanged;
and (b) the Remaining Protected Balance is reduced by the
amount of each withdrawal.
During Contract Year 13, the death of the first Designated Life
occurred. Withdrawals of the Protected Payment Amount (5% of the
Protected Payment Base) will continue to be paid each year (even
after the Contract Value and Remaining Protected Balance were
reduced to zero) until the Rider terminates.
If there was a change in Owner, Beneficiary or marital status
prior to the death of the first Designated Life that resulted in
the surviving Designated Life (spouse) to become ineligible for
lifetime income benefits, then the lifetime income benefits
under the Rider would not continue for the surviving Designated
Life and the Rider would terminate upon the death of the first
Designated Life.
Effective November 1, 2008, the following subsections
of the Foundation 10 Rider and Flexible Lifetime
Income Rider (Single) are amended.
The Withdrawal of Protected Payment Amount subsection is
replaced with the following:
Withdrawal
of Protected Payment Amount
While this Rider is in effect, you may withdraw up to the
Protected Payment Amount each Contract Year without reducing the
Protected Payment Base, regardless of market performance, until
the Rider terminates. Any portion of the Protected Payment
Amount not withdrawn during a Contract Year may not be carried
over to the next Contract Year. If a withdrawal does not exceed
the Protected Payment Amount immediately prior to that
withdrawal, the Protected Payment Base will remain unchanged.
The Remaining Protected Balance will decrease by the withdrawal
amount immediately following the withdrawal.
Withdrawals Exceeding the Protected Payment
Amount. If a withdrawal (except an RMD withdrawal)
exceeds the Protected Payment Amount immediately prior to that
withdrawal, we will (immediately following the excess
withdrawal) reduce the Protected Payment Base on a proportionate
basis for the amount in excess of the Protected Payment Amount.
We will reduce the Remaining Protected Balance either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount. (See
the Sample below for a numerical example of the
adjustments to the Protected Payment Base and Remaining
Protected Balance as a result of an excess withdrawal)
The amount available for withdrawal under the Contract must be
sufficient to support any withdrawal that would otherwise exceed
the Protected Payment Amount.
For information regarding taxation of withdrawals, see the
FEDERAL TAX ISSUES section in the Prospectus.
The Depletion of Remaining Protected Balance subsection is
amended as follows:
The fourth paragraph (“If a withdrawal (except an RMD
withdrawal) made from the Contract exceeds the Protected Payment
Amount, this Rider will terminate”) of the Depletion of
Remaining Protected Balance is replaced with the following:
If a withdrawal (except an RMD withdrawal) made from the
Contract exceeds the Protected Payment Amount, the withdrawal
will be treated as an excess withdrawal and the Protected
Payment Base will be reduced according to the Withdrawals
Exceeding the Protected Payment Amount subsection.
The Termination subsection is amended as follows:
The first set of bullets is amended to include the following:
•
the day the Contract Value is reduced to zero as a result of a
withdrawal (except an RMD withdrawal) that exceeds the Protected
Payment Amount
Example #4 in the Appendices titled “Foundation
10 Rider Sample Calculations” and “Flexible Lifetime
Income Rider (Single and Joint) Sample Calculations” are
replaced with the following:
Sample
The Values shown below are based on the following assumptions
immediately before the excess withdrawal:
No withdrawals were taken prior to the excess withdrawal
A withdrawal of $12,000 was taken, which exceeds the Protected
Payment Amount of $5,000 for the Contract Year. The Protected
Payment Base and Remaining Protected Balance will be reduced
based on the following calculation:
First, determine the excess withdrawal amount. The
excess withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $7,000 (Total withdrawal amount − Protected
Payment Amount; $12,000 − $5,000 = $7,000).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value −
Protected Payment Amount). Numerically, the ratio is 8.75%
($7,000
¸
($85,000 − $5,000); $7,000
¸
$80,000 = 0.0875 or 8.75%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$91,250 (Protected Payment Base x (1-ratio); $100,000 ×
(1-8.75%); $100,000 × 91.25% = $91,250.
Fourth, determine the new Remaining Protected
Balance. The Remaining Protected Balance is reduced
either on a proportionate basis or by the total withdrawal
amount, whichever results in the lower Remaining Protected
Balance amount.
To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $86,687.50 (Remaining Protected Balance −
Protected Payment Amount) × (1-ratio);
($100,000 − $5,000) × (1-8.75%); $95,000 ×
91.25% = $86,687.50).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $88,000 (Remaining Protected Balance −
total withdrawal amount; $100,000 − $12,000 =
$88,000).
Therefore, since $86,687.50 (proportionate method) is less than
$88,000 (total withdrawal amount method) the new Remaining
Protected Balance is $86,687.50.
Effective November 1, 2008, the following subsections
of the Flexible Lifetime Income Rider (Joint) are
amended.
The Withdrawal of Protected Payment Amount subsection is
replaced with the following:
Withdrawal
of Protected Payment Amount
While this Rider is in effect, you may withdraw up to the
Protected Payment Amount each Contract Year without reducing the
Protected Payment Base, regardless of market performance, until
the Rider terminates. Any portion of the Protected Payment
Amount not withdrawn during a Contract Year may not be carried
over to the next Contract Year.
If a withdrawal does not exceed the Protected Payment Amount
immediately prior to that withdrawal, the Protected Payment Base
will remain unchanged. Immediately following the withdrawal, the
Remaining Protected Balance will decrease by the withdrawal
amount.
Withdrawals Exceeding the Protected Payment
Amount. If a withdrawal (except an RMD withdrawal)
exceeds the Protected Payment Amount immediately prior to that
withdrawal, we will (immediately following the excess
withdrawal) reduce the Protected Payment Base on a proportionate
basis for the amount in excess of the Protected Payment Amount.
We will reduce the Remaining Protected Balance either on a
proportionate basis or by the total withdrawal amount, whichever
results in the lower Remaining Protected Balance amount. (See
the Sample below for a numerical example of the
adjustments to the Protected Payment Base and Remaining
Protected Balance as a result of an excess withdrawal)
The amount available for withdrawal under the Contract must be
sufficient to support any withdrawal that would otherwise exceed
the Protected Payment Amount.
For information regarding taxation of withdrawals, see the
FEDERAL TAX ISSUES section in the Prospectus.
The Depletion of Remaining Protected Balance subsection is
amended as follows:
The first bullet (“• if a withdrawal (except an RMD
withdrawal) made from the Contract exceeds the Protected Payment
Amount, this Rider will terminate, and”) is replaced with
the following:
•
if a withdrawal (except an RMD withdrawal) made from the
Contract exceeds the Protected Payment Amount, the withdrawal
will be treated as an excess withdrawal and the Protected
Payment Base will be reduced according to the Withdrawals
Exceeding the Protected Payment Amount subsection, and
The Termination subsection is amended as follows:
The first set of bullets is amended to include the following:
•
the day the Contract Value is reduced to zero as a result of a
withdrawal (except an RMD withdrawal) that exceeds the Protected
Payment Amount
Example #4 in the Appendix titled “Flexible Lifetime
Income Rider (Single and Joint) Sample Calculations” is
replaced with the following:
Sample
The Values shown below are based on the following assumptions
immediately before the excess withdrawal:
No withdrawals were taken prior to the excess withdrawal
A withdrawal of $12,000 was taken, which exceeds the Protected
Payment Amount of $5,000 for the Contract Year. The Protected
Payment Base and Remaining Protected Balance will be reduced
based on the following calculation:
First, determine the excess withdrawal amount. The excess
withdrawal amount is the total withdrawal amount less the
Protected Payment Amount. Numerically, the excess withdrawal
amount is $7,000 (Total withdrawal amount − Protected
Payment Amount; $12,000 − $5,000 = $7,000).
Second, determine the ratio for the proportionate
reduction. The ratio is the excess withdrawal amount
determined above divided by (Contract Value −
Protected Payment Amount). Numerically, the ratio is 8.75%
($7,000
¸
($85,000 − $5,000); $7,000
¸
$80,000 = 0.0875 or 8.75%.
Third, determine the new Protected Payment Base. The
Protected Payment Base will be reduced on a proportionate basis.
The Protected Payment Base is multiplied by 1 less the ratio
determined above. Numerically, the new Protected Payment Base is
$91,250 (Protected Payment Base × (1-ratio); $100,000
× (1-8.75%); $100,000 × 91.25% = $91,250.
Fourth, determine the new Remaining Protected
Balance. The Remaining Protected Balance is reduced
either on a proportionate basis or by the total withdrawal
amount, whichever results in the lower Remaining Protected
Balance amount.
To determine the proportionate reduction, the Remaining
Protected Balance is reduced by the Protected Payment Amount
multiplied by 1 less the ratio determined above. Numerically,
after the proportionate reduction, the Remaining Protected
Balance is $86,687.50 (Remaining Protected Balance −
Protected Payment Amount) × (1-ratio);
($100,000 − $5,000) × (1-8.75%); $95,000 ×
91.25% = $86,687.50).
To determine the total withdrawal amount reduction, the
Remaining Protected Balance is reduced by the total withdrawal
amount. Numerically, after the Remaining Protected Balance is
reduced by the total withdrawal amount, the Remaining Protected
Balance is $88,000 (Remaining Protected Balance −
total withdrawal amount; $100,000 − $12,000 =
$88,000).
Therefore, since $86,687.50 (proportionate method) is less than
$88,000 (total withdrawal amount method) the new Remaining
Protected Balance is $86,687.50.
Audited Financial Statements dated as of December 31,2007 and for each of the periods presented which are incorporated by reference from the 2007 Annual Report include the following for Separate Account A:
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
(2)
Depositor’s Financial Statements
Audited Financial Statements dated as of
December 31, 2007 and 2006, and for each of the three years in the
period ended December 31, 2007, included in Part B include the following for Pacific Life & Annuity Company:
Independent Auditors’ Report
Statements of Financial Condition
Statements of Operations
Statements of Stockholder’s Equity
Statements of Cash Flows
Notes to Financial Statements
(b)
Exhibits
1.
(a)
Minutes of Action of Board of Directors of PM Group
Life Insurance Company (PM Group) (PL&A) dated July1, 1998.1
II-1
2.
Not applicable
3.
(a)
Distribution Agreement between Pacific Life & Annuity Company
(PL&A) and Pacific Select Distributors, Inc. (PSD)1
(b)
Form of Selling Agreement between Pacific Life & Annuity
Company (PL&A), PSD and Various Broker-Dealers4
4.
(a)
Form of Individual Flexible Premium Deferred
Variable Annuity Contract
(Form No. 10-2130)5
(b)
Form of Qualified Retirement Plan Rider (Form No. 20-24200)1
(c)
Form of 403(b) Tax-Sheltered Annuity Rider (Form No. 20-25200)1
(2) Form of Excess Withdrawal Endorsement (Form No. 15-2152)
(k)
(1) Form of Joint Life 5% Guaranteed
Withdrawal Benefit Rider (Form No. 20-2135)7
(2) Form of Excess Withdrawal Endorsement (Form No. 15-2152B)
(l)
Form of Guaranteed Protection
Advantage 3 Rider (Form No. 20-2144)8
(m)
(1) Form of Guaranteed Withdrawal
Benefit Rider II Rider (Form No. 20-2146)8
(2) Form of Excess Withdrawal Endorsement (Form No. 15-2152)
(n)
Form of Guaranteed Withdrawal
Benefit III Rider (Form No. 20-2153)
(o)
Form of Guaranteed Withdrawal
Benefit Rider (Form No. 20-2154)
(p)
Form of Joint Life Guaranteed Withdrawal
Benefit Rider (Form No. 20-2155)
5.
(a)
Form of Variable Annuity
Application (Form No. 25-2130)5
(b)
Portfolio Optimization
Enrollment/Rider Request Form (Form No. N2150-6B)4
6.
(a)
Articles of Incorporation of PM Group Life1
(b)
Amended and Restated Articles of Incorporation of PL&A1
(c)
By-laws of Pacific Life & Annuity Company1
7.
Not applicable
8.
(a)
Pacific Select Fund Participation Agreement and
Addendums thereto (to add the Strategic Value and Focused 30
Portfolios, add nine new Portfolios, and add the Equity Income and
Research Portfolios)1
(b)
Administrative Agreement Between Pacific Life & Annuity
Company (PL&A) and Pacific Life Insurance Company (“Pacific
Life”)1
(c)
Fund Participation Agreement Between Pacific Life & Annuity Company,
Pacific Select Distributors, Inc., American Funds Insurance Series, American Funds
Distributors, and Capital Research and Management Company.2
(d)
Form of Exhibit B to
the Pacific Select Fund Participation Agreement (to add International
Small-Cap and Diversified Bond)4
(e)
Form of AllianceBernstein Variable Products Series Fund, Inc. Participation Agreement
(f)
Form of BlackRock Variable Series Fund, Inc. Participation Agreement
(g)
Form of Franklin Templeton Variable Insurance Products Trust Participation Agreement
(h)
Form of AllianceBernstein Investments, Inc. Administrative Services Agreement
(i)
Form of BlackRock Distributors, Inc. Administrative Services Agreement
(j)
Form of Franklin Templeton Services, LLC Administrative Services Agreement
9.
Opinion and Consent of legal officer of Pacific Life & Annuity Company as to
the legality of Contracts being registered.5
II-2
10.
Consent of Independent
Registered Public Accounting Firm and Consent of Independent
Auditors9
Pacific Life & Annuity Company is an Arizona Stock Life Insurance Company
wholly-owned by Pacific Life Insurance Company (a Nebraska Stock Life
Insurance Company) which is wholly-owned by Pacific LifeCorp (a Delaware
Stock Holding Company) which is, in turn, 100% owned by Pacific Mutual Holding
Company (a Nebraska Mutual Holding Company).
II-4
Item 27. Number of Contractholders
Pacific
Voyages-Approximately
376 Qualified
328 Non Qualified
Item 28. Indemnification
(a)
The Distribution Agreement between Pacific Life & Annuity Company and
Pacific Select Distributors, Inc. (PSD), formerly called Pacific
Mutual Distributors, Inc. (PMD) provides substantially as follows:
Pacific Life & Annuity Company hereby agrees to indemnify and hold
harmless PMD and its officers and directors, and employees for any
expenses (including legal expenses), losses, claims, damages, or
liabilities incurred by reason of any untrue or alleged untrue
statement or representation of a material fact or any omission or
alleged omission to state a material fact required to be stated to
make other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment thereof,
or sales materials supplied or approved by Pacific Life & Annuity
Company or the Separate Account. Pacific Life & Annuity Company shall
reimburse each such person for any legal or other expenses reasonably
incurred in connection with investigating or defending any such loss,
liability, damage, or claim. However, in no case shall Pacific Life &
Annuity Company be required to indemnify for any expenses, losses,
claims, damages, or liabilities which have resulted from the willful
misfeasance, bad faith, negligence, misconduct, or wrongful act of
PMD.
PMD hereby agrees to indemnify and hold harmless Pacific Life &
Annuity Company, its officers, directors, and employees, and the
Separate Account for any expenses, losses, claims, damages, or
liabilities arising out of or based upon any of the following in
connection with the offer or sale of the contracts: (1) except for
such statements made in reliance on any prospectus, registration
statement or sales material supplied or approved by Pacific Life &
Annuity Company or the Separate Account, any untrue or alleged untrue
statement or representation is made; (2) any failure to deliver a
currently effective prospectus; (3) the use of any unauthorized sales
literature by any officer, employee or agent of PMD or Broker; (4) any
willful misfeasance, bad faith, negligence, misconduct or wrongful
act. PMD shall reimburse each such person for any legal or other
expenses reasonably incurred in connection with investigating or
defending any such loss, liability, damage, or claim.
(b)
The Form of Selling Agreement between Pacific Life & Annuity Company,
Pacific Select Distributors, Inc. (PSD), formerly called Pacific
Mutual Distributors, Inc. (PMD) and Various Broker-Dealers and Agency (Selling Entities) provides
substantially as follows:
Pacific Life & Annuity Company and PSD agree to indemnify and hold harmless Selling Entities,
their officers, directors, agents and employees, against any and all losses, claims, damages, or
liabilities to which they may become subject under the Securities Act, the Exchange Act, the
Investment Company Act of 1940, or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact required to be stated or
necessary to make the statements made not misleading in the registration statement for the
Contracts or for the shares of Pacific Select Fund (the “Fund”) filed pursuant to the Securities
Act, or any prospectus included as a part thereof, as from time to time amended and supplemented,
or in any advertisement or sales literature provided by Pacific Life & Annuity Company and PSD.
II-5
Selling Entities agree to, jointly and severally, hold harmless and indemnify Pacific Life &
Annuity Company and PSD and any of their respective affiliates, employees, officers, agents and
directors (collectively, “Indemnified Persons”) against any and all claims, liabilities and
expenses (including, without limitation, losses occasioned by any rescission of any Contract
pursuant to a “free look” provision or by any return of initial purchase payment in connection with
an incomplete application), including, without limitation, reasonable attorneys’ fees and expenses
and any loss attributable to the investment experience under a Contract, that any Indemnified
Person may incur from liabilities resulting or arising out of or based upon (a) any untrue or
alleged untrue statement other than statements contained in the registration statement or
prospectus relating to any Contract, (b)(i) any inaccurate or misleading, or allegedly inaccurate
or misleading sales material used in connection with any marketing or solicitation relating to any
Contract, other than sales material provided preprinted by Pacific Life & Annuity Company or PSD,
and (ii) any use of any sales material that either has not been specifically approved in writing by
Pacific Life & Annuity Company or PSD or that, although previously approved in writing by Pacific
Life & Annuity Company or PSD, has been disapproved, in writing by either of them, for further use,
or (c) any act or omission of a Subagent, director, officer or employee of Selling Entities,
including, without limitation, any failure of Selling Entities or any Subagent to be registered as
required as a broker/dealer under the 1934 Act, or licensed in accordance with the rules of any
applicable SRO or insurance regulator.
II-6
Item 29. Principal Underwriters
(a)
PSD, formerly called PMD, also acts as principal underwriter for the Pacific
Select Exec Separate Account of Pacific Life and Annuity Company, Pacific
Select Fund, and the following Separate Accounts of Pacific Life Insurance
Company: Pacific Select Separate Account, Pacific Select Exec Separate Account,
Pacific Select Variable Annuity Separate Account, Pacific Corinthian Variable
Separate Account, Separate Account B, COLI Separate Account, COLI II Separate
Account, COLI III Separate Account, and Pacific Select Fund.
(b)
For information regarding PSD, reference is made to Form B-D, SEC File No.
8-15264, which is herein incorporated by reference.
(c)
PSD retains no compensation or net discounts or commissions from the Registrant.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and the rules under that section will be maintained by Pacific
Life Insurance Company at 700 Newport Center Drive, Newport Beach,
California92660.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The registrant hereby undertakes:
(a)
to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in this registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted, unless otherwise permitted.
(b)
to include either (1) as a part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post
card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of
Additional Information, or (3) to deliver a Statement of Additional
Information with the Prospectus.
(c)
to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form promptly upon
written or oral request.
II-7
Additional Representations
(a) The Registrant and its Depositor are relying upon American Council of
Life Insurance, SEC No-Action Letter, SEC Ref. No. 1P-6-88 (November 28, 1988)
with respect to annuity contracts offered as funding vehicles for retirement
plans meeting the requirements of Section 403(b) of the Internal Revenue Code,
and the provisions of paragraphs (1)-(4) of this letter have been complied
with.
(b) REPRESENTATION PURSUANT TO SECTION 26(f) OF THE INVESTMENT COMPANY
ACT OF 1940: Pacific Life & Annuity Company and the sponsoring insurance
company of the Registrant represent that the fees and charges to be deducted
under the Variable Annuity Contract (“Contract”) described in the prospectus
contained in this registration statement are, in the aggregate, reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed in connection with the Contract.
II-8
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it
meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has caused this
Post-Effective Amendment No. 5 to the Registration Statement on Form
N-4 to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Newport Beach, and the
State of California on this 11th day of September, 2008.
SEPARATE ACCOUNT A
(Registrant)
By:
PACIFIC LIFE & ANNUITY COMPANY
By:
James T. Morris*
Director, Chairman, President and Chief Executive Officer
By:
PACIFIC LIFE & ANNUITY COMPANY
(Depositor)
By:
James T. Morris*
Director, Chairman, President and Chief Executive Officer
Pursuant to the requirements
of the Securities Act of 1933, Post-Effective Amendment No. 5 to the Registration Statement
has been signed below by the following persons in the
capacities and on the dates indicated:
Signature
Title
Date
James T. Morris*
Director, Chairman, President and Chief Executive
Officer
(Powers of
Attorney are contained in
Post-Effective Amendment No. 4 of the Registration Statement filed
on Form N-4 for Separate Account A, File No. 333-136598, Accession No.
0000892569-08-0000667, filed on April 25, 2008, as Exhibit 13.)
II-9
Dates Referenced Herein and Documents Incorporated by Reference
