Pacific Life Insurance Company, a stock company, has issued this Rider as a part of the
annuity Contract to which it is attached.
All provisions of the Contract that do not conflict with this Rider apply to this Rider. In the
event of any conflict between the provisions of this Rider and the provisions of the Contract, the
provisions of this Rider shall prevail over the provisions of the Contract.
The numeric examples contained in this Rider are based on certain assumptions. They 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.
Definition of Terms – Unless redefined below, the terms defined in the Contract will have the same
meaning when used in this Rider. For purposes of this Rider, the following definitions apply:
Annual RMD Amount – The amount required to be distributed each Calendar Year for
purposes of satisfying the minimum distribution requirements of Internal Revenue Code Section
401(a)(9) and related Code provisions in effect on 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Protected Payment Amount – The maximum amount that can be withdrawn under this Rider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 a Non-Natural Owner) is age [65] or
older when the first withdrawal was taken or the most recent reset occurred, whichever is later,
the Protected Payment Amount on any day after the Rider Effective Date is equal to [5.0%]
multiplied by the Protected Payment Base as of that day, less cumulative withdrawals during that
Contract Year.
If the oldest Owner (or youngest Annuitant, in the case of a Non-Natural Owner) is younger than
age [65] when the first withdrawal was taken or the most recent reset occurred, whichever is
later, the Protected Payment Amount on any day after the Rider Effective Date is equal to the
lesser of:
(a)
[5.0%] multiplied by the Protected Payment Base as of that day, less cumulative
withdrawals during that Contract Year; or
(b)
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.
Quarterly Rider Anniversary – Every three month anniversary of the Rider Effective Date.
Reset Date – Any Contract Anniversary after the Rider Effective Date on which an Automatic Reset
or an Owner-Elected Reset occurs.
For purposes of this Rider, the term “withdrawal” includes any applicable withdrawal charges and
charges for premium taxes and/or other taxes, if applicable. 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.
Core Withdrawal Benefit II Rider – You have purchased a Core Withdrawal Benefit II Rider. Subject
to the terms and conditions described herein, this Rider:
(a)
allows for withdrawals up to the Protected Payment Amount without any
adjustment to the Protected Payment Base, regardless of market performance, until
the Rider terminates as specified in the Termination of Rider provision of this
Rider;
(b)
allows for withdrawals for purposes of satisfying the minimum
distribution requirements of Internal Revenue Code Section 401(a)(9) and related
Code provisions in effect on the Rider Effective Date, regardless of the amount,
without any adjustment to the Protected Payment Base, subject to certain conditions
as described herein;
(c)
provides for Automatic Annual Resets or Owner-Elected Resets of the
Protected Payment Base and Remaining Protected Balance.
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This Rider may be purchased and added to the Contract on the Contract Issue Date or Contract
Anniversary, if available, provided that on the Rider Effective Date: (a) the age of each Annuitant
is [85] years or younger; (b) the Contract is not issued as an Inherited IRA or Inherited TSA; and
(c) the entire Contract Value is invested according to the investment allocation requirements
applicable to this Rider.
Annual Charge – An annual charge for expenses related to this Rider will be deducted on a quarterly
basis. The annual charge is equal to 0.60% (0.15% quarterly) and will not exceed a maximum
annual charge percentage of 1.20% (0.30% quarterly).
The charge is deducted, in arrears, on each Quarterly Rider Anniversary that this Rider remains in
effect. The charge is equal to the quarterly charge percentage multiplied by the Protected Payment
Base on the day the charge is deducted. The charge will be deducted from the variable Investment
Options on a proportionate basis relative to the Account Value in each such variable Investment
Option. Any portion of the annual charge will not be deducted from the DCA Plus fixed account (if
available under the Contract).
The annual charge percentage established on the Rider Effective Date will not change, except as
otherwise described in the provisions of this Rider.
If this Rider terminates on a Quarterly Rider Anniversary, the entire charge for the prior
Quarterly Rider Anniversary will be deducted from the Contract Value on that Quarterly Rider
Anniversary.
If the Rider terminates prior to a Quarterly Rider Anniversary, we will prorate the charge. The
prorated amount will be 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 Quarterly Rider Anniversary immediately following the day the Rider
terminates.
We will waive the charge for the current quarter in the following cases:
(a)
if the Rider terminates as a result of the death of an Owner or sole surviving
Annuitant;
(b)
upon full annuitization of the Contract;
(c)
after the Contract Value is zero.
Any portion of the annual charge we deduct from any of our fixed-rate General Account Investment
Options (if available under the Contract) will not be greater than the annual interest credited in
excess of that option’s minimum guaranteed interest rate.
Change in Annual Charge – The annual charge percentage, and corresponding deduction, may change as
a result of any automatic reset or Owner-elected reset. The annual charge percentage will never
exceed the annual charge percentage then in effect for new issues of this same rider. If we are no
longer issuing this rider, any change in the annual charge percentage will not result in an annual
charge percentage that exceeds the maximum annual charge percentage specified in the Annual Charge
provision.
If the Protected Payment Base and Remaining Protected Balance are never reset, the annual charge
percentage established on the Rider Effective Date is guaranteed not to change.
Initial Values – The Protected Payment Base and Remaining Protected Balance are initially
determined on the Rider Effective Date. On the Rider Effective Date, the Protected Payment Base
and Remaining Protected Balance are equal to the Initial Purchase Payment or, if effective on a
Contract Anniversary, the Contract Value on that Contract Anniversary. The initial Protected
Payment Amount on the Rider Effective Date is equal to [5.0%] multiplied by the Protected Payment
Base.
Subsequent Purchase Payments – Purchase Payments received after the Rider Effective Date will
result in an increase in the Protected Payment Base and Remaining Protected Balance by the amount
of the Purchase Payment.
Limitation on Subsequent Purchase Payments – For purposes of this Rider, in no event may any
Purchase Payment received on or after the first (1st) Contract Anniversary, measured from the Rider
Effective Date or the most recent Reset Date, whichever is later, result in the total of all
Purchase Payments received since that Contract Anniversary to exceed $100,000, without our prior
approval.
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This provision only applies if the Contract permits Purchase Payments after the first (1st)
Contract Anniversary, measured from the Contract Date.
For purposes of this Rider, we reserve the right to restrict subsequent Purchase Payments.
Withdrawal of Protected Payment Amount – While this Rider is in effect, you may withdraw up to the
Protected Payment Amount without any adjustment to the Protected Payment Base, regardless of market
performance, until the Rider terminates as specified in the Termination of Rider provision of this
Rider.
If a withdrawal does not exceed the Protected Payment Amount immediately prior to the withdrawal,
the Protected Payment Base will remain unchanged. Immediately following the withdrawal, the
Remaining Protected Balance will decrease by the withdrawal amount.
Withdrawals Exceeding Protected Payment Amount – Except as otherwise provided under the Withdrawals
to Satisfy Required Minimum Distribution provision of this Rider, if a withdrawal exceeds the
Protected Payment Amount immediately prior to that withdrawal, we will reduce the Protected Payment
Base and Remaining Protected Balance. This adjustment will occur immediately following the
withdrawal according to the following calculation:
(a)
Determine excess withdrawal amount (“A”) where A equals total withdrawal amount minus
the Protected Payment Amount immediately prior to the withdrawal;
(b)
Determine ratio for proportionate reduction (“B”) where B equals A divided by (Contract
Value immediately prior to the withdrawal minus Protected Payment Amount immediately prior
to the withdrawal);
(c)
Determine the new Protected Payment Base which equals (Protected Payment Base
immediately prior to the withdrawal) multiplied by (1 minus B). The Protected Payment Base
will never be less than zero;
(d)
Determine the new Remaining Protected Balance which equals the lesser of:
1.
(Remaining Protected Balance immediately prior to the withdrawal minus the
Protected Payment Amount immediately prior to the withdrawal) multiplied by (1 minus
B); or
2.
The Remaining Protected Balance immediately prior to the withdrawal minus the
total withdrawal amount.
The amount available for withdrawal under the Contract must be sufficient to support any withdrawal
that would otherwise exceed the Protected Payment Amount.
Withdrawals to Satisfy Required Minimum Distribution – No adjustment will be made to the Protected
Payment Base if a withdrawal made under this Rider exceeds the Protected Payment Amount immediately
prior to the withdrawal, provided that such withdrawal (herein referred to as an “RMD withdrawal”)
is for purposes of satisfying the minimum distribution requirements of Internal Revenue Code
Section 401(a)(9) and related Code provisions in effect on the Rider Effective Date, and further
subject to the following:
(a)
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;
(b)
the Annual RMD Amount is based on this Contract only; and
(c)
no withdrawals (other than 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.
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:
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(a)
if the oldest Owner (or youngest Annuitant, in the case of a Non-Natural Owner):
(i)
was younger than age [65] when the first withdrawal was taken under this
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
(ii)
was age [65] or older when the first withdrawal was taken under this
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 payments under subparagraphs (a)(i) and (a)(ii) above will be made under a series of
pre-authorized withdrawals under a payment frequency, as elected by the Owner, but no less
frequently than annually;
(b)
no additional Purchase Payments will be accepted under the Contract;
(c)
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; and
(d)
the Contract will cease to provide any death benefit.
Depletion of Remaining Protected Balance – If a 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 a Non-Natural Owner):
(a)
was younger than age [65] when the first withdrawal was taken under this Rider after
the Rider Effective Date or the most recent Reset Date, whichever is later, this Rider will
terminate; or
(b)
was age [65] or older when the first withdrawal was taken under this 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 a withdrawal made under subparagraph (b) (except an RMD withdrawal) taken from the Contract
exceeds the Protected Payment Amount, the Protected Payment Base will be reduced according to the
Withdrawals Exceeding Protected Payment Amount provision of this Rider.
Any death benefit proceeds to be paid to the Beneficiary from remaining Contract Value will be paid
as described under the Death Benefit provisions of the Contract.
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 if the
Protected Payment Base is less than the Contract Value on that Contract Anniversary.
The Protected Payment Base and Remaining Protected Balance will be reset to an amount equal to 100%
of the Contract Value.
The annual charge percentage may change as a result of any automatic reset. (See Change in Annual
Charge provision). We will provide you with written confirmation of each automatic reset.
Automatic Reset — Opt-Out Election – If you are within [sixty (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 the annual charge
percentage to their respective amounts immediately before the automatic reset.
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 [sixty (60)] day period after the Contract Anniversary on which
the reset is effective.
Any future automatic resets will continue in effect in accordance with the Automatic Reset
provision of this Rider.
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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 provision.
Owner-Elected Resets (Non-Automatic) – You may, on any Contract Anniversary after the Rider
Effective Date or the most recent Reset Date, whichever is later, elect to reset the Remaining
Protected Balance and Protected Payment Base to an amount equal to 100% of the Contract Value as of
that Contract Anniversary. The annual charge percentage may change if you elect this reset option.
(See Change in Annual Charge provision).
On each Reset Date we will set the Remaining Protected Balance and Protected Payment Base to an
amount equal to 100% of the Contract Value as of that Reset Date.
If you elect this option, your election must be received, in a form satisfactory to us, at our
Service Center within [sixty (60)] days after the Contract Anniversary on which the reset is
effective. This option may result in a reduction in the Protected Payment Base, Remaining Protected
Balance, and Protected Payment Amount. We will provide you with written confirmation of your
election.
Application of Rider Provisions – 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. The
limitations and restrictions on Purchase Payments and withdrawals, the deduction of quarterly
charges and any future reset options available on and after each Reset Date, will again apply and
will be measured from that Reset Date.
Annuitization – If you annuitize the Contract at the maximum Annuity Date specified in the Contract
and this Rider is still in effect at the time of your election and a Life Only fixed annuity option
is chosen, the annuity payments will be equal to the greater of:
(a)
the Life Only fixed annual payment amount calculated based on the Net Contract Value at
the maximum Annuity Date, less any charges for premium taxes and/or other taxes, and the
Life Only fixed annuity rates based on the greater of our current income factors in effect
for the Contract on the maximum Annuity Date; or our guaranteed income factors; or
(b)
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 the
Contract, your annuity payments will be determined in accordance with the terms of the 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 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
Contract Value or Remaining Protected Balance is at 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.
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Termination of Rider – Except as otherwise provided under the Continuation of Rider if Surviving
Spouse Continues Contract provision of this Rider, this Rider will automatically terminate upon the
earliest to occur of one of the following events:
(a)
the day any portion of the Contract Value is no longer invested according to the
investment allocation requirements applicable to this Rider;
(b)
the day the Remaining Protected Balance is reduced to zero;
(c)
the day of the first death of an Owner or the date of death of the sole surviving
Annuitant;
(d)
the day the Contract is terminated in accordance with the provisions of the
Contract;
(e)
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; or
(f)
the Annuity Date;
(g)
the day that the Contract Value is reduced to zero as a result of a withdrawal
(except an RMD withdrawal) that exceeds the Protected Payment Amount.
This Rider will not terminate under subparagraph (b) above if the oldest Owner (or youngest
Annuitant, in the case of a Non-Natural Owner) was age [65] or older when the first withdrawal was
taken under this Rider after the Rider Effective Date or the most recent Reset Date, whichever is
later.
This Rider and the Contract will not terminate under subparagraph (d) above if at the time of this
event, the Contract Value is zero and we are making pre-authorized withdrawals of the Protected
Payment Amount. In this case, the Rider and Contract will terminate under:
(i)
subparagraph (b) if the oldest Owner (or youngest Annuitant, in the case of a
Non-Natural Owner) was younger than age [65] when the first withdrawal was taken under
this Rider after the Rider Effective Date or the most recent Reset Date, whichever is
later; or
(ii)
subparagraph (c) if the oldest Owner (or youngest Annuitant, in the case of a
Non-Natural Owner) was age [65] or older when the first withdrawal was taken under this
Rider after the Rider Effective Date or the most recent Reset Date, whichever is later.
Rider Effective Date – This Rider is effective on the Contract Date, unless a later date is shown
below.
Rider Effective Date: [Date]
All other terms and conditions of the Contract remain unchanged by this Rider.
PACIFIC LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer
Secretary
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CORE WITHDRAWAL BENEFIT II RIDER
SAMPLE CALCULATIONS – For Illustration Purposes Only
The numeric examples shown in this section are based on certain assumptions. They 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. These examples are not
intended to serve as projections of future investment returns.
The values shown in Examples 1 through 4 are based on the following assumptions:
•
Rider purchased at Contract issue by a 64-year old
•
Automatic resets are shown if applicable
•
Investment returns are random
Example 1: Setting of Initial Values
Contract
Protected
Remaining
Protected
Contract
Purchase
Value After
Payment
Protected
Payment
Year
Payment
Withdrawal
Transaction
Base
Balance
Amount
Beginning of Year 1
$
100,000
$
100,000
$
100,000
$
100,000
$
5,000
Example 2: Subsequent Purchase Payment
Contract
Protected
Remaining
Protected
Contract
Purchase
Value After
Payment
Protected
Payment
Year
Payment
Withdrawal
Transaction
Base
Balance
Amount
Beginning of Year 1
$
100,000
$
100,000
$
100,000
$
100,000
$
5,000
Activity
$
100,000
$
200,000
$
200,000
$
200,000
$
10,000
Beginning of Year 2
$
207,000
$
207,000
$
207,000
$
10,350
•
Since a subsequent purchase payment of $100,000 was made in the first Contract Year, the
Protected Payment Base and Remaining Protected Balance are increased by the amount of the
purchase payment and the Protected Payment Amount is adjusted to equal 5% of the new
Protected Payment Base.
•
An automatic Reset takes place at the beginning of Contract Year 2, since the Contract
Value ($207,000) is higher than the Protected Payment Base ($200,000). This resets the
Protected Payment Base and Remaining Protected Balance to $207,000. Also, the Protected
Payment Amount increases to $10,350 (5% x $207,000).
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Example 3: Compliant Withdrawals
Contract
Protected
Remaining
Protected
Contract
Purchase
Value After
Payment
Protected
Payment
Year
Payment
Withdrawal
Transaction
Base
Balance
Amount
Beginning of Year 1
$
100,000
$
100,000
$
100,000
$
100,000
$
5,000
Activity
$
100,000
$
200,000
$
200,000
$
200,000
$
10,000
Beginning of Year 2
$
207,000
$
207,000
$
207,000
$
10,350
Activity
$
5,000
$
204,000
$
207,000
$
202,000
$
5,350
Beginning of Year 3
$
205,000
$
207,000
$
202,000
$
10,350
Beginning of Year 4
$
215,000
$
215,000
$
215,000
$
10,750
•
Since a compliant withdrawal takes place in Contract Year 2, the Protected Payment Base
remains the same ($207,000) and the Remaining Protected Balance ($202,000) is reduced by
the amount of the withdrawal ($5,000).
•
At the beginning of Contract Year 3, a Reset does not take place since the Contract
Value ($205,000) is less than the Protected Payment Base ($207,000). The Protected Payment
Base ($207,000) and the Remaining Protected Balance ($202,000) remain the same and the
Protected Payment Amount is reset to $10,350 (5% x 207,000).
•
An automatic Reset takes place at the beginning of Contract Year 4, since the Contract
Value ($215,000) is higher than the Protected Payment Base ($207,000). This resets the
Protected Payment Base and Remaining Protected Balance to $215,000. Also, the Protected
Payment Amount increases to $10,750 (5% x $215,000).
Example 4: Non-Compliant Withdrawals
Contract
Protected
Remaining
Protected
Contract
Purchase
Value After
Payment
Protected
Payment
Year
Payment
Withdrawal
Transaction
Base
Balance
Amount
Beginning of Year 1
$
100,000
$
100,000
$
100,000
$
100,000
$
5,000
Activity
$
100,000
$
200,000
$
200,000
$
200,000
$
10,000
Beginning of Year 2
$
207,000
$
207,000
$
207,000
$
10,350
Activity
$
20,000
$
182,000
$
196,567
$
186,739
$
0
Beginning of Year 3
$
192,000
$
196,567
$
186,739
$
9,828
Beginning of Year 4
$
215,000
$
215,000
$
215,000
$
10,750
•
Due to the non-compliant w/d of $20,000 made in Contract Year 2, the Protected Payment
Base is reduced to $196,567 and the Remaining Protected Balance is reduced to $186,739.
o
A = $9,650 = ($20,000 – $10,350)
o
B = 0.0504 = $9,650/($202,000 – $10,350)
o
PPB = $196,567 = $207,000 x (1 – 0.0504)
o
RPB = $186,739 = lesser of:
§
$186,739 = ($207,000 – $10,350) x (1 – 0.0504); or
§
$187,000 = ($207,000 – $20,000)
o
At the beginning of Contract Year 3, the Protected Payment Amount is
reset to $9,828 (5% x $196,567)
•
An automatic Reset takes place at the beginning of Contract Year 4, since the Contract
Value ($215,000) is higher than the Protected Payment Base ($196,567). This resets the
Protected Payment Base and Remaining Protected Balance to $215,000. Also, the Protected
Payment Amount increases to $10,750 (5% x $215,000).