-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SOFgBoXU7BDT4Os/AJQVuKe5MhK+r6+6hFOrhiixj1B/EShYx4H0stAJsI0uVKXo aztSAqWxwSm8XA3or7ebvw== 0000928385-99-002388.txt : 19990730 0000928385-99-002388.hdr.sgml : 19990730 ACCESSION NUMBER: 0000928385-99-002388 CONFORMED SUBMISSION TYPE: N-4 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PFL LIFE VARIABLE ANNUITY ACCOUNT C CENTRAL INDEX KEY: 0001034621 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 222824743 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4 SEC ACT: SEC FILE NUMBER: 333-83957 FILM NUMBER: 99672352 FILING VALUES: FORM TYPE: N-4 SEC ACT: SEC FILE NUMBER: 811-09503 FILM NUMBER: 99672677 BUSINESS ADDRESS: STREET 1: 4333 EDGEWOOD ROAD NE CITY: CEDAR RAPIDS STATE: IA ZIP: 52499-0001 BUSINESS PHONE: 3192978121 MAIL ADDRESS: STREET 1: 4333 EDGEWOOD ROAD NE CITY: CEDAR RAPIDS STATE: IA ZIP: 52499-0001 N-4 1 FORM N-4 As filed with the Securities and Exchange Commission on July 29, 1999 Registration No. 333 - _____ 811 - _____ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __X__ Pre-Effective Amendment No. ___ Post-Effective Amendment No. ___ and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 __X__ Amendment No. ---- PFL LIFE VARIABLE ANNUITY ACCOUNT C (Exact Name of Registrant) PFL LIFE INSURANCE COMPANY (Name of Depositor) 4333 Edgewood Road N.E. Cedar Rapids, IA 52499-0001 (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number: (319) 297-8468 Frank A. Camp, Esq. PFL Life Insurance Company 4333 Edgewood Road, N.E. Cedar Rapids, IA 52499-0001 (Name and Address of Agent for Service) Copy to: Frederick R. Bellamy, Esq. Sutherland Asbill and Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2415 Title of Securities Being Registered: Flexible Premium Variable Annuity Policies Approximate date of proposed offering: As soon as practicable after effectiveness of Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine. THE ENDEAVOR GENERATIONS PLUS The flexible premium deferred variable VARIABLE ANNUITY annuity has many investment choices. The mutual fund account has 13 subaccounts Issued Through that are available in this annuity. The mutual fund subaccounts are listed PFL LIFE VARIABLE below. You bear the enitre investment ANNUITY ACCOUNT C risk for all amounts you put in the mutual fund account. There is also a By fixed account, which offers interest at rates that are guaranteed by PFL Life PFL LIFE INSURANCE COMPANY Insurance Company (PFL). You can choose any combination of these investment Prospectus - ______________ choices. This prospectus and the mutual fund ENDEAVOR SERIES TRUST prospectuses give you important Subadvised by Morgan Stanley Asset information about the Endeavor Management Inc. Generations Plus variable annuity Endeavor Asset Allocation Portfolio and the mutual funds. Please read Endeavor Money Market Portfolio them carefully before you invest Subadvised by T. Rowe Price and keep them for future reference. Associates, Inc. T. Rowe Price Equity Income Portfolio If you would like more information T. Rowe Price Growth Stock Portfolio about The Endeavor Generations Plus Subadvised by Rowe Price-Fleming Variable Annuity, you can obtain a International, Inc. free copy of the Statement of T. Rowe Price International Stock Additional Information (SAI) dated Portfolio __________________. Please call us Subadvised by OpCap Advisors at (800) 525-6205 or write us at: Endeavor Value Equity Portfolio PFL Life Insurance Company, Endeavor Opportunity Value Portfolio Financial Markets Division, Variable Subadvised by J.P. Morgan Investment Annuity Department, 4333 Edgewood Management Inc. Road N.E., Cedar Rapids, Iowa, Endeavor Enhanced Index Portfolio 52499-0001. A registration statement, Subadvised by The Dreyfus Corporation including the SAI, has been filed Dreyfus U.S. Government Securities with the Securities and Exchange Portfolio Commission (SEC) and is incorporated Dreyfus Small Cap Value Portfolio herein by reference. Information Subadvised by Montgomery Asset about the variable annuity can be Management, LLC reviewed and copied at the SEC's Endeavor Select 50 Portfolio Public Reference Room in Washington, Subadvised by Massachusetts Financial D.C. You may obtain information about Services Company the operation of the public reference Endeavor High Yield Portfolio room by calling the SEC at Subadvised by Janus Capital Corporation 1-800-SEC-0330. The SEC also maintains Endeavor Janus Growth Portfolio a web site (http://www.sec.gov) that contains the prospectus, the SAI, The Securities and Exchange Commission material incorporated by reference, has not approved or disapproved these and other information. The table of securities, or passed upon the adequacy contents of the SAI is included at of this prospectus. Any representation the end of this prospectus. to the contrary is a criminal offense. Please note that the variable annuity and the mutual funds: . are not bank deposits . are not federally insured . are not endorsed by any bank or government agency . are not guaranteed to achieve their goal . are subject to risks,including loss of premium
TABLE OF CONTENTS Page GLOSSARY OF TERMS.............................. Withdrawals - 403(b) Annuities................ Diversification and Distribution SUMMARY........................................ Requirements.............................. Taxation of Death Benefit Proceeds............ ANNUITY CERTIFICATE FEE TABLE.................. Annuity Payments.............................. Transfers, Assignments or Exchanges........... EXAMPLES....................................... Possible Tax Law Changes...................... 1. THE GENERATIONS PLUS VARIABLE 7. ACCESS TO YOUR MONEY.......................... ANNUITY ................................... Surrenders.................................... Delay of Payment and Transfers................ Excess Interest Adjustment.................... 2. ANNUITY PAYMENTS........................... Systematic Payout Option...................... (THE INCOME PHASE)......................... Nursing Care and Terminal Condition Annuity Payment Options.................... Withdrawal Option......................... Unemployment Waiver........................... 3. PURCHASE................................... Certificate Issue Requirements............. 8. PERFORMANCE................................... Issue Requirements......................... Premium Payments........................... 9. DEATH BENEFIT................................. Initial Premium Requirements............... When We Pay A Death Benefit................... Additional Premium Payments................ When We Do Not Pay A Death Benefit............ Maximum Total Premium Payments............. Amount of Death Benefit....................... Premium Enhancement........................ Guaranteed Minimum Death Benefit.............. Allocation of Premium Payments............. Adjusted Partial Withdrawal................... Certificate value.......................... 10. OTHER INFORMATION............................. 4. INVESTMENT CHOICES......................... Ownership..................................... The Mutual Fund Account.................... Assignment.................................... The Fixed Account.......................... PFL Life Insurance Company.................... Transfers.................................. The Mutual Fund Account....................... Family Income Protector.................... Mixed and Shared Funding...................... Dollar Cost Averaging Program.............. Reinstatements................................ Asset Rebalancing.......................... Voting Rights................................. Telephone Transactions..................... Distributor of the Annuity.................... Non-participating............................. 5. EXPENSES................................... Variations in Certain Provisions.............. Surrender Charges.......................... Year 2000 Matters............................. Mortality and Expense Risk Fee............. IMSA.......................................... Administrative Charges..................... Legal Proceedings............................. Premium Taxes.............................. Financial Statements.......................... Federal, State and Local Taxes............. Transfer Fee............................... TABLE OF CONTENTS OF THE STATEMENT Family Income Protector.................... OF ADDITIONAL INFORMATION......................... Portfolio Management Fees.................. APPENDIX A 6. TAXES...................................... Annuities in General....................... Historical Performance Data Qualified and Nonqualified Annuities...... The Mutual Fund Account....................... Withdrawals - Nonqualified Annuities....... Withdrawals - Qualified Annuities.........
2 GLOSSARY OF TERMS Accumulation Unit--An accounting and/or surrender charges on such unit of measure used in calculating withdrawals); plus the certificate value in the mutual . interest credited in the fixed fund account before the annuity account; plus or minus commencement date. . accumulated gains or losses in the mutual fund account; minus Adjusted Certificate value - An . service charges, premium taxes, amount equal to the certificate and transfer fees, if any. value increased or decreased by any excess interest adjustments. Certificate Year - A certificate year begins on the certificate date Annuitant--The person entitled to and on each certificate receive annuity payments after the anniversary. annuity commencement date and during whose life any annuity Excess Interest Adjustment--A payments involving life positive or negative adjustment to contingencies will continue. amounts withdrawn upon partial withdrawals, full surrenders, or Annuity Commencement Date--The date transfers from the guaranteed upon which annuity payments are to period options, or to amounts commence. This date may be any date applied to annuity payment options. at least thirty days after the The adjustment reflects changes in certificate date and may not be the interest rates declared by PFL later than the last day of the since the date any payment was certificate month starting after received by, or an amount was the annuitant attains age 85, transferred to, the guaranteed except as expressly allowed by PFL. period option. The excess interest In no event will this date be later adjustment can either decrease or than the last day of the month increase the amount to be received following the month in which the by the certificate owner upon full annuitant attains age 95. surrender or commencement of annuity payments, depending upon Annuity Payment Option--A method of whether there has been an increase receiving a stream of annuity or decrease in interest rates, payments selected by the respectively. certificate owner. Fixed Account--One or more Cash Value--The certificate value investment choices under the increased or decreased by an excess certificate that are part of the interest adjustment, less any general assets of PFL and are not applicable surrender charge, in the mutual fund account. premium taxes, and Family Income Protector rider fee, and less the Group Contract - The contract annual Service Charge. issued to the group contract owner, under which certificates are issued Certificate - The document issues to eligible participants. under the group contract to the eligible participants who apply for Group Contract Owner- The entity coverage. The certificate is not which owns the group contract. part of the group contract. Guaranteed Period Options--The Certificate Owner or Owner- The various guaranteed interest rate person who may exercise all rights periods of the fixed account which and privileges under the may be offered by PFL and into certificate. The owner during the which premium payments may be paid lifetime of the annuitant and prior or amounts transferred. to the annuity commencement date is the person designated as the owner Mutual Fund Account--A separate or a successor owner in the account established and registered enrollment form. Also referred to as a unit investment trust under as "you". the Investment Company Act of 1940, as amended, to which premium Certificate value--On or before the payments under the certificates may annuity commencement date, the be allocated and which invests in certificate value is equal to the designated portfolios of the certificate owner's: Endeavor Series Trust and such other mutual funds as PFL may . premium payments (including any determine from time to time. premium enhancement); minus . partial withdrawals (including the net effect of any applicable excess interest adjustments 3 Mutual Fund Subaccount--A (Note: The Statement of Additional subdivision within the mutual fund Information contains a more account, the assets of which are extensive Glossary.) invested in a specified portfolio of the Endeavor Series Trust. 4 SUMMARY The sections in this summary can accumulate during the correspond to sections in this accumulation phase will largely prospectus, which discuss the determine the income payments you topics in more detail. Words receive during the income phase. printed in italics in this prospectus are defined in the 2. ANNUITY PAYMENTS Glossary. (THE INCOME PHASE) 1. THE VARIABLE ANNUITY The certificate allows you to CERTIFICATE receive income under one of five annuity payment options. You may The Flexible Premium Variable choose from fixed payment options, Annuity certificate offered by PFL variable payment options, or a Life Insurance Company (PFL, we, us combination of both. If you select or our) provides a way for you to a variable payment option, the invest on a tax-deferred basis in dollar amount of your payments may the following investment choices: go up or down. thirteen subaccounts of the mutual fund account and a fixed account of 3. PURCHASE PFL. The certificate is intended to accumulate money for retirement or You can buy a nonqualified other long-term investment certificate with $5,000 or more, purposes. and a qualified certificate with $2,000 or more, under most This certificate offers thirteen circumstances. You can add as subaccounts in the mutual fund little as $50 at any time during account that are listed in Section the accumulation phase. 4. Each mutual fund subaccount invests exclusively in shares of Each premium payment will receive a one of the portfolios of the premium enhancement that PFL adds Endeavor Series Trust. The to your Certificate Value. We may certificate value may depend on the change the enhancement rate at any investment experience of the time. Under certain circumstances, selected subaccounts. Therefore, you might forfeit (or lose) the you bear the entire investment risk premium enhancement. with respect to all certificate value in any subaccount. You could 4. INVESTMENT CHOICES lose the amount that you invest. You can allocate your premium The fixed account offers an payments to one or more of the interest rate that is guaranteed by investment choices listed below. PFL. We guarantee to return your investment with interest credited The following thirteen mutual fund for all amounts allocated to the portfolios are described in the fixed account. Endeavor Series Trust prospectus: You can transfer money between any SUBADVISED BY MORGAN STANLEY of the investment choices. We ASSET MANAGEMENT INC. reserve the right to impose a $10 Endeavor Asset Allocation fee for each transfer in excess of Endeavor Money Market 12 transfers per certificate year. SUBADVISED BY T. ROWE PRICE ASSOCIATES, INC. The certificate, like all deferred T. Rowe Price Equity Income annuities, has two phases: the T. Rowe Price Growth Stock "accumulation phase" and the "income phase." During the accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as income when you take them out of the certificate. The income phase occurs when you begin receiving regular payments from your certificate. The money you 5 SUBADVISED BY ROWE PRICE-FLEMING an annual rate of 1.75% from the INTERNATIONAL, INC. assets in each mutual fund T. Rowe Price International Stock subaccount. SUBADVISED BY OPCAP ADVISORS Endeavor Value Equity During the accumulation phase, we Endeavor Opportunity Value deduct an annual service charge of SUBADVISED BY J.P. MORGAN no more than $40 from the INVESTMENT MANAGEMENT INC. certificate value on each Endeavor Enhanced Index certificate anniversary and at the SUBADVISED BY THE DREYFUS time of surrender. The charge is CORPORATION waived if either the certificate Dreyfus U.S. Government Securities value or the sum of all premium Dreyfus Small Cap Value payments, minus all partial SUBADVISED BY MONTGOMERY withdrawals, is at least $100,000. ASSET MANAGEMENT, LLC Endeavor Select 50 We will deduct state premium taxes, SUBADVISED BY MASSACHUSETTS which currently range from 0% to FINANCIAL SERVICES COMPANY 3.50%, upon total surrender, Endeavor High Yield payment of a death benefit, or when SUBADVISED BY JANUS CAPITAL annuity payments begin. CORPORATION Endeavor Janus Growth Portfolio If you elect the "family income protector" rider, then there is an Depending upon their investment annual fee during the accumulation performance, you can make or lose phase of 0.30% of the minimum money in any of the mutual fund annuitization value. If you subaccounts. annuitize under the rider, then during the income phase there is a You can also allocate your premium guaranteed payment fee at an annual payments to the fixed account. rate of 1.25% of the daily net asset value in the mutual fund 5. EXPENSES account. No deductions are made from premium The value of the net assets of the payments at the time you buy the mutual fund subaccounts will certificate so that the full amount reflect the investment advisory fee of each premium payment is invested and other expenses incurred by the in one or more of your investment underlying portfolios. Those fees choices. and expenses are detailed in the Endeavor Series Trust prospectus We may deduct a surrender charge of that is attached to this up to 8% of premium payments prospectus. withdrawn within nine years after the premium is paid. To calculate 6. TAXES surrender charges, we consider the premium you paid to come out before Your earnings, if any, are not any earnings. taxed until you take them out. If you take money out during the Full surrenders, partial accumulation phase, earnings come withdrawals, and transfers from a out first for federal tax purposes, guaranteed period option of the and are taxed as income. If you are fixed account may also be subject younger than 59 when you take money to an excess interest adjustment, out, you may be charged a 10% which may increase or decrease the federal penalty tax. Payments amount you receive. This adjustment during the income phase may be may also apply to amounts applied considered partly a return of your to an annuity payment original investment so that part of option from a guaranteed period option each payment would not be taxable of the fixed account. as income. We deduct daily mortality and expense risk fees, distribution and administrative expense charges at 6 7. ACCESS TO YOUR MONEY have to return the certificate will depend on the state where the You can take out $500 or more certificate was issued. It is anytime during the accumulation generally only 10 days. The amount phase. After one year, you may take of the refund will generally be the out up to 10% of your cumulative certificate value, less any premium premium payments free of surrender enhancement. We may reduce the charges or excess interest refund by less than the dollar adjustments once each certificate amount of the premium enhancement, year. Amounts withdrawn in the if necessary, to ensure that you first year, or in excess of 10% of would not ever be worse off because your cumulative premium payments of the credit than if we never gave thereafter, may be subject to a you the credit. We will pay the surrender charge and/or excess refund within 7 days after we interest adjustment. You may also receive written notice of have to pay income tax and a tax cancellation and the returned penalty on any money you take out. certificate. The certificate will then be deemed void. In some states 8. PERFORMANCE you may have more than 10 days to return a certificate, or receive a The value of the certificate will refund of more (or less) than the vary up or down depending upon the certificate value. investment performance of the mutual fund subaccounts you choose. No Probate. Usually when you die We provide performance information the person you choose as your in Appendix B and in the Statement beneficiary will receive the death of Additional Information. This benefit under this certificate data is not intended to indicate without going through probate. future performance. State laws vary on how the amount that may be paid is treated for 9. DEATH BENEFIT estate tax purposes. If you are both the certificate Who should purchase the owner and the annuitant and you die Certificate? This certificate is before the income phase begins, designed for people seeking long- then your beneficiary will receive term tax-deferred accumulation of a death benefit. assets, generally for retirement or other long-term purposes; and for Naming different persons as persons who have maximized their certificate owner and annuitant can use of other retirement savings affect whether the death benefit is methods, such as 401(k) plans and payable and to whom amounts will be individual retirement accounts. The paid. Use care when naming tax-deferred feature is most certificate owners, annuitants and attractive to people in high beneficiaries, and consult your federal and state tax brackets. You agent if you have questions. should not buy this certificate if you are looking for a short-term The guaranteed minimum death investment or if you cannot take benefit is a Step-Up Death Benefit the risk of losing money that you (before age 76). put in. No death benefit is paid if the There are various additional fees certificate owner dies; if the and charges associated with certificate owner is not also the variable annuities. You should annuitant. consider whether the features and benefits unique to variable 10. OTHER INFORMATION annuities, such as the opportunity for lifetime income payments, a Right to Cancel Period. You may company guaranteed death benefit return your certificate for a and the guaranteed level of certain refund. The amount of time you charges are appropriate for your needs. Because variable annuities also provide tax-deferral when purchased outside of qualified plans, the tax deferral features of variable annuities are unnecessary when purchased to fund a qualified plan. 7 Financial Statements. Financial . Under certain medically related Statements for PFL and the mutual circumstances, we will allow you fund subaccounts are in the to surrender or partially Statement of Additional withdraw your certificate value Information. without a surrender charge and excess interest adjustment. This Additional Features. This feature is called the "nursing certificate has additional features care and terminal condition that might interest you. These withdrawal option." include the following: . Under certain unemployment . You can arrange to have money circumstances, you may withdraw automatically sent to you all or a portion of the monthly, quarterly, semi- certificate value free of annually or annually while your surrender charges and excess certificate is in the interest adjustments. This accumulation phase. This feature feature is called the is referred to as the "unemployment waiver." "systematic payout option." Amounts you receive may be . You may make transfers and/or included in your gross income, change the allocation of and in certain circumstances, additional premium payments by may be subject to penalty taxes. telephone. . You can arrange to have a These features are not available in certain amount of money all states and may not be suitable automatically transferred from for your particular situation. the fixed account, either monthly or quarterly, into your Inquiries choice of mutual fund subaccounts. This feature is If you need more information, called "dollar cost averaging." please contact us at: . You can elect an optional rider Administrative and Service Office that guarantees you a minimum Financial Markets Division annuitization value. This Variable Annuity Department feature is called the "family PFL Life Insurance Company income protector." 4333 Edgewood Road N.E. P.O. Box 3183 . We will, upon your request, Cedar Rapids, IA 52406-3183 automatically transfer amounts among the mutual fund subaccounts on a regular basis to maintain a desired allocation of the certificate value among the various mutual fund subaccounts. This feature is called "asset rebalancing." 8
============================================================================================================================= ANNUITY CERTIFICATE FEE TABLE ============================================================================================================================= Separate Account Annual Expenses Certificate Owner Transaction Expenses (as a percentage of average account value) - ----------------------------------------------------------------------------------------------------------------------------- Sales Load On Purchase Payments.......... 0 Mortality and Expense Risk 1.35% Maximum Surrender Charge Administrative (as a % of Premium Payments (and Distribution) Charge 0.40% Surrendered)/(1)(2)/................ 8% Surrender Fees .......................... 0 TOTAL SEPARATE ACCOUNT Annual Service Charge/(1)/............... $40 Per Certificate ANNUAL EXPENSES 1.75% Transfer Fee/(1)/........................ Currently No Fee Family Income Protector (optional)/(3)/ Rider Fee............................ 0.30% ============================================================================================================================= Portfolio Annual Expenses/(4)/ (as a percentage of average net assets and after expense reimbursements) ============================================================================================================================= Total Total Rule Portfolio Account and Management Other 12b-1 Annual Portfolio Fees Expenses Fees/(5)/ Expenses/(6)/ Expenses - ----------------------------------------------------------------------------------------------------------------------------- Endeavor Asset Allocation...................... 0.75% 0.03% 0.02% 0.78% 2.33% Endeavor Money Market.......................... 0.50% 0.10% - 0.60% 2.15% T. Rowe Price Equity Income.................... 0.80% 0.05% - 0.85% 2.40% T. Rowe Price Growth Stock..................... 0.80% 0.07% - 0.87% 2.42% T. Rowe Price International Stock/(7)/......... 0.90% 0.08% - 0.98% 2.53% Endeavor Value Equity.......................... 0.80% 0.04% 0.01% 0.84% 2.39% Endeavor Opportunity Value/(8)/................ 0.80% 0.18% 0.01% 0.98% 2.53% Endeavor Enhanced Index........................ 0.75% 0.35% - 1.10% 2.65% Dreyfus U.S. Government Securities/(9)/........ 0.60% 0.12% - 0.72% 2.27% Dreyfus Small Cap Value........................ 0.80% 0.06% 0.08% 0.86% 2.41% Endeavor Select 50/(10)/....................... 1.10% 0.39% - 1.49% 3.04% Endeavor High Yield/(11)/...................... 0.775% 0.525% - 1.30% 2.85% Endeavor Janus Growth/(12)/.................... 0.775% 0.095% - 0.87% 2.42% =============================================================================================================================
9 /(1)/ The surrender charge and be greater or less than those transfer fee, if any is shown in the Table. imposed, apply to each certificate, regardless of how certificate value is allocated /(5)/ The Board of Trustees of among the mutual fund account Endeavor Series Trust has and the fixed account. The authorized an arrangement service charge applies to the whereby, subject to best price fixed account and the mutual and execution, executing fund account, and is assessed brokers will share commissions on a pro rata basis relative to with the Trust's affiliated each account's certificate broker. Under supervision of value as a percentage of the the Trustees, the affiliated certificate's total certificate broker will use the "recaptured value. The service charge is commission" to promote deducted on each certificate marketing of the Trust's anniversary and at the time of shares. The staff of the surrender, if surrender occurs Securities and Exchange during a certificate year. Commission believes that, There is no fee for the first through the use of these 12 transfers per year. For recaptured commissions, the additional transfers, PFL may Trust is indirectly paying for charge a fee of $10 per distribution expenses and such transfer, but currently does amounts must be shown as 12b-1 not charge for any transfers. fees in the above table. The use of recaptured commissions /(2)/ The surrender charge is to promote the sale of the decreased based on the number Trust's shares involves no of years since the premium additional costs to the Trust payment was made, from 8% in or any Owner. Endeavor Series the year in which the premium Trust, based on advice of payment was made, to 0% in the counsel, does not believe that tenth year after the premium recaptured brokerage payment was made. If applicable commissions should be treated a surrender charge will only be as 12b-1 fees. For more applied to withdrawals that information on the Trust's exceed the amount available Brokerage Enhancement Plan, see under certain listed the Trust's prospectus exceptions. accompanying this Prospectus. /(3)/ The annual rider fee for the /(6)/ Endeavor Management Co. has optional Family Income agreed, until further notice, Protector rider (only deducted to assume expenses of the during the accumulation phase) Portfolios that exceed the is currently equal to 0.30% of following rates: Endeavor Asset the minimum annuitization value Allocation--1.25%; Endeavor on the previous certificate Money Market--0.99%; T. Rowe anniversary; PFL may at its Price Equity Income--1.30%; T. discretion change the rate in Rowe Price Growth Stock--1.30%; the future, but the rate will T. Rowe Price International never be greater than 0.50% per Stock--1.53%; Endeavor Value year. The guaranteed payment Equity--1.30%; Endeavor fee is only charged if you Opportunity Value--1.30%; annuitize under the family Endeavor Enhanced Index--1.30%; income protector rider, and Dreyfus U.S. Government then only after annuitization. Securities--1.00%; Dreyfus This fee is reflected in the Small Cap Value--1.30%; amount of the variable Endeavor Select 50--1.50%; payments. The guaranteed Endeavor High Yield--1.30%. payment fee is currently equal Endeavor Management Co. has to an effective annual rate of agreed for a period of at least 1.25% of the daily net asset one year to assume the expenses value in the variable of the Endeavor Janus Growth investment options; PFL may at Portfolio that exceed 0.87%. its discretion change the rate Expenses shown for the Endeavor in the future, but the rate Janus Growth Portfolio are will never be greater than estimated for 1999. Expenses 2.25% per year. Once the family shown for the Endeavor Select income protector rider is added 50 and Endeavor High Yield to your certificate, neither Portfolios are annualized. the rider fee nor the guaranteed payment fee that is /(7)/ Total Portfolio Annual Expenses in effect at that time will for the T. Rowe Price change during the life of that International Stock Portfolio family income protector rider. before credits allowed by the They could change if you custodian for the period ended upgrade. December 31, 1998 were 1.10%. /(4)/ The fee table information relating to the Endeavor Series Trust was provided to PFL by Endeavor Management Co., and PFL has not independently verified such information. Actual future expenses of the portfolios may 10 /(8)/ Total Portfolio Annual the custodian for the period Expenses for the Endeavor ended December 31, 1998 were Opportunity Value Portfolio 1.55% annualized. before waivers/reimbursement and credits allowed by the /(11)/ Total Portfolio Annual custodian for the period ended Expenses for the Endeavor High December 31, 1998 were 0.99%. Yield Portfolio before waivers/reimbursement and /(9)/ Total Portfolio Annual credits allowed to the Expenses for the Dreyfus U.S. custodian for the period ended Government Securities December 31, 1998 were 1.58% Portfolio before annualized. waiver/reimbursements and credits allowed by the /(12)/ The Endeavor Janus Growth custodian for the period ended Portfolio is new, so the Total December 31, 1998 were 0.73%. Portfolio Annual Expenses before waivers/reimbursement /(10)/ Total Portfolio Annual for the period ending December Expenses for the Endeavor 31, 1999 are estimated to be Select 50 Portfolio before 0.895%. waivers/reimbursement and credit allowed by 11 EXAMPLES You would pay the following entire certificate value is in the expenses on a $1,000 investment applicable mutual fund subaccount (plus a 5% premium enhancement), and assuming the family income assuming a hypothetical 5% annual protector rider has been selected: return on assets, assuming the
=============================================================================================================================== If the Certificate is annuitized at If the Certificate is surrendered the end of the applicable time period or at the end of the applicable if the Certificate is not surrendered or time period. annuitized. ----------------------------------------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Asset Allocation $111 $ 166 $215 $369 $31 $ 95 $162 $343 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Money Market $109 $ 160 $205 $323 $29 $ 89 $152 $323 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Income $111 $ 168 $218 $374 $31 $ 97 $165 $348 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price Growth Stock $111 $ 168 $219 $376 $31 $ 97 $166 $350 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price International Stock $112 $ 172 $225 $387 $32 $101 $171 $360 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Value Equity $111 $ 168 $218 $374 $31 $ 97 $165 $348 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Opportunity Value $113 $ 172 $225 $388 $33 $101 $172 $361 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Enhanced Index $114 $ 175 $231 $398 $34 $104 $178 $372 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus U.S. Government Securities $110 $ 164 $211 $361 $30 $ 93 $158 $335 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Small Cap Value $112 $ 171 $223 $383 $32 $ 99 $169 $357 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Select 50 $118 $ 187 $250 $435 $38 $116 $197 $408 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor High Yield $116 $ 182 $241 $417 $36 $110 $187 $391 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Endeavor Janus Growth $111 $ 168 $219 $376 $31 $ 97 $166 $350 - ------------------------------------------------------------------------------------------------------------------------------ ==============================================================================================================================
The above tables should assist you those shown. The assumed 5% annual in understanding the costs and return is hypothetical and should expenses that you will bear, not be considered a representation directly or indirectly. These of past or future annual returns, include the 1998 expenses of the which may be greater or less than underlying portfolios, except for the assumed rate. Endeavor Janus Growth (whose expenses listed above are estimates In the examples, the $40 annual for the first full year of service charge is reflected as a operations). In addition to the charge of ________% based on expenses listed above, premium average certificate value of taxes may be applicable. $___________. These examples should not be These examples also reflect the considered a representation of past annual fee of 0.30% for the family or future expenses, and actual income protector rider. expenses may be greater or less than 12 Expenses would be lower if you do The certificate is a "variable" not elect that rider. annuity because the value of your investments can go up or down based Financial Information. The on the performance of your subaccounts had not commenced investment choices. If you invest operations as of December 31, 1998, in the mutual fund account, the therefore there is no condensed amount of money you are able to financial information to report as accumulate in your certificate of the date of this prospectus. during the accumulation phase depends upon the performance of your investment choices. The amount 1. THE GENERATIONS PLUS VARIBLE of annuity payments you receive ANNUITY during the income phase from the mutual fund account also depends This prospectus describes The upon the investment performance of Endeavor Generations Plus Variable your investment choices for the Annuity certificate offered by PFL income phase. Life Insurance Company. The certificate also contains a An annuity is a contract between fixed account. The fixed account you, the certificate owner, and an offers interest at rates that are insurance company (in this case guaranteed by PFL not to decrease PFL), where the insurance company during the selected guaranteed promises to pay you an income in period. There may be different the form of annuity payments. These interest rates for each different payments begin on a designated guaranteed period that you select. date, referred to as the annuity commencement date. Until the 2. ANNUITY PAYMENTS annuity commencement date, your (THE INCOME PHASE) annuity is in the accumulation phase and the earnings are tax You choose the annuity commencement deferred. Tax deferral means you date. You can change this date by generally are not taxed on your giving us 30 days written notice annuity until you take money out of before the current annuity your annuity. After the annuity commencement date. The new annuity commencement date, your annuity commencement date must be at least switches to the income phase. 30 days after we receive notice of the change. The latest annuity The Generations Plus Variable commencement date cannot be after Annuity consists of (a) a group the certificate month following the annuity contract that we, PFL Life month in which the annuitant Insurance Company, issue to the attains age 95. contract holder, and (b) an individual certificate that we Election of Annuity Payment Option. issue to you. This prospectus ---------------------------------- describes your certificate. The Before the annuity commencement certificate is a flexible premium date, if the annuitant is alive, variable annuity. You can use the you may choose an annuity payment certificate to accumulate funds for option or change your election. If retirement or other long-term the annuitant dies before the financial planning purposes. Your annuity commencement date, the individual investment and your beneficiary may elect to receive rights are determined primarily by the death benefit in a lump sum or your own certificate. under one of the annuity payment options. It is a "flexible premium" annuity because after you purchase it, you Unless you specify otherwise, the can generally make additional annuitant will receive the annuity investments of any amount of $50 or payments. After the annuitant's more, until the annuity death, the beneficiary will receive commencement date. But you are not any remaining guaranteed payments. required to make any additional investments. 13 Annuity Payment Options The annuity payment options are explained below. Options 1, 2, and The certificate provides five 4 are fixed only. Options 3 and 5 annuity payment options that are can be fixed or variable. described below. You may chose any combination of annuity payment Payment Option 1--Interest options. We will use your adjusted -------------------------- certificate value to provide these Payments. We will pay the interest annuity payments. The adjusted -------- certificate value is the on the amount we use to provide certificate value increased or annuity payments in equal payments, decreased by any applicable excess or this amount may be left to interest adjustment. If the accumulate for a period of time you adjusted certificate value on the and PFL agree to. You and PFL will annuity commencement date is less agree on withdrawal rights when you than $2,000, PFL reserves the right elect this option. to pay it in one lump sum in lieu of applying it under an annuity Payment Option 2--Income for a payment option. You can receive ------------------------------ annuity payments monthly, Specified Period. We will make quarterly, semi-annually, or ---------------- annually. level payments only for the fixed period you choose. No funds will Unless you choose to receive remain at the end. variable payments under annuity payment options 3 or 5, the amount Payment Option 3--Life Income. You of each payment will be set on the ----------------------------- annuity commencement date and will may choose between: not change. You may, however, choose to receive variable payments Fixed Payments under payment options 3 and 5. The dollar amount of the first variable . No Period Certain--We will payment will be determined in make level payments only accordance with the annuity payment during the annuitant's rates set forth in the applicable lifetime. table contained in the group contract and/or certificate. The . 10 Years Certain--We will dollar amount of additional make level payments for the variable payments will vary based longer of the annuitant's on the investment performance of lifetime or ten years. the mutual fund subaccount(s). The dollar amount of each variable . Guaranteed Return of payment after the first may Certificate Proceeds--We will increase, decrease, or remain make level payments for the constant. If the actual investment longer of the annuitant's performance exactly matched the lifetime or until the total assumed investment return of 5% at dollar amount of payments we all times, the amount of each make to you equals the amount variable annuity payment would applied to this option. remain equal. If actual investment performance exceeds the assumed Variable Payments investment return, the amount of the variable annuity payments would . No Period Certain--Payments increase. Conversely, if actual will be made only during the investment performance is lower lifetime of the annuitant. than the assumed investment return, the amount of the variable annuity . 10 Years Certain--Payments payments would decrease. will be made for the longer of the annuitant's lifetime A charge for premium taxes and an or ten years. excess interest adjustment may be made when annuity payments begin. Payment Option 4--Income of a ----------------------------- Specified Amount. Payments are made ---------------- for any specified amount until the amount applied to this option, with interest, is exhausted. This will be a series of level payments followed by a smaller final payment. 14 Payment Option 5--Joint and 3. PURCHASE - --------------------------- Survivor Annuity. You may choose Certificate Issue Requirements - ---------------- between: PFL will issue a certificate IF: Fixed Payments . PFL receives all information needed to issue the certificate; . Payments are made during the joint lifetime of the payee . PFL receives a minimum initial and a joint payee of your premium payment; and selection. Payments will be made as long as either person . You (annuitant and any joint is living. certificate owner) are age 84 or younger. Variable Payments Premium Payments . Payments are made as long as either the payee or the joint You should make checks for premium payee is living. payments payable only to PFL Life Insurance Company and send them to Other annuity payment options may the administrative and service be arranged by agreement with PFL. office. Your check must be honored Certain annuity payment options may in order for PFL to pay any not be available in all states. associated payments and benefits due under the certificate. NOTE CAREFULLY: - --------------- Initial Premium Requirements IF: The initial premium payment for nonqualified certificates must be . you choose Life Income with No at least $5,000, and at least Period Certain or a Joint and $2,000 for qualified certificates. Survivor Annuity; and There is no minimum initial premium payment for certificates issued . the annuitant(s) dies before the under section 403(b) of the due date of the second annuity Internal Revenue Code; however, payment; your premium must be received within 90 days of the certificate THEN: date or your certificate will be canceled. We will credit your . we may make only one annuity initial premium payment to your payment. certificate within two business days after the day we receive it IF: and your complete certificate information. If we are unable to . you choose Income for a credit your initial premium Specified Period, Life Income payment, we will contact you within with 10 years Certain, Life five business days and explain why. Income with Guaranteed Return of We will also return your initial Certificate Proceeds, or Income premium payment at that time unless of a Specified Amount; and you tell us to keep it and credit it as soon as possible. . the person receiving payments dies prior to the end of the The date on which we credit your guaranteed period; initial premium payment to your certificate is the certificate THEN date. The certificate date is used to determine certificate years, . the remaining guaranteed certificate months and certificate payments will be continued to anniversaries. that person's beneficiary, or their present value may be paid in a single sum. We will not pay interest on amounts represented by uncashed annuity payment checks if the postal or other delivery service is unable to deliver checks to the payee's address of record. The payee is responsible to keep PFL informed of the payee's current address of record. 15 Additional Premium Payments You may change allocations for future additional premium payments You are not required to make any by sending us written instructions additional premium payments. or by telephone, subject to the However, you can make additional limitations described under premium payments as often as you "Telephone Transactions." The like during the lifetime of the allocation change will apply to annuitant and during the premium payments received after the accumulation phase. Additional date we receive the change request. premium payments must be at least $50. We will credit additional Certificate value premium payments to your certificate as of the business day You should expect your certificate we receive your premium and value to change from valuation required information. period to valuation period. A valuation period begins at the Maximum Total Premium Payments close of trading on the New York Stock Exchange on each business day We allow premium payments up to a and ends at the close of trading on total of $1,000,000 without prior the next succeeding business day. A approval. business day is each day that the New York Stock Exchange is open. Premium Enhancement The New York Stock Exchange generally closes at 4:00 p.m. An amount equal to 5% of the eastern time. Holidays are initial premium payment will be generally not business days. added to the certificate value (4% if you are 70 years old or older). 4. INVESTMENT CHOICES The amount of the premium enhancement is not considered a The Mutual Fund Account premium payment. The premium enhancement percentage may vary There are currently thirteen from premium to premium on variable subaccounts available subsequent premium payments, but under the certificates. will never be less than 0.25% nor more than 7%. A confirmation will The mutual fund subaccounts invest be sent advising the certificate in shares of the various portfolios holder of the amount of premium of the Endeavor Series Trust. The enhancement applicable to each companies that provide investment subsequent premium payment. No advice and administrative services premium enhancement will apply if for the underlying portfolios the certificate is cancelled offered through this certificate pursuant to the Right to Cancel are listed below. The following provision. mutual fund investment choices are currently offered through this Allocation of Premium Payments certificate: When you purchase a certificate, we Subadvised by Morgan Stanley will allocate your premium payment Asset Management Inc. (plus the premium enhancement) to Endeavor Asset Allocation the investment choices you select. Portfolio Your allocation must be in whole Endeavor Money Market Portfolio percentages and must total 100%. We Subadvised by T. Rowe Price will allocate additional premium Associates, Inc. payments the same way, unless you T. Rowe Price Equity Income request a different allocation. If Portfolio you allocate premium payments to T. Rowe Price Growth Stock the dollar cost averaging fixed Portfolio account, you must give us Subadvised by Rowe Price-Fleming directions regarding the mutual International, Inc. fund subaccount(s) to which T. Rowe Price International Stock transfers are to be made or we Portfolio cannot accept your premium payment. Subadvised by OpCap Advisors Endeavor Value Equity Portfolio Endeavor Opportunity Value Portfolio 16 Subadvised by J.P. Morgan Company Act of 1940 (the "1940 Investment Management Inc. Act"). Accordingly, neither the Endeavor Enhanced Index Portfolio general account nor any interests Subadvised by The Dreyfus therein are generally subject to Corporation the provisions of the 1933 or 1940 Dreyfus U.S. Government Acts. PFL has been advised that the Securities Portfolio staff of the SEC has not reviewed Dreyfus Small Cap Value Portfolio the disclosures in this prospectus Subadvised by Montgomery Asset which relate to the fixed account. Management, LLC Endeavor Select 50 Portfolio We guarantee that the interest Subadvised by Massachusetts credited to the fixed account will Financial not be less than 3% per year. At Services Company the end of a guaranteed period Endeavor High Yield Portfolio option you selected, the value in Subadvised by Janus Capital that guaranteed period option will Corporation automatically be transferred into a Endeavor Janus Growth Portfolio new guaranteed period option of the same length (or the next shorter The general public may not purchase period if the same period is no shares of these underlying longer offered) at the current portfolios. The investment interest rate for that period. You objectives and policies may be can transfer to another investment similar to other portfolios and choice by giving us notice within mutual funds managed by the same 30 days before the end of the investment adviser or manager that expiring guaranteed period. are sold directly to the public. You should not expect that the Surrenders or partial withdrawals investment results of the from a guaranteed period option of underlying funds to be the same as the fixed account are subject to an those of the other portfolios or excess interest adjustment. This mutual funds. adjustment may increase or decrease the amount of interest credited to More detailed information, your certificate. The excess including an explanation of the interest adjustment will not portfolio's investment objectives, decrease the interest credited to may be found in the current your certificate below 3% per year, prospectus for the Endeavor Series however. You bear the risk that we Trust, which is attached to this will not credit interest greater prospectus. You should read the than 3% per year. We determine prospectus for the Endeavor Series credited rates, which are Trust carefully before you invest. guaranteed for at least one year, in our sole discretion. We may receive expense reimbursements or other revenues If you select the fixed account, from the Endeavor Series Trust or your money will be placed with the its manager. The amount of these other general assets of PFL. The reimbursements or revenues, if any, amount of money you are able to may be based on the amount of accumulate in the fixed account assets that PFL or the mutual fund during the accumulation phase account invests in the underlying depends upon the total interest portfolios. credited. The amount of annuity payments you receive during the The Fixed Account income phase from the fixed portion of your certificate will remain Premium payments allocated and level for the entire income phase. amounts transferred to the fixed account become part of the general Transfers account of PFL. Interests in the general account have not been During the accumulation phase, you registered under the Securities Act may make transfers from any mutual of 1933 (the "1933 Act"), nor is fund subaccount as often as you the general account registered as wish within certain limitations. an investment company under the Investment 17 Transfers from a guaranteed period Transfers may be made by telephone, option of the fixed account are subject to the limitations limited to the following: described below under "Telephone At the end of a guaranteed period, Transactions." you must notify us within 30 days prior to the end of the guaranteed Currently, there is no charge for period that you wish to transfer transfers. However, the number of the amount in that guaranteed transfers permitted may be limited period option to another investment in the future and charges per choice. transfer may apply in the future. We reserve the right to prohibit . Transfers of amounts equal to transfers to the fixed account if interest credited. This may we are crediting an effective affect your overall interest- annual interest rate of 3.0%. crediting rate, because transfers are deemed to come Family Income Protector from the oldest premium payment first. The optional "family income protector" rider assures you of a . Other than at the end of a minimum level of income in the guaranteed period, transfers of future by guaranteeing a minimum amounts from the guaranteed annuitization value (discussed period option in excess of below) after 10 years. You may amounts equal to interest elect to purchase this benefit, credited, are subject to an which guarantees a minimum amount excess interest adjustment. If you will have to apply to a family it is a negative adjustment, the income protector annuity payment maximum amount you can transfer option and which guarantees a is 25% of the amount in that minimum amounts of those payments guaranteed period option, less once you begin to receive them. By any previous transfers during electing this benefit, you can the current certificate year. If participate in the gains of the it is a positive adjustment, we underlying variable investment do not limit the amount that you options you select while knowing can transfer. that you are guaranteed a minimum level of income in the future, There are no transfers permitted regardless of the performance of out of the dollar cost averaging the underlying variable investment fixed account option except through options. the dollar cost averaging program. You can annuitize under the Family Each transfer must be at least $500 Income Protector (subject to the (or the entire mutual fund conditions described below) at the subaccount value), except for greater of the adjusted certificate transfers of guaranteed period value (described above) or the option amounts equal to interest minimum annuitization value. credited, for which there is a minimum transfer amount of $50. If Minimum Annuitization Value. The less than $500 remains, then we --------------------------- reserve the right to either deny minimum annuitization value is: the transfer or include that amount in the transfer. . the certificate value on the date the rider is issued, During the income phase of your certificate, you may transfer . plus any additional premium values out of any mutual fund payments (not including any subaccount up to four times per premium enhancement), year. However, you cannot transfer values out of the fixed account in . minus an adjustment for any this phase. The minimum amount that withdrawals made after the date can be transferred during this the rider is issued, phase is the lesser of $10 of monthly income, or the entire . accumulated at the annual growth monthly income of the annuity units rate written on page one of the in the mutual fund subaccount from rider, which the transfer is being made. . minus any premium taxes. 18 The annual growth rate is currently after the rider is added. However, 6% per year; PFL may, at its all of these benefit specifications discretion, change the rate in the may change if you elect to upgrade future, but the rate will never be the minimum annuitization value. less than 3% per year, and once the rider is added to your certificate, Minimum Annuitization Value the annual growth rate will not --------------------------- vary during the life of that rider. Upgrade. You can upgrade your Withdrawals may reduce the minimum ------- annuitization value on a basis minimum annuitization value to the greater than dollar-for-dollar. See certificate value within 30 days the Statement of Additional after any certificate anniversary Information for more information. before your 85th birthday (earlier if required by state law). For your The minimum annuitization value may convenience, we will put the last only be used to annuitize using the date to upgrade on page one of the family income protector payment rider. options and may not be used with any of the other annuity payment If you upgrade, the current rider options listed in section 2. The will terminate and a new one will family income protector payment be issued with its own specified options are: guaranteed benefits and fees. Please note that the benefits and . Life Income - An election may be fees under the new rider may differ made for "No Period Certain" or from your benefits and fees prior "10 Years Certain". In the event to upgrading. of the death of the annuitant prior to the end of the chosen Conditions of Exercise of the period certain, the remaining ----------------------------- period certain payments will be Family Income Protector. You can continued to the beneficiary. ----------------------- only annuitize using the family . Joint and Full Survivor - An income protector within the 30 days election may be made for "No after the tenth or later Period Certain" or "10 Years certificate anniversary after the Certain". Payments will be made family income protector is elected as long as either the annuitant or, in the case of an upgrade of or joint annuitant is living. In the minimum annuitization value, the event of the death of both the tenth or later certificate the annuitant and joint anniversary following the upgrade; annuitant prior to the end of PFL may, at its discretion, change the chosen period certain, the the waiting period before the remaining period certain family income protector can be payments will be continued to exercised in the future. You the beneficiary. cannot, however, annuitize using the family income protector after The minimum annuitization value is the certificate anniversary after used to calculate the family income your 94th birthday (earlier if protector payment and does not required by state law). For your establish or guarantee a convenience, we will put the first certificate value or guarantee and last date to annuitize using performance of any investment the family income protector on page option. one of the rider. In addition to the annual growth Note Carefully -- If you annuitize rate, other benefits and fees under at any time other than indicated the rider (the rider fee, the fee above, you cannot use the family waiver threshold, guaranteed income protector. payment fee, and the waiting period before the family income protector Guaranteed Minimum Stabilized can be exercised, as well as the ----------------------------- annual growth rate) are also Payments. Annuity payments under guaranteed not to change -------- the family income protector are guaranteed to never be less than the initial payment. See the Statement of Additional Information for information concerning the calculation of the initial payment. The payments will also be "stabilized" or held constant during each certificate year. 19 Under the family income protector, The guaranteed payment fee is each annuity payment will be the included on page one of the rider. greater of the stabilized payment or the payment calculated without Termination. The family income regard to the stabilized payments. ----------- During the first certificate year protector is irrevocable. You have after annuitizing using the family the option not to use the benefit income protector, each stabilized but you will not receive a refund payment will equal the initial of any fees you have paid. The payment. On each certificate family income protector will anniversary thereafter, the terminate upon the earliest of the stabilized payment will increase or following: decrease depending on the performance of the investment . annuitization (you will still options you selected, and then be get guaranteed minimum held constant at that amount for stabilized payments if you that certificate year. The annuitize using the minimum stabilized payment on each annuitization value under the certificate anniversary will equal family income protector), the greater of the initial payment or the payment supportable by the . upgrade of the minimum annuity units in the selected annuitization value (although a investment options. See the new rider will be issued), Statement of Additional Information for additional information . termination of your certificate, concerning stabilized payments. or Family Income Protector Rider Fee. . 30 days after the certificate - --------------------------------- anniversary after your 94th A rider fee, currently 0.30% of the birthday (earlier if required by minimum annuitization value on the state law). previous certificate anniversary, is charged annually prior to The family income protector does annuitization. We will also charge not establish or guarantee this fee if you take a complete certificate value or guarantee withdrawal. PFL may change the performance of any investment rider fee percentage in the future, option. Because this benefit is but it will never be greater than based on conservative actuarial 0.50%. The rider fee is deducted factors, the level of lifetime from each variable investment income that it guarantees may be option in proportion to the amount less than the level that would be of certificate value in each provided by application of the subaccount. certificate value at otherwise applicable adjusted annuity The rider fee on any given factors. Therefore, the family certificate anniversary will be income protector should be regarded waived if the certificate value as a safety net. The costs of exceeds the fee waiver threshold. annuitizing under the Family Income The fee waiver threshold currently Protector include the guaranteed is two times the minimum payment fee, and also the lower annuitization value. PFL may, at payout levels inherent in the its discretion, change the fee annuity tables used for those waiver threshold in the future, but minimum payouts. These costs should it will never be greater than two be balanced against the benefits of and one-half times the minimum a minimum payout level. annuitization value. Dollar Cost Averaging Program Guaranteed Payment Fee. A - ---------------------- During the accumulation phase, you guaranteed payment fee, currently may instruct us to automatically equal to an effective annual rate transfer money from the dollar cost of 1.25% of the daily net asset averaging fixed account option, the value in the mutual fund account, Endeavor Money Market Subaccount, is reflected in the amount of the or the Dreyfus U.S. Government variable payments you receive if Securities Subaccount, into any you annuitize under the family other mutual fund subaccounts. You income protector rider. PFL may may specify the dollar amount to be change the guaranteed payment fee transferred either monthly or in the future, but it will never be quarterly; however each transfer greater than 2.25%. must be at least $500. A minimum of 6 monthly or 4 quarterly transfers are required and a maximum of 24 months or 8 quarterly transfers 20 are allowed. Transfers must begin requesting a transaction by within 30 days. We will make the telephone. We may also require transfers on the 28th day of the written confirmation of your applicable month. There is no request. We will not be liable for charge for this program. following telephone requests that we believe are genuine. Telephone Dollar cost averaging buys more requests must be received while the accumulation units when prices are New York Stock Exchange is open to low and fewer accumulation units assure same-day pricing of the when prices are high. It does not transaction. We may discontinue guarantee profits or assure that this option at any time. you will not experience a loss. You should consider your ability to 5. EXPENSES continue the dollar cost averaging program during all economic There are charges and expenses conditions. associated with your certificate that reduce the return on your We may credit different interest investment in the certificate. rates for dollar cost averaging programs of varying time periods. Surrender Charge If you discontinue the dollar cost averaging program before its During the accumulation phase, you completion, then the interest can withdraw part or all of the credited on amounts in the dollar cash value. Cash value is the cost averaging fixed account may be certificate value increased or adjusted downward, but not below decreased by any excess interest the minimum guaranteed effective adjustment and decreased by any annual interest rate of 3%. applicable surrender charge, premium taxes, and Family Income Asset Rebalancing Protector rider fees, and less the annual Service Charge. We may apply During the accumulation phase you a surrender charge to compensate us can instruct us to automatically for expenses relating to sales, rebalance the amounts in your including commissions to registered mutual fund subaccounts to maintain representatives and other your desired asset allocation. This promotional expenses. After the feature is called asset rebalancing first year, you can withdraw up to and can be started and stopped at 10% of your cumulative premium any time free of charge. However, payments once each certificate year we will not rebalance if you are in free of surrender charges. This the dollar cost averaging program amount is referred to as the free or if any other transfer is percentage and is determined at the requested. Asset rebalancing time of the withdrawal. If you ignores amounts in the fixed withdraw money in excess of 10% of account. You can choose to your cumulative premium payments , rebalance monthly, quarterly, semi- you might have to pay a surrender annually, or annually. charge, which is a contingent deferred sales charge, on the Telephone Transactions excess amount. The following schedule shows the surrender You may make transfers and change charges that apply during the nine the allocation of additional years following each premium premium payments by telephone IF: payment: . you select the "Telephone Transfer/Reallocation Authorization" box in the certificate enrollment form or enrollment information; or . you later make this request in writing. You will be required to provide certain information for identification purposes when 21
- ----------------------------------- Number of Years Surrender Charge The mortality and expense risk fee Since Premium (as a percentage of is at an annual rate of 1.35% of Payment Date premium withdrawn) assets. This annual fee is assessed - ----------------------------------- daily based on the net asset value of each mutual fund subaccount. 0 - 1 8% - ----------------------------------- If this charge does not cover our 1 - 2 8% actual costs, we absorb the loss. - ----------------------------------- Conversely, if the charge more than 2 - 3 8% covers actual costs, the excess is - ----------------------------------- added to our surplus. We expect to 3 - 4 7% profit from this charge. We may use - ----------------------------------- any profit for any proper purpose, 4 - 5 6% including distribution expenses. - ----------------------------------- 5 - 6 5% Administrative Charges - ----------------------------------- 6 - 7 4% We deduct an administrative charge - ----------------------------------- to cover the costs of administering 7-8 3% the annuity (including certain - ----------------------------------- distribution-related expenses). 8-9 2% This daily charge is equal to an - ----------------------------------- annual rate of 0.40% of the daily 9 or more 0% net asset value of the mutual fund - ----------------------------------- account.
In addition, an annual service For example, assume your premium charge of $40 (but not more than 2% payments total $100,000 at the of the certificate value) is beginning of certificate year 2 and charged on each certificate you withdraw $30,000. Since that anniversary and at surrender. The amount is more than your free service charge is waived if your percentage, you would pay a certificate value is at least surrender charge of $1,600 on the $100,000 or if the sum of your $20,000 remaining after the free premiums, less all partial percentage (8% of ($30,000 - withdrawals, is at least $100,000. $10,000)). Premium Taxes You receive the full amount of a requested partial withdrawal Some states assess premium taxes on because we deduct any applicable the premium payments you make. We excess interest adjustment and currently do not deduct for these surrender charge from your taxes at the time you make a remaining certificate value. You premium payment. However, we will receive your cash value upon full deduct the total amount of premium surrender. taxes, if any, from the certificate value when: For surrender charge purposes, the oldest premium is considered to be . you elect to begin receiving withdrawn first. annuity payments; Keep in mind that withdrawals may . you surrender the certificate; be taxable, and if made before age or 59 1/2, may be subject to a 10% federal penalty tax. For tax . you die and a death benefit is purposes, withdrawals are paid (you must also be the considered to come from earnings annuitant for the death benefit first. to be paid). Surrender charges are waived if you Generally, premium taxes range from withdraw money under the nursing 0% to 3.50%, depending on the care and terminal condition state. withdrawal option or unemployment waiver. Mortality and Expense Risk Fee We charge a fee as compensation for bearing certain mortality and expense risks under the certificate. Examples include a guarantee of annuity rates, the death benefits, certain expenses of the certificate, and assuming the risk that the current charges will be insufficient in the future to cover costs of administering the certificate. 22 Federal, State and Local Taxes Annuities in General We may in the future deduct charges Deferred annuities are a way of from the certificate for any taxes setting aside money for future we incur because of the needs like retirement. Congress certificate. However, no deductions recognized how important saving for are being made at the present time. retirement is and provided special rules in the Internal Revenue Code Transfer Fee for annuities. You are allowed to make 12 free Simply stated, these rules provide transfers per year before the that generally you will not be annuity commencement date. If you taxed on the earnings, if any, on make more than 12 transfers per the money held in your annuity year, we reserve the right to certificate until you take the charge $10 for each transfer. money out. This is referred to as Premium payments, asset rebalancing tax deferral. There are different and dollar cost averaging transfers rules as to how you will be taxed are not considered transfers. All depending on how you take the money transfer requests made at the same out and the type of annuity - time are treated as a single qualified or nonqualified request. (discussed below). Family Income Protector You will not be taxed on increases in the value of your annuity until If you elect the family income a distribution occurs - either as a protector, there is an annual rider withdrawal or as annuity payments. fee during the accumulation phase of 0.30% of the minimum When a non-natural person (e.g., annuitization value, and a corporation or certain other guaranteed payment fee during the entities other than tax-qualified income phase of 1.25% of the daily trusts) owns a nonqualified net asset value if you annuitize annuity, the certificate will under the rider. The annual rider generally not be treated as an fee is also deducted upon a annuity for tax purposes. complete withdrawal. (See Section 4, "INVESTMENT CHOICES - Family Qualified and Nonqualified Annuities Income Protector.") If you purchase the certificate Portfolio Management Fees under an individual retirement annuity, a pension plan, or The value of the assets in each specially sponsored program, your mutual fund subaccount will reflect certificate is referred to as a the fees and expenses paid by the qualified annuity. underlying fund. A description of these expenses is found in the Qualified annuities are issued in prospectus for the Endeavor Series connection with the following Trust. plans: 6. TAXES . Individual Retirement Annuity (IRA): A traditional IRA allows NOTE: PFL has prepared the individuals to make following information on federal contributions, which may be income taxes as a general deductible, to the certificate. discussion of the subject. It is A Roth IRA also allows not intended as tax advice to any individuals to make individual. You should consult your contributions to the own tax adviser about your own certificate, but it does not circumstances. PFL has included an allow a deduction for additional discussion regarding contributions, and distributions taxes in the Statement of may be tax-free if the owner Additional Information. meets certain rules. . Tax-Sheltered Annuity (403(b) Plan): A 403(b) Plan may be made available to employees of certain public school systems and tax-exempt organizations and permits 23 contributions to the certificate on . which come from premium payments a pre-tax basis. made prior to August 14, 1982. . Corporate Pension and Profit- All deferred non-qualified annuity Sharing and H.R. 10 Plan: annuities that are issued by PFL Employers and self-employed Life (or its affiliates) to the individuals can establish same owner during any calendar year pension or profit-sharing plans are treated as one annuity for for their employees or purposes of determining the amount themselves and make includable in the owner's income contributions to the certificate when a taxable distributions on a pre-tax basis. occurs. . Deferred Compensation Plan (457 Withdrawals - Qualified Annuities Plan): Certain governmental and tax-exempt organizations can The above information describing establish a plan to defer the taxation of nonqualified compensation on behalf of their annuities does not apply to employees through contributions qualified annuities. There are to the certificate. special rules that govern with respect to qualified annuities. If you purchase the certificate as Generally, these rules restrict: an individual and not under an individual retirement annuity, . the amount that can be 403(b) plan, 457 plan, or pension contributed to the certificate or profit sharing plan, your during any year; and certificate is referred to as a nonqualified annuity. . the time when amounts can be paid from the certificates. Withdrawals - Nonqualified Annuities In addition, a penalty tax may be If you make a withdrawal from your assessed on amounts withdrawn from certificate before the annuity the certificate prior to the date commencement date, the Internal you reach age 59 1/2, unless you Revenue Code treats that withdrawal meet one of the exceptions to this as first coming from earnings and rule. You may also be required to then from your premium payments. begin taking minimum distributions When you make a withdrawal you are from the certificate by a certain taxed on the amount of the date. The terms of the plan may withdrawal that is earnings. (The limit the rights otherwise excess interest adjustment available to you under the resulting from the withdrawal may certificates. affect the amount on which you are taxed.) Different rules apply for We have provided more information annuity payments. See "Annuity in the Statement of Additional Payments" below. Information. You should consult your legal counsel or tax adviser The Internal Revenue Code also if you are considering purchasing a provides that withdrawn earnings certificate for use with any may be subject to a penalty. The retirement plan. amount of the penalty is equal to 10% of the amount that is Withdrawals - 403(b) Annuities includable in income. Some withdrawals will be exempt from the The Internal Revenue Code limits penalty. They include any amounts: the withdrawal of premium payments from certain 403(b) annuities. . paid on or after the taxpayer Withdrawals can generally only be reaches age 59 1/2; made when a certificate owner: . paid after the taxpayer dies; . reaches age 59 1/2; . paid if the taxpayer becomes totally disabled (as that term . leaves his/her job; is defined in the Internal Revenue Code); . dies; . paid in a series of . becomes disabled (as that term substantially equal payments is defined in the Internal made annually (or more Revenue Code); or frequently) under a lifetime annuity; . paid under an immediate annuity; or 24 in the case of hardship. However, payments you receive will be in the case of hardship, the includable in your gross income. certificate owner can only withdraw the premium payments and In general, the excludable portion not any earnings. of each annuity payment you receive will be determined as follows: Diversification and Distribution Requirements . Fixed payments - by dividing the "investment in the contract" on The Internal Revenue Code provides the annuity commencement date by that the underlying investments for the total expected value of the a variable annuity must satisfy annuity payments for the term of certain diversification the payments. This is the requirements in order to be treated percentage of each annuity as an annuity. The annuity must payment that is excludable. also meet certain distribution requirements at the death of an . Variable payments - by dividing owner in order to be treated as an the "investment in the contract" annuity. These diversification and on the annuity commencement date distribution requirements are by the total number of expected discussed in the Statement of periodic payments. This is the Additional Information. PFL may amount of each annuity payment modify the group contract and that is excludable. certificate to attempt to maintain favorable tax treatment. The remainder of each annuity payment is includable in gross Taxation of Death Benefit Proceeds income. Once the "investment in the contract" has been fully recovered, Amounts may be distributed from the the full amount of any additional certificate because of the death of annuity payments is includable in a certificate owner or the gross income. annuitant. Generally, such amounts are includable in the income of the If you select more than one annuity recipient: payment option, special rules govern the allocation of the . if distributed in a lump sum, certificate's entire "investment in these amounts are taxed in the the contract" to each such option, same manner as a full surrender; for purposes of determining the or excludable amount of each payment received under that option. We . if distributed under an annuity advise you to consult a competent payment option, these amounts tax adviser as to the potential tax are taxed in the same manner as effects of allocating amounts to annuity payments. any particular annuity payment option. For these purposes, the "investment in the contract" is not affected by If, after the annuity commencement the owner's or annuitant's death. date, annuity payments stop because That is, the "investment in the an annuitant died, the excess (if contract" remains generally the any) of the "investment in the total premium payments, less contract" as of the annuity amounts received, which were not commencement date over the includable in gross income. (The aggregate amount of annuity same tax treatment applies to any payments received that was excluded amounts distributed after an from gross income is generally owner's death.) The premium credit allowable as a deduction for your that we add to your certificate last taxable year. value is not included in the investment in the contract. Transfers, Assignments or Exchanges Annuity Payments A transfer of ownership or assignment of a certificate, the Although the tax consequences may designation of an annuitant or vary depending on the annuity other beneficiary who is not also payment option you select, in the owner, the general, for nonqualified and certain qualified annuities, only a portion of the annuity 25 selection of certain annuity Withdrawals from the fixed account commencement dates, or a change of may also be subject to an excess annnuitant, may result in certain interest adjustment. income or gift tax consequences to the owner that are beyound the Income taxes, federal tax penalties scope of this discussion. An owner and certain restrictions may apply contemplating any such transfer, to any withdrawals you make. assignment, selection, or change should contact a competent tax During the income phase, the adviser with respect to the annuity payment option you select potential tax effects of such a will determine your access to the transaction. money in your certificate. Possible Tax Law Changes Delay of Payment and Transfers Although the likelihood of Payment of any amount due from the legislative changes in uncertain, mutual fund account for a there is always the possibility surrender, a death benefit, or the that the tax treatment of the death of the owner of a certificate could change by nonqualified certificate, will legislation or otherwise. You generally occur within seven should consult a tax adviser with business days from the date all respect to legislative developments required information is received by and their effect on the PFL. PFL may be permitted to defer certificate. such payment from the mutual fund account if: 7. ACCESS TO YOUR MONEY . the New York Stock Exchange is Surrenders closed other than for usual weekends or holidays or trading During the accumulation phase, you on the Exchange is otherwise can have access to the money in restricted; your certificate in several ways: . an emergency exists as defined . by making a withdrawal (either a by the SEC or the SEC requires complete or partial withdrawal); that trading be restricted; or or . the SEC permits a delay for the . by taking annuity payments. protection of owners. If you want to make a complete In addition, transfers of amounts withdrawal, you will receive the from the mutual fund subaccounts value of your certificate plus or may be deferred under these minus any excess interest circumstances. adjustment, minus: Pursuant to the requirements of . surrender charges; certain state laws, we reserve the right to defer payment of the cash . premium taxes; value from the fixed account for up to six months. . the service charges; and Excess Interest Adjustment . Family Income Protector rider fees. Money that you withdraw from a guaranteed period option of the If you want to take a partial fixed account before the end of its withdrawal, in most cases it must guaranteed period (the number of be for at least $500. Unless you years you specified the money would tell us otherwise, we will take the remain in the guaranteed period withdrawal from each of the option) may be subject to an excess investment choices in proportion to interest adjustment. At the time the certificate value. you request a withdrawal, if interest rates set by PFL have Remember that any withdrawal you risen since the date of the initial take will reduce the certificate guarantee, the excess interest value, and might reduce the amount adjustment will result in a lower of the death benefit. See Section cash value on surrender. However, 9, Death Benefit, for more details. if interest rates have fallen since Withdrawals may be subject to a the date of the initial guarantee, surrender charge. 26 the excess interest adjustment will This benefit may not be available result in a lower cash value on in all states. See the group surrender. However, if interest contract and certificate or rates have fallen since the date of endorsement for details and the initial guarantee, the excess conditions. interest adjustment will result in a higher cash value on surrender. Unemployment Waiver There will be no excess interest adjustment on any of the following: No surrender charges or excess interest adjustment will apply to . lump sum withdrawals of the free withdrawals if you or your spouse percentage available (see is unemployed. In order to qualify, Surrender Charge, page _____ you (or your spouse, whichever is above);nursing care and terminal applicable) must have been: condition withdrawals; . employed full time for at least . unemployment withdrawals; two years prior to becoming unemployed; and . withdrawals to satisfy any minimum distribution . employed full time on the requirements; and systematic certificate date; and payout option payments, which do not exceed 10% of your . unemployed for at least 60 days cumulative premium payments in a row at the time of the divided by the number of payouts withdrawal; and made per year. . must have a minimum cash value Certain conditions must be at the time of withdrawal of satisfied. See the Statement of $5,000. Additional Information for more details. This benefit is also available to the annuitant or annuitant's spouse Systematic Payout Option if the certificate owner is not a natural person. You can receive regular payments from your certificate by using the You must provide written proof from systematic payout option. Under your State's Department of Labor, this option, you can receive up to which verifies that you qualify for 10% (annually) of your cumulative and are receiving unemployment premium payments free of surrender benefits at the time of withdrawal. charges. Payments can be made This benefit may not be available monthly, quarterly, semi-annually, in all states. See the certificate or annually. for details. Nursing Care and Terminal Condition 8. PERFORMANCE Withdrawal Option The Mutual Fund Account No surrender charges or excess interest adjustment will apply if PFL periodically advertises you or your spouse has been: performance of the various mutual fund subaccounts. We may disclose . confined in a hospital or at least four different kinds of nursing facility for 30 days in performance. First, we may a row; or calculate performance by determining the percentage change . diagnosed with a terminal in the value of an accumulation condition (usually a life unit by dividing the increase expectancy of 12 months or (decrease) for that unit by the less). value of the accumulation unit at the beginning of the period. This This benefit is also available to performance number reflects the the annuitant or annuitant's spouse deduction of the mortality and if the owner is not a natural expense risk fees and person. administrative charges. It does not reflect the deduction of any applicable premium taxes or surrender charges. The deduction of any applicable premium taxes or 27 surrender charges would reduce the Distribution requirements apply to percentage increase or make greater the certificate value upon the any percentage decrease. death of any certificate owner. These requirements are detailed in Second, any advertisement will also the Statement of Additional include total return figures, which Information. reflect the deduction of the mortality and expense risk fees, When We Pay A Death Benefit administrative charges and surrender charges. These figures Before the Annuity Commencement Date will also reflect the premium ------------------------------------ enhancement. We will pay a death benefit to your beneficiary Third, for periods starting prior to the date the annuities were IF: first offered, the performance will be based on the historical . you are both the annuitant and performance of the corresponding an owner of the certificate; and investment portfolios for the periods commencing from the date on . you die before the annuity which the particular investment commencement date. portfolio was made available through the mutual fund account. If the only beneficiary is your Fourth, in addition, for certain surviving spouse, then he or she investment portfolios, performance may elect to continue the may be shown for the period certificate as the new annuitant commencing from the inception date and owner, instead of receiving the of the investment portfolio. These death benefit. All future surrender figures should not be interpreted charges will be waived. to reflect actual historical performance of the mutual fund We will also pay a death benefit to account. your beneficiary IF: We also may, from time to time, . you are not the annuitant; and include in our advertising and sales materials, tax deferred . the annuitant dies before the compounding charts and other annuity commencement date; and hypothetical illustrations, which may include, comparisons of . you specifically requested that currently taxable and tax deferred the death benefit be paid upon investment programs, based on the annuitant's death. selected tax brackets. After the Annuity Commencement Date Appendix B contains performance ----------------------------------- information that you may find The death benefit payable, if any, useful. It is divided into various on or after the annuity parts, depending upon the type of commencement date depends on the performance information shown. annuity payment option selected. Future performance will vary and future results will not be the same IF: as the results shown. . you are not the annuitant; and 9. DEATH BENEFIT . you die on or after the annuity We will pay a death benefit to your commencement date; and beneficiary, under certain circumstances, if the annuitant . the entire interest in the dies before the annuity certificate has not been paid to commencement date and the annuitant you; was also an owner. (If the annuitant was not an owner, a death THEN: benefit may or may not be paid. See below). The beneficiary may choose . the remaining portion of such an annuity payment option, or may interest in the certificate will choose to receive a lump sum. be distributed at least as rapidly as under the method of distribution being used as of the date of your death. When We Do Not Pay A Death Benefit No death benefit is paid in the ------------------------------- following cases: --------------- 28 IF: . you are not the annuitant; and Guaranteed Minimum Death Benefit . the annuitant dies prior to the The guaranteed minimum death annuity commencement date; and benefit is the Step-Up Death Benefit - the largest certificate . you did not specifically request value on the certificate date or on that the death benefit be paid any certificate anniversary before upon the annuitant's death; you reach age 76; plus any premium payments you have made since then; THEN: minus any adjusted partial withdrawals (discussed below) we . you will become the new have paid to you since then. annuitant and the certificate will continue. The Step-Up Death Benefit is not available if the owner or annuitant IF: is 75 or older on the certificate date. In those instances, the death . you are not the annuitant; and benefit will be a return of premium - total premium payments, less any . you die prior to the annuity adjusted partial withdrawals as of commencement date; the date of death. This will not include any premium enhancement. THEN: IF: . the new owner must surrender the certificate for the certificate . the surviving spouse elects to value increased or decreased by continue the certificate instead an excess interest adjustment of receiving the death benefit; within five years of your death. and Note carefully. If the owner does . the guaranteed minimum death - -------------- benefit is greater than the not name a contingent owner, the certificate value; owner's estate will become the new owner. If no probate estate is THEN: opened (because, for example, the owner has precluded the opening of . we will increase the certificate a probate estate by means of a value to be equal to the trust or other instrument), and PFL guaranteed minimum death has not received written notice of benefit. This increase is made the trust as a successor owner only at the time the surviving signed prior to the owner's death, spouse elects to continue the then that trust may not exercise certificate. ownership rights to the certificate. It may be necessary to Adjusted Partial Withdrawal open a probate estate in order to exercise ownership rights to the When you request a partial certificate if no contingent owner withdrawal, your guaranteed minimum is named in a written notice death benefit will be reduced by an received by PFL. amount called the adjusted partial withdrawal. Under certain Amount of Death Benefit circumstances, the adjusted partial withdrawal may be more than the Death benefit provisions may differ amount of your withdrawal request. from state to state. The death It is also possible that if a death benefit may be paid as a lump sum benefit is paid after you have made or as annuity payments. The death a partial withdrawal, then the benefit will be the greatest of: total amount paid could be less than the total premium payments. We . certificate value on the date we have included a detailed receive the required information; explanation of this adjustment in or the Statement of Additional Information. . cash value on the date we receive the required information; or . guaranteed minimum death benefit (discussed below). 29 10. OTHER INFORMATION The Mutual Fund Account Ownership PFL established a mutual fund account, called the PFL Life Variable You, as owner of the certificate, Annuity Account C, under the laws of exercise all rights under the the State of Iowa on February 20, certificate. You can change the 1997. The mutual fund account certificate owner at any time by receives and currently invests the notifying us in writing. An premium payments that are allocated ownership change may be a taxable to it for investment in shares of event. the underlying mutual fund portfolios. Assignment The mutual fund account is You can also assign the certificate registered with the SEC as a unit any time during your lifetime. PFL investment trust under the will not be bound by the assignment Investment Company Act of 1940. until we receive written notice of However, the SEC does not supervise the assignment. We will not be the management, the investment liable for any payment or other practices, or the policies of the action we take in accordance with mutual fund account or PFL. Income, the certificate before we receive gains and losses, whether or not notice of the assignment. There may realized, from assets allocated to be limitations on your ability to the mutual fund account are, in assign a qualified annuity. accordance with the policies, credited to or charged against the PFL Life Insurance Company mutual fund account without regard to PFL's other income, gains or PFL Life Insurance Company was losses. incorporated under the laws of the State of Iowa on April 19, 1961 as The assets of the mutual fund NN Investors Life Insurance account are held in PFL's name on Company, Inc. It is engaged in the behalf of the mutual fund account sale of life and health insurance and belong to PFL. However, those and annuity policies. PFL is a assets that underlie the wholly owned indirect subsidiary of certificates are not chargeable AEGON USA, Inc. which conducts most with liabilities arising out of any of its operations through other business PFL may conduct. The subsidiary companies engaged in the mutual fund account includes other insurance business or in providing subaccounts that are not available non-insurance financial services. under these certificates. All of the stock of AEGON USA, Inc., is indirectly owned by AEGON Information about the mutual fund N.V. of the Netherlands, the account can be reviewed and copied securities of which are publicly at the SEC's Public Reference Room traded. AEGON N.V., a holding in Washington, D.C. You may obtain company, conducts its business information about the operation of through subsidiary companies the public reference room by engaged primarily in the insurance calling the SEC at 1-800-SEC-0330. business. PFL is licensed in the In addition, the SEC maintains a District of Columbia, Guam, and in web site (http://www.sec.gov) that all states except New York. contains other information regarding the mutual fund account. All obligations arising under the group contracts and certificates, Mixed and Shared Funding including the promise to make annuity payments, are general Before making a decision concerning corporate obligations of PFL. the allocation of premium payments to a particular mutual fund subaccount, please read the Endeavor Series Trust prospectus. The Endeavor Series Trust is not limited to selling its shares to 30 this mutual fund account and can determine that we are permitted to accept investments from any vote the shares in our own right, separate account or qualified we may do so. retirement plan. Since the portfolios of the underlying funds Each person having a voting are available to registered mutual interest will receive proxy fund accounts offering variable material, reports, and other annuity products of PFL, as well as materials relating to the variable annuity and variable life appropriate portfolio. products of other insurance companies, and qualified retirement Distributor of the Annuity plans, there is a possibility that a material conflict may arise AFSG Securities Corporation is the between the interests of this principal underwriter of the group mutual fund account and one or more contract and certificates. Like of the mutual fund accounts of PFL, it is an indirect wholly owned another participating insurance subsidiary of AEGON USA, Inc. It is company. In the event of a material located at 4333 Edgewood Road N.E., conflict, the affected insurance Cedar Rapids, IA 52499-0001. AFSG companies, including PFL, agree to Securities Corporation is take any necessary steps to resolve registered as a broker/dealer under the matter. This includes removing the Securities Exchange Act of their mutual fund accounts from the 1934. It is a member of the underlying funds. See the National Association of Securities underlying funds' prospectuses for Dealers, Inc. more details. Commissions of up to 5.5% of Reinstatements premium payments or 4.5% of premium payments plus an annual continuing You may surrender your certificate fee based on certificate values and transfer your money directly to will be paid to broker/dealers who another life insurance company sell the certificates under (sometimes referred to as a 1035 agreements with AFSG Securities Exchange or a trustee-to-trustee Corporation. These commissions are transfer). You may also ask us to not deducted from premium payments. reinstate your certificate after In addition, certain production, such a transfer by returning the persistency and managerial bonuses same total dollar amount of funds may be paid. PFL may also pay to the applicable investment compensation to financial choices. The dollar amount will be institutions for their services in used to purchase new accumulation connection with the sale and units at the then current price. servicing of the group contract and Because of changes in market value, certificates. your new accumulation units may be worth more or less than the units Non-participating you previously owned. We recommend that you consult a tax professional The certificates do not participate to explain the possible tax or share in the profits or surplus consequences of exchanges and/or earnings of PFL. No dividends are reinstatements. payable on the certificates. Voting Rights Variations in Certain Provisions Mutual Fund Account. PFL will vote Certain provisions of the group - ------------------- contract and certificates may vary all shares of the Endeavor Series from the descriptions in this Trust in accordance with prospectus in order to comply with instructions we receive from you different state laws. See your and other certificate owners that certificate for variations since have voting interests in the any such state variations will be portfolios. We will send you and included in your certificates or in other certificate owners written riders or endorsements attached to requests for instructions on how to your certificates vote those shares. When we receive those instructions, we will vote all of the shares in proportion to those instructions. If, however, we 31 Year 2000 Matters IMSA We have in place a Year 2000 Project Plan (the "Plan") to review PFL is a member of the Insurance and analyze existing hardware and Marketplace Standards Association software systems, as well as voice (IMSA). IMSA members subscribe to a and data communications systems, to set of ethical standards involving determine if they are Year 2000 the sales and service of compliant. As of the date of this individually sold life insurance prospectus, all of our mission- and annuities. As a member, we may critical systems are Year 2000 use the IMSA logo and language in compliant and ready. The Year 2000 advertisements. Project Plan is continuing as scheduled, as we continue with the Legal Proceedings validation of our mission-critical and non-mission-critical systems, There are no legal proceedings to including revalidation testing in which the mutual fund account is a 1999. In addition, PFL has party or to which the assets of the undertaken aggressive initiatives account are subject. PFL, like to test all systems that interface other life insurance companies, is with any third parties and other involved in lawsuits. In some class business partners. All of these action and other lawsuits involving steps are aimed at allowing current other insurers, substantial damages operations to remain unaffected by have been sought and/or material the Year 2000 date change. settlement payments have been made. Although the outcome of any As of the date of this prospectus, litigation cannot be predicted with we have identified and made certainty, PFL believes that at the available what we believe are the present time there are no pending appropriate resources of hardware, or threatened lawsuits that are people, and dollars, including the reasonably likely to have a engagement of outside third material adverse impact on the parties, to ensure that the Plan mutual fund account or PFL. will be completed. Financial Statements Our actions under The Year 2000 Project Plan are intended to The financial statements of PFL and significantly reduce PFL's risk of the mutual fund account are a material business interruption included in the Statement of based on the Year 2000 issues. Additional Information. Resolving the Year 2000 computer problem is complex and TABLE OF CONTENTS OF THE STATEMENT multifaceted. We cannot know OF ADDITIONAL INFORMATION conclusively whether a response plan is successful until the Year Glossary of Terms 2000 arrives (or an earlier date if The Certificate--General Provisions the systems or equipment address Certain Federal Income Tax Year 2000 data prior to the Year Consequences 2000). In spite of its efforts or Investment Experience results, PFL's ability to function Family Income Protector - unaffected to and through the Year Hypothetical Illustration 2000 may be adversely affected by Historical Performance Data actions, or failure to act, of Published Ratings third parties beyond our knowledge State Regulation of PFL or control. Administration Records and Reports This statement is a Year 2000 Distribution of the Certificates Readiness Disclosure pursuant to Section 3(9) of the Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. (S) 1 (1998). See the prospectus for the Endeavor Series Trust for information on its preparation for Year 2000. 32 Voting Rights Independent Auditors Other Products Other Information Custody of Assets Financial Statements Legal Matters 33 APPENDIX A HISTORICAL PERFORMANCE DATA THE MUTUAL FUND ACCOUNT Standardized Performance Data PFL may advertise historical yields and total returns for the subaccounts of the mutual fund account. In addition, PFL may advertise the effective yield of the subaccount investing in the Endeavor Money Market Portfolio (the "Endeavor Money Market Subaccount"). These figures are calculated according to standardized methods prescribed by the SEC. They are based on historical earnings and are not intended to indicate future performance. Endeavor Money Market Subaccount. The yield of the Endeavor Money Market Subaccount for a certificate refers to the annualized income generated by an investment under a certificate in the subaccount over a specified seven-day period. The yield is calculated by assuming that the income generated for that seven-day period is generated each seven-day period over a 52-week period and is shown as a percentage of the investment. The effective yield is calculated similarly but, when annualized, the income earned by an investment under a certificate in the subaccount is assumed to be reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. Other Subaccounts. The yield of a mutual fund subaccount (other than the Endeavor Money Market Subaccount) for a certificate refers to the annualized income generated by an investment under a certificate in the subaccount over a specified thirty-day period. The yield is calculated by assuming that the income generated by the investment during that thirty-day period is generated each thirty-day period over a 12-month period and is shown as a percentage of the investment. The total return of a subaccount refers to return quotations assuming an investment under a certificate has been held in the subaccount for various periods of time including a period measured from the date the subaccount commenced operations. When a subaccount has been in operation for one, five, and ten years, respectively, the total return for these periods will be provided. The total return quotations for a subaccount will represent the average annual compounded rates of return that equate an initial investment of $1,000 in the subaccount to the redemption value of that investment as of the last day of each of the periods for which total return quotations are provided. The redemption value will, of course, reflect the premium enhancement. The yield and total return calculations for a subaccount do not reflect the effect of any premium taxes that may be applicable to a particular certificate, and they do not reflect the rider charge for the optional family income protector. To the extent that any or all of a premium tax is applicable to a particular certificate, the yield and/or total return of that certificate will be reduced. For additional information regarding yields and total returns calculated using the standard formats briefly summarized above, please refer to the Statement of Additional Information, a copy of which may be obtained from the administrative and service office upon request. Based on the method of calculation described in the Statement of Additional Information, the average annual total returns for periods from inception of the subaccounts to December 31, 1998, and for the one and five year periods ended December 31, 1998 are shown in Table 1 below. Total returns shown reflect deductions for the mortality and expense risk fee, and the administrative charges. Performance figures may reflect the 1.35% mortality and expense risk fee for the Step-Up Death Benefit. Standard total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. Non-Standardized Performance Data In addition to the standard data discussed above, similar performance data for other periods may also be shown. A-1 PFL may also advertise or disclose average annual total return or other performance data in non-standard formats for a subaccount of the mutual fund account. The non-standard performance data may assume that no surrender charge is applicable, and may also make other assumptions such as the amount invested in a subaccount, differences in time periods to be shown, or the effect of partial withdrawals or annuity payments. All non-standard performance data will be advertised only if the standard performance data is also disclosed. For additional information regarding the calculation of other performance data, please refer to the Statement of Additional Information. The non-standardized average annual total return figures shown in Table 2 are based on the assumption that the certificate is not surrendered, and therefore the surrender charge is not imposed. Also, Table 2 does not reflect the rider charge for the optional family income protector. A-2 STATEMENT OF ADDITIONAL INFORMATION THE ENDEAVOR GENERATIONS PLUS VARIABLE ANNUITY Issued through PFL LIFE VARIABLE ANNUITY ACCOUNT C Offered by PFL LIFE INSURANCE COMPANY 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 __________________ This statement of additional information expands upon subjects discussed in the current prospectus for the Endeavor Generations Plus Variable Annuity offered by PFL Life Insurance Company. You may obtain a copy of the prospectus dated May 1, 1999 by calling 1-800-525-6205, or by writing to the Administrative and Service Office, Financial Markets Division--Variable Annuity Dept., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. Terms used in the current prospectus for the variable annuity are incorporated in this Statement of Additional Information. This Statement of Additional Information is not a prospectus and should be read only in conjunction with the prospectuses for the variable annuity and the Endeavor Series Trust. Dated: __________________, 1999 TABLE OF CONTENTS
Page ---- GLOSSARY OF TERMS....................................................................... THE GENERATIONS PLUS VARIABLE ANNUITY--GENERAL PROVISIONS............................... Certificate Owner.................................................................. Entire Contract.................................................................... Misstatement of Age or Sex......................................................... Addition, Deletion or Substitution of Investments.................................. Excess Interest Adjustment......................................................... Reallocation of Certificate Values After the Annuity Commencement Date............. Annuity Payment Options............................................................ Death Benefit...................................................................... Death of Certificate Owner......................................................... Assignment......................................................................... Evidence of Survival............................................................... Non-Participating.................................................................. Amendments......................................................................... Employee and Agent Purchases....................................................... CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................................. Tax Status of the Certificate...................................................... Taxation of PFL.................................................................... INVESTMENT EXPERIENCE................................................................... Accumulation Units................................................................. Annuity Unit Value and Annuity Payment Rates....................................... FAMILY INCOME PROTECTOR - HYPOTHETICAL ILLUSTRATION..................................... HISTORICAL PERFORMANCE DATA............................................................. Money Market Yields................................................................ Other Subaccount Yields............................................................ Total Returns...................................................................... Other Performance Data............................................................. Adjusted Historical Performance Data - The Mutual Fund Account..................... PUBLISHED RATINGS....................................................................... STATE REGULATION OF PFL................................................................. ADMINISTRATION.......................................................................... RECORDS AND REPORTS..................................................................... DISTRIBUTION OF THE ANNUITY............................................................. VOTING RIGHTS........................................................................... The Mutual Fund Account............................................................ OTHER PRODUCTS.......................................................................... CUSTODY OF ASSETS....................................................................... LEGAL MATTERS........................................................................... INDEPENDENT AUDITORS.................................................................... OTHER INFORMATION....................................................................... FINANCIAL STATEMENTS....................................................................
-2- GLOSSARY OF TERMS Accumulation Unit--An accounting unit of measure used in calculating the certificate value in the mutual fund account before the annuity commencement date. Adjusted Certificate Value--An amount equal to the certificate value increased or decreased by any excess interest adjustments. Administrative and Service Office--Financial Markets Division--Variable Annuity Dept., PFL Life Insurance Company, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. Annuitant--The person entitled to receive annuity payments after the annuity commencement date and during whose life any annuity payments involving life contingencies will continue. Annuity Commencement Date--The date upon which annuity payments are to commence. This date may be any date at least thirty days after the certificate date and may not be later than the last day of the certificate month starting after the annuitant attains age 85, except as expressly allowed by PFL. In no event will this date be later than the last day of the month following the month in which the annuitant attains age 95. Annuity Payment Option--A method of receiving a stream of annuity payments selected by the certificate owner. Annuity Unit--An accounting unit of measure used in the calculation of the amount of the second and each subsequent variable annuity payment. Enrollment form--A written application, order form, or any other information received electronically or otherwise upon which the certificate is issued and/or is reflected on the data or specifications page. Beneficiary--The person who has the right to the death benefit set forth in the certificate. Business Day--A day when the New York Stock Exchange is open for business. Cash Value--The certificate value increased or decreased by an excess interest adjustment, less the surrender charge, premium taxes, and Family Income Protector rider fees, if any, and less the Service Charge. Certificate- The document issued under the Group Contract to the eligible Participants who apply for coverage. The Certificate is not part of the Group Contract. Certificate Owner or Owner- The person who may exercise all rights and privileges under the certificate. The owner during the lifetime of the annuitant and prior to the annuity commencement date is the person designated as the owner or a successor owner in the enrollment form. Participant-A person who makes premium payments or for whom premium payments are made under the Group Contract. Certificate Value--On or before the annuity commencement date, the certificate value is equal to the certificate owner's: . premium payments (including any premium enhancement); minus . partial withdrawals (including any applicable excess interest adjustments and/or surrender charges on such withdrawals); plus . interest credited in the fixed account; plus . accumulated gains or losses in the mutual fund account; minus . service charges, premium taxes, and transfer fees, if any. -3- Certificate Year - A certificate year begins on the certificate date and on each certificate anniversary. Code--The Internal Revenue Code of 1986, as amended. Due Proof of Death--A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by the attending physician, or any other proof satisfactory to PFL will constitute due proof of death. Excess Interest Adjustment--A positive or negative adjustment to amounts withdrawn upon partial withdrawals, full surrenders or transfers, from the guaranteed period options, or to amounts applied to annuity payment options. The adjustment reflects changes in the interest rates declared by PFL since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the certificate owner upon full surrender or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. Fixed Account--One or more investment choices under the certificate that are part of the general assets of PFL and which are not in the separate accounts. Group Contract - The contract issued to the Group Contract Owner, under which certificates are issued to eligible Participants. Group Contract Owner- The entity which applies for the Group Contract. Guaranteed Period Options--The various guaranteed interest rate periods which may be offered by PFL under the fixed account into which premiums may be paid or amounts may be transferred. Investment Choices--Any of the guaranteed period options of the fixed account, the dollar cost averaging fixed account option, and any of the mutual fund subaccounts. Mutual Fund Account--A separate account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended, to which premium payments under the certificates may be allocated and which invests in designated portfolios of the Endeavor Series Trust and such other mutual funds as PFL may determine from time to time. Mutual Fund Subaccount--A subdivision within the mutual fund account, the assets of which are invested in a specified portfolio of the underlying funds. Nonqualified Annuity--A certificate other than a qualified annuity. Premium Payment--An amount paid to PFL by the certificate owner or on the certificate owner's behalf as consideration for the benefits provided by the certificate. Qualified Annuity--A certificate issued in connection with retirement plans that qualify for special federal income tax treatment under the Code. Service Charge--An annual charge on each certificate anniversary (and a charge at the time of surrender during any certificate year) for certificate maintenance and related administrative expenses. This annual charge is $40, but will not exceed 2% of the policy value. Successor Owner--A person appointed by the certificate owner to succeed to ownership of the certificate in the event of the death of the certificate owner who is not the annuitant before the annuity commencement date. Surrender Charge--A percentage of each premium payment in an amount from 8% to 0% depending upon the length of time from the date of each premium payment. The surrender charge is assessed on surrenders of, or -4- partial withdrawals from, the certificate. A surrender charge may also be referred to as a "contingent deferred sales charge." Valuation Period--The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of values. Such determination shall be made on each business day. Variable Annuity Payments--Payments made pursuant to an annuity payment option which fluctuate as to dollar amount or payment term in relation to the investment performance of the specified subaccounts within the mutual fund account. Written Notice or Written Request--Written notice, signed by the certificate owner, that gives PFL the information it requires and is received at the administrative and service office. For some transactions, PFL may accept an electronic notice such as telephone instructions. Such electronic notice must meet the requirements PFL establishes for such notices. -5- In order to supplement the description in the prospectus, the following provides additional information about PFL and the Generations Plus Variable Annuity, which may be of interest to a prospective purchaser. Words printed in italics in this Statement of Additional Information are defined in the Glossary of Terms, beginning on page 4. THE GENERATIONS PLUS VARIABLE ANNUITY--GENERAL PROVISIONS Certificate Owner The certificate shall belong to the certificate owner upon issuance of the certificate after completion of an enrollment form and delivery of the initial premium payment. While the annuitant is living, the certificate owner may: (1) assign the certificate; (2) surrender the certificate; (3) amend or modify the certificate with PFL's consent; (4) receive annuity payments or name a payee to receive the payments; and (5) exercise, receive and enjoy every other right and benefit contained in the certificate. The exercise of these rights may be subject to the consent of any assignee or irrevocable beneficiary, and of your spouse in a community or marital property state. Unless PFL has been notified of a community or marital property interest in the certificate, it will rely on its good faith belief that no such interest exists and will assume no responsibility for inquiry. A successor owner can be named in the enrollment form, information provided in lieu thereof, or in a written notice. The successor owner will become the new certificate owner upon your death, if you predecease the annuitant. If no successor owner survives you and you predecease the annuitant, your estate will become the certificate owner. Note carefully. If the certificate owner does not name a contingent owner, the - -------------- certificate owner's estate will become the new certificate owner. If no probate estate is opened because the owner has precluded the opening of a probate estate by means of a trust or other instrument, unless PFL has received written notice of the trust as a successor owner signed prior to the owner's death, that trust may not exercise ownership rights to the certificate. It may be necessary to open a probate estate in order to exercise ownership rights to the certificate if no contingent owner is named in a written notice received by PFL. The certificate owner may change the ownership of the certificate in a written notice. When this change takes effect, all rights of ownership in the certificate will pass to the new owner. A change of ownership may have tax consequences. When there is a change of certificate owner or successor owner, the change will take effect as of the date the certificate owner signs the written notice, subject to any payment PFL has made or action PFL has taken before recording the change. Changing the certificate owner or naming a new successor certificate owner cancels any prior choice of successor owner, but does not change the designation of the beneficiary or the annuitant. If ownership is transferred (except to the owner's spouse) because the certificate owner dies before the annuitant, the cash value generally must be distributed to the successor owner within five years of the certificate owner's death, or payments must be made for a period certain or for the successor owner's lifetime so long as any period certain does not exceed that successor owner's life expectancy, if the first payment begins within one year of your death. Entire Contract The group contract and certificate, any endorsements thereon, the enrollment form, or information provided in lieu thereof constitute the entire contract between PFL and the certificate owner. All statements in the enrollment form are representations and not warranties. No statement will cause the certificate to be void or to be used in defense of a claim unless contained in the enrollment form or information provided in lieu thereof. -6- Misstatement of Age or Sex If the age or sex of the annuitant or certificate owner has been misstated, PFL will change the annuity benefit payable to that which the premium payments would have purchased for the correct age or sex. The dollar amount of any underpayment made by PFL shall be paid in full with the next payment due such person or the beneficiary. The dollar amount of any overpayment made by PFL due to any misstatement shall be deducted from payments subsequently accruing to such person or beneficiary. Any underpayment or overpayment will include interest at 5% per year, from the date of the wrong payment to the date of the adjustment. The age of the annuitant or certificate owner may be established at any time by the submission of proof satisfactory to PFL. Addition, Deletion, or Substitution of Investments PFL cannot and does not guarantee that any of the mutual fund subaccounts will always be available for premium payments, allocations, or transfers. PFL retains the right, subject to any applicable law, to make certain changes in the mutual fund account and its investments. PFL reserves the right to eliminate the shares of any portfolio held by a mutual fund subaccount and to substitute shares of another portfolio of the underlying funds, or of another registered open-end management investment company for the shares of any portfolio, if the shares of the portfolio are no longer available for investment or if, in PFL's judgment, investment in any portfolio would be inappropriate in view of the purposes of the mutual fund account. To the extent required by the Investment Company Act of 1940, (the "1940 Act"), as amended, substitutions of shares attributable to your interest in a mutual fund subaccount will not be made without prior notice to you and the prior approval of the Securities and Exchange Commission ("SEC"). Nothing contained herein shall prevent the mutual fund account from purchasing other securities for other series or classes of variable annuities, or from effecting an exchange between series or classes of variable annuities on the basis of your requests. New subaccounts may be established when, in the sole discretion of PFL, marketing, tax, investment or other conditions warrant. Any new subaccounts may be made available to existing certificate owners on a basis to be determined by PFL. Each additional subaccount will purchase shares in a mutual fund portfolio, or other investment vehicle. PFL may also eliminate one or more subaccounts if, in its sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any subaccount is eliminated, PFL will notify you and request a reallocation of the amounts invested in the eliminated subaccount. If no such reallocation is provided by you, PFL will reinvest the amounts in the subaccount that invests in the Endeavor Money Market Portfolio (or in a similar portfolio of money market instruments), in another subaccount, or in the fixed account, if appropriate. In the event of any such substitution or change, PFL may, by appropriate endorsement, make such changes in the group contracts and certificates as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the certificates, the mutual fund account may be (i) operated as a management company under the 1940 Act or any other form permitted by law, (ii) deregistered under the 1940 Act in the event such registration is no longer required or (iii) combined with one or more other mutual fund accounts. To the extent permitted by applicable law, PFL also may transfer the assets of the mutual fund account associated with the certificates to another account or accounts. Excess Interest Adjustment Money that you withdraw from (or transfer out of) a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. At the time you request a withdrawal, if interest rates set by PFL have risen since the date of the initial guarantee, the excess interest adjustment will result in a lower certificate value. However, if interest rates have fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher certificate value. Excess interest adjustments will not reduce the adjusted certificate value for a guaranteed period option below the premium payments and transfers to that guaranteed period option, less any prior partial withdrawals and transfers -7- from the guaranteed period option, plus interest at the certificate's minimum guaranteed effective annual interest rate of 3%. This is referred to as the EIA floor. The formula that will be used to determine the excess interest adjustment is: S* (G - C)* (M/12) S = Gross amount being withdrawn that is subject to the excess interest adjustment G = Guaranteed Interest Rate in effect for the certificate C = Current Guaranteed Interest Rate then being offered on new premiums for the next longer option period than "M". If this certificate or such an option period is no longer offered, "C" will be the U.S. Treasury rate for the next longer maturity (in whole years) than "M" on the 25th day of the previous calendar month, plus up to 2%. M = Number of months remaining in the current option period, rounded up to the next higher whole number of months. * = multiplication . = exponentiation The following examples assume no premium enhancement. Example 1 (Surrender, rates increase by 3%): Single Premium: $50,000 Guarantee Period: 5 Years Guarantee Rate: 5.50% per annum Surrender: Middle of Certificate Year 3 Certificate Value at middle of Certificate Year 3 = 50,000* (1.055) . 2.5 = 57,161.18 Penalty Free Amount at middle of Certificate Year 3 = 50,000* .10 = 5,000.00 Amount Subject to EIA = 57,161.18 - 5,000.00 = 52,161.18 EIA Floor = 50,000* (1.03) . 2.5 = 53,834.80 Excess Interest Adjustment G = .055 C = .085 M = 30 Excess Interest Adjustment = S* (G - C)* (M/12) = 52,161.18* (.055 - .085)* (30/12) = -3,912.09, but excess interest adjustment cannot cause the adjusted certificate value to fall below the EIA floor, so the adjustment is limited to 53,834.80 - 57,161.18 = -3,326.38 Adjusted Certificate Value ("ACV") = PV + EIA = 57,161.18 + (-3,326.38) = 53,834.80 Surrender Charges = (50,000 - 5,000) * .08 = 3,600
-8- Cash Value at middle of Certificate Year 3 = 53,834.80 - 3,600 = 50,234.80
Example 2 (Surrender, rates decrease by 1%): Single Premium: $50,000 Guarantee Period: 5 Years Guarantee Rate: 5.50% per annum Surrender: Middle of Certificate Year 3 Certificate Value at middle of Certificate Year 3 = 50,000* (1.055) . 2.5 = 57,161.18 Penalty Free Amount at middle of Certificate Year 3 = 50,000* .10 = 5,000 Amount Subject to EIA = 57,161.18 - 5,000 = 52,161.18 EIA Floor = 50,000* (1.03) . 2.5 = 53,834.80 Excess Interest Adjustment G = .055 C = .045 M = 30 Excess Interest Adjustment = S * (G - C) * (M/12) = 52,161.18 * (.055 - .045) * (30/12) = 1,304.03 Adjusted Certificate Value = 57,161.18 + 1,304.03 = 58,465.21 Surrender Charges = (50,000 - 5,000) * .08 = 3,600 Cash Value at middle of Certificate Year 3 = 58,447.31 - 3,600 = 54,847.31
On a partial withdrawal, PFL will pay the certificate owner the full amount of withdrawal requested (as long as the certificate value is sufficient). Amounts withdrawn will reduce the certificate value by an amount equal to: R - E + SC R = the requested partial withdrawal; E = the excess interest adjustment; and SC = the surrender charges on (EPW - E); where EPW = the excess partial withdrawal amount. Example 3 (Partial Withdrawal, rates increase by 1%): -9- Single Premium: $50,000 Guarantee Period: 5 Years Guarantee Rate: 5.50% per annum Partial Withdrawal: $20,000; Middle of Certificate Year 3 Certificate Value at middle of Certificate Year 3 = 50,000 * (1.055) . 2.5 = 57,161.18 Penalty Free Amount at middle of Certificate Year 3 = 50,000 * .10 = 5,000 Excess Interest/Surrender Charge (SC) Adjustment S = 20,000 - 5,000 = 15,000 G = .055 C = .065 M = 30 E = 15,000 * (.055 - .065) * (30/12) = -375 EPW = 20,000 - 5,000 = 15,000 SC = .08 * (15,000 - (- 375) = 1,230 Remaining Certificate Value at middle of Certificate Year 3 = 57,161.18 - (R - E + SC) = 57,161.18 - (20,000 - (- 375) + 1,230) = 35,556.18
Example 4 (Partial Withdrawal, rates decrease by 1%): Single Premium: $50,000 Guarantee Period: 5 Years Guarantee Rate: 5.50% per annum Partial Withdrawal: $20,000; Middle of Certificate Year 3 Certificate Value at middle of Certificate Year 3 = 50,000 * (1.055) . 2.5 = 57,161.18 Penalty Free Amount at middle of Certificate Year 3 = 50,000 * .10 = 5,000 Excess Interest/Surrender Charge Adjustment S = 20,000 - 5,000 = 15,000 G = .055 C = .045 M = 30 E = 15,000* (.055 - .045) * (30/12) = 375 EPW = 20,000 - 5,000 = 15,000 SC = .08 * (15,000 - 375) = 1,170 Remaining Certificate Value at middle of Certificate Year 3 = 57,161.18 - (R - E + SC)
-10- = 57,161.18 - (20,000 - 375 + 1,170) = 36,366.18
Reallocation of Certificate Values After the Annuity Commencement Date After the annuity commencement date, you may reallocate the value of a designated number of annuity units of a mutual fund subaccount then credited to a certificate into an equal value of annuity units of one or more other mutual fund subaccounts or the fixed account. The reallocation shall be based on the relative value of the annuity units of the account(s) or subaccount(s) at the end of the business day on the next payment date. The minimum amount which may be reallocated is the lesser of (1) $10 of monthly income or (2) the entire monthly income of the annuity units in the account or subaccount from which the transfer is being made. If the monthly income of the annuity units remaining in an account or subaccount after a reallocation is less than $10, PFL reserves the right to include the value of those annuity units as part of the transfer. The request must be in writing to PFL's administrative and service office. There is no charge assessed in connection with such reallocation. PFL reserves the right to limit the number of times a reallocation of annuity units may be made in any given certificate year. After the annuity commencement date, no transfers may be made from the fixed account to the mutual fund account. Annuity Payment Options During the lifetime of the annuitant and prior to the annuity commencement date, the certificate owner may choose an annuity payment option or change the election, but written notice of any election or change of election must be received by PFL at its administrative and service office at least thirty (30) days prior to the annuity commencement date. If no election is made prior to the annuity commencement date, annuity payments will be made under (i) Payment Option 3, life income with level payments for 10 years certain, using the existing adjusted certificate value of the fixed account, or (ii) under Payment Option 3, life income with variable payments for 10 years certain using the existing certificate value of the mutual fund account, or (iii) in a combination of (i) and (ii). The person who elects an annuity payment option can also name one or more successor payees to receive any unpaid amount PFL has at the death of a payee. Naming these payees cancels any prior choice of a successor payee. A payee who did not elect the annuity payment option does not have the right to advance or assign payments, take the payments in one sum, or make any other change. However, the payee may be given the right to do one or more of these things if the person who elects the option tells PFL in writing and PFL agrees. Variable Payment Options The dollar amount of the first variable annuity payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the group contract and/or certificate. The tables are based on a 5% effective annual Assumed Investment Return and the "1983 Table a" (male, female, and unisex if required by law) mortality table improved to the year 2000 with projection Scale G. ("The 1983 Table a" mortality rates are adjusted based on improvements in mortality since 1983 to more appropriately reflect increased longevity. This is accomplished using a set of improvement factors referred to as projection scale G.) The dollar amount of additional variable annuity payments will vary based on the investment performance of the subaccount(s) of the mutual fund account selected by the annuitant or beneficiary. Determination of the First Variable Payment. The amount of the first variable payment depends upon the sex (if consideration of sex is allowed under state law) and adjusted age of the annuitant. The adjusted age is the annuitant's actual age nearest birthday, on the annuity commencement date, adjusted as follows: Annuity Commencement Date Adjusted Age ------------------------- ------------ Before 2001 Actual Age 2001-2010 Actual Age minus 1 -11- 2011-2020 Actual Age minus 2 2021-2030 Actual Age minus 3 2031-2040 Actual Age minus 4 After 2040 Actual Age minus 5 This adjustment assumes an increase in life expectancy, and therefore it results in lower payments than without such an adjustment. Determination of Additional Variable Payments. All variable annuity payments other than the first are calculated using annuity units and are credited to the certificate. The number of annuity units to be credited in respect of a particular subaccount is determined by dividing that portion of the first variable annuity payment attributable to that subaccount by the annuity unit value of that subaccount on the annuity commencement date. The number of annuity units of each particular subaccount credited to the certificate then remains fixed, assuming no transfers to or from that subaccount occur. The dollar value of variable annuity units in the chosen subaccount will increase or decrease reflecting the investment experience of the chosen subaccount. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant, and is equal to the sum of the amounts determined by multiplying the number of annuity units of each particular subaccount credited to the certificate by the annuity unit value for the particular subaccount on the date the payment is made. Death Benefit Adjusted Partial Withdrawal. The amount of your Guaranteed Minimum Death Benefit is reduced due to a partial withdrawal called the adjusted partial withdrawal. The reduction amount depends on the relationship between your Guaranteed Minimum Death Benefit and certificate value. The adjusted partial withdrawal is equal to (1) multiplied by (2), where: (1) is the Gross Partial Withdrawals, where gross partial withdrawal = requested withdrawal - excess interest adjustment + surrender charges on (excess partial withdrawal - excess interest adjustment); and (2) is the adjustment factor = current death benefit prior to the withdrawal divided by the current certificate value prior to the withdrawal. The following examples describe the effect of a withdrawal on the Guaranteed Minimum Death Benefit and certificate value. - -------------------------------------------------------------------------------- Example 1 (Assumed Facts for Example) - -------------------------------------------------------------------------------- $75,000 current Guaranteed Minimum Death Benefit (GMDB) before withdrawal - -------------------------------------------------------------------------------- $50,000 current certificate value before withdrawal - -------------------------------------------------------------------------------- $75,000 current death benefit (larger of certificate value and GMDB) - -------------------------------------------------------------------------------- 6% current surrender charge percentage - -------------------------------------------------------------------------------- $15,000 requested withdrawal - -------------------------------------------------------------------------------- $40,000 Cumulative Premium Payments - -------------------------------------------------------------------------------- $ 4,000 surrender charge-free amount (assumes 10% of premium penalty free withdrawal is available) - -------------------------------------------------------------------------------- $11,000 excess partial withdrawal - EPW (amount subject to surrender charge) - -------------------------------------------------------------------------------- $ 100 excess interest adjustment (assumes interest rates have decreased since initial guarantee) - -------------------------------------------------------------------------------- -12- - -------------------------------------------------------------------------------- $ 654 surrender charge on (EPW less EIA)=0.06*(11,000-100) - -------------------------------------------------------------------------------- $11,554 reduction in certificate value due to excess partial withdrawal = 11,000-100+654 - -------------------------------------------------------------------------------- $23,331 adjusted partial withdrawal = (4,000 + 11,554) * (75,000/50,000) - -------------------------------------------------------------------------------- $51,669 New GMDB (after withdrawal) = 75,000- 23,331 - -------------------------------------------------------------------------------- $34,446 New certificate value (after withdrawal)=50,000-15,554 - -------------------------------------------------------------------------------- Summary: - ------- Reduction in guaranteed minimum death benefit = $23,331 Reduction in certificate value = $15,554 Note, guaranteed minimum death benefit is reduced more than the certificate value since the guaranteed minimum death benefit was greater than the certificate value just prior to the withdrawal. - -------------------------------------------------------------------------------- Example 2 --------- (Assumed Facts for Example) - -------------------------------------------------------------------------------- $50,000 current Guaranteed Minimum Death Benefit (GMDB) before withdrawal - -------------------------------------------------------------------------------- $75,000 current certificate value before withdrawal - -------------------------------------------------------------------------------- $75,000 current death benefit (larger of certificate value and GMDB) - -------------------------------------------------------------------------------- 6% current surrender charge percentage - -------------------------------------------------------------------------------- $15,000 requested withdrawal - -------------------------------------------------------------------------------- $60,000 Cumulative Premium Payments - -------------------------------------------------------------------------------- $ 6,000 surrender charge-free amount (assumes 10% of premium penalty free withdrawal is available) - -------------------------------------------------------------------------------- $ 9,000 excess partial withdrawal - EPW (amount subject to surrender charge) - -------------------------------------------------------------------------------- $ -100 excess interest adjustment (assumes interest rates have increased since initial guarantee) - -------------------------------------------------------------------------------- $ 546 surrender charge on (EPW less EIA)=0.06*[(9000-(-100)] - -------------------------------------------------------------------------------- $ 9,646 reduction in certificate value due to EPW= 9000-(-100) +456 =9000 + 100 + 546 - -------------------------------------------------------------------------------- $15,646 adjusted partial withdrawal = (6,000 + 9,646) * (75,000/75,000) - -------------------------------------------------------------------------------- $34,354 New GMDB (after withdrawal) = 50,000- 15,646 - -------------------------------------------------------------------------------- $59,354 New certificate value (after withdrawal)=75,000 - 15,646 - -------------------------------------------------------------------------------- Summary: - ------- Reduction in guaranteed minimum death benefit = $15,646 Reduction in certificate value = $15,646 Note, the guaranteed minimum death benefit and certificate value are reduced by the same amount since the certificate value was higher than the guaranteed minimum death benefit just prior to the withdrawal. Due proof of death of the annuitant is proof that the annuitant that is the certificate owner died prior to the commencement of annuity payments. Upon receipt of this proof and an election of a method of settlement and return of the certificate, the death benefit generally will be paid within seven days, or as soon thereafter as PFL has sufficient information about the beneficiary to make the payment. The beneficiary may receive the amount payable in a lump sum cash benefit, or, subject to any limitation under any state or federal law, rule, or regulation, under -13- one of the annuity payment options described above, unless a settlement agreement is effective at the death of the certificate owner preventing such election. If the annuitant was the certificate owner, and the beneficiary was not the annuitant's spouse, the death benefit must (1) be distributed within five years of the date of the deceased certificate owner's death, or (2) payments under an annuity payment option must begin no later than one year after the deceased certificate owner's death and must be made for the beneficiary's lifetime or for a period certain (so long as any certain period does not exceed the beneficiary's life expectancy). Death proceeds which are not paid to or for the benefit of a natural person, must be distributed within five years of the date of the deceased certificate owner's death. If the sole beneficiary is the deceased certificate owner's surviving spouse, such spouse may elect to continue the certificate as the new annuitant and owner instead of receiving the death benefit. If the annuitant is not the certificate owner, and the certificate owner dies prior to the annuity commencement date, a successor owner may surrender the certificate at any time for the amount of the adjusted certificate value. If the successor owner is not the deceased certificate owner's spouse, however, the adjusted policy value must be distributed: (1) within five years after the date of the deceased certificate owner's death, or (2) payments under an annuity payment option must begin no later than one year after the deceased certificate owner's death and must be made for the successor owner's lifetime or for a period certain (so long as any period certain does not exceed the successor owner's life expectancy). Beneficiary. The beneficiary designation in the enrollment form will remain in effect until changed. The owner may change the designated beneficiary by sending written notice to PFL. The beneficiary's consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the certificate owner may then designate a new beneficiary.) The change will take effect as of the date the certificate owner signs the written notice, whether or not the certificate owner is living when the notice is received by PFL. PFL will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the certificate owner fails to specify their interests, they will share equally. Death of Certificate Owner Federal tax law requires that if any certificate owner (including any joint owner or any successor owner who has become a current owner) dies before the annuity commencement date, then the entire value of the certificate must generally be distributed within five years of the date of death of such owner. Certain rules apply where (1) the spouse of the deceased certificate owner is the sole beneficiary, (2) the certificate owner is not a natural person and the primary annuitant dies or is changed, or (3) any certificate owner dies after the annuity commencement date. See "Certain Federal Income Tax Consequences" for a detailed description of these rules. Other rules may apply to qualified annuities. Assignment During the lifetime of the annuitant you may assign any rights or benefits provided by the certificate. An assignment will not be binding on PFL until a copy has been filed at its administrative and service office. Your rights and benefits and those of the beneficiary are subject to the rights of the assignee. PFL assumes no responsibility for the validity or effect of any assignment. Any claim made under an assignment shall be subject to proof of interest and the extent of the assignment. An assignment may have tax consequences. Unless you so direct by filing written notice with PFL, no beneficiary may assign any payments under the certificate before they are due. To the extent permitted by law, no payments will be subject to the claims of any beneficiary's creditors. Ownership under qualified annuities is restricted to comply with the Code. -14- Evidence of Survival PFL reserves the right to require satisfactory evidence that a person is alive if a payment is based on that person being alive. No payment will be made until PFL receives such evidence. Non-Participating The group contract and certificates will not share in PFL's surplus earnings; no dividends will be paid. Amendments No change in the group contract or certificates is valid unless made in writing by PFL and approved by one of PFL's officers. No registered representative has authority to change or waive any provision of the group contract or certificates. PFL reserves the right to amend the group contract and certificates to meet the requirements of the Code, regulations or published rulings. You can refuse such a change by giving written notice, but a refusal may result in adverse tax consequences. Employee and Agent Purchases The certificate may be acquired by an employee or registered representative of any broker/dealer authorized to sell the certificate or their spouse or minor children, or by an officer, director, trustee or bona-fide full-time employee of PFL or its affiliated companies or their spouse or minor children. In such a case, PFL may credit an amount equal to a percentage of each premium payment to the certificate due to lower acquisition costs PFL experiences on those purchases. The credit will be reported to the Internal Revenue Service as taxable income to the employee or registered representative. PFL may offer certain employer sponsored savings plans, in its discretion reduced fees and charges including, but not limited to, the surrender charges, the mortality and expense risk fee and the administrative charge for certain sales under circumstances which may result in savings of certain costs and expenses. In addition, there may be other circumstances of which PFL is not presently aware which could result in reduced sales or distribution expenses. Credits to the certificate or reductions in these fees and charges will not be unfairly discriminatory against any owner. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary does not constitute tax advice. It is a general discussion of certain of the expected federal income tax consequences of investment in and distributions with respect to a certificate, based on the Code, as amended, proposed and final Treasury Regulations thereunder, judicial authority, and current administrative rulings and practice. This summary discusses only certain federal income tax consequences to "United States Persons," and does not discuss state, local, or foreign tax consequences. United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships and trusts or estates that are subject to United States federal income tax regardless of the source of their income. Tax Status of the Certificate The following discussion is based on the assumption that the certificate qualifies as an annuity contract for federal income tax purposes. Distribution Requirements. The Code requires that nonqualified annuities contain specific provisions for distribution of certificate proceeds upon the death of any certificate owner. In order to be treated as an annuity contract for federal income tax purposes, the Code requires that such certificates provide that if any certificate owner dies on or after the annuity commencement date and before the entire interest in the certificate has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such certificate owner's death. If any certificate owner dies before the annuity commencement date, the entire interest in -15- the certificate must generally be distributed within 5 years after such certificate owner's date of death or be used to purchase an immediate annuity under which payments will begin within one year of such certificate owner's death and will be made for the life of the beneficiary or for a period not extending beyond the life expectancy of the "designated beneficiary" as defined in section 72(s) of the Code. However, if upon such certificate owner's death prior to the annuity commencement date, such certificate owner's surviving spouse becomes the sole new certificate owner, then the certificate may be continued with the surviving spouse as the new certificate owner. Under the certificate, the beneficiary is the designated beneficiary of an owner/annuitant and the successor owner is the designated beneficiary of a certificate owner who is not the annuitant. If any owner is not a natural person, then for purposes of these distribution requirements, the primary annuitant shall be treated as a certificate owner and any death or change of such primary annuitant shall be treated as the death of an owner. The nonqualified annuities contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the certificates satisfy all such Code requirements. The provisions contained in the certificates will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise. Diversification Requirements. Section 817(h) of the Code provides that in order for a variable contract which is based on a segregated asset account to qualify as an annuity contract under the Code, the investments made by such account must be "adequately diversified" in accordance with Treasury regulations. The Treasury regulations issued under Section 817(h) (Treas. Reg. ss.1.817-5) apply a diversification requirement to each of the mutual fund subaccounts. The mutual fund account, through the Endeavor Series Trust and its portfolios, intends to comply with the diversification requirements of the Treasury. PFL has entered into agreements regarding participation in the Endeavor Series Trust which requires the portfolios to be operated in compliance with the Treasury regulations. Owner Control. In certain circumstances, owners of variable annuity contracts - ------------- may be considered the owners, for federal income tax purposes, of the assets of the separate account used to support their contracts. In those circumstances, income and gains from the separate account assets would be includable in the variable annuity contract owner's gross income. Several years ago, the IRS stated in published rulings that a variable annuity owner will be considered the owner of the separate account assets if the owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. More recently, the Treasury Department announced in connection with the issuance of regulations concerning investment diversification, that those regulations "do not provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor (i.e., you), rather than the insurance company, to be treated as the owner of the assets in the account." This announcement also stated that guidance would be issued by way of regulations or rulings on the "extent to which policyholders may direct their investments to particular subaccounts without being treated as owners of the underlying assets." The ownership rights under the contract are similar to, but different in certain respects from those described by the IRS in rulings in which it was determined that contract owners were not owners of separate account assets. For example, you have the choice of one or more subaccounts in which to allocate premiums and certificate values, and may be able to transfer among these accounts more frequently than in such rulings. These differences could result in you being treated as the owner of the assets of the mutual fund account. In addition, PFL does not know what standards will be set forth, if any, in the regulations or rulings that the Treasury Department has stated it expects to issue. PFL therefore reserves the right to modify the group contract and certificates as necessary to attempt to prevent you from being considered the owner of a pro rata share of the assets of the mutual fund account. -16- Withholding. The portion of any distribution under a certificate that is includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld. Election forms will be provided at the time distributions are requested or made. For certain qualified annuities, certain distributions are subject to mandatory withholding. The withholding rate varies according to the type of distribution and the owner's tax status. For qualified annuities, "eligible rollover distributions" from section 401(a) plans and section 403(b) tax-sheltered annuities are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is the taxable portion of any distribution from such a plan, except certain distributions such as distributions required by the Code or distributions in a specified annuity form. The 20% withholding does not apply, however, if the certificate owner chooses a "direct rollover" from the plan to another tax-qualified plan or IRA. Qualified Annuities. The qualified annuity is designed for use with several types of tax-qualified retirement plans. The tax rules applicable to participants and beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits; distributions prior to age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Some retirement plans are subject to distribution and other requirements that are not incorporated into our administration procedures. Owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the certificates comply with applicable law. For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the owner (or plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year in which the certificate owner (or plan participant) reaches age 70 1/2. Each certificate owner is responsible for requesting distributions under the certificate that satisfy applicable tax rules. PFL makes no attempt to provide more than general information about use of the certificate with the various types of retirement plans. Purchasers of certificates for use with any retirement plan should consult their legal counsel and tax adviser regarding the suitability of the certificate. Individual Retirement Annuities. In order to qualify as a traditional individual retirement annuity under Section 408(b) of the Code, a certificate must contain certain provisions: (i) the certificate owner must be the annuitant; (ii) the certificate generally is not transferable by the certificate owner, e.g., the certificate owner may not designate a new certificate owner, designate a contingent certificate owner or assign the certificate as collateral security; (iii) the total premium payments for any calendar year may not exceed $2,000, except in the case of a rollover amount or contribution under Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code; (iv) annuity payments or withdrawals must begin no later than April 1 of the calendar year following the calendar year in which the annuitant attains age 70 1/2; (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the annuitant and the beneficiary may not be selected; and (vi) certain payments of death benefits must be made in the event the annuitant dies prior to the distribution of the policy value. Certificates intended to qualify as a traditional individual retirement annuities under Section 408(b) of the Code contain such provisions. Amounts in the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject to a 10% penalty tax. Section 408 of the Code also indicates that no part of the funds for a traditional individual retirement account or annuity should be invested in a life insurance contract, but the regulations thereunder allow such funds to be invested in an annuity contract that provides a death benefit that equals the greater of the premiums paid or the cash value for the contract. The certificate provides an enhanced death benefit that could exceed the amount of such a permissible death benefit, but it is unclear to what extent such an enhanced death benefit could disqualify the certificate under Section 408 of the Code. The Internal Revenue Service has not reviewed the certificate for -17- qualification as an IRA, and has not addressed in a ruling of general applicability whether an enhanced death benefit provision, such as the provision in the certificate, comports with IRA qualification requirements. Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax and other special rules may apply. You should consult a tax adviser before combining any converted amounts with any other Roth IRA contributions, including any other conversion amounts from other tax years. The Roth IRA is available to individuals with earned income and whose adjusted gross income is under $110,000 for single filers, $160,000 for married filing jointly, and $10,000 for married filing separately. The amount per individual that may be contributed to all IRAs (Roth and traditional) is $2,000. Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made from assets which have been held in the account for 5 tax years and are made after attaining age 59 1/2, to pay for qualified first time homebuyer expenses (lifetime maximum of $10,000) or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a premature withdrawal penalty tax unless an exception applies. Unlike the traditional IRA, there are no minimum required distributions during the certificate owner's lifetime; however, required distributions at death are the same. Section 403(b) Plans. Under Section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase certificates for their employees are excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to FICA (Social Security) taxes. The certificates include a death benefit that in some cases may exceed the greater of the premium payments or the policy value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in any tax-sheltered annuity under section 403(b). Because the death benefit may exceed this limitation, employers using the certificates in connection with such plans should consult their tax adviser. Additionally, in accordance with the requirements of the Code, Section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, and (ii) earnings on those contributions and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989. Distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59 1/2, separation from service, disability, or financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans. Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the certificates to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the certificate is assigned or transferred to any individual as a means to provide benefit payments. The certificates include a death benefit that in some cases may exceed the greater of the premium payments or the policy value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in an pension or profit sharing plan. Because the death benefit may exceed this limitation, employers using the certificates in connection with such plans should consult their tax adviser. Deferred Compensation Plans. Section 457 of the Code, while not actually providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans with respect to service for state governments, local governments, political sub-divisions, agencies, instrumentalities and certain affiliates of such entities, and tax exempt organizations. The certificates can be used with such plans. Under such plans a participant may specify the form of investment in which his or her participation will be made. For non-governmental Section 457 plans, all such investments, however, are owned by, and are subject to, the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-government employer may be entitled to draw on deferred amounts for purposes unrelated to its Section 457 plan obligations. In general, all amounts received under a Section 457 plan are taxable and are subject to federal income tax withholding as wages. Non-natural Persons. Pursuant to Section 72(u) of the Code, an annuity contract held by a taxpayer other than a natural person generally will not be treated as an annuity contract under the Code; accordingly, an owner who is -18- not a natural person will recognize as ordinary income for a taxable year the excess of (i) the sum of the certificate value as of the close of the taxable year and all previous distributions under the certificate over (ii) the sum of the premium payments paid for the taxable year and any prior taxable year and the amounts includable in gross income for any prior taxable year with respect to the certificate. For these purposes, the certificate value at year-end may have to be increased by any positive excess interest adjustment, which could result from a full surrender at such time. There is, however, no definitive guidance on the proper tax treatment of excess interest adjustments, and the owner should contact a competent tax adviser with respect to the potential tax consequences of an excess interest adjustment. Notwithstanding the preceding sentences in this paragraph, Section 72(u) of the Code does not apply to (i) a certificate the nominal certificate owner of which is not a natural person but the beneficial owner of which is a natural person, (ii) a certificate acquired by the estate of a decedent by reason of such decedent's death, (iii) a qualified annuity (other than one qualified under Section 457) or (iv) a single- payment annuity the annuity commencement date for which is no later than one year from the date of the single premium payment; instead, such certificates are taxed as described above under the heading "Taxation of Annuities." Taxation of PFL PFL at present is taxed as a life insurance company under part I of Subchapter L of the Code. The mutual fund account are treated as part of PFL and, accordingly, will not be taxed separately as "regulated investment companies" under Subchapter M of the Code. PFL does not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the mutual fund account retained as part of the reserves under the certificate. Based on this expectation, it is anticipated that no charges will be made against the mutual fund account for federal income taxes. If, in future years, any federal income taxes are incurred by PFL with respect to the mutual fund account, PFL may make a charge to that account. INVESTMENT EXPERIENCE A "net investment factor" is used to determine the value of accumulation units and annuity units, and to determine annuity payment rates. Accumulation Units Allocations of a premium payment directed to a mutual fund subaccount are credited in the form of accumulation units. Each subaccount has a distinct accumulation unit value. The number of units credited is determined by dividing the premium payment or amount transferred to the mutual fund subaccount by the accumulation unit value of the mutual fund subaccount as of the end of the valuation period during which the allocation is made. For each mutual fund subaccount, the accumulation unit value for a given business day is based on the net asset value of a share of the corresponding portfolio of the Endeavor Series Trust less any applicable charges or fees. Upon allocation to the selected mutual fund subaccount, premium payments are converted into accumulation units of the subaccount. The number of accumulation units to be credited is determined by dividing the dollar amount allocated to each subaccount by the value of an accumulation unit for that subaccount as next determined after the premium payment is received at the administrative and service office or, in the case of the initial premium payment, when the enrollment form is received, whichever is later. The value of an accumulation unit was arbitrarily established at $1 at the inception of each subaccount. Thereafter, the value of an accumulation unit is determined as of the close of trading on each day the New York Stock Exchange is open for trading. For the mutual fund account, an index (the "net investment factor") which measures the investment performance of a subaccount during a valuation period is used to determine the value of an accumulation unit for the next subsequent valuation period. The net investment factor may be greater or less than or equal to one; therefore, the value of an accumulation unit may increase, decrease or remain the same from one valuation period to the next. You bear this investment risk. The net investment performance of a subaccount and deduction of certain charges affect the accumulation unit value. -19- The net investment factor for any mutual fund subaccount for any valuation period is determined by dividing (a) by (b) and subtracting (c) from the result, where: (a) is the net result of: (1) the net asset value per share of the shares held in the subaccount determined at the end of the current valuation period, plus (2) the per share amount of any dividend or capital gain distribution made with respect to the shares held in the subaccount if the ex-dividend date occurs during the current valuation period, plus or minus (3) a per share credit or charge for any taxes determined by PFL to have resulted during the valuation period from the investment operations of the subaccount; (b) is the net asset value per share of the shares held in the subaccount determined as of the end of the immediately preceding valuation period. (c) is the charge for mortality and expense risk during the valuation period, equal on an annual basis to 1.35% (for the Annual Step-Up Death Benefit) of the daily net asset value of the subaccount, plus the 0.40% administrative charge. Illustration of Mutual Fund Account Accumulation Unit Value Calculations Formula and Illustration for Determining the Net Investment Factor Net Investment Factor = (A + B - C) - E --------- D Where: A = The net asset value of an underlying fund share as of the end of the current valuation period. Assume.................................................A = $11.57 B = The per share amount of any dividend or capital gains distribution since the end of the immediately preceding valuation period. Assume.................................................B = 0 C = The per share charge or credit for any taxes reserved for at the end of the current valuation period. Assume.................................................C = 0 D = The net asset value of an underlying fund share at the end of the immediately preceding valuation period. Assume.................................................D = $11.40 E = The daily deduction for the mortality and expense risk fee and the administrative charge, which totals 1.75% on an annual basis. On a daily basis, E equals .000047529. Then, the net investment factor = (11.57 + 0 - 0) -.000047529 = Z = 1.014864752. ------------- (11.40) Formula and Illustration for Determining Accumulation Unit Value Accumulation Unit Value = A * B Where: A = The accumulation unit value for the immediately preceding valuation period. -20- Assume..................................................... = $ X B = The net investment factor for the current valuation period. Assume..................................................... = Y Then, the accumulation unit value = $ X * Y = $ Z Annuity Unit Value and Annuity Payment Rates For the mutual fund account, the amount of variable annuity payments will vary with annuity unit values. Annuity unit values rise if the net investment performance of the subaccount exceeds the assumed interest rate of 5% annually. Conversely, annuity unit values fall if the net investment performance of the subaccount is less than the assumed rate. The value of a variable annuity unit in each subaccount was established at $1.00 on the date operations began for that subaccount. For the mutual fund account, the value of a variable annuity unit on any subsequent business day is equal to (a) multiplied by (b) multiplied by (c), where: (a) is the variable annuity unit value on the immediately preceding business day; (b) is the net investment factor for the valuation period; and (c) is the investment result adjustment factor for the valuation period. The investment result adjustment factor for the valuation period is the product of discount factors of .99986634 per day to recognize the 5% effective annual assumed investment return. The valuation period is the period from the close of the immediately preceding business day to the close of the current business day. The dollar amount of subsequent variable annuity payments will depend upon changes in applicable annuity unit values. The annuity payment rates vary according to the annuity option elected and the sex and adjusted age of the annuitant at the annuity commencement date. The group contract and/or certificate also contains a table for determining the adjusted age of the annuitant. Illustration of Calculations for Annuity Unit Value and Variable Annuity Payments Formula and Illustration for Determining Annuity Unit Value Annuity Unit Value = A * B * C Where: A = annuity unit value for the immediately preceding valuation period. Assume..................................................... = $ X B = Net investment factor for the valuation period for which the annuity unit value is being calculated. Assume..................................................... = Y C = A factor to neutralize the assumed interest rate of 5% built into the Annuity Tables used. Assume..................................................... = Z Then, the annuity unit value is: $ X * Y * Z = $ Q Formula and Illustration for Determining Amount of -21- First Monthly Variable Annuity Payment First monthly variable annuity payment = A * B ----- $1,000 Where: A = The adjusted certificate value as of the annuity commencement date. Assume..................................................... = $ X B = The Annuity purchase rate per $1,000 of adjusted certificate value based upon the option selected, the sex and adjusted age of the annuitant according to the tables contained in the group contract and/or certificate. Assume..................................................... = $ Y Then, the first monthly variable annuity payment = $ X * $ Y = $ Z --------- 1,000 Formula and Illustration for Determining the Number of Annuity Units Represented by Each Monthly Variable Annuity Payment Number of annuity units = A - B Where: A = The dollar amount of the first monthly variable annuity payment. Assume..................................................... = $ X B = The annuity unit value for the valuation date on which the first monthly payment is due. Assume..................................................... = $ Y Then, the number of annuity units $ X = Z --- $ Y FAMILY INCOME PROTECTOR - HYPOTHETICAL ILLUSTRATION The amounts shown below are hypothetical guaranteed minimum monthly payment amounts under the "family income protector" for a $100,000 premium when annuity payments do not begin until the rider anniversary indicated in the left-hand column. These figures assume the following: . there were no subsequent premium payments or withdrawals; . there were no premium taxes; . the $100,000 premium is subject to the family income protector; . the annuitant is (or both annuitants are) 60 years old when the rider is issued; . the annual growth rate is 6.0% (once established an annual growth rate will not change during the life of the family income protector rider); and . there was no upgrade of the minimum annuitization value. Six different annuity payment options are illustrated: a male annuitant, a female annuitant and a joint and survivor annuity, each on a Life Only and a Life with 10-Year Certain basis. The figures below, which are the amount of the first monthly payment, are based on an assumed investment return of 3%. Subsequent payments will never be less than the amount of the first payment (although subsequent payments are calculated using a 5% assumed investment return). Illustrations of guaranteed minimum payments based on other assumptions will be provided upon request. Life Only = Life Annuity with No Period Certain Life 10 = Life Annuity with 10 Years Certain
-22- ================================================================================ Rider Anniversary at Male Female Joint & Survivor Exercise Date - -------------------------------------------------------------------------------- Life Only Life 10 Life Only Life 10 Life Only Life 10 - -------------------------------------------------------------------------------- 10 (age 70) $ 1,135 $ 1,067 $ 976 $ 949 $ 854 $ 852 - -------------------------------------------------------------------------------- 15 1,833 1,634 1,562 1,469 1,332 1,318 - -------------------------------------------------------------------------------- 20 (age 80) 3,049 2,479 2,597 2,286 2,145 2,078 ================================================================================ This hypothetical illustration should not be deemed representative of past or future performance of any underlying variable investment option. Withdrawals will affect the minimum annuitization value as follows: Each certificate year, withdrawals up to the limit of the total free amount (the minimum annuitization value on the last certificate anniversary multiplied by the annual growth rate) reduce the minimum annuitization value on a dollar-for-dollar basis. Withdrawals over this free amount will reduce the minimum annuitization value on a pro rata basis by an amount equal to the minimum annuitization value immediately prior to the excess withdrawal multiplied by the percentage reduction in the certificate value resulting from the excess withdrawal. The free amount will always be a relatively small fraction of the minimum annuitization value. The amount of the first payment provided by the family income protector will be determined by multiplying each $1,000 of minimum annuitization value by the applicable annuity factor shown on Schedule I of the family income protector rider. The applicable annuity factor depends upon the annuitant's (and joint annuitant's, if any) sex (or without regard to gender if required by law), age, and the family income protector payment option selected and is based on a guaranteed interest rate of 3% and the "1983 Table a" mortality table improved to the year 2000 with projection Scale G. Subsequent payments will be calculated as described in the family income protector rider using a 5% assumed investment return. Subsequent payments may fluctuate annually in accordance with the investment performance of the annuity subaccounts. However, subsequent payments are guaranteed to never be less than the initial payment. The stabilized payment on each subsequent certificate anniversary after annuitization using the family income protector will equal the greater of the initial payment or the payment supportable by the annuity units in the selected subaccounts. The supportable payment is equal to the number of variable annuity units in the selected subaccounts multiplied by the variable annuity unit values in those subaccounts on the date the payment is made. The variable annuity unit values used to calculate the supportable payment will assume a 5% assumed investment return. If the supportable payment at any payment date during a certificate year is greater than the stabilized payment for that certificate year, the excess will be used to purchase additional annuity units. Conversely, if the supportable payment at any payment date during a certificate year is less than the stabilized payment for that certificate year, there will be a reduction in the number of annuity units credited to the certificate to fund the deficiency. In the case of a reduction, you will not participate as fully in the future investment performance of the subaccounts you selected since fewer annuity units are credited to your certificate. Purchases and reductions will be allocated to each subaccount on a proportionate basis. PFL bears the risk that it will need to make payments if all annuity units have been used in an attempt to maintain the stabilized payment at the initial payment level. In such an event, PFL will make all future payments equal to the initial payment. Once all the annuity units have been used, the amount of your payment will not increase or decrease and will not depend upon the performance of any subaccounts. To compensate PFL for this risk, a guaranteed payment fee will be deducted. HISTORICAL PERFORMANCE DATA Money Market Yields PFL may from time to time disclose the current annualized yield of the Endeavor Money Market Subaccount, which invests in the Endeavor Money Market Portfolio, for a 7-day period in a manner which does not take into -23- consideration any realized or unrealized gains or losses on shares of the Endeavor Money Market Portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the 7- day period in the value of a hypothetical account having a balance of 1 unit of the Endeavor Money Market Subaccount at the beginning of the 7-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing this quotient on a 365-day basis. The net change in account value reflects (i) net income from the portfolio attributable to the hypothetical account; and (ii) charges and deductions imposed under a certificate that are attributable to the hypothetical account. The charges and deductions include the per unit charges for the hypothetical account for (i) the administrative charges; and (ii) the mortality and expense risk fee. Current yield will be calculated according to the following formula: Current Yield = ((NCS - ES)/UV) * (365/7) Where: NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7- day period attributable to a hypothetical account having a balance of 1 subaccount unit. ES = Per unit expenses of the subaccount for the 7-day period. UV = The unit value on the first day of the 7-day period. Because of the charges and deductions imposed under a certificate, the yield for the Endeavor Money Market Subaccount will be lower than the yield for the Endeavor Money Market Portfolio. The yield calculations do not reflect the effect of any premium taxes that may be applicable to a particular certificate. PFL may also disclose the effective yield of the Endeavor Money Market Subaccount for the same 7-day period, determined on a compounded basis. The effective yield is calculated by compounding the base period return according to the following formula: Effective Yield = (1 + ((NCS - ES)/UV))365/7 - 1 Where: NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7- day period attributable to a hypothetical account having a balance of 1 subaccount unit. ES = Per unit expenses of the subaccount for the 7-day period. UV = The unit value on the first day of the 7-day period. The yield on amounts held in the Endeavor Money Market Subaccount normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The Endeavor Money Market Subaccount's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Endeavor Money Market Portfolio, the types and quality of portfolio securities held by the Endeavor Money Market Portfolio and its operating expenses. For the seven days ended December 31, 1998, the effective yield of the Endeavor Money Market Subaccount was 3.083%. For the seven days ended December 31, 1998, the yield of the Endeavor Money Market Subaccount was 3.236%. -24- Other Subaccount Yields PFL may from time to time advertise or disclose the current annualized yield of one or more of the mutual fund subaccounts (except the Endeavor Money Market Subaccount) for 30-day periods. The annualized yield of a subaccount refers to income generated by the subaccount over a specific 30-day period. Because the yield is annualized, the yield generated by a subaccount during the 30-day period is assumed to be generated each 30-day period over a 12-month period. The yield is computed by: (i) dividing the net investment income of the subaccount less subaccount expenses for the period, by (ii) the maximum offering price per unit on the last day of the period times the daily average number of units outstanding for the period, (iii) compounding that yield for a 6-month period, and (iv) multiplying that result by 2. Expenses attributable to the subaccount include (i) the administrative charges; and (ii) the mortality and expense risk fee. The 30-day yield is calculated according to the following formula: Yield = 2 * ((((NI - ES)/(U - UV))+ 1)6 - 1) Where: NI = Net investment income of the subaccount for the 30-day period attributable to the subaccount's unit. ES = Expenses of the subaccount for the 30-day period. U = The average number of units outstanding. UV = The unit value at the close (highest) of the last day in the 30-day period. Because of the charges and deductions imposed by the mutual fund account, the yield for a mutual fund subaccount will be lower than the yield for its corresponding portfolio. The yield calculations do not reflect the effect of any premium taxes that may be applicable to a particular certificate. The yield on amounts held in the mutual fund subaccounts normally will fluctuate over time. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The types and quality of its investments and its operating expenses affect a subaccount's actual yield. Total Returns PFL may from time to time also advertise or disclose total returns for one or more of the mutual fund subaccounts for various periods of time. One of the periods of time will include the period measured from the date the subaccount commenced operations. When a subaccount has been in operation for 1, 5 and 10 years, respectively, the total return for these periods will be provided. Total returns for other periods of time may from time to time also be disclosed. Total returns represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods. The ending date for each period for which total return quotations are provided will be for the most recent month end practicable, considering the type and media of the communication and will be stated in the communication. Total returns will be calculated using subaccount unit values which PFL calculates on each business day based on the performance of the mutual fund account's underlying portfolio, and the deductions for the mortality and expense risk fee and the administrative charges. Total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. The total return will then be calculated according to the following formula: P (1 + T)N = ERV Where: T = The average annual total return net of subaccount recurring charges. -25- ERV = The ending redeemable value of the hypothetical account at the end of the period. P = A hypothetical initial payment of $1,000. N = The number of years in the period. Other Performance Data PFL may from time to time also disclose average annual total returns in a non- standard format in conjunction with the standard format described above. The non-standard format will be identical to the standard format except that the surrender charge percentage will be assumed to be 0%. PFL may from time to time also disclose cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formula. CTR = (ERV / P) - 1 Where: CTR = The cumulative total return net of subaccount recurring charges for the period. ERV = The ending redeemable value of the hypothetical investment at the end of the period. P = A hypothetical initial payment of $1,000. All non-standard performance data will only be advertised if the standard performance data for the same period, as well as for the required period, is also disclosed. Adjusted Historical Performance Data--The Mutual Fund Account From time to time, sales literature or advertisements may quote average annual total returns for periods prior to the date a particular mutual fund subaccount commenced operations. Such performance information for the mutual fund subaccounts will be calculated based on the performance of the various portfolios and the assumption that the mutual fund subaccounts were in existence for the same periods as those indicated for the portfolios, with the level of certificate charges that are currently in effect. PUBLISHED RATINGS PFL may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to it by one or more independent rating organizations such as A.M. Best Company, Standard & Poor's Insurance Ratings Services, Moody's Investors Service and Duff & Phelps Credit Rating Co. The purpose of the ratings is to reflect the financial strength and/or claims-paying ability of PFL. The ratings should not be considered as bearing on the investment performance of assets held in the mutual fund account or of the safety or riskiness of an investment in the mutual fund account. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, the claims-paying ability of PFL as measured by Standard & Poor's Insurance Ratings Services, Moody's Investors Service or Duff & Phelps Credit Rating Co. may be referred to in advertisements or sales literature or in reports to owners. These ratings are opinions of an operating insurance company's financial capacity to meet the obligations of its insurance policies in accordance with their terms. Claims-paying ability ratings do not refer to an insurer's ability to meet non-policy obligations (i.e., debt/commercial paper). STATE REGULATION OF PFL -26- PFL is subject to the laws of Iowa governing insurance companies and to regulation by the Iowa Division of Insurance. An annual statement in a prescribed form is filed with the Division of Insurance each year covering the operation of PFL for the preceding year and its financial condition as of the end of such year. Regulation by the Division of Insurance includes periodic examination to determine PFL's contract liabilities and reserves so that the Division may determine the items are correct. PFL's books and accounts are subject to review by the Division of Insurance at all times and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. In addition, PFL is subject to regulation under the insurance laws of other jurisdictions in which it may operate. ADMINISTRATION PFL performs administrative services for the certificates. These services include issuance of the certificates, maintenance of records concerning the certificates, and certain valuation services. RECORDS AND REPORTS All records and accounts relating to the mutual fund account will be maintained by PFL. As presently required by the Investment Company Act of 1940, as amended, and regulations promulgated thereunder, PFL will mail to all certificate owners at their last known address of record, at least annually, reports containing such information as may be required under that Act or by any other applicable law or regulation. Certificate Owners will also receive confirmation of each financial transaction and any other reports required by law or regulation. DISTRIBUTION OF THE ANNUITIES The certificates are offered to the public through brokers licensed under the federal securities laws and state insurance laws. The offering of the certificates is continuous and PFL does not anticipate discontinuing the offering of the certificates. However, PFL reserves the right to discontinue the offering of the certificates. AFSG Securities Corporation, an affiliate of PFL, is the principal underwriter of the certificates and may enter into agreements with broker-dealers for the distribution of the certificates. Distribution of the certificates had not begun as of the date of this prospectus. VOTING RIGHTS The Mutual Fund Account To the extent required by law, PFL will vote the underlying funds' shares held by the mutual fund account at regular and special shareholder meetings of the underlying funds in accordance with instructions received from persons having voting interests in the portfolios, although the Endeavor Series Trust does not hold regular annual shareholder meetings. If, however, the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result PFL determines that it is permitted to vote the Endeavor Series Trust shares in its own right, it may elect to do so. Before the annuity commencement date, you hold the voting interest in the selected portfolios. The number of votes that you have the right to instruct will be calculated separately for each subaccount. The number of votes that you have the right to instruct for a particular subaccount will be determined by dividing your certificate value in the subaccount by the net asset value per share of the corresponding portfolio in which the subaccount invests. Fractional shares will be counted. -27- After the annuity commencement date, the person receiving annuity payments has the voting interest, and the number of votes decreases as annuity payments are made and as the reserves for the certificate decrease. The person's number of votes will be determined by dividing the reserve for the certificate allocated to the applicable Subaccount by the net asset value per share of the corresponding portfolio. Fractional shares will be counted. The number of votes that you or the person receiving income payments has the right to instruct will be determined as of the date established by the underlying fund for determining shareholders eligible to vote at the meeting of the underlying fund. PFL will solicit voting instructions by sending you, or other persons entitled to vote, written requests for instructions prior to that meeting in accordance with procedures established by the underlying fund. Portfolio shares as to which no timely instructions are received and shares held by PFL in which you, or other persons entitled to vote, have no beneficial interest will be voted in proportion to the voting instructions that are received with respect to all certificates participating in the same subaccount. Each person having a voting interest in a Subaccount will receive proxy material, reports, and other materials relating to the appropriate Portfolio. OTHER PRODUCTS PFL makes other variable annuities available that may also be funded through the mutual fund account. These variable annuities may have different features, such as different investment options or charges. CUSTODY OF ASSETS The assets of each of the mutual fund subaccounts are held by PFL. The assets of each of the subaccounts are segregated and held separate and apart from the assets of the other subaccounts and from PFL's general account assets. PFL maintains records of all purchases and redemptions of shares of the Endeavor Series Trust held by each of the mutual fund subaccounts. Additional protection for the assets of the mutual fund account is afforded by PFL's fidelity bond, presently in the amount of $5,000,000, covering the acts of officers and employees of PFL. LEGAL MATTERS Sutherland Asbill & Brennan LLP, of Washington D.C. has provided legal advice to PFL relating to certain matters under the federal securities laws applicable to the issue and sale of the certificates. INDEPENDENT AUDITORS The Financial Statements of PFL as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, included in this Statement of Additional Information have been audited by Ernst & Young LLP, Independent Auditors, 801 Grand Avenue, Suite 3400, Des Moines, Iowa 50309. The Financial Statements of certain subaccounts of PFL Life Variable Annuity Account C (which comprises the Annuity) will be audited by Ernst & Young. -28- OTHER INFORMATION A registration statement has been filed with the Securities and Exchange Commission, under the Securities Act of 1933 as amended, with respect to the certificates discussed in this Statement of Additional Information. Not all of the information set forth in the Registration Statement, amendments and exhibits thereto has been included in the prospectus or this Statement of Additional Information. Statements contained in the Prospectus and this Statement of Additional Information concerning the content of the certificates and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the Securities and Exchange Commission. FINANCIAL STATEMENTS The values of your interest in the mutual fund account will be affected solely by the investment results of the selected subaccount(s). Financial Statements of The PFL Life Variable Annuity Account C are contained herein. The financial statements of PFL, which are included in this Statement of Additional Information, should be considered only as bearing on the ability of PFL to meet its obligations under the certificates. They should not be considered as bearing on the investment performance of the assets held in the mutual fund account. -29- PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements All required financial statements are included in Part B of this Registration Statement. (b) Exhibits: (1) (a) Resolution of the Board of Directors of PFL Life Insurance Company authorizing establishment of the Mutual Fund Account. Note 1 (2) Not Applicable. (3) (a) Principal Underwriting Agreement by and between PFL Life Insurance Company, on its own behalf and on the behalf of the Mutual Fund Account, and AFSG Securities Corporation. Note 7 (b) Amendment to Exhibit A of Principal Underwriting Agreement by and between PFL Life Insurance Company, on its own behalf and on the behalf of the Mutual Fund Account, and AFSG Securities Corporation. Note 9 (c) Form of Broker/Dealer Supervision and Sales Agreement by and between AFSG Securities Corporation and the Broker/Dealer. Note 7 (4) (a) Form of Group Master Policy and Optional Riders for the Endeavor Generations Plus Variable Annuity. Note 9 (b) Form of Group Certificate for the Endeavor Generations Plus Variable Annuity. Note 9 (c) Form of Individual Policy for the Endeavor Generations Plus Variable Annuity. Note 9 (5) (a) Form of Group Master Application for the Endeavor Generations Plus Variable Annuity. Note 9 (b) Form of Group Certificate Enrollment Application for the Endeavor Generations Plus Variable Annuity. Note 9 (c) Form of Individual Application for the Endeavor Generations Plus Variable Annuity. Note 9 (6) (a) Articles of Incorporation of PFL Life Insurance Company. Note 2 (b) ByLaws of PFL Life Insurance Company. Note 2 (7) Not Applicable. (8) (a) Participation Agreement by and between PFL Life Insurance Company and Endeavor Series Trust. Note 2 (b) Amendment to Participation Agreement by and between PFL Life Insurance Company and Endeavor Series Trust. Note 6 (c) Amendment to Participation Agreement by and between PFL Life Insurance Company and Endeavor Series Trust. Note 9 (9) Opinion and Consent of Counsel. Note 9 (10) (a) Consent of Independent Auditors. Note 10 (10) (b) Opinion and Consent of Actuary. Note 9 (11) Not applicable. (12) Not applicable. (13) Performance Data Calculations. Note 10 (14) Powers of Attorney. (P.S. Baird, W.L. Busler, D.C. Kolsrud, R.J. Kontz) Note 3 (Craig D. Vermie) Note 4. (Brenda K. Clancy) Note 5. (Larry N. Norman) Note 8. Note 1. Incorporated herein by reference to the Initial filing of Registrants Form N-4 Registration Statement (File No. 33-33085) on January 23, 1990. Note 2. Incorporated herein by reference to the Registrants filing of Post- Effective Amendment No. 2 to Form N-4 Registration Statement (File No. 33-33085) on April 1, 1991. Note 3. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 6 to Form N-4 Registration Statement (File No. 33-33085) on January 28, 1994. Note 4. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 11 to Form N-4 Registration Statement (File No. 33-33085) on April 24, 1996. Note 5. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 12 to Form N-4 Registration Statement (File No. 33-33085) on February 28, 1997. Note 6. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 13 to Form N-4 Registration Statement (File No. 33-33085) on April 28, 1997. Note 7. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 14 to Form N-4 Registration Statement (File No. 33-33085) on February 27, 1998. Note 8. Incorporated herein by reference to the Registrant's filing of Post- Effective Amendment No. 16 to Form N-4 Registration Statement (File No. 33-33085) on September 28, 1998. Note 9. Filed herewith. Note 10. To be filed by amendment. Item 25. Directors and Officers of the Depositor (PFL Life Insurance Company)
Name and Business Address Principal Positions and Offices with Depositor ------------------------- --------------------------------------------- William L. Busler Director, Chairman of the Board and President 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 Patrick S. Baird Director, Senior Vice President and Chief Operating 4333 Edgewood Road, N.E. Officer Cedar Rapids, Iowa 52499-0001 Craig D. Vermie Director, Vice President, Secretary and General Counsel 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 Douglas C. Kolsrud Director, Senior Vice President, Chief Investment 4333 Edgewood Road, N.E. Officer and Corporate Actuary Cedar Rapids, Iowa 52499-0001 Larry N. Norman Director and Executive Vice President 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 Robert J. Kontz Vice President and Corporate Controller 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 Brenda K. Clancy Vice President, Treasurer and Chief Financial Officer 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant
Jurisdiction of Percent of Voting Name Incorporation Securities Owned Business - ---- ------------- ---------------- -------- AEGON N.V. Netherlands 53.63% of Vereniging Holding company Corporation AEGON Netherlands Membership Association Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company Corporation Netherlands Corporation AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company Corporation Netherlands Corporation AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company Corporation Netherlands Corporation AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company Corporation Netherlands Corporation
Voting Trust Delaware Voting Trust Trustees: K.J. Storm Donald J. Shepard H.B. Van Wijk Dennis Hersch AEGON U.S. Holding Delaware 100% of Voting Trust Holding company Corporation Short Hills Management New Jersey 100% of AEGON U.S. Holding company Company Holding Corporation CORPA Reinsurance New York 100% of AEGON U.S. Holding company Company Holding Corporation AEGON Management Indiana 100% of AEGON U.S. Holding company Company Holding Corporation RCC North America Inc. Delaware 100% of AEGON U.S. Holding company Holding Corporation AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company Holding Corporation AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company Group, Inc. Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel Insurance Group, Inc. insurance Monumental General Maryland 100% Monumental General Provides management Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated third party administrator Executive Management and Maryland 100% Monumental General Provides actuarial Consultant Services, Inc. Administrators, Inc. consulting services Monumental General Mass Maryland 100% Monumental General Marketing arm for Marketing, Inc. Insurance Group, Inc. sale of mass marketed insurance coverages Diversified Investment Delaware 100% AUSA Holding Co. Registered investment Advisors, Inc. advisor Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer Corp. Advisors, Inc. AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer Supplemental Ins. Division, Inc. Tennessee 100% AUSA Holding Co. Insurance
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency Canadian Dealer Network Inc. AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor Management, Inc. AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate Advisors, Inc. administrative and real estate investment services Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial Advisors, Inc. software production and sales Quantra Software Corporation Delaware 100% Quantra Corporation Manufacture and sell mortgage loan and security management software Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling Advisors, Inc. Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling Advisors, Inc. Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for Advisors, Inc. real estate investment management AEGON USA Realty Iowa 100% AEGON USA Real estate management Management, Inc Realty Advisors, Inc. USP Real Estate Investment Trust Iowa 21.89% First AUSA Life Real estate investment Ins. Co , 13.11% PFL Life trust Ins. Co. 4.86% Bankers United Life Assurance Co. RCC Properties Limited Iowa AEGON USA Realty Limited Partnership Partnership Advisors Inc. is General Partner and 5% owner. AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership Markets, Inc. Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile America, Inc. extended maintenance contracts Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling for employees and agents of affiliated companies Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment Services, Inc. advisor Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer Associated Mariner Financial Michigan 100% Intersecurities, Inc. Holding co./management Group, Inc. services Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer Financial Group, Inc. Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning Services, Inc. Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency Financial Group, Inc. Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency of Hawaii, Inc. Agency, Inc. Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency of Massachusetts, Inc. Agency, Inc. Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency Ohio, Inc. Agency, Inc. Associated Mariner Agency Texas 100% Associated Mariner Insurance agency Texas, Inc. Agency, Inc. Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency New Mexico, Inc. Agency, Inc. Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination Financial Group, Inc. Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor 50% Janus Capital Corp. IDEX Series Fund Massachusetts Various Mutual fund First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding Company company
AUSA Life Insurance New York 100% First AUSA Life Insurance Company, Inc. Insurance Company Life Investors Insurance Iowa 100% First AUSA Life Insurance Company of America Ins. Co. Life Investors Alliance, LLC Delaware 100% LIICA Purchases, own, and hold the equity interest of other entities Bankers United Life Iowa 100% Life Investors Ins. Insurance Assurance Company Company of America Life Investors Agency Iowa 100% Life Investors Ins. Marketing Group, Inc. Company of America PFL Life Insurance Company Iowa 100% First AUSA Life Insurance Ins. Co. AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing Group, Inc. AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of structured of Kentucky Services Group, Inc. settlements AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of structured Services Group settlements Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Insurance Stock First AUSA Life Ins. Co. Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Insurance Stock First AUSA Life Ins. Co. Western Reserve Life Assurance Ohio 100% First AUSA Life Insurance Co. of Ohio Ins. Co. WRL Series Fund, Inc. Maryland Various Mutual fund WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for Assurance Co. of Ohio affiliated mutual fund WRL Investment Florida 100% Western Reserve Life Registered investment Management, Inc. Assurance Co. of Ohio advisor AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance agency Assurance Co. of Ohio ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency Assurance Co. of Ohio ISI Insurance Agency Ohio 100% ISI Insurance Insurance agency of Ohio, Inc. Agency Inc.
ISI Insurance Agency Texas 100% ISI Insurance Insurance agency of Texas, Inc. Agency Inc. ISI Insurance Agency Massachusetts 100% ISI Insurance Insurance Agency of Massachusetts, Inc. Agency Inc. Monumental Life Insurance Co. Maryland 100% First AUSA Life Insurance Ins. Co. AEGON Special Markets Maryland 100% Monumental Life Marketing Group, Inc. Ins. Co. Monumental General Casualty Co. Maryland 100% First AUSA Life Insurance Ins. Co. United Financial Services, Inc. Maryland 100% First AUSA Life General agency Ins. Co. Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Insurance Ins. Co. The Whitestone Corporation Maryland 100% First AUSA Life Insurance agency Ins. Co. Cadet Holding Corp. Iowa 100% First AUSA Life Holding company Ins. Co. Commonwealth General Delaware 100% AEGON USA, Inc. Holding company Corporation ("CGC") PB Series Trust Massachusetts N/A Mutual fund Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins. cos. Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life Insurance Company Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent Commonwealth General. Kentucky 100% CGC Administrator of structured Assignment Corporation settlements AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer PB Investment Advisors, Inc. Delaware 100% CGC Registered investment advisor Diversified Financial Products Inc. Delaware 100% CGC Provider of investment, marketing and admin. services to ins. cos. AEGON USA Real Estate Delaware 100% Diversified Financial Real estate and mortgage Services, Inc. Products Inc.. holding company
Capital Real Estate Delaware 100% CGC Furniture and equipment Development Corporation lessor Capital General Development Delaware 100% CGC Holding company Corporation Ammest Realty Corporation Texas 100% Peoples Security Life Special purpose subsidiary Insurance Company JMH Operating Company, Inc. Mississippi 100% Peoples Security Life Real estate holdings Insurance Company Independence Automobile Florida 100% Capital Security Automobile Club Association, Inc. Life Insurance Company Independence Automobile Georgia 100% Capital Security Automobile Club Club, Inc. Life Insurance Company Capital 200 Block Corporation Delaware 100% CGC Real estate holdings Capital Broadway Corporation Kentucky 100% CGC Real estate holdings Southlife, Inc. Tennessee 100% CGC Investment subsidiary Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management (EIN 23-1720755) support services National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary Agency, Inc. Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary Corporation Agency, Inc. Frazer Association Consultants, Illinois 100% Ampac Insurance TPA license-holder Inc. Agency, Inc. Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment Agency, Inc. lessor Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group Agency, Inc. insurance programs Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary Agency, Inc. Academy Insurance Group, Inc. Delaware 100% CGC Holding company Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company Group, Inc. Pension Life Insurance New Jersey 100% Academy Insurance Insurance company Company of America Group, Inc. Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary Group, Inc.
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary Group, Inc. Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent Group, Inc. Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary Insurance Agency, Inc. Group, Inc. Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary Group, Inc. Ampac, Inc. Texas 100% Academy Insurance Managing general agent Group, Inc. Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary (EIN 23-2364438) Group, Inc. Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services Group, Inc. Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary Group, Inc. Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary Group, Inc. NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club Group, Inc. NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary Group, Inc. Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. Services, Inc. Group, Inc. services Unicom Administrative Germany 100%Unicom Administrative Provider of admin. Services, GmbH Services, Inc. services Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company Insurance Company 19.8% Peoples Security Life Insurance Company 1% CGC Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary Caicos Islands Peoples Benefit Life Missouri 3.7% CGC Insurance company Insurance Company 20% Capital Liberty, L.P. 76.3% Monumental Life Insurance Co.
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company Life Insurance Company Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary
Item 27. Number of Contract Owners As of December 31, 1998, there were no Contract owners. Item 28. Indemnification The Iowa Code (Sections 490.850 et. seq.) provides for permissive ------- indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The Code also specifies producers for determining when indemnification payments can be made. Insofar as indemnification for liabilities arising under the Securities Act of 933 may be permitted to directors, officers and controlling persons of the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in connection with the securities being registered), the Depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters AFSG Securities Corporation 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001 The directors and officers of AFSG Securities Corporation are as follows: Larry N. Norman Sarah J. Strange Director and President Director and Vice President Frank A. Camp Bob Warner Director and Secretary Assistant Compliance Officer Lisa Wachendorf Linda Gilmer Vice President and Treasurer/Controller Chief Compliance Officer Debra C. Cubero Priscilla Hechler Vice President Assistant Vice President and Assistant Secretary Emily Bates Thomas Pierpan Assistant Treasurer Assistant Vice President and Assistant Secretary Clifton Flenniken Darin D. Smith Assistant Treasurer Assistant Vice President and Assistant Secretary
The principal business address of each person listed is AFSG Securities Corporation, 4333 Edgewood Road, N.E., Cedar Rapids, IA 52499-0001. Commissions and Other Compensation Received by Principal Underwriter. - -------------------------------------------------------------------- AFSG Securities Corporation, the broker/dealer, received $0 from the Registrant for the year ending December 31, 1998, for its services in distributing the Policies. No other commission or compensation was received by the principal underwriter, directly or indirectly, from the Registrant during the fiscal year. AFSG Securities Corporation serves as the principal underwriter for the PFL Endeavor VA Separate Account, the PFL Retirement Builder Variable Annuity Account, the PFL Life Variable Annuity Account A, the PFL Wright Variable Annuity Account and the AUSA Endeavor Variable Annuity Account. These accounts are separate accounts of PFL Life Insurance Company or AUSA Life Insurance Company, Inc. AFSG Securities Corporation also serves as principal underwriter for Separate Account I, Separate Account II, Separate Account IV and Separate Account V of Peoples Benefit Life Insurance Company, and for Separate Account B and Separate Account C of AUSA Life Insurance Company, Inc. Item 30. Location of Accounts and Records The records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by PFL Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. Item 31. Management Services. All management Contracts are discussed in Part A or Part B. Item 32. Undertakings (a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as Premiums under the Contract may be accepted. (b) Registrant undertakes that it will include either (i) a postcard 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 (ii) a space in the Policy application that an applicant can check to request a Statement of Additional Information. (c) Registrant undertakes 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 to PFL at the address or phone number listed in the Prospectus. (d) PFL Life Insurance Company hereby represents that the fees and charges deducted under the contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by PFL Life Insurance Company. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, in the City of Cedar Rapids and State of Iowa, on this 19th day of July, 1999. PFL LIFE VARIABLE ANNUITY ACCOUNT C PFL LIFE INSURANCE COMPANY Depositor * _________________________ William L. Busler President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the duties indicated. Signatures Title Date - ---------- ----- ---- * Director July , 1999 - ---------------------- Patrick S. Baird /s/ Craig D. Vermie Director July 19, 1999 - ---------------------- Craig D. Vermie ______________________ * Director July ____, 1999 William L. Busler (Principal Executive Officer) ______________________ * Director July ____, 1999 Larry N. Norman ______________________ * Director July ____, 1999 Douglas C. Kolsrud ______________________ * Vice President and July ____, 1999 Robert J. Kontz Corporate Controller ______________________ * Treasurer July ____, 1999 Brenda K. Clancy * By Craig D. Vermie, attorney in-fact. Registration No. 333-______ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ EXHIBITS TO FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FOR THE ENDEAVOR GENERATIONS PLUS VARIABLE ANNUITY _______________ EXHIBIT INDEX ------------- Exhibit No. Description of Exhibit Page No.* - ----------- ---------------------- --------- (1)(a) Resolution (3)(b) Amendment to Underwriting Agreement (4)(a) Form of Group Master Policy and Optional Riders (4)(b) Form of Group Certificate (4)(c) Form of Individual Policy (5)(a) Form of Group Master Application (5)(b) Form of Group Certificate Enrollment Application (5)(c) Form of Individual Application (8)(c) Amendment to Participation Agreement (9) Opinion and Consent of Counsel (10) (b) Opinion and Consent of Actuary ___________ * Page numbers included only in manually executed original. EX-1.A 2 EXHIBIT (1) (A) EXHIBIT (1)(a) -------------- RESOLUTION CERTIFICATION ------------- I, Craig D. Vermie, being the duly constituted Secretary of PFL Life Insurance Company, an Iowa corporation with its principal place of business located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa, hereby certify that the following is a true and correct copy of a resolution adopted by the Board of Directors of said corporation by written consent dated as of February 20, 1997, and that said resolution is still in full force and effect: RESOLVED, that the officers of the Company be and they hereby are authorized to establish the " PFL Life Variable Annuity Account C," a separate account for the purpose of selling approved variable insurance contracts; BE IT FURTHER RESOLVED, that the officers of this company be and they hereby are authorized and instructed to take any and all actions necessary in order to carry out the powers hereby conferred, including but not limited to, the filing of any statement and amendments thereto with the Securities and Exchange Commission, execution of any and all required underwriting agreements, state regulatory filings, Blue Sky filings, policy filings, and to execute any and all other documents that may be required by any Federal, state or local regulatory agency in order to operate the separate account. Dated at Cedar Rapids, Iowa, this 26th day of February, 1997. (SEAL) By: /s/ Craig D. Vermie ------------------- Craig D. Vermie EX-3.B 3 EXHIBIT (3) (B) EXHIBIT (3)(b) -------------- AMENDMENT TO PRINCIPAL UNDERWRITING AGREEMENT AMENDMENT TO PRINCIPAL UNDERWRITING AGREEMENT EXHIBIT A DATED JULY 27, 1999 1. PFL Life Variable Annuity Account A 2. PFL Endeavor VA Separate Account 3. PFL Wright Variable Annuity Account 4. PFL Retirement Builder Variable Annuity Account 5. PFL Endeavor Target Account 6. PFL Endeavor Variable Life Account 7. Legacy Builder Variable Life Separate Account 8. PFL Life Variable Annuity Account C AFSG SECURITIES CORPORATION PFL LIFE INSURANCE COMPANY By: /s/ Larry N. Norman By: /s/ William L. Busler ------------------- --------------------- Larry N. Norman William L. Busler Title: President Title: President ---------------- ------------------ EX-4.A 4 EXHIBIT (4) (A) EXHIBIT (4)(A) -------------- GROUP MASTER POLICY AND OPTIONAL RIDERS [LOGO OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GROUP CONTRACT OWNER: SECURITIES CUSTOMERS DLR INSURANCE TRUST II GROUP CONTRACT NUMBER: 12345 GROUP CONTRACT DATE: APRIL 1, 1999 WE AGREE . To provide annuity payments as These agreements are subject to set forth in Section 10 of this the provisions of this Contract. Contract, This Contract is issued in consideration of the . Or to pay withdrawal benefits in application, if any, and payment accordance with Section 5 of of the premiums as provided. this Contract. This Contract may be applied for . Or to pay death proceeds in an issued to qualify as a tax- accordance with Section 9 of qualified annuity under the this Contract. applicable sections of the Internal Revenue Code. Signed for us at our home office. /S/ Craig D. Vermie /S/ William L. Busler SECRETARY PRESIDENT This Contract is a legal contract between the Contract Owner and the Company. READ YOUR CONTRACT CAREFULLY Group Flexible Premium Variable Annuity Contract Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C) AV432 101 114 199 Non-Participating SECTION 1 DEFINITIONS ADJUSTED POLICY VALUE GROUP CONTRACT OWNER The Policy Value increased or The entity, as shown on the decreased by any Excess Interest Contract Data Page, which applies Adjustment for the Group Contract ANNUITANT INVESTMENT OPTIONS The Participant to whom annuity Any of the Guaranteed Period payments will be made, unless Options of the Fixed Account, the another payee is named. Dollar Cost Averaging Fixed Account Option, and any of the Subaccounts ANNUITY COMMENCEMENT DATE of the Separate Account(s). Date the Annuitant will begin PARTICIPANT receiving payments from this annuity, which may not be later A person who makes premium payments than the last day of the or for whom premium payments are Certificate month starting after made under the Group Contract the Annuitant attains age 85, except as expressly allowed by us, PAYEE but in no event later than the last day of the month following the The person to whom annuity payments month in which the Annuitant will be made. attains age 95. PAYMENT OPTIONS CASH VALUE Options through which the Amount defined in Section 5, that distribution of the Adjusted Policy can be withdrawn if the annuity Value can be directed. Certificate is surrendered. POLICY VALUE CERTIFICATE The amount (defined in Section 4) The document issued under the Group applicable under the Certificate Contract to the eligible that can be used to fund one of the Participants who apply for Payment Options. coverage. The Certificate is not a part of the Group Contract SEPARATE ACCOUNT CERTIFICATE ANNIVERSARY The separate investment account(s) established by us, as described in The anniversary of the Certificate Section 6. Date for each year this Certificate remains in force. SUBACCOUNT CERTIFICATE DATE A division of a Separate Account, as described in Section 6. The date shown on page 3 of the Certificate and the date on which SURRENDER the Certificate becomes effective. A partial or full withdrawal of CERTIFICATE OWNER funds from the Policy Value or Cash Value. The owner of the annuity Certificate. Unless otherwise WITHDRAWAL specified on the Certificate Data page, the Annuitant and the A distribution of funds from the Certificate Owner shall be one and Policy Value or Cash Value. the same person. YIELD CERTIFICATE YEAR The effective annual interest rate The 12 month periods following the applicable to the Fixed Account Certificate Date shown on the Certificate Data page. The first YOU, YOUR Certificate Year starts on the Certificate Date. Each subsequent The owner of this Certificate. year starts on the anniversary of Unless otherwise specified on the the Certificate Date. Certificate Data Page, the Annuitant and the Certificate Owner DISTRIBUTION shall be one and the same person. A withdrawal or disbursement of funds from the Policy Value or Cash Value. GROUP CONTRACT The Contract issued to the Group Contract Owner, under which Certificates are issued to eligible Participants. AVB432CT PAGE 2 SECTION 2 - CONTRACT DATA GROUP CONTRACT NUMBER: [12345] GROUP CONTRACT DATE: [April 15, 1999] GROUP CONTRACT OWNER: [Securities Customers DRL Insurance Trust II] SEPARATE ACCOUNT: [PFL Endeavor Variable Annuity Account] DCA SUBACCOUNT(S): [Money Market Portfolio, U.S. Government Securities Portfolio] PREMIUM PAYMENT MINIMUMS (PER CERTIFICATE) Initial Premium Payment, Nonqualified: [$5,000.00] Initial Premium Payment, Qualified*: [$2,000.00] *Waived for 403(b) annuities Subsequent Premium Payments: [$50.00] SERVICE CHARGE: [$40] Before the Annually Commencement Date: [5%] Annually Compounding Death Benefit Mortality and Expense Risk Fee and Administrative Charge: [1.75%] Step-Up to age 75 Death Benefit Mortality and Expense Risk Fee and Administrative Charge: [1.75%] Return of Premium Death Benefit Mortality and Expense Risk Fee and Administrative Charge: [1.55%] Distribution Financing Charge [.00%] After the Annuity Commencement Date: Mortality and Expense Risk Fee and Administrative Charge: [1.55%] FIXED ACCOUNT MINIMUM ANNUAL INTEREST RATE: 3% SURRENDER CHARGE: Number of Years Since Percentage of Premium [Premium Payment Date] Withdrawn [0 - 1 8% 1 - 2 8% 2 - 3 8% 3 - 4 7% 4 - 5 6% 5 - 6 5% 6 - 7 4% 7 - 8 3% 8 - 9 2% 9 and thereafter 0%] AV 432 101 114 779 MSP PAGE 3 SECTION 2 - CONTRACT DATA - CONT SCHEDULE OF ADDITIONAL BENEFITS: FORM NO. ADDITIONAL BENEFIT(S) AE 1051 199 LUMP SUM WITHDRAWAL OPTION AE 1058 199 GUARANTEED MINIMUM DEATH BENEFIT AE 1060 199 GUARANTEED MINIMUM DEATH BENEFIT AE 1061 199 GUARANTEED MINIMUM DEATH BENEFIT AE 1064 199 SYSTEMATIC PAYOUT OPTION AE 1074 199 SERVICE CHARGE WAIVER AE 1075 199 PREMIUM ENHANCEMENT] AV 432 101 114 779 MSP PAGE 3(A) SECTION 3 - PREMIUM PAYMENTS PAYMENT OF PREMIUMS ALLOCATION OF PREMIUM PAYMENTS Premium payments may be made any Premium payments may be applied to time on or after the effective date the various Investment Options of the Certificate and before the which we make available. The Annuity Commencement Date. The Certificate Owner must tell us what Certificate Owner may start or percent of each premium payment to stop, increase or decrease, or skip allocate to the various Investment any premium payments. Options. Each percent may be either zero or any whole number; however, MAXIMUM AND MINIMUM PREMIUM PAYMENT the allocation among all Investment Options must total 100%. The premium payments may not be more than the amount permitted by CHANGE OF ALLOCATION law if this is a tax-qualified annuity. The minimum premium The Certificate Owner may change payments we will accept are the allocation of premium payments specified on page 3. The maximum to the various Investment Options. total premium payments, per The Certificate Owner must tell us Participant, which we will accept in a signed notice which gives us without prior Company approval is the facts that we need. Premium $1,000,000. payments received after the date on which we receive the notice will be PREMIUM PAYMENT DATE applied on the basis of the new allocation. The premium payment date is the date on which the premium payment PREMIUM TAXES is credited to the Certificate. The initial premium payment less any A state may impose a premium tax. premium taxes will be credited to It may be imposed when a premium the Certificate within two business payment is made, or on the Annuity days of receipt of such payment and Commencement Date, on the date of the required information. death, or on the date of full Subsequent additional premium surrender. When permitted by state payments will be credited to the law, we will not deduct the tax Certificate as of the business day until the Annuity Commencement when the premium payment and Date, date of death, or date of required information are received. full surrender. A business day is any day on which the New York Stock Exchange is open for trading. SECTION 4 - POLICY VALUE POLICY VALUE The Adjusted Policy Value may be used on the Annuity Commencement On or before the Annuity Date to provide lifetime income or Commencement Date, the Policy Value income for a period of no less than of each Certificate is equal to 60 months under the Payment Options the: in Section 10. (a) premium payments; minus SERVICE CHARGE (b) Gross Partial Withdrawals; plus On each Certificate Anniversary and at the time of surrender during any (c) interest credited to the Fixed Certificate Year before the Annuity Account; plus Commencement Date, we reserve the right to charge an amount up to the (d) accumulated gains in the amount of the Service Charge shown Separate Account; minus on page 3 for administration expenses. It will be deducted from (e) accumulated losses in the each Investment Option in Separate Account; minus proportion to the portion of Policy Value (prior to such charge) in (f) service charges, premium taxes each Investment Option, and transfer fees, if any. respectively, on that Certificate Anniversary, or at the time of ADJUSTED POLICY VALUE surrender. In no event will the Service Charge exceed 2% of the The Adjusted Policy Value is the Policy Value at the time it is Policy Value increased or decreased deducted. by any Excess Interest Adjustment M1016 PAGE 4 SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS CASH VALUE 4) The Excess Interest Adjustment may affect the death proceeds The Cash Value may be partially defined in Section 9; withdrawn or will be paid in the event of a full surrender of the 5) If interest rates have decreased Certificate. We must receive from the time the affected written withdrawal or surrender Guaranteed Period(s) started request from the Certificate Owner until the time the transaction at or before the commencement of occurs, the Excess Interest annuity payments. Adjustment will result in additional funds available to Information on the current amount the Certificate Owner; of a Certificate's Cash Value is available upon request The Cash 6) If interest rates have increased Value is equal to the Adjusted from the time the affected Policy Value less any Surrender Guaranteed Period(s) started Charges. There is-no Cash Value until the time the transaction after annuity payments have occurs, the Excess Interest commenced. Adjustment will result in a decrease in the funds available EXCESS INTEREST ADJUSTMENT to the Certificate Owner. Full Surrenders, Partial 7) Certain amounts are not subject Withdrawals, transfers, and amounts to the Excess Interest applied to a Payment Option from Adjustment as provided in the Fixed Account Guaranteed Period Sections 5, 7 and 8. Options described in Section 7 will be subject to an Excess Interest The formula for determining the Adjustment except as provided for amount of the Excess Interest in the Partial Withdrawals Adjustment is as follows: provision below. Excess Interest Adjustment = S x (G- An Excess Interest Adjustment C) x (M/12) applies in the following situations: where: S is the gross (that is, before surrender charges 1) When the Certificate Owner and premium taxes, if any) withdraws all or any portion of amount being surrendered, their Cash Value, partially withdrawn, transferred, or applied to 2) When the Certificate Owner a Payment Option that is exercises Annuity Payment subject to the Excess Options, Interest Adjustment 3) When death proceeds are G is the guaranteed interest calculated. However, death rate for the Guaranteed proceeds will not be reduced if Period applicable to S. the Excess Interest Adjustment is negative. M is the number of months remaining in the The Excess Interest Adjustment is Guaranteed Period for S. only applied to transactions rounded up to the next affecting the Guaranteed Period higher whole number of Options of the Fixed Account (see months. Section 7) and is based on any change in interest rates from the C is the current guaranteed time the affected Guaranteed interest rate then being Period(s) started until the time offered on new Premium the Excess Interest Adjustment Payments for the next occurs. The Excess Interest longer Guaranteed Period Adjustment is applied as follows: than "M". If the Certificate form or such a 1) The Excess Interest Adjustment Guaranteed Period Option is only applied when the is no longer offered, "C" transactions occur prior to the will be the U.S. Treasury end of any Guaranteed Period rate for the next longer Option; maturity (in whole years) than "M" on the 25th day 2) Transfers to the Guaranteed of the previous calendar Period Options of the Fixed month, plus up to 2%. Account are considered Premium Payments for purposes of Upon full surrender, the Excess determining the Excess Interest Interest Adjustment (EIA) for each Adjustment; Guaranteed Period Option will not reduce the Adjusted Policy Value 3) The Excess Interest Adjustment for that Guaranteed Period Option is distinct from, and is applied below the amount paid into, less prior to, the Surrender Charge; any prior withdrawals and transfers from, that Guaranteed Period Option, plus interest at the 3% guaranteed effective annual interest rate. U1016 PAGE 5 SECTION 5 - CONT PARTIAL WITHDRAWALS If any Partial Withdrawal reduces the Cash Value below $500, we We will pay the Certificate Owner a reserve the right to pay the full portion of the Cash Value as a Cash Value and terminate the Partial Withdrawal provided we Certificate. receive a written request while the Certificate is in effect and before We may delay payment of the Cash the Annuity Commencement Date. When Value from the Fixed Account for up the Certificate Owner requests a to 6 months after we receive the Partial Withdrawal they must tell request If the Certificate Owner us how it is to be allocated from dies after we receive the request, among the Investment Options. If but before ore the request is the request for a Partial processed, the request will be Withdrawal from any Investment processed before the death proceeds Option is less than or equal to the are determined. Cash Value in that option, or Subaccount, we will pay the amount Each Partial Withdrawal consists of of the request However, if the a portion that is subject to request for a Partial Withdrawal Surrender Charge (that is, the from any Investment Option is Excess Partial Withdrawal) and a greater than the Cash Value in that remaining portion that is free from option, we will pay the Cash Value Surrender Charge (that is, the of that Investment Option. Surrender Charge-free amount). Either portion may be zero (0) The Gross Partial Withdrawal is the depending on the Partial Withdrawal total amount which will be deducted requested and prior amounts from the Certificate's Policy Value withdrawn. as a result of each Partial Withdrawal. The Gross Partial Partial Withdrawals may be made Withdrawal may be more or less than free from Surrender Charges and the requested Partial Withdrawal free from Excess Interest amount, depending on whether Adjustments as follows: Surrender Charges and/or Excess Interest Adjustments apply at the MINIMUM REQUIRED DISTRIBUTION time the Partial Withdrawal is requested. For tax-qualified plans, Partial Withdrawals taken to The Excess Partial Withdrawal satisfy minimum distribution amount is the portion of the requirements under Section requested Partial Withdrawal that 401(a)(9) of the Internal is subject to Surrender Charge Revenue Code (IRC) are (that is, the portion which is in available with no Surrender excess of the Surrender Charge-free Charges and no Excess Interest portion). For example, if the Adjustments. The amount requested withdrawal amount is $ available from each 1,000, and the Surrender Charge- Certificate with respect to free amount is $200, then the the minimum distribution Excess Partial Withdrawal would be requirement is based solely on $800. Excess Partial Withdrawals this Certificate. will reduce the Policy Value by an amount equal to (X-Y+Z) where: The Certificate Owner must be at least 70 1/2 years old in X = Excess Partial Withdrawal the calendar year of A = Amount of Partial withdrawal distribution, must submit a subject Excess Interest Adjustment written request to us and must Y = Excess Interest djustment = take the distribution before (A) x (G-C) x (M/12) where G. year end. If the Certificate C and M are defined in the Owner attains age 70 1/2 in Excess Interest Adjustment the calendar year of provision above, with "A" distribution, a written substituted for "S" in the request which is postmarked no definitions of G and M. later than the end of the Z = Surrender Charge on X minus Y. current calendar year must be submitted to us. The formula for determining the Gross Partial Withdrawal is as Systematic minimum follows: distributions must be at least $50 or a lump sum distribution Gross Partial Withdrawal = R - E + SC is available if minimum required distributions are where: R is the requested Partial less than $50 Withdrawal; Any amount requested in excess E is the Excess Interest of the IRC minimum required Adjustment; and distribution will have the appropriate Surrender Charges SC is the Surrender Charge on and Excess Interest (EPW - E); where Adjustments applied, unless the excess distribution EPW is the Excess Partial qualifies as Surrender Charge- Withdrawal amount. free or Excess Interest Adjustment-free under any additional options provided. M1017 PAGE 5(A) SECTION 5 - CONT NURSING CARE AND TERMINAL CONDITION Annuitant's, Annuitant's spouse's, Certificate Owner's, WITHDRAWAL OPTION or Certificate Owner's spouse's physician. Proof of Beginning in the first confinement may be a Certificate Year, if the physician's statement or a Certificate Owner or statement from a hospital or Certificate Owner's spouse nursing facility (annuitant or annuitant's administrator. spouse if the Certificate Owner is not a natural person) UNEMPLOYMENT WAIVER has been 1) confined in a Hospital or Nursing Facility Beginning in the first for 30 consecutive days or 2) Certificate Year, the diagnosed as having a Terminal Certificate Owner may withdraw Condition, the Certificate all or a portion of the Policy Owner may elect to withdraw Value free of Surrender all or a portion of the Policy Charges and free of any Excess Value without Surrender Interest Adjustment if the Charges and without Excess Certificate Owner or Interest Adjustment. The Certificate Owner's spouse minimum withdrawal under this (annuitant or annuitant's option is $ 1000. spouse, if the Certificate Owner is not a natural person) For Nursing Care, we must becomes unemployed. In order receive each withdrawal to qualify, the Certificate request and proof of Owner 1) must have been eligibility with each request employed full time for at no later than 90 days least two years prior to following the date that becoming unemployed, 2) must confinement has ceased, unless have been employed full time it can be shown that it was on the Certificate Date, 3) not reasonably possible to must have been unemployed for provide the notice and proof at least 60 consecutive days within the above time period at the time of withdrawal and and that the notice and proof consist of providing us with a were given as soon as determination letter from the reasonably possible. However, applicable State's Department in no event, except the of Labor which verifies that absence of legal capacity, the Certificate Owner shall the notice and proof be qualifies for and is receiving provided later than one year unemployment benefits at the following the date that time of withdrawal. The confinement has ceased. For a determination letter must be Terminal Condition, we must received by us no later than receive each withdrawal 15 days following the date of request and the applicable the withdrawal request. proof of eligibility no later than one year following diagnosis of the Terminal Condition. Proof of a Terminal Condition is required only with the initial withdrawal request and must be furnished by the U1017 PAGE 5(B) SECTION 5 - CONT SURRENDER CHARGES purposes, premium payments are deemed to be withdrawn before Amounts withdrawn in excess of any earnings. Surrender Charge-free Partial Withdrawals are subject to a After all premium payments are Surrender Charge. If applicable, considered to be withdrawn, the this charge will either apply for a remaining Adjusted Policy Value may number of years following each be withdrawn free from any premium payment date or for a Surrender Charge. number of years following the Certificate Date as shown on page GUARANTEED RETURN OF FIXED ACCOUNT 3. The amount of this charge, if PREMIUM PAYMENTS any, will be a percentage, (as shown on page 3 of each Upon full surrender of the Certificate) of the amount of Certificate, the Certificate Owner premium withdrawn. will always receive at least the premium payments made to, less For Surrender Charge purposes, the prior withdrawals and transfers oldest premium payment is from, the Fixed Account considered to be withdrawn first If the amount withdrawn exceeds this, MINIMUM VALUES the next oldest premium payment is considered to be withdrawn, and so Benefits available under the on until the most recent premium Certificate are not less than those payment is considered to be required by any statute of the withdrawn. For Surrender Charge state in which the Certificate is delivered. SECTION 6 - SEPARATE ACCOUNT SEPARATE ACCOUNT of the Separate Account in accordance with a method of We have established and will valuation which we establish in maintain one or more Separate good faith. Valuation Period means Account(s), indicated on the the period of time from one Certificate Data Page, under the determination of the value of each laws of the state of Iowa. Any Subaccount to the next. Such realized or unrealized income, net determinations are made when the gains and losses from the assets of value of the assets and liabilities the Separate Account are credited of each Subaccount is calculated. to or charged against it without This is generally the close of regard to our other income, gains business on each day on which the or losses. Assets are put in the New York Stock Exchange is open. Separate Account for the Certificates, as well as for other We also reserve the right to variable annuity policies and transfer assets of the Separate Certificates. Any Separate Account Account, which we determine to be may invest assets in shares of one associated with the class of or more mutual fund portfolios, or Certificates to which the in the case of a managed Separate Certificate belongs, to another Account, direct investments in separate account. If this type of stocks or other securities as transfer is made, the term permitted by law. Fund Shares refer "Separate Account", as used in this to shares of underlying mutual contract and in the Certificate, funds or prorata ownership of the shall then mean the separate assets held in a Subaccount of a account to which the assets were managed Separate Account. Fund transferred. shares are purchased, redeemed and valued on behalf of the Separate We also reserve the right to: Account. (a) deregister the Separate Account under the Investment Company Act o The Separate Account is divided 1940; into Subaccounts. Each Subaccount invests exclusively in shares of (b) manage the Separate Account one of the portfolios of an under the direction of a underlying mutual fund. We reserve committee at any time; the right to add or remove any Subaccount of the Separate Account. (c) restrict or eliminate any voting rights of Certificate The assets of the Separate Account Owners or other persons who are our property. These assets will have voting rights as to the equal or exceed the reserves and Separate Account; and other contract liabilities of the Separate Account. These assets will (d) combine the Separate Account not be chargeable with liabilities with one or more other separate arising out of any other business accounts; we conduct. We reserve the right, subject to regulations governing (e) create new Separate Accounts; the Separate Account, to transfer assets of a Subaccount, in excess (f) add new Subaccounts to or of the reserves and other contract remove existing Subaccounts liabilities with respect to that from the Separate Account, or Subaccount, to another Subaccount combine Subaccounts; or to our General Account. (g) add new underlying mutual We will determine the fair market funds, remove existing mutual value of the assets funds, or substitute a new fund for an existing fund. P1037 PAGE 6 SECTION 6 - SEPARATE ACCOUNT - CONT The Net Asset Value of a fund share provide accumulation units in those is the per-share value calculated Subaccounts. The number of by the mutual fund or, in the case accumulation units purchased in a of a managed Separate Account, by Subaccount will be determined by the Company. The Net Asset Value is dividing the premium payment computed by adding the value of the allocated to or any amount Subaccount's investments, cash and transferred to that Subaccount, by other assets, subtracting its the value of an accumulation unit liabilities, and then dividing by for that Subaccount on the premium the number of shares outstanding. payment or transfer date. Net Asset Values of fund shares reflect investment advisory fees The number of accumulation units and other expenses incurred in withdrawn or transferred from the managing a mutual fund or a managed Subaccounts will be determined by Separate Account dividing the amount withdrawn or transferred by the value of an CHANGE IN INVESTMENT OBJECTIVE OR accumulation unit for that POLICY OF A MUTUAL FUND Subaccount on the withdrawal or transfer date. If required by law or regulation, an investment policy of the The value of an accumulation unit Separate Account will only be on any business day is determined changed if approved by the by multiplying the value of that appropriate insurance official of unit at the end of the immediately the state of Iowa or deemed preceding valuation period by the approved in accordance with such net investment factor for the law or regulation. If so required, valuation period. the process for obtaining such approval is f fled with the The net investment factor used to insurance official of the state or calculate the value of an district in which this contract is accumulation unit in each delivered. Subaccount for the Valuation Period is determined by dividing (a) by CHARGES AND DEDUCTIONS (b) and subtracting (c) from the result, where: The Mortality and Expense Risk Fee and the Administrative Charge are (a) is the result of: each deducted both before and after (1) the net asset value of a the Annuity Commencement Date to fund share held in that compensate for changes in mortality Subaccount determined as of and expenses not anticipated by the the end of the current mortality and administration valuation period; plus charges guaranteed in the contract. (2) the per share amount of any Any applicable Service Charge is dividend or capital gain deducted prior to the Annuity distributions made by the Commencement Date only. fund for shares held in that Subaccount if the ex- Any applicable Distribution dividend date occurs during Financing Charge is deducted prior the valuation period; plus to the Annuity Commencement Date or minus only, to compensate f or costs of distributing the policy. (3) a per share credit or charge for any taxes If the Mortality and Expense Risk reserved for, which we Fee(s) and/or Distribution determine to have resulted Financing Charges are more than from the investment sufficient, the Company will retain operations of that the balance as profit or reduce Subaccount. these fees and charges in the future. (b) is the net asset value of a fund share held in that ACCUMULATION UNITS Subaccount determined as of the end of the immediately The Policy Value in the Separate preceding valuation period. Account before the Annuity Commencement Date is represented by (c) is a factor representing the accumulation units. The dollar Mortality and Expense Risk Fee value of accumulation units for and Administrative Charge each Subaccount will change from before the Annuity Commencement day to day reflecting the Date, plus any applicable investment experience of the Distribution Financing Charge. Subaccount. This factor is less than or equal to, on an annual basis, Premium payments allocated to and the sum of the applicable any amounts transferred to the percentages shown on page 3 of Subaccounts will be applied to the daily net asset value of a fund share held in that Subaccount. Since the net investment factor may be greater or less than one, the accumulation unit value may increase or decrease. PB1037 PAGE 7 SECTION 7 - FIXED ACCOUNT FIXED ACCOUNT We reserve the right f or new premium payments, transfers, or Premium payments applied to and any rollovers to offer or not to offer amounts transferred to the Fixed any GPO, except that we will always Account will reflect a fixed offer at least a one year GPO. interest rate. The interest rates we set will be credited for For purposes of crediting interest increments of at least one year when funds are withdrawn from or measured from each premium payment transferred into a GPO, the amount or transfer date. These rates will of the oldest premium payment or never be less than an effective rollover into that GPO is annual interest rate of 3%. considered to be withdrawn first If the amount withdrawn exceeds this GUARANTEED PERIODS amount, the next oldest premium payment or rollover is considered We may offer optional Guaranteed to be withdrawn next, and so on Period Options, into which premium until the most recent premium payments may be paid or amounts payment or rollover is considered transferred. The current interest to be withdrawn (this is a "First- rate we set for funds entering each In, First-Out" or FIFO procedure). Guaranteed Period Option (GPO) is Premium payment(s) or rollover(s) guaranteed until the end of that are deemed to be withdrawn first, option's Guaranteed Period. At that then credited interest. time, the premium payment made or amount transferred into the GPO, Partial withdrawals, Surrenders, less any withdrawals or transfers transfers, and amounts applied to a from that GPO, plus accrued Payment Option from the Guarantee interest, will be rolled into a new Period Option(s) are subject to an GPO or may be transferred to any Excess Interest Adjustment as Subaccount(s) within the Separate described in Section 5. Account(s). DOLLAR COST AVERAGING FIXED ACCOUNT The Certificate Owner may choose OPTION the investment Option(s) they want the funds rolled into by giving us We may offer a Dollar Cost a written notice within 30 days Averaging (DCA) Fixed Account before the end of the expiring Option separate from the Guaranteed option's Guaranteed Period. Period Options. This option will However, any Guaranteed Period have a one year interest rate elected may not extend beyond the guarantee. The current interest maximum Annuity Commencement Date rate we set for the DCA Fixed defined in Section 11. In the Account may differ from the rates absence of such election, the funds credited on the one year GPO in the will be rolled into a new GPO which Fixed Account In addition, the is the same as the expiring GPO current interest rate we credit may unless that GPO is no longer vary on different portions of the offered, in which case, the next DCA Fixed Account The credited shorter GPO offered will be used. interest rate will never be less The Certif icate Owner will be than the minimum effective annual mailed a notice of completion of interest rate of 3%. The DCA Fixed the rollover with the new interest Account Option will only be rate applicable. The new GPO will available under a Dollar Cost be deemed as accepted if we do not Averaging program as described in receive a written rejection within Section 8. 30 days from the postmark date of the completion notice. SECTION 8 - TRANSFERS A. TRANSFERS BEFORE THE ANNUITY apply to Policy Value transfers at COMMENCEMENT DATE the end of a Guaranteed Period. Prior to the Annuity Commencement Transfers of interest credited in Date, the Certificate Owner may the GPOs to other Investment transfer the value of the Options are allowed on a "First-In, accumulation units from one First-Out" basis. Such transfers Investment Option to another. The may be made monthly, quarterly, Certificate Owner must sign a semi-annually, or annually. Each notice to transfer which gives us such transfer must be at least $50 the facts that we need. and will not be subject to an Excess Interest Adjustment. Transfers of Policy Value from the Guaranteed Period Options (GPO) of Transfers of Policy Value from the the Fixed Account prior to the end Separate Account are subject to a of that GPO are subject to an minimum of $500, or the entire Excess Interest Adjustment If the Subaccount Policy Value, if less. Excess Interest Adjustment at the However, if the remaining time of such Policy Value transfer Subaccount Policy Value is less is a negative adjustment, then the than $500, we reserve the right to maximum Policy Value transfer is include that amount as part of the 25% of that GPO's Policy Value, transfer. less Policy Values previously transferred out of that GPO during The Certificate Owner may choose the current certificate year. If which GPO to transfer to or from, the Excess Interest Adjustment at however, any GPO elected may not the time of such Policy Value extend beyond the maximum Annuity transfer is a positive adjustment, Commencement Date defined in no maximum will apply to such Section 11. Policy Values transferred from the GPO. No Excess Interest Adjustment will V1050 PAGE 8 SECTION 8 - CONT No transfers will be allowed out of guarantee that the Dollar Cost the Dollar Cost Averaging Fixed Averaging program will result in Account Option except through the higher Policy Values or will Dollar Cost Averaging Option. otherwise be successful. We reserve the right to limit The Dollar Cost Averaging may be transfers to no more than 12 in any discontinued after satisfying the one Certificate Year. Any transfers minimum number of required in excess of 12 per Certificate transfers by sending written notice Year may be charged a $10 per to us. While Dollar Cost Averaging transfer fee. Transfers among is in effect, Asset Rebalancing is multiple Investment Options will be not available. treated as one transfer in determining the number of transfers ASSET REBALANCING that have occurred. We also reserve the right to prohibit transfer d to Prior to the Annuity Commencement the Fixed Account if we are Date, the Certificate Owner may crediting an effective annual instruct us to automatically interest rate of 3%. transfer amounts among the Subaccounts of the Separate Account DOLLAR COST AVERAGING OPTION on a regular basis to maintain a desired allocation of the Policy Prior to the Annuity Commencement Value among the various Subaccounts Date, the Certificate Owner may offered. Rebalancing will occur on instruct us to automatically a monthly, quarterly, semi-annual transfer a specified amount from or annual basis, beginning on a the Dollar Cost Averaging (DCA) date selected. The Certif icate Fixed Account Option or f from the Owner must select the percentage of Dollar Cost Averaging the Policy Value desired in each of Subaccount(s), if any, shown on the various Subaccounts offered page 3 to any Subaccount(s) of the (totaling 100%). Any amounts in the Separate Account The automatic Fixed Account are ignored for the transfers can occur monthly or purposes of asset rebalancing. quarterly. If the Dollar Cost Rebalancing can be started, stopped Averaging request is received prior or changed at any time. Asset to the 28th day of any month, the Rebalancing is not available while first transfer will occur on the Dollar Cost Averaging is in effect 28th day of that month. If the Rebalancing will cease as soon as Dollar Cost Averaging request is we receive a request for any other received on or after the 28th day transfer. of any month, the first transfer will occur on the 28th day of the B. TRANSFERS AFTER THE ANNUITY following month. COMMENCEMENT DATE Prior to the Annuity Commencement After the Annuity Commencement Date, no transfers, (except through Date, the Certificate Owner may Dollar Cost Averaging) will be transfer the value of the variable allowed from a DCA Fixed Account annuity units from one Subaccount Transfers will continue until the to another within the Separate elected Subaccount or DCA Fixed Account or to the Fixed Account. If Account value is depleted. The the Certificate Owner wants to amount transferred each time must transfer the value of the variable be at least $500, All transfers annuity units, the Certificate from the DCA account will be the Owner must tell us in a signed same amount as the initial notice which gives us the facts transfer. Changes to the amount that we need. We reserve the right transferred will only be allowed to limit transfers between the when additional premium is Subaccounts or to the Fixed allocated or a new amount is Accounts to once per Certificate transferred into the DCA Account Year. Changes to the Subaccounts to which these transfers are allocated are The minimum amount which may be not restricted. Transfers must be transferred is the lesser of $10 scheduled for at least 6 but not monthly income or the entire more than 24 months or for at least monthly income of the variable 4 but not more than 8 quarters each annuity units in the Subaccount time the Dollar Cost Averaging from which the transfer is being program is started or restarted made. If the monthly income of the following termination of the remaining units in a Subaccount is program for any reason. less than $10, we have the right to include the value of those variable Dollar Cost Averaging results in annuity units as part of the the purchase of more accumulation transfer. units when the value of the accumulation unit is low, and fewer After the Annuity Commencement accumulation units when the value Date, no transfers may be made from of the accumulation unit is high. the Fixed Account to any other However, there is no Investment Options. VB1050 PAGE 9 SECTION 9 - DEATH PROCEEDS A. DEATH PROCEEDS PRIOR TO ANNUITY II. Annuitant and Certificate COMMENCEMENT DATE Owner are different and the Annuitant dies. The amount of death proceeds will be the greater of the Cash Value, When we have due proof that the Policy Value, or any guaranteed the Annuitant died prior to minimum death benefit. the Annuity Commencement Date, the Certificate Owner will If no payment option is selected by become the new Annuitant and the date of death, the beneficiary no death proceeds are payable. may make such election within one If the Certificate Owner is year of the date we receive due also the deceased Annuitant's proof of death. The beneficiary may surviving spouse, an amount elect to receive the death proceeds equal to the excess, if any, as a lump sum payment or may use of any guaranteed minimum the death proceeds to provide any death benefit over the Policy of the annuity payment options Value will then be added to described in Section 10. Interest the Policy Value. This amount on death proceeds will be paid as will be added only once at the required by law. time of such election. Furthermore, all future B. DEATH PRIOR TO ANNUITY Surrender Charges will be COMMENCEMENT DATE waived. Death proceeds are payable However, in lieu of becoming contingent upon the relationships the new Annuitant, the between the Certificate Owner, Certificate Owner may elect to Annuitant, successor Certificate have the death proceeds Owner and beneficiary as outlined distributed to the beneficiary below. The Certificate must be on the death of the Annuitant surrendered upon settlement and This election must be in will be terminated upon receiving writing and must be received proof of death. by us prior to the Annuitant's death. In such case, when we I. Certificate Owner is also the have due proof that the Annuitant When we have due Annuitant died prior to the proof that the Certificate Annuity Commencement Date, we Owner died before the Annuity will provide the death Commencement Date, we will proceeds to the beneficiary. provide the death proceeds to the beneficiary. a) If the Certificate Owner has elected to have the a) Beneficiary is the deceased death proceeds paid as a Certificate Owner's lump sum, the beneficiary surviving spouse. The must, within 60 days of our beneficiary may elect to receipt of due proof of the continue the Certificate Annuitant's death, either: rather than receiving the death proceeds. If the 1) receive the lump sum proceed; Certificate is continued, or an amount equal to the 2) elect to receive annuity excess, if any, of any payments. Such payments guaranteed minimum death must begin within one benefit over the Policy year of our receipt of Value will then be added to due proof of the the Policy Value. This Annuitant's death and amount will be added only must be made for a once, at the time of such period certain or for election. Furthermore, all this beneficiary's future Surrender Charges lifetime, so long as any will be waived. period certain does not exceed this If this beneficiary elects beneficiary's life to have the death proceeds expectancy. paid, the death proceeds must be distributed: b) Death proceeds which are not paid to or for the (1) by the end of 5 years benefit of a natural person after the date of the must be distributed by the deceased Certificate end of 5 years after the Owner's death, or date of the Annuitant's death. (2) payments must begin no later than one year after III. Annuitant and Certificate the deceased Certificate Owner are different and the Owner's death and must be Certificate Owner dies. made for a period certain or for this beneficiary's If the Certificate Owner dies lifetime, so long as any prior to the Annuity period certain does not Commencement Date and before exceed this beneficiary's the entire interest in the life expectancy. Certificate is distributed, the successor Certificate b) Beneficiary is not the Owner will become the new deceased Certificate Certificate Owner. The Owner's surviving spouse. remaining portion of any The death proceeds must be interest in the policy must be distributed as provided in distributed to the extent l.a)(1) or l.a)(2) above. provided below in III.a), III.b), III.c), or III.d). c) Death proceeds which are not paid to or for the a) Successor Certificate Owner benefit of a natural person is the deceased Certificate must be distributed by the Owner's surviving spouse. end of 5 years after the The successor Certificate date of the deceased Owner may elect to continue Certificate Owner's death. this Certificate rather than receive the Adjusted Policy Value. If the Certificate is continued, all future Surrender Charges will be waived. If the successor Certificate Owner elects to receive the Adjusted Policy Value, the Adjusted Policy Value must be distributed: S961 PAGE 10 SECTION 9 - CONT (1) by the end of 5 years IV. More than one Certificate after the date of the Owner. If there is more than deceased Certificate one Certificate Owner, then Owner's death, or the death of any Certificate Owner will be treated the same (2) payments must begin no as the death of the later than one year after Certificate Owner. the deceased Certificate Owner's death and must be D. DEATH ON OR AFTER THE ANNUITY made for a period certain COMMENCEMENT DATE or for the successor Certificate Owner's The death proceeds on or after the lifetime, so long as any Annuity Commencement Date depend on period certain does not the payment option selected. If any exceed the successor Certificate Owner dies on or after Certificate Owner's life the Annuity Commencement Date, but expectancy. before the entire interest in the Certificate is distributed, the b) Successor Certificate remaining portion of such interest Owner is not the deceased in the Certificate will be Certificate Owner's distributed at least as rapidly as surviving spouse. The under the method of distribution Adjusted Policy Value must being used as of the date of that be distributed as provided Certificate Owner's death. in III.a)(1) or III.a)(2) above. E. AN OWNER IS NOT AN INDIVIDUAL c) Successor Certificate In the case of a non tax-qualified Owner is not a natural annuity, if any Certificate Owner person. The Adjusted or beneficial Certificate Owner is Policy Value must be not an individual, then for distributed as provided in purposes of the federal income tax III.a)(1) above. mandatory distribution provisions in subsection C or D above, (1) the d) No successor Certificate Annuitant will be treated as the Owner survives the Certificate Owner of the deceased Certificate Certificate, and (2) if there is Owner. The deceased any change in the Annuitant, such a Certificate Owner's estate change will be treated as the death will become the new of the Certificate Owner. Certificate Owner (or the estate may name a new Certificate Owner). The executor or Administrator must be named in a form acceptable to us. The Adjusted Policy Value must be distributed by the end of 5 years after the date of the deceased Certificate Owner's death. SECTION 10 - ANNUITY PAYMENTS A. GENERAL PAYMENT PROVISIONS the adjusted age of the Annuitant. The adjusted age is the Annuitant's Payment actual age on the Annuitant's nearest birthday, at the Annuity If the Certificate is in force on Commencement Date, adjusted as the Annuity Commencement Date, we follows: will use the Fixed Account portion and/or the Separate Account portion Annuity of the Adjusted Policy Value to Commencement Date Adjusted Age make annuity payments to the Payee ----------------- ------------ under Option 3 and/or 3-V, Before 2001 Actual Age minus respectively, with 10 years 2010 - 2001 Actual Age minus 1 certain, or if elected, under one 2020 - 2011 Actual Age minus 2 or more of the other options 2030 - 2021 Actual Age minus 3 described in this section. However, 2040 - 2031 Actual Age minus 4 the option(s) elected must provide After 2040 Actual Age minus 5 for lifetime income or income for a period of at least 60 months. The Election of Optional Method of Payment Certificate Owner will become the Annuitant at the Annuity Before the Annuity Commencement Commencement Date. Payments will be Date the Certificate Owner can made at 1, 3, 6 or 12 month elect or change a payment option. intervals. We reserve the right to The Certificate Owner may elect, in change the frequency of payments to a signed notice which gives us the avoid making payments of less than facts that we need, annuity $50 payments that may be either variable, fixed, or a combination Before the Annuity Commencement of both. If a combination is Date, if the death proceeds become elected, they must also tell us payable or if the Certificate is what part of the proceeds on the surrendered, we will pay any Annuity Commencement Date are to be proceeds in one sum, or if elected, applied to provide each type of all or part of these proceeds may payment (It must also specify which be placed under one or more of the Subaccounts.} The amount of a options described in this section. combined payment will be the sum of If we agree, the proceeds may be the variable and fixed payments. placed under some other method of Payments under a variable payment payment instead. option will ref lect the investment performance of the selected Adjusted Age Subaccount of the Separate Account. Payments under Options 3 and 5, and the first payment under Options 3-V and 5-V are determined based on SB961 Page 11 SECTION 10 - ANNUITY PAYMENTS - CONT Payee when the Certificate Owner elects this option. The interest rate we Unless specified otherwise, the declare for this option may be Payee shall be the Annuitant, or different than the interest rate(s) the beneficiary as specified in the credited prior to the Annuity Beneficiary provision. Commencement Date. Proof of Age Option 2 - Income for a Specified Period We may require proof of the age of We will make level payments only any person who has an annuity for the fixed period the purchased under Options 3, 3-V, 5 Certificate Owner chooses. In the and 5-V of this section before we event of the death of the person make the first payment. receiving payments prior to the end of the fixed period elected, Minimum Proceeds payments will be continued to that person's beneficiary or their If the proceeds are less than present value may be paid in a $2,000, we reserve the right to pay single sum. No funds will remain at them out as a lump sum instead of the end. applying them to a payment option. Option 3 - Life Income - The Premium Tax Certificate Owner may choose between: We may be required by law to pay premium tax on the amount applied 1. No Period Certain - We will to a payment option. If the make level payments only requirement is applicable to the during the Annuitant's issue state, we will deduct the lifetime. premium tax before applying the 2. 10 Years Certain - We will make proceeds. level payments for the longer of the Annuitant's lifetime or B. FIXED ACCOUNT PAYMENTS ten years. 3. Guaranteed Return of Policy Guaranteed Payment Options Proceeds - We will make level payments for the longer of the The fixed account payment is Annuitant's lifetime or until determined by multiplying each the total dollar amount of $1,000 of proceeds allocated to a payments we made to the Payee fixed Payment Option by the amounts equals the amount applied to shown on page 12 for the option this option. selected. Options 1, 2 and 4 are based on a guaranteed interest rate Option 4 - Income of a Specified Amount of 3%. Options 3 and 5 are based on a Payments are made for any specified guaranteed interest rate of 3% and amount until the amount applied to the "1983 Table a" (male, female, this option, with interest, are and unisex if required by law) exhausted. This will be a series of mortality table improved to the level payments followed by a year 2000 with projection scale G. smaller final payment In the event (The "1983 Table a" mortality rates of the death of the person are adjusted based on improvements receiving payments prior to the in mortality since 1983 to more time proceeds with interest are appropriately reflect increased exhausted, payments will be longevity. This is accomplished continued to that person's using a set of improvement factors beneficiary or their present value referred to as projection scale G.) may be paid in a single sum. Option 1 - Interest Payments Option 5 - Joint and Survivor Annuity We will pay the interest on the Payments are made during the joint amount we use to provide annuity lifetime of the Payee and a joint payments in equal payments or this Payee of the Certificate Owner's amount may be left to accumulate selection. Payments will be made as for a period of time we and the long as either person is living. Certificate Owner agree to. We and the Certificate Owner will agree on Current Payment Options withdrawal rights The amounts shown in the tables on page 12 are the guaranteed amounts. Current amounts offered to individuals of the same class may be obtained from us. S962 Page 11(A) SECTION 10 - CONT C. VARIABLE ACCOUNT PAYMENT OPTIONS the percentage shown on page 3 of the daily net asset value of Variable Annuity Units a fund share held in the Separate Account for that The proceeds chosen by the Subaccount. Certificate Owner to apply to a variable payment option will be Determination of the First Variable used to purchase variable annuity Payment units in Subaccounts chosen by the Certificate Owner. The dollar value The amount of the first variable of variable annuity units in the payment is determined by chosen Subaccounts will increase or multiplying each $ 1,000 of decrease reflecting the investment proceeds allocated to a variable experience of the chosen payment option by the amounts shown Subaccounts. The value of a on page 13 for the variable option variable annuity unit in a the Certificate Owner selects. the particular Subaccount on any tables are based on a 5% effective business day is equal to (a) annual Assumed Investment Return multiplied by (b) multiplied by and the "1983 Table a" (male, (c), where: female, and unisex if required by law) mortality table improved to (a) is the variable annuity unit the year 2000 with projection scale value for that Subaccount on G. (The "1983 Table a" mortality the immediately preceding rates are adjusted based on business day; improvements in mortality since 1983 to more appropriately reflect (b) is the net investment factor increased longevity. This is for that Subaccount for the accomplished using a set of Valuation Period; and improvement factors referred to as projection scale G.) (c) is the Assumed Investment Return adjustment factor for Option 3V - Life Income the Valuation Period. The Certificate Owner may choose The Assumed Investment Return between: adjustment factor for the valuation period is the product of discount 1. "No Period Certain" - Payments factors of .99986634 per day to will be made only during the recognize the 5.0% effective annual lifetime of the Annuitant. Assumed Investment Return. 2. "10 Years Certain" - Payments The net investment factor used to will be made for the longer of calculate the value of a variable the Annuitant's lifetime or ten annuity unit in each Subaccount for years. In the event of the death the Valuation Period is determined of the person receiving payments by dividing (a) by (b) and prior to the end of the period subtracting (c) from the result, for which the election was made, where: payments will be continued to that person's beneficiary or (a) is the net result of: their present value may be paid in a single sum. (1) the net asset value of a fund share held in that Option 5V - Joint and Survivor Annuity Subaccount determined as of the end of the current Payments are made as long as either valuation period; plus the Payee or the joint Payee is (2) the per share amount of any living. dividend or capital gain distributions made by the Determination of Subsequent Variable fund for shares held in Payments that Subaccount if the ex- dividend date occurs during The amount of each variable annuity the Valuation Period; plus payment after the first will or minus increase or decrease according to (3) a per share credit or the value of the variable annuity charge for any taxes units which reflect the investment reserved for, which we experience of the selected determine to have resulted Subaccounts. Each variable annuity from the investment payment after the first will be operations of the equal to the number of variable Subaccount. annuity units in the selected Subaccounts multiplied by the (b) is the net asset value of a variable annuity unit value on the fund share held in that date the payment is made. The Subaccount determined as of the number of variable annuity units in end of the immediately each selected Subaccount is preceding Valuation Period. determined by dividing the first variable annuity payment allocated (c) is a factor representing the to the Subaccount by the variable Mortality and Expense Risk Fee annuity unit value of that and Administrative Charge Subaccount on the Annuity applicable after the Annuity Commencement Date. Commencement Date. This factor is less than or equal to, on an annual basis, SB962 PAGE 11(B) GUARANTEED FIXED ACCOUNT PAYMENT OPTIONS The amounts shown in these tables are the guaranteed amounts for each $1,000 of the proceeds. Higher current amounts may be available at the time of settlement.
- ------------------------------------------------------------------------------------------------------------------------------- Option 2, Table I Option 3, Table II Option 3, Table III Option 3, Table IV - ----------------------------- ---------------------------- ---------------------------- ---------------------------- Number Amount of Monthly Installment for life Monthly Installment for life Monthly Installment for Life Of Years Monthly No Period Certain 10 Years Certain Guaranteed Return of Payable Installment Proceeds ------------------------------------------------------------------------------------------------ Age* Male Female Unisex Male Female Unisex Male Female Unisex - -------------------------------------------------------------------------------------------------------------------------------- 50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70 $3.73 $3.49 $3.61 51 3.93 3.60 3.77 3.90 3.59 3.75 3.79 3.53 3.66 52 4.00 3.65 3.83 3.97 3.64 3.81 3.84 3.58 3.71 53 4.07 3.71 3.90 4.04 3.70 3.87 3.90 3.63 3.76 5 $17.91 54 4.15 3.77 3.97 4.11 3.75 3.94 3.96 3.68 3.82 6 15.14 55 4.23 3.83 4.04 4.19 3.82 4.01 4.03 3.73 3.88 7 13.16 56 4.32 3.90 4.11 4.27 3.88 4.08 4.10 3.79 3.94 8 11.68 57 4.41 3.97 4.19 4.35 3.95 4.15 4.17 3.85 4.00 9 10.53 58 4.50 4.05 4.28 4.44 4.02 4.24 4.24 3.91 4.07 10 9.61 59 4.61 4.13 4.37 4.53 4.10 4.32 4.32 3.97 4.14 11 8.86 60 4.72 4.21 4.47 4.63 4.18 4.41 4.40 4.04 4.22 12 8.24 61 4.84 4.30 4.57 4.74 4.26 4.51 4.49 4.12 4.30 13 7.71 62 4.96 4.40 4.68 4.85 4.35 4.61 4.58 4.19 4.38 14 7.26 63 5.10 4.50 4.80 4.97 4.45 4.71 4.68 4.28 4.47 15 6.87 64 5.24 4.61 4.93 5.09 4.55 4.83 4.78 4.36 4.56 16 6.53 65 5.40 4.73 5.06 5.22 4.66 4.95 4.88 4.45 4.66 17 6.23 66 5.56 4.85 5.21 5.36 4.77 5.07 4.99 4.55 4.76 18 5.96 67 5.74 4.99 5.36 5.50 4.89 5.20 5.11 4.65 4.87 19 5.73 68 5.93 5.13 5.53 5.65 5.02 5.34 5.24 4.76 4.98 20 5.51 69 6.13 5.29 5.71 5.80 5.15 5.49 5.37 4.87 5.10 70 6.34 5.45 5.90 5.96 5.30 5.64 5.51 4.99 5.23 - --------------------------------------------------------------------------------------------------------------------------------
Option 5, Table V - -------------------------------------------------------------------------------------------------------------------------------- Monthly Installment For Joint and Full Survivor - -------------------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male Annuitant* --------------------------------------------------------------------------------------------------------- 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - -------------------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.31 4.53 4.77 5.02 - -------------------------------------------------------------------------------------------------------------------------------- Monthly Installment For Unisex Joint and Full Survivor - -------------------------------------------------------------------------------------------------------------------------------- Age of Age of Joint Annuitant* First Annuitant* --------------------------------------------------------------------------------------------------------- 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - -------------------------------------------------------------------------------------------------------------------------------- 50 $3.04 $3.09 $3.15 $3.21 $3.27 $3.33 $3.39 55 3.17 3.24 3.32 3.40 3.48 3.56 3.63 60 3.34 3.44 3.54 3.64 3.75 3.85 3.95 65 3.57 3.70 3.83 3.97 4.11 4.26 4.39 70 3.87 4.04 4.22 4.42 4.62 4.82 5.01 - --------------------------------------------------------------------------------------------------------------------------------
*Adjusted Age as defined in Section 10.A. - -------------------------------------------------------------------------------- The annual, semi-annual or quarterly installments under Option 2 shall be the monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and for Options 3 and 5 the monthly installment shown multiplied by 11.80, 5.95 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. T828 PAGE 12 VARIABLE PAYMENT OPTIONS BASED ON ASSUMED INVESTMENT RETURN The amounts shown in these tables are the initial payment amounts based on a 5.0% Assumed Investment Return for each $1,000 of the proceeds.
- ------------------------------------------------------------------------------------------------------------------------------------ Option 3 - V, Table II Option 3 - V, Table III - --------------------------- ------------------------------------------------------------------------------------------- Monthly Installment for Life Monthly Installment for Life No Period Certain 10 Years Certain Age* Male Female Unisex Male Female Unisex - ------------------------------------------------------------------------------------------------------------------------------------ 50 $5.11 $4.81 $4.96 $5.07 $4.79 $4.94 51 5.17 4.85 5.02 5.13 4.83 4.99 52 5.24 4.90 5.07 5.19 4.88 5.04 53 5.31 4.95 5.13 5.25 4.93 5.10 54 5.38 5.01 5.20 5.32 4.98 5.16 55 5.46 5.06 5.26 5.39 5.04 5.22 56 5.54 5.12 5.34 5.47 5.09 5.28 57 5.63 5.19 5.41 5.54 5.16 5.36 58 5.72 5.26 5.49 5.63 5.22 5.43 59 5.82 5.34 5.58 5.72 5.29 5.51 60 5.93 5.42 5.68 5.81 5.37 5.60 61 6.04 5.50 5.78 5.91 5.44 5.69 62 6.17 5.60 5.89 6.02 5.53 5.78 63 6.30 5.69 6.00 6.13 5.62 5.88 64 6.44 5.80 6.13 6.25 5.71 5.99 65 6.60 5.91 6.26 6.37 5.82 6.10 66 6.76 6.04 6.40 6.50 5.92 6.22 67 6.94 6.17 6.56 6.63 6.04 6.35 68 7.13 6.31 6.72 6.77 6.16 6.48 69 7.33 6.46 6.90 6.92 6.29 6.62 70 7.55 6.63 7.09 7.07 6.43 6.76 - ------------------------------------------------------------------------------------------------------------------------------------
Option 5V, Table V - ------------------------------------------------------------------------------------------------------------------------------------ Monthly Installment For Joint and Full Survivor Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ----------------------------------------------------------------------------------------------------------------------------------- 50 $4.32 $4.36 $4.41 $4.46 $4.51 $4.57 $4.62 55 4.42 4.47 4.53 4.60 4.67 4.75 4.83 60 4.54 4.62 4.70 4.80 4.90 5.01 5.12 65 4.71 4.82 4.94 5.07 5.22 5.37 5.53 70 4.95 5.10 5.27 5.46 5.67 5.89 6.13 - ----------------------------------------------------------------------------------------------------------------------------------- Monthly Installment For Unisex Joint and Full Survivor - ----------------------------------------------------------------------------------------------------------------------------------- Age of Age of Joint Annuitant* First ----------------------------------------------------------------------------------------------------------- Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ----------------------------------------------------------------------------------------------------------------------------------- 50 $4.40 $4.45 $4.50 $4.55 $4.61 $4.67 $4.72 55 4.52 4.59 4.66 4.73 4.81 4.89 4.96 60 4.69 4.78 4.87 4.97 5.08 5.19 5.29 65 4.91 5.04 5.17 5.31 5.46 5.62 5.77 70 5.22 5.40 5.59 5.79 6.02 6.24 6.47 - -----------------------------------------------------------------------------------------------------------------------------------
* Adjusted Age as defined in Section 10.A. - -------------------------------------------------------------------------------- The annual, semi-annual or quarterly installments shall be the monthly installment shown for Options 3-V and 5-V multiplied by 11.70, 5.93 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. TB828 PAGE 13 SECTION 11 - GENERAL PROVISIONS THE CONTRACT Date. The entire contract consists of EVIDENCE OF SURVIVAL this contract, riders, and the attached application. All We have the right to require statements in the application or in satisfactory evidence that a person the enrollment form for a was alive if a payment is based on Participant Certificate are that person being alive. No payment representations and not warranties. will be made until we receive the No statement will cause this evidence. contract to be void or be used in defense of a claim unless contained SETTLEMENT in the application. Any payment by us under the PARTICIPANT CERTIFICATES Certificate is payable at our Home Office. We will issue a Certificate to each Participant Such Certificates are RIGHTS OF CERTIFICATE OWNER not a part of this contract The Certificate Owner may, while MODIFICATION OF CONTRACT the Annuitant is living: No change in this Contract or the 1. Assign the Certificate. Group Certificate is valid unless 2. Surrender the Certificate to us. made in writing by us and approved 3. Amend or modify the Certificate by one of our officers. No with our consent. registered representative has 4. Receive annuity payments or name authority to change or waive any a Payee to receive the payments. provision of the Group Certificate 5. Exercise, receive and enjoy or this Contract every other right and benefit contained in the Certificate. TAX QUALIFICATION The use of these rights may be This Contract is intended to subject to the consent of any qualify as an annuity contract for assignee or irrevocable federal income tax purposes. The beneficiary; and of the spouse in a provisions of this Contract are to community or marital property be interpreted to maintain such state. qualification. To maintain such tax qualification, we reserve the right Unless we have been notified of a to amend this Contract to reflect community or marital property any clarifications that may be interest in the Certificate, we needed or are appropriate to will rely on our good faith belief maintain such tax qualification or that no such interest exists and to conform this Contract to any will assume no responsibility for applicable changes in the tax inquiry. qualification requirements. We will send the Certificate Owner a copy SUCCESSOR CERTIFICATE OWNER in the event of any such amendment If such an amendment is refused, it A successor Certificate Owner can must be by giving us written be named in any enrollment form, or notice, and refusal may result in in a notice the Certificate Owner adverse tax consequences. signs which gives us the facts that we need. The successor Certificate NON -PARTICIPATING Owner will become the new Certificate Owner when the The Group Contract and Group Certificate Owner dies, if the Certificates will not share in our Certificate Owner dies before the surplus earnings. Annuitant If no successor Certificate Owner survives the AGE OR SEX CORRECTIONS Certificate Owner and the Certificate Owner dies before the If the age or sex of the Annuitant Annuitant, the Certificate Owner's has been misstated, the benefits estate will become the new will be those which the premiums Certificate Owner. paid would have purchased for the correct age and sex. If required by ANNUITY COMMENCEMENT DATE law to ignore differences in the sex of the Annuitant, the payment The Annuity Commencement Date is options will be determined using the date annuity payments begin. the unisex factors in Section 10. This date may not be later than the last day of the Certificate month Any underpayment made by us will be starting after the Annuitant paid with the next payment Any attains age 85, except as expressly overpayment made by us will be allowed by us, but in no event deducted from future payments. Any later than the last day of the underpayment or overpayment, will Certificate month following the include interest at 5% per year, month in which the Annuitant from the date of the wrong payment attains age 95. The Certificate to the date of the adjustment Owner may change the Annuity Commencement Date at any time INCONTESTABILITY before the Annuity Commencement Date by giving us 30 days' written This Contract shall be notice. incontestable from the Contract H719 PAGE 14 SECTION 11 - CONT ASSIGNMENT at the time the death proceeds become payable. If there is more (a) In the case of a non-tax than one beneficiary and the qualified annuity, the Certificate Owner failed to specify Certificate may be assigned. their interest, they will share The assignment must be in equally. Payment will be made to writing and filed with us. the named contingent beneficiary(ies) only if all (b) We assume no responsibility for primary beneficiaries have died the validity of any assignment before the death proceeds become Any claim made under an payable. If any primary beneficiary assignment shall be subject to is alive at the time the death proof of interest and the proceeds become payable, but dies extent of the assignment. before receiving their payment, their share will be paid to their (c) The Certificate may be applied estate. for and issued to qualify as a tax-qualified annuity under In cases where the annuitant dies certain sections of the and the Certificate Owner (who is Internal Revenue Code. This not the annuitant) elected to will be specified in the receive the death proceeds in enrollment form, or information accordance with Section 9, if the provided in lieu thereof. annuitant's estate has been named Ownership of the Certificate as beneficiary, then payment will then is restricted so that it be made to the Certificate Owner. will comply with provisions of the Internal Revenue Code. PROTECTION OF PROCEEDS Assignment of the Certificate may Unless the Certificate Owner so result in adverse tax consequences. directs by filing written notice with us, no beneficiary may assign BENEFICIARY any payments under the Certificate Death proceeds, when payable in before the same are due. To the accordance with Section 9, are extent permitted by law, no payable to the designated payments under the Certificate will beneficiary or beneficiaries. Such be subject to the claims of beneficiary(ies) must be named in creditors of the Certificate Owner the enrollment form, or information or any beneficiary. provided in lieu thereof, and may be changed without consent (unless DEFERMENT irrevocably designated or required by law) by notifying us in writing We will pay any Partial Withdrawals on a form acceptable to us. The or surrender proceeds from the change will take effect upon the Separate Account(s) within 7 days date signed, whether or not you are after we receive all requirements living when we receive it The that we need. However, it may notice must have been postmarked happen that the New York Stock (or show other evidence of delivery Exchange is closed for trading that is acceptable to us) on or (other than the usual weekend or before the date of death. The most holiday closings), or the recent change of beneficiary notice Securities and Exchange Commission will replace any prior beneficiary restricts trading or determines designations. No change will apply that an emergency exists. If so, it to any payment we made before the may not be practical for us to written notice was received. If an determine the investment experience irrevocable beneficiary dies, the of the Separate Account In that Certificate Owner may designate a case, we may defer transfers among new beneficiary. the Subaccounts and to the Fixed Account, and determination or The Certificate Owner may direct payment of Partial Withdrawals or that the beneficiary shall not have surrender proceeds. the right to withdraw, assign or commute any sum payable under an When permitted by law, we may defer option. In the absence of such paying any Partial Withdrawals or election or direction, the surrender proceeds from the Fixed beneficiary may change the manner Account for up to 6 months from the of payment or make an election of date we receive the request If the any option. Certificate Owner dies after the request is received, but before the If any primary or contingent request is processed, the request beneficiary dies before the will be processed before the death Annuitant* that beneficiary's proceeds are determined. Interest interest in the Certificate ends will be paid on any amount deferred with that beneficiary's death. Only for 30 days or more. This rate will those beneficiaries living at the be computed at the rate of interest time of the Annuitant's death will currently paid on proceeds left be eligible to receive their share under the Interest Payments of the Death Proceeds. In the event Settlement Option. no contingent beneficiaries have been named and all primary REPORTS TO OWNER beneficiaries have died before the death proceeds become payable, the We will give the Certificate Owner Certificate Owner(s) will become an annual report at least once each the beneficiary(ies) unless elected Certificate Year. This report will otherwise in accordance with show the number and value of the Section 9. If both primary and accumulation units held in each of contingent beneficiaries have been the Subaccounts as well as the named, payment will be made to the value of the Fixed Account. it will named primary beneficiaries living also give the Death Benefit, Cash Value, and any other facts required by law or regulation. J719 PAGE 15 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [2nd] Certificate Year, amounts $500, minimum) up to [10%] of the Policy Value immediately prior to the Partial Withdrawal are available as a Lump Sum Distribution once per Certificate Year with no Surrender Charges and no Excess Interest Adjustment. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1051 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date Provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c), where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the [5%] Annually Compounding Death Benefit The GMDB is equal to the total premiums paid for the Certificate, less any Adjusted Partial Withdrawals, accumulated at [5%] interest per annum from the payment or withdrawal date to the date of death. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1058 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c) where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the Double Enhanced Death Benefit The GMDB is the greater of (1) and (2) where: (1) is a [5%] Annually Compounding Death Benefit, equal to: a) the total premiums paid for the Certificate; minus b) Adjusted Partial Withdrawals (as described below); plus c) interest accumulated at [5%] per annum from the payment or withdrawal date to the earlier of the date of death or the Certificate Owner's [81st] birthday. (2) is a Step-Up Death Benefit, equal to: a) the largest Policy Value on the Certificate Date or [any] Certificate [Anniversary] prior to the earlier of the date of death or the Certificate Owner's [81st] birthday; plus b) any Premium Payments made since then, minus any Adjusted Partial Withdrawals made since then. If the Certificate Owner is a nonnatural person, or if the Certificate Owner has elected to have the death proceeds paid upon the death of the annuitant, the Guaranteed Minimum Death Benefit will be based upon the annuitant's age. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1060 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date Provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c), where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the Return of Premium Death Benefit The GMDB is equal to the total premiums paid for the Certificate, less any Partial Withdrawals, as of the date of death. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1061 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [1st] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semi-annual or annual basis. SPO payouts must be at least $50 and may not exceed 10% of the Policy Value at the time a SPO payout is made divided by the number of payouts made per year (e.g. 12 for monthly). No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout Monthly and quarterly payouts must be sent through electronic funds transfer directly to your checking or savings account The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1064 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 SERVICE CHARGE WAIVER This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Service Charge provision in Section 4, Policy Value, is amended to include the following language: The Service Charge will not be deducted on a Certificate Anniversary or at the time of surrender if, at such time, either (1) the sum of all premium payments made less the sum of all withdrawals taken equals or exceeds [$50,000] or (2) the Policy Value equals or exceeds [$50,000] This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1074 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT When a Premium Payment is paid, a Premium Enhancement Percentage of [.25%] to [5%] be applied to that Premium Payment and the resulting amount will be added to t Policy Value. The amount of the Premium Enhancement is not considered a Premium Payment The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than 0.25% more than [5%.] The Premium Enhancement Percentage applicable to the Initial Premium is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1075 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM INCOME BENEFIT RIDER This rider provides a Minimum Annuitization Value which can only be used with the Annuity Factors shown in Schedule I of this rider. This Minimum Annuitization value is guaranteed by us, regardless of the performance of the variable annuity's investments. This rider is attached to and made part of the Contract as of the Contract Date. This rider may only be terminated as provided herein. This rider is subject to all of the provisions in the Contract that do not conflict with the provisions of this rider. The Rider Payment Options provide for variable annuity payments. Subsequent payments may fluctuate with the investment performance of the Subaccounts, but will never be less than the initial payment. DEFINITIONS Election Date The following definitions used in A date that the Certificate Owner this Rider are for reference only. elects to begin Guaranteed Minimum Income Benefit payments. The Annuitant Election Date must be within 30 days following a Certificate The Annuitant is designated on the Anniversary. The first and last Certificate Data Page. The variable dates to elect a Rider Payment annuity payments are paid to the Option are shown on page one of the Annuitant (or surviving Joint rider attached to the Certificate. Annuitant). Minimum Annuitization Value Annuity Factor The amount we will use to determine A factor for the applicable the Guaranteed Minimum Income Annuitant age, sex and Rider Benefit payments. Payment Option is shown in schedule I or Schedule II of this rider. For Rider Date the Rider Payment Option chosen, the Annuity Factor from Schedule I The date that the rider is added to and the Minimum Annuitization Value the Certificate. This date may only will be used to determine the be the issue date of the applicable annuity payments. For Certificate or a Certificate Annuitants age 85 or older at the Anniversary date. This is also the time of annuitization, the age 85 Certificate Anniversary that the Annuity Factor will be used for Certificate Owner most recently Schedule I. Factors not shown are elected to upgrade the Minimum available from us upon request Annuitization Value, if applicable. Schedule I and Schedule II are based on the "1983 Table a" Supportable Payment mortality table, improved to the year 2000 with projection scale G. The Supportable Payment is equal to the number of variable annuity units in the selected Subaccounts multiplied by the variable annuity unit values in those Subaccounts on the date the payment is made. RGMI 4 499 1 GUARANTEED MINIMUM INCOME BENEFIT (C) is the Minimum Annuitization Value after the current On the Election Date, the Certificate Year maximum Certificate Owner may use the annual free amount has been Minimum Annuitization Value and the withdrawn, but prior to applicable Annuity Factor to withdrawal of the excess provide variable payments to the portion. Annuitant The first variable payment is determined by For each Certificate Year, the multiplying each $ 1,000 of Minimum maximum annual free amount is equal Annuitization Value by the Annuity to the Minimum Annuitization Value, Factor on Schedule 1. Each as of the beginning of the subsequent payment will be Certificate Year, multiplied by the calculated as described in the effective Annual Growth Rate as Contract, using a 5% Assumed shown on page one of the rider Investment Return. attached to the Certificate. Withdrawals during a Certificate For subsequent payments, an annual Year will reduce the available Mortality and Expense Risk Fee and maximum annual free amount by the Administrative Charge (which amount of the Withdrawal. includes an investment risk fee) will be charged. This total fee may RIDER FEE be different than the Mortality and Expense Risk Fee and Administrative We will deduct a fee from the value Charge in effect prior to the of the Certificate on each Election Date. It may also be Certificate Anniversary and on the different than the Mortality and termination date of this rider. The Expense Risk Fee and Administrative Rider Fee is the Minimum Charge for the settlement options Annuitization Value at the time the shown in the Certificate. fee is deducted, multiplied by the Rider Fee Percentage shown on the The subsequent payments may first page of the rider attached to fluctuate in accordance with the the Certificate. The fee will be investment performance of the deducted from each Subaccount in annuity Subaccounts. However, such proportion to the amount of value payments will never be less than of the Certificate in each the initial payment. Subaccount. This fee will not be deducted after the Election Date or MINIMUM ANNUITIZATION VALUE if the Certificate terminates due to the death of the Certificate The Minimum Annuitization Value is Owner. used to determine the Guaranteed Minimum Income Benefit payments. WAIVER OF RIDER FEE On the Rider Date, the Minimum If the value of the Certificate, on Annuitization Value is the value of a particular Certificate the Certificate. Thereafter, based Anniversary, exceeds an amount upon the effective Annual Growth equal to the Rider Fee Waiver Rate (shown on page one of the Threshold (shown on page one of the rider attached to the Certificate), rider attached to the Certificate) it will be the value of the multiplied by the Minimum Certificate on the Rider Date, plus Annuitization Value, the Rider Fee any additional payments made after will be waived for that Certificate the Rider Date, minus policy Anniversary. Withdrawals (adjusted as described below), minus any premium taxes. MINIMUM ANNUITIZATION VALUE UPGRADE Withdrawals The Certificate Owner may elect, in writing, to upgrade the Minimum In any Certificate Year, the Annuitization Value to the value of Minimum Annuitization Value will the Certificate on a Certificate only be reduced by the actual Anniversary. This may be done amount of a withdrawal as long as within 30 days immediately the withdrawal does not exceed a following any Certificate maximum annual free amount Anniversary, and prior to the Last Withdrawals in excess of the Date to Upgrade shown on page one maximum annual free amount will of the rider attached to the reduce the Minimum Annuitization Certificate. Value by an amount equal to (A) divided by (B) multiplied by (C) If an upgrade is elected, the rider where: attached to the Certificate will terminate and a new rider will be (A) is the amount of the excess issued with a new Rider Date, withdrawal; Election Date and its own guaranteed benefits. The new annual (B) is the value of the Rider Fee Percentage may be Certificate after the different than this rider's, but it current Certificate Year will never be greater than 0.50%. maximum annual free amount has been withdrawn, but prior to the withdrawal of the excess portion; and RGMI 4 499 2 RIDER PAYMENT OPTIONS units as described below. If the Supportable Payment (at any payment The Minimum Annuitization Value and date) is less than the stabilized applicable Annuity Factors from payment for that year, annuity Schedule I may be applied to the units will be redeemed as described following payment options: below to fund the deficiency. Life Income - An election may be Purchase/Redemption of Annuity made for "No Period Certain" or " Units: 10 Years Certain". In the event of the death of the person The number of annuity units receiving payments prior to the purchased or redeemed is equal to end of the chosen period certain, the annuity income purchased or the remaining period certain redeemed, respectively, divided payments will be continued to the by the annuity unit value for beneficiary. each respective Subaccount Purchases and redemptions of Joint and Full Survivor - An annuity income will be allocated election may be made f or "No to each Subaccount on a Period Certain" or " 1 0 Years proportionate basis. The amount Certain". Payments will be made of annuity income purchased or as long as either the Annuitant redeemed is the difference or Joint Annuitant is living. In between the Supportable Payment the event of the death of both and the stabilized payment, times the Annuitant and the Joint the attained age nearest birthday Annuitant prior to the end of the Annuity Factors shown in Schedule chosen period certain, the 11, divided by $ 1,000. These remaining period certain payments factors will reflect the will be continued to the remaining certain period, if any, beneficiary. but will be calculated on the same basis as the Schedule 11 GUARANTEED MINIMUM PAYMENT factors. On the Election Date, the The Company bears the risk that it Certificate Owner will receive will need to make payments if all guaranteed minimum payments. The annuity units have been redeemed in annual Mortality and Expense Risk an attempt to maintain the Fee and Administrative Charge for stabilized payment at the initial these payments is shown on page one payment level. In such an event, of the rider attached to the the Company will make all future Certificate. The percentage shown payments equal to the initial on page one of the rider attached payment. to the Certificate also includes a fee to cover investment risk ASSIGNMENT associated with guaranteeing a minimum payment. Payments made under this rider may not be pledged or assigned. The first payment is based on the Payments will only be made to the Annuity Factors in Schedule 1. We Annuitant or Joint Annuitant named guarantee that each subsequent in the policy. payment will be equal to or greater than the initial payment. TERMINATION During the first Certificate Year This rider will be terminated, with following annuitization, each respect to each Certificate, upon payment will be stabilized to equal the earliest of: the initial payment On each Certificate Anniversary following a. the Election Date; annuitization, the stabilized payment will be increased or b. 30 days after the Last Date to decreased (but never below the Elect Benefit shown on the initial payment) and held level for first page of the rider that Certificate Year. On each attached to the Certificate. Certificate Anniversary following annuitization, the stabilized c. the date the Certificate payment will equal the greater of terminates; the initial payment or the Supportable Payment at that time. d. the date the Certificate Owner elects to apply the value of If the Supportable Payment (at any the Certificate to annuitize payment date) is greater than the the Certificate; and stabilized payment for that year, the excess will be used to purchase e. the date the Certificate Owner additional annuity elects to upgrade their Minimum Annuitization Value. This rider cannot be terminated prior to the earliest of the above dates. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT RGMI 4 499 3 SCHEDULE I - ANNUITY FACTORS The amounts shown in these tables are the Annuity Factors for each $1,000 of the Minimum Annuitization Value and assume a 3% Assumed Investment Return.
- ---------------------------------------------------------------------------------------------------------------------- - --------------------------- --------------------------------------------------------------------------------- Monthly Annuity Factor For Monthly Annuity Factor For Life With No Period Life With 10 Years Certain Certain -------------------------------------------------------------------------------------------- Age* Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70 51 3.93 3.60 3.77 3.90 3.59 3.75 52 4.00 3.65 3.83 3.97 3.64 3.81 53 4.07 3.71 3.90 4.04 3.70 3.87 54 4.15 3.77 3.97 4.11 3.75 3.94 55 4.23 3.83 4.04 4.19 3.82 4.01 56 4.32 3.90 4.11 4.27 3.88 4.08 57 4.41 3.97 4.19 4.35 3.95 4.15 58 4.50 4.05 4.28 4.44 4.02 4.24 59 4.61 4.13 4.37 4.53 4.10 4.32 60 4.72 4.21 4.47 4.63 4.18 4.41 61 4.84 4.30 4.57 4.74 4.26 4.51 62 4.96 4.40 4.68 4.85 4.35 4.61 63 5.10 4.50 4.80 4.97 4.45 4.71 64 5.24 4.61 4.93 5.09 4.55 4.83 65 5.40 4.73 5.06 5.22 4.66 4.95 66 5.56 4.85 5.21 5.36 4.77 5.07 67 5.74 4.99 5.36 5.50 4.89 5.20 68 5.93 5.13 5.53 5.65 5.02 5.34 69 6.13 5.29 5.71 5.80 5.15 5.49 70 6.34 5.45 5.90 5.96 5.30 5.64 - ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male Annuitant* - ---------------------------------------------------------------------------------------------------------------------- 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.31 4.53 4.77 5.02 - ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor with 10 Year Period Certain - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male Annuitant* - ---------------------------------------------------------------------------------------------------------------------- 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.24 $3.31 $3.38 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.30 4.52 4.76 4.99 - ----------------------------------------------------------------------------------------------------------------------
*Age nearest birthday - ---------------------------------------------------------------------------- The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity Factor shown multiplied by 11.80, 5.95 or 2.99 respectively. - ---------------------------------------------------------------------------- Annuity Factors not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. RGMI 4 499 SCHEDULE II - ANNUITY FACTORS The amounts shown in these tables are the Annuity Factors for each $1,000 of the Minimum Annuitization Value and assume a 5% Assumed Investment Return.
- ---------------------------------------------------------------------------------------------------------------------- - --------------------------- --------------------------------------------------------------------------------- Monthly Annuity Factor Monthly Annuity Factor For Life With No Period Certain Life With 10 Years Certain - --------------------------- ------------------------------------------------------------------------------------------ Age* Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $5.14 $4.83 $4.99 $5.09 $4.80 $4.95 51 5.20 4.87 5.04 5.15 4.85 5.00 52 5.27 4.92 5.10 5.21 4.89 5.05 53 5.34 4.98 5.16 5.27 4.94 5.11 54 5.41 5.03 5.22 5.34 4.99 5.17 55 5.49 5.09 5.29 5.41 5.05 5.23 56 5.57 5.15 5.36 5.48 5.11 5.30 57 5.66 5.22 5.44 5.56 5.17 5.37 58 5.75 5.29 5.52 5.65 5.24 5.45 59 5.85 5.37 5.61 5.74 5.31 5.53 60 5.96 5.45 5.71 5.83 5.38 5.61 61 6.08 5.53 5.81 5.93 5.46 5.70 62 6.20 5.63 5.92 6.04 5.55 5.80 63 6.34 5.73 6.04 6.15 5.64 5.90 64 6.48 5.83 6.16 6.27 5.73 6.01 65 6.64 5.95 6.30 6.39 5.84 6.12 66 6.81 6.07 6.44 6.52 5.94 6.24 67 6.99 6.21 6.60 6.66 6.06 6.37 68 7.18 6.35 6.77 6.80 6.18 6.50 69 7.39 6.51 6.95 6.94 6.31 6.64 70 7.61 6.68 7.14 7.09 6.45 6.78 - ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male Annuitant* - --------------------- ------------------------------------------------------------------------------------------------ 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65 55 4.43 4.49 4.55 4.62 4.70 4.77 4.85 60 4.56 4.64 4.73 4.82 4.92 5.03 5.15 65 4.74 4.84 4.96 5.10 5.24 5.40 5.56 70 4.98 5.13 5.30 5.49 5.70 5.93 6.17 - ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor with 10 Year Period Certain - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male Annuitant* - ---------------------------------------------------------------------------------------------------------------------- 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65 55 4.43 4.49 4.55 4.62 4.70 4.77 4.85 60 4.56 4.64 4.72 4.82 4.92 5.03 5.14 65 4.73 4.84 4.96 5.09 5.24 5.39 5.55 70 4.97 5.12 5.29 5.48 5.69 5.91 6.14 - ----------------------------------------------------------------------------------------------------------------------
*Age nearest birthday - -------------------------------------------------------------------------------- The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity Factor shown multiplied by 11.70, 5.93 or 2.99 respectively. - -------------------------------------------------------------------------------- Annuity Factors not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. RGMI 4 499 PFL Life Insurance Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 [LOGO OF PFL LIFE INSURANCE COMPANY APPEARS HERE] Group Flexible Premium Variable Annuity Contract Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C.) Non -Participating INDEX
Page Page Accumulation Units............................. 7 Guaranteed Period.............................. 8 Adjusted Age (Settlement Options).............. 7 Incontestability............................... 14 Age or Sex Corrections......................... 14 Modification of Contract....................... 14 Annuity Commencement Date...................... 14 Nonparticipation............................... 14 Annuity Payments............................... 11, 11(A) Nursing Care and Terminal Condition Assignment..................................... 15 Withdrawal Option.............................. 5(B) Beneficiary.................................... 15 Partial Withdrawals............................ 5, 6 Cash Value..................................... 5, 6 Payee.......................................... 11(A) Certificate Data Page.......................... 3 Payment Option Tables.......................... 12, 13 Death Proceeds................................. 10, 11 Policy Value................................... 4 Definitions.................................... 2 Premium Payments............................... 4 Dollar Cost Averaging.......................... 9 Proof of Age................................... 11(A) Excess Interest Adjustment..................... 5 Protection of Proceeds......................... 15 Evidence of Survival........................... 14 Right to Cancel................................ 1 Fixed Account.................................. 8 Separate Account............................... 6, 7 Guaranteed Return of Fixed Account Service Charge................................. 4 Premium Payments............................... 6 Settlement..................................... 14 Surrender Charges.............................. 6 Transfers...................................... 9 Unemployment Waive............................. 5(B)
Y576 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, the Certificate Owner may withdraw, free from Surrender Charges, and free from Excess Interest Adjustment, an amount equal to the Cumulative Earnings, if any, in the Policy Value. The Cumulative Earnings is an amount equal to the Policy Value at the time a Lump Sum payout is made, minus the sum of all premium payments reduced by all prior Partial Withdrawals, if any. The minimum Partial Withdrawal under this option is $500. This Partial Withdrawal option is available once per Certificate Year. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1052 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, the Certificate Owner may withdraw an amount ($500 minimum) free from Surrender Charges and free from Excess Interest Adjustment up to the Cumulative Free Percentage (CFP) times the Policy Value immediately prior to the Partial Withdrawal. On the Certificate Date the CFP is [ 10% ]. Thereafter, [ 10% ] will be added to the CFP on each Certificate Anniversary. The unused portion of the CFP in any Certificate Year will be carried forward at each successive Certificate Anniversary. Any portion of the CFP previously taken will reduce the CFP currently available. Any Partial Withdrawals will reduce the CFP by the ratio of the requested Partial Withdrawal amount to the Policy Value immediately prior to the Partial Withdrawal. The maximum CFP will be [ 100% ] beginning in the [ yth ] Certificate Year, and will never be less than zero. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1053 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] MORTALITY AND EXPENSE RISK FEE AND ADMINISTRATIVE CHARGE REDUCTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 6, Separate Account - Charges and Deductions, is amended to include the following language: MORTALITY AND EXPENSE RISK FEE AND ADMINISTRATIVE CHARGE REDUCTION The Mortality and Expense Risk Fee and Administrative Charge (before the Annuity Commencement Date) as shown on the Certificate Data Page will be reduced to [ x ] % if, at the time such fees are deducted, either (1) the sum of all premium payments less the sum of all partial withdrawals is at least $ [ y ] or (2) the Policy Value is at least $ [ y ]. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1054 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, the Certificate Owner may withdraw, free from Surrender Charges, and free from Excess Interest Adjustment, an amount equal to the accumulated interest in the Fixed Account, during the prior [ 12 ] months, or since the last Partial Withdrawal, if later. The minimum Partial Withdrawal under this option is $500. This Partial Withdrawal option is available once per Certificate Year. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to ail the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1056 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, the Certificate Owner may withdraw an amount ($500 minimum) free from Surrender Charges, and free from Excess Interest Adjustment up to the Cumulative Free Percentage (CFP) times the cumulative premium payments immediately prior to the Partial Withdrawal. On the Certificate Date the CFP is [ 10% ] . Thereafter, [ 10% ] will be added to the CFP on each Certificate Anniversary. The unused portion of the CFP in any Certificate Year will be carried forward at each successive Certificate Anniversary. Any portion of the CFP previously taken will reduce the CFP currently available. Any Partial Withdrawals will reduce the CFP by the ratio of the requested Partial Withdrawal amount to the cumulative premium payments immediately but prior to, the Partial Withdrawal. The maximum CFP will be [100%] beginning in the [ yth ] Certificate Year and will never be less than zero. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1057 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, the Certificate Owner may withdraw, free from Surrender Charges, and free from Excess Interest Adjustment, an amount equal to the earnings, if any, in the Policy Value, during the prior [ 12 ] months, or since the last Partial Withdrawal, if later. The amount of earnings is equal to the Policy Value at the time a Lump Sum payout is made, minus the Policy Value at the later of the date of the last Partial Withdrawal or the date [ 12 ] months prior to the Lump Sum payout, minus the premiums paid during the corresponding time period. The minimum Partial Withdrawal under this option is $500. This Partial Withdrawal option is available once per Certificate Year. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1059 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date Provision in Section 9, Death Proceeds is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c), where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the Step-Up Death Benefit. The GMDB is equal to the largest Policy Value on the Certificate Date or on [ any/every ] [ xth ] Certificate [ Anniversary/Monthiversary ] prior to the earlier of the date of death or the Certificate Owner's [ yth ] birthday, plus any Premium Payments made since then, minus any Adjusted Partial withdrawals made since then. If the Certificate Owner is a nonnatural person, or if the Certificate Owner has elected to have the death proceeds paid upon the death of the annuitant, the Guaranteed Minimum Death Benefit will be based upon the annuitant's age. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1062 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date Provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c), where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is [ x ] % Annually Compounding Death Benefit The GMDB is equal to the total premiums paid for the Certificate, less any Adjusted Partial Withdrawals, accumulated at [ x ] % interest per annum from he payment or withdrawal date to the earlier of the date of death or the Certificate Owner's [ yth ] birthday. If the Certificate Owner is a nonnatural person, or if the Certificate Owner has elected to have the death proceeds paid upon the death of the annuitant, the Guaranteed Minimum Death Benefit will be based upon the annuitant's age. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1063 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semi-annual or annual basis. At the time a SPO payout is made, such payout must be at least $50 and may not exceed [ 10% ] of the cumulative premium payments immediately prior to the Partial Withdrawal, divided by the number of payouts made per year (e.g. 12 for monthly). No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout. Monthly and quarterly payouts must be sent through electronic funds transfer directly to a checking or savings account. The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1065 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semiannual or annual basis. At the time a SPO payout is made, such payout must be at least $50 and may not exceed the Cumulative Earnings, if any, in the Policy Value, divided by the number of payouts made per year (eg. 12 for monthly). The Cumulative Earnings is an amount equal to the Policy Value at the time a SPO payout is made, minus the sum of all premium payments reduced by all prior Partial Withdrawals, if any. No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout. Monthly and quarterly payouts must be sent through electronic funds transfer directly to a checking or savings account. The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1066 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semi-annual or annual basis. At the time a SPO payout is made, such payout must be at least $50 and may not exceed the earnings, if any, in the Policy Value during the prior [ 12 ] months or since the last Partial Withdrawal, if later, divided by the number of payouts made per year (e.g. 12 for monthly). The amount of earnings is equal to the Policy Value at the time a SPO payout is made, minus the Policy Value at the later of the date of the last Partial Withdrawal or the date [ 12 ] months prior to the SPO payout, minus the premiums paid during the corresponding time period. No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout. Monthly and quarterly payouts must be sent through electronic funds transfer directly to a checking or savings account. The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1067 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value-and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semi-annual or annual basis. At the time a SPO payout is made, such payout must be at least $50 and may not exceed the accumulated interest in the Fixed Account during the prior [ 12 ] months, or since the last Partial Withdrawal, if later, divided by the number of payouts made per year (e.g. 12 for monthly). No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout. Monthly and quarterly payouts must be sent through electronic funds transfer directly to a checking or savings account. The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1068 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [ xth ] Certificate Year amounts ($500 minimum) up to [ 10% ] of the Cumulative Premium Payments immediately prior to the Partial Withdrawal are available as a Lump Sum distribution once per Certificate Year with no Surrender Charges and no Excess Interest Adjustment This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1069 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT If the Cumulative Premium Payments less partial withdrawals are less than $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less partial withdrawals are greater than or equal to $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The amount of the Premium Enhancement is not considered a Premium Payment The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than .25% nor more than [ b ]%. The Premium Enhancement Percentage applicable to the Initial Premium is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1073 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT If the Cumulative Premium Payments less partial withdrawals are less than $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less partial withdrawals are greater than or equal to $ [ x ] and less than $ [ y ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less partial withdrawals are greater than or equal to $ [ y ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The amount of the Premium Enhancement is not considered a Premium Payment. The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than .25% nor more than [ b ] %. The Premium Enhancement Percentage applicable to the Initial Premium is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1076 199 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date Provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c), where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the Return of Premium Death Benefit. The GMDB is equal to the total premiums paid for the Certificate, less any Adjusted Partial Withdrawals, as of the date of death. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1127 799 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT If the Cumulative Premium Payments less requested partial withdrawals amounts are less than $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less requested partial withdrawals amounts are greater than or equal to $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The Premium Enhancement Percentage may also vary depending on Your attained age at the time a Premium Payment is made. However, the Premium Enhancement Percentage applicable to Premium Payments made at attained ages less than age [ z ] will be at least as great as the corresponding percentage applicable at attained ages [ z ] and above. The Premium Enhancement will be applied using the same allocation as the corresponding Premium Payment. The amount of the Premium Enhancement is not considered a Premium Payment. The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than [ a ] % nor more than [ b ] %. The Premium Enhancement Percentage applicable to the Initial Premium Payment is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will sent to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1128 799 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT When a Premium Payment is paid, a Premium Enhancement Percentage of [ x to y ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The Premium Enhancement Percentage may also vary depending on Your attained age at the time of a Premium Payment is made. However, the Premium Enhancement Percentage applicable to Premium Payments made at attained ages less than age [ z ] will be at least as great as the corresponding percentage applicable at attained ages [ z ] and above. The amount of the Premium Enhancement is not considered a Premium Payment. The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than [ x ] % nor more than [ y ] %. The Premium Enhancement Percentage applicable to the Initial Premium Payment is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. The Premium Enhancement will be applied using the same allocation as the corresponding Premium Payment. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1129 799 [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT If the Cumulative Premium Payments less requested partial withdrawals are less than $ [ x ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less requested partial withdrawals are greater than or equal to $ [ x ] and less than $[y] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. If the Cumulative Premium Payments less requested partial withdrawal amounts are greater than or equal to $ [ y ] when a Premium Payment is paid, then a Premium Enhancement Percentage of [ a to b ] % will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The Premium Enhancement Percentage may also vary depending on Your attained age at the time a Premium Payment is made. However, the Premium Enhancement Percentage applicable to Premium Payments made at attained ages less than age [ z ] will be at least as great as the corresponding percentage applicable at attained ages [ z ] and above. The Premium Enhancement will be applied using the same allocation as the corresponding Premium Payment. The amount of the Premium Enhancement is not considered a Premium Payment The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than .[ a ] % nor more than [ b ] %. The Premium Enhancement Percentage applicable to the Initial Premium is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1130 799 EX-4.B 5 EXHIBIT (4) (B) EXHIBIT (4)(b) -------------- GROUP CERTIFICATE [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 ANNUITANT: JOHN DOE CERTIFICATE OWNER(S): JOHN DOE CERTIFICATE NUMBER: IA - 123456 CERTIFICATE DATE: February 24, 1999 WE AGREE This Certificate may be applied for and issued to qualify as a tax- . To provide annuity payments as qualified annuity under the set forth in Section 10 of applicable sections of the Internal this Certificate, Revenue Code. . Or to pay withdrawal benefits 20 DAY RIGHT TO CANCEL in accordance with Section 5 of this Certificate, You may cancel this Certificate by delivering or mailing a written . Or to pay death proceeds in notice to us. You must return this accordance with Section 9 of Certificate before midnight of the this Certificate. 20th day after the day you receive it Notice given by mail and return Withdrawals, transfers and amounts of this Certificate by mail are applied to a Payment Option may be effective on being postmarked, subject to an Excess Interest properly addressed and postage Adjustment in accordance with prepaid. Sections 5, 8, and 10, respectively, of this Certificate. We will pay you an amount equal to the sum of: These agreements are subject to the provisions of this Certificate. . the premiums paid; and This Certificate is issued in consideration of the enrollment . the accumulated gains or form, or information provided in losses, if any, in the lieu thereof, and payment of the Separate Account(s) on the premiums as provided date of cancellation; unless otherwise required by law. Signed for us at our home office /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT READ YOUR CERTIFICATE CAREFULLY Group Flexible Premium Variable Annuity Certificate Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C) Non -Participating AV432 101 114 199 CRT SECTION 1 DEFINITIONS ADJUSTED POLICY VALUE GROUP CONTRACT OWNER The Policy Value increased or The entity, as shown on the decreased by any Excess Interest Certificate Data Page, which Adjustment. applies for the Group Contract. ANNUITANT INVESTMENT OPTIONS The Participant to whom annuity Any of the Guaranteed Period payments will be made, unless Options of the Fixed Account, the another payee is named. Dollar Cost Averaging Fixed Account Option, and any of the Subaccounts ANNUITY COMMENCEMENT DATE of the Separate Account (s). Date the Annuitant will begin PARTICIPANT receiving payments from this annuity, which may not be later A person who makes premium payments than the last day of the or for whom premium payments are Certificate month starting after made under the Group Contract. the Annuitant attains age 85, except as expressly allowed by us, PAYEE but in no event later than the last day of the month following the The person to whom annuity payments month in which the Annuitant will be made. attains age 95. PAYMENT OPTIONS CASH VALUE Options through which the Amount defined in Section 5, that distribution of the Adjusted Policy can be withdrawn if this annuity Value can be directed. Certificate is surrendered. POLICY VALUE CERTIFICATE the amount (defined in Section 4) The document issued under the Group applicable under the Certificate Contract to the eligible that can be used to fund one of the Participants who apply for Payment Options. coverage. The Certificate is not a part of the Group Contract. SEPARATE ACCOUNT CERTIFICATE ANNIVERSARY The separate investment account(s) established by us, as described in The anniversary of the Certificate Section 6. Date for each year this Certificate remains in force. SUBACCOUNT CERTIFICATE DATE A division of a Separate Account, as described in Section 6. The date shown on page 3 of this Certificate and the date on which SURRENDER this Certificate becomes effective. A partial or full withdrawal of CERTIFICATE OWNER funds from the Policy Value or Cash Value. The owner of the annuity Certificate. Unless otherwise WITHDRAWAL specified on the Certificate Data page, the Annuitant and the A distribution of funds from the Certificate Owner shall be one and Policy Value or Cash Value. the same person. YIELD CERTIFICATE YEAR The effective annual interest rate The 12 month periods following the applicable to the Fixed Account. Certificate Date shown on the Certificate Data page. The first YOU, YOUR Certificate Year starts on the Certificate Date. Each subsequent The owner of this Certificate. year starts on the anniversary of Unless otherwise specified on the the Certificate Date. Certificate Data Page, the Annuitant and the Certificate Owner DISTRIBUTION shall be one and the same person. A withdrawal or disbursement of funds from the Policy Value or Cash Value. GROUP CONTRACT The Contract issued to the Group Contract Owner, under which Certificates are issued to eligible Participants. AVB432 CRT PAGE 2 SECTION 2 - CERTIFICATE DATA GROUP CONTRACT NUMBER: [12345] GROUP CONTRACT OWNER: [SECURITIES CUSTOMERS] [DRL INSURANCE TRUST II] CERTIFICATE NUMBER: [01 - AG000 11] ANNUITANT: [JOHN DOE] INITIAL PREMIUM PAYMENT: [$5,000] ISSUE AGE/SEX: [35/MALE] CERTIFICATE DATE: [May 1, 1999] CERTIFICATE Owner(s): [JOHN DOE] ANNUITY COMMENCEMENT DATE [February 12, 2047] Premium Enhancement Percentage on Initial Premium Payment [5%] SEPARATE Account (s). [PFL Endeavor Variable Annuity Account] DCA SUBACCOUNT(S): [Money Market Portfolio, U.S. Government Securities Portfolio] PREMIUM PAYMENT MINIMUMS Initial Premium Payment, Nonqualified: [$5,000] Initial Premium Payment*, Qualified: *Waived for 403(b) annuities [$2,000] Subsequent Premium Payments: [$50.00] Before the Annuity Commencement Date: Mortality and Expense Risk Fee and Administrative Charge: [1.75%] Distribution Financing Charge: [.00%] Number of Certificate years that the charge is deducted: [0] After the Annuity Commencement Date: Mortality and Expense Risk Fee and Administrative Charge: [1.55%] SERVICE CHARGE [$40] FIXED ACCOUNT GUARANTEED MINIMUM EFFECTIVE ANNUAL INTEREST RATE: 3% SURRENDER CHARGE: Number of Years Percentage of [Since Premium Premium Payment Date] Withdrawn 0-1 8% 1-2 8% 2-3 8% 3-4 7% 4-5 6% 5-6 5% 6-7 4% 7-8 3% 8-9 2% 9-and thereafter 0% Page 3 AV432 101 114 799SP SECTION 2 - CERTIFICATE DATA - CONT SCHEDULE OF ADDITIONAL BENEFITS: Form No. Additional Benefit (s) [AE 1051 199 Lump Sum Withdrawal Option ] [AE 1060 199 Guaranteed Minimum Death Benefit ] [AE 1064 199 Systematic Payout Option ] [AE 1074 199 Service Charge Waiver ] [AE 1075 199 Premium Enhancement ] AV432 101 114 799 CRT Page 3 (A) SECTION 3 - PREMIUM PAYMENTS PAYMENT OF PREMIUMS ALLOCATION OF PREMIUM PAYMENTS Premium payments may be made any Premium payments may be applied to time while this Certificate is in the various Investment Options force before the Annuity which we make available. You must Commencement Date. You may start or tell us what percent of each stop, increase or decrease, or skip premium payment to allocate to the any premium payments. various Investment Options. Each percent may be either zero or any MAXIMUM AND MINIMUM PREMIUM PAYMENT whole number; however, the allocation among all Investment The premium payments may not be Options must total 100%. more than the amount permitted by law if this is a tax-qualified CHANGE OF ALLOCATION annuity. The minimum premium payments we will accept are You may change the allocation of specified on page 3. The maximum premium payments to the various total premium payments, per Investment Options. You must tell Participant, which we will accept us in a signed notice which gives without prior Company approval is $ us the facts that we need. Premium 1,000,000. payments received after the date on which we receive the notice will be PREMIUM PAYMENT DATE applied on the basis of the new allocation. The premium payment date is the date on which the premium payment PREMIUM TAXES is credited to the Certificate. The initial premium payment less any A state may impose a premium tax. premium taxes will be credited to It may be imposed when a premium the Certificate within two business payment is made, on the Annuity days of receipt of such payment and Commencement Date, on the date of the required information. death, or on the date of full Subsequent additional premium surrender. When permitted by state payments will be credited to the law, we will not deduct the tax Certificate as of the business day until the Annuity Commencement when the premium payment and Date, date of death, or date of required information are received. full surrender. A business day is any day on which the New York Stock Exchange is open for trading. SECTION 4 - POLICY VALUE POLICY VALUE The Adjusted Policy Value may be used on the Annuity Commencement On or before the Annuity Date to provide lifetime income or Commencement Date. the Policy Value income for a period of no less than is equal to your: 60 months under the Payment Options in Section 10. (a) premium payments; minus SERVICE CHARGE (b) Gross Partial Withdrawals (as defined in Section 5); plus On each Certificate Anniversary and at the time of surrender during any (c) interest credited to the Fixed Certificate Year before the Annuity Account (see Section 7); plus Commencement Date, we reserve the right to charge an amount up to the (d) accumulated gains in the amount of the Service Charge shown Separate Account(s) (see on page 3 for administrative Section 6); minus expenses. It will be deducted from each Investment Option in (e) accumulated losses in the proportion to the portion of Policy Separate Account(s) (see Value (prior to such charge) in Section 6); minus each Investment Option, respectively, on that Certificate (f) service charges, premium taxes Anniversary or at the time of and transfer fees, if any. surrender. In no event will the Service Charge exceed 2% of the ADJUSTED POLICY VALUE Policy Value at the time it is deducted. The Adjusted Policy Value is the Policy Value increased or decreased by any Excess Interest Adjustment. M987 PAGE 4 SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS CASH VALUE 4) The Excess Interest Adjustment may affect the death proceeds On or before the Annuity defined in Section 9; Commencement Date, the Cash Value is equal to the Adjusted Policy 5) If interest rates have Value less any Surrender Charges. decreased from the time the Information on the current amount affected Guaranteed Period(s) of a Certificate's Cash Value is started until the time the available upon request The Cash transaction occurs, the Excess Value may be partially withdrawn or Interest Adjustment will will be paid in the event of a full result in additional funds surrender of the Certificate. We available to you; must receive your written partial withdrawal or surrender request 6) If interest rates have before the Annuity Commencement increased from the time the Date. affected Guaranteed Period(s) started until the time the There is no Cash Value once an transaction occurs, the Excess Annuity Payment Option has been Interest Adjustment will selected. result in a decrease in the funds available to you. EXCESS INTEREST ADJUSTMENT 7) Certain amounts are not Full Surrenders, Partial subject to the Excess Interest Withdrawals, transfers, and amounts Adjustment as provided in applied to a Payment Option from Sections 5, 7 and 8. the Fixed Account Guaranteed Period Options described in Section 7 will The formula for determining the be subject to an Excess Interest amount of the Excess Interest Adjustment except as provided F or Adjustment is as follows: in the Partial Withdrawals provision below. Excess Interest Adjustment = S x (G- C) x (M/12) An Excess Interest Adjustment applies in the following situations: where: S is the gross (that is, before surrender charges 1) When you withdraw all or any and premium taxes, if any) portion of your Cash Value, amount being surrendered, partially withdrawn, 2) When you exercise Annuity transferred, or applied to Payment Options, a Payment Option that is subject to the Excess 3) When death proceeds are Interest Adjustment. calculated. However, death proceeds will not be reduced G is the guaranteed interest if the Excess Interest rate for the Guaranteed Adjustment is negative. Period applicable to S. The Excess Interest Adjustment is M is the number of months only applied to transactions remaining in the affecting the Guaranteed Period Guaranteed Period for S. Options of the Fixed Account (see rounded up to the next Section 7) and is based on any higher whole number of change in interest rates from the months. time the affected Guaranteed Period(s) started until the time C is the current guaranteed the Excess Interest Adjustment interest rate then being occurs. The Excess Interest offered on new Premium Adjustment is applied as follows: Payments for the next longer Guaranteed Period 1) The Excess Interest Adjustment than "M". If this is only applied when the Certificate form or such a transactions occur prior to Guaranteed Period Option the end of any Guaranteed is no longer offered, "C" Period Option; will be the U.S. Treasury rate for the next longer 2) Transfers to the Guaranteed maturity (in whole years) Period Options of the Fixed than "M" on the 25th day Account are considered Premium of the previous calendar Payments for purposes of month, plus up to 2%. determining the Excess Interest Adjustment; Upon full surrender, the Excess 3) The Excess Interest Adjustment Interest Adjustment (EIA) for each is distinct from, and is Guaranteed Period Option will not applied prior to, the reduce the Adjusted Policy Value Surrender Charge; for that Guaranteed Period Option below the amount paid into, less any prior withdrawals and transfers from, that Guaranteed Period Option, plus interest at the 3% guaranteed effective annual interest rate. U987 PAGE 5 SECTION 5 - CONT PARTIAL WITHDRAWALS If any Partial Withdrawal reduces the Cash Value below $500, we We will pay you a portion of the reserve the right to pay the full Cash Value as a Partial Withdrawal Cash Value and terminate the provided we receive your written Certificate. request while the Certificate is in effect and before the Annuity We may delay payment of the Cash Commencement Date. When you request Value from the Fixed Account for up a Partial Withdrawal you must tell to 6 months after we receive the us how it is to be allocated from request If the Certificate Owner among the Investment Options. If dies after we receive the request, your request for a Partial but bef ore the request is Withdrawal from any Investment processed, the request wilt be Option is less than or equal to the processed before the death proceeds Cash Value in that option, we will are determined. pay the amount of your request. However, if your request for a Each Partial Withdrawal consists of Partial Withdrawal from any a portion that is subject to Investment Option is greater than Surrender Charge (that is, the the Cash Value in that option, we Excess Partial Withdrawal) and a will pay you the Cash Value of that remaining portion that is free from investment Option. Surrender Charge (that is, the Surrender Charge-free amount). The Gross Partial Withdrawal is the Either portion may be zero (0) total amount which will be deducted depending on the Partial Withdrawal from your Policy Value as a result requested and prior amounts of each Partial Withdrawal. The withdrawn. Gross Partial Withdrawal may be more or less than your requested Partial Withdrawals may be made Partial Withdrawal amount, free from Surrender Charges and depending on whether Surrender free from Excess Interest Charges and/or Excess Interest Adjustments as follows: Adjustments apply at the time you request the Partial Withdrawal. MINIMUM REQUIRED DISTRIBUTION The Excess Partial Withdrawal For tax-qualified plans, amount is the portion of the Partial Withdrawals taken to requested Partial Withdrawal that satisfy minimum distribution is subject to Surrender Charge requirements under Section (that is, the portion which is in 401(a)(9) of the Internal excess of the Surrender Charge-free Revenue Code (IRC) are portion). For example, if the available with no Surrender requested withdrawal amount is Charges and no Excess Interest $1,000, and the Surrender Charge- Adjustments. The amount free amount is $200, then the available from each Excess Partial Withdrawal would be Certificate with respect to $800. Excess Partial Withdrawals the minimum distribution will reduce the Policy Value by an requirement is based solely on amount equal to (X-Y+Z) where: this Certificate. X = Excess Partial Withdrawal The Certificate Owner must be at least 70 1/2 years old in A = Amount of Partial Withdrawal the calendar year of subject to Excess Interest distribution, must submit a Adjustment written request to us and must take the distribution before Y = Excess Interest Adjustment = year end. If the Certificate (A) x (G-C) x (M/12) where G, C Owner attains age 70 1/2 in and M are defined in the Excess the calendar year of Interest Adjustment provision distribution, a written above, with "A" substituted for request which is postmarked no S in the definitions of G and later than the end of the M. current calendar year must be submitted to us. Z = Surrender Charge on X minus Y. Systematic minimum The formula for determining the distributions must be at least Gross Partial Withdrawal is as $50 or a lump sum distribution follows: is available if minimum required distributions are Gross Partial Withdrawal = R - E + less than $50. SC Any amount requested in excess where: R is the requested Partial of the IRC minimum required Withdrawal; distribution will have the appropriate Surrender Charges E is the Excess Interest and Excess Interest Adjustment; and Adjustments applied, unless the excess distribution SC is the Surrender Charge qualifies as Surrender Charge- on (EPW - E); where free or Excess Interest Adjustment-free under any EPW is the Excess Partial additional options provided. Withdrawal amount. M1015 PAGE 5(A) SECTION 5 - CONT NURSING CARE AND TERMINAL CONDITION withdrawal request and must be WITHDRAWAL OPTION furnished by the Annuitant's, Annuitant's spouse's, Beginning in the first Certificate Owner's, or Certificate Year, if the Certificate Owner's spouse's Certificate Owner or Certificate physician. Proof of confinement Owner's spouse (annuitant or may be a physician's statement annuitant's spouse if the or a statement from a hospital Certificate Owner is not a or nursing facility natural person) has been 1) administrator. confined in a Hospital or Nursing Facility for 30 UNEMPLOYMENT WAIVER consecutive days or 2) diagnosed as having a Terminal Condition, Beginning in the first you may elect to withdraw all or Certificate Year, you may a portion of the Policy Value withdrawal all or a portion of without Surrender Charges and the Policy Value free of without Excess Interest Surrender Charges and free of Adjustment The minimum any Excess Interest Adjustment withdrawal under this option is if the Certificate Owner or $1000. Certificate Owner's spouse (annuitant or annuitant's For Nursing Care, we must spouse, if the Certificate Owner receive each withdrawal request is not a natural person) becomes and proof of eligibility with unemployed. In order to qualify, each request no later than 90 you 1) must` have been employed days following the date that full time for at least two years confinement has ceased, unless prior to your becoming it can be shown that it was not unemployed, 2) must have been reasonably possible to provide employed full time on your the notice and proof within the Certificate Date, 3) must have above time period and that the been unemployed for at least 60 notice and proof were given as consecutive days at the time of soon as reasonably possible. withdrawal and 4) must have a However, in no event, except the minimum Cash Value at the time absence of legal capacity, shall of withdrawal of $5000. Proof of the notice and proof be provided unemployment will consist of later than one year following providing us with a the date that confinement has determination letter from the ceased. For a Terminal applicable State's Department of Condition, we must receive each Labor which verifies that you withdrawal request and the qualify for and are receiving applicable proof of eligibility unemployment benefits at the no later than one year following time of withdrawal. The diagnosis of the Terminal determination letter must be Condition. Proof of a Terminal received by us no later than 15 Condition is required only with days following the date of the the initial withdrawal request. U1015 PAGE 5(B) SECTION 5 - CONT SURRENDER CHARGES considered to be withdrawn. For Surrender Charge purposes, premium Amounts withdrawn in excess of any payments are deemed to be withdrawn Surrender Charge-free Partial before earnings. Withdrawals are subject to a Surrender Charge. If applicable, After all premium payments are this charge will either apply for a considered to be withdrawn, the number of years following each remaining Adjusted Policy Value may premium payment date or F or a be withdrawn free from any number of years following the Surrender Charge. Certificate Date as shown on page 3. The amount of this charge, if GUARANTEED RETURN OF FIXED ACCOUNT any, will be a percentage, (as PREMIUM PAYMENTS shown on page 3 of each Certificate) of the amount of Upon full surrender of the premium withdrawn. Certificate, you will always receive at least the premium For Surrender Charge purposes, the payments made to, less prior oldest premium payment is withdrawals and transfers from, the considered to be withdrawn first If Fixed Account. the amount withdrawn exceeds this, the next oldest premium payment is MINIMUM VALUES considered to be withdrawn, and so on until the most recent premium Benefits available under this payment is Certificate are not less than those required by any statute of the state in which the Certificate is delivered. SECTION 6 - SEPARATE ACCOUNT SEPARATE ACCOUNT We will determine the fair market value of the assets of the Separate We have established and will Account in accordance with a method maintain one or more Separate of valuation which we establish in Account (s), indicated on the good faith. Valuation Period means Certificate Data Page, under the the period of time from one laws of the state of Iowa. Any determination of the value of each realized or unrealized income, net Subaccount to the next Such gains and losses from the assets of determinations are made when the the Separate Account are credited value of the assets and liabilities to or charged against it without of each Subaccount is calculated. regard to our other income, gains This is generally the close of or losses. Assets are put in the business on each day on which the Separate Account for this New York Stock Exchange is open. Certificate, as well as for other variable annuity policies and We also reserve the right to Certificates. Any Separate Account transfer assets of the Separate may invest assets in shares of one Account, which we determine to be or more mutual fund portfolios, or associated with the class of in the case of a managed Separate Certificates to which this Account, direct investments in Certificate belongs, to another stocks or other securities as separate account. If this type of permitted by law. Fund Shares refer transfer is made, the term to shares of underlying mutual "Separate Account", as used in the funds or prorata ownership of the contract and in the Certificate, assets held in a Subaccount of a shall then mean the separate managed Separate Account Fund account to which the assets were shares are purchased, redeemed and transferred. valued on behalf of the Separate Account. We also reserve the right, when permitted by law to: The Separate Account is divided into Subaccounts. Each Subaccount (a) deregister the Separate invests exclusively in shares of Account under the Investment one of the portfolios of an Company Act of 1940; underlying mutual fund. We reserve the right to add or remove any (b) manage the Separate Account Subaccount of the Separate Account. under the direction of a committee at any time; The assets of the Separate Account are our property. These assets will (c) restrict or eliminate any equal or exceed the reserves and voting rights of Certificate other contract liabilities of the Owners or other persons who Separate Account. These assets will have voting rights as to the not be chargeable with liabilities Separate Account; and arising out of any other business we conduct. We reserve the right, (d) combine the Separate Account subject to regulations governing with one or more other the Separate Account, to transfer separate accounts; assets of a Subaccount, in excess of the reserves and other contract (e) create new Separate Accounts; liabilities with respect to that Subaccount, to another Subaccount (f) add new Subaccounts to or or to our General Account. remove existing Subaccounts from the Separate Account, or combine Subaccounts; (g) add new underlying mutual funds, remove existing mutual funds, or substitute a new fund for an existing fund. P1032 PAGE 6 SECTION 6 - SEPARATE ACCOUNT - CONT The Net Asset Value of a fund share provide accumulation units in those is the per-share value calculated Subaccounts. The number of by the mutual fund or, in the case accumulation units purchased in a of a managed Separate Account, by Subaccount will be determined by the Company. The Net Asset Value is dividing the premium payment computed by adding the value of the allocated to or any amount Subaccount's investments, cash and transferred to that Subaccount, by other assets, subtracting its the value of an accumulation unit liabilities, and then dividing by for that Subaccount on the premium the number of shares outstanding. payment or transfer date. Net Asset Values of fund shares reflect investment advisory fees The number of accumulation units and other expenses number incurred withdrawn or transferred from the in managing a mutual fund or a Subaccounts will be determined by managed Separate Account. dividing the amount withdrawn or transferred by the value of an CHANGE IN INVESTMENT OBJECTIVE OR accumulation unit for that POLICY OF A MUTUAL FUND Subaccount on the withdrawal or transfer date. If required by law or regulation, an investment policy of the The value of an accumulation unit Separate Account will only be on any business day is determined changed if approved by the by multiplying the value of that appropriate insurance official of unit at the end of the immediately the state of Iowa or deemed preceding valuation period by the approved in accordance with such net investment factor for the law or regulation. If so required, valuation period. the process for obtaining such approval is F fled with the The net investment factor used to insurance official of the state or calculate the value of an district in which this contract is accumulation unit in each delivered. Subaccount for the Valuation Period is determined by dividing (a) by CHARGES AND DEDUCTIONS (b) and subtracting (c) from the result, where: The Mortality and Expense Risk Fee and the Administrative Charge are (a) is the result of: each deducted both before and after the Annuity Commencement Date to (1) the net asset value of a compensate for changes in mortality fund share held in that and expenses not anticipated by the Subaccount determined as mortality and administration of the end of the current charges guaranteed in the valuation period; plus certificate. (2) the per share amount of Any applicable Service Charge is any dividend or capital deducted prior to the Annuity gain distributions made Commencement Date only. by the fund for shares held in that Subaccount Any applicable Distribution if the ax-dividend date Financing Charge is deducted prior occurs during the to the Annuity Commencement Date valuation period; plus or only, to compensate F or costs of minus distributing the policy. (3) a per share credit or If the Mortality and Expense Risk charge for any taxes Fee(s) and/or Distribution reserved for, which we Financing Charges are more than determine to have sufficient, the Company will retain resulted from the the balance as profit or reduce investment operations of these fees and charges in the that Subaccount. future. (b) is the net asset value of a ACCUMULATION UNITS fund share held in that Subaccount determined as of The Policy Value in the Separate the end of the immediately Account before the Annuity preceding valuation period. Commencement Date is represented by accumulation units. The dollar (c) is a factor representing the value of accumulation units for Mortality and Expense Risk Fee each Subaccount will change from and Administrative Charge day to day reflecting the before the Annuity investment experience of the Commencement Date, plus any Subaccount. applicable Distribution Financing Charge. This factor Premium payments allocated to and is less than or equal to, on any amounts transferred to the an annual basis, the sum of Subaccounts will be applied to the applicable percentages shown on page 3 of the daily net asset value of a fund share held in that Subaccount. Since the net investment factor may be greater or less than one, the accumulation unit value may increase or decrease. PB1032 PAGE 7 SECTION 7 - FIXED ACCOUNT FIXED ACCOUNT We reserve the right or new premium payments, transfers, or rollovers Premium payments applied to and any to offer or not to offer any GPO, amounts transferred to the Fixed except that we will always offer at Account will reflect a fixed least a one year GPO. interest rate. The interest rates we set will be credited for For purposes of crediting interest increments of at least one year when funds are withdrawn from or measured from each premium payment transferred into a GPO, the amount or transfer date. These rates will of the oldest premium payment or never be less than an effective rollover into that GPO is annual interest rate of 3%. considered to be withdrawn first. If the amount withdrawn exceeds GUARANTEED PERIODS this amount, the next oldest premium payment or rollover is We may offer optional Guaranteed considered to be withdrawn next, Period Options, into which premium and so on until the most recent payments may be paid or amounts premium payment or rollover is transferred. The current interest considered to be withdrawn (this is rate we set for funds entering each a "First-In, First-Out" or FIFO Guaranteed Period Option (GPO) is procedure). Premium payment(s) or guaranteed until the end of that rollover(s) are deemed to be option's Guaranteed Period. At that withdrawn first, then credited time, the premium payment made or interest. amount transferred into the GPO, less any withdrawals or transfers Partial withdrawals, Surrenders, from that GPO, plus accrued transfers, and amounts applied to a interest, will be rolled into a new Payment Option from the Guarantee GPO or may be transferred to any Period Option(s) are subject to an Subaccount(s) within the Separate Excess Interest Adjustment as Account (s). described in Section 5. You may choose the Investment DOLLAR COST AVERAGING FIXED ACCOUNT Option(s) you want the funds rolled OPTION into by giving us a written notice within 30 days before the end of We may offer a Dollar Cost the expiring option's Guaranteed Averaging (DCA) Fixed Account Period. However, any Guaranteed Option separate from the Guaranteed Period elected may not extend Period Options. This option will beyond the maximum Annuity have a one year interest rate Commencement Date defined in guarantee. The current interest Section 11. In the absence of such rate we set for the DCA Fixed election, the funds will be rolled Account may differ from the rates into a new GPO which is the same as credited on the one year GPO in the the expiring GPO unless that GPO is Fixed Account In addition, the no longer offered, in which case, current interest rate we credit may the next shorter GPO offered will vary on different portions of the be used. You will be mailed a DCA Fixed Account The credited notice of completion of the interest rate will never be less rollover with the new interest rate than the minimum effective annual applicable. The new GPO will be interest rate of 3%. The DCA Fixed deemed as accepted if we do not Account Option will only be receive a written rejection within available under a Dollar Cost 30 days from the postmark date of Averaging program as described in the completion notice. Section 8. SECTION 8 TRANSFERS A. TRANSFERS BEFORE THE ANNUITY apply to Policy Value transfers at COMMENCEMENT DATE the end of a Guaranteed Period. Prior to the Annuity Commencement Transfers of interest credited in Date, you may transfer the value of the GPOs to other Investment the accumulation units from one Options are allowed on a "First-In, Investment Option to another. You First-Out" basis. Such transfers must sign a notice to transfer may be made monthly, quarterly, which gives us the facts that we semi-annually, or annually. Each need. such transfer must be at least $50 and will not be subject to an Transfers of Policy Value from the Excess Interest Adjustment. Guaranteed Period Options (GPO) of the Fixed Account prior to the end Transfers of Policy Value from the of that GPO are subject to an Separate Account are subject to a Excess Interest Adjustment. If the minimum of $500 or the entire Excess Interest Adjustment at the Subaccount Policy Value, if less. time of such Policy Value transfer However, if the remaining is a negative adjustment, then the Subaccount Policy Value is less maximum Policy Value transfer is than $500, we reserve the right to 25% of that GPO's Policy Value, include that amount as part of the less Policy Values previously transfer. transferred out of that GPO during the current certificate year. If You may choose which GPO to the Excess Interest Adjustment at transfer to or from, however, any the time of such Policy Value GPO elected may not extend beyond transfer is a positive adjustment, the maximum Annuity Commencement no maximum will apply to such Date defined in Section 11. Policy Values transferred from the GPO. No Excess Interest Adjustment will V1021 PAGE 8 SECTION 8 - CONT No transfers will be allowed out of of the accumulation unit is high. the Dollar Cost Averaging Fixed However, there is no guarantee that Account Option except through the the Dollar Cost Averaging program Dollar Cost Averaging Option. will result in higher Policy Values or will otherwise be successful. We reserve the right to limit transfers to no more than 12 in any The Dollar Cost Averaging may be one Certificate Year. Any transfers discontinued after satisfying the in excess of 12 per Certificate minimum number of required Year may be charged a $10 per transfers by sending written notice transfer fee. Transfers among to us. While Dollar Cost Averaging multiple Investment Options will be is in effect, Asset Rebalancing is treated as one transfer in not available. determining the number of transfers that have occurred. We also reserve ASSET REBALANCING the right to prohibit transfers to the Fixed Account if we are Prior to the Annuity Commencement crediting an effective annual Date, you may instruct us to interest rate of 3%. automatically transfer amounts among the Subaccounts of the DOLLAR COST AVERAGING OPTION Separate Account on a regular basis to maintain a desired allocation of Prior to the Annuity Commencement the Policy Value among the various Date, you may instruct us to Subaccounts offered. Rebalancing automatically transfer a specified will occur on a monthly, quarterly, amount from the Dollar Cost semi-annual or annual basis, Averaging (DCA) Fixed Account beginning on a date selected. You Option or from the Dollar Cost must select the percentage of the Averaging Subaccount(s), if any, Policy Value desired in each of the shown on page 3 to any various Subaccounts offered Subaccount(s) of the Separate (totaling 100%). Any amounts in the Account. The automatic transfers Fixed Account are ignored for the can occur monthly or quarterly. If purposes of asset rebalancing. the Dollar Cost Averaging request Rebalancing can be started, stopped is received prior to the 28th day or changed at any time. Asset of any month, the first transfer Rebalancing is not available while will occur on the 28th day of that Dollar Cost Averaging is in effect. month. If the Dollar Cost Averaging Rebalancing will cease as soon as request is received on or after the we receive a request for any other 28th day of any month, the first transfer. transfer will occur on the 28th day of the following month. B. TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE Prior to the Annuity Commencement Date, no transfers, (except through After the Annuity Commencement Dollar Cost Averaging) will be Date, you may transfer the value of allowed from a DCA Fixed Account the variable annuity units from one Transfers will continue until the Subaccount to another within the elected Subaccount or DCA Fixed Separate Account or to the Fixed Account value is depleted. The Account If you want to transfer the amount transferred each time must value of the variable annuity be at least 5500. All transfers units, you must tell us in a signed from the DCA account will be the notice which gives us the facts same amount as the initial that we need. We reserve the right transfer. Changes to the amount to limit transfers between the transferred will only be allowed Subaccounts or to the Fixed when additional premium is Accounts to once per Certificate allocated or a new amount is Year. transferred into the DCA Account Changes to the Subaccounts to which The minimum amount which may be these transfers are allocated are transferred is the lesser of $10O not restricted. Transfers must be monthly income or the entire scheduled for at least 6 but not monthly income of the variable more than 24 months or for at least annuity units in the Subaccount 4 but not more than 8 quarters each from which the transfer is being time the Dollar Cost Averaging made. If the monthly income of the program is started or restarted remaining units in a Subaccount is following termination of the less than $ 10, we have the right program for any reason. to include the value of those variable annuity units as part of Dollar Cost Averaging results in the transfer. the purchase of more accumulation units when the value of the After the Annuity Commencement accumulation unit is low, and fewer Date, no transfers may be made from accumulation units when the value the Fixed Account to any other Investment Options. VB1021 PAGE 9 SECTION 9 - DEATH PROCEEDS A. DEATH PROCEEDS PRIOR TO II. Annuitant and Certificate ANNUITY COMMENCEMENT DATE Owner are different and the Annuitant dies. The amount of death proceeds will be the greater of the Cash Value, When we have due proof that the Policy Value, or any guaranteed the Annuitant died prior to minimum death benefit. the Annuity Commencement Date, the Certificate Owner will If no payment option is selected by become the new Annuitant and the date of death, the beneficiary no death proceeds are payable. may make such election within one If the Certificate Owner is year of the date we receive due also the deceased Annuitant's proof of death. The beneficiary may surviving spouse, an amount elect to receive the death proceeds equal to the excess, if any, as a lump sum payment or may use of any guaranteed minimum the death proceeds to provide any death benefit over the Policy of the annuity payment options Value will then be added to described in Section 10. Interest the Policy Value. This amount on death proceeds will be paid as will be added only once at the required by law. time of such election. Furthermore, all future B. DEATH PRIOR TO ANNUITY Surrender Charges will be COMMENCEMENT DATE waived. Death proceeds are payable However, in lieu of becoming contingent upon the relationships the new Annuitant, the between the Certificate Owner, Certificate Owner may elect to Annuitant, successor Certificate have the death proceeds Owner and beneficiary as outlined distributed to the beneficiary below. The Certificate must be on the death of the Annuitant surrendered upon settlement and This election must be in will be terminated upon receiving writing and must be received proof of death. by us prior to the Annuitant's death. In such case, when we I. Certificate Owner is also the have due proof that the Annuitant. Annuitant died prior to the Annuity Commencement Date, we When we have due proof that the will provide the death Certificate Owner died before proceeds to the beneficiary. the Annuity Commencement Date, we will provide the death a) If the Certificate Owner proceeds to the beneficiary. has elected to have the death proceeds paid as a a) Beneficiary is the deceased lump sum, the beneficiary Certificate Owner's must, within 60 days of our surviving spouse. The receipt of due proof of the beneficiary may elect to Annuitant's death, either: continue the Certificate rather than receiving the 1) receive the lump sum death proceeds. If the proceeds; or Certificate is continued, an amount equal to the excess, 2) elect to receive annuity if any, of any guaranteed payments. Such payments minimum death benefit over must begin within one year the Policy Value will then of our receipt of due proof be added to the Policy of the Annuitant's death Value. This amount will be and must be made for a added only once, at the time period certain or for this of such election. beneficiary's lifetime, so Furthermore, all future long as any period certain Surrender Charges will be does not exceed this waived. beneficiary's life expectancy. If this beneficiary elects to have the death proceeds b) Death proceeds which are paid, the death proceeds not paid to or for the must be distributed: benefit of a natural person must be distributed by the (1) by the end of 5 years end of 5 years after the after the date of the date of the Annuitant's deceased Certificate Owner's death. death, or III. Annuitant and Certificate (2) payments must begin no Owner are different and the later than one year after Certificate Owner dies. the deceased Certificate Owner's death and must be If the Certificate Owner dies made for a period certain or prior to the Annuity for this beneficiary's Commencement Date and before lifetime, so long as any the entire interest in the period certain does not Certificate is distributed, exceed this beneficiary's the successor Certificate life expectancy. Owner will become the new Certificate Owner. The b) Beneficiary is not the remaining portion of any deceased Certificate Owner's interest in the policy must be surviving spouse. The death distributed to the extent proceeds must be distributed provided below in III.a), as provided in l.a)(1) or III.b), III.c), or III.d). l.a)(2) above. c) Death proceeds which are not a) Successor Certificate Owner paid to or for the benefit is the deceased Certificate of a natural person must be Owner's surviving spouse. distributed by the end of 5 The successor Certificate years after the date of the Owner may elect to continue deceased Certificate Owner's this Certificate rather death. than receive the Adjusted Policy Value. If the Certificate is continued, all future Surrender Charges will be waived if the successor Certificate Owner elects to receive the Adjusted Policy Value, the Adjusted Policy Value must be distributed: S956 PAGE 10 SECTION 9 - CONT (1) by the end of 5 years after IV. More than one Certificate Owner. the date of the deceased Certificate Owner's death,or If there is more than one Certificate Owner, then the (2) payments must begin no death of any Certificate Owner later than one year after the will be treated the same as deceased Certificate Owner's the death of the Certificate death and must be made for a Owner. period certain or for the successor Certificate Owner's D. DEATH ON OR AFTER THE ANNUITY lifetime, so long as any period COMMENCEMENT DATE certain does not exceed the successor Certificate Owner's The death proceeds on or after the life expectancy. Annuity Commencement Date depend on the payment option selected. If any b) Successor Certificate Owner is Certificate Owner dies on or after not the deceased Certificate the Annuity Commencement Date, but Owner's surviving spouse. The before the entire interest in the Adjusted Policy Value must be Certificate is distributed, the distributed as provided in remaining portion of such interest III.a)(1) or III.a)(2) above. in the Certificate will be distributed at least as rapidly as c) Successor Certificate Owner is under the method of distribution not a natural person. The being used as of the date of that Adjusted Policy Value must be Certificate Owner's death. distributed as provided in III.a)(1) above. E. AN OWNER IS NOT AN INDIVIDUAL d) No successor Certificate Owner In the case of a non tax-qualified survives the deceased annuity, if any Certificate Owner Certificate Owner. The deceased or beneficial Certificate Owner is Certificate Owner's estate will not an individual, then for become the new Certificate Owner purposes of the federal income tax (or the estate may name a new mandatory distribution provisions Certificate Owner). The executor in subsection C or D above, (1) the or Administrator must be named Annuitant will be treated as the in a form acceptable to Certificate Owner of the us. The Adjusted Policy Value Certificate, and (2) if there is must be distributed by the any change in the Annuitant, such a end of 5 years after the date change will be treated as the death of the deceased Certificate of the Certificate Owner. Owner's death. SECTION 10 - ANNUITY PAYMENTS A. GENERAL PAYMENT PROVISIONS the adjusted age of the Annuitant The adjusted age is the Annuitant's Payment actual age on the Annuitant's nearest birthday, at the Annuity If the Certificate is in force on Commencement Date, adjusted as the Annuity Commencement Date, we follows: will use the Fixed Account portion and/or the Separate Account portion Annuity of the Adjusted Policy Value to Commencement Adjusted Age make annuity payments to the Payee Date under Option 3 and/or 3-V, ------------ ------------ respectively, with 10 years Before 2001 Actual Age certain, or if elected, under one 2001 - 2010 Actual Age minus 1 or more of the other options 2011 - 2020 Actual Age minus 2 described in this section. However, 2021 - 2030 Actual Age minus 3 the option(s) elected must provide 2031 - 2040 Actual Age minus 4 for lifetime income or income for a After 2040 Actual Age minus 5 period of at least 60 months. The Certificate Owner will become the Election of Optional Method of Annuitant at the Annuity Payment Commencement Date. Payments will be made at 1, 3,6 or 12 month Before the Annuity Commencement intervals. We reserve the right to Date the Certificate Owner can change the frequency of payments to elect or change a payment option. avoid making payments of less than The Certificate Owner may elect, in $50. a signed notice which gives us the facts that we need, annuity Before the Annuity Commencement payments that may be either Date, if the death proceeds become variable, Fixed, or a combination payable or if the Certificate is of both. If a combination is surrendered, we will pay any elected, they must also tell us proceeds in one sum, or if elected, what part of the proceeds on the all or part of these proceeds may Annuity Commencement Date are to be be placed under one or more of the applied to provide each type of options described in this section. payment (It must also specify which If we agree, the proceeds may be Subaccounts.) The amount of a placed under some other method of combined payment will be the sum of payment instead. the variable and fixed payments. Payments under a variable payment Adjusted Age option will refelect the investment performance of the selected Payments under Options 3 and 5, and Subaccount of the Separate Account. the first payment under Options 3-V and 5-V are determined based on SB956 PAGE 11 SECTION 10 - ANNUITY PAYMENTS - CONT Payee Certificate Owner will agree on withdrawal rights when you elect Unless specified otherwise, the this option. The interest rate we Payee shall be the Annuitant, or declare for this option may be the beneficiary as specified in the different than the interest rate(s) Beneficiary provision. credited prior to the Annuity Commencement Date. Proof of Age Option 2 - Income for a Specified We may require proof of the age of Period any person who has an annuity purchased under Options 3, 3-V, 5 We will make level payments only and 5-V of this section before we for the fixed period you choose. In make the first payment. the event of the death of the person receiving payments prior to Minimum Proceeds the end of the fixed period elected, payments will be continued If the proceeds are less than to that person's beneficiary or $2,000, we reserve the right to pay their present value may be paid in them out as a lump sum instead of a single sum. No funds will remain applying them to a payment option. at the end. Premium Tax Option 3 - Life Income - You may choose between: We may be required by law to pay premium tax on the amount applied 1. No Period Certain - We will to a payment option. If the make level payments only requirement is applicable to the during the Annuitant's issue state, we will deduct the lifetime. premium tax before applying the proceeds. 2. 10 Years Certain - We will make level payments only B. FIXED ACCOUNT PAYMENTS during the Annuitant's lifetime or ten years. Guaranteed Payment Options 3. Guaranteed a Return of Policy The fixed account payment is Proceeds - We will make level determined by multiplying each payments for the longer of the $1,000 of proceeds allocated to a Annuitant's lifetime or until fixed Payment Option by the amounts the total dollar amount of shown on page 12 for the option payments we made to you equals selected. Options 1, 2 and 4 are the amount applied to this based on a guaranteed interest rate option. of 3%. Option 4 - Income of a Specified Options 3 and 5 are based on a Amount guaranteed interest rate of 3% and the "1983 Table a" (male, female, Payments are made for any specified and unisex if required by law) amount until the amount applied to mortality table improved to the this option, with interest, are year 2000 with projection scale G. exhausted. This will be a series of (The "1983 Table a" mortality rates level payments followed by a are adjusted based on improvements smaller final payment In the event in mortality since 1983 to more of the death of the person appropriately ref elect increased receiving payments prior to the longevity. This is accomplished time proceeds with interest are using a set of improvement factors exhausted, payments will be referred to as projection scale G.) continued to that person's beneficiary or their present value Option 1 - Interest Payments may be paid in a single sum. We will pay the interest on the Option 5 - Joint and Survivor amount we use to provide annuity Annuity payments in equal payments or this amount may be left to accumulate Payments are made during the joint for a period of time we and the lifetime of the Payee and a joint Certificate Owner agree to. We and Payee of your selection. Payments the will be made as long as either person is living. Current Payment Options The amounts shown in the tables on page 12 are the guaranteed amounts. Current amounts offered to individuals of the same class may be obtained from us. S960 PAGE 11 (A) SECTION 10 - CONT C. VARIABLE ACCOUNT PAYMENT OPTIONS the percentage shown on page 3 of the daily net asset value Variable Annuity Units of a fund share held in the Separate Account for that The proceeds chosen by the Subaccount. Certificate Owner to apply to a variable payment option will be Determination of the First Variable used to purchase variable annuity Payment units in Subaccounts chosen by the Certificate Owner. The dollar value The amount of the first variable of variable annuity units in the payment is determined by chosen Subaccounts will increase or multiplying each $ 1,000 of decrease reflecting the investment proceeds allocated to a variable experience of the chosen payment option by the amounts shown Subaccounts. The value of a on page 13 for the variable option variable annuity unit in a you select The tables are based on particular Subaccount on any a 5% effective annual Assumed business day is equal to (a) Investment Return and the " 1983 multiplied by (b) multiplied by Table a" (male, female, and unisex (c), where: if required by law) mortality table improved to the year 2000 with (a) is the variable annuity unit projection scale G. (The " 1983 value for that Subaccount on Table a" mortality rates are the immediately preceding adjusted based on improvements in business day; mortality since 1983 to more appropriately ref elect increased (b) is the net investment factor longevity. This is accomplished for that Subaccount for the using a set of improvement factors Valuation Period; and referred to as projection scale G.) (c) is the Assumed Investment Option 3V- Life Income Return adjustment factor for the Valuation Period. You may choose between: The Assumed Investment Return 1. "No Period Certain" - Payments adjustment factor for the valuation will be made only during the period is the product of discount lifetime of the Annuitant. factors of .99986634 per day to recognize the 5.0% effective annual 2. "10 Years Certain" - Payments Assumed Investment Return. will be made for the longer of the Annuitant's lifetime or The net investment factor used to ten years. In the event of the calculate the value of a variable death of the person receiving annuity unit in each Subaccount for payments prior to the end of the Valuation Period is determined the period for which the by dividing (a) by (b) and election was made, payments subtracting (c) from the result, will be continued to that where: person's beneficiary or their present value may be paid in a (a) is the net result of: single sum. (1) the net asset value of a Option 5V - Joint and Survivor fund share held in that Annuity Subaccount determined as of the end of the current Payments are made as long as either valuation period; plus the Payee or the joint Payee is living. (2) the per share amount of any dividend or capital Determination of Subsequent gain distributions made Variable Payments by the fund for shares held in that Subaccount The amount of each variable annuity if the ex-dividend date payment after the first will occurs during the increase or decrease according to Valuation Period; plus or the value of the variable annuity minus units which reflect the investment (3) a per share credit or experience of the selected charge for any taxes Subaccounts. Each variable annuity reserved for, which we payment after the first will be determine to have equal to the number of variable resulted from the annuity units in the selected investment operations of Subaccounts multiplied by the the Subaccount. variable annuity unit value on the date the payment is made. The (b) is the net asset value of a number of variable annuity units in fund share held in that each selected Subaccount is Subaccount determined as of determined by dividing the first the end of the immediately variable annuity payment allocated preceding Valuation Period. to the Subaccount by the variable annuity unit value of that (c) is a factor representing the Subaccount on the Annuity Mortality and Expense Risk Fee Commencement Date. and Administrative Charge applicable after the Annuity Commencement Date. This factor is less than or equal to, on an annual basis, SB960 PAGE 11 (B) GUARANTEED FIXED ACCOUNT PAYMENT OPTIONS The amounts shown in these tables are the guaranteed amounts for each $1,000 of the proceeds. Higher current amounts may be available at the time of settlement.
- ---------------------------------------------------------------------------------------------------------------------- Option 2, Table I Option 3, Table II Option 3, Table III Option 3, Table IV - --------------------------- --------------------------------------------------------------------------------- Monthly Installment for Number Amount of Monthly Installment For Monthly Installment for Guaranteed Return Of Years Monthly Life No Period Certain Life 10 Years Certain of Proceeds Payable Installment ------------------------------------------------------------------------------------------ Age* Male Female Unisex Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70 $3.73 $3.49 $3.61 51 3.93 3.60 3.77 3.90 3.59 3.75 3.79 3.53 3.66 52 4.00 3.65 3.83 3.97 3.64 3.81 3.84 3.58 3.71 53 4.07 3.71 3.90 4.04 3.70 3.87 3.90 3.63 3.76 5 $ 17.91 54 4.15 3.77 3.97 4.11 3.75 3.94 3.96 3.68 3.82 6 15.14 55 4.23 3.83 4.04 4.19 3.82 4.01 4.03 3.73 3.88 7 13.16 56 4.32 3.90 4.11 4.27 3.88 4.08 4.10 3.79 3.94 8 11.68 57 4.41 3.97 4.19 4.35 3.95 4.15 4.17 3.85 4.00 9 10.53 58 4.50 4.05 4.28 4.44 4.02 4.24 4.24 3.91 4.07 10 9.61 59 4.61 4.13 4.37 4.53 4.10 4.32 4.32 3.97 4.14 11 8.86 60 4.72 4.21 4.47 4.63 4.18 4.41 4.40 4.04 4.22 12 8.24 61 4.84 4.30 4.57 4.74 4.26 4.51 4.49 4.12 4.30 13 7.71 62 4.96 4.40 4.68 4.85 4.35 4.61 4.58 4.19 4.38 14 7.26 63 5.10 4.50 4.80 4.97 4.45 4.71 4.68 4.28 4.47 15 6.87 64 5.24 4.61 4.93 5.09 4.55 4.83 4.78 4.36 4.56 16 6.53 65 5.40 4.73 5.06 5.22 4.66 4.95 4.88 4.45 4.66 17 6.23 66 5.56 4.85 5.21 5.36 4.77 5.07 4.99 4.55 4.76 18 5.96 67 5.74 4.99 5.36 5.50 4.89 5.20 5.11 4.65 4.87 19 5.73 68 5.93 5.13 5.53 5.65 5.02 5.34 5.24 4.76 4.98 20 5.51 69 6.13 5.29 5.71 5.80 5.15 5.49 5.37 4.87 5.10 70 6.34 5.45 5.90 5.96 5.30 5.64 5.51 4.99 5.23 - ----------------------------------------------------------------------------------------------------------------------
Option 5, Table V - ---------------------------------------------------------------------------------------------------------------------- Monthly Installment For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.31 4.53 4.77 5.02 - ---------------------------------------------------------------------------------------------------------------------- Monthly Installment For Unisex Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Joint Annuitant* First ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than First First First First First First First - ---------------------------------------------------------------------------------------------------------------------- 50 $3.04 $3.09 $3.15 $3.21 $3.27 $3.33 $3.39 55 3.17 3.24 3.32 3.40 3.48 3.56 3.63 60 3.34 3.44 3.54 3.64 3.75 3.85 3.95 65 3.57 3.70 3.83 3.97 4.11 4.26 4.39 70 3.87 4.04 4.22 4.42 4.62 4.82 5.01 - ---------------------------------------------------------------------------------------------------------------------- *Adjusted Age as defined in Section 10.A. - ----------------------------------------------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments under Option 2 shall be monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and for Options 3 and 5 the monthly installment shown multiplied by 11.80, 5.95 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. T825 PAGE 12 VARIABLE PAYMENT OPTIONS BASED ON ASSUMED INVESTMENT RETURN The amounts shown in these tables are the initial payment amounts based on a 5.0% Assumed Investment Return for each $1,000 of the proceeds.
- ---------------------------------------------------------------------------------------------------------------------- Option 3-V, Table II Option 3-V, Table III - --------------------------- --------------------------------------------------------------------------------- Monthly Installment For Monthly Installment for Life No Period Certain Life 10 Years Certain ------------------------------------------------------------------------------------------ Age* Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $5.11 $4.81 $4.96 $5.07 $4.79 $4.94 51 5.17 4.85 5.02 5.13 4.83 4.99 52 5.24 4.90 5.07 5.19 4.88 5.04 53 5.31 4.95 5.13 5.25 4.93 5.10 54 5.38 5.01 5.20 5.32 4.98 5.16 55 5.46 5.06 5.26 5.39 5.04 5.22 56 5.54 5.12 5.34 5.47 5.09 5.28 57 5.63 5.19 5.41 5.54 5.16 5.36 58 5.72 5.26 5.49 5.63 5.22 5.43 59 5.82 5.34 5.58 5.72 5.29 5.51 60 5.93 5.42 5.68 5.81 5.37 5.60 61 6.04 5.50 5.78 5.91 5.44 5.69 62 6.17 5.60 5.89 6.02 5.53 5.78 63 6.30 5.69 6.00 6.13 5.62 5.88 64 6.44 5.80 6.13 6.25 5.71 5.99 65 6.60 5.91 6.26 6.37 5.82 6.10 66 6.76 6.04 6.40 6.50 5.92 6.22 67 6.94 6.17 6.56 6.63 6.04 6.35 68 7.13 6.31 6.72 6.77 6.16 6.48 69 7.33 6.46 6.90 6.92 6.29 6.62 70 7.55 6.63 7.09 7.07 6.43 6.76 - ----------------------------------------------------------------------------------------------------------------------
Option 5V, Table V - ---------------------------------------------------------------------------------------------------------------------- Monthly Installment For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $4.32 $4.36 $4.41 $4.46 $4.51 $4.57 $4.62 55 4.42 4.47 4.53 4.60 4.67 4.75 4.83 60 4.54 4.62 4.70 4.80 4.90 5.01 5.12 65 4.71 4.82 4.94 5.07 5.22 5.37 5.53 70 4.95 5.10 5.27 5.46 5.67 5.89 6.13 - ---------------------------------------------------------------------------------------------------------------------- Monthly Installment For Unisex Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Joint Annuitant* First ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than First First First First First First First - ---------------------------------------------------------------------------------------------------------------------- 50 $4.40 $4.45 $4.50 $4.55 $4.61 $4.67 $4.72 55 4.52 4.59 4.66 4.73 4.81 4.89 4.96 60 4.69 4.78 4.87 4.97 5.08 5.19 5.29 65 4.91 5.04 5.17 5.31 5.46 5.62 5.77 70 5.22 5.40 5.59 5.79 6.02 6.24 6.47 - ---------------------------------------------------------------------------------------------------------------------- *Adjusted Age as defined in Section 10.A. - ----------------------------------------------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments shall be the monthly installment shown for Options 3-V and 5-V multiplied by 11.70, 5.93 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. TB828 PAGE 13 SECTION 11 GENERAL PROVISIONS PARTICIPANT CERTIFICATES 3. Amend or modify this Certificate with our consent. We will issue a Certificate to each 4. Receive annuity payments or Participant. name a Payee to receive the payments. MODIFICATION OF CONTRACT 5. Exercise, receive and enjoy every other right and benefit No change in this Certificate or contained in this Certificate. the Group Contract is valid unless made in writing by us and approved The use of these rights may be by one of our officers. No subject to the consent of any registered representative has assignee or irrevocable authority to change or waive any beneficiary; and of the spouse in a provision of the Group Contract or community or marital property this Certificate. state. TAX QUALIFICATION Unless we have been notified of a community or marital property This Certificate is intended to interest in this Certificate, we qualify as an annuity contract for will rely on our good faith belief federal income tax purposes. The that no such interest exists and provisions of this Certificate are will assume no responsibility for to be interpreted to maintain such inquiry. qualification. To maintain such tax qualification, we reserve the right SUCCESSOR CERTIFICATE OWNER to amend this Certificate to reflect any clarifications that may A successor Certificate Owner can be needed or are appropriate to be named in any enrollment form, or maintain such tax qualification or in a notice you sign which gives us to conform this Certificate to any the facts that we need. The applicable changes in the tax successor Certificate Owner will qualification requirements. We will become the new Certificate Owner send the Certificate Owner a copy when you die, if you die before the in the event of any such amendment Annuitant If no successor If such an amendment is refused, it Certificate Owner survives you and must be by giving us written you die before the Annuitant, your notice, and refusal may result in estate will become the new adverse tax consequences. Certificate Owner. NON -PARTICIPATING CHANGE OF OWNERSHIP The Group Contract and Group In the case of a non-tax qualified Certificates will not share in our annuity, you can change the surplus earnings. Certificate Owner of this Certificate from yourself to a new AGE OR SEX CORRECTIONS Certificate Owner, in a notice you sign which gives us the facts that If the age or sex of the Annuitant we need. When this change takes has been misstated, the benefits effect, all rights of ownership in will be those which the premiums this Certificate will pass to the paid would have purchased for the new Certificate Owner. correct age and sex. If required by law to ignore differences in the A change of Certificate Owner or sex of the Annuitant, the payment successor Certificate Owner will options will be determined using not be effective until it is the unisex factors in Section 10. recorded in our records. After it has been so recorded, the change Any underpayment made by us will be will take effect as of the date you paid with the next payment Any signed the notice. However, if the overpayment made by us will be Annuitant dies before the notice deducted from future payments. Any has been so recorded, it will not underpayment or overpayment, will be effective as to those proceeds include interest at 5% per year, we have paid before the change was from the date of the wrong payment recorded in our records. We may to the date of the adjustment. require that the change be endorsed in the Certificate. Changing the INCONTESTABILITY Certificate Owner or naming a new successor Certificate Owner cancels This Certificate shall be any prior choice of successor incontestable from the Certificate Certificate Owner, but does not Date. change the beneficiary or the Annuitant. EVIDENCE OF SURVIVAL ANNUITY COMMENCEMENT DATE We have the right to require satisfactory evidence that a person The Annuity Commencement Date is was alive if a payment is based on the date annuity payments begin. that person being alive. No payment This date may not be later than the will be made until we receive the last day of the Certificate month evidence. starting after the Annuitant attains age 85, except as expressly SETTLEMENT allowed by us, but in no event later than the last day of the Any payment by us under this Certificate month following the Certificate is payable at our Home month in which the Annuitant Office. attains age 95. You may change the Annuity Commencement Date at any RIGHTS OF CERTIFICATE OWNER time before the Annuity Commencement Date by giving us 30 You may, while the Annuitant is days' written notice. living: 1. Assign this Certificate. 2. Surrender this Certificate to us. H690 PAGE 14 SECTION 11 - CONT ASSIGNMENT at the time the death proceeds become payable. If there is more (a) In the case of a non-tax than one beneficiary and you failed qualified annuity, this to specify their interest, they Certificate may be assigned. will share equally. Payment will be The assignment must be in made to the named contingent writing and filed with us. beneficiary(ies) only if all primary beneficiaries have died (b) We assume no responsibility before the death proceeds become for the validity of any payable. If any primary beneficiary assignment Any claim made is alive at the time the death under an assignment shall be proceeds become payable, but dies subject to proof of interest before receiving their payment, and the extent of the their share will be paid to their assignment. estate. (c) This Certificate may be In cases where the annuitant dies applied for and issued to and the Certificate Owner (who is qualify as a tax-qualified not the annuitant) elected to annuity under certain sections receive the death proceeds in of the Internal Revenue Code. accordance with Section 9, if the This will be specified in the annuitant's estate has been named enrollment form, or as beneficiary, then payment will information provided in lieu be made to the Certificate Owner. thereof. Ownership of this Certificate then is restricted PROTECTION OF PROCEEDS so that it will comply with provisions of the Internal Unless you so direct by filing Revenue Code. written notice with us, no beneficiary may assign any payments Assignment of this Certificate may under this Certificate before the result in adverse tax consequences. same are due. To the extent permitted by law, no payments under BENEFICIARY this Certificate will be subject to the claims of creditors of the Death proceeds, when payable in Certificate Owner or any accordance with Section 9, are beneficiary. payable to the designated beneficiary or beneficiaries. Such DEFERMENT beneficiary(ies) must be named in the enrollment form, or information We will pay any Partial Withdrawals provided in lieu thereof, and may or surrender proceeds from the be changed without consent (unless Separate Account(s) within 7 days irrevocably designated or required after we receive all requirements by law) by notifying us in writing that we need. However, it may on a form acceptable to us. The happen that the New York Stock change will take effect upon the Exchange is closed for trading date signed, whether or not you are (other than the usual weekend or living when we receive it The holiday closings), or the notice must have been postmarked Securities and Exchange Commission (or show other evidence of delivery restricts trading or determines that is acceptable to us) on or that an emergency exists. If so, it before the date of death. The most may not be practical for us to recent change of beneficiary notice determine the investment experience will replace any prior beneficiary of the Separate Account In that designations. No change will apply case, we may defer transfers among to any payment we made before the the Subaccounts and to the Fixed written notice was received. If an Account, and determination or irrevocable beneficiary dies, you payment of Partial Withdrawals or may designate a new beneficiary. surrender proceeds. You may direct that the beneficiary When permitted by law, we may defer shall not have the right to paying any Partial Withdrawals or withdraw, assign or commute any sum surrender proceeds from the Fixed payable under an option. In the Account for up to 6 months from the absence of such election or date we receive the request. If the direction, the beneficiary may Certificate Owner dies after the change the manner of payment or request is received, but before the make an election of any option. request is processed, the request will be processed before the death If any primary or contingent proceeds are determined. Interest beneficiary dies before the will be paid on any amount deferred Annuitant, that beneficiary's for 30 days or more. This rate will interest in this Certificate ends be computed at the rate of interest with that beneficiary's death Only currently paid on proceeds left those beneficiaries living at the under the Interest Payments time of the Annuitant's death will Settlement Option. be eligible to receive their share of the Death Proceeds. In the event REPORTS TO OWNER no contingent beneficiaries have been- named and all primary We will give you an annual report beneficiaries have died before the at least once each Certificate death proceeds become payable, the Year. This report will show the Certificate Owner(s) will become number and value of the the beneficiary(ies) unless elected accumulation units held in each of otherwise in accordance with the Subaccounts as well as the Section 9. If both primary and value of the Fixed Account. It will contingent beneficiaries have been also give you the Death Benefit, named, payment will be made to the Cash Value, and any other facts named primary beneficiaries living required by law or regulation. J690 PAGE 15 [LOGO PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 LUMP SUM PARTIAL WITHDRAWAL OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [2nd] Certificate Year, amounts ($500, minimum) up to [10%] of the Policy Value immediately prior to the Partial Withdrawal are available as a Lump Sum distribution once per Certificate Year with no Surrender Charges and no Excess Interest Adjustment. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to ail the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1051 199 [LOGO PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM DEATH BENEFIT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. The Death Proceeds Prior to Annuity Commencement Date provision in Section 9, Death Proceeds, is replaced with the following language: The amount of the death proceeds will be the greatest of (a), (b), or (c) where: (a) is the Policy Value on the date we receive due proof of death and an election of a method of settlement; (b) is the Cash Value on the date we receive due proof of death and an election of a method of settlement, and; (c) is the Guaranteed Minimum Death Benefit (GMDB), plus any additional premium payments received, less any Gross Partial Withdrawals from the date of death to the date of payment of death proceeds. If no payment option is selected by the date of death, the beneficiary may make such election within 60 days of the date we receive due proof of death. The beneficiary may elect to receive the death proceeds as a lump sum payment or may use the death proceeds to provide any of the annuity payment options described in Section 10. Interest on death proceeds will be paid as required by law. The Guaranteed Minimum Death Benefit is the Double Enhanced Death Benefit The GMDB is the greater of (1) and (2) where: (1) is a [5%] Annually Compounding Death Benefit, equal to: a) the total premiums paid for the Certificate; minus b) Adjusted Partial Withdrawals (as described below); plus c) interest accumulated a [5%] per annum from the payment or withdrawal date to the earlier of the date of death or the Certificate Owner's [81st] birthday. (2) is a Step-Up Death Benefit, equal to: a) the largest Policy Value on the Certificate Date or [any] Certificate [Anniversary] prior to the earlier of the date of death or the Certificate Owner's [81st] birthday; plus b) any Premium Payments made since then, minus any Adjusted Partial Withdrawals made since then. If the Certificate Owner is a nonnatural person, or if the Certificate Owner has elected to have the death proceeds paid upon the death of the annuitant, the Guaranteed Minimum Death Benefit will be based upon the annuitant's age. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an Adjustment Factor. The Adjustment Factor is equal to the amount of the death proceeds prior to the Partial Withdrawal divided by the Policy Value prior to the Partial Withdrawal. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1060 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 SYSTEMATIC PAYOUT OPTION This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Partial Withdrawals provision in Section 5, Cash Value and Partial Withdrawals, is amended to include the following language: Beginning in the [1st] Certificate Year, a Systematic Payout Option (SPO) is available on a monthly, quarterly, semi-annual or annual basis. SPO payouts must be at least $50 and may not exceed 10% of the Policy Value at the time a SPO payout is made divided by the number of payouts made per year (e.g. 12 for monthly). No Surrender Charges or Excess Interest Adjustment will apply to the SPO payout Monthly and quarterly payouts must be sent through electronic funds transfer directly to your checking or savings account. The Certificate Owner may start or stop SPO payouts at any time; however, 30 days written notice is required to stop SPO payouts. Once stopped, the Certificate Owner must wait until the first day of the next Certificate Year to begin a new SPO. Once the Certificate Owner has elected a SPO, the Certificate Owner must wait a minimum time before the first SPO payment: one month for a monthly SPO, three months for quarterly, six months for semi-annual, or twelve months for annual. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1064 199 [LOGO OF PFL APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 SERVICE CHARGE WAIVER This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate Data page. The Service Charge provision in Section 4, Policy Value, is amended to include the following language: The Service Charge will not be deducted on a Certificate Anniversary or at the time of surrender if, at such time, either (1) the sum of all premium payments made less the sum of all withdrawals taken equals or exceeds [$50,000] or (2) the Policy Value equals or exceeds [$50,000] This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1074 199 [LOGO OF PFL APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 PREMIUM ENHANCEMENT This Rider is a part of the Contract/Certificate if it is shown in the Schedule of Additional Benefits section on the Contract/Certificate page. Section 3, Premium Payments, is amended to include the following language: PREMIUM ENHANCEMENT When a Premium Payment is paid, a Premium Enhancement Percentage of [25%] to [5%] will be applied to that Premium Payment and the resulting amount will be added to the Policy Value. The amount of the Premium Enhancement is not considered a Premium Payment The Premium Enhancement Percentage may vary from premium to premium on subsequent Premium Payments, but will never be less than 0.25% more than [5%]. The Premium Enhancement Percentage applicable to the Initial Premium is set forth on the Certificate Data Page. We will advise You of the amount of the Premium Enhancement applicable to each subsequent Premium Payment in a confirmation that We will send to You. No Premium Enhancement will apply if the Certificate is cancelled pursuant to the Right to Cancel provision. This Rider takes effect and expires concurrently with the Contract/Certificate to which it is attached and is subject to all the terms and conditions of the Contract/Certificate not inconsistent herewith. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT AE 1075 199 [LOGO OF PFL LIFE APPEARS HERE] PFL Life Insurance Company A Stock Company Home Office located at 4333 Edgewood Road N.E, Cedar Rapids, Iowa 52499 (Hereafter called the Company, we, our or us) (319) 398-8511 GUARANTEED MINIMUM INCOME BENEFIT RIDER This rider provides your variable annuity with a Minimum Annuitization Value which can only be used with the Annuity Factors shown in Schedule l of this rider. This Minimum Annuitization value is guaranteed by us, regardless of the performance of the variable annuity's investments. This rider is attached to and made part of your Certificate as of the Rider Date. This rider may only be terminated as provided herein. This rider is subject to all of the provisions in the Certificate that do not conflict with the provisions of this rider. The Rider Payment Options provide for variable annuity payments. Subsequent payments may fluctuate with the investment performance of Your annuity Subaccounts, but will never be less than the initial payment. Certificate Number: [123456] Rider Date: [05-01-1999] Last Date To Upgrade: [07-15-2038] Annual Growth Rate: [3.00%] Guaranteed Minimum Income Benefit: Rider Fee Percentage: [0.50%] First Date to Elect Benefit: [07-15-2009] Rider Fee Waiver Last Date to Elect Benefit [12-31-2048] Threshold: [250%] Mortality and Expense Risk Fee and Administrative Charge after the Election Date: [3.50%]
Minimum Annuitization Guaranteed Minimum Rider Date Age Value* Monthly Payment** ----------- -------- --------------------- --------------------- [ 07/15/ 1998 35 $100,000.00 N/A ] Election Date [ 07/15/2008 45 $134,391.64 $479.78 ] [ 07/15/2009 46 $138,423.39 $501.09 ] [ 07/15/2010 47 $142,576.09 $523.25 ] [ 07/15/2011 48 $146,853.37 $547.76 ] [ 07/15/2012 49 $151,258.97 $571.76 ] [ 07/15/2013 50 $155,796.74 $598.26 ] [ 07/15/2014 51 $160,470.64 $625.84 ] [ 07/15/2015 52 $165,284.76 $656.18 ] [ 07/15/2016 53 $170,243.31 $687.78 ] [ 07/15/2017 54 $175,350.61 $720.69 ]
*Assumes no further payments, no premium tax, and no withdrawals. This amount may only be used for annuitization with the Rider Payment Options provided in this rider. ** Assumes the Minimum Annuitization Value shown is applied to a life with 10 year certain Rider Payment Option with monthly payments. RGMI 4 499(CRT) 1 DEFINITIONS Mortality and Expense Risk Fee and Administrative Charge in effect The following definitions used in prior to the Election Date. It may this Rider are for reference only. also be different than the Mortality and Expense Risk Fee and Annuitant Administrative Charge for the settlement options shown in the The Annuitant is designated on the Certificate. Certificate Data Page. The variable annuity payments are paid to the The subsequent payments may Annuitant (or surviving Joint fluctuate in accordance with the Annuitant). investment performance of Your annuity Subaccounts. However, such Annuity Factor payments will never be less than the initial payment. A factor for the applicable Annuitant age, sex and Rider MINIMUM ANNUITIZATION VALUE Payment Option is shown in Schedule I or Schedule II of this rider. For The Minimum Annuitization Value is the Rider Payment Option chosen, used to determine Your Guaranteed the Annuity Factor from Schedule I Minimum Income Benefit payments. On and the Minimum Annuitization Value the Rider Date, the Minimum will be used to determine the Annuitization Value is the value of applicable annuity payments. For Your Certificate. thereafter, based Annuitants age 85 or older at the upon the effective Annual Growth time of annuitization, the age 85 Rate (shown on page one of this Annuity Factor will be used for rider), it will be the value of Schedule I. Factors not shown are Your Certificate on the Rider Date, available from us upon request. plus any additional payments made Schedule I and Schedule II are after the Rider Date, minus policy based on the " 1983 Table a" withdrawals (adjusted as described mortality table, improved to the below), minus any premium taxes. year 2000 with projection scale G. Withdrawals Election Date In any Certificate Year, the A date that You elect to begin Minimum Annuitization Value will Guaranteed Minimum Income Benefit only be reduced by the actual payments. The Election Date must be amount of a withdrawal as long as within 30 days following a the withdrawal does not exceed a Certificate Anniversary. The first maximum annual free amount. and last dates to elect a Rider Withdrawals in excess of the Payment Option are shown on page maximum annual free amount will one of this rider. reduce the Minimum Annuitization Value by an amount equal to (A) Minimum Annuitization Value divided by (B) multiplied by (C) where: The amount we will use to determine the Guaranteed Minimum Income (A) is the amount of the Benefit payments. excess withdrawal; Rider Date (B) is the value of Your Certificate after the current The date that this rider is added Certificate Year maximum to the Certificate. This date may annual free amount has been only be the issue date of the withdrawn, but prior to the Certificate or a Certificate withdrawal of the excess Anniversary date. this is also the portion; and Certificate Anniversary that You most recently elected to upgrade (C) is the Minimum the Minimum Annuitization Value, if Annuitization Value after the applicable. current Certificate Year maximum annual free amount has Supportable Payment been withdrawn, but prior to withdrawal of the excess The Supportable Payment is equal to portion. the number of variable annuity units in the selected Subaccounts For each Certificate Year, the multiplied by the variable annuity maximum annual free amount is equal unit values in those Subaccounts on to the Minimum Annuitization Value, the date the payment is made. as of the beginning of the Certificate Year, multiplied by the GUARANTEED MINIMUM INCOME BENEFIT effective Annual Growth Rate as shown on page one of this rider. On the Election Date, You may use Withdrawals during a Certificate the Minimum Annuitization Value and Year will reduce the available the applicable Annuity Factor to maximum annual free amount by the provide variable payments to the amount of the withdrawal. Annuitant. The first variable payment is determined by RIDER FEE multiplying each $1,000 of Minimum Annuitization Value by the Annuity We will deduct a fee from the value Factor on Schedule I. Each of the Certificate on each subsequent payment will be Certificate Anniversary and on the calculated as described in the termination date of this rider. The Certificate, using a 5% Assumed Rider Fee is the Minimum Investment Return. Annuitization Value at the time the fee is deducted, multiplied by the For subsequent payments, an annual Rider Fee Percentage shown on the Mortality and Expense Risk Fee and first page of this rider. The fee Administrative Charge (which will be deducted from each includes an investment risk fee) Subaccount in proportion to the will be charged. This fee may be amount of value of the Certificate different than the in each Subaccount This fee will not be deducted after the Election Date or if the Certificate terminates due to the death of the Certificate Owner. RGMI 4 499(CRT) 2 WAIVER OF RIDER FEE annuitization, each payment will be stabilized to equal the initial If the value of the Certificate, on payment On each Certificate a particular Certificate Anniversary following Anniversary, exceeds an amount annuitization, the stabilized equal to the Rider Fee Waiver payment will be increased or Threshold (shown on page one of decreased (but never below the this rider) multiplied by the initial payment) and held level for Minimum Annuitization Value, the that Certificate Year. On each Rider Fee will be waived for that Certificate Anniversary following Certificate Anniversary. annuitization, the stabilized payment will equal the greater of MINIMUM ANNUITIZATION VALUE UPGRADE the initial payment or the Supportable Payment at that time. The Certificate Owner may elect, in writing, to upgrade the Minimum If the Supportable Payment (at any Annuitization Value to the value of payment date) is greater than the the Certificate on a Certificate stabilized payment for that year, Anniversary. This may be done the excess will be used to purchase within 30 days immediately additional annuity units as following any Certificate described below. If the Supportable Anniversary, and prior to the Last Payment (at any payment date) is Date to Upgrade shown on page one less than the stabilized payment of this rider. for that year, annuity units will be redeemed as described below to If an upgrade is elected, this fund the deficiency. rider will terminate and a new rider will be issued with a new Purchase/Redemption of Annuity Rider Date, Election Date and its Units: own guaranteed benefits. The new annual Rider Fee Percentage may be The number of annuity units different than this rider's, but purchased or redeemed is equal it will never be greater than to the annuity income 0.50%. purchased or redeemed, respectively, divided by the RIDER PAYMENT OPTIONS annuity unit value For each respective The Minimum Annuitization Value and Subaccount..Purchases and applicable Annuity Factors from redemptions of annuity income Schedule I may be applied to the will be allocated to each following payment options: Subaccount on a proportionate basis. The amount of annuity Life Income - An election may income purchased or redeemed be made for "No Period Certain" is the difference between the or " 10 Years Certain". In the Supportable Payment and the event of the death of the stabilized payment, times the person receiving payments prior attained age nearest birthday to the end of the chosen period Annuity Factors shown in certain, the remaining period Schedule II, divided by certain payments will be $1,000. These factors will continued to the beneficiary. reflect the remaining certain period, if any, but will be Joint and Full Survivor - An calculated on the same basis election may be made for "No as the Schedule II factors. Period Certain" or " 10 Years Certain". Payments will be made The Company bears the risk that it as long as either the Annuitant will need to make payments if all or Joint Annuitant is living. annuity units have been redeemed in In the event of the death of an attempt to maintain the both the Annuitant and the stabilized payment at the initial Joint Annuitant prior to the payment level. In such an event, end of the chosen period the Company will make all future certain, the remaining period payments equal to the initial certain payments will be payment. continued to the beneficiary. ASSIGNMENT GUARANTEED MINIMUM PAYMENT Payments made under this rider may On the Election Date, the owner not be pledged or assigned. will receive guaranteed minimum Payments will only be made to the payments. The annual Mortality and Annuitant or Joint Annuitant named Expense Risk Fee and Administration in the Certificate. Charge for these payments is shown on page one of this rider. The TERMINATION percentage shown on page one also includes a fee to cover investment This rider will be terminated upon risk associated with guaranteeing a the earliest of: minimum payment. a. the Election Date; The first payment is based on the b. 30 days after the Last Date to Annuity Factors in Schedule I. We Elect Benefit shown on the guarantee that each subsequent first page of this rider. payment will be equal to or greater c. the date the Certificate than your initial payment terminates; d. the date you elect to apply During the first Certificate Year the value of the Certificate following to annuitize the Certificate; and e. the date you elect to upgrade your Minimum Annuitization Value. This rider cannot be terminated prior to the earliest of the above dates. Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT RGMI 4 499(CRT) 3 SCHEDULE I - ANNUITY FACTORS The amounts shown in these tables are the Annuity Factors for each $1,000 of the Minimum Annuitization Value and assume a 3% Assumed Investment Return.
- ---------------------------------------------------------------------------------------------------------------------- - --------------------------- ------------------------------------------------------------------------------- Monthly Annuity Factor For Monthly Annuity Factor For Life With No Period Certain Life With 10 Years Certain ------------------------------------------------------------------------------------------ Age Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70 51 3.93 3.60 3.77 3.90 3.59 3.75 52 4.00 3.65 3.83 3.97 3.64 3.81 53 4.07 3.71 3.90 4.04 3.70 3.87 54 4.15 3.77 3.97 4.11 3.75 3.94 55 4.23 3.83 4.04 4.19 3.82 4.01 56 4.32 3.90 4.11 4.27 3.88 4.08 57 4.41 3.97 4.19 4.35 3.95 4.15 58 4.50 4.05 4.28 4.44 4.02 4.24 59 4.61 4.13 4.37 4.53 4.10 4.32 60 4.72 4.21 4.47 4.63 4.18 4.41 61 4.84 4.30 4.57 4.74 4.26 4.51 62 4.96 4.40 4.68 4.85 4.35 4.61 63 5.10 4.50 4.80 4.97 4.45 4.71 64 5.24 4.61 4.93 5.09 4.55 4.83 65 5.40 4.73 5.06 5.22 4.66 4.95 66 5.56 4.85 5.21 5.36 4.77 5.07 67 5.74 4.99 5.36 5.50 4.89 5.20 68 5.93 5.13 5.53 5.65 5.02 5.34 69 6.13 5.29 5.71 5.80 5.15 5.49 70 6.34 5.45 5.90 5.96 5.30 5.64 - ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.31 4.53 4.77 5.02 - ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor with 10 Year Period Certain - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.24 $3.31 $3.38 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.30 4.52 4.76 4.99 - ---------------------------------------------------------------------------------------------------------------------- *Age nearest birthday - ----------------------------------------------------------------------------------------------------------------------
The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity Factor shown multiplied by 11.80, 5.95 or 2.99 respectively. - -------------------------------------------------------------------------------- Annuity Factors not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. RGMI 4 499 SCHEDULE II - ANNUITY FACTORS The amounts shown in these tables are the Annuity Factors for each $1,000 of the Minimum Annuitization Value and assume a 5% Assumed Investment Return.
- ---------------------------------------------------------------------------------------------------------------------- - --------------------------- ------------------------------------------------------------------------------- Monthly Annuity Factor For Monthly Annuity Factor For Life With No Period Certain Life With 10 Years Certain ------------------------------------------------------------------------------------------ Age Male Female Unisex Male Female Unisex - ---------------------------------------------------------------------------------------------------------------------- 50 $5.14 $4.83 $4.99 $5.09 $4.80 $4.95 51 5.20 4.87 5.04 5.15 4.85 5.00 52 5.27 4.92 5.10 5.21 4.89 5.05 53 5.34 4.98 5.16 5.27 4.94 5.11 54 5.41 5.03 5.22 5.34 4.99 5.17 55 5.49 5.09 5.29 5.41 5.05 5.23 56 5.57 5.15 5.36 5.48 5.11 5.30 57 5.66 5.22 5.44 5.56 5.17 5.37 58 5.75 5.29 5.52 5.65 5.24 5.45 59 5.85 5.37 5.61 5.74 5.31 5.53 60 5.96 5.45 5.71 5.83 5.38 5.61 61 6.08 5.53 5.81 5.93 5.46 5.70 62 6.20 5.63 5.92 6.04 5.55 5.80 63 6.34 5.73 6.04 6.15 5.64 5.90 64 6.48 5.83 6.16 6.27 5.73 6.01 65 6.64 5.95 6.30 6.39 5.84 6.12 66 6.81 6.07 6.44 6.52 5.94 6.24 67 6.99 6.21 6.60 6.66 6.06 6.37 68 7.18 6.35 6.77 6.80 6.18 6.50 69 7.39 6.51 6.95 6.94 6.31 6.64 70 7.61 6.68 7.14 7.09 6.45 6.78 - ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65 55 4.43 4.49 4.55 4.62 4.70 4.77 4.85 60 4.56 4.64 4.73 4.82 4.92 5.03 5.15 65 4.74 4.84 4.96 5.10 5.24 5.40 5.56 70 4.98 5.13 5.30 5.49 5.70 5.93 6.17 - ---------------------------------------------------------------------------------------------------------------------- Monthly Annuity Factor For Joint and Full Survivor with 10 Year Period Certain - ---------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ---------------------------------------------------------------------------------------------------------------------- 50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65 55 4.43 4.49 4.55 4.62 4.70 4.77 4.85 60 4.56 4.64 4.72 4.82 4.92 5.03 5.14 65 4.73 4.84 4.96 5.09 5.24 5.39 5.55 70 4.97 5.12 5.29 5.48 5.69 5.91 6.14 - ---------------------------------------------------------------------------------------------------------------------- *Age nearest birthday - ----------------------------------------------------------------------------------------------------------------------
The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity Factor shown multiplied by 11.70, 5.93 or 2.99 respectively. - -------------------------------------------------------------------------------- Annuity Factors not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. RGMI 4 499 PFL Life Insurance Company Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 [LOGO OF PFL LIFE APPEARS HERE] Group Flexible Premium Variable Annuity Certificate Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C.) Non -Participating INDEX
Page Page Accumulation Units............................ 7 Guaranteed Period............................ 8 Adjusted Age (Settlement Options)............. 7 Incontestability............................. 14 Age or Sex Corrections........................ 14 Modification of Contract..................... 14 Annuity Commencement Date..................... 14 Nonparticipation............................. 14 Annuity Payments.............................. 11,11(A) Nursing Care and Terminal Condition Assignment.................................... 15 Withdrawal Option............................ 5(B) Beneficiary................................... 15 Partial Withdrawals.......................... 5, 6 Cash Value.................................... 5, 6 Payee........................................ 11(A) Certificate Data Page......................... 3 Payment Option Tables........................ 12, 13 Death Proceeds................................ 10, 11 Policy Value................................. 4 Definitions................................... 2 Premium Payments............................. 4 Dollar Cost Averaging......................... 9 Proof of Age................................. 11(A) Excess Interest Adjustment.................... 5 Protection of Proceeds....................... 15 Evidence of Survival.......................... 14 Right to Cancel.............................. 1 Fixed Account................................. 8 Separate Account............................. 6, 7 Guaranteed Return of Fixed Account Service Charge............................... 4 Premium Payments............................ 6 Settlement................................... 14 Surrender Charges............................ 6 Transfers.................................... 9 Unemployment Waiver.......................... 5(B)
Y560 EX-4.C 6 EXHIBIT (4) (C) EXHIBIT (4)(C) -------------- INDIVIDUAL POLICY [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] ANNUITANT: JOHN DOE OWNER(S): JOHN DOE POLICY NUMBER: 07 - 0001234 POLICY DATE: May 1, 1999 WE AGREE This policy may be applied for and issued to qualify as a tax-qualified . To provide annuity payments as set annuity under the applicable sections forth in Section 10 of this policy, of the Internal Revenue Code. . Or to pay withdrawal benefits in accordance with Section 5 of this policy, 20 DAY RIGHT TO CANCEL You may cancel this policy by delivering . Or to pay death proceeds in or mailing a written notice or sending a accordance with Section 9 of this telegram to us. You must return the policy. policy before midnight of the twentieth day after the day you receive it Notice Withdrawals, transfers and amounts given by mail and return of the policy applied to a Payment Option may be by mail are effective on being subject to an Excess Interest Adjustment postmarked, properly addressed and in accordance with Sections 5, 8, and postage prepaid. 10, respectively, of this policy. We will pay you an amount equal to the sum of: These agreements are subject to the provisions of this policy. This policy is issued in consideration of the . the premiums paid; and application, or information provided in lieu thereof, and payment of the initial . the accumulated gains or losses, if any, in the premium. Separate Account on the date of cancellation; unless otherwise required by law.
Signed for us at our home office. /s/ Craig D. Vermie /s/ William L. Busler SECRETARY PRESIDENT This policy is a legal contract between the policyowner and the company. READ YOUR POLICY CAREFULLY Flexible Premium Variable Annuity Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C) Non-Participating AV464 101 121 799 SECTION 1 DEFINITIONS ADJUSTED POLICY VALUE - The Policy Value retirement home, a rest home, a increased or decreased by any Excess community living center or a place Interest Adjustment. mainly for the treatment of alcoholism, mental illness or drug abuse. ANNUITANT - The person to whom annuity payments will be made, unless another NURSING CARE - Nursing care prescribed payee is named. by a physician and performed or supervised by a registered graduate ANNUITY COMMENCEMENT DATE - Date the nurse. Such care includes nursing and Annuitant will begin receiving payments rehabilitation services available 24 from this policy, which may not be later hours a day. than the last day of the policy month starting after the Annuitant attains age PAYEE - The person to whom annuity 85, except as expressly allowed by us, payments will be made. but in no event later than the last day of the month following the month in PAYMENT OPTIONS - Options through which which the Annuitant attains age 95. the distribution of the Adjusted Policy Value can be directed. CASH VALUE - Amount, defined in Section 5, that can be withdrawn if the annuity PHYSICIAN - Doctor of Medicine or Doctor is surrendered. of Osteopathy who is licensed as such and operating within the scope of the CUSTODIAL CARE - Care designed license. essentially to help a person with the activities of daily living which does POLICY ANNIVERSARY - The anniversary of not require the continuous attention of the Policy Date for each year the policy trained medical or paramedical remains in force. personnel. POLICY DATE - The date shown on page 3 DISTRIBUTION - A withdrawal or of this policy and the date on which disbursement of funds from the Policy this policy becomes effective. Value or Cash Value. POLICY YEAR - The 12 month periods HOSPITAL - An institution which 1) is following the Policy Date shown on the operated pursuant to the laws of the Policy Data page. The first Policy Year jurisdiction in which it is located, 2) starts on the Policy Date. Each operates primarily for the care and subsequent year starts on the treatment of sick and injured persons on anniversary of the Policy Date. an inpatient basis, 3) provides 24-hour a day nursing service by or under the SEPARATE ACCOUNT - The separate supervision of registered graduate investment account established by us, as professional nurses, 4) is supervised by described in Section 6. a staff of one or more licensed physicians, and 5) has medical, surgical SUBACCOUNT - A division of the Separate and diagnostic facilities or access to Account, as described in Section 6. such facilities. INVESTMENT OPTIONS SURRENDER - A partial or full withdrawal of funds from the Policy Value or Cash Any of the Guaranteed Period Options of Value. the Fixed Account, the Dollar Cost Averaging Fixed Account Option, and any TERMINAL CONDITION - A condition of the Subaccounts of the Separate resulting from an accident or illness Account. which, as determined by a physician, has reduced life expectancy to not more than NURSING FACILITY - A facility which 1) 12 months, despite appropriate medical is operated pursuant to the laws of the care. jurisdiction in which it is located, 2) provides Nursing Care or Custodial Care, WITHDRAWAL - A distribution of funds 3) primarily provides nursing care under from the Policy Value or Cash Value. the direction of a licensed physician, registered graduate professional nurse, YOU, YOUR - The owner of this policy. or licensed vocational nurse, except Unless otherwise specified on the Policy when receiving custodial care, and 4), Data page, the Annuitant and the owner is not other than incidentally a shall be one and the same person. hospital, a home for the aged, a
AVB464 PAGE 2 SECTION 2 - POLICY DATA POLICY NUMBER: 07 - 001234 ANNUITANT: JOHN DOE INITIAL PREMIUM PAYMENT: $ 5,000.00 ISSUE AGE/SEX: 35 / MALE POLICY DATE May 1, 1999 OWNER(S): JOHN DOE ANNUITY COMMENCEMENT BENEFICIARY: JANE DOE DATE: March 10, 2049 Premium Enhancement Percentage on Initial Premium Payment: 5% Fixed Account Guaranteed Minimum Effective Annual Interest Rate: 3% Before the Annuity Commencement Date: Mortality and Expense Risk Fee and Administrative Charge: 1.75% After the Annuity Commencement Date: Mortality and Expense Risk Fee and Administrative Charge: 1.55% AV464 101 121 799 SP Page 3 SECTION 3 - PREMIUM PAYMENTS PAYMENT OF PREMIUMS premium payments which we will accept Premium payments may be made any time without prior Company approval is while this policy is in force before the $1,000,000. Annuity Commencement Date. You may start or stop, increase or decrease, or skip PREMIUM PAYMENT DATE any premium payments. The premium payment date is the date on PREMIUM ENHANCEMENT which the premium payment is credited to the policy. The initial premium payment When a Premium Payment is paid, a less any applicable premium taxes will Premium Enhancement Percentage will be be credited to the policy within two applied to that Premium Payment and the business days of receipt of the premium resulting amount will be added to the payment and the information needed. Policy Value. The amount of the Premium Subsequent additional premium payments Enhancement is not considered a Premium will be credited to the policy as of the Payment. The Premium Enhancement business day when the premium payment Percentage may vary from premium to and required information are received. A premium on subsequent Premium Payments business day is any day on which the New and will vary based on Your attained age York Stock Exchange is open for trading. at the time a Premium Payment is made, but will never be less than 0.25% nor ALLOCATION OF PREMIUM PAYMENTS more than 7%. The Premium Enhancement Percentage applicable at attained ages Premium payments may be applied to below age 70 will always be at least as various Investment Options which we make great as the corresponding percentage available. You must indicate what applicable at attained ages 70 and percent of each premium payment to above. The Premium Enhancement allocate to various Investment Options. Percentage applicable to the Initial Each percent may be either zero or any Premium Payment is set forth on the whole number, however, the allocation Policy Data page. We will advise You of among all accounts must total 100%. the amount of the Premium Enhancement applicable to each subsequent Premium CHANGE OF ALLOCATION Payment in a confirmation that We will send to You. Premium Enhancements will You may change the allocation of premium be applied using the same allocation as payments to various Investment Options. on the corresponding Premium Payment. No You must tell us in a notice you sign Premium Enhancement will apply if the which gives us the facts that we need. Policy is cancelled pursuant to the Premium payments received after the date Right to Cancel provision. on which we receive your notice will be applied on the basis of the new MAXIMUM AND MINIMUM PREMIUM PAYMENT allocation. The premium payments may not be more PREMIUM TAXES than the amount permitted by law if this is a tax-qualified annuity. The' minimum Your state may impose a premium tax. It initial premium payment is $5,000. If may be imposed either when a premium this policy is being used as a tax- payment is made, on the Annuity qualified annuity, the minimum initial Commencement Date, on the date of death, premium is $2,000, except that no or on the date of full surrender. When minimum initial premium payment will be permitted by state law, we will not required for 403(b) annuities. The deduct the tax until the Annuity minimum subsequent premium payment we Commencement Date, date of death, or will accept is $50. The maximum total date of full surrender.
SECTION 4 - POLICY VALUE POLICY VALUE Commencement Date to provide On or before the Annuity Commencement lifetime income or income for a period Date, the Policy Value is equal to Your: of no less than 60 months under the (a) premium payments; plus Payment Options in Section 10. corresponding Premium Enhancements; minus SERVICE CHARGE (b) Gross Partial Withdrawals (as defined in Section 5); plus On each Policy Anniversary and at the (c) interest credited to the Fixed time of surrender during any Policy Year Account (see Section 7); plus before the Annuity Commencement Date, we (d) accumulated gains in the Separate reserve the right to charge up to $40 Account (see Section 6); minus for policy administration expenses. The (e) accumulated losses in the Separate Service Charge will be deducted from Account (see Section 6); minus each Investment Option in proportion to (f) service charges, premium taxes and the portion of Policy Value (prior to transfer fees, if any. such charge) in each Investment Option. In no event will the Service Charge ADJUSTED POLICY VALUE exceed 2% of the Policy Value on the Policy Anniversary or at the time of The Adjusted Policy Value is the Policy surrender. Value increased or decreased by any Excess Interest Adjustment. The Service Charge will not be deducted on a Policy Anniversary or at the time You may use the Adjusted Policy Value on of surrender if, at either of these the Annuity times, (1) the sum of all premium payments less the sum of all withdrawals taken is at least $100,000; or (2) the Policy Value equals or exceeds $ 100,000.
M1038 PAGE 4 SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS CASH VALUE 6) If interest rates have increased On or before the Annuity Commencement from the time the affected Date, the Cash Value is equal to the Guaranteed Period(s) started until Adjusted Policy Value less any Surrender the time the transaction occurs, the Charges. Information on the current Excess Interest Adjustment will amount of Your policy's Cash Value is result in a decrease in the funds available upon request The Cash Value available to You may be partially withdrawn or will be 7) Certain amounts are not subject to paid in the event of a full surrender of the Excess Interest Adjustment as the policy. We must receive your written provided in Sections 5, 7 and 8. partial withdrawal or surrender request before the Annuity Commencement Date. The formula for determining the amount of the Excess Interest Adjustment is as There is no Cash Value once an Annuity follows: Payment Option has been selected. Excess Interest Adjustment = S x (G-C) x EXCESS INTEREST ADJUSTMENT (M/12) Full Surrenders, Partial Withdrawals, Where: S is the gross (that is, before transfers, and amounts applied to a surrender charges and premium Payment Option from the Fixed Account taxes, if any) amount being Guaranteed Period Options described in surrendered, partially Section 7 will be subject to an Excess withdrawn, transferred, or Interest Adjustment except as provided applied to a Payment Option for in the Partial Withdrawals provision that is subject to the Excess below. Interest Adjustment. G is the guaranteed interest rate An Excess Interest Adjustment applies in for the Guaranteed Period the following situations: applicable to S. 1) When you withdraw all or any portion M is the number of months of your Cash Value, remaining in the Guaranteed 2) When you exercise Annuity Payment Period for S. rounded up to the Options, next higher whole number of 3) When death proceeds are calculated. months. However, death proceeds will not be C is the current guaranteed reduced if the Excess Interest interest rate then being Adjustment is negative. offered on new Premium Payments for the next longer Guaranteed The Excess Interest Adjustment is only Period than "M". If this applied to transactions affecting the Certificate form or such a Guaranteed Period Options of the Fixed Guaranteed Period Option is no Account (see Section 7) and is based on longer offered, "C" will be the any change in interest rates from the U.S. Treasury rate for the next time the affected Guaranteed Period(s) longer maturity (in whole started until the time the Excess years) than "M" on the 25th day Interest Adjustment occurs. The Excess of the previous calendar month, Interest Adjustment is applied as plus up to 2%. follows: Upon full surrender, the Excess Interest 1) The Excess Interest Adjustment is Adjustment (EIA) for each Guaranteed only applied when the transactions Period Option will not reduce the occur prior to the end of any Adjusted Policy Value for that Guaranteed Period Option; Guaranteed Period Option below the 2) Transfers to the Guaranteed Period amount paid into, less any prior Options of the Fixed Account are withdrawals and transfers from, that considered Premium Payments for Guaranteed Period Option, plus interest purposes of determining the Excess at the 3% guaranteed effective annual Interest Adjustment; interest rate. 3) The Excess Interest Adjustment is distinct from, and is applied prior PARTIAL WITHDRAWALS to, the Surrender Charge; 4) The Excess Interest Adjustment may We will pay you a portion of the Cash affect the death proceeds defined in Value as a Partial Withdrawal provided Section 9; we receive your written request while 5) If interest rates have decreased the policy is in effect and before the from the time the affected Annuity Commencement Date. When you Guaranteed Period(s) started until request a Partial Withdrawal you must the time the transaction occurs, the tell us how it is to be allocated from Excess Interest Adjustment will among the Investment Options. If your result in additional funds available request for a Partial Withdrawal from to You; any Investment Option is less than or equal to the Cash Value in that option, we will pay the amount of your request However, if your request for a Partial Withdrawal from any Investment Option is greater than the Cash Value in that option, we will pay you the Cash Value of that Investment Option.
U1038 PAGE 5 SECTION 5 - CASH VALUES AND PARTIAL WITHDRAWALS - CONT LUMP SUM The Gross Partial Withdrawal is the total amount which will be deducted from Beginning in the second Policy Year, Your Policy Value as a result of each amounts ($500, minimum) up to 10% of Partial Withdrawal. The Gross Partial the cumulative premium payments Withdrawal may be more or less than Your immediately prior to the Partial requested Partial Withdrawal amount, Withdrawal are available as Lump Sum depending on whether Surrender Charges distributions in one or more and/or Excess Interest Adjustments apply withdrawals during a Policy Year with at the time You request the Partial no Surrender Charges and no Excess Withdrawal. Interest Adjustment. The Excess Partial Withdrawal amount is SYSTEMATIC PAYOUT OPTION the portion of the requested Partial Withdrawal that is subject to Surrender Beginning in the first Policy Year, a Charge (that is, the portion which is in Systematic Payout Option (SPO) is excess of the Surrender Charge-free available on a monthly, quarterly, portion). For example, if the requested semi-annual or annual basis. SPO withdrawal amount is $1,000, and the payouts must be at least $50 and may Surrender Charge-free amount is $200, not exceed 10% of the cumulative then the Excess Partial Withdrawal would premium payments at the time a SPO be $800. Excess Partial Withdrawals will payout is made divided by the number reduce the Policy Value by an amount of payouts made per year (e.g. 12 for equal to (X-Y+Z} where: monthly). No Surrender Charges or Excess Interest Adjustment will apply X = Excess Partial Withdrawal to the SPO payout Monthly and A = Amount of Partial Withdrawal subject quarterly payouts must be sent through to Excess Interest Adjustment electronic funds transfer directly to Y = Excess Interest Adjustment = (A) x Your checking or savings account You (G-C) x (M/12) where G, C and M are may start or stop SPO payouts at any defined in the Excess Interest time; however, 30 days written notice Adjustment provision above, with "A" is required to stop SPO payouts. Once substituted for "S" in the stopped, You must wait until the first definitions of G and M. day of the next Policy Year to begin a Z = Surrender Charge on X minus Y. new SPO. The formula for determining the Gross Once You have elected a SPO, You must Partial Withdrawal is as follows: wait a minimum time before the first SPO payment one month for a monthly Gross Partial Withdrawal = R - E + SC SPO, three months for quarterly, six months for semi-annual, or twelve where: R is the requested Partial months for annual. Withdrawal; E is the Excess Interest MINIMUM REQUIRED DISTRIBUTION Adjustment; and SC is the Surrender Charge on For tax-qualified plans, Partial (EPW - E); where Withdrawals taken to satisfy minimum EPW is the Excess Partial distribution requirements under Withdrawal amount Section 401(a)(9) of the Internal Revenue Code (IRC) are available with If any Partial Withdrawal reduces the no Surrender Charges and no Excess Cash Value below $500, we reserve the Interest Adjustments. The amount right to pay the full Cash Value and available from this policy with terminate the policy. respect to the minimum distribution requirement is based solely on this We may delay payment of the Cash Value policy. from the Fixed Account for up to 6 months after we receive the request If The Owner must be at least 70 1/2 the Owner dies after we receive the years old in the calendar year of request, but before the request is distribution, must submit a written processed, the request will be processed request to us and must take the before the death proceeds are distribution before year end. If the determined. Owner attains age 70 1/2 in the calendar year of distribution, a Each Partial Withdrawal consists of a written request which is postmarked no portion that is subject to Surrender later than the end of the current Charge (that is, the Excess Partial calendar year must be submitted to us. Withdrawal) and a remaining portion that is free from Surrender Charge (that is, Systematic minimum distributions must the Surrender Charge-free amount). be at least $50. or a lump sum Either portion may be zero (0) depending distribution is available if minimum on the Partial Withdrawal requested and required distributions are less than prior amounts withdrawn. $50. Partial Withdrawals may be made free Any amount requested in excess of the from Surrender Charges and free from IRC minimum required distribution will Excess Interest Adjustments as follows: have the appropriate Surrender Charges and Excess Interest Adjustments applied, unless the excess distribution qualifies as Surrender Charge- free or Excess Interest Adjustment-free under any additional options provided.
P1038 PAGE 6 SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS - CONT NURSING CARE AND TERMINAL CONDITION letter from the applicable State's WITHDRAWAL OPTION Department of Labor which verifies that You qualify for and are receiving Beginning in the first Policy Year, if unemployment benefits at the time of the Owner or Owner's spouse (annuitant withdrawal. The determination letter or annuitant's spouse if the Owner is must be received by us no later than 15 not a natural person) has been 1) days following the date of the confined in a Hospital or Nursing withdrawal request. Facility for 30 consecutive days or 2) diagnosed as having a Terminal SURRENDER CHARGES Condition, you may elect to withdraw all or a portion of the Policy Value Amounts withdrawn in excess of the without Surrender Charges and without Surrender Charge free withdrawal Excess Interest Adjustment The minimum provisions above are subject to a withdrawal under this option is $1000. Surrender Charge. The amount of this charge, if any, will be a percentage, as For Nursing Care, we must receive each shown in the table below, of the amount withdrawal request and proof of of premium withdrawn: eligibility with each request no later than 90 days following the date that Number of Years Percentage confinement has ceased, unless it can Since Premium of Premium Withdrawn be shown that it was not reasonably Payment Date possible to provide the notice and proof within the above time period and 0 - 1 8% that the notice and proof were given as 1 - 2 8% soon as reasonably possible. However, 2 - 3 8% in no event, except the absence of 3 - 4 7% legal capacity shall the notice and 4 - 5 6% proof be provided later than one year 5 - 6 5% following the date that confinement has 6 - 7 4% ceased. For a Terminal Condition, we 7 - 8 3% must receive each withdrawal request 8 - 9 2% and the applicable proof of eligibility 9 and thereafter 0% no later than one year following diagnosis of the Terminal Condition. Proof of a Terminal Condition is For Surrender Charge purposes, the required only with the initial oldest premium payment is considered to withdrawal request and must be be withdrawn first If the amount furnished by the Annuitant's, withdrawn exceeds this, the next oldest Annuitant's spouse's, Owner's, or premium payment is considered to be Owner's spouse's physician. Proof of withdrawn, and so on until the most confinement may be a physician's recent premium payment is considered to statement or a statement from a be withdrawn. Premium payments are hospital or nursing facility deemed to be withdrawn before earnings. administrator. After all premium payments are UNEMPLOYMENT WAIVER considered to be withdrawn, the remaining Adjusted Policy Value may be Beginning in the first Policy Year, You withdrawn free of any Surrender Charge. may withdraw all or a portion of the Policy Value free of Surrender Charges GUARANTEED RETURN OF FIXED ACCOUNT and free of any Excess Interest PREMIUM PAYMENTS Adjustment if the Owner or Owner's spouse (annuitant or annuitant's Upon full surrender of the policy, You spouse, if the Owner is not a natural will always receive at least the premium person) becomes unemployed. In order to payments made to, less prior withdrawals qualify, You 1) must have been employed and transfers from, the Fixed Account. full time for at least two years prior to Your becoming unemployed, 2) must MINIMUM VALUES have been employed full time on Your Policy Date, 3) must have been Benefits available under this policy are unemployed for at least 60 consecutive not less than those required by any days at the time of withdrawal and 4) statute of the state in which the policy must have a minimum Cash Value at the is delivered. time of withdrawal of $5000. Proof of unemployment will consist of providing us with a determination
PB1038 PAGE 7 SECTION 6 - SEPARATE ACCOUNT SEPARATE ACCOUNT We will determine the fair market value We have established and will maintain a of the assets of the Separate Account in Separate Account, under the laws of the accordance with a method of valuation state of Iowa Any realized or unrealized which we establish in good faith. income, net gains and losses from the Valuation Period means the period of assets of the Separate Account are time from one determination of the value credited to or charged against it of each Subaccount to the next Such without regard to our other income, determinations are made when the value gains or losses. Assets are put in the of the assets and liabilities of each Separate Account for this policy, as Subaccount is calculated. This is well as for other variable annuity generally the close of business on each policies. Any Separate Account may day on which the New York Stock Exchange invest assets in shares of one or more is open. mutual fund portfolios, or in the case of a managed Separate Account, direct We also reserve the right to transfer investments in stocks or other assets of the Separate Account, which we securities as permitted by law. Fund determine to be associated with the Shares refer to shares of underlying class of policies to which this policy mutual funds or prorate ownership of the belongs, to another separate account If assets held in a Subaccount of a managed this type of transfer is made, the term Separate Account Fund shares are "Separate Account", as used in the purchased, redeemed and valued on behalf policy, shall then mean the separate of the Separate Account. account to which the assets were transferred. The Separate Account is divided into Subaccounts. Each Subaccount invests We also reserve the right, when exclusively in shares of one of the permitted by law to: portfolios of an underlying mutual fund. (a) deregister the Separate Account We reserve the right to add or remove under the Investment Company Act of any Subaccount of the Separate Account. 1940; (b) manage the Separate Account under The assets of the Separate Account are the direction of a committee at any our property. These assets will equal or time; exceed the reserves and other contract (c) restrict or eliminate any voting liabilities of the Separate Account rights of Policy Owners or other These assets will not be chargeable with persons who have voting rights as liabilities arising out of any other to the Separate Account; and business we conduct We reserve the (d) combine the Separate Account with right, subject to regulations governing one or more other separate the Separate Account, to transfer assets accounts; of a Subaccount, in excess of the (e) create new Separate Accounts; reserves and other contract liabilities (f) add new Subaccounts to or remove with respect to that Subaccount, to existing Subaccounts from the another Subaccount or to our General Separate Account, or combine Account. Subaccounts; (g) add new underlying mutual funds, remove existing mutual funds, or substitute a new fund for an existing fund.
V1078 PAGE 8 SECTION 6 - SEPARATE ACCOUNT - CONT The Net Asset Value of a fund share is accumulation units purchased in a the per-share value calculated by the Subaccount will be determined by mutual fund or, in the case of a managed dividing the amount allocated to or Separate Account, by the Company. The transferred to that Subaccount, by the Net Asset Value is computed by adding value of an accumulation unit for that the value of the Subaccount's Subaccount on the premium payment or investments, cash and other assets, transfer date. subtracting its liabilities, and then dividing by the number of shares The number of accumulation units outstanding. Net Asset Values of fund withdrawn or transferred from the shares reflect investment advisory fees Subaccounts will be determined by and other expenses incurred in managing dividing the amount withdrawn or a mutual fund or a managed Separate transferred by the value of an Account. accumulation unit for that Subaccount on the withdrawal or transfer date. CHANGE IN INVESTMENT OBJECTIVE OR POLICY OF A MUTUAL FUND The value of an accumulation unit on any business day is determined by If required by law or regulation, an multiplying the value of that unit at investment policy of the Separate the end of the immediately preceding Account will only be changed if approved valuation period by the net investment by the appropriate insurance official of factor for the valuation period. the state of lowa or deemed approved in accordance with such law or regulation. The net investment factor used to If so required, the process for calculate the value of an accumulation obtaining such approval is filed with unit in each Subaccount for the the insurance official of the state or Valuation Period is determined by district in which this policy is dividing (a) by (b) and subtracting (c) delivered. from the result, where: CHARGES AND DEDUCTIONS (a) is the result of: (1) the net asset value of a fund The Mortality and Expense Risk Fee and share held in that Subaccount the Administrative Charge are each determined as of the end of the deducted both before and after the current valuation period; plus Annuity Commencement Date to compensate (2) the per share amount of any for changes in mortality and expenses dividend or capital gain not anticipated by the mortality and distributions made by the fund administration charges guaranteed in the for shares held in that policy. Subaccount if the ax-dividend date occurs during the valuation The Service Charge is deducted prior to period; plus or minus the Annuity Commencement Date only. (3) a per share credit or charge for any taxes reserved for, which we If the Mortality and Expense Risk Fee is determine to have resulted from more than sufficient, the Company will the investment operations of retain the balance as profit or reduce that Subaccount. this fee in the future. (b) is the net asset value of a fund share held in that Subaccount ACCUMULATION UNITS determined as of the end of the immediately preceding valuation The Policy Value in the Separate Account period. before the Annuity Commencement Date is (c) is a factor representing the represented by accumulation units. The Mortality and Expense Risk Fee and dollar value of accumulation units for Administrative Charge before the each Subaccount will change from day to Annuity Commencement Date. This day reflecting the investment experience factor is less than or equal to, on of the Subaccount. an annual basis, the percentage shown on page 3 of the daily net Premium payments and Premium asset value of a fund share held in Enhancements allocated to and any that Subaccount. amounts transferred to the Subaccounts will be applied to provide accumulation Since the net investment factor may be units in those Subaccounts. The number greater or less than one, the of accumulation unit value may increase or decrease.
VB1078 PAGE 9 SECTION 7 - FIXED ACCOUNT FIXED ACCOUNT We reserve the right for new premium payments, transfers, or rollovers to Premium payments and Premium offer or not to offer any GPO, except Enhancements applied to and any amounts that we will always offer at least a one transferred to the Fixed Account will year GPO. reflect a fixed interest rate. The interest rates we set will be credited For purposes of crediting interest when for increments of at least one year funds are withdrawn from or transferred measured from each premium payment or into a GPO, the amount of the oldest transfer date. These rates will never be premium payment or rollover into that less than an effective annual interest GPO is considered to be withdrawn first rate of 3%. If the amount withdrawn exceeds this amount, the next oldest premium payment GUARANTEED PERIODS or rollover is considered to be withdrawn next, and so on until the most We may offer optional Guaranteed Period recent premium payment or rollover is Options, into which premium payments may considered to be withdrawn (this is a be paid or amounts transferred The "First-In, First-Out" or FIFO current interest rate we set for funds procedure). Premium payment(s) or entering each Guaranteed Period Option rollover(s) are deemed to be withdrawn (GPO) is guaranteed until the end of first, then credited interest. that option's Guaranteed Period. At that time, the premium payment made or amount Partial withdrawals, Surrenders, transferred into the GPO, less any transfers, and amounts applied to a withdrawals or transfers from that GPO, Payment Option from the Guarantee Period plus Premium Enhancement, plus accrued Option(s) are subject to an Excess interest, will be rolled into a new GPO Interest Adjustment as described in or may be transferred to any Section 5. Subaccount(s) within the Separate Account(s). DOLLAR COST AVERAGING FIXED ACCOUNT OPTION You may choose the Investment Option(s) You want the funds roiled into by giving We may offer a Dollar Cost Averaging us a written notice within 30 days (DCA) Fixed Account Option separate from before the end of the expiring option's the Guaranteed Period Options. This Guaranteed Period. However, any option will have a one year interest Guaranteed Period elected may not extend rate guarantee. The current interest beyond the maximum Annuity Commencement rate we set for the DCA Fixed Account Date defined in Section 11. In the may differ from the rates credited on absence of such election, the funds will the one year GPO in the Fixed Account In be rolled into a new GPO which is the addition, the current interest rate we same as the expiring GPO unless that GPO credit may vary on different portions of is no longer offered, in which case, the the DCA Fixed Account The credited next shorter GPO offered will be used interest rate will never be less than You will be mailed a notice of the minimum effective annual interest completion of the rollover with the new rate of 3%. The DCA Fixed Account Option interest rate applicable. The new GPO will only be available under a Dollar will be deemed as accepted if we do not Cost Averaging program as described in receive a written rejection within 30 Section 8. days from the postmark date of the completion notice.
SECTION 8 - TRANSFERS A. TRANSFERS BEFORE THE ANNUITY Policy Value transfers at the end of a COMMENCEMENT DATE Guaranteed Period. Prior to the Annuity Commencement Date, Transfers of interest credited in the you may transfer the value of the GPOs to other Investment Options are accumulation units from one Investment allowed on a "First-In, First-Out" Option to another. You must sign a basis. Such transfers may be made notice to transfer which gives us the monthly, quarterly, semi-annually, or facts that we need. annually. Each such transfer must be at least $50. and will not be subject to an Transfers of Policy Value from the Excess Interest Adjustment. Guaranteed Period Options (GPO) of the Fixed Account prior to the end of that Transfers of Policy Value from the GPO are subject to an Excess Interest Separate Account are subject to a Adjustment. If the Excess Interest minimum of $500, or the entire Adjustment at the time of such Policy Subaccount Policy Value, if less. Value transfer is a negative adjustment, However, if the remaining Subaccount then the maximum Policy Value transfer Policy Value is less than $500, we is 25% of that GPO's Policy Value, less reserve the right to include that amount Policy Values previously transferred out as part of the transfer. of that GPO during the current Policy Year. If the Excess Interest Adjustment You may choose which GPO to transfer to at the time of such Policy Value or from, however, any GPO elected may transfer is a positive adjustment, no not extend beyond the maximum Annuity maximum will apply to such Policy Values Commencement Date defined in Section 11. transferred from the GPO. No Excess Interest Adjustment will apply to
L916 PAGE 10 SECTION 8 - TRANSFERS - CONT No transfers will be allowed out of the result in higher Policy Values or will Dollar Cost Averaging Fixed Account otherwise be successful. Option except through the Dollar Cost Averaging Option. The Dollar Cost Averaging may be discontinued after satisfying the We reserve the right to limit transfers minimum number of required transfers by to no more than 12 in any one sending written notice to us. While Certificate Year. Any transfers in Dollar Cost Averaging is in effect, excess of 12 per Certificate Year may be Asset Rebalancing is not available. charged a $10 per transfer fee. Transfers among multiple Investment ASSET REBALANCING Options will be treated as one transfer in determining the number of transfers Prior to the Annuity Commencement Date, that have occurred. We also reserve the you may instruct us to automatically right to prohibit transfers to the Fixed transfer amounts among the Subaccounts Account if we are crediting an effective of the Separate Account on a regular annual interest rate of 3%. basis to maintain a desired allocation of the Policy Value among the various DOLLAR COST AVERAGING OPTION Subaccounts offered. Rebalancing will occur on a monthly, quarterly, semi- Prior to the Annuity Commencement Date, annual or annual basis, beginning on a you may instruct us to automatically date selected. You must select the transfer a specified amount from the percentage of the Policy Value desired Money Market Subaccount, the Dollar Cost in each of the various Subaccounts Averaging (DCA) Fixed Account Option, or offered (totaling 100%). Any amounts in the U.S. Government Securities the Fixed Account are ignored for the Subaccount to any other Subaccount(s) of purposes of asset rebalancing. the Separate Account The automatic Rebalancing can be started, stopped or transfers can occur monthly or changed at any time. Asset Rebalancing quarterly. If the Dollar Cost Averaging is not available while Dollar Cost request is received prior to the 28th Averaging is in effect Rebalancing will day of any month, the first transfer cease as soon as we receive a request will occur on the 28th day of that for any other transfer. month. If the Dollar Cost Averaging request is received on or after the 28th B. TRANSFERS AFTER THE ANNUITY day of any month, the first transfer COMMENCEMENT DATE will occur on the 28th day of the following month. After the Annuity Commencement Date, you may transfer the value of the variable Prior to the Annuity Commencement Date, annuity units from one Subaccount to no transfers, (except through Dollar another within the Separate Account or Cost Averaging) will be allowed from a to the Fixed Account. If you want to DCA Fixed Account Transfers will transfer the value of the variable continue until the elected Subaccount or annuity units, you must tell us in a DCA Fixed Account value is depleted. The signed notice which gives us the facts amount transferred each time must be at that we need. We reserve the right to least $500. All transfers from the DCA limit transfers between the Subaccounts account will be the same amount as the or to the Fixed Accounts to once per initial transfer. Changes to the amount Policy Year. transferred will only be allowed when additional premium is allocated or a new The minimum amount which may be amount is transferred into the DCA transferred is the lesser of $10 monthly Account Changes to the Subaccounts to income or the entire monthly income of which these transfers are allocated are the variable annuity units in the not restricted. Transfers must be Subaccount from which the transfer is scheduled for at least 6 but not more being made. If the monthly income of the than 24 months or for at least 4 but not remaining units in a Subaccount is less more than 8 quarters each time the than $ 10, we have the right to include Dollar Cost Averaging program is started the value of those variable annuity or restarted following termination of units as part of the transfer. the program for any reason. After the Annuity Commencement Date, no Dollar Cost Averaging results in the transfers may be made from the Fixed purchase of more accumulation units when Account to any other Investment Options. the value of the accumulation unit is low, and fewer accumulation units when the value of the accumulation unit is high. However, there is no guarantee that the Dollar Cost Averaging program will
LB916 PAGE 11 SECTION 9 - DEATH PROCEEDS A. DEATH PROCEEDS PRIOR TO ANNUITY Adjustment Factor. The Adjustment Factor COMMENCEMENT DATE is equal to the amount of the death proceeds prior to the Partial Withdrawal The amount of death proceeds will be the divided by the Policy Value prior to the greatest of (a), (b) or (c) where: Partial Withdrawal. (a) is the Policy Value on the date we receive due proof of death and an C. DEATH PRIOR TO ANNUITY COMMENCEMENT election of a method of settlement; DATE (b) is the Cash Value on the date we receive due proof of death and an Death proceeds are payable contingent election of a method of settlement, upon the relationships between the and; owner, annuitant, successor owner and (c) is the Guaranteed Minimum Death beneficiary as outlined below. The Benefit (GMDB), plus any additional policy must be surrendered upon premium payments received, less any settlement or on proof of death. Gross Partial Withdrawals from the date of death to the date of payment I. Annuitant and owner are the same. of death proceeds. When we have due proof that the owner If you have not selected a payment died before the Annuity Commencement option by the date of death, the Date, we will provide the death beneficiary may make such election proceeds to the beneficiary. within one year of the date we receive due proof of the Owner's or Annuitant's a) Beneficiary is the deceased death as described in C. below. The owner's surviving spouse. The beneficiary may elect to receive the beneficiary may elect to continue death proceeds as a lump sum payment or this policy as owner and annuitant may use the death proceeds to provide rather than receiving the death any of the annuity payment options proceeds. If the policy is described in Section 10. Interest on continued, an amount equal to the death proceeds will be paid as required excess, if any, of the Guaranteed by law. Minimum Death Benefit over the Policy Value will then be added to B. GUARANTEED MINIMUM DEATH BENEFIT the Policy Value. This amount will be added only once, at the time of The Guaranteed Minimum Death Benefit such election. If the policy is (GMDB) is the annual Step-Up Death continued, all future Surrender Benefit. The amount of the death benefit Charges will be waived. is equal to the largest Policy Value on the Policy Date or on any Policy If this beneficiary elects to have Anniversary prior to the earlier of the the death proceeds paid, the death date of death or the Owner's 76th proceeds must be distributed: birthday, plus any Premium Payments made since then, minus any Adjusted Partial (1) by the end of 5 years after Withdrawals made since then. the date of the deceased owner's death, or If the Owner is a nonnatural person, or (2) payments must begin no later if the Owner has elected to have the death than one year after the proceeds paid upon the death of the deceased owner's death and Annuitant, the GMDB will be based upon must be made for a period the Annuitant's age. certain or for this beneficiary's lifetime, so If the Owner is a nonnatural person, or long as any period certain if the Owner has elected to have the does not exceed this death proceeds paid upon the death of beneficiary's life the Annuitant, the Guaranteed Minimum expectancy. Death Benefit will be based upon the b) Beneficiary is not the deceased Annuitant's age. owner's surviving spouse. The death proceeds must be distributed A Partial Withdrawal taken as provided as provided in l.a)(1) or l.a)(2) in Section 5 will reduce the Guaranteed above. Minimum Death Benefit by an amount c) Death proceeds which are not paid referred to as the "Adjusted Partial to or for the benefit of a natural Withdrawal". The Adjusted Partial person must be distributed by the Withdrawal may be a different amount end of 5 years after the date of than the Gross Partial Withdrawal the deceased owner's death. described in Section 5. The Adjusted Partial Withdrawal is the total amount deducted from the GMDB as a result of a Partial Withdrawal as used in the GMDB provision. It is equal to the Gross Partial Withdrawal described in Section 5, multiplied by an
D322 PAGE 12 SECTION 9 - DEATH PROCEEDS - CONT II. Annuitant and owner are different waived If the successor owner and the annuitant dies. elects to receive the Adjusted Policy Value, the Adjusted When we have due proof that the Policy Value must be annuitant died prior to the Annuity distributed: Commencement Date, the owner will become the new annuitant and no (1) by the end of 5 years after death proceeds are payable. If the the date of the deceased owner is also the deceased owner's death, or annuitant's surviving spouse, an (2) payments must begin no later amount equal to the excess, if any, than one year after the of the Guaranteed Minimum Death deceased owner's death and Benefit over the Policy Value will must be made for a period then be added to the Policy Value. certain or for the successor This amount will be added only once owner's lifetime, so long as Furthermore, all future surrender any period certain does not charges will be waived. exceed the successor owner's life expectancy. However, in lieu of becoming the new b) Successor owner is not the Annuitant, the owner may elect to deceased owner's surviving have the death proceeds distributed spouse. The Adjusted Policy to the beneficiary on the death of Value must be distributed as the Annuitant. This election must be provided in III.a)(1) or in writing and must be received by III.a)(2) above. us prior to the Annuitant's death. c) Successor owner is not a natural In such case, when we have due proof person. The Adjusted Policy that the annuitant died prior to the Value must be distributed as Annuity Commencement Date, we will provided in III.a)(1) above. provide the death proceeds to the d) No successor owner survives the beneficiary. deceased owner. The deceased owner's estate will become the a) If the owner has elected to have new owner (or the estate may the death proceeds paid as a lump name a new owner). The executor sum, the beneficiary must, within or Administrator must be named 60 days of our receipt of due in a form acceptable to us. The proof of the annuitant's death, Adjusted Policy Value must be either: distributed by the end of 5 1) receive the lump sum proceeds; or years after the date of the 2) elect to receive annuity deceased owner's death. payments. Such payments must begin within one year of our IV. More than one Owner. receipt of due proof of the annuitant's death and must be If there is more than one owner, made for a period certain or then the death of any owner will be for this beneficiary's treated the same as the death of lifetime, so long as any the owner. period certain does not exceed this beneficiary's life D. DEATH ON OR AFTER THE ANNUITY expectancy. COMMENCEMENT DATE b) Death proceeds which are not paid to or for the benefit of a The death proceeds on or after the natural person must be Annuity Commencement Date depend on the distributed by the end of 5 years payment option selected. If any owner after the date of the annuitant's dies on or after the Annuity death. Commencement Date, but before the entire interest in the policy is distributed, III. Annuitant and owner are different the remaining portion of such interest and the owner dies. in the policy will be distributed to the beneficiary at least as rapidly as under If the owner dies prior to the the method of distribution being used as Annuity Commencement Date and of the date of that owner's death. before the entire interest in the policy is distributed, the E. AN OWNER IS NOT AN INDIVIDUAL successor owner will become the new owner. The remaining portion of any In the case of a non tax-qualified interest in the policy must be annuity, if any owner or beneficial distributed to the extent provided owner, is not an individual, then for below in III.a), III.b), III.c), or purposes of the federal income tax III.d). mandatory distribution provisions in subsection C or D above, (1) the primary a) Successor owner is the deceased annuitant will be treated as the owner owner's surviving spouse. The of the policy, and (2) if there is any successor owner may elect to change in the primary annuitant, such a continue this policy rather than change will be treated as the death of receive the Adjusted Policy the owner. Value. If the policy is continued, all future Surrender Charges will be
DB322 PAGE 13 SECTION 10 - ANNUITY PAYMENTS A. GENERAL PAYMENT PROVISIONS Payee Payment Unless you specify otherwise, the payee shall be the annuitant, or the If this policy is in force on the beneficiary as defined in the Annuity Commencement Date, we will use Beneficiary provision. the Fixed Account portion and/or the Separate Account portion of the Adjusted Proof of Age Policy Value to make annuity payments to the Payee under Option 3 and/or 3-V, We may require proof of the age of respectively, with 10 years certain, or any person who has an annuity if elected, under one or more of the purchased under Options 3, 3-V, 5 and other options described in this section. 5-V of this section before we make However, the option(s) elected must the first payment. provide for lifetime income or income for a period of at least 60 months. You Minimum Proceeds will become the annuitant at the Annuity Commencement Date. Payments will be made If the proceeds are less than $2,000, at 1, 3, 6 or 12 month intervals. We we reserve the right to pay them out reserve the right to change the as a lump sum instead of applying frequency of payments to avoid making them to a payment option. payments of less than $50.00. Premium Tax Before the Annuity Commencement Date, if the death proceeds become payable or if We may be required by law to pay you surrender this policy, we will pay premium tax on the amount applied to any proceeds in one sum, or if elected, a payment option. If so, we will all or part of these proceeds may be deduct the premium tax before placed under one or more of the options applying the proceeds. described in this section. If we agree, the proceeds may be placed under some Supplementary Contract other method of payment instead. Once proceeds become payable and a Adjusted Age payment option has been selected, this policy will terminate and we Payments under Options 3 and 5 and the will issue a supplementary contract first payment under Options 3-V and 5-V to reflect the terms of the selected are determined based on the adjusted age option. The contract will name the of the annuitant The adjusted age is the payees and will describe the payment annuitant's actual age on the schedule. annuitant's nearest birthday, at the Annuity Commencement Date, adjusted as B. FIXED ACCOUNT PAYMENTS follows: Guaranteed Payment Options Annuity Commencement Date Adjusted Age The fixed account payment is - ------------------- ------------------ determined by multiplying each $1,000 Before 2001 Actual Age of policy proceeds allocated to a 2001 - 2010 Actual Age minus 1 fixed payment option by the amounts 2011 - 2020 Actual Age minus 2 shown on page 16 for the option you 2021 - 2030 Actual Age minus 3 select Options 1, 2 and 4 are based 2031 - 2040 Actual Age minus 4 on a guaranteed interest rate of 3%. After 2040 Actual Age minus 5 Options 3 and 5 are based on a Election of Optional Method of Payment guaranteed interest rate of 3%, and the "1983 Table a" (male, female, and Before the Annuity Commencement Date you unisex if required by law) mortality can elect or change a payment option. table improved to the year 2000 with You may elect, in a notice you sign projection scale G. (The "1983 Table which gives us the facts that we need, a" mortality rates are adjusted based annuity payments that may be either on improvements in mortality since variable, fixed, or a combination of 1983 to more appropriately reflect both If you elect a combination, you increased longevity. This is must also tell us what part of the accomplished using a set of policy proceeds on the Annuity improvement factors referred to as Commencement Date are to be applied to projection scale G.) provide each type of payment (You must also specify which Subaccounts). The Option 1 - Interest Payments amount of a combined payment will be the sum of the variable and fixed payments. We will pay the interest on the Payments under a variable payment option amount we use to provide annuity will reflect the investment performance payments in equal payments or this of the selected Subaccount of the amount may be left to accumulate for Separate Account. a period of time we and the Certificate Owner agree to. We and the Certificate Owner will agree on withdrawal rights when you elect this option. The interest rate we declare for this option may be different that the interest rate(s) credited prior to the Annuity Commencement Date. Option 2 - Income for a Specified Period We will make level payments only for the fixed period you choose. In the event of the death of the person receiving payments prior to the end of the fixed period elected, payment will be continued to that person's beneficiary or their present value may be paid in a single sum. No funds will remain at the end. S977 PAGE 14 SECTION 10 - ANNUITY PAYMENTS - CONT Option 3 - Life Income - You may capital gain distributions choose between: made by the fund for shares held in that Subaccount if 1. No Period Certain - We will make the ax-dividend date occurs level payments only during the during the Valuation Annuitant's lifetime. Period; plus or minus 2. 10 Years Certain - We will make (3) a per share credit or level payments for the longer of charge for any taxes the Annuitant's lifetime or ten reserved for, which we years. determine to have resulted from the investment 3. Guaranteed Return of Policy operations of the Proceeds - We will make level Subaccount. payments for the longer of the Annuitant's lifetime or until (b) is the net asset value of a the total dollar amount of fund share held in that payments we made to you equals Subaccount determined as of the the amount applied to this end of the immediately option. preceding Valuation Period. Option 4 - Income of a Specified (c) is a factor representing the Amount Mortality and Expense Risk Fee and Administrative Charge. This Payments are made for any specified factor is less than or equal amount until the amount applied to to, on an annual basis, the this option, with interest, are percentage shown on page 3 of exhausted. This will be a series of the daily net asset value of a level payments followed by a fund share held in the Separate smaller final payment In the event Account for that Subaccount. of the death of the person receiving payments prior to the Determination of the First Variable time proceeds with interest are Payment exhausted, payments will be continued to that person's The amount of the first variable beneficiary or their present value payment is determined by may be paid in a single sum. multiplying each $ 1,000 of policy proceeds allocated to a variable Option 5 - Joint and Survivor payment option by the amounts shown Annuity on page 17 for the variable option you select The tables are based on Payments are made during the joint a 5% effective annual Assumed lifetime of the Payee and a joint Investment Return and the "1983 Payee of your selection. Payments Table a" (male, female, and unisex will be made as long as either if required by law) mortality table person is living. improved to the year 2000 with projection scale G. (The "1983 Current Payment Options Table a" mortality rates are adjusted based on improvements in The amounts shown in the tables on mortality since 1983 to more page 12 are the guaranteed amounts. appropriately reflect increased Current amounts offered to longevity. This is accomplished individuals of the same class may using a set of improvement factors be obtained from us. referred to as projection scale G.) C. VARIABLE ACCOUNT PAYMENT OPTIONS Option 3-V - Life Income Variable Annuity Units An election may be made between: The policy proceeds you tell us to 1. "No Period Certain" - Payments apply to a variable payment option will be made during the will be used to purchase variable lifetime of the Annuitant. annuity units in your chosen Subaccounts. The dollar value of 2. "10 Years Certain" - Payments variable annuity units in your will be made for the longer of chosen Subaccounts will increase or the Annuitant's lifetime or ten decrease reflecting the investment years. In the event of the experience of your chosen death of the person receiving Subaccounts. The value of a payments prior to the end of variable annuity unit in a the period for which the particular Subaccount on any election was made, payments business day is equal to (a) will be continued to that multiplied by (b) multiplied by person's beneficiary or their (c), where: present value may be paid in a single sum. (a) is the variable annuity unit value for that Subaccount on Option 5-V - Joint and Survivor the immediately preceding Annuity business day; (b) is the net investment factor Payments are made as long as either for that Subaccount for the the annuitant or the joint Valuation Period; and annuitant is living. (c) is the Assumed Investment Return adjustment factor for Determination of Subsequent the Valuation Period. Variable Payments The Assumed Investment Return The amount of each variable annuity adjustment factor for the valuation payment after the first will period is the product of discount increase or decrease according to factors of .99986634 per day to the value of the variable annuity recognize the 5.0% effective annual units which reflect the investment Assumed Investment Return. experience of the selected. Subaccounts. Each variable annuity The net investment factor used to payment after the first will be calculate the value of a variable equal to the number of variable annuity unit in each Subaccount for annuity units in the selected the Valuation Period is determined Subaccounts multiplied by the by dividing (a) by (b) and variable annuity unit value on the subtracting (c) from the result, date the payment is made. The where: number of variable annuity units in each selected Subaccount is (a) is the net result of: determined by dividing the first variable annuity payment allocated (1) the net asset value of a to the Subaccount by the variable fund share held in that annuity unit value of that Subaccount determined as of Subaccount on the Annuity the end of the current Commencement Date. valuation period; plus (2) the per share amount of any dividend or SB977 PAGE 15 GUARANTEED FIXED ACCOUNT PAYMENT OPTIONS The amounts shown in these tables are the guaranteed amounts for each $1,000 of the proceeds. Higher current amounts may be available at the time of settlement.
- --------------------------------------------------------------------------------------------------------------------------- Option 2, Table I Option 3, Table II Option 3, Table III Option 3, Table IV - ------------------------- ------------------------------------------------------------------------------------------ Number Amount of Monthly Installment for Monthly Installment for Monthly Installment for Life of Years Monthly Life Life Guaranteed Return of Payable Installment No Period Certain 10 Years Certain Proceeds ------------------------------------------------------------------------------------------------ Age* Male Female Unisex Male Female Unisex Male Female Unisex - --------------------------------------------------------------------------------------------------------------------------- 50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70 $3.73 $3.49 $3.61 51 3.93 3.60 3.77 3.90 3.59 3.75 3.79 3.53 3.66 52 4.00 3.65 3.83 3.97 3.64 3.81 3.84 3.58 3.71 53 4.07 3.71 3.90 4.04 3.70 3.87 3.90 3.63 3.76 5 $17.91 54 4.15 3.77 3.97 4.11 3.75 3.94 3.96 3.68 3.82 6 15.14 55 4.23 3.83 4.04 4.19 3.82 4.01 4.03 3.73 3.88 7 13.16 56 4.32 3.90 4.11 4.27 3.88 4.08 4.10 3.79 3.94 8 11.68 57 4.41 3.97 4.19 4.35 3.95 4.15 4.17 3.85 4.00 9 10.53 58 4.50 4.05 4.28 4.44 4.02 4.24 4.24 3.91 4.07 10 9.61 59 4.61 4.13 4.37 4.53 4.10 4.32 4.32 3.97 4.14 11 8.86 60 4.72 4.21 4.47 4.63 4.18 4.41 4.40 4.04 4.22 12 8.24 61 4.84 4.30 4.57 4.74 4.26 4.51 4.49 4.12 4.30 13 7.71 62 4.96 4.40 4.68 4.85 4.35 4.61 4.58 4.19 4.38 14 7.26 63 5.10 4.50 4.80 4.97 4.45 4.71 4.68 4.28 4.47 15 6.87 64 5.24 4.61 4.93 5.09 4.55 4.83 4.78 4.36 4.56 16 6.53 65 5.40 4.73 5.06 5.22 4.66 4.95 4.88 4.45 4.66 17 6.23 66 5.56 4.85 5.21 5.36 4.77 5.07 4.99 4.55 4.76 18 5.96 67 5.74 4.99 5.36 5.50 4.89 5.20 5.11 4.65 4.87 19 5.73 68 5.93 5.13 5.53 5.65 5.02 5.34 5.24 4.76 4.98 20 5.51 69 6.13 5.29 5.71 5.80 5.15 5.49 5.37 4.87 5.10 70 6.34 5.45 5.90 5.96 5.30 5.64 5.51 4.99 5.23
- ------------------------------------------------------------------------------------------------------------------- Option 5, Table V - ------------------------------------------------------------------------------------------------------------------- Monthly Installment For Joint and Full Survivor - ------------------------------------------------------------------------------------------------------------------- Age of Age of Female Annuitant* Male ------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ------------------------------------------------------------------------------------------------------------------- 50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39 55 3.11 3.19 3.27 3.35 3.44 3.53 3.63 60 3.27 3.37 3.47 3.58 3.70 3.82 3.95 65 3.47 3.60 3.74 3.89 4.05 4.22 4.39 70 3.74 3.91 4.10 4.31 4.53 4.77 5.02
- ------------------------------------------------------------------------------------------------------------------- Monthly Installment For Unisex Joint and Full Survivor - ------------------------------------------------------------------------------------------------------------------- Age of Age of Joint Annuitant* First ------------------------------------------------------------------------------------------ Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than First First First First First First First - ------------------------------------------------------------------------------------------------------------------- 50 $3.04 $3.09 $3.15 $3.21 $3.27 $3.33 $3.39 55 3.17 3.24 3.32 3.40 3.48 3.56 3.63 60 3.34 3.44 3.54 3.64 3.75 3.85 3.95 65 3.57 3.70 3.83 3.97 4.11 4.26 4.39 70 3.87 4.04 4.22 4.42 4.62 4.82 5.01 - -------------------------------------------------------------------------------------------------------------------
*Adjusted Age as defined in Section 10.A. - -------------------------------------------------------------------------------- The annual, semi-annual or quarterly installments under Option 2 shall be the monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and for Options 3 and 5 the monthly installment shown multiplied by 11.80, 5.95 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. T831 PAGE 16 VARIABLE PAYMENT OPTIONS BASED ON ASSUMED INVESTMENT RETURN The amounts shown in these tables are the initial payment amounts based on a 5.0% Assumed Investment Return for each $1,000 of the proceeds.
- ------------------------------------------------------------------------------------------------------------------------------------ Option 3 - V, Table II Option 3 - V, Table III - --------------- ---------------------------------------------------------------------------------------------------------- Monthly Installment for Life Monthly Installment for Life No Period Certain 10 Years Certain -------------------------------------------------------------------------------------------------------------------- Age* Male Female Unisex Male Female Unisex - ------------------------------------------------------------------------------------------------------------------------------------ 50 $5.11 $4.81 $4.96 $5.07 $4.79 $4.94 51 5.17 4.85 5.02 5.13 4.83 4.99 52 5.24 4.90 5.07 5.19 4.88 5.04 53 5.31 4.95 5.13 5.25 4.93 5.10 54 5.38 5.01 5.20 5.32 4.98 5.16 55 5.46 5.06 5.26 5.39 5.04 5.22 56 5.54 5.12 5.34 5.47 5.09 5.28 57 5.63 5.19 5.41 5.54 5.16 5.36 58 5.72 5.26 5.49 5.63 5.22 5.43 59 5.82 5.34 5.58 5.72 5.29 5.51 60 5.93 5.42 5.68 5.81 5.37 5.60 61 6.04 5.50 5.78 5.91 5.44 5.69 62 6.17 5.60 5.89 6.02 5.53 5.78 63 6.30 5.69 6.00 6.13 5.62 5.88 64 6.44 5.80 6.13 6.25 5.71 5.99 65 6.60 5.91 6.26 6.37 5.82 6.10 66 6.76 6.04 6.40 6.50 5.92 6.22 67 6.94 6.17 6.56 6.63 6.04 6.35 68 7.13 6.31 6.72 6.77 6.16 6.48 69 7.33 6.46 6.90 6.92 6.29 6.62 70 7.55 6.63 7.09 7.07 6.43 6.76
- ------------------------------------------------------------------------------------------------------------------------------------ Option 5V, Table V - ------------------------------------------------------------------------------------------------------------------------------------ Monthly Installment For Joint and Full Survivor - ------------------------------------------------------------------------------------------------------------------------------------ Age of Age of Female Annuitant* Male ----------------------------------------------------------------------------------------------------------- Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than Male Male Male Male Male Male Male - ------------------------------------------------------------------------------------------------------------------------------------ 50 $4.32 $4.36 $4.41 $4.46 $4.51 $4.57 $4.62 55 4.42 4.47 4.53 4.60 4.67 4.75 4.83 60 4.54 4.62 4.70 4.80 4.90 5.01 5.12 65 4.71 4.82 4.94 5.07 5.22 5.37 5.53 70 4.95 5.10 5.27 5.46 5.67 5.89 6.13
- ------------------------------------------------------------------------------------------------------------------------------------ Monthly Installment For Unisex Joint and Full Survivor - ------------------------------------------------------------------------------------------------------------------------------------ Age of Age of Joint Annuitant* First ----------------------------------------------------------------------------------------------------------- Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years Less Than Less Than Less Than Less Than Less Than Same As More Than First First First First First First First - ------------------------------------------------------------------------------------------------------------------------------------ 50 $4.40 $4.45 $4.50 $4.55 $4.61 $4.67 $4.72 55 4.52 4.59 4.66 4.73 4.81 4.89 4.96 60 4.69 4.78 4.87 4.97 5.08 5.19 5.29 65 4.91 5.04 5.17 5.31 5.46 5.62 5.77 70 5.22 5.40 5.59 5.79 6.02 6.24 6.47 - ------------------------------------------------------------------------------------------------------------------------------------
*Adjusted Age as defined in Section 10.A. - -------------------------------------------------------------------------------- The annual, semi-annual or quarterly installments shall be the monthly installment shown for Options 3-V and 5-V multiplied by 11.70, 5.93 or 2.99 respectively. - -------------------------------------------------------------------------------- Dollar amounts of monthly installments not shown in the above tables will be calculated on the same basis as those shown and may be obtained from the Company. TB831 PAGE 17 SECTION 11 - GENERAL PROVISIONS THE CONTRACT RIGHTS OF OWNER The entire contract consists of The owner may, while the annuitant this policy, endorsements, if any, is living: and the application, or information provided in lieu thereof, signed by 1. Assign this policy. You. 2. Surrender the policy to us. MODIFICATION OF POLICY 3. Amend or modify the policy with No change in this policy is valid our consent. unless made in writing by us and approved by one of our officers. No 4. Receive annuity payments or name Registered Representative has a Payee to receive the payments. authority to change or waive any provision of Your policy. 5. Exercise, receive and enjoy every other right and benefit TAX QUALIFICATION contained in the policy. This policy is intended to qualify The use of these rights may be as an annuity contract for federal subject to the consent of any income tax purposes. The provisions assignee or irrevocable of this policy are to be beneficiary; and of the spouse in a interpreted to maintain such community or marital property qualification, notwithstanding any state. other provisions to the contrary. To maintain such tax qualification, Unless we have been notified of a we reserve the right to amend this community or marital property policy to reflect any interest in this policy, we will clarifications that may be needed rely on our good faith belief that or are appropriate to maintain such no such interest exists and will tax qualification or to conform assume no responsibility for this policy to any applicable inquiry. changes in the tax qualification requirements. We will send You a SUCCESSOR OWNER copy in the event of any such amendment If You refuse such an A successor owner can be named in amendment it must be by giving us the application, or information written notice, and Your refusal provided in lieu thereof, or in a may result in adverse tax notice you sign which gives us the consequences. facts that we need. The successor owner will become the new owner NON -PARTICIPATING when you die, if you die before the annuitant. If no successor owner This policy will not share in our survives you and you die before the surplus earnings. annuitant, your estate will become the new owner. AGE OR SEX CORRECTIONS CHANGE OF OWNERSHIP If the age or sex of the annuitant has been misstated, the benefits In the case of a non-tax qualified will be those which the premiums annuity, you can change the owner paid would have purchased for the of this policy, from yourself to a correct age and sex. If required by new owner, in a notice you sign law to ignore differences in the which gives us the facts that we sex of the annuitant, the annuity need. When this change takes payments will be determined using effect, all rights of ownership in the unisex factors in Section 10. this policy will pass to the new owner. Any underpayment made by us will be paid with the next payment Any A change of owner or successor overpayment made by us will be owner will not be effective until deducted from future payments. Any it is recorded in our records. underpayment or overpayment, will After it has been so recorded, the include interest at 5% per year, change will take effect as of the from the date of the wrong payment date you signed the notice. to the date of the adjustment. However, if the annuitant dies before the notice has been so INCONTESTABILITY recorded, it will not be effective as to those proceeds we have paid This policy shall be incontestable before the change was recorded in from the Policy Date. our records. We may require that the change be endorsed in the EVIDENCE OF SURVIVAL policy. Changing the owner or naming a new successor owner We have the right to require cancels any prior choice of satisfactory evidence that a person successor owner, but does not was alive if a payment is based on change the beneficiary or the that person being alive. No payment annuitant. will be made until we receive the evidence. A change of ownership may result in adverse tax consequences. SETTLEMENT ANNUITY COMMENCEMENT DATE Any payment by us under this policy is payable at our Home Office. The Annuity Commencement Date is the date annuity payments begin. This date may not be later than the last day of the policy month starting after the Annuitant attains age 85, except as expressly allowed by us, but in no event later than the last day of the policy month following the month in which the Annuitant attains age 95. You may change the Annuity Commencement Date at any time before the Annuity Commencement Date by giving us 30 days' written notice. H745 PAGE 18 SECTION 11 - GENERAL PROVISIONS - CONT ASSIGNMENT become payable. If there is more than one beneficiary and you failed (a) In the case of a non tax- to specify their interest, they qualified annuity, this policy will share equally. Payment will be may be assigned. The made to the named contingent assignment must be in writing beneficiary(ies) only if ail and filed with us. primary beneficiaries have died before the death proceeds become (b) We assume no responsibility payable. If any primary beneficiary for the validity of any is alive at the time the death assignment Any claim made proceeds become payable, but dies under an assignment shall be before receiving their payment, subject to proof of interest their share will be paid to their and the extent of the estate. assignment. In cases where the annuitant dies (c) This policy may be applied for and the owner (who is not the and issued to qualify as a tax- annuitant) elected to receive the qualified annuity under death benefit in accordance with certain sections of the Section 9, if the annuitant's Internal Revenue Code. estate has been named as Ownership of this policy then beneficiary, then payment will be is restricted so that it will made to the owner. comply with provisions of the Internal Revenue Code. PROTECTION OF PROCEEDS Assignment of this policy may Unless you so direct by filing result in adverse tax consequences. written notice with us, no beneficiary may assign any payments BENEFICIARY under this policy before the same are due. To the extent permitted by Death proceeds, when payable in law, no payments under this policy accordance with Section 9, are will be subject to the claims of payable to the designated creditors of any beneficiary. beneficiary or beneficiaries. Such beneficiary(ies) must be named in DEFERMENT the application, or information provided in lieu thereof, and may We will pay any Partial Withdrawals be changed without consent (unless or Surrender proceeds from the irrevocably designated or required Separate Account within 7 days by law) by notifying us in writing after we receive all requirements on a form acceptable to us. The that we need. However, it may change will take effect upon the happen that the New York Stock date you sign it, whether or not Exchange is closed for trading you are living when we receive it. (other than the usual weekend or The notice must have been holiday closings), or the postmarked (or show other evidence Securities and Exchange Commission of delivery that is acceptable to restricts trading or determines us) on or before the date of death that an emergency exists. If so, it Your most recent change of may not be practical for us to beneficiary notice will replace any determine the investment experience prior beneficiary designations. No of the Separate Account In that change will apply to any payment we case, we may defer transfers among made before the written notice was the Subaccounts and to the Fixed received. If an irrevocable Account, and determination or beneficiary dies, you may designate payment of Partial Withdrawals or a new beneficiary. Surrender proceeds. You may direct that the beneficiary When permitted by law, we may defer shall not have the right to paying any Partial Withdrawals or withdraw, assign or commute any sum Surrender proceeds from the Fixed payable under an option. In the Account for up to 6 months from the absence of such election or date we receive your request. If direction, the beneficiary may the Owner dies after the request is change the manner of payment or received, but before the request is make an election of any option. processed, the request will be processed before the death proceeds If any primary or contingent are determined. Interest will be beneficiary dies before the paid on any amount deferred for 30 annuitant, that beneficiary's days or more. This rate will be 3% interest in this policy ends with per year unless otherwise required that beneficiary's death Only those by law. beneficiaries living at the time of the annuitant's death will be REPORTS TO OWNER eligible to receive their share of the Death Proceeds. In the event no We will give you an annual report contingent beneficiaries have been at least once each Policy Year. named and all primary beneficiaries This report will show the number have died before the death proceeds and value of the accumulation units become payable, the owner(s) will held in each of the Subaccounts as become the beneficiary(ies) unless well as the value of the Fixed elected otherwise in accordance Account. It will also give you the with Section 9. If both primary and Death Benefit, Cash Value; and any contingent beneficiaries have been other facts required by law or named, payment will be made to the regulation. named primary beneficiaries living at the time the death proceeds J745 PAGE 19 PFL Life Insurance Company Home Office located at 4333 Edgewood Road NE., Cedar Rapids, Iowa 52499 [LOGO PFL LIFE INSURANCE APPEARS HERE] Flexible Premium Variable Annuity Income Payable At Annuity Commencement Date Benefits Based On The Performance Of The Separate Account Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 10C.) Non -Participating INDEX
Page Page Accumulation Units........... 9 Incontestability.............. 18 Age or Sex Corrections....... 18 Modification of Policy........ 18 Annuity Commencement Date.... 18 Nonparticipation.............. 18 Annuity Payments............. 14, 15 Owner......................... 18 Adjusted Policy Value........ 4 Partial Withdrawals........... 5, 6, 7 Assignment................... 19 Payee......................... 14 Beneficiary.................. 19 Payment of Premiums........... 4 Cash Value................... 5 Payment Option Tables......... 16, 17 Contract..................... 18 Policy Data Page.............. 3 Death Proceeds............... 12, 13 Policy Value.................. 4 Definitions.................. 2 Proof of Age.................. 14 Dollar Cost Averaging Option. 11 Protection of Proceeds........ 19 Evidence of Survival......... 18 Right to Cancel............... 1 Excess Interest Adjustment... 5 Separate Account.............. 8, 9 Fixed Account................ 10 Service Charge................ 4 Guaranteed Minimum Death Settlement.................... 18 Benefit.................... 12 Surrender Charges............. 7 Guaranteed Return of Fixed Transfers..................... 10, 11 Account Premium Payments... 7 Guaranteed Periods........... 10
Y604 EX-5.A 7 EXHIBIT (5) (A) EXHIBIT (5)(a) -------------- GROUP MASTER APPLICATION Application for Group Insurance to PFL LIFE INSURANCE COMPANY Home Office: 4333 Edgewood Rd NE, Cedar Rapids IA 52499-0001 ________________________________________________________________________________ hereby applies for Group Policy No. ____________ to which this application is attached Said Group Policy is hereby approved and the terms thereof are hereby accepted. This application is executed in duplicate, with one part being attached to said Policy and the other returned to PFL LIFE INSURANCE COMPANY. It is understood and agreed that no agent of PFL Life Insurance Company has power on behalf of said Company to make or modify this or any other application for insurance. This application supersedes any previous application for the said Group Policy. Dated at _______________________________ this _____ day of __________, _________ __________________________________ By _______________________________ _________________________________ __________________________________ Agent Signature Agent Number _________________________________ Agent Name (please print) A-M-1000 (IA) EX-5.B 8 EXHIBIT (5) (B) EXHIBIT (5)(b) -------------- GROUP CERTIFICATE ENROLLMENT APPLICATION
- ----------------------------------------------------------------------------------------------------------------------------------- Variable Annuity Enrollment Form Issued by: PFL Life Insurance Company ("PFL Life") 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001 Mail the enrollment form and check: PFL Life Insurance Company, Attn: Variable Annuity Dept. - ----------------------------------------------------------------------------------------------------------------------------------- In the event the owner is a trust, please provide verification of trustees. 1. OWNER If no annuitant is Name: Phone No.: specified in #2, the ------------------------------------------------------------------------------------------------------------- Owner will be the Annuitant. Address: City: State: Zip: ------------------------------------------------------------------------------------------------------------- [_] Male [_] Female SS#/TIN [_][_][_]-[_][_]-[_][_][_][_] Birthdate [_][_]/[_][_]/[_][_][_][_] - ----------------------------------------------------------------------------------------------------------------------------------- JOINT OWNER(S) Name: Phone No.: ------------------------------------------------------------------------------------------------------------- Address: City: State: Zip: ------------------------------------------------------------------------------------------------------------- [_] Male [_] Female SS#/TIN [_][_][_]-[_][_]-[_][_][_][_] Birthdate [_][_]/[_][_]/[_][_][_][_] ------------------------------------------------------------------------------------------------------------ - ---------------------------------------------------------------------------------------------------------------------------------- 2. ANNUITANT Name: Relationship to Owner: Complete only if ------------------------------------------------------------------------------------------------------------ different from Address: City: State: Zip: Owner. ------------------------------------------------------------------------------------------------------------ [_] Male [_] Female SS#/ TIN [_][_][_]-[_][_]-[_][_][_][_] Birthdate [_][_]/[_][_]/ [_][_][_][_] - ---------------------------------------------------------------------------------------------------------------------------------- 3. BENEFICIARY(IES) Primary: Relationship to Annuitant: % --------------------------------------------------------------------------------------------- ---------- Primary: Relationship to Annuitant: % --------------------------------------------------------------------------------------------- ---------- Contingent: Relationship to Annuitant: % --------------------------------------------------------------------------------------------- ---------- Contingent: Relationship to Annuitant: % --------------------------------------------------------------------------------------------- ---------- - ------------------------------------------------------------------------------------------------------------------------------- 4. TELEPHONE TRANSFERS Following is authorized to make telephone transfer requests (check one only): [_] Owner(s) only, or [_] Owner(s) and Owner's Registered Representative (Print Rep Name) _________________________________ - -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- 5. ALLOCATION OF PREMIUM PAYMENTS Please check selected funds and fixed accounts. The initial premium will be allocated as selected here. If Dollar Cost Averaging, see section 7 on reverse side. VARIABLE OPTIONS: Morgan Stanley Asset Management Inc. Montgomery Asset Management, L.L.C. [_] Endeavor Asset Allocation Portfolio .0% [_] Endeavor Select 50 Portfolio .0% ----- ----- Initial Premium [_] Endeavor Money Market Portfolio .0% $ ----- MFS Investment Management T. Rowe Price Associates, Inc. [_] Endeavor High Yield Portfolio .0% Make check payable [_] T. Rowe Price Equity Income Portfolio .0% ----- to PFL Life ----- Insurance Company. [_] T. Rowe Price Growth Stock Portfolio .0% ----- Type of Annuity; [_] T. Rowe Price International Janus Capital Corporation [_] Non- qualified Stock Portfolio .0% [_] Endeavor Janus Growth Portfolio .0% ----- ----- Qualified Types: Also complete OpCap Advisors First Trust Advisors L.P. Section 6. [_] Endeavor Value Equity Portfolio .0% [_] The Dow(SM) Target 10 (July Series) .0% [_] IRA ----- ----- [_] Roth IRA [_] Endeavor Opportunity Value Portfolio .0% [_] The Dow(SM) Target 5 (July Series) .0% [_] SEP/IRA ----- ----- [_] 403(b) [_] The DowSM Target 10 (January Series) .0% [_] Keogh ----- [_] Roth Conversion J.P. Morgan Investment Management Inc. [_] The DowSM Target 5 (January Series) .0% [_] Other _________ ----- ___________________ [_] Endeavor Enhanced Index Portfolio .0% ___________________ ----- .0% ---------------------------------------------- Dreyfus Corporation .0% ---------------------------------------------- [_] Dreyfus U.S. Government .0% ---------------------------------------------- Securities Portfolio .0% .0% ----- ---------------------------------------------- [_] Dreyfus Small Cap Value Portfolio .0% .0% ----- ---------------------------------------------- FIXED OPTIONS: [_] Dollar Cost Averaging .0% ----- (Must complete section 7.) [_] 1 Year Guarantee Period .0% ----- [_] 3 Year Guarantee Period .0% ----- [_] 5 Year Guarantee Period .0% ----- [_] 7 Year Guarantee Period .0% ----- Total Variable and Fixed 100% ----- . Policy values, when allocated to any of the Variable Options are not guaranteed as to fixed dollar amount. . When funds are allocated to Fixed Account Guarantee Periods, policy values under certificate may increase or decrease in accordance with Excess Interest Adjustment Prior to the end of Guarantee Period. - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- 6. QUALIFIED PLAN INFORMATION IRA/SEP/ROTH IRA ROTH IRA Rollover $ _____________ Contribution for tax year ________ Date first established $ _____________ Trustee to Trustee Transfer [_ ][_]/[_][_]/[_][_][_][_] or date of conversion $ _____________ Rollover from [_]IRA [_]403(b) [_]Pension $__________________ Portion previously taxed [_] Other _____________________________
VA-ENROLL 5/99 18371 399 - ------------------------------------------------------------------------------------------------------------------------------------ 7. DOLLAR COST AVERAGING Transfer Frequency: Transfer to (indicate investment option and percentage): PROGRAM _________________________ _____.0% _____________________________ _____.0% DCA Program Options _________________________ _____.0% _____________________________ _____.0% [_] 6 month program _________________________ _____.0% _____________________________ _____.0% Authorized by [_] 12 month program _________________________ _____.0% _____________________________ _____.0% Owner Signature Number of transfers ____ _________________________ _____.0% _____________________________ _____.0% in Section 11. _________________________ _____.0% _____________________________ _____.0% Total: 100% Other Frequency Options [_] Monthly (6 min, 24 max) [_] Quarterly (4 min, 8 max) - ----------------------------------------------------------------------------------------------------------------------------------- 8. OTHER Family Income Protector Option: [_] No [_] Yes (Available at an additional cost, see prospectus) Please complete. - ------------------------------------------------------------------------------------------------------------------------------------ 9. MINIMUM DEATH BENEFIT Your selection cannot be changed after the certificate has been issued. If no option specified, Return of Select one Premium Death Benefit will apply. [_] 5% Annually Compounding Death Benefit: (Only if owner(s) and annuitant are under age 75 at time of purchase). Annual Mortality and Expense (M&E) Risk Fee and Admin. Charge 1.60%. [_] Double Enchanced Death Benefit: (Only available if owner(s) and the annuitant are under age 81 at time of purchase). Annual M&E Risk Fee and Admin. Charge 1.60%. [_] Return of Premium Death Benefit: Annual M&E Risk Fee and Admin. Charge 1.30%. - ------------------------------------------------------------------------------------------------------------------------------------ 10. REPLACEMENT INFORMATION Will this annuity replace or change any existing annuity of life insurance? [_] No [_] Yes (If Yes, complete the following): Company: Policy No.: --------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 11. SIGNATURE(S) . Unless I have notified the Company of a community or marital property interest in this certificate, the OF AUTHORIZATION Company will rely on a good faith belief that no such interest exists and will assume no responsibility ACCEPTANCE for injury. . To the best of my knowledge and belief, my answers to the questions on this application are correct and true, and I agree that this enrollment form becomes a part of the annuity certificate when issued to me. . I (we) am in receipt of a current prospectus for this variable annuity. . This enrollment form is subject to acceptance by PFL Life. If this enrollment form is rejected for any reason, PFL Life will be liable only for return of premiums paid. [_] Check here if you want to be sent a copy of Statement of Additional Information. I HAVE REVIEWED MY EXISTING ANNUITY COVERAGE AND FIND THIS COVERAGE SUITABLE FOR MY NEEDS. Signed at: City: State: Date: --------------------------------------------------------------------------------------------------------------- Owner(s): Annuitant (if not Owner): --------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 12. AGENT Do you have any reason to believe the annuity for will replace or change any existing annuity or life INFORMATION insurance? [_] No [_] Yes I HAVE REVIEWED THE APPLICANT'S EXISTING ANNUITY COVERAGE AND FIND THIS COVERAGE IS SUITABLE FOR HIS/HER NEEDS. Registered Representative/ Licensed Agent Name (please print): Signature: -------------------------------------------------------------------------------------------------------------- Phone No.: SS#/TIN [_][_][_]-[_][_]-[_][_][_][_] [_]A [_]B [_]C ----------------------------------------- PFL Life Agent #: -------------------------------------------------------------------------------------------------------------- Firm Name: -------------------------------------------------------------------------------------------------------------- Firm Address: --------------------------------------------------------------------------------------------------------------
VA-ENROLL 5/99 (B) EX-5.C 9 EXHIBIT (5) (C) EXHIBIT (5)(C) -------------- INDIVIDUAL APPLICATION
- -------------------------------------------------------------------------------------------------------------------------------- Application for Variable Annuity Issued by: PFL Life Insurance Company ("PFL Life") 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001 Mail the applicaton and check: PFL Life Insurance Company, Attn: Variable Annuity Dept. - -------------------------------------------------------------------------------------------------------------------------------- In the event the owner is a trust, please provide verification of trustees. 1. OWNER Name: Phone No. --------------------------------------------------------------------------------------------------------- If no annuitant is specified in #2, the Address: City: State: Zip: --------------------------------------------------------------------------------------------------------- Owner will be the Annuitant. [_] Male [_] Female SS#/ TIN [_][_][_] - [_][_] - [_][_][_][_] Birthdate [_][_]/[_][_] /[_][_][_][_] - -------------------------------------------------------------------------------------------------------------------------------- JOINT OWNER(S) Name: Phone No. --------------------------------------------------------------------------------------------------------- Address: City: State: Zip: --------------------------------------------------------------------------------------------------------- [_] Male [_] Female SS#/ TIN [_][_][_] - [_][_] - [_][_][_][_] Birthdate [_][_]/[_][_] /[_][_][_][_] - -------------------------------------------------------------------------------------------------------------------------------- 2. ANNUITANT Name: Relationship to Owner: --------------------------------------------------------------------------------------------------------- Complete only if Address: City: State: Zip: --------------------------------------------------------------------------------------------------------- different from Owner. [_] Male [_] Female SS#/ TIN [_][_][_] - [_][_] - [_][_][_][_] Birthdate [_][_]/[_][_] /[_][_][_][_] - -------------------------------------------------------------------------------------------------------------------------------- 3. BENEFICIARY(IES) Primary: Relationship to Annuitant: % ------------------------------------------------------------------------------------------------ ------- Primary: Relationship to Annuitant: % ------------------------------------------------------------------------------------------------ ------- Contingent: Relationship to Annuitant: % ------------------------------------------------------------------------------------------------ ------- Contingent: Relationship to Annuitant: % ------------------------------------------------------------------------------------------------ ------- - -------------------------------------------------------------------------------------------------------------------------------- 4. TELEPHONE Following is authorized to make telephone transfer requests (check one only): TRANSFERS [_] Owner(s) only, or [_] Owner(s) and Owner's Registered Representative (Print Rep Name) _________________________________ - --------------------------------------------------------------------------------------------------------------------------------
5. ALLOCATION Please check selected funds and fixed accounts. The initial premium will be allocated as selected here. OF PREMIUM If Dollar Cost Averaging, section 7 on reverse side. PAYMENTS VARIABLE OPTIONS: Morgan Stanley Asset Management Inc. Montgomery Asset Management, L.L.C. [_] Endeavor Asset Allocation Portfolio .0% [_] Endeavor Select 50 Portfolio .0% ---- ---- Initial Premium [_] Endeavor Money Market Portfolio .0% ---- $ MFS Investment Management T. Rowe Price Associates, Inc. [_] Endeavor High Yield Portfolio .0% ---- Make Check payable [_] T. Rowe Price Equity Income .0% ---- to PFL Life insurance [_] T. Rowe Price Growth Stock .0% ---- Company [_] T. Rowe Price International Janus Capital Corporation Stock Portfolio .0% [_] Endeavor Janus Growth Portfolio .0% ---- ---- Type of Annuity: [_] Non-qualified OpCap Advisors ___________________________________ .0% ---- Qualified Types: [_] Endeavor Value Equity Portfolio .0% ___________________________________ .0% ---- Also complete [_] Endeavor Opportunity Value Portfolio .0% ___________________________________ .0% ---- ---- Section 6 [_] IRA J.P. Morgan Investment Management Inc. .0% ___________________________________ .0% ---- ---- [_] Roth IRA [_] Endeavor Enhanced Index Portfolio .0% ___________________________________ .0% ---- ---- [_] SEP/IRA [_] 403(b) Dreyfus Corporation [_] Keogh [_] Dreyfus U.S. Government .0% ---- [_] Roth Conversion Securities Portfolio [_] Other ________ [_] Dreyfus Small Cap Value Portfolio .0% ---- __________________ __________________ FIXED OPTIONS: [_] Dollar Cost Averaging .0% ---- (Must complete section 7.) [_] 1 year Guarantee Period .0% ---- [_] 3 year Guarantee Period .0% ---- [_] 5 year Guarantee Period .0% ---- [_] 7 year Guarantee Period .0% ---- Total Varirable and Fixed 100% ---- . Policy values, when allocated to any of the Variable Options are not guaranteed as to fixed dollar amount. . When funds are allocated to Fixed Account Guarantee Periods, policy values under policy may increase or decrease in accordance with Excess Interest Adjustment prior to the end of guarantee Period. - ---------------------------------------------------------------------------------------------------------------------------------
6. QUALIFIED PLAN IRA/SEP/ROTH IRA ROTH IRA Rollover INFORMATION $ ________________ Contribution for tax year ________ [_][_]/[_][_]/[_][_][_][_] Date first established Or date of conversion $ ________________ Trustee to Trustee Transfer $ ________________ Rollover from [_] IRA [_] Pension $ __________________ Portion previously taxed [_] Other ________________________
VA-APP R799 7. DOLLAR COST AVERAGING Transfer Frequency: Transfer to (indicate investment option and percentage): PROGRAM _____________________________ _____.0% __________________________ _____.0% DCA Program Options _____________________________ _____.0% __________________________ _____.0% Authorized by Owner [_] 6 month program _____________________________ _____.0% __________________________ _____.0% Signature in Section 11. [_] 2 month program _____________________________ _____.0% __________________________ _____.0% Number of transfers _____ _____________________________ _____.0% __________________________ _____.0% Other Frequency Options _____________________________ _____.0% __________________________ _____.0% [_] Monthly (6 min, 24 max) _____________________________ _____.0% __________________________ _____.0% [_] Quarterly (4 min, 8 max) _____________________________ _____.0% __________________________ _____.0% Total: 100% - ----------------------------------------------------------------------------------------------------------------------------------- 8. OTHER Family Income Protector Option: [_] No [_] Yes (Available at an additional cost, see prospectus) Please complete. - ----------------------------------------------------------------------------------------------------------------------------------- 9. REPLACEMENT Will this annuity replace or change any existing annuity of life insurance? [_] No [_] Yes (If Yes, INFORMATION complete the following) Company: Policy No.: ---------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 10. SIGNATURE(S) . Unless I have notified the Company of a community or marital property interest in this certificate, the OF AUTHORIZATION Company will rely on a good faith belief that no such interest exists and will assume no responsibility ACCEPTANCE for injury. . To the best of my knowledge and belief, my answers to the questions on this application are correct and true, and I agree that this application becomes a part of the annuity certificate when issued to me. . I (we) am in receipt of a current prospectus for this variable annuity. . This application is subject to acceptance by PFL Life. If this application is rejected for any reason, PFL Life will be liable only for return of premiums paid. [_] Check here if you want to be sent a copy of Statement of Additional Information. I HAVE REVIEWED MY EXISTING ANNUITY COVERAGE AND FIND THIS COVERAGE SUITABLE FOR MY NEEDS. Signed at: City: State: Date: ---------------------------------------------------------------------------------------------------------- Owner(s): Annuitant (if not Owner): ---------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 11. AGENT Do you have any reason to believe the annuity for will replace or change any existing annuity or life INFORMATION insurance? [_] No [_] Yes I HAVE REVIEWED THE APPLICANT'S EXISTING ANNUITY COVERAGE AND FIND THIS COVERAGE IS SUITABLE FOR HIS/HER NEEDS. Registered Representative/ Licensed Agent Name (please print): Signature: ---------------------------------------------------------------------------------------------------------- Phone No.: SS#/TIN [_][_][_]-[_][_]-[_][_][_][_] [_] [_] A [_] B [_] C -------------------------------------- PFL Life Agent #: ---------------------------------------------------------------------------------------------------------- Firm Name: ---------------------------------------------------------------------------------------------------------- Firm Address: ----------------------------------------------------------------------------------------------------------
VA-APP R799 B EX-8.C 10 EXHIBIT (8) (C) EXHIBIT (8)(c) -------------- AMENDMENT TO PARTICIPATION AGREEMENT AMENDED ------- SCHEDULE A ---------- EFFECTIVE JUNE 1, 1999 Account(s), Policy(ies) and Portfolio(s) Subject To the Participation Agreement Among Endeavor Series Trust, Endeavor Management Company, And PFL Life Insurance Company Accounts: PFL Endeavor Variable Annuity Account - -------- AUSA Endeavor Variable Annuity Account Peoples Benefit Life Insurance Company Separate Account V Peoples Benefit Life Insurance Company Separate Account C PFL Endeavor Variable Life Account PFL Life Variable Annuity Account C Policies: The Endeavor Variable Annuity - -------- The Endeavor Platinum Variable Annuity The AUSA Endeavor Variable Annuity The Advisor's Edge Variable Annuity The Endeavor Variable Life The Endeavor Generations Plus Variable Annuity Portfolios: Endeavor Asset Allocation - ---------- Endeavor Money Market T. Rowe Price Equity Income T. Rowe Price Growth Stock T. Rowe Price International Stock Endeavor Value Equity Endeavor Opportunity Value Endeavor Enhanced Index Dreyfus U.S. Government Securities Dreyfus Small Cap Value Endeavor Select 50 Endeavor High Yield Endeavor Janus Growth Portfolio Approved: -------- Endeavor Management Co. PFL Life Insurance Company By: /s/ Vincent J. McGuinness, By: /s/ William L. Busler ------------------------------ ------------------------- Vincent J. McGuinness, Jr. William L. Busler Title: President Title: President ---------------------------- ---------------------- Date: June 24, 1999 Date: June 24, 1999 ------------------------------ ----------------------- AUSA Life Insurance Company, Inc. Endeavor Series Trust By: /s/ William L. Busler By: /s/ Vincent J. McGuinness, Jr. ---------------------- ------------------------------- William L. Busler Vincent J. McGuinness, Jr. Title: Vice President Title: President ------------------- ---------------------------- Date: June 24, 1999 Date: June 24, 1999 -------------------- ----------------------------- Peoples Benefit Life Insurance Company By: /s/ Larry N. Norman ---------------------- Title: Vice President ------------------- Date: June 24, 1999 -------------------- 2 EX-9 11 EXHIBIT (9) EXHIBIT (9) ----------- OPINION AND CONSENT OF COUNSEL [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] June 7, 1999 PFL Life Insurance Company 4333 Edgewood Road N.E. Cedar Rapids, Iowa 52499-0001 Dear Sir/Madam: With reference to the Registration Statement on Form N-4 by PFL Life Insurance Company and PFL Life Variable Annuity Account C with the Securities and Exchange Commission covering extra credit variable annuity contracts, I have examined such documents and such law as I considered necessary and appropriate, and on the basis of such examination, it is my opinion that: 1. PFL Life Insurance Company is duly organized and validly existing under the laws of the State of Iowa and has been duly authorized to issue immediate variable annuity contracts by the Department of Insurance of the State of Iowa. 2. PFL Variable Annuity Account C is a duly authorized and existing separate account established pursuant to the provisions of Section 508A.1 of the Iowa Insurance Code. 3. The Generations Plus Variable Annuity Contracts, when issued as contemplated by said Form N-4 Registration Statement, will constitute legal, validly issued and binding obligations of PFL Life Insurance Company. I hereby consent to the filing of this opinion as an exhibit to said N-4 Registration Statement. Very truly yours, PFL LIFE INSURANCE COMPANY /s/ Frank A. Camp Frank A. Camp Division General Counsel Financial Markets Division EX-10.B 12 EXHIBIT (10) (B) EXHIBIT (10)(b) --------------- OPINION AND CONSENT OF ACTUARY [LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE] June 7, 1999 PFL Life Insurance Company 4333 Edgewood Road NE Cedar Rapids, Iowa 52499-0001 Re: PFL Life Variable Annuity Account C Registration on Form N-4 SEC File No. 333-_______ Dear Sir/Madam: With regard to the above registration statement, I have examined such documents and made such inquiries as I have deemed necessary and appropriate, and on the basis of such examination, have the following opinions: Fees and charges deducted under the PFL Endeavor Generations Plus Variable Annuity policies are those deemed necessary to appropriately reflect: (1) the expenses incurred in the acquisition and distribution of the Policies, (2) the expenses associated with the development and servicing of the policies, (3) the assumption of certain risks arising from the operation and management of the Policies and that provides for a reasonable margin of profit. Fees and charges assessed include: (i) Service Charge and Administrative Charge (ii) Contingent Deferred Sales Change (Surrender Charge) (iii) Mortality and Expense Risk Free (M & E) (iv) Taxes (including Premium and other Taxes if applicable) The magnitude of each of the individual charges listed above in (i) through (iv) is established in the pricing of the PFL Endeavor Generations Plus Variable Annuity, to achieve a reasonable Return on Investment (ROI), which is within the range of industry practice with respect to comparable variable annuity products. PFL Life Insurance Company Page 2 June 7, 1999 In the process of determining the reasonable ROI, each individual charge is also established within the reasonable range of industry practice. For example, in conjunction with the pricing process the company has analyzed publicly available information pertaining to similar industry products, taking into consideration such factors as current charge levels, the existence of charge level guarantees, and guaranteed annuity rates. The methodology and results of the comparative surveys included in this analysis are maintained at the company's administrative offices. Except by coincidence, it is not expected that actual charges assessed in a given year would exactly offset actual expenses incurred. Acquisition expenses (as well as major product and/or systems development expenses) are incurred "up front" and recovered, with a reasonable profit margin, through future years' charges. In addition, the company cannot increase certain charges under the Policies in the pricing process. Therefore, in my opinion, the fees and charges deducted under the Policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the company. I hereby consent to the use of this opinion, which is included as an Exhibit to the Registration Statement. /s/ Calvin R. Birkey - --------------------------- Calvin R. Birkey, FSA, MAAA Managing Actuary PFL Life Insurance Company -----END PRIVACY-ENHANCED MESSAGE-----