N-4 1 initialregstmt.htm initialregstmt.htm

As filed with the Securities and Exchange Commission on February 18, 2011
1933 Act Registration No. 333-______
1940 Act Registration No. 811-08517

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /

AMENDMENT NO. 262 /X/

Lincoln Life Variable Annuity Account N
(Exact Name of Registrant)

Lincoln InvestmentSolutionsSM

 
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
1300 South Clinton Street
Post Office Box 1110
Fort Wayne, Indiana 46801
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, Including Area Code: (260) 455-2000

Nicole S. Jones, Esquire
The Lincoln National Life Insurance Company
1300 South Clinton Street
Post Office Box 1110
Fort Wayne, IN 46801
(Name and Address of Agent for Service)

Copy to:
Mary Jo Ardington, Esquire
The Lincoln National Life Insurance Company
1300 South Clinton Street
Post Office Box 1110
Fort Wayne, IN 46801

Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of the Registration Statement.

Title of Securities being registered: Interests in a separate account under individual flexible payment deferred variable annuity contracts.

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.


 

 
 

 

Lincoln InvestmentSolutionsSM
 
Lincoln Life Variable Annuity Account N
 
Individual Variable Annuity Contracts
 
Home Office:
 
The Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46802
www.LincolnFinancial.com
1-888-868-2583
 
This prospectus describes an individual flexible premium deferred variable annuity contract that is issued by The Lincoln National Life Insurance Company (Lincoln Life). This prospectus is primarily for use with nonqualified plans and qualified retirement plans under Sections 408 (IRAs) and 408A (Roth IRAs) of the tax code. Generally, you do not pay federal income tax on the contract's growth until it is paid out. Qualified retirement plans already provide for tax deferral. Therefore, there should be reasons other than tax deferral for acquiring the contract within a qualified plan. The contract is designed to accumulate contract value and to provide retirement income that you cannot outlive or for an agreed upon time. These benefits may be a variable or fixed amount, if available, or a combination of both. If you die before the annuity commencement date, we will pay your beneficiary a death benefit. In the alternative, you generally may choose to receive a death benefit upon the death of the annuitant.
 
The minimum initial purchase payment for the contract is $10,000. Additional purchase payments may be made to the contract and must be at least $100 per payment ($25 if transmitted electronically), and at least $300 annually.
 
Except as noted below, you choose whether your contract value accumulates on a variable or a fixed (guaranteed) basis or both. Your contract may not offer a fixed account or if permitted by your contract, we may discontinue accepting purchase payments or transfers into the fixed side of the contract at any time. If any portion of your contract value is in the fixed account, we promise to pay you your principal and a minimum interest rate. For the life of your contract or during certain periods, we may impose restrictions on the fixed account. Also, an interest adjustment may be applied to any withdrawal, surrender or transfer from the fixed account before the expi- ration date of a guaranteed period.
 
You should carefully consider whether or not this contract is the best product for you.
 
All purchase payments for benefits on a variable basis will be placed in Lincoln Life Variable Annuity Account N (variable annuity account [VAA]). The VAA is a segregated investment account of Lincoln Life. You take all the investment risk on the contract value and the retirement income for amounts placed into one or more of the contract's variable options. If the subaccounts you select make money, your contract value goes up; if they lose money, it goes down. How much it goes up or down depends on the performance of the subaccounts you select. We do not guarantee how any of the variable options or their funds will perform. Also, neither the
 
U.S. Government nor any federal agency insures or guarantees your investment in the contract. The contracts are not bank deposits and are not endorsed by any bank or government agency.
 
The available funds are listed below:
 
BlackRock Variable Series Funds, Inc: 
Lincoln Variable Insurance Products Trust (Standard Class): 
   BlackRock Global Allocation V.I. Fund 
LVIP Baron Growth Opportunities Fund 
Delaware VIP ® Trust (Standard Class): 
LVIP BlackRock Inflation Protected Bond Fund 
   Delaware VIP ® Diversified Income Series 
LVIP Capital Growth Fund 
   Delaware VIP ® Limited-Term Diversified Income Series 
LVIP Cohen & Steers Global Real Estate Fund 
DWS Variable Series II (Class A): 
LVIP Columbia Value Opportunities Fund 
   DWS Alternative Asset Allocation Plus VIP Portfolio 
LVIP Delaware Bond Fund 
Fidelity ® Variable Insurance Products (Initial Class): 
LVIP Delaware Diversified Floating Rate Fund 
   Fidelity ® VIP Contrafund ® Portfolio 
LVIP Delaware Social Awareness Fund 
   Fidelity ® VIP Mid Cap Portfolio 
LVIP Delaware Special Opportunities Fund 
 
LVIP Dimensional Non-US Equity Fund 
 
LVIP Dimensional U.S. Equity Fund 
 
LVIP Global Income Fund 
 
LVIP Janus Capital Appreciation Fund 
 
LVIP JP Morgan High Yield Fund 
 
LVIP MFS International Growth Fund 
 
LVIP MFS Value Fund 
 
LVIP Mid-Cap Value Fund 


1
 
 
 

 
LVIP Mondrian International Value Fund
LVIP Money Market Fund
LVIP SSgA Bond Index Fund
LVIP SSgA Conservative Index Allocation Fund
LVIP SSgA Conservative Structured Allocation Fund
LVIP SSgA Developed International 150 Fund
LVIP SSgA Emerging Markets 100 Fund
LVIP SSgA Global Tactical Allocation Fund
LVIP SSgA International Index Fund
LVIP SSgA Large Cap 100 Fund
LVIP SSgA Moderate Index Allocation Fund
LVIP SSgA Moderate Structured Allocation Fund
LVIP SSgA Moderately Aggressive Index Allocation Fund
LVIP SSgA Moderately Aggressive Structured Allocation Fund
LVIP SSgA S&P 500 Index Fund*
LVIP SSgA Small-Cap Index Fund
LVIP SSgA Small-Mid Cap 200 Fund
LVIP T. Rowe Price Growth Stock Fund
LVIP T. Rowe Price Structured Mid-Cap Growth Fund
LVIP Templeton Growth Fund
LVIP Total Bond Fund
LVIP Turner Mid-Cap Growth Fund
LVIP Vanguard International Equity ETF Fund
LVIP Vanguard Domestic Equity ETF Fund
LVIP Wells Fargo Intrinsic Value Fund
LVIP Wilshire Conservative Profile Fund
LVIP Wilshire Moderate Profile Fund
LVIP Wilshire Moderately Aggressive Profile Fund
 
PIMCO Variable Insurance Trust (Advisor Class):
PIMCO VIT CommodityRealReturn ® Strategy Portfolio
 
*"S&P 500" is a trademark of The McGraw-Hill Companies, Inc. and has been licensed for use by Lincoln Variable Insurance Products Trust and its affiliates. The product is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of purchasing the product. (Please see the Statement of Additional Information which sets forth additional disclaimers and limitations of liability on behalf of S&P.)
 
This prospectus gives you information about the contracts that you should know before you decide to buy a contract and make pur- chase payments. You should also review the prospectuses for the funds that accompany this prospectus, and keep all prospectuses for future reference.
 
Neither the SEC nor any state securities commission has approved this contract or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
 
More information about the contracts is in the current Statement of Additional Information (SAI), dated the same date as this prospec- tus. The SAI is incorporated by reference into this prospectus and is legally part of this prospectus. For a free copy of the SAI, write: The Lincoln National Life Insurance Company, PO Box 2348, Fort Wayne, IN 46801-2348, or call 1-888-868-2583. The SAI and other information about Lincoln Life and the VAA are also available on the SEC's website (http://www.sec.gov). There is a table of contents for the SAI on the last page of this prospectus.
 
_______, 2011
 
2
 
 
 

 
Table of Contents 
 
 
Item 
Page 
4
6
11 
13 
14 
15 
18 
24 
24 
25 
28 
     Death Benefit 
29 
32 
34 
34 
43 
48 
52 
56 
     Annuity Payouts 
60 
67 
70 
70 
75 
     Voting Rights 
75 
76 
76 
76 
 
77 
 
 

 
 
 

 


3
 
 
 

 
Special Terms
 
In this prospectus, the following terms have the indicated meanings:
 
4LATER ® Advantage or 4LATER ® - An option that provides an Income Base during the accumulation period, which can be used to establish a Guaranteed Income Benefit with i4LIFE ® Advantage in the future.
 
Account or variable annuity account (VAA) - The segregated investment account, Account N, into which we set aside and invest the assets for the variable side of the contract offered in this prospectus.
 
Account Value - Under i4LIFE ® Advantage, the initial Account Value is the contract value on the valuation date that i4LIFE ® Advantage is effective, less any applicable premium taxes. Dur- ing the Access Period, the Account Value equals the initial Account Value plus investment gains minus losses, regular income payments, Guaranteed Income Benefit payments, and withdrawals.
 
Accumulation unit - A measure used to calculate contract value for the variable side of the contract before the annuity commencement date and to calculate the i4LIFE ® Advantage Account Value during the Access Period.
 
Annuitant - The person upon whose life the annuity benefit payments are based, and upon whose life a death benefit may be paid.
 
Annuity commencement date - The valuation date when funds are withdrawn or converted into annuity units or fixed dollar payout for payment of retirement income benefits under the annuity payout option you select.
 
Annuity payout - An amount paid at regular intervals after the annuity commencement date under one of several options available to the annuitant and/or any other payee. This amount may be paid on a variable or fixed basis, or a combination of both.
 
Annuity unit - A measure used to calculate the amount of annuity payouts for the variable side of the contract after the annuity commencement date. See Annuity Payouts.
 
Beneficiary - The person you choose to receive any death benefit paid if you die before the annuity commencement date.
 
Contractowner (you, your, owner) - The person who can exer- cise the rights within the contract (decides on investment allo- cations, transfers, payout option, designates the beneficiary, etc.). Usually, but not always, the contractowner is the annui- tant.
 
Contract value (may be referenced to as account value in mar- keting materials) - At a given time before the annuity com- mencement date, the total value of all accumulation units for a contract plus the value of the fixed side of the contract, if any.
 
Contract year - Each one-year period starting with the effec- tive date of the contract and starting with each contract anniver- sary after that.
 
Death benefit - Before the annuity commencement date, the amount payable to your designated beneficiary if the contractowner dies or, if selected, to the contractowner if the annuitant dies. See The Contracts - Death Benefit for a description of the various death benefit options.
 
Good Order - The actual receipt at our Home Office of the requested transaction in writing or by other means we accept, along with all information and supporting legal documentation necessary to effect the transaction. The forms we provide will identify the necessary documentation. We may, in our sole dis- cretion, determine whether any particular transaction request is in good order, and we reserve the right to change or waive any good order requirements at any time.
 
Guaranteed Income Benefit - An option that provides a guar- anteed minimum payout floor for the i4LIFE ® Advantage regular income payments. The calculation of the Guaranteed Income Benefit or the features applicable to the Guaranteed Income Benefit may vary based on the rider provisions applicable to certain contractowners.
 
i4LIFE ® Advantage - An income program which combines periodic variable lifetime income payments with the ability to make withdrawals during a defined period.
 
Lincoln Life (we, us, our) - The Lincoln National Life Insur- ance Company.
 
Lincoln Lifetime IncomeSM Advantage 2.0 – Provides mini- mum guaranteed lifetime periodic withdrawals that may increase based on automatic enhancements and age-based increases to the withdrawal amount.
 
Lincoln SmartSecurity ® Advantage – Provides minimum guar- anteed periodic withdrawals for life, regardless of the invest- ment performance of the contract and provided certain condi- tions are met, that may increase due to subsequent purchase payments and step-ups.
 
Living Benefit – A general reference to certain riders that may be available for purchase that provide some type of a minimum guarantee while you are alive. These riders are the Lincoln SmartSecurity ® Advantage, Lincoln Lifetime IncomeSM Advan- tage 2.0, 4LATER ® Advantage, and i4LIFE ® Advantage (with or without the Guaranteed Income Benefit). If you select a Living Benefit rider, excess withdrawals may have adverse effects on the benefit, and you may be subject to Investment Require- ments.
 
Purchase payments - Amounts paid into the contract.
 
Subaccount - The portion of the VAA that reflects investments in accumulation and annuity units of a class of a particular fund available under the contracts. There is a separate subaccount which corresponds to each class of a fund.
 
4
 
 
 

 
 
Valuation date - Each day the New York Stock Exchange (NYSE) is open for trading.
 
Valuation period - The period starting at the close of trading (currently 4:00 p.m. New York time) on each day that the NYSE
 
is open for trading (valuation date) and ending at the close of such trading on the next valuation date.
 
5
 
 
 

 
Expense Tables
 
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the contract.
 
The first table describes the fees and expenses that you will pay at the time that you buy the contract, surrender the contract, or transfer contract value between investment options, and/or (if available) the fixed account. State premium taxes may also be deducted.
 
We also may apply an interest adjustment to amounts being withdrawn, surrendered or transferred from a guaranteed period account (except for dollar cost averaging and regular income payments under i4LIFE ® Advantage). See Fixed Side of the Contract.
 
The next table describes the fees and expenses that you will pay periodically during the time that you own the contract, not including fund fees and expenses or rider charges.
 
Periodic Charges (Other Than Fund Expenses or Rider Charges): 
 
Separate Account Annual Expenses (as a percentage of average daily net assets in the subaccounts):1 
 
Account Value Death Benefit 
 
   Mortality and Expense Risk Charge 
0.50% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
0.60% 
Guarantee of Principal Death Benefit 
 
   Mortality and Expense Risk Charge 
0.55% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
0.65% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
 
   Mortality and Expense Risk Charge 
0.80% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
0.90% 
Estate Enhancement Benefit (EEB) 
 
   Mortality and Expense Risk Charge 
1.00% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
1.10% 

1 The mortality and expense risk charge and administrative charge together are 1.10% on and after the Annuity Commencement Date.
 
The following table describes the additional fees and expenses that you will pay periodically during the time that you own the contract if you purchase an optional rider other than i4LIFE ® Advantage. (Only one rider may be purchased at a time.)
 
Periodic Optional Rider Charges – Other Than i4LIFE ® Advantage: 
Single Life 
Joint Life 
Lincoln Lifetime IncomeSM Advantage 2.0:1 
   
   Guaranteed Maximum Charge 
2.00% 
2.00% 
   Current Charge 
1.05% 
1.25% 
Lincoln SmartSecurity ® Advantage:2 
   
   Guaranteed Maximum Charge 
1.50% 
1.50% 
   Current Charge 
0.65% 
0.80% 
4LATER ® Advantage:3 
   
   Guaranteed Maximum Charge 
1.50% 
N/A 
   Current Charge 
0.65% 
 
Lincoln SmartIncomeSM Inflation4 
   
   Maximum Unscheduled Payment Charge 
7.00% 
N/A 


1     
As an annualized percentage of the Income Base (initial purchase payment or contract value at the time of election), as increased for subsequent purchase payments, Automatic Annual Step-ups, 5% Enhancements and decreased by Excess Withdrawals. This charge is deducted from the contract value on a quarterly basis.
 
2     
As an annualized percentage of the Guaranteed Amount (initial purchase payment or contract value at the time of election), as increased for subsequent purchase payments and step-ups and decreased for withdrawals. This charge is deducted from the contract value on a quarterly basis.
 
3     
As an annualized percentage of the Income Base (initial purchase payment or contract value at the time of election), as increased for subsequent purchase payments, automatic 15% Enhancements, and resets and decreases for withdrawals. This charge is deducted from the subaccounts on a quarterly basis.
6
 
 
 

 
4     
As a percentage of the Unscheduled Payment. There is not charge for this rider unless Unscheduled Payments are taken. The Unscheduled Payment charge percentage is reduced over a 7-year period at the following rates: 7%, 7%, 7%, 6%, 5%, 4%, 3%. This charge is assessed only on and after the Annuity Commencement Date.
The following tables describe the fees and expenses that you will pay periodically during the time that you own the contract if you purchase i4LIFE ® Advantage. The fees and expenses set forth below replace the separate account annual expense described above.
 
1) If you had not previously purchased Lincoln Lifetime IncomeSM Advantage 2.0 and you have not also purchased the 4LATER ® Advantage Guaranteed Income Benefit:
 
Periodic Optional Rider Charges – i4LIFE ® Advantage Without Guaranteed Income Benefit (version 4):* 
   
Account Value Death Benefit 
 
1.00% 
Guarantee of Principal Death Benefit 
 
1.05% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
 
1.30% 
       *As an annualized percentage of average Account Value, computed daily. This charge is assessed only on and after the periodic income commencement date. 
         During the Lifetime Income Period, the charge will be 1.00%. 
   
Periodic Optional Rider Charges – i4LIFE ® Advantage With Guaranteed Income Benefit (version 4):* 
   
 
Single Life 
Joint Life 
Account Value Death Benefit 
   
   Guaranteed Maximum Charge 
3.00% 
3.00% 
   Current Charge 
1.65% 
1.85% 
Guarantee of Principal Death Benefit 
   
   Guaranteed Maximum Charge 
3.05% 
3.05% 
   Current Charge 
1.70% 
1.90% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
   
   Guaranteed Maximum Charge 
3.30% 
3.30% 
   Current Charge 
1.95% 
2.15% 
       *As an annualized percentage of average Account Value, computed daily. This charge is assessed only on and after the periodic income commencement date. 


2) If you dropped Lincoln Lifetime IncomeSM Advantage 2.0 to purchase i4LIFE ® Advantage and you have not also purchased the 4LATER ® Advantage Guaranteed Income Benefit:
 
Periodic Optional Rider Charges – i4LIFE ® Advantage With Guar- 
 
anteed Income Benefit (version 4): 
 
Account Value Death Benefit plus 
 
   Guaranteed Maximum Charge** 
0.60%* plus 
 
the guaranteed maximum charge of 2.00% for Lincoln Lifetime IncomeSM 
 
Advantage 2.0 
   Current Charge** 
1.05% Single Life 
 
1.25% Joint Life 
Guarantee of Principal Death Benefit plus 
 
   Guaranteed Maximum Charge** 
0.65%* plus 
 
the guaranteed maximum charge of 2.00% for Lincoln Lifetime IncomeSM 
 
Advantage 2.0 
   Current Charge** 
1.05% Single Life 
 
1.25% Joint Life 
Enhanced Guaranteed Minimum Death Benefit 
 
(EGMDB) plus 
 
   Guaranteed Maximum Charge** 
0.90%* plus 
 
the guaranteed maximum charge of 2.00% for Lincoln Lifetime IncomeSM 
 
Advantage 2.0 
   Current Charge** 
1.05% Single Life 
 
1.25% Joint Life 


*As a percentage of average daily net assets in the subaccounts. This charge is assessed on and after the periodic income commencement date.
 
**As an annualized percentage of the Income Base, except the initial charge is assessed as an annualized percentage of the greater of contract value or the Income Base (carried over from Lincoln Lifetime IncomeSM Advantage 2.0). This charge is deducted from contract value on a quarterly basis before the Lifetime Income
 
7
 
 

 
 
Period and annually thereafter, and only on and after the periodic income commencement date. The charge may be increased upon an automatic annual step-up and decreased upon an Excess Withdrawal.
 
3) If you purchase i4LIFE ® Advantage with the 4LATER ® Advantage Guaranteed Income Benefit: 
 
 Periodic Optional Rider Charges – i4LIFE ® Advantage With 4LATER ® Advantage Guaranteed Income Benefit:* 
 
 Account Value Death Benefit 
 
     Guaranteed Maximum Charge 
2.50% 
     Current Charge 
1.65% 
 Guarantee of Principal Death Benefit 
 
     Guaranteed Maximum Charge 
2.55% 
     Current Charge 
1.70% 
 Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
 
     Guaranteed Maximum Charge 
2.80% 
     Current Charge 
1.95% 


*As an annualized percentage of average Account Value, computed daily. This charge is assessed only on and after the periodic income commencement date.
 
These charges are explained in detail in the Charges and Other Deductions section of this prospectus.
 
The next item shows the minimum and maximum total annual operating expenses charged by the funds that you may pay periodi- cally during the time that you own the contract. The expenses are for the year ended December 31, 2010. More detail concerning each fund's fees and expenses is contained in the prospectus for each fund.
 
 
Maximum 
Minimum 
 
Total Annual Fund Operating Expenses 
   
(expenses that are deducted from fund assets, 
   
including management fees, distribution and/or 
   
service (12b-1) fees, and other expenses): 
5.32% 
0.57% 
Net Total Annual Fund Operating Expenses 
   
(after contractual waivers/reimbursements*): 
1.84% 
0.57% 


*43 of the funds have entered into contractual waiver or reimbursement arrangements that may reduce fund management and other fees and/or expenses during the period of the arrangement. These arrangements vary in length, but no arrangement will terminate before April 30, 2012.
 
The following table shows the expenses charged by each fund for the year ended December 31, 2010:
 
(as a percentage of each fund's average net assets):
 
                     
Total 
         
Other 
     
Total 
Total 
Expenses 
 
Management 
 
12b-1 Fees 
 
Expenses 
     
Expenses 
Contractual 
(after 
 
Fees (before 
 
(before any 
 
(before any 
 
Acquired 
 
(before any 
waivers/ 
Contractual 
 
any waivers/ 
 
waivers/ 
 
waivers/ 
 
Fund 
 
waivers/ 
reimburse- 
waivers/ 
 
reimburse- 
 
reimburse- 
 
reimburse- 
 
Fees and 
 
reimburse- 
ments 
reimburse- 
 
ments) 
+
ments) 
+
ments) 
+
Expenses 
=
ments) 
(if any) 
ments) 
 
BlackRock Global Allocation V.I. Fund 
                     
Delaware VIP ® Diversified Income Series 
                     
Delaware VIP ® Limited-Term Diversified Income Series 
                     
DWS Alternative Asset Allocation Plus VIP Portfolio 
                     
Fidelity ® VIP Contrafund ® Portfolio 
                     
Fidelity ® VIP Mid Cap Portfolio 
                     
LVIP Baron Growth Opportunities Fund(1) 
1.00 
     
0.09 
 
0.00 
 
1.34 
-0.05 
1.29 
LVIP BlackRock Inflation Protected Bond Fund(2) 
0.45 
     
0.11 
 
0.00 
 
0.81 
   
LVIP Capital Growth Fund(3) 
0.73 
     
0.10 
 
0.00 
 
1.08 
-0.02 
1.06 
LVIP Cohen & Steers Global Real Estate Fund(4) 
0.95 
     
0.19 
 
0.00 
 
1.39 
-0.22 
1.17 
LVIP Columbia Value Opportunities Fund 
1.05 
     
0.20 
 
0.00 
 
1.50 
   
LVIP Delaware Bond Fund 
0.33 
     
0.08 
 
0.00 
 
0.76 
   
LVIP Delaware Diversified Floating Rate Fund(2)(5) 
0.60 
     
0.45 
 
0.00 
 
1.30 
-0.25 
1.05 
LVIP Delaware Social Awareness Fund 
0.39 
     
0.09 
 
0.00 
 
0.83 
   


8
 
 
 

                     
Total 
         
Other 
     
Total 
Total 
Expenses 
 
Management 
 
12b-1 Fees 
 
Expenses 
     
Expenses 
Contractual 
(after 
 
Fees (before 
 
(before any 
 
(before any 
 
Acquired 
 
(before any 
waivers/ 
Contractual 
 
any waivers/ 
 
waivers/ 
 
waivers/ 
 
Fund 
 
waivers/ 
reimburse- 
waivers/ 
 
reimburse- 
 
reimburse- 
 
reimburse- 
 
Fees and 
 
reimburse- 
ments 
reimburse- 
 
ments) 
+
ments) 
+
ments) 
+
Expenses 
=
ments) 
(if any) 
ments) 
LVIP Delaware Special Opportunities Fund 
0.42% 
     
0.09% 
 
0.00% 
 
0.86% 
   
LVIP Global Income Fund(6) 
0.65 
     
0.19 
 
0.00 
 
1.09 
-0.09% 
1.00% 
LVIP Janus Capital Appreciation Fund(7) 
0.75 
     
0.10 
 
0.00 
 
1.10 
-0.09 
1.01 
LVIP J.P. Morgan High Yield Fund(8) 
0.65 
     
0.19 
 
0.00 
 
1.09 
-0.02 
1.07 
LVIP MFS International Growth Fund(9) 
0.91 
     
0.15 
 
0.00 
 
1.31 
-0.02 
1.29 
LVIP MFS Value Fund 
0.65 
     
0.08 
 
0.00 
 
0.98 
   
LVIP Mid-Cap Value Fund(10) 
0.95 
     
0.15 
 
0.00 
 
1.35 
-0.06 
1.29 
LVIP Mondrian International Value Fund 
0.74 
     
0.12 
 
0.00 
 
1.11 
   
 
LVIP Money Market Fund 
0.34 
     
0.09 
 
0.00 
 
0.68 
   
LVIP SSgA Bond Index Fund(11) 
0.40 
     
0.08 
 
0.00 
 
0.73 
-0.07 
0.66 
LVIP SSgA Conservative Index Allocation Fund(12) 
0.25 
     
1.05 
 
0.40 
 
1.95 
-1.10 
0.85 
LVIP SSgA Conservative Structured Allocation Fund(12) 
0.25 
     
0.14 
 
0.42 
 
1.06 
-0.19 
0.87 
LVIP SSgA Developed International 150 Fund(13) 
0.75 
     
0.35 
 
0.00 
 
1.35 
-0.35 
1.00 
LVIP SSgA Emerging Markets 100 Fund(14) 
1.09 
     
0.34 
 
0.00 
 
1.68 
-0.69 
0.99 
LVIP SSgA Global Tactical Allocation Fund(15) 
0.25 
     
0.11 
 
0.38 
 
0.99 
   
LVIP SSgA International Index Fund(16) 
0.40 
     
0.33 
 
0.00 
 
0.98 
-0.13 
0.85 
LVIP SSgA Large Cap 100 Fund(17) 
0.52 
     
0.09 
 
0.00 
 
0.86 
-0.12 
0.74 
LVIP SSgA Moderate Index Allocation Fund(12) 
0.25 
     
0.55 
 
0.40 
 
1.45 
-0.60 
0.85 
LVIP SSgA Moderate Structured Allocation Fund(12) 
0.25 
     
0.10 
 
0.43 
 
1.03 
-0.15 
0.88 
LVIP SSgA Moderately Aggressive Index Allocation Fund(12) 
0.25 
     
1.05 
 
0.41 
 
1.96 
-1.10 
0.86 
 
LVIP SSgA Moderately Aggressive Structured Allocation 
                     
   Fund(12) 
0.25 
     
0.27 
 
0.42 
 
1.19 
-0.32 
0.87 
LVIP SSgA Small/Mid Cap 200 Fund(18) 
0.69 
     
0.17 
 
0.00 
 
1.11 
-0.29 
0.82 
LVIP SSgA S&P 500 Index Fund 
0.23 
     
0.09 
 
0.00 
 
0.57 
   
LVIP SSgA Small-Cap Index Fund 
0.32 
     
0.14 
 
0.00 
 
0.71 
   
 
LVIP T. Rowe Price Growth Stock Fund 
0.73 
     
0.09 
 
0.00 
 
1.07 
   
 
LVIP T. Rowe Price Structured Mid-Cap Growth Fund 
0.74 
     
0.11 
 
0.00 
 
1.10 
   
LVIP Templeton Growth Fund 
0.74 
     
0.11 
 
0.00 
 
1.10 
   
LVIP Turner Mid-Cap Growth Fund(19) 
0.90 
     
0.18 
 
0.00 
 
1.33 
-0.10 
1.23 
LVIP Vanguard International Equity ETF Fund 
                     
LVIP Wells Fargo Intrinsic Value Fund(20) 
0.75 
     
0.09 
 
0.00 
 
1.09 
-0.04 
1.05 
LVIP Wilshire Conservative Profile Fund(21) 
0.25 
     
0.05 
 
0.69 
 
1.24 
-0.10 
1.14 
LVIP Wilshire Moderate Profile Fund(21) 
0.25 
     
0.04 
 
0.77 
 
1.31 
-0.09 
1.22 
LVIP Wilshire Moderately Aggressive Profile Fund(21) 
0.25 
     
0.04 
 
0.80 
 
1.34 
-0.09 
1.25 
   
PIMCO VIT CommodityRealReturn ® Strategy Portfolio
(22)(23)(24)(25)(26) 
0.74 
     
0.09 
 
0.13 
 
1.21 
-0.13 
1.08 


(1)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Annual Fund Operating Expenses exceed 1.29% of the average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(2)     
Other expenses are based on estimated amounts for the current fiscal year.
 
 
(3)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Standard Class to the extent that the fund's Total
 
Annual Fund Operating Expenses exceed 1.06% of average daily net assets. The Agreement will continue at least through April 30, 2012.
 
(4)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.22% of the first $250 million of average net assets of the fund and 0.32% of the excess over $250 million of average daily nets assets of the fund. The agreement will continue at least through April 30, 2012.
9
 
 
 

 
(5)     
Other expenses are based on estimated amounts for the current fiscal year. Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Expenses exceed 1.05% of average daily net assets. The agreement will continue at least through April 30, 2012.
 
 
(6)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.05% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012. LIA has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Annual Fund Operating Expenses exceed 1.00% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(7)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.15% on the first $100 million of average daily net assets of the Fund; and 0.10% on the next $150 million of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(8)     
Other expenses are based on estimated amounts for the current fiscal year. Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Expenses exceed 1.07% of average daily net assets of the fund.The agreement will continue at least through April 30, 2012.
 
 
(9)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the Fund's Standard Class to the extent that the Total Annual Fund Operating Expenses exceed 1.29% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(10)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.05% of the first $25 million of average net assets of the Fund. The agreement will continue at least through April 30, 2012.
 
 
 
LIA has contractually agreed to reimburse the Fund's Standard Class to the extent that the Total Annual Fund Operating Expenses exceed 1.29% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(11)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.07% on the first $500 million of average daily net assets of the fund and 0.12% of average daily net assets of the fund in excess of $500 million. This waiver will continue at least through April 30, 2012.
 
 
(12)     
Other expenses are based on estimated amounts for the current fiscal year. Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.10% of average daily net assets of the fund. The agreement will continue at least though April 30, 2012. LIA has also contractually agreed to reimburse the fund's Standard Class to the extent that the Total Expenses (excluding underlying fund fees and expenses) exceeds 0.45% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
(13)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.35% on the first $100 million of average daily net assets of the fund and 0.43% of average daily net assets of the fund in excess of $100 million. The agreement will continue at least through April 30, 2012.
 
 
(14)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.69% on the first $100 million of average daily net assets of the Fund and 0.76% of average daily net assets of the fund in excess of $100 million. The agreement will continue at least through April 30, 2012.
 
 
(15)     
The fee table has been restated to reflect the fees and expenses of the fund as a result of fund strategy changes effective July 30, 2010. The Total Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operation expenses of the fund and does not include Acquired Fund Fees and Expenses.
 
 
(16)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.06% on the first $500 million of average daily net assets of the fund and 0.09% of
 
average daily net assets of the fund in excess of $500 million. The agreement will continue at least through April 30, 2012.
 
LIA has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Annual Fund Operating Expenses exceed 0.85% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
(17)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.12% on the first $100 million of average daily net assets of the fund and 0.22% of average daily net assets of the fund in excess of $100 million. The agreement will continue at least through April 30, 2012.
 
 
(18)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.29% on the first $100 million of average daily net assets of the fund and 0.39% of average daily net assets of the fund in excess of $100 million. The agreement will continue at least through April 30, 2012.
 
 
(19)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund; 0.10% on the first $25 million of average daily net assets of the fund and 0.05% on the next $50 million of average daily net assets. The agreement will continue at least through April 30, 2012.
 
 
(20)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.03% on the first $250 million of average daily net assets of the fund; 0.08% on the next $500 million and 0.13% of average daily net assets in excess of $750 million. The agreement will continue at least through April 30, 2012.
 
 
(21)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.05% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012.
 
 
 
LIA has contractually agreed to reimburse the fund's Standard Class to the extent that the Total Annual Fund Operating Expenses (excluding underlying fund fees and expenses) exceed 0.45% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012. The "Acquired Fund Fees and Expenses" in the chart are based on the 2009 fees and expenses of the underlying funds that were owned by the fund during 2009 and are provided to show you an estimate of the underlying fees and expenses attributable to the fund. The fund's expense ratio will vary depending on the actual allocations to the underlying funds and the actual expense of the underlying funds.
 
 
(22)     
PIMCO has contractually agreed to waive the management fee and administration fee it received from the Portfolio in an amount equal to the management fee paid to PIMCO by the Subsidiary as described. This waiver may not be terminated by PIMCO and will remain in effect as long as PIMCO's contract with the Subsidiary is in place.
 
 
(23)     
The Subsidiary has entered into a separate contract with PIMCO for the management of the Subsidiary's portfolio pursuant to which the Subsidiary pays PIMCO management fee and administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets.
 
 
(24)     
The Total Annual Portfolio Operating Expenses do not match the Ratio of Expense to Average Net Assets of the Portfolio, as set forth in the Financial Highlights table of the shareholder report, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Portfolio and does not include Acquired Fund Fees and Expenses.
 
 
(25)     
"Other Expenses" reflect interest expense. Interest expense is based on the amounts incurred during the Portfolio's most recent fiscal year as a result of entering into certain investments, such as reverse repurchase agreements. This interest expense is required to be treated as an expense of the Portfolio for accounting purposes, but the amount of the interest expense (if any) will vary with the Portfolio's use of those investments (like reverse repurchase agreements) as an investment strategy.
 
 
(26)     
"Management Fees" reflect an advisory and a supervisory and administrative fee payable by the Portfolio to PIMCO.
 
Certain underlying funds have reserved the right to impose fees when fund shares are redeemed within a specified period of time of purchase ("redemption fees") which are not reflected in
 
10
 
 
 

 
the table above. As of the date of this prospectus, none have done so. See The Contracts - Market Timing for a discussion of redemption fees.
 
For information concerning compensation paid for the sale of the contracts, see Distribution of the Contracts.
 
EXAMPLES
 
This Example is intended to help you compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include contractowner transaction expenses, separate account annual expenses, and fund fees and expenses.
 
The Example assumes that you invest $10,000 in the contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year, the maximum fees and expenses of any of the funds and that the EEB death benefit and Lincoln Lifetime IncomeSM Advantage 2.0 at the guaranteed maximum charge are in effect. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
 
1) If you surrender your contract at the end of the applicable time period: 
       
 
                                                                                                                                                                                 1 year
3 years 
5 years 
10 years 
 
                                                                                                                                                                                     $x,xxx
$x,xxx 
$x,xxx 
$x,xxx 
 
 
2) If you annuitize or do not surrender your contract at the end of the applicable time period: 
       
 
                                                                                                                                                                                 1 year
3 years 
5 years 
10 years 
 
                                                                                                                                                                                     $xxx
$x,xxx 
$x,xxx 
$x,xxx 
 


For more information, see Charges and Other Deductions in this prospectus, and the prospectuses for the funds. Premium taxes may also apply, although they do not appear in the examples. Different fees and expenses not reflected in the examples may be imposed during a period in which regular income payments or annuity payouts are made. See The Contracts - i4LIFE ® Advantage, Guaran- teed Income Benefit with i4LIFE ® Advantage, 4LATER ® Advantage and Annuity Payouts, including Lincoln SmartIncomeSM Inflation.
 
These examples should not be considered a representation of past or future expenses. Actual expenses may be more or less than those shown.
 
Summary of Common Questions
 
What kind of contract am I buying? It is an individual variable or fixed and/or interest adjusted, if applicable, annuity contract between you and Lincoln Life. This prospectus primarily describes the variable side of the contract. See The Contracts. The contract and cer- tain riders, benefits, service features and enhancements may not be available in all states, and the charges may vary in certain states. You should refer to your contract for any state specific provisions. Please check with your investment representative regarding their availability.
 
What is the variable annuity account (VAA)? It is a separate account we established under Indiana insurance law, and registered with the SEC as a unit investment trust. VAA assets are allocated to one or more subaccounts, according to your investment choices. VAA assets are not chargeable with liabilities arising out of any other business which we may conduct. See Variable Annuity Account.
 
What are Investment Requirements? If you elect one of the following riders: Lincoln Lifetime IncomeSM Advantage 2.0, 4LATER ® Advantage, Lincoln SmartSecurity ® Advantage, or i4LIFE ® Advantage with the Guaranteed Income Benefit, you will be subject to cer- tain requirements for your subaccount investments. You will be limited in how much you can invest in certain subaccounts. See The Contracts - Investment Requirements.
 
What are my investment choices? Based upon your instruction for purchase payments, the VAA applies your purchase payments to buy shares in one or more of the investment options. In turn, each fund holds a portfolio of securities consistent with its investment policy. See Investments of the Variable Annuity Account - Description of the Funds.
 
Who invests my money? Several different investment advisers manage the investment options. See Investments of the Variable Annuity Account - Description of the Funds.
 
How does the contract work? If we approve your application, we will send you a contract. When you make purchase payments during the accumulation phase, you buy accumulation units. If you decide to receive an annuity payout, your accumulation units are con- verted to annuity units. Your annuity payouts will be based on the number of annuity units you receive and the value of each annuity unit on payout days. See The Contracts.
 
What charges do I pay under the contract? We apply a charge to the daily net asset value of the VAA that consists of a mortality and expense risk charge according to the death benefit you select. There is an administrative charge in addition to the mortality and
 
11
 
[Missing Graphic Reference]
expense risk charge. The charges for any riders applicable to your contract will also be deducted from your contract value. See Charges and Other Deductions.
 
We will deduct any applicable premium tax from purchase payments or contract value, unless the governmental entity dictates other- wise, at the time the tax is incurred or at another time we choose.
 
See Expense Tables and Charges and Other Deductions for additional fees and expenses in these contracts.
 
The funds' investment management fees, expenses and expense limitations, if applicable, are more fully described in the prospec- tuses for the funds.
 
The surrender, withdrawal or transfer of value from a fixed account guaranteed period may be subject to the interest adjustment, if applicable. See Fixed Side of the Contract.
 
Charges may also be imposed during the regular income or annuity payout period, including i4LIFE ® Advantage, if elected. See The Contracts and Annuity Payouts.
 
For information about the compensation we pay for sales of contracts, see The Contracts - Distribution of the Contracts.
 
What purchase payments do I make, and how often? Subject to the minimum and maximum payment amounts, your payments are completely flexible. See The Contracts - Purchase Payments.
 
How will my annuity payouts be calculated? If you decide to annuitize, you may select an annuity option and start receiving annuity payouts from your contract as a fixed option or variable option or a combination of both. See Annuity Payouts - Annuity Options.
 
Remember that participants in the VAA benefit from any gain, and take a risk of any loss, in the value of the securities in the funds' portfolios.
 
What happens if I die before I annuitize? Your beneficiary will receive death benefit proceeds based upon the death benefit you select. Your beneficiary has options as to how the death benefit is paid. In the alternative, you may choose to receive a death benefit on the death of the annuitant. See The Contracts - Death Benefit.
 
May I transfer contract value between variable options and between the variable and fixed sides of the contract? Yes, subject to currently effective restrictions. For example, transfers made before the annuity commencement date are generally restricted to no more than twelve (12) per contract year. If permitted by your contract, we may discontinue accepting transfers into the fixed side of the contract at any time. See The Contracts - Transfers On or Before the Annuity Commencement Date and Transfers After the Annu- ity Commencement Date.
 
What are Living Benefit Riders? Living Benefit riders are optional riders available to purchase for an additional fee. These riders pro- vide different types of minimum guarantees if you meet certain conditions. These riders are the Lincoln SmartSecurity ® Advantage and Lincoln Lifetime IncomeSM Advantage 2.0 (both of which are withdrawal benefit riders), 4LATER ® Advantage, and i4LIFE ® Advan- tage (with or without the Guaranteed Income Benefit) (both of which are annuity payout riders). If you select a Living Benefit rider, excess withdrawals may have adverse effects on the benefit (especially during times of poor investment performance), and you will be subject to Investment Requirements (unless you elect i4LIFE ® Advantage without the Guaranteed Income Benefit). Excess withdraw- als under certain Living Benefit Riders may result in a reduction or premature termination of those benefits or of those riders. If you are not certain how an excess withdrawal will reduce your future guaranteed amounts, you should contact either your registered rep- resentative or us prior to requesting a withdrawal to find out what, if any, impact the excess withdrawal will have on any guarantees under the living benefit rider. These riders are discussed in detail in this prospectus. In addition, an overview of these riders is pro- vided with this prospectus.
 
What is Lincoln Lifetime IncomeSM Advantage 2.0? Lincoln Lifetime IncomeSM Advantage 2.0 is a rider that you may purchase for an additional charge and which provides on an annual basis guaranteed lifetime periodic withdrawals up to a guaranteed amount based on an Income Base, a 5% Enhancement to the Income Base or automatic annual step-ups to the Income Base, and age-based increases to the guaranteed periodic withdrawal amount. Withdrawals may be made up to the Guaranteed Annual Income amount as long as that amount is greater than zero. The Income Base is not available as a separate benefit upon death or surrender and is increased by subsequent purchase payments, 5% Enhancements to the Income Base, automatic annual step-ups to the Income Base and is decreased by certain withdrawals in accordance with provisions described in the prospectus. See The Contracts - Lincoln Life- time IncomeSM Advantage 2.0. You may not simultaneously elect Lincoln Lifetime IncomeSM Advantage 2.0 and another one of the Living Benefit riders. By electing this rider you will be subject to Investment Requirements. See The Contracts - Investment Require- ments.
 
What is the Lincoln SmartSecurity ® Advantage? This benefit, which may be available for purchase at an additional charge, provides a Guaranteed Amount equal to the initial purchase payment (or contract value at the time of election) as adjusted. You may access this benefit through periodic withdrawals. Excess withdrawals will adversely affect the Guaranteed Amount. See The Contracts - Lincoln SmartSecurity ® Advantage. You cannot simultaneously elect Lincoln SmartSecurity ® Advantage with any other Living Benefit rider. By electing this benefit, you will be subject to Investment Requirements. See The Contracts - Investment Requirements.
 
12
 
[Missing Graphic Reference]
What is i4LIFE ® Advantage? i4LIFE ® Advantage is an income program, available for purchase at an additional charge, that provides periodic variable lifetime income payments, a death benefit, and the ability to make withdrawals during a defined period of time (Access Period). For an additional charge, you may purchase a minimum payout floor, the Guaranteed Income Benefit. We assess a charge, imposed only during the i4LIFE ® Advantage payout phase, based on the i4LIFE ® Advantage death benefit you choose and whether or not the Guaranteed Income Benefit is in effect.
 
What is the Guaranteed Income Benefit? The Guaranteed Income Benefit provides a minimum payout floor for your i4LIFE ® regular income payments. By electing this benefit, you will be subject to Investment Requirements. The i4LIFE ® Guaranteed Income Benefit is purchased when you elect i4LIFE ® Advantage or any time during the Access Period subject to terms and conditions at that time. The minimum floor is based on the contract value at the time you elect i4LIFE ® with the Guaranteed Income Benefit. 4LATER ® Advantage, Lincoln SmartSecurity ® Advantage and Lincoln Lifetime IncomeSM Advantage 2.0 have features that may be used to establish the amount of the Guaranteed Income Benefit. You may use your Guaranteed Amount from Lincoln SmartSecurity ® Advantage or your Income Base from Lincoln Lifetime IncomeSM Advantage 2.0 to establish the Guaranteed Income Benefit at the time you terminate
 
Lincoln SmartSecurity ® Advantage or Lincoln Lifetime IncomeSM Advantage 2.0 to purchase i4LIFE ® Advantage. 4LATER ® Advantage is purchased prior to the time you elect i4LIFE ® Advantage and provides a guaranteed value, the Income Base, which can be used to establish the Guaranteed Income Benefit floor in the future. See The Contracts - i4LIFE ® Advantage Guaranteed Income Benefit, 4LATER ® Advantage Guaranteed Income Benefit, and Lincoln Lifetime IncomeSM Advantage 2.0 - i4LIFE ® Advantage option.
 
What is 4LATER ® Advantage? 4LATER ® Advantage, which may be available for purchase at an additional charge, is a way to guaran- tee today a minimum payout floor (a Guaranteed Income Benefit) in the future for the i4LIFE ® Advantage regular income payments. 4LATER ® Advantage provides an initial Income Base that is guaranteed to increase at a specified percentage over the accumulation period of the annuity. By electing this benefit, you will be subject to Investment Requirements. See The Contracts - 4LATER ® Advan- tage.
 
What is Lincoln SmartIncomeSM Inflation? Lincoln SmartIncomeSM Inflation is a fixed annuity payout option that provides periodic annuity payouts that may increase or decrease each year based on changes in a consumer price index that measures inflation. Lincoln SmartIncomeSM Inflation also provides a guaranteed minimum payout, a death benefit and access to a reserve value from which unscheduled payments may be taken. See The Contracts – Annuity Payouts - Lincoln SmartIncomeSM Inflation.
 
May I surrender the contract or make a withdrawal? Yes, subject to contract requirements and to the restrictions of any qualified retirement plan for which the contract was purchased. See The Contracts - Surrenders and Withdrawals. A portion of surrender or withdrawal proceeds may be taxable. In addition, if you decide to take a distribution before age 59½, a 10% Internal Revenue Service (IRS) tax penalty may apply. A surrender or a withdrawal also may be subject to 20% withholding. See Federal Tax Matters.
 
Do I get a free look at this contract? Yes. You can cancel the contract within ten days (in some states longer) of the date you first receive the contract. You need to return the contract, postage prepaid, to our Home Office. In most states you assume the risk of any market drop on purchase payments you allocate to the variable side of the contract. See Return Privilege.
 
Where may I find more information about accumulation unit values? Because the subaccounts which are available under the con- tracts did not begin operation before the date of this prospectus, financial information for the subaccounts is not included in this Pro- spectus or in the SAI.
 
Investment Results
 
At times, the VAA may compare its investment results to various unmanaged indices or other variable annuities in reports to share- holders, sales literature and advertisements. The results will be calculated on a total return basis for various periods, with or without contingent deferred sales charges. Results calculated without contingent deferred sales charges will be higher. Total returns include the reinvestment of all distributions, which are reflected in changes in unit value. The money market subaccount's yield is based upon investment performance over a 7-day period, which is then annualized.
 
Note that there can be no assurance that any money market fund will be able to maintain a stable net asset value per share. During extended periods of low interest rates, and due in part to the contract fees and expenses, the yields of any subaccount investing in a money market fund may also become extremely low and possibly negative.
 
The money market yield figure and annual performance of the subaccounts are based on past performance and do not indicate or represent future performance.
 
The Lincoln National Life Insurance Company
 
The Lincoln National Life Insurance Company (Lincoln Life), organized in 1905, is an Indiana-domiciled insurance company, engaged primarily in the direct issuance of life insurance contracts and annuities. Lincoln Life is wholly owned by Lincoln National Corporation (LNC), a publicly held insurance and financial services holding company incorporated in Indiana. Lincoln Life is obligated to pay all amounts promised to policy owners under the policies.
 
13
 
[Missing Graphic Reference]
Depending on when you purchased your contract, you may be permitted to make allocations to the fixed account, which is part of our general account. See The Fixed Side of the Contract. In addition, any guarantees under the contract that exceed your contract value, such as those associated with death benefit options and Living Benefit riders are paid from our general account (not the VAA). There- fore, any amounts that we may pay under the contract in excess of contract value are subject to our financial strength and claims- paying ability and our long-term ability to make such payments. With respect to the issuance of the contracts, Lincoln Life does not file periodic financial reports with the SEC pursuant to the exemption for life insurance companies provided under Rule 12h-7 of the Securities Exchange Act of 1934.
 
We issue other types of insurance policies and financial products as well, and we also pay our obligations under these products from our assets in the general account. Moreover, unlike assets held in the VAA, the assets of the general account are subject to the general liabilities of the Company and, therefore, to the Company's general creditors. In the event of an insolvency or receivership, payments we make from our general account to satisfy claims under the contract would generally receive the same priority as our other contractowner obligations.
 
Our Financial Condition. Among the laws and regulations applicable to us as an insurance company are those which regulate the investments we can make with assets held in our general account. In general, those laws and regulations determine the amount and type of investments which we can make with general account assets.
 
In addition, state insurance regulations require that insurance companies calculate and establish on their financial statements, a speci- fied amount of reserves in order to meet the contractual obligations to pay the claims of our policyholders. In order to meet our claims-paying obligations, we regularly monitor our reserves to ensure we hold sufficient amounts to cover actual or expected con- tract and claims payments. However, it is important to note that there is no guarantee that we will always be able to meet our claims paying obligations, and that there are risks to purchasing any insurance product.
 
State insurance regulators also require insurance companies to maintain a minimum amount of capital in excess of liabilities, which acts as a cushion in the event that the insurer suffers a financial impairment, based on the inherent risks in the insurer's operations. These risks include those associated with losses that we may incur as the result of defaults on the payment of interest or principal on assets held in our general account, which include bonds, mortgages, general real estate investments, and stocks, as well as the loss in value of these investments resulting from a loss in their market value.
 
How to Obtain More Information. We encourage both existing and prospective policyholders to read and understand our financial statements. We prepare our financial statements on both a statutory basis and according to Generally Accepted Accounting Principles (GAAP). Our audited GAAP financial statements, as well as the financial statements of the VAA, are located in the SAI. If you would like a free copy of the SAI, please write to us at: PO Box 2348, Fort Wayne, IN 46801-2348 , or call 1-888-868-2583. In addition, the Statement of Additional Information is available on the SEC's website at http://www.sec.gov. You may obtain our audited statutory financial statements and any unaudited statutory financial statements that may be available by visiting our website at www.LincolnFinancial.com.
 
You also will find on our website information on ratings assigned to us by one or more independent rating organizations. These rat- ings are opinions of an operating insurance company's financial capacity to meet the obligations of its insurance and annuity con- tracts based on its financial strength and/or claims-paying ability. Additional information about rating agencies is included in the Statement of Additional Information.
 
Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. Through its affiliates, Lincoln Financial Group offers annuities, life, group life and disability insurance, 401(k) and 403(b) plans, and comprehensive finan- cial planning and advisory services.
 
Variable Annuity Account (VAA)
 
On November 3, 1997, the VAA was established as an insurance company separate account under Indiana law. It is registered with the SEC as a unit investment trust under the provisions of the Investment Company Act of 1940 (1940 Act). The VAA is a segregated investment account, meaning that its assets may not be charged with liabilities resulting from any other business that we may con- duct. Income, gains and losses, whether realized or not, from assets allocated to the VAA are, in accordance with the applicable annu- ity contracts, credited to or charged against the VAA. They are credited or charged without regard to any other income, gains or losses of Lincoln Life. We are the issuer of the contracts and the obligations set forth in the contract, other than those of the contractowner, are ours. The VAA satisfies the definition of a separate account under the federal securities laws. We do not guarantee the investment performance of the VAA. Any investment gain or loss depends on the investment performance of the funds. You assume the full investment risk for all amounts placed in the VAA.
 
The VAA is used to support other annuity contracts offered by us in addition to the contracts described in this prospectus. The other annuity contracts supported by the VAA generally invest in the same funds as the contracts described in this prospectus. These other annuity contracts may have different charges that could affect the performance of their subaccounts, and they offer different benefits.
 
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Financial Statements
 
The December 31, 2010 financial statements of the VAA and the December 31, 2010 consolidated financial statements of Lincoln Life are located in the SAI. If you would like a free copy of the SAI, complete and mail the request on the last page of this prospectus, or call 1-888-868-2583.
 
Investments of the Variable Annuity Account
 
You decide the subaccount(s) to which you allocate purchase payments. There is a separate subaccount which corresponds to each class of each fund. You may change your allocation without penalty or charges. Shares of the funds will be sold at net asset value with no initial sales charge to the VAA in order to fund the contracts. The funds are required to redeem fund shares at net asset value upon our request.
 
Investment Advisers
 
As compensation for its services to the fund, the investment adviser receives a fee from the fund which is accrued daily and paid monthly. This fee is based on the net assets of each fund, as defined in the prospectus for the fund.
 
Certain Payments We Receive with Regard to the Funds
 
With respect to a fund, including affiliated funds, the adviser and/or distributor, or an affiliate thereof, may make payments to us (or an affiliate). It is anticipated that such payments will be based on a percentage of assets of the particular fund attributable to the con- tracts along with certain other variable contracts issued or administered by us (or an affiliate). These percentages are negotiated and vary with each fund. Some funds may pay us significantly more than other funds and the amount we receive may be substantial. These percentages currently range up to 0.50%, and as of the date of this prospectus, we were receiving payments from each fund family. We (or our affiliates) may profit from these payments or use these payments for a variety of purposes, including payment of expenses that we (and our affiliates) incur in promoting, marketing, and administering the contracts and, in our role as intermediary, the funds. These payments may be derived, in whole or in part, from the investment advisory fee deducted from fund assets. Contractowners, through their indirect investment in the funds, bear the costs of these investment advisory fees (see the funds' pro- spectuses for more information). Additionally, a fund's adviser and/or distributor or its affiliates may provide us with certain services that assist us in the distribution of the contracts and may pay us and/or certain affiliates amounts for marketing programs and sales support, as well as amounts to participate in training and sales meetings.
 
Description of the Funds
 
Each of the subaccounts of the VAA is invested solely in shares of one of the funds available under the contract. Each fund may be subject to certain investment policies and restrictions which may not be changed without a majority vote of shareholders of that fund.
 
We select the funds offered through the contract based on several factors, including, without limitation, asset class coverage, the strength of the manager's reputation and tenure, brand recognition, performance, and the capability and qualification of each sponsor- ing investment firm. Another factor we consider during the initial selection process is whether the fund or an affiliate of the fund will make payments to us or our affiliates. We review each fund periodically after it is selected. Upon review, we may remove a fund or restrict allocation of additional purchase payments to a fund if we determine the fund no longer meets one or more of the factors and/or if the fund has not attracted significant contractowner assets. Finally, when we develop a variable annuity product in coopera- tion with a fund family or distributor (e.g., a "private label" product), we generally will include funds based on recommendations made by the fund family or distributor, whose selection criteria may differ from our selection criteria.
 
Certain funds offered as part of this contract have similar investment objectives and policies to other portfolios managed by the adviser. The investment results of the funds, however, may be higher or lower than the other portfolios that are managed by the adviser or sub-adviser. There can be no assurance, and no representation is made, that the investment results of any of the funds will be comparable to the investment results of any other portfolio managed by the adviser or sub-adviser, if applicable.
 
Certain funds invest substantially all of their assets in other funds. As a result, you will pay fees and expenses at both fund levels. This will reduce your investment return. These arrangements are referred to as funds of funds or master-feeder funds. Funds of funds or master-feeder structures may have higher expenses than funds that invest directly in debt or equity securities.
 
Following are brief summaries of the fund descriptions. More detailed information may be obtained from the current prospectus for the fund. You should read each fund prospectus carefully before investing. Prospectuses for each fund are available by contacting us. In addition, if you receive a summary prospectus for a fund, you may obtain a full statutory prospectus by referring to the contact information for the fund company on the cover page of the summary prospectus. Please be advised that there is no assur- ance that any of the funds will achieve their stated objectives.
 
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BlackRock Variable Series Funds, Inc.,advised by BlackRock Advisors, LLC and subadvised by BlackRock Investment Management, LLC.
 
* BlackRock Global Allocation V.I. Fund.
 
Delaware VIP ® Trust, advised by Delaware Management Company.
 
·  
Delaware VIP ® Diversified Income Series.
·  
Delaware VIP ® Limited-Term Diversified Income Series.
 
DWS Variable Series II, advised by Deutsche Investment Management Americas, Inc. and subadvised by RREEF America L.L.C.
 
* DWS Alternative Asset Allocation Plus VIP Portfolio.
 
Fidelity ® Variable Insurance Products, advised by Fidelity Management and Research Company and subadvised by FMR CO., Inc.
 
·  
Fidelity ® VIP Contrafund Portfolio.
·  
Fidelity ® VIP Mid Cap Portfolio.
 
Lincoln Variable Insurance Products Trust, advised by Lincoln Investment Advisors Corporation.
 
·  
LVIP Baron Growth Opportunities Fund: Capital appreciation. (Subadvised by BAMCO, Inc.)
·  
LVIP BlackRock Inflation Protected Bond Fund: Real return. (Subadvised by BlackRock Financial Management, Inc.)
·  
LVIP Capital Growth Fund: Capital growth. (Subadvised by Wellington Management)
·  
LVIP Cohen & Steers Global Real Estate Fund: Total Return. (Subadvised by Cohen & Steers Capital Management)
·  
LVIP Columbia Value Opportunities Fund: Long-term capital appreciation. (Subadvised by Columbia Management Advisors, LLC)
·  
LVIP Delaware Bond Fund: Current income. (Subadvised by Delaware Management Company)*
·  
LVIP Delaware Diversified Floating Rate Fund: Total return. (Subadvised by Delaware Management Company)*
·  
LVIP Delaware Social Awareness Fund: Capital appreciation. (Subadvised by Delaware Management Company)*
·  
LVIP Delaware Special Opportunities Fund: Capital appreciation. (Subadvised by Delaware Management Company)*
·  
LVIP Dimensional Non-US Equity Fund
·  
LVIP Dimensional U.S. Equity Fund
·  
LVIP Global Income Fund: Current income consistent with preservation of capital. (Subadvised by Mondrian Investment Partners Limited and Franklin Advisors, Inc.)
·  
LVIP Janus Capital Appreciation Fund: Long-term growth. (Subadvised by Janus Capital Management LLC)
·  
LVIP J.P. Morgan High Yield Fund: High level of current income. (Subadvised by J.P. Morgan Investment Management, Inc.)
·  
LVIP MFS International Growth Fund: Long-term capital appreciation. (Subadvised by Massachusetts Financial Services Company)
·  
LVIP MFS Value Fund: Capital appreciation.(Subadvised by Massachusetts Financial Services Company)
·  
LVIP Mid-Cap Value Fund: Long-term capital appreciation. (Subadvised by Wellington Management)
·  
LVIP Mondrian International Value Fund: Long-term capital appreciation. (Subadvised by Mondrian Investment Partners Limited)
·  
LVIP Money Market Fund: Current income/Preservation of capital. (Subadvised by Delaware Management Company)*
 
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·  
LVIP SSgA Bond Index Fund: Replicate Barclays Aggregate Bond Index (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Developed International 150 Fund: Long-term capital appreciation. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Emerging Markets 100 Fund: Long-term capital appreciation. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Global Tactical Allocation Fund. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA International Index Fund: Replicate broad foreign index. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Large Cap 100 Fund: Long-term capital appreciation. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Small-Mid Cap 200 Fund: Long-term capital appreciation. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA S&P 500 Index Fund: Replicate S&P 500 Index. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Small-Cap Index Fund: Replicate Russell 2000 Index. (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP T. Rowe Price Growth Stock Fund: Long-term growth of capital. (Subadvised by T. Rowe Price Associates, Inc.)
·  
LVIP T. Rowe Price Structured Mid-Cap Growth Fund: Maximum capital appreciation. (Subadvised by T. Rowe Price Associates, Inc.)
·  
LVIP Templeton Growth Fund: Long-term growth of capital. (Subadvised by Templeton Investment Counsel, LLC)
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LVIP Total Bond Fund
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LVIP Turner Mid-Cap Growth Fund: Capital appreciation. (Subadvised by Turner Investment Partners, Inc.)
·  
LVIP Vanguard International Equity ETF Fund
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LVIP Vanguard Domestic Equity ETF Fund
·  
LVIP Wells Fargo Intrinsic Value Fund: Income. (Subadvised by Metropolitan West Capital Management, LLC)
·  
LVIP Wilshire Conservative Profile Fund: Current income; a fund of funds. (Subadvised by Wilshire Associates Incorporated)
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LVIP Wilshire Moderate Profile Fund: Growth and income; a fund of funds. (Subadvised by Wilshire Associates Incorporated)
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LVIP Wilshire Moderately Aggressive Profile Fund: Growth and income; a fund of funds. (Subadvised by Wilshire Associates Incorporated)
 
*Investments in any of the funds sub-advised by Delaware Management Company and offered under the LVIP Trust are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies including their subsidiaries or related companies (the "Macquarie Group") and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of any of the funds sub-advised by Delaware Management Company and offered under the LVIP Trust, the repayment of capital from any of the funds sub- advised by Delaware Management Company and offered under the LVIP Trust or any particular rate of return.
 
PIMCO Variable Insurance Trust, advised by PIMCO
 
* PIMCO VIT CommodityRealReturn ® Strategy Portfolio: Maximum real return.
 
Fund Shares
 
We will purchase shares of the funds at net asset value and direct them to the appropriate subaccounts of the VAA. We will redeem sufficient shares of the appropriate funds to pay annuity payouts, death benefits, surrender/withdrawal proceeds or for other purposes described in the contract. If you want to transfer all or part of your investment from one subaccount to another, we may redeem shares held in the first and purchase shares of the other. Redeemed shares are retired, but they may be reissued later.
 
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Shares of the funds are not sold directly to the general public. They are sold to us, and may be sold to other insurance companies, for investment of the assets of the subaccounts established by those insurance companies to fund variable annuity and variable life insur- ance contracts.
 
When a fund sells any of its shares both to variable annuity and to variable life insurance separate accounts, it is said to engage in mixed funding. When a fund sells any of its shares to separate accounts of unaffiliated life insurance companies, it is said to engage in shared funding.
 
The funds currently engage in mixed and shared funding. Therefore, due to differences in redemption rates or tax treatment, or other considerations, the interest of various contractowners participating in a fund could conflict. Each of the fund's Board of Directors will monitor for the existence of any material conflicts, and determine what action, if any, should be taken. The funds do not foresee any disadvantage to contractowners arising out of mixed or shared funding. If such a conflict were to occur, one of the separate accounts might withdraw its investment in a fund. This might force a fund to sell portfolio securities at disadvantageous prices. See the pro- spectuses for the funds.
 
Reinvestment of Dividends and Capital Gain Distributions
 
All dividends and capital gain distributions of the funds are automatically reinvested in shares of the distributing funds at their net asset value on the date of distribution. Dividends are not paid out to contractowners as additional units, but are reflected as changes in unit values.
 
Addition, Deletion or Substitution of Investments
 
We reserve the right, within the law, to make certain changes to the structure and operation of the VAA at our discretion and without your consent. We may add, delete, or substitute funds for all contractowners or only for certain classes of contractowners. New or substitute funds may have different fees and expenses, and may only be offered to certain classes of contractowners.
 
Substitutions may be made with respect to existing investments or the investment of future purchase payments, or both. We may close subaccounts to allocations of purchase payments or contract value, or both, at any time in our sole discretion. The funds, which sell their shares to the subaccounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the subaccounts. Substitutions might also occur if shares of a fund should no longer be available, or if invest- ment in any fund's shares should become inappropriate, in the judgment of our management, for the purposes of the contract, or for any other reason in our sole discretion and, if required, after approval from the SEC.
 
We also may:
 
·  
remove, combine, or add subaccounts and make the new subaccounts available to you at our discretion;
·  
transfer assets supporting the contracts from one subaccount to another or from the VAA to another separate account;
·  
combine the VAA with other separate accounts and/or create new separate accounts;
·  
deregister the VAA under the 1940 Act; and
·  
operate the VAA as a management investment company under the 1940 Act or as any other form permitted by law.
 
We may modify the provisions of the contracts to reflect changes to the subaccounts and the VAA and to comply with applicable law. We will not make any changes without any necessary approval by the SEC. We will also provide you written notice.
 
Charges and Other Deductions
 
We will deduct the charges described below to cover our costs and expenses, services provided and risks assumed under the con- tracts. We incur certain costs and expenses for the distribution and administration of the contracts and for providing the benefits pay- able thereunder.
 
Our administrative services include:
 
·  
processing applications for and issuing the contracts;
·  
processing purchases and redemptions of fund shares as required (including dollar cost averaging, portfolio rebalancing, and automatic withdrawal services - See Additional Services and the SAI for more information on these programs);
·  
maintaining records;
·  
administering annuity payouts;
·  
furnishing accounting and valuation services (including the calculation and monitoring of daily subaccount values);
·  
reconciling and depositing cash receipts;
·  
providing contract confirmations;
·  
providing toll-free inquiry services; and
·  
furnishing telephone and electronic fund transfer services.
 
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The risks we assume include:
 
·  
the risk that annuitants receiving annuity payouts, including Lincoln SmartIncomeSM Inflation payouts, under contracts live longer than we assumed when we calculated our guaranteed rates (these rates are incorporated in the contract and cannot be changed);
·  
the risk that death benefits paid will exceed the actual contract value;
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the risk that lifetime payments to individuals from Lincoln SmartSecurity ® Advantage or Lincoln Lifetime IncomeSM Advantage 2.0 will exceed the contract value;
·  
the risk that, if the i4LIFE ® Advantage with the Guaranteed Income Benefit or 4LATER ® Guaranteed Income Benefit is in effect, the required regular income payments will exceed the account value; and
·  
the risk that our costs in providing the services will exceed our revenues from contract charges (which we cannot change).
 
The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the description of the charge. For example, the contingent deferred sales charge collected may not fully cover all of the sales and dis- tribution expenses actually incurred by us. Any remaining expenses will be paid from our general account which may consist, among other things, of proceeds derived from mortality and expense risk charges deducted from the account. We may profit from one or more of the fees and charges deducted under the contract. We may use these profits for any corporate purpose, including financing the distribution of the contracts.
 
Deductions from the VAA
 
We apply to the average daily net asset value of the subaccounts a charge which is equal to an annual rate of:
 
   
Enhanced Guaranteed 
Guarantee of 
 
 
With Estate Enhancement 
Minimum Death 
Principal Death 
 
 
Benefit Rider (EEB) 
Benefit (EGMDB) 
Benefit 
Account Value Death Benefit 
* Mortality and expense risk charge 
1.00% 
0.80% 
0.55% 
0.50% 
* Administrative charge 
0.10% 
0.10% 
0.10% 
0.10% 
* Total annual charge for each 
       
 subaccount* 
1.10% 
0.90% 
0.65% 
0.60% 
 
Rider Charges 
       


A fee or expense may also be deducted in connection with any benefits added to the contract by rider or endorsement.
 
Lincoln Lifetime IncomeSM Advantage 2.0 Charge. While this rider is in effect, there is a charge for the Lincoln Lifetime IncomeSM Advantage 2.0, if elected. The rider charge is currently equal to an annual rate of 1.05% (0.2625% quarterly) for the Lincoln Lifetime IncomeSM Advantage 2.0 single life option and 1.25% (0.3125% quarterly) for the Lincoln Lifetime IncomeSM Advantage 2.0 joint life Option.
 
The charge is applied to the Income Base as increased for subsequent purchase payments, Automatic Annual Step-ups, 5% Enhance- ments, and decreased for Excess Withdrawals. We will deduct the cost of this rider from the contract value on a quarterly basis, with the first deduction occurring on the valuation date on or next following the three-month anniversary of the rider's effective date. This deduction will be made in proportion to the value in each subaccount and any fixed account of the contract on the valuation date the rider charge is assessed. The amount we deduct will increase or decrease as the Income Base increases or decreases, because the charge is based on the Income Base. Refer to the Lincoln Lifetime IncomeSM Advantage 2.0 Income Base section for a discussion and example of the impact of the changes to the Income Base.
 
The annual rider percentage charge may increase each time the Income Base increases as a result of the Automatic Annual Step-up, but the charge will never exceed the guaranteed maximum annual percentage charge of 2.00%. Therefore, your percentage charge for this rider could increase every Benefit Year anniversary. If your percentage charge is increased, you may opt out of the Automatic Annual Step-up by giving us notice within 30 days after the Benefit Year anniversary if you do not want your percentage charge to change. If you opt out of the step-up, your current charge will remain in effect and the Income Base will be returned to the prior Income Base. This opt out will only apply for this particular Automatic Annual Step-up. You will need to notify us each time the per- centage charge increases if you do not want the Automatic Annual Step-up. By opting out of an Automatic Annual Step-up, you will continue to be eligible for the 5% Enhancement through the end of the current Enhancement Period, but the charge could increase to the then current charge on 5% Enhancements after the 10th Benefit Year anniversary. You will have the option to opt out of the Enhancements after the 10th Benefit Year.
 
During the first ten Benefit Years an increase in the Income Base as a result of the 5% Enhancement will not cause an increase in the annual rider percentage charge but will increase the dollar amount of the charge. After the 10th Benefit Year anniversary the annual rider percentage charge may increase each time the Income Base increases as a result of the 5% Enhancement, but the charge will never exceed the guaranteed maximum annual percentage charge of 2.00%. If your percentage charge is increased, you may opt-out of the 5% Enhancement by giving us notice within 30 days after the Benefit Year anniversary if you do not want your percentage charge to change. If you opt out of the 5% Enhancement, your current charge will remain in effect and the Income Base will be
 
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returned to the prior Income Base. This opt-out will only apply for this particular 5% Enhancement. You will need to notify us each time the percentage charge increases if you do not want the 5% Enhancement.
 
The rider charge will increase to the then current rider charge, if after the first Benefit Year anniversary, cumulative purchase pay- ments added to the contract after the first Benefit Year, equal or exceed $100,000. You may not opt-out of this rider charge increase. See The Contracts – Living Benefit riders – Lincoln Lifetime IncomeSM Advantage 2.0 – Income Base.
 
The rider charge will be discontinued upon termination of the rider. The pro-rata amount of the rider charge will be deducted upon termination of the rider (except for death) or surrender of the contract.
 
If the contract value is reduced to zero while the contractowner is receiving a Guaranteed Annual Income, no rider charge will be deducted.
 
Lincoln SmartSecurity ® Advantage Charge. While this Rider is in effect, there is a charge for the Lincoln SmartSecurity ® Advantage, if elected. The Rider charge is currently equal to an annual rate of:
 
1)     
0.65% of the Guaranteed Amount (0.1625% quarterly) for the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, Single Life option; or
 
 
2)     
0.80% of the Guaranteed Amount (0.2000% quarterly) for the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, Joint Life option. See The Contracts - Lincoln SmartSecurity ® Advantage - Guaranteed Amount for a description of the calculation of the Guaranteed Amount.
 
If you purchase this Rider in the future, the percentage charge will be the current charge in effect at the time of purchase.
 
The charge is applied to the Guaranteed Amount as adjusted. We will deduct the cost of this Rider from the contract value on a quar- terly basis, with the first deduction occurring on the valuation date on or next following the three-month anniversary of the effective date of the Rider. This deduction will be made in proportion to the value in each subaccount of the contract on the valuation date the Rider charge is assessed. The charge may be deducted in proportion to the value in the fixed account as well. The amount we deduct will increase or decrease as the Guaranteed Amount increases or decreases, because the charge is based on the Guaranteed Amount. Refer to the Lincoln SmartSecurity ® Advantage, Guaranteed Amount section, for a discussion and example of the impact of changes to the Guaranteed Amount.
 
Under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, the annual Rider percentage charge will not change upon each automatic step-up of the Guaranteed Amount for the 10-year period.
 
If you elect to step-up the Guaranteed Amount for another step-up period (including if we administer the step-up election for you or if you make a change from a Joint Life to a Single Life option after a death or divorce), a pro-rata deduction of the Rider charge based on the Guaranteed Amount immediately prior to the step-up will be made on the valuation date of the step-up. This deduction covers the cost of the Rider from the time of the previous deduction to the date of the step-up. After a contractowner's step-up, we will deduct the Rider charge for the stepped-up Guaranteed Amount on a quarterly basis, beginning on the valuation date on or next fol- lowing the three-month anniversary of the step-up. At the time of the elected step-up, the Rider percentage charge will change to the current charge in effect at that time (if the current charge has changed), but it will never exceed the guaranteed maximum annual per- centage charge of 1.50% of the Guaranteed Amount. If you never elect to step-up your Guaranteed Amount, your Rider percentage charge will never change, although the amount we deduct will change as the Guaranteed Amount changes. The Rider charge will be discontinued upon the earlier of the annuity commencement date, election of i4LIFE ® Advantage or termination of the Rider. The pro- rata amount of the Rider charge will be deducted upon termination of the Rider or surrender of the contract.
 
4LATER ® Advantage Charge. Prior to the periodic income commencement date (which is defined as the valuation date the initial regu- lar income payment under i4LIFE ® Advantage is determined), the annual 4LATER ® charge is currently 0.65% of the Income Base. The Income Base (an amount equal to the initial purchase payment or contract value at the time of election), as adjusted, is a value that will be used to calculate the 4LATER ® Guaranteed Income Benefit. An amount equal to the quarterly 4LATER ® Rider charge multiplied by the Income Base will be deducted from the subaccounts on every third month anniversary of the later of the 4LATER ® Rider Effec- tive Date or the most recent reset of the Income Base. This deduction will be made in proportion to the value in each subaccount on the valuation date the 4LATER ® Rider charge is assessed. The amount we deduct will increase as the Income Base increases, because the charge is based on the Income Base. As described in more detail below, the only time the Income Base will change is when there are additional purchase payments, withdrawals, automatic enhancements at the end of the 3-year waiting periods or in the event of a Reset to the current Account Value. If you purchase 4LATER ® in the future, the percentage charge will be the charge in effect at the time you elect 4LATER ® .
 
Upon a reset of the Income Base, a pro-rata deduction of the 4LATER ® Rider charge based on the Income Base immediately prior to the reset will be made on the valuation date of the reset. This deduction covers the cost of the 4LATER ® Rider from the time of the previous deduction to the date of the reset. After the reset, we will deduct the 4LATER ® Rider charge for the reset Income Base on a quarterly basis, beginning on the valuation date on or next following the three-month anniversary of the reset. At the time of the reset, the annual charge will be the current charge in effect for new purchases of 4LATER ® at the time of reset, not to exceed the guaranteed
 
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maximum charge of 1.50% of the Income Base. If you never elect to reset your Income Base, your 4LATER ® Rider percentage charge will never change, although the amount we deduct will change as your Income Base changes.
 
Prior to the periodic income commencement date, a pro-rata amount of the 4LATER ® Rider charge will be deducted upon termination of the 4LATER ® Rider for any reason other than death. On the periodic income commencement date, a pro-rata deduction of the 4LATER ® Rider charge will be made to cover the cost of 4LATER ® since the previous deduction.
 
i4LIFE ® Advantage Charge. i4LIFE ® Advantage is subject to a charge (imposed during the i4LIFE ® Advantage payout phase), com- puted daily of the Account Value. The annual rate of the i4LIFE ® Advantage charge is: 1.00% for the i4LIFE ® Advantage Account Value death benefit; 1.05% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 1.30% for the i4LIFE ® Advantage EGMDB. This charge consists of a mortality and expense risk and administrative charge (charges for the Guaranteed Income Benefit are not included and are listed below). If i4LIFE ® Advantage is elected at issue of the contract, i4LIFE ® Advantage and the charge will begin on the contract's effective date. Otherwise, i4LIFE ® Advantage and the charge will begin on the periodic income commencement date which is the valuation date on which the regular income payment is determined. After the Access Period ends, the charge will be the same rate as the cost of the i4LIFE ® Advantage Account Value death benefit. If you dropped Lincoln Lifetime IncomeSM Advantage 2.0 to purchase i4LIFE ® Advantage with Guaranteed Income Benefit (version 4), the charges that you will pay will be different. See the i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers of Lincoln Lifetime IncomeSM Advantage 2.0 Charge.
 
i4LIFE ® Advantage Guaranteed Income Benefit Charge. The Guaranteed Income Benefit (version 4) which is available for purchase with i4LIFE ® Advantage is subject to a current annual charge of 0.65% of the Account Value (single life option), which is added to the i4LIFE ® Advantage charge for a total current percentage charge of the Account Value, computed daily as follows: 1.65% for the i4LIFE ® Advantage Account Value death benefit; 1.70% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 1.95% for the i4LIFE ® Advantage EGMDB.
 
If you elect the joint life option, the charge for the Guaranteed Income Benefit (version 4) which is purchased with i4LIFE ® Advantage will be subject to a current annual charge of 0.85% of the Account Value which is added to the i4LIFE ® Advantage charge for a total current percentage charge of the Account Value, computed daily as follows: 1.85% for the i4LIFE ® Advantage Account Value death benefit; 1.90% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 2.15% for the i4LIFE ® Advantage EGMDB.
 
The Guaranteed Income Benefit percentage charge will not change unless there is an automatic step up of the Guaranteed Income Benefit (version 4) during which the Guaranteed Income Benefit is stepped-up to 75% of the current regular income payment (described later in the i4LIFE ® Advantage section of this prospectus). At the time of the step-up, the Guaranteed Income Benefit per- centage charge will change to the current charge in effect at that time (if the current charge has changed) up to the guaranteed maxi- mum annual charge of 2.00% (version 4) of the Account Value. If we automatically administer the step-up for you and your percent- age charge is increased, you may ask us to reverse the step-up by giving us notice within 30 days after the date on which the step-up occurred. If we receive notice of your request to reverse the step-up, on a going forward basis we will decrease the percentage charge to the percentage charge in effect before the step-up occurred. Any increased charges paid between the time of the step-up and the date we receive your notice to reverse the step-up will not be reimbursed. Future step-ups will continue even after you decline a cur- rent step-up. We will provide you with written notice when a step-up will result in an increase to the current charge so that you may give us timely notice if you wish to reverse a step-up.
 
After the periodic income commencement date, if the Guaranteed Income Benefit is terminated, the Guaranteed Income Benefit annual charge will also terminate.
 
4LATER ® Guaranteed Income Benefit Charge. The 4LATER ® Guaranteed Income Benefit which is purchased with i4LIFE ® Advantage is subject to a current annual charge of 0.65% of the Account Value, which is added to the i4LIFE ® Advantage charge for a total cur- rent percentage charge of the Account Value, computed daily as follows: 1.65% for the i4LIFE ® Account Value death benefit; 1.70% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 1.95% for the EGMDB. These charges apply only during the i4LIFE ® Advantage payout phase.
 
On and after the periodic income commencement date, the 4LATER ® Guaranteed Income Benefit charge will be added to the i4LIFE ® charge as a daily percentage of average Account Value. This is a change to the calculation of the 4LATER ® charge because after the periodic income commencement date, when the 4LATER ® Guaranteed Income Benefit is established, the Income Base is no longer applicable. The percentage 4LATER ® charge is the same immediately before and after the periodic income commencement date; how- ever, the charge is multiplied by the Income Base (on a quarterly basis) prior to the periodic income commencement date and then multiplied by the average daily account value after the periodic income commencement date.
 
After the periodic income commencement date, the 4LATER ® Guaranteed Income Benefit percentage charge will not change unless the contractowner elects additional 15 year step-up periods during which the 4LATER ® Guaranteed Income Benefit (described later) is stepped-up to 75% of the current regular income payment. At the time you elect a new 15 year period, the 4LATER ® Guaranteed Income Benefit percentage charge will change to the current charge in effect at that time (if the current charge has changed) up to the guaranteed maximum annual charge of 1.50% of Account Value.
 
After the periodic income commencement date, if the 4LATER ® Guaranteed Income Benefit is terminated, the 4LATER ® Guaranteed Income Benefit annual charge will also terminate.
 
21
 
[Missing Graphic Reference]
i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers of Lincoln Lifetime IncomeSM Advantage 2.0. If you drop Lincoln Lifetime IncomeSM Advantage 2.0 to establish the Guaranteed Income Benefit (version 4) under i4LIFE ® Advantage you will pay a quarterly charge (imposed during the i4LIFE ® Advantage payout phase) starting with the first three month anniversary of the effective date of i4LIFE ® Advantage and every three months thereafter. The initial charge for this rider is equal to an annual rate of 1.05% of the Lincoln Lifetime IncomeSM Advantage 2.0 Income Base or contract value, if greater, (0.2625% quarterly) for the single life option and 1.25% of the Income Base or contract value, if greater, (0.3125% quarterly) for the joint life option. Purchasers of Lin- coln Lifetime IncomeSM Advantage 2.0 are guaranteed that in the future the guaranteed maximum initial charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) will be the guaranteed maximum charge then in effect at the time they purchase Lincoln Lifetime IncomeSM Advantage 2.0. This is the charge for i4LIFE ® Advantage with Guaranteed Income Benefit. This charge is in addi- tion to the daily mortality and expense risk and administrative charge for your death benefit option set out under Deductions from the VAA.
 
The charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers of Lincoln Lifetime IncomeSM Advantage 2.0 will not change unless there is an automatic step-up of the Guaranteed Income Benefit to 75% of the current regular income pay- ment (described later in the i4LIFE ® Advantage section of the prospectus). At such time, the charge will increase by an amount equal to the prior charge rate (or initial charge rate if the first anniversary of the rider's effective date) multiplied by the percentage increase to the Guaranteed Income Benefit and by the percentage increase, if any, to the Lincoln Lifetime IncomeSM Advantage 2.0 current charge. This means that the charge may change annually.
 
The following example shows how the initial charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers of Lincoln Lifetime IncomeSM Advantage 2.0 is calculated as well as adjustments due to increases to the Guaranteed Income Benefit and the Lincoln Lifetime IncomeSM Advantage 2.0 charge. The example is a nonqualified contract and assumes the contractowner is 60 years old on the effective date of electing the i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers of Lin- coln Lifetime IncomeSM Advantage 2.0. Pursuant to the provisions of the Guaranteed Income Benefit (version 4) the initial Guaranteed Income Benefit is set at 4% of the Income Base based upon the contractowner's age (see Guaranteed Income Benefit (version 4) for a more detailed description). The example also assumes that the current charge for Lincoln Lifetime IncomeSM Advantage 2.0 is 1.05%. The first example assumes an increase to the initial charge based upon an increase to the Guaranteed Income Benefit due to the auto-
 
matic step-up: 
   
                   1/1/10
Contract value as of the last valuation date under Lincoln Lifetime IncomeSM 
$ 100,000 
 
Advantage 2.0 
 
                   1/1/10
Income Base as of the last valuation date under Lincoln Lifetime IncomeSM 
$ 125,000 
 
Advantage 2.0 
 
                   1/1/10
Initial Annual Charge for i4LIFE ® Advantage with Guaranteed Income Benefit 
$1,312.50 
 
(version 4) ($125,000 * 1.05% current charge for Lincoln Lifetime IncomeSM 
 
 
Advantage 2.0) 
 
                   1/2/10
i4LIFE ® Advantage Account Value 
$ 100,000 
                   1/2/10
Amount of initial i4LIFE ® Advantage Regular Income Payment 
$ 5,051 
                   1/2/10
Initial Guaranteed Income Benefit (4% * $125,000 Income Base) 
$ 5,000 
                   1/2/11
Recalculated Regular Income Payment 
$ 6,900 
                   1/2/11
New Guaranteed Income Benefit (75% * $6,900 Regular Income Payment) 
$ 5,175 
                   1/2/11
Annual Charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 
$1,358.44 
 
4) ($1,312.50 * (5,175/$5,000)) 
 


If the Lincoln Lifetime IncomeSM Advantage 2.0 charge has also increased, subject to a maximum charge of 2.00%, the i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) charge will increase upon a step-up.
 
Continuing the above example: 
 
                   1/2/11
Annual Charge for Lincoln Lifetime IncomeSM Advantage 2.0 
$1,358.44 
                   1/2/12
Recalculated Regular Income Payment 
$ 7,400 
                   1/2/12
New Guaranteed Income Benefit (75% * $7,400 Regular Income Payment) 
$ 5,550 
 
Assume the Lincoln Lifetime IncomeSM Advantage 2.0 charge increases from 
 
 
1.05% to 1.15%. 
 
                   1/2/12
Annual Charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 
$1,595.63 
 
4) ($1,358.44 * ($5,550/$5,175) * (1.15%/1.05%)) 
 


The new annual charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) is $1,595.63 which is equal to the current annual charge of $1,358.44 multiplied by the percentage increase of the Guaranteed Income Benefit ($5,550/$5,175) times the per- centage increase to the Lincoln Lifetime IncomeSM Advantage 2.0 current charge (1.15%/1.05%).
 
If the Lincoln Lifetime IncomeSM Advantage 2.0 percentage charge is increased, you may ask us to reverse the step-up by giving us notice within 30 days after the date on which the step-up occurred. If we receive this notice, we will decrease the percentage charge,
 
22
 
[Missing Graphic Reference]
on a going forward basis, to the percentage charge in effect before the step-up occurred. If the Guaranteed Income Benefit increased due to the step-up we would decrease the Guaranteed Income Benefit to the Guaranteed Income Benefit in effect before the step-up occurred. Future step-ups as described in the rider would continue.
 
Deductions for Premium Taxes
 
Any premium tax or other tax levied by any governmental entity as a result of the existence of the contracts or the VAA will be deducted from the contract value, unless the governmental entity dictates otherwise, when incurred, or at another time of our choos- ing.
 
The applicable premium tax rates that states and other governmental entities impose on the purchase of an annuity are subject to change by legislation, by administrative interpretation or by judicial action. These premium tax rates generally depend upon the law of your state of residence. The tax rates range from zero to 3.5%.
 
Other Charges and Deductions
 
The surrender, withdrawal or transfer of value from a fixed account guaranteed period may be subject to the interest adjustment if applicable. See Fixed Side of the Contract.
 
The mortality and expense risk and administrative charge of 0.60% of the value in the VAA will be assessed on all variable annuity payouts (except for the i4LIFE ® Advantage, which has a different charge), including options that may be offered that do not have a life contingency and therefore no mortality risk. This charge covers the expense risk and administrative services listed previously in this prospectus. The expense risk is the risk that our costs in providing the services will exceed our revenues from contract charges.
 
There are additional deductions from and expenses paid out of the assets of the underlying funds that are more fully described in the prospectuses for the funds.
 
Charges for Lincoln SmartIncomeSM Inflation. There is no charge for Lincoln SmartIncomeSM Inflation unless Unscheduled Pay- ments are taken. The following table describes the Unscheduled Payment charge for the Lincoln SmartIncomeSM Inflation on and after the Annuity Commencement Date. See The Contracts - Annuity Payouts for a complete description of Lincoln SmartIncomeSM Infla- tion.
 
Lincoln SmartIncomeSM Inflation Unscheduled Payment charge (as a percentage of the Unscheduled Payment)*
 
Rider Year 
1
2
3
4
5
6
7
8
Charge 
7% 
7% 
7% 
6% 
5% 
4% 
3% 
0% 


*A new Rider Year starts on each Rider Date anniversary. The charge is applied only to amounts in excess of the annual 10% Reserve Value free amount. See The Contracts - Annuity Payouts, Annuity Options for a detailed description of Reserve Value.
 
Unscheduled Payments of up to 10% of the then current Reserve Value may be taken each Rider Year without charge, as long as the then current Reserve Value is greater than zero. The Unscheduled Payment charge is assessed against Unscheduled Payments in excess of 10% of the then current Reserve Value in a Rider Year. Unscheduled Payments that do not exceed on a cumulative basis more than 10% of the then current Reserve Value each year are not subject to an Unscheduled Payment charge. If an Unscheduled Payment is subject to an Unscheduled Payment charge, the charge will be deducted from the Unscheduled Payment so that you will receive less than the amount requested. If the annuitant or secondary life is diagnosed with a terminal illness or confined to an extended care facility after the first Rider Year, then no Unscheduled Payment charges are assessed on any Unscheduled Payment. The Unscheduled Payment charge is also waived upon payment of a death benefit as described in the Lincoln SmartIncomeSM Infla- tion section of this prospectus.
 
Additional Information
 
The charges described previously may be reduced or eliminated for any particular contract. However, these reductions may be avail- able only to the extent that we anticipate lower distribution and/or administrative expenses, or that we perform fewer sales or admin- istrative services than those originally contemplated in establishing the level of those charges, or when required by law. Lower distri- bution and administrative expenses may be the result of economies associated with:
 
·  
the use of mass enrollment procedures,
·  
the performance of administrative or sales functions by the employer,
·  
the use by an employer of automated techniques in submitting deposits or information related to deposits on behalf of its employees, or
·  
any other circumstances which reduce distribution or administrative expenses.
 
The exact amount of charges and fees applicable to a particular contract will be stated in that contract.
 
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The Contracts
 
Purchase of Contracts
 
If you wish to purchase a contract, you must apply for it through a sales representative authorized by us. The completed application is sent to us and we decide whether to accept or reject it. If the application is accepted, a contract is prepared and executed by our legally authorized officers. The contract is then sent to you through your sales representative. See Distribution of the Contracts.
 
When a completed application and all other information necessary for processing a purchase order is received in good order at our Home office, an initial purchase payment will be priced no later than two business days after we receive the order. If you submit your application and/or initial purchase payment to your agent, we will not begin processing your purchase order until we receive the appli- cation and initial purchase payment from your agent's broker-dealer. While attempting to finish an incomplete application, we may hold the initial purchase payment for no more than five business days unless we receive your consent to our retaining the payment until the application is completed. If the incomplete application cannot be completed within those five days and we have not received your consent, you will be informed of the reasons, and the purchase payment will be returned immediately. Once the application is complete, we will allocate your initial purchase payment within two business days.
 
Who Can Invest
 
To apply for a contract, you must be of legal age in a state where the contracts may be lawfully sold and also be eligible to participate in any of the qualified and nonqualified plans for which the contracts are designed. At the time of issue, the contractowner, joint owner and annuitant must be under age 86. Certain death benefit options may not be available at all ages. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license, photo i.d. or other identifying documents.
 
In accordance with money laundering laws and federal economic sanction policy, the Company may be required in a given instance to reject a purchase payment and/or freeze a contractowner's account. This means we could refuse to honor requests for transfers, with- drawals, surrenders or death benefits. Once frozen, monies would be moved from the VAA to a segregated interest-bearing account maintained for the contractowner, and held in that account until instructions are received from the appropriate regulator.
 
If you are purchasing the contract through a tax-favored arrangement, including traditional IRAs and Roth IRAs, you should consider carefully the costs and benefits of the contract (including annuity income benefits) before purchasing the contract, since the tax- favored arrangement itself provides tax-deferred growth.
 
Replacement of Existing Insurance
 
Careful consideration should be given prior to surrendering or withdrawing money from an existing insurance contract to purchase the contract described in this prospectus. Surrender charges may be imposed on your existing contract and/or a new surrender charge period may be imposed with the purchase of, or transfer into, this contract. An investment representative or tax adviser should be consulted prior to making an exchange. Cash surrenders from an existing contract may be subject to tax and tax penalties.
 
Purchase Payments
 
Purchase payments are payable to us at a frequency and in an amount selected by you in the application. The minimum initial pur- chase payment is $10,000. The minimum annual amount for additional purchase payments is $300. The minimum payment to the contract at any one time must be at least $100 ($25 if transmitted electronically). If a minimum purchase payment is not submitted, we will contact you to see if additional money will be sent, or if we should return the purchase payment to you. Purchase payments in total may not equal or exceed $2 million without our approval. If you stop making purchase payments, the contract will remain in force as a paid-up contract. However, we may terminate the contract as allowed by your state's non-forfeiture law for individual deferred annuities. Purchase payments may be made or, if stopped, resumed at any time until the annuity commencement date, the surrender of the contract, or the death of the contractowner, whichever comes first. Upon advance written notice, we reserve the right to limit purchase payments made to the contract.
 
Valuation Date
 
Accumulation and annuity units will be valued once daily at the close of trading (normally, 4:00 p.m., New York time) on each day the New York Stock Exchange is open (valuation date). On any date other than a valuation date, the accumulation unit value and the annu- ity unit value will not change.
 
Allocation of Purchase Payments
 
Purchase payments allocated to the variable account are placed into the VAA's subaccounts, according to your instructions. You may also allocate purchase payments in the fixed account, if available.
 
24
 
[Missing Graphic Reference]
The minimum amount of any purchase payment which can be put into any one subaccount is $20. The minimum amount of any pur- chase payment which can be put into a fixed account guaranteed period is $2,000, subject to state approval.
 
If we receive your purchase payment from you or your broker-dealer in good order at our Home Office prior to 4:00 p.m., New York time, we will use the accumulation unit value computed on that valuation date when processing your purchase payment. If we receive your purchase payment in good order at or after 4:00 p.m., New York time, we will use the accumulation unit value computed on the next valuation date. If you submit your purchase payment to your representative, we will generally not begin processing the purchase payment until we receive it from your representative's broker-dealer. If your broker-dealer submits your purchase payment to us through the Depository Trust and Clearing Corporation (DTCC) or, pursuant to terms agreeable to us, uses a proprietary order place- ment system to submit your purchase payment to us, and your purchase payment was placed with your broker-dealer prior to 4:00 p.m., New York time, then we will use the accumulation unit value computed on that valuation date when processing your purchase payment. If your purchase payment was placed with your broker-dealer at or after 4:00 p.m. New York time, then we will use the accu- mulation unit value computed on the next valuation date.
 
The number of accumulation units determined in this way is not impacted by any subsequent change in the value of an accumulation unit. However, the dollar value of an accumulation unit will vary depending not only upon how well the underlying fund's investments perform, but also upon the expenses of the VAA and the underlying funds.
 
Valuation of Accumulation Units
 
Purchase payments allocated to the VAA are converted into accumulation units. This is done by dividing the amount allocated by the value of an accumulation unit for the valuation period during which the purchase payments are allocated to the VAA. The accumulation unit value for each subaccount was or will be established at the inception of the subaccount. It may increase or decrease from valua- tion period to valuation period. Accumulation unit values are affected by investment performance of the funds, fund expenses, and the contract charges. The accumulation unit value for a subaccount for a later valuation period is determined as follows:
 
1.     
The total value of the fund shares held in the subaccount is calculated by multiplying the number of fund shares owned by the sub- account at the beginning of the valuation period by the net asset value per share of the fund at the end of the valuation period, and adding any dividend or other distribution of the fund if an ex-dividend date occurs during the valuation period; minus
 
 
2.     
The liabilities of the subaccount at the end of the valuation period; these liabilities include daily charges imposed on the subac- count, and may include a charge or credit with respect to any taxes paid or reserved for by us that we determine result from the operations of the VAA; and
 
 
3.     
The result is divided by the number of subaccount units outstanding at the beginning of the valuation period.
 
The daily charges imposed on a subaccount for any valuation period are equal to the daily mortality and expense risk charge and the daily administrative charge multiplied by the number of calendar days in the valuation period. Contracts with different features have different daily charges, and therefore, will have different corresponding accumulation unit values on any given day. In certain circum- stances, and when permitted by law, it may be prudent for us to use a different standard industry method for this calculation, called the Net Investment Factor method. We will achieve substantially the same result using either method.
 
Transfers On or Before the Annuity Commencement Date
 
After the first 30 days from the effective date of your contract, you may transfer all or a portion of your investment from one subac- count to another. A transfer involves the surrender of accumulation units in one subaccount and the purchase of accumulation units in the other subaccount. A transfer will be done using the respective accumulation unit values determined at the end of the valuation date on which the transfer request is received.
 
Transfers (among the variable subaccounts and as permitted between the variable and fixed accounts) are limited to twelve (12) per contract year unless otherwise authorized by us. Currently, there is no charge for a transfer. This limit does not apply to transfers made under the automatic transfer programs of dollar cost averaging or portfolio rebalancing elected on forms available from us. See Additional Services and the SAI for more information on these programs.
 
The minimum amount which may be transferred between subaccounts is $300 (or the entire amount in the subaccount, if less than $300). If the transfer from a subaccount would leave you with less than $300 in the subaccount, we may transfer the total balance of the subaccount.
 
A transfer request may be made to our Home Office using written, telephone, fax, or electronic instructions, if the appropriate authori- zation is on file with us. Our address, telephone number, and Internet address are on the first page of this prospectus. In order to pre- vent unauthorized or fraudulent transfers, we may require certain identifying information before we will act upon instructions. We may also assign the contractowner a Personal Identification Number (PIN) to serve as identification. We will not be liable for following instructions we reasonably believe are genuine. Telephone requests will be recorded and written confirmation of all transfer requests will be mailed to the contractowner on the next valuation date.
 
25
 
[Missing Graphic Reference]
Please note that the telephone and/or electronic devices may not always be available. Any telephone or electronic device, whether it is yours, your service provider's, or your agent's, can experience outages or slowdowns for a variety of reasons. These outages or slow- downs may delay or prevent our processing of your request. Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your transfer request by writing to our Home Office.
 
Requests for transfers will be processed on the valuation date that they are received when they are received in good order at our Home Office before the end of the valuation date (normally 4:00 p.m. New York time). If we receive a transfer request in good order at or after 4:00p.m., New York time, we will process the request using the accumulation unit value computed on the next valuation date.
 
If your contract offers a fixed account, you may also transfer all or any part of the contract value from the subaccount(s) to the fixed side of the contract, except during periods when (if permitted by your contract) we have discontinued accepting transfers into the fixed side of the contract. The minimum amount which can be transferred to a fixed account is $2,000 or the total amount in the sub- account if less than $2,000. However, if a transfer from a subaccount would leave you with less than $300 in the subaccount, we may transfer the total amount to the fixed side of the contract.
 
You may also transfer part of the contract value from a fixed account to the various subaccount(s) subject to the following restric- tions:
 
·  
the sum of the percentages of fixed value transferred is limited to 25% of the value of that fixed account in any twelve month period; and
·  
the minimum amount which can be transferred is $300 or the amount in the fixed account.
 
Transfers of all or a portion of a fixed account (other than automatic transfer programs and i4LIFE ® Advantage transfers) may be sub- ject to interest adjustments, if applicable.
 
Transfers may be delayed as permitted by the 1940 Act. See Delay of Payments.
 
Market Timing
 
Frequent, large, or short-term transfers among subaccounts and the fixed account, such as those associated with "market timing" transactions, can affect the funds and their investment returns. Such transfers may dilute the value of the fund shares, interfere with the efficient management of the fund's portfolio, and increase brokerage and administrative costs of the funds. As an effort to protect our contractowners and the funds from potentially harmful trading activity, we utilize certain market timing policies and procedures (the "Market Timing Procedures"). Our Market Timing Procedures are designed to detect and prevent such transfer activity among the subaccounts and the fixed account that may affect other contractowners or fund shareholders.
 
In addition, the funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. The prospectuses for the funds describe any such policies and procedures, which may be more or less restrictive than the frequent trading policies and procedures of other funds and the Market Timing Procedures we have adopted to discourage frequent transfers among subaccounts. While we reserve the right to enforce these policies and procedures, contractowners and other persons with interests under the contracts should be aware that we may not have the contractual authority or the operational capacity to apply the frequent trading policies and procedures of the funds. However, under SEC rules, we are required to: (1) enter into a written agreement with each fund or its principal underwriter that obligates us to provide to the fund promptly upon request certain information about the trading activity of individual contractowners, and (2) execute instructions from the fund to restrict or prohibit further purchases or transfers by specific contractowners who violate the excessive trading policies established by the fund.
 
You should be aware that the purchase and redemption orders received by the funds generally are "omnibus" orders from intermedi- aries such as retirement plans or separate accounts funding variable insurance contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of variable insurance contracts.
 
The omnibus nature of these orders may limit the funds' ability to apply their respective disruptive trading policies and procedures. We cannot guarantee that the funds (and thus our contractowners) will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that may invest in the funds. In addition, if a fund believes that an omnibus order we submit may reflect one or more transfer requests from policy owners engaged in disruptive trading activity, the fund may reject the entire omnibus order.
 
Our Market Timing Procedures detect potential "market timers" by examining the number of transfers made by contractowners within given periods of time. In addition, managers of the funds might contact us if they believe or suspect that there is market timing. If requested by a fund company, we may vary our Market Timing Procedures from subaccount to subaccount to comply with specific fund policies and procedures.
 
We may increase our monitoring of contractowners who we have previously identified as market timers. When applying the param- eters used to detect market timers, we will consider multiple contracts owned by the same contractowner if that contractowner has been identified as a market timer. For each contractowner, we will investigate the transfer patterns that meet the parameters being
 
26
 
[Missing Graphic Reference]
used to detect potential market timers. We will also investigate any patterns of trading behavior identified by the funds that may not have been captured by our Market Timing Procedures.
 
Once a contractowner has been identified as a "market timer" under our Market Timing Procedures, we will notify the contractowner in writing that future transfers (among the subaccounts and/or the fixed account) will be temporarily permitted to be made only by original signature sent to us by U.S. mail, first-class delivery for the remainder of the contract year (or calendar year if the contract is an individual contract that was sold in connection with an employer sponsored plan). Overnight delivery or electronic instructions (which may include telephone, facsimile, or Internet instructions) submitted during this period will not be accepted. If overnight deliv- ery or electronic instructions are inadvertently accepted from a contractowner that has been identified as a market timer, upon discov- ery, we will reverse the transaction within 1 or 2 business days. We will impose this "original signature" restriction on that contractowner even if we cannot identify, in the particular circumstances, any harmful effect from that contractowner's particular transfers.
 
Contractowners seeking to engage in frequent, large, or short-term transfer activity may deploy a variety of strategies to avoid detec- tion. Our ability to detect such transfer activity may be limited by operational systems and technological limitations. The identification of contractowners determined to be engaged in such transfer activity that may adversely affect other contractowners or fund share- holders involves judgments that are inherently subjective. We cannot guarantee that our Market Timing Procedures will detect every potential market timer. If we are unable to detect market timers, you may experience dilution in the value of your fund shares and increased brokerage and administrative costs in the funds. This may result in lower long-term returns for your investments.
 
Our Market Timing Procedures are applied consistently to all contractowners. An exception for any contractowner will be made only in the event we are required to do so by a court of law. In addition, certain funds available as investment options in your contract may also be available as investment options for owners of other, older life insurance policies issued by us. Some of these older life insur- ance policies do not provide a contractual basis for us to restrict or refuse transfers which are suspected to be market timing activity. In addition, because other insurance companies and/or retirement plans may invest in the funds, we cannot guarantee that the funds will not suffer harm from frequent, large, or short-term transfer activity among subaccounts and the fixed accounts of variable con- tracts issued by other insurance companies or among investment options available to retirement plan participants.
 
In our sole discretion, we may revise our Market Timing Procedures at any time without prior notice as necessary to better detect and deter frequent, large, or short-term transfer activity to comply with state or federal regulatory requirements, and/or to impose addi- tional or alternate restrictions on market timers (such as dollar or percentage limits on transfers). If we modify our Market Timing Procedures, they will be applied uniformly to all contractowners or as applicable to all contractowners investing in underlying funds.
 
Some of the funds have reserved the right to temporarily or permanently refuse payments or transfer requests from us if, in the judg- ment of the fund's investment adviser, the fund would be unable to invest effectively in accordance with its investment objective or policies, or would otherwise potentially be adversely affected. To the extent permitted by applicable law, we reserve the right to defer or reject a transfer request at any time that we are unable to purchase or redeem shares of any of the funds available through the VAA, including any refusal or restriction on purchases or redemptions of the fund shares as a result of the funds' own policies and proce- dures on market timing activities. If a fund refuses to accept a transfer request we have already processed, we will reverse the trans- action within 1 or 2 business days. We will notify you in writing if we have reversed, restricted or refused any of your transfer requests. Some funds also may impose redemption fees on short-term trading (i.e., redemptions of mutual fund shares within a cer- tain number of business days after purchase). We reserve the right to administer and collect any such redemption fees on behalf of the funds. You should read the prospectuses of the funds for more details on their redemption fees and their ability to refuse or restrict purchases or redemptions of their shares.
 
Transfers After the Annuity Commencement Date
 
You may transfer all or a portion of your investment in one subaccount to another subaccount or to the fixed side of the contract, as permitted under your contract. Those transfers will be limited to three times per contract year. You may also transfer from a variable annuity payment to a fixed annuity payment. You may not transfer from a fixed annuity payment to a variable annuity payment.
 
If you select i4LIFE ® Advantage your transfer rights and restrictions for the variable subaccounts and the fixed account during the Access Period are the same as stated in the section of this prospectus called Transfers On or Before the Annuity Commencement Date. During the i4LIFE ® Advantage Lifetime Income Period, you are subject to the rights set forth in the prior paragraph.
 
Ownership
 
The owner on the date of issue will be the person or entity designated in the contract specifications. If no owner is designated, the annuitant(s) will be the owner. The owner may name a joint owner.
 
As contractowner, you have all rights under the contract. According to Indiana law, the assets of the VAA are held for the exclusive benefit of all contractowners and their designated beneficiaries; and the assets of the VAA are not chargeable with liabilities arising from any other business that we may conduct. Qualified contracts may not be assigned or transferred except as permitted by appli- cable law and upon written notification to us. Non-qualified contracts may not be collaterally assigned. An assignment affects the
 
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death benefit and living benefits calculated under the contract. We assume no responsibility for the validity or effect of any assign- ment. Consult your tax adviser about the tax consequences of an assignment.
 
Joint Ownership
 
If a contract has joint owners, the joint owners shall be treated as having equal undivided interests in the contract. Either owner, inde- pendently of the other, may exercise any ownership rights in this contract. Not more than two owners (an owner and joint owner) may be named and contingent owners are not permitted.
 
Annuitant
 
The following rules apply prior to the annuity commencement date. You may name only one annuitant [unless you are a tax-exempt entity, then you can name two joint annuitants]. You (if the contractowner is a natural person) have the right to change the annuitant at any time by notifying us of the change. The new annuitant must be under age 86 as of the effective date of the change. This change may cause a reduction in the death benefit on the death of the annuitant. See The Contracts - Death Benefit. A contingent annuitant may be named or changed by notifying us in writing. Contingent annuitants are not allowed on contracts owned by non-natural own- ers. On or after the annuity commencement date, the annuitant or joint annuitants may not be changed and contingent annuitant des- ignations are no longer applicable.
 
Surrenders and Withdrawals
 
Before the annuity commencement date, we will allow the surrender of the contract or a withdrawal of the contract value upon your written request on an approved Lincoln distribution request form (available from the Home Office), subject to the rules discussed below. Surrender or withdrawal rights after the annuity commencement date depend on the annuity payout option selected.
 
The amount available upon surrender/withdrawal is the contract value less any applicable charges, fees, and taxes at the end of the valuation period during which the written request for surrender/withdrawal is received in good order at the Home Office. If we receive a surrender or withdrawal request in good order at or after 4:00 p.m., New York time, we will process the request using the accumula- tion unit value computed on the next valuation date. The minimum amount which can be withdrawn is $300. Unless a request for withdrawal specifies otherwise, withdrawals will be made from all subaccounts within the VAA and from the fixed account in the same proportion that the amount of withdrawal bears to the total contract value. Surrenders and withdrawals from the fixed account may be subject to the interest adjustment. See Fixed Side of the Contract. Unless prohibited, surrender/withdrawal payments will be mailed within seven days after we receive a valid written request at the Home Office. The payment may be postponed as permitted by the 1940 Act.
 
If you request a lump sum surrender and your surrender value is over $10,000, your money will be placed into a SecureLine ® account in your name. You are the owner of the account, and are the only one authorized to transfer proceeds from the account. You may choose to leave the proceeds in this account, or you may begin writing checks immediately.
 
The SecureLine ® account is a special service that we offer in which your surrender proceeds are placed into an interest-bearing account. Instead of mailing you a check, we will send a checkbook so that you will have access to the account simply by writing a check for all or any part of the proceeds. The SecureLine ® account is part of our general account. It is not a bank account and it is not insured by the FDIC or any other government agency. As part of our general account, it is subject to the claims of our creditors. We receive a benefit from all amounts left in the SecureLine ® account. You may request that surrender proceeds be paid directly to you instead of deposited in a SecureLine ® account. Interest credited in the SecureLine ® account is taxable as ordinary income in the year such interest is credited, and is not tax deferred. We recommend that you consult your tax advisor to determine the tax consequences associated with the payment of interest on amounts in the SecureLine ® account.
 
The tax consequences of a surrender/withdrawal are discussed later in this booklet. See Federal Tax Matters - Taxation of With- drawals and Surrenders.
 
Additional Services
 
These are the additional services available to you under your contract: dollar-cost averaging (DCA), automatic withdrawal service (AWS) and portfolio rebalancing. Currently, there is no charge for these services. However, we reserve the right to impose one. In order to take advantage of one of these services, you will need to complete the appropriate election form that is available from our Home office. For further detailed information on these services, please see Additional Services in the SAI.
 
Dollar-cost averaging allows you to transfer amounts from the DCA fixed account, if available, or certain variable subaccounts into the variable subaccounts on a monthly basis or in accordance with other terms we make available. We reserve the right to discontinue or modify this program at any time. DCA does not assure a profit or protect against loss.
 
The automatic withdrawal service (AWS) provides for an automatic periodic withdrawal of your contract value.
 
Portfolio rebalancing is an option that restores to a pre-determined level the percentage of contract value allocated to each variable account subaccount. The rebalancing may take place monthly, quarterly, semi-annually or annually.
 
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Only one of the two additional services (DCA and portfolio rebalancing) may be used at one time. For example, you cannot have DCA and portfolio rebalancing running simultaneously.
 
Death Benefit
 
The chart below provides a brief overview of how the death benefit proceeds will be distributed if death occurs prior to i4LIFE ® Advantage elections or prior to the annuity commencement date. Refer to your contract for the specific provisions applicable upon death.
 
UPON DEATH OF: 
AND 
AND 
DEATH BENEFIT PROCEEDS PASS TO: 
 
 
contractowner 
There is a surviving joint owner 
The annuitant is living or deceased 
joint owner 
 
 
contractowner 
There is no surviving joint owner 
The annuitant is living or deceased 
designated beneficiary 
 
 
contractowner 
There is no surviving joint owner 
The annuitant is living or deceased 
contractowner's estate 
 
 
and the beneficiary predeceases the 
     
 
contractowner 
     
 
annuitant 
The contractowner is living 
There is no contingent annuitant 
The youngest contractowner 
 
     
becomes the contingent annuitant 
 
     
and the contract continues. The 
 
     
contractowner may waive* this 
 
     
continuation and receive the death 
 
     
benefit proceeds. 
 
 
annuitant 
The contractowner is living 
The contingent annuitant is living 
contingent annuitant becomes the 
 
     
annuitant and the contract continues 
 
 
annuitant** 
The contractowner is a trust or other 
No contingent annuitant allowed 
designated beneficiary 
 
 
non-natural person 
with non-natural contractowner 
   


*Notification from the contractowner to select the death benefit proceeds must be received within 75 days of the death of the annuitant.
 
**Death of annuitant is treated like death of the contractowner.
 
If the contractowner (or a joint owner) or annuitant dies prior to the annuity commencement date, a death benefit may be payable. You can choose the death benefit. Only one death benefit may be in effect at any one time and this election terminates if you elect i4LIFE ® Advantage and have the EEB Death Benefit or elect any other annuitization option. Generally, the more expensive the death benefit the greater the protection.
 
You should consider the following provisions carefully when designating the beneficiary, annuitant, any contingent annuitant and any joint owner, as well as before changing any of these parties. The identity of these parties under the contract may significantly affect the amount and timing of the death benefit or other amount paid upon a contractowner's or annuitant's death.
 
You may designate a beneficiary during your lifetime and change the beneficiary by filing a written request with our Home Office. Each change of beneficiary revokes any previous designation. We reserve the right to request that you send us the contract for endorse- ment of a change of beneficiary.
 
Upon the death of the contractowner, a death benefit will be paid to the beneficiary. Upon the death of a joint owner, the death benefit will be paid to the surviving joint owner. If the contractowner is a corporation or other non-individual (non-natural person), the death of the annuitant will be treated as death of the contractowner.
 
If an annuitant who is not the contractowner or joint owner dies, then the contingent annuitant, if named, becomes the annuitant and no death benefit is payable on the death of the annuitant. If no contingent annuitant is named, the contractowner (or younger of joint owners) becomes the annuitant. Alternatively, a death benefit may be paid to the contractowner (and joint owner, if applicable, in equal shares). Notification of the election of this death benefit must be received by us within 75 days of the death of the annuitant. The con- tract terminates when any death benefit is paid due to the death of the annuitant.
 
Only the contract value as of the valuation date we approve the payment of the death claim is available as a death benefit if a contractowner, joint owner or annuitant was added or changed subsequent to the effective date of this contract unless the change occurred because of the death of a prior contractowner, joint owner or annuitant. If your contract value equals zero, no death benefit will be paid.
 
Account Value Death Benefit. If you elect the Account Value Death Benefit contract option, we will pay a death benefit equal to the contract value on the valuation date the death benefit is approved by us for payment. No additional death benefit is provided. Once you have selected this death benefit option, it cannot be changed. (Your contract may refer to this benefit as the Contract Value Death Benefit.)
 
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Guarantee of Principal Death Benefit. If you do not select a death benefit, the Guarantee of Principal Death Benefit will apply to your contract. If the Guarantee of Principal Death Benefit is in effect, the death benefit will be equal to the greater of:
 
·  
The current contract value as of the valuation date we approve the payment of the claim; or
·  
The sum of all purchase payments decreased by withdrawals in the same proportion that withdrawals reduced the contract value (withdrawals less than or equal to the Guaranteed Annual Income amount under the Lincoln Lifetime IncomeSM Advantage 2.0 rider may reduce the sum of all purchase payments amount on a dollar for dollar basis. See The Contracts - Lincoln Lifetime IncomeSM Advantage 2.0.
 
In a declining market, withdrawals deducted in the same proportion that withdrawals reduce the contract value may have a magnified effect on the reduction of the death benefit payable.
 
All references to withdrawals include deductions for any applicable charges associated with those withdrawals and premium taxes, if any.
 
Enhanced Guaranteed Minimum Death Benefit (EGMDB). If the EGMDB is in effect, the death benefit paid will be the greatest of:
 
·  
The current contract value as of the valuation date we approve the payment of the claim; or
·  
the sum of all purchase payments decreased by withdrawals in the same proportion that withdrawals reduced the contract value (withdrawals less than or equal to the Guaranteed Annual Income amount under the Lincoln Lifetime IncomeSM Advantage 2.0 rider may reduce the sum of all purchase payments amount on a dollar for dollar basis. See The Contracts - Lincoln Lifetime IncomeSM Advantage 2.0; or
·  
the highest contract value which the contract attains on any contract anniversary (including the inception date) (determined before the allocation of any purchase payments on that contract anniversary) prior to the 81st birthday of the deceased and prior to the death of the contractowner, joint owner (if applicable) or annuitant for whom the death claim is approved for payment. The highest contract value is increased by purchase payments and is decreased by withdrawals subsequent to that anniversary date in the same proportion that withdrawals reduced the contract value.
 
In a declining market, withdrawals deducted in the same proportion that withdrawals reduce the contract value may have a magnified effect on the reduction of the death benefit payable. All references to withdrawals include deductions for any applicable charges asso- ciated with those withdrawals and premium taxes, if any.
 
The EGMDB is not available under contracts issued to a contractowner, or joint owner or annuitant, who is age 80 or older at the time of issuance.
 
You may discontinue the EGMDB at any time by completing the Death Benefit Discontinuance form and sending it to our Home Office. The benefit will be discontinued as of the valuation date we receive the request, and the Guarantee of Principal Death Benefit will apply. We will deduct the charge for the Guarantee of Principal Death Benefit as of that date. See Charges and Other Deductions.
 
Estate Enhancement Benefit Rider (EEB Rider). The amount of death benefit payable under this Rider is the greatest of the following amounts:
 
 
The contract value as of the valuation date we approve the payment of the claim; or
 
 
The sum of all purchase payments decreased by withdrawals in the same proportion that withdrawals reduced the contract value (withdrawals less than or equal to the Guaranteed Annual Income amount under the Lincoln Lifetime IncomeSM Advantage 2.0 rider may reduce the sum of all purchase payments amount on a dollar for dollar basis. See The Contracts - Lincoln Lifetime IncomeSM Advantage 2.0; or
 
 
The highest contract value on any contract anniversary (including the inception date) (determined before the allocation of any purchase payments on that contract anniversary) prior to the 81st birthday of the deceased contractowner, joint owner (if appli- cable), or annuitant and prior to the death of the contractowner, joint owner or annuitant for whom a death claim is approved for payment. The highest contract value is adjusted for certain transactions. It is increased by purchase payments made on or after that contract anniversary on which the highest contract value is obtained. It is decreased by withdrawals subsequent to that con- tract anniversary date in the same proportion that withdrawals reduced the contract value; or
 
 
The current contract value as of the valuation date we approve the payment of the claim plus an amount equal to the Enhance- ment Rate times the lesser of:
 
   
the contract earnings; or
 
   
the covered earnings limit.
Note: If there are no contract earnings, there will not be an amount provided under this item.
 
In a declining market, withdrawals deducted in the same proportion that withdrawals reduce the contract value may have a magnified effect on the reduction of the death benefit payable. All references to withdrawals include deductions for any applicable charges asso- ciated with that withdrawal and premium taxes, if any.
 
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The Enhancement Rate is based on the age of the oldest contractowner, joint owner (if applicable), or annuitant on the date when the Rider becomes effective. If the oldest is under age 70, the rate is 40%. If the oldest is age 70 to 75, the rate is 25%. The EEB Rider is not available if the oldest contractowner, joint owner (if applicable), or annuitant is age 76 or older at the time the Rider would become effective.
 
Contract earnings equal:
 
·  
the contract value as of the date of death of the individual for whom a death claim is approved by us for payment; minus
·  
the contract value as of the effective date of this Rider (determined before the allocation of any purchase payments on that date); minus
·  
each purchase payment that is made to the contract on or after the effective date of the Rider, and prior to the date of death of the individual for whom a death claim is approved for payment; plus
·  
any contractual basis that has previously been withdrawn, which is the amount by which each withdrawal made on or after the effective date of the Rider, and prior to the date of death of the individual for whom a death claim is approved for payment, exceeded the contract earnings immediately prior to the withdrawal.
 
The previously withdrawn contractual basis associated with each withdrawal made on or after the effective date of the rider is an amount equal to the greater of $0 and (A), where
 
(A)     
is the amount of the withdrawal minus the greater of $0 and (B); where
 
 
(B)     
is the result of [(i) - (ii)]; where
 
 
(i)     
is the contract value immediately prior to the withdrawal; and
 
 
(ii)     
is the amount of purchase payments made into the contract prior to the withdrawal. The covered earnings limit equals 200% of:
 
·  
the contract value as of the effective date of this Rider (determined before the allocation of any purchase payments on that date); plus
·  
each purchase payment that is made to the contract on or after the effective date of the Rider, and prior to the date of death of the individual for whom a death claim is approved for payment, and prior to the contract anniversary immediately preceding the 76th birthday of the oldest of the contractowner, joint owner (if applicable) or annuitant; minus
·  
any contractual basis that has previously been withdrawn, which is the amount by which each withdrawal made on or after the effective date of the Rider, and prior to the date of death of the individual for whom a death claim is approved for payment, exceeded the contract earnings immediately prior to the withdrawal.
 
The previously withdrawn contractual basis associated with each withdrawal made on or after the effective date of the rider is an amount equal to the greater of $0 and (A), where
 
(A)     
is the amount of the withdrawal minus the greater of $0 and (B); where
 
 
(B)     
is the result of [(i) - (ii)]; where
 
 
(i)     
is the contract value immediately prior to the withdrawal; and
 
 
(ii)     
is the amount of purchase payments made into the contract prior to the withdrawal.
 
The EEB Rider may not be available in all states. Please check with your investment representative regarding availability of this rider. Contracts purchased after the Rider becomes available in your state may only elect the Rider at the time of purchase.
 
The EEB Rider may not be terminated unless you surrender the contract or the contract is in the annuity payout period.
 
General Death Benefit Information
 
Only one of these death benefit elections may be in effect at any one time and these elections terminate if you elect i4LIFE ® Advantage.
 
If there are joint owners, upon the death of the first contractowner, we will pay a death benefit to the surviving joint owner. The surviv- ing joint owner will be treated as the primary, designated beneficiary. Any other beneficiary designation on record at the time of death will be treated as a contingent beneficiary. If the surviving joint owner is the spouse of the deceased joint owner, he/she may continue the contract as sole contractowner. Upon the death of the spouse who continues the contract, we will pay a death benefit to the desig- nated beneficiary(s).
 
If the beneficiary is the spouse of the contractowner, then the spouse may elect to continue the contract as the new contractowner. Pursuant to the Federal Defense of Marriage Act, same-sex marriages are not recognized for purposes of federal law. Therefore, the favorable tax treatment provided by federal tax law to an opposite-sex spouse is not available to a same-sex spouse. Same-sex spouses should consult a tax advisor prior to purchasing annuity products that provide benefits based upon status as a spouse, and
 
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prior to exercising any spousal rights under an annuity. Should the surviving spouse elect to continue the contract, a portion of the death benefit may be credited to the contract. Any portion of the death benefit that would have been payable (if the contract had not been continued) that exceeds the current contract value on the date the surviving spouse elects to continue will be added to the con- tract value. If the contract is continued in this way, the death benefit in effect at the time the beneficiary elected to continue the con- tract will remain as the death benefit.
 
If the EEB Rider is in effect, the Enhancement Rate for future benefits will be based on the age of the older of the surviving spouse or the annuitant at the time the EEB is paid into the contract. The contract earnings and the covered earnings limit will be reset, treating the current contract value (after crediting any death benefit amount into the contract as described above) as the initial deposit for pur- poses of future benefit calculations. If either the surviving spouse or the surviving annuitant is 76 or older, the EEB death benefit will be reduced to the EGMDB for a total annual charge of 0.90% .
 
The value of the death benefit will be determined as of the valuation date we approve the payment of the claim. Approval of payment will occur upon our receipt of a claim submitted in good order. To be in good order, we require all the following:
 
1.     
proof (e.g. an original certified death certificate), or any other proof of death satisfactory to us, of the death; and
 
 
2.     
written authorization for payment; and
 
 
3.     
all required claim forms, fully completed (including selection of a settlement option).
 
Notwithstanding any provision of this contract to the contrary, the payment of death benefits provided under this contract must be made in compliance with Code Section 72(s) or 401(a)(9) as applicable, as amended from time to time. Death benefits may be tax- able. See Federal Tax Matters.
 
Unless otherwise provided in the beneficiary designation, one of the following procedures will take place on the death of a beneficiary:
 
·  
If any beneficiary dies before the contractowner, that beneficiary's interest will go to any other beneficiaries named, according to their respective interests; and/or
·  
If no beneficiary survives the contractowner, the proceeds will be paid to the contractowner's estate.
 
If the beneficiary is a minor, court documents appointing the guardian/custodian may be required.
 
Unless the contractowner has already selected a settlement option, the beneficiary may choose the method of payment of the death benefit. The death benefit payable to the beneficiary or joint owner must be distributed within five years of the contractowner's date of death unless the beneficiary begins receiving within one year of the contractowner's death the distribution in the form of a life annuity or an annuity for a designated period not extending beyond the beneficiary's life expectancy.
 
Upon the death of the annuitant, Federal tax law requires that an annuity election be made no later than 60 days after we have approved the death claim for payment.
 
If the death benefit becomes payable, the recipient may elect to receive payment either in the form of a lump sum settlement or an annuity payout. If a lump sum settlement is elected, the proceeds will be mailed within seven days of approval by us of the claim sub- ject to the laws, regulations and tax code governing payment of death benefits. This payment may be postponed as permitted by the Investment Company Act of 1940.
 
In the case of a death of one of the parties to the annuity contract, if the recipient of the death benefit has elected a lump sum settle- ment and the contract value is over $10,000, the proceeds will be placed into the interest-bearing account in the recipient's name as the owner of the account. The SecureLine ® account allows the recipient additional time to decide how to manage death benefit pro- ceeds with the balance earning interest from the day the account is opened. SecureLine ® is not a method of deferring taxation.
 
The SecureLine ® account is a special service that we offer in which the death benefit proceeds are placed into an interest-bearing account. Instead of mailing you (or the recipient of the death proceeds) a check, we will send a checkbook so that you (or the death proceeds recipient) will have access to the account simply by writing a check for all or any part of the proceeds. The SecureLine ® account is part of our general account. It is not a bank account and it is not insured by the FDIC or any other government agency. As part of our general account, it is subject to the claims of our creditors. We receive a benefit from all amounts left in the SecureLine ® account. The recipient of death benefit proceeds may request to receive the proceeds in the form of a check rather than a deposit into the SecureLine ® account. Interest in the SecureLine ® account is taxable as ordinary income in the year such interest is credited, and is not tax-deferred. We recommend that you consult your tax advisor to determine the tax consequences associated with the payment of interest on amounts in the SecureLine ® account.
 
Investment Requirements
 
If you purchase a Living Benefit rider (Lincoln Lifetime IncomeSM Advantage 2.0, 4LATER ® Advantage, Lincoln SmartSecurity ® Advan- tage, or the Guaranteed Income Benefit under i4LIFE ® Advantage), you will be subject to Investment Requirements, which means you will be limited in how much you can invest in certain subaccounts of your contract. Currently, if you purchase i4LIFE ® without the Guaranteed Income Benefit, you will not be subject to any Investment Requirements, although we reserve the right to impose Invest- ment Requirements for this rider in the future.
 
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We have divided the subaccounts of your contract into groups and have specified the minimum or maximum percentages of contract value that must be in each group at the time you purchase the rider (or when the rider Investment Requirements are enforced, if later). Some subaccounts are not available to you if you purchase certain riders. The Investment Requirements may not be consistent with an aggressive investment strategy. You should consult with your registered representative to determine if the Investment Require- ments are consistent with your investment objectives.
 
You can select the percentages of contract value (includes Account Value if i4LIFE ® Advantage is in effect) to allocate to individual subaccounts within each group, but the total investment for all subaccounts within the group must comply with the specified mini- mum or maximum percentages for that group.
 
In accordance with these Investment Requirements, you agree to be automatically enrolled in the portfolio rebalancing option under your contract and thereby authorize us to automatically rebalance your contract value on a periodic basis. On each quarterly anniver- sary of the effective date of the Rider, we will rebalance your contract value, on a pro-rata basis, based on your allocation instructions in effect at the time of the rebalancing. Any reallocation of contract value among the subaccounts made by you prior to a rebalancing date will become your allocation instructions for rebalancing purposes. Confirmation of the rebalancing will appear on your quarterly statement and you will not receive an individual confirmation after each reallocation. If we rebalance contract value from the subaccounts and your allocation instructions do not contain any subaccounts that meet the Investment Requirements then that por- tion of the rebalanced contract value that does not meet the Investment Requirements will be allocated to the Delaware VIP Limited- Term Diversified Income Series as the default investment option or any other subaccount that we may designate for that purpose. These investments will become your allocation instructions until you tell us otherwise.
 
We may change the list of subaccounts in a group, change the number of groups, change the minimum or maximum percentages of contract value allowed in a group, change the investment options that are or are not available to you, or change the rebalancing fre- quency at any time in our sole discretion. You will be notified at least 30 days prior to the date of any change. We may make such modifications at any time when we believe the modifications are necessary to protect our ability to provide the guarantees under these Riders. Our decision to make modifications will be based on several factors including the general market conditions and the style and investment objectives of the subaccount investments.
 
At the time you receive notice of a change to the Investment Requirements, you may:
 
1.     
drop the applicable rider immediately, without waiting for a termination event if you do not wish to be subject to these Investment Requirements; or
 
 
2.     
submit your own reallocation instructions for the contract value, before the effective date specified in the notice, so that the Invest- ment Requirements are satisfied; or
 
 
3.     
take no action and be subject to the quarterly rebalancing as described above. If this results is a change to your allocation instruc- tions, then these will be your new allocation instructions until you tell us otherwise.
 
At this time, the subaccount groups are as follows: 
   
Group 1 
Group 2 
 
Investments must be at least 30% of contract value 
Investments cannot exceed 70% of contract value or Account Value 
 
or Account Value 
   
1. 
LVIP Delaware Bond Fund 
All other funds except as described below. 
   
2. 
Delaware VIP Limited-Term Diversified Income 
     
Series 
   
3. 
Delaware VIP Diversified Income Series 
     
4. 
LVIP SSgA Bond Index Fund 
     
5. 
LVIP Global Income Fund 
     
6. 
LVIP Total Bond Fund 
     
7. 
LVIP Delaware Diversified Floating Rate Fund 
     
8. 
LVIP BlackRock Inflation Protected Bond Fund 
     


Group 3
 
Investments cannot exceed 10% of contract value or Account Value
 
1.     
Delaware VIP Emerging Markets Series
 
 
2.     
LVIP SSgA Emerging Markets 100 Fund
 
 
3.     
Delaware VIP REIT Series
 
 
4.     
LVIP Cohen & Steers Global Real Estate Fund
 
 
5.     
MFS VIT Utilities Series
 
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[Missing Graphic Reference]
6.     
AllianceBernstein VPS Global Thematic Growth Portfolio
 
 
7.     
DWS Alternative Asset Allocation Plus VIP Portfolio
 
To satisfy these Investment Requirements, you may allocate 100% of your contract value among the funds on the following list. If you allocate less than 100% of contract value to or among these funds, then these funds will be considered as part of Group 1 or 2 above, as applicable, and you will be subject to the Group 1 or 2 restrictions. The PIMCO VIT CommodityRealReturn ® Strategy Portfolio and the fixed accounts are not available with these riders. The fixed account is only available for dollar cost averaging.
 
BlackRock Global Allocation VI Fund 
LVIP SSgA Conservative Structured Allocation Fund 
Delaware VIP Diversified Income Series 
LVIP SSgA Moderate Index Allocation Fund 
Delaware VIP Limited-Term Diversified Income Series 
LVIP SSgA Moderate Structured Allocation Fund 
LVIP BlackRock Inflation Protected Bond Fund 
LVIP SSgA Moderately Aggressive Index Allocation Fund 
LVIP Delaware Bond Fund 
LVIP SSgA Moderately Aggressive Structured Allocation Fund 
LVIP Delaware Diversified Floating Rate Fund 
LVIP Total Bond Fund 
LVIP Global Income Fund 
LVIP Wilshire Conservative Profile Fund 
LVIP SSgA Bond Index Fund 
LVIP Wilshire Moderate Profile Fund 
LVIP SSgA Global Tactical Allocation Fund 
LVIP Wilshire Moderately Aggressive Profile Fund 
LVIP SSgA Conservative Index Allocation Fund 
 


Living Benefit Riders
 
The optional Living Benefit riders offered under this variable annuity contract - Lincoln Lifetime IncomeSM Advantage 2.0, Lincoln SmartSecurity ® Advantage, i4LIFE ® Advantage with the Guaranteed Income Benefit (version 4) and 4LATER ® Advantage - are described in the following sections. The riders offer either a minimum withdrawal benefit (Lincoln Lifetime IncomeSM Advantage 2.0, and Lincoln SmartSecurity ® Advantage) or a minimum annuity payout (i4LIFE ® Advantage and 4LATER ® Advantage) You may not elect more than one Living Benefit rider at a time. Upon election of a Living Benefit rider, you will be subject to Investment Require- ments (unless you elect i4LIFE ® Advantage without the Guaranteed Income Benefit (version 4)). The overview chart provided with this prospectus provides a brief description and comparison of each Living Benefit rider. Excess withdrawals under certain Living Benefit riders may result in a reduction or premature termination of those benefits or of those riders. If you are not certain how an excess withdrawal will reduce your future guaranteed amounts, you should contact either your registered representative or us prior to requesting a withdrawal to find out what, if any, impact the excess withdrawal will have on any guarantees under the Living Benefit rider. Terms and conditions may change after the contract is purchased.
 
Lincoln Lifetime IncomeSM Advantage 2.0
 
The Lincoln Lifetime IncomeSM Advantage 2.0 is a Living Benefit rider available for purchase in your contract that provides:
 
·  
Guaranteed lifetime periodic withdrawals up to the Guaranteed Annual Income amount which is based upon a guaranteed Income Base (a value equal to either your initial purchase payment or contract value, if elected after the contract's effective date);
·  
A 5% Enhancement to the Income Base if greater than an Automatic Annual Step-up so long as no withdrawals are made in that year and the rider is within a ten-year Enhancement period;
·  
Automatic Annual Step-ups of the Income Base to the contract value if the contract value is equal to or greater than the Income Base after the 5% Enhancement;
·  
Age-based increases to the Guaranteed Annual Income amount (after reaching a higher age-band and after an Automatic Annual Step-up).
 
Please note any withdrawals made prior to age 55 or that exceed the Guaranteed Annual Income amount or that are not payable to the contractowner or contractowner's bank account (or to the annuitant or the annuitant's bank account, if the owner is a non- natural person) (Excess Withdrawals) may significantly reduce your Income Base as well as your Guaranteed Annual Income amount by an amount greater than the dollar amount of the Excess Withdrawal and may terminate the rider and contract if the Income Base is reduced to zero.
 
In order to purchase Lincoln Lifetime IncomeSM Advantage 2.0 the purchase payment or contract value (if purchased after the contract is issued) must be at least $25,000. This rider provides guaranteed, periodic withdrawals for your life as contractowner/annuitant (single life option) or for the lives of you as contractowner/annuitant and your spouse as joint owner (joint life option) regardless of the investment performance of the contract, provided that certain conditions are met. An Income Base is used to calculate the Guaran- teed Annual Income payment from your contract, but is not available as a separate benefit upon death or surrender. The Income Base is equal to the initial purchase payment (or contract value if elected after contract issue), increased by subsequent purchase pay- ments, Automatic Annual Step-ups and 5% Enhancements, and decreased by Excess Withdrawals in accordance with the provisions
 
34
 
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set forth below. After the first anniversary of the rider effective date, cumulative additional purchase payments into the contract will be limited to an amount equal to $100,000 without Home Office approval. No additional purchase payments are allowed if the contract value decreases to zero for any reason. No additional purchase payments are allowed after the Nursing Home Enhancement is requested and approved by us (described later in this prospectus).
 
This rider provides for guaranteed, periodic withdrawals up to the Guaranteed Annual Income amount commencing after the younger of you or your spouse (joint life option) reach age 55. The Guaranteed Annual Income payments are based upon specified percentages of the Income Base. The specified withdrawal percentages of the Income Base are age based and may increase over time. With the single life option, you may receive Guaranteed Annual Income payments for your lifetime. If you purchase the joint life option, Guaran- teed Annual Income amounts for the lifetimes of you and your spouse will be available.
 
Withdrawals in excess of the Guaranteed Annual Income amount or that are made prior to age 55 or that are not payable to the contractowner or contractowner's bank account (or to the annuitant or the annuitant's bank account, if the owner is a non-natural per- son) (Excess Withdrawals) may significantly reduce your Income Base and your Guaranteed Annual Income payments by an amount greater than the dollar amount of the Excess Withdrawal and may terminate the Income Base, rider and the contract. Withdrawals will also negatively impact the availability of the 5% Enhancement. These options are discussed below in detail.
 
Lincoln Life offers other optional riders available for purchase with its variable annuity contracts. These riders provide different meth- ods to take income from your contract value and may provide certain guarantees. There are differences between the riders in the fea- tures provided as well as the charge structure. In addition, the purchase of one rider may impact the availability of another rider. Infor- mation about the relationship between Lincoln Lifetime IncomeSM Advantage 2.0 and these other riders is included later in this discussion. Not all riders will be available at all times. You may consider purchasing the Lincoln Lifetime IncomeSM Advantage 2.0 if you want a guaranteed lifetime income payment that may grow as you get older and may increase through the Automatic Annual Step-up or 5% Enhancement. The cost of the Lincoln Lifetime IncomeSM Advantage 2.0 may be higher than other Living Benefit riders that you may purchase in your contract. The age at which you may start receiving the Guaranteed Annual Income amount may be dif- ferent than the ages that you may receive guaranteed payments under other riders.
 
Availability. The Lincoln Lifetime IncomeSM Advantage 2.0 is available for purchase with new and existing nonqualified and qualified (IRAs and Roth IRAs) annuity contracts. The contractowner/annuitant as well as the spouse under the joint life option must be under age 86 at the time this rider is elected. You cannot elect the rider and any other living benefit rider offered in your contract at the same time (Lincoln SmartSecurity ® Advantage or 4LATER ® Advantage). You may not elect the rider if you have also elected i4LIFE ® Advan- tage or Lincoln SmartIncomeSM Inflation, both annuity payout options. You must wait at least 12 months after terminating Lincoln SmartSecurity ® Advantage, 4LATER ® Advantage or any other living benefits we may offer in the future before electing Lincoln Lifetime IncomeSM Advantage 2.0. See The Contracts - Lincoln SmartSecurity ® Advantage, 4LATER ® Advantage, i4LIFE ® Advantage and Annu- ity Payouts - Lincoln SmartIncomeSM Inflation for more information. There is no guarantee that the Lincoln Lifetime IncomeSM Advan- tage 2.0 will be available for new purchasers in the future as we reserve the right to discontinue this benefit at any time. The availabil- ity of this rider will depend upon your state's approval of this rider. Check with your registered representative regarding availability.
 
If you purchase the Lincoln Lifetime IncomeSM Advantage 2.0 you will be limited in your ability to invest within the subaccounts offered within your contract. You will be required to adhere to Investment Requirements. In addition, the fixed account is not avail- able except for use with dollar cost averaging. See Investment Requirements.
 
If the rider is elected at contract issue, then the rider will be effective on the contract's effective date. If the rider is elected after the contract is issued (by sending a written request to our Home Office), the rider will be effective on the next valuation date following approval by us.
 
Benefit Year. The Benefit Year is the 12-month period starting with the effective date of the rider and starting with each anniversary of the rider effective date after that.
 
Income Base. The Income Base is a value used to calculate your Guaranteed Annual Income amount. The Income Base is not avail- able to you as a lump sum withdrawal or a death benefit. The initial Income Base varies based on when you elect the rider. If you elect the rider at the time you purchase the contract, the initial Income Base will equal your initial purchase payment. If you elect the rider after we issue the contract, the initial Income Base will equal the contract value on the effective date of the rider. The maximum Income Base is $10,000,000. This maximum takes into consideration the total Income Bases and Guaranteed Amounts from all Lin- coln Life contracts (or contracts issued by our affiliates) in which you (and/or spouse if joint life option) are the covered lives under any other Living Benefit riders. See The Contracts - 4LATER ® Advantage and Lincoln SmartSecurity ® Advantage.
 
Additional purchase payments automatically increase the Income Base by the amount of the purchase payment (not to exceed the maximum Income Base); for example, a $10,000 additional purchase payment will increase the Income Base by $10,000. After the first anniversary of the rider effective date, cumulative additional purchase payments into the contract will be limited to an amount equal to $100,000 without Home Office approval. If we grant approval to exceed the $100,000 additional purchase payment restric- tion, the charge will change to the then current charge in effect on the next Benefit Year anniversary. Additional purchase payments will not be allowed if the contract value decreases to zero for any reason including market loss.
 
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Excess Withdrawals reduce the Income Base as discussed below. Withdrawals less than or equal to the Guaranteed Annual Income amount will not reduce the Income Base.
 
Since the charge for the rider is based on the Income Base, the cost of the rider increases when additional purchase payments, Auto- matic Annual Step-ups and 5% Enhancements are made, and the cost decreases as Excess Withdrawals are made because these transactions all adjust the Income Base. In addition, the percentage charge may change when Automatic Annual Step-ups or 5% Enhancements occur as discussed below or additional purchase payments occur. See Charges and Other Deductions - Lincoln Life- time IncomeSM Advantage 2.0 Charge.
 
5% Enhancement to the Income Base. On each Benefit Year anniversary, the Income Base, minus purchase payments received in that year, will be increased by 5% if the contract owner/annuitant (as well as the spouse if the joint life option is in effect) are under age 86, if there were no withdrawals in that year and the rider is within a 10-year Enhancement period described below. If during any 10-year Enhancement period there are no Automatic Annual Step-ups the 5% Enhancements will stop at the end of the Enhancement period and will not restart until the next Benefit Year anniversary following the Benefit Year anniversary upon which an Automatic Annual Step-up occurs. Any purchase payment made after the initial purchase payment will be added immediately to the Income Base and will result in an increased Guaranteed Annual Income amount but must be invested in the contract at least one Benefit Year before it will be used in calculating the 5% Enhancement. Any purchase payments made within the first 90 days after the effective date of the rider will be included in the Income Base for purposes of calculating the 5% Enhancement on the first Benefit Year anniversary.
 
If you decline an Automatic Annual Step-up during the first ten Benefit Years, you will continue to be eligible for the 5% Enhance- ments through the end of the current Enhancement Period, but the charge could increase to the then current charge on any 5% Enhancements after the 10th Benefit Year Anniversary. You will have the option to opt out of the Enhancements after the 10th Benefit Year. In order to be eligible to receive further 5% Enhancements the contractowner/annuitant (single life option), or the contractowner and spouse (joint life option) must still be living and be under age 86.
 
Note: The 5% Enhancement is not available in any year there is a withdrawal from contract value including a Guaranteed Annual Income payment. A 5% Enhancement will occur in subsequent years only under certain conditions. If you are eligible (as defined below) for the 5% Enhancement in the next year, the Enhancement will not occur until the Benefit Year anniversary of that year.
 
The following is an example of the impact of the 5% Enhancement on the Income Base (assuming no withdrawals):
 
Initial purchase payment = $100,000; Income Base = $100,000
 
Additional purchase payment on day 30 = $15,000; Income Base = $115,000
 
Additional purchase payment on day 95 = $10,000; Income Base = $125,000
 
On the first Benefit Year Anniversary, the Income Base will not be less than $130,750 ($115,000 times 1.05%=$120,750 plus $10,000). The $10,000 purchase payment on day 95 is not eligible for the 5% Enhancement until the 2nd Benefit Year Anniversary.
 
The 5% Enhancement will be in effect for 10 years (the Enhancement period) from the effective date of the rider. A new Enhancement period will begin each time an Automatic Annual Step-up to the contract value occurs as described below. As explained below, the 5% Enhancement and Automatic Annual Step-up will not occur in the same year. If the Automatic Annual Step-up provides a greater increase to the Income Base, you will not receive the 5% Enhancement. If the Automatic Annual Step-up and the 5% Enhancement increase the Income Base to the same amount then you will receive the Automatic Annual Step-up. The 5% Enhancement or the Auto- matic Annual Step-up cannot increase the Income Base above the maximum Income Base of $10,000,000.
 
You will not receive the 5% Enhancement on any Benefit Year anniversary in which there is a withdrawal, including a Guaranteed Annual Income payment from the contract during that Benefit Year. The 5% Enhancement will occur on the following Benefit Year anniversary if no further withdrawals are made from the contract and the rider is within the Enhancement period.
 
An example of the impact of a withdrawal on the 5% Enhancement is included in the Withdrawal Amounts section below.
 
If during the first ten Benefit years your Income Base is increased by the 5% Enhancement on the Benefit Year anniversary, your per- centage charge for the rider will not change on the Benefit Year anniversary. However, the amount you pay for the rider will increase since the charge for the rider is based on the Income Base. After the tenth Benefit Year anniversary the annual rider percentage charge may increase to the current charge each year if the Income Base increases as a result of the 5% Enhancement, but the charge will never exceed the guaranteed maximum annual percentage charge of 2.00%. See Charges and Other Deductions - Lin- coln Lifetime IncomeSM Advantage 2.0 Charge.
 
If your percentage charge for this rider is increased due to a 5% Enhancement that occurs after the tenth rider year anniversary, you may opt-out of the 5% Enhancement by giving us notice in writing within 30 days after the Benefit Year anniversary if you do not want your percentage charge for the rider to change. This opt-out will only apply for this particular 5% Enhancement. You will need to notify us each time thereafter if you do not want the 5% Enhancement. You may not opt-out of the 5% Enhancement if the current charge for the rider increases due to additional purchase payment made during that Benefit Year that exceeds the $100,000 purchase payment restriction after the first Benefit Year. See Income Base section for more details.
 
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Automatic Annual Step-ups of the Income Base. The Income Base will automatically step-up to the contract value on each Benefit Year anniversary if:
 
a.     
the contractowner/annuitant (single life option), or the contractowner and spouse (joint life option) are still living and under age 86; and
 
 
b.     
the contract value on that Benefit Year anniversary, after the deduction of any withdrawals (including the rider charge), plus any purchase payments made on that date is equal to or greater than the Income Base after the 5% Enhancement (if any).
 
Each time the Income Base is stepped up to the current contract value as described above, your percentage charge for the rider will be the current charge for the rider, not to exceed the guaranteed maximum charge. Therefore, your percentage charge for this rider could increase every Benefit Year anniversary. See Charges and Other Deductions - Lincoln Lifetime IncomeSM Advantage 2.0 Charge.
 
Each time the Automatic Annual Step-up occurs a new 10-year Enhancement period starts. The Automatic Annual Step-up is available even in those years when a withdrawal has occurred.
 
If your percentage charge for this rider is increased upon an Automatic Annual Step-up, you may opt-out of the Automatic Annual Step-up by giving us notice in writing within 30 days after the Benefit Year anniversary if you do not want your percentage charge for the rider to change. This opt-out will only apply for this particular Automatic Annual Step-up. You will need to notify us each time the percentage charge increases if you do not want the Step-up.
 
As stated above, if you decline an Automatic Annual Step-up during the first ten Benefit Years, you will continue to be eligible for the 5% Enhancements through the end of the current Enhancement Period, but the charge could increase to the then current charge on any 5% Enhancements after the 10th Benefit Year anniversary. You will have the option to opt out of the Enhancements after the 10th Benefit Year. See the earlier Income Base section. You may not opt-out of the Automatic Annual Step-up if an additional purchase pay- ment made during that Benefit Year caused the charge for the rider to increase to the current charge.
 
Following is an example of how the Automatic Annual Step-ups and the 5% Enhancement will work (assuming no withdrawals or additional purchase payments):
 
   
Income Base with 
 
Potential for Charge 
 
Contract Value 
5% Enhancement 
Income Base 
to Change 
Initial Purchase Payment $50,000 
$50,000 
N/A 
$50,000 
N/A 
1st Benefit Year Anniversary 
$54,000 
$52,500 
$54,000 
Yes 
2nd Benefit Year Anniversary 
$53,900 
$56,700 
$56,700 
No 
3rd Benefit Year Anniversary 
$57,000 
$59,535 
$59,535 
No 
4th Benefit Year Anniversary 
$64,000 
$62,512 
$64,000 
Yes 


On the 1st Benefit Year anniversary, the Automatic Annual Step-up increased the Income Base to the contract value of $54,000 since the increase in the contract value is greater than the 5% Enhancement amount of $2,500 (5% of $50,000). On the 2nd Benefit Year anniversary, the 5% Enhancement provided a larger increase (5% of $54,000 = $2,700). On the 3rd Benefit Year anniversary, the 5% Enhancement provided a larger increase (5% of $56,700=$2,835). On the 4th Benefit Year anniversary, the Automatic Annual Step-up to the contract value was greater than the 5% Enhancement amount of $2,977 (5% of $59,535). An Automatic Annual Step-up cannot increase the Income Base beyond the maximum Income Base of $10,000,000.
 
Withdrawal Amount. You may make periodic withdrawals up to the Guaranteed Annual Income amount each Benefit Year for your (contractowner) lifetime (single life option) or the lifetimes of you and your spouse (joint life option) as long as your Guaranteed Annual Income amount is greater than zero. You may start taking Guaranteed Annual Income withdrawals when you (single life option) or the younger of you and your spouse (joint life option) turn age 55.
 
The initial Guaranteed Annual Income amount is calculated when you purchase the rider. If you (or younger of you and your spouse if the joint life option is elected) are under age 55 at the time the rider is elected the initial Guaranteed Annual Income amount will be zero. If you (or the younger of you and your spouse if the joint life option is elected) are age 55 or older at the time the rider is elected the initial Guaranteed Annual Income amount will be equal to a specified percentage of the Income Base. The specified percentage of the Income Base will be based on your age (or younger of you and your spouse if the joint life option is elected). Upon your first with- drawal the Guaranteed Annual Income percentage is based on your age (single life option) or the younger of you and your spouse's age (joint life option) at the time of the withdrawal. For example, if you purchase the rider at age 57, your Guaranteed Annual Income percentage is 4%. If you waited until you were age 60 (single life option) to make your first withdrawal your Guaranteed Annual Income percentage would be 5%. During the first Benefit Year the Guaranteed Annual Income amount is calculated using the Income Base as of the effective date of the rider (including any purchase payments made within the first 90 days after the effective date of the rider). After the first Benefit Year anniversary we will use the Income Base calculated on the most recent Benefit Year anniversary for calculating the Guaranteed Annual Income amount. After your first withdrawal the Guaranteed Annual Income amount percentage will only increase on a Benefit Year Anniversary if after there has been an Automatic Annual Step-up on or after you have reached an appli- cable higher age band. If you have reached an applicable age band and there has not been an Automatic Annual Step-up then the
 
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Guaranteed Annual Income amount percentage will not increase until the next Automatic Annual Step-up occurs. If you do not with- draw the entire Guaranteed Annual Income amount during a Benefit Year, there is no carryover of the extra amount into the next Ben- efit Year.
 
Guaranteed Annual Income Percentages by Ages 
   
 
Guaranteed 
Age (Joint Life 
Guaranteed Annual Income 
 
 Age (Single 
Annual Income amount 
Option - younger of 
amount percentage 
 
 Life Option) 
percentage (single life option) 
you and your spouse's age) 
(joint life option) 
 
 At least 55 and under 59 1/2 
4% 
55-64 
4% 
 
 59 1/2+ 
5% 
65+ 
5% 
 


If your contract value is reduced to zero because of market performance or rider charges, withdrawals equal to the Guaranteed Annual Income amount will continue automatically for your life (and your spouse's life if applicable) under the Guaranteed Annual Income Annuity Payout Option. You may not withdraw the remaining Income Base in a lump sum. You will not be entitled to the Guaranteed
 
Annual Income amount if the Income Base is reduced to zero as a result of an Excess Withdrawal. If the Income Base is reduced to zero due to an Excess Withdrawal the rider and contract will terminate. If the contract value is reduced to zero due to an Excess Withdrawal the rider and contract will terminate.
 
Withdrawals equal to or less than the Guaranteed Annual Income amount will not reduce the Income Base. All withdrawals you make will decrease the contract value.
 
The following example shows the calculation of the Guaranteed Annual Income amount and how withdrawals less than or equal to the Guaranteed Annual Income amount affect the Income Base and the contract value. The contractowner is age 58 (4% Guaranteed Annual Income percentage for single life option) on the rider's effective date, and makes an initial purchase payment of $200,000 into the contract:
 
Contract value on the rider's effective date 
$200,000 
Income Base on the rider's effective date 
$200,000 
Initial Guaranteed Annual Income amount on the rider's 
$ 8,000 
effective date ($200,000 x 4%) 
 
Contract value six months after rider's effective date 
$210,000 
Income Base six months after rider's effective date 
$200,000 
Withdrawal six months after rider's effective date when 
$ 8,000 
contractowner is still age 58 
 
Contract value after withdrawal ($210,000 - $8,000) 
$202,000 
Income Base after withdrawal ($200,000 - $0) 
$200,000 
Contract value on first Benefit Year anniversary 
$205,000 
Income Base on first Benefit Year anniversary 
$205,000 
Guaranteed Annual Income amount on first Benefit Year 
$ 8,200 
anniversary 
 


Since there was a withdrawal during the first year the 5% Enhancement is not available but the Automatic Annual Step-up was avail- able and increased the Income Base to the contract value of $205,000. On the first anniversary of the rider's effective date the Guaran- teed Annual Income amount is $8,200 (4% x $205,000).
 
Purchase payments added to the contract subsequent to the initial purchase payment will increase the Guaranteed Annual Income amount by an amount equal to the applicable Guaranteed Annual Income amount percentage multiplied by the amount of the subse- quent purchase payment. For example, assuming a contractowner is age 58 (single life option), if the Guaranteed Annual Income amount of $2,000 (4% of $50,000 Income Base) is in effect and an additional purchase payment of $10,000 is made, the new Guaran- teed Annual Income amount that Benefit Year is $2,400 ($2,000 + 4% of $10,000). The Guaranteed Annual Income payment amount will be recalculated immediately after a purchase payment is added to the contract.
 
Cumulative additional purchase payments into the contract that exceed $100,000 after the first anniversary of the rider effective date must receive Home Office approval. Additional purchase payments will not be allowed if the contract value is zero. No additional pur- chase payments are allowed after the Nursing Home Enhancement is requested and approved by us (described below).
 
5% Enhancements and Automatic Annual Step-ups will increase the Income Base and thus the Guaranteed Annual Income amount. The Guaranteed Annual Income amount after the Income Base is adjusted either by a 5% Enhancement or an Automatic Annual Step-up will be equal to the adjusted Income Base multiplied by the applicable Guaranteed Annual Income percentage.
 
Nursing Home Enhancement. The Guaranteed Annual Income amount will be increased to 10%, called the Nursing Home Enhance- ment, during a Benefit Year when the contractowner/annuitant is age 65 or older or the youngest of the contractowner and spouse is age 65 or older (joint life option), and one is admitted into an accredited nursing home or equivalent health care facility. The Nursing
 
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Home Enhancement applies if the admittance into such facility occurs 60 months or more after the effective date of the rider, the indi- vidual was not in the nursing home in the year prior to the effective date of the rider, and upon entering the nursing home, the person has been then confined for at least 90 consecutive days. For the joint life option the Nursing Home Enhancement is available only on the first life to enter the nursing home. If no withdrawal has been taken since the rider's effective date, the Nursing Home Enhance- ment will be available when the contractowner/annuitant is age 65 or the youngest of the contractowner and spouse is age 65 (joint life option). If a withdrawal has been taken since the rider's effective date, the Nursing Home Enhancement will be available on the next Benefit Year anniversary after the contractowner/annuitant is age 65 or the youngest of the contractowner and spouse is age 65 (joint life option).
 
You may request the Nursing Home Enhancement by filling out a request form provided by us. Proof of nursing home confinement will be required each year. If you leave the nursing home, your Guaranteed Annual Income amount will be reduced to the amount you would otherwise be eligible to receive starting after the next Benefit Year anniversary. Any withdrawals made prior to the entrance into a nursing home and during the Benefit Year that the Nursing Home Enhancement commences, will reduce the amount available that year for the Nursing Home Enhancement. Purchase payments may not be made into the contract after a request for the Nursing Home Enhancement is approved by us and any purchase payments made either in the 12 months prior to entering the nursing home or while you are residing in a nursing home will not be included in the calculation of the Nursing Home Enhancement.
 
The requirements of an accredited nursing home or equivalent health care facility are set forth in the Nursing Home Enhancement Claim Form. The criteria for the facility include, but are not limited to: providing 24 hour a day nursing services; an available physician; an employed nurse on duty or call at all times; maintains daily clinical records; and able to dispense medications. This does not include an assisted living or similar facility. The admittance to a nursing home must be pursuant to a plan of care provided by a licensed health care practitioner, and the nursing home must be located in the United States.
 
The remaining references to the Guaranteed Annual Income amount also include the Nursing Home Enhancement amount.
 
Excess Withdrawals. Excess Withdrawals are the cumulative amounts withdrawn from the contract during the Benefit Year (including the current withdrawal) that exceed the Guaranteed Annual Income amount at the time of the withdrawal or are withdrawals made prior to age 55 (younger of you or your spouse for joint life) or that are not payable to the contractowner or contractowner's bank account (or to the annuitant or the annuitant's bank account, if the owner is a non-natural person).
 
When an Excess Withdrawal occurs:
 
1.     
The Income Base is reduced by the same proportion that the Excess Withdrawal reduces the contract value. This means that the reduction in the Income Base could be more than the dollar amount of the withdrawal; and
 
 
2.     
The Guaranteed Annual Income amount will be recalculated to equal the applicable Guaranteed Annual Income amount per- centage multiplied by the new (reduced) Income Base (after the pro rata reduction for the Excess Withdrawal).
 
We will provide you with quarterly statements that will include the Guaranteed Annual Income amount (as adjusted for Guaranteed Annual Income amount payments, Excess Withdrawals and additional purchase payments) available to you for the Benefit Year, if applicable, in order for you to determine whether a withdrawal may be an Excess Withdrawal. We encourage you to either consult with your registered representative or call our Customer Service Center number provided on the front page of this prospectus if you have questions about Excess Withdrawals.
 
The following example demonstrates the impact of an Excess Withdrawal on the Income Base, the Guaranteed Annual Income amount and the contract value. The contractowner who is age 58 (single life option) makes a $12,000 withdrawal which causes a $12,915.19 reduction in the Income Base.
 
Prior to Excess Withdrawal: Contract value = $60,000 Income Base = $85,000
 
Guaranteed Annual Income amount = $3,400 (4% of the Income Base of $85,000)
 
After a $12,000 Withdrawal ($3,400 is within the Guaranteed Annual Income amount, $8,600 is the Excess Withdrawal):
 
The contract value is reduced by the amount of the Guaranteed Annual Income amount of $3,400 and the Income Base is not reduced:
 
Contract value = $56,600 ($60,000 - $3,400) Income Base = $85,000
 
The contract value is also reduced by the $8,600 Excess Withdrawal and the Income Base is reduced by 15.19435%, the same pro- portion that the Excess Withdrawal reduced the $56,600 contract value ($8,600 ÷ $56,600)
 
Contract value = $48,000 ($56,600 - $8,600)
 
Income Base = $72,084.81 ($85,000 x 15.19435% = $12,915.19; $85,000 - $12,915.19 = $72,084.81). Guaranteed Annual Income amount = $2,883.39 (4% of $72,084.81 Income Base)
 
On the following Benefit Year anniversary:
 
39
 
[Missing Graphic Reference]
Contract value = $43,000
 
Income Base = $72,084.81
 
Guaranteed Income amount = $2,883.39 (4% x $72,084.81)
 
In a declining market, Excess Withdrawals may significantly reduce your Income Base as well as your Guaranteed Annual Income amount. If the Income Base is reduced to zero due to an Excess Withdrawal the rider will terminate. If the contract value is reduced to zero due to an Excess Withdrawal the rider and contract will terminate.
 
Withdrawals from IRA contracts will be treated as within the Guaranteed Annual Income amount (even if they exceed the Guaranteed Annual Income amount) only if the withdrawals are taken as systematic monthly or quarterly installments of the amount needed to satisfy the required minimum distribution (RMD) rules under Internal Revenue Code Section 401(a)(9). In addition, in order for this exception for RMDs to apply, the following must occur:
 
1.     
Lincoln's monthly or quarterly automatic withdrawal service is used to calculate and pay the RMD;
 
 
2.     
The RMD calculation must be based only on the value in this contract; and
 
 
3.     
No withdrawals other than RMDs are made within the Benefit Year (except as described in the next paragraph).
 
If your RMD withdrawals during a Benefit Year are less than the Guaranteed Annual Income amount, an additional amount up to the Guaranteed Annual Income amount may be withdrawn. If a withdrawal, other than an RMD is made during the Benefit Year, then all amounts withdrawn in excess of the Guaranteed Annual Income amount, including amounts attributable to RMDs, will be treated as Excess Withdrawals.
 
Distributions from qualified contracts are generally taxed as ordinary income. In nonqualified contracts, withdrawals of contract value that exceed purchase payments are taxed as ordinary income. See Federal Tax Matters for a discussion of the tax consequences of withdrawals.
 
Guaranteed Annual Income Amount Annuity Payout Option. If you are required to take annuity payments because you have reached the maturity date of the contract, you have the option of electing the Guaranteed Annual Income Amount Annuity Payout Option. If the contract value is reduced to zero and you have a remaining Income Base, you will receive the Guaranteed Annual Income Amount Annuity Payout Option. If you are receiving the Guaranteed Annual Income Amount Annuity Payout Option, the beneficiary may be eligible to receive final payment upon death of the single life or surviving joint life. To be eligible the death benefit option in effect immediately prior to the effective date of the Guaranteed Annual Income Amount Annuity Payout Option must be one of the following death benefits: the Guarantee of Principal death benefit or the EGMDB. Contractowners may decide to choose the Guaranteed Annual Income Amount Annuity Payout Option over i4LIFE ® Advantage if they feel this may provide a higher final payment option over time and they may place more importance on this over access to the Account Value.
 
The Guaranteed Annual Income Amount Annuity Payout Option is an annuity payout option which the contractowner (and spouse if applicable) will receive annual annuity payments equal to the Guaranteed Annual Income amount for life (this option is different from other annuity payout options, including i4LIFE ® Advantage, which are based on your contract value). Payment frequencies other than annual may be available. You will have no other contract features other than the right to receive annuity payments equal to the Guar- anteed Annual Income amount for your life or the life of you and your spouse for the joint life option.
 
The final payment is a one-time lump-sum payment. If the effective date of the rider is the same as the effective date of the contract the final payment will be equal to the sum of all purchase payments, decreased by withdrawals. If the effective date of the rider is after the effective date of the contract the final payment will be equal to the contract value on the effective date of the rider, increased for purchase payments received after the rider effective date and decreased by withdrawals. Excess Withdrawals reduce the final payment in the same proportion as the withdrawals reduce the contract value; withdrawals less than or equal to the Guaranteed Annual Income amount and payments under the Guaranteed Annual Income Amount Annuity Payout Option will reduce the final payment dollar for dollar.
 
Death Prior to the Annuity Commencement Date. The Lincoln Lifetime IncomeSM Advantage 2.0 has no provision for a payout of the Income Base or any other death benefit upon death of the contractowners or annuitant. At the time of death, if the contract value equals zero, no death benefit options (as described earlier in this prospectus) will be in effect. Election of the Lincoln Lifetime IncomeSM Advantage 2.0 does not impact the death benefit options available for purchase with your annuity contract except as described below in Impact to Withdrawal Calculations of Death Benefits before the Annuity Commencement Date. All death benefit payments must be made in compliance with Internal Revenue Code Sections 72(s) or 401(a)(9) as applicable as amended from time to time. See The Contracts - Death Benefit.
 
Upon the death of the single life, the Lincoln Lifetime IncomeSM Advantage 2.0 will end and no further Guaranteed Annual Income amounts are available (even if there was an Income Base in effect at the time of the death). If the beneficiary elects to continue the contract after the death of the single life (through a separate provision of the contract), the beneficiary may purchase a new Lincoln Lifetime IncomeSM Advantage 2.0 if available under the terms and charge in effect at the time of the new purchase. There is no carry- over of the Income Base.
 
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[Missing Graphic Reference]
Upon the first death under the joint life option, the lifetime payout of the Guaranteed Annual Income amount will continue for the life of the surviving spouse. The 5% Enhancement and Automatic Annual Step-up will continue if applicable as discussed above. Upon the death of the surviving spouse, the Lincoln Lifetime IncomeSM Advantage 2.0 will end and no further Guaranteed Annual Income amounts are available (even if there was an Income Base in effect at the time of the death).
 
As an alternative, after the first death, the surviving spouse if under age 86 may choose to terminate the joint life option and purchase a new single life option, if available, under the terms and charge in effect at the time for a new purchase. In deciding whether to make this change, the surviving spouse should consider whether the change will cause the Income Base and the Guaranteed Annual Income amount to decrease.
 
General Provisions
 
Termination. After the fifth anniversary of the effective date of the rider, the contractowner may terminate the rider by notifying us in writing. Lincoln Lifetime IncomeSM Advantage 2.0 will automatically terminate:
 
·  
on the annuity commencement date (except payments under the Guaranteed Annual Income Amount Annuity Payout Option will continue if applicable); or
·  
upon the death under the single life option or the death of the surviving spouse under the joint life option; or when the Guaran- teed Annual Income amount or contract value is reduced to zero due to an Excess Withdrawal; or
·  
upon surrender of the contract; or
·  
upon termination of the underlying annuity contract.
 
The termination will not result in any increase in contract value equal to the Income Base. Upon effective termination of this rider, the benefits and charges within this rider will terminate. If you terminate the rider, you must wait one year before you can re-elect any Living Benefit rider, Lincoln SmartSecurity ® Advantage, 4LATER ® Advantage, or any other living benefits we may offer in the future.
 
Compare to Lincoln SmartSecurity ® Advantage. If a contractowner is interested in purchasing a rider that provides guaranteed mini- mum withdrawals, the following factors should be considered when comparing Lincoln Lifetime IncomeSM Advantage 2.0 and the Lincoln SmartSecurity ® Advantage (only one of these riders can be added to a contract at any one time): the Lincoln Lifetime IncomeSM Advantage 2.0 has the opportunity to provide a higher Income Base than the Guaranteed Amount under Lincoln SmartSecurity ® Advantage because of the 5% Enhancement or Automatic Annual Step-up. The Income Base for Lincoln Lifetime IncomeSM Advantage 2.0 may also be higher than the Guaranteed Amount under Lincoln SmartSecurity ® Advantage because with- drawals equal to or less than the Guaranteed Annual Income amount do not reduce the Income Base whereas withdrawals under Lin- coln SmartSecurity ® Advantage reduce the Guaranteed Amount. Lincoln Lifetime IncomeSM Advantage 2.0 also provides the potential for lifetime withdrawals from an earlier age (rather than age 65 with the Lincoln SmartSecurity ® Advantage). However, the percentage charge for the Lincoln Lifetime IncomeSM Advantage 2.0 is higher and has the potential to increase on every Benefit Year Anniversary if the increase in contract value exceeds the 5% Enhancement and after the 10th Benefit Year anniversary upon a 5% Enhancement. Since the Lincoln Lifetime IncomeSM Advantage 2.0 Income Base is not reduced by withdrawals that are less than or equal to the Guaranteed Annual Income amount, the charge, which is applied against the Income Base will not be reduced. Whereas with Lincoln SmartSecurity ® Advantage, withdrawals reduce the Guaranteed Amount against which the Lincoln SmartSecurity ® Advantage charge is applied. In addition, the Lincoln SmartSecurity ® Advantage provides that guaranteed Maximum Annual Withdrawal amounts can continue to a beneficiary to the extent of any remaining Guaranteed Amount while the Lincoln Lifetime IncomeSM Advantage 2.0 does not offer this feature.
 
i4LIFE ® Advantage Option. i4LIFE ® Advantage is an income program, available for purchase at an additional charge, that provides periodic variable income payments for life, the ability to make withdrawals during a defined period of time (the Access Period) and a death benefit during the Access Period. A minimum payout floor, called the Guaranteed Income Benefit, is also available for purchase at the time you elect i4LIFE ® Advantage. You cannot have both i4LIFE ® Advantage and Lincoln Lifetime IncomeSM Advantage 2.0 in effect on your contract at the same time.
 
Contractowners with an active Lincoln Lifetime IncomeSM Advantage 2.0 may decide to drop Lincoln Lifetime IncomeSM Advantage 2.0 and purchase i4LIFE ® Advantage with Guaranteed Income Benefit (version 4). If this decision is made, the contractowner can use the Lincoln Lifetime IncomeSM Advantage 2.0 Income Base reduced by all Guaranteed Annual Income payments since the last Auto- matic Annual Step-up or the rider's effective date (if there has not been an Automatic Annual Step-up) to establish the i4LIFE ® Advan- tage with Guaranteed Income Benefit (version 4) at the terms in effect for purchasers of this rider. If you choose to drop the Lincoln Lifetime IncomeSM Advantage 2.0 and have the single life option, you must purchase i4LIFE ® Advantage with Guaranteed Income Ben- efit (version 4) single life option. If you drop the Lincoln Lifetime IncomeSM Advantage 2.0 and have the joint life option, you must purchase i4LIFE ® Advantage Guaranteed Income Benefit (version 4) joint life option.
 
Contractowners who purchase Lincoln Lifetime IncomeSM Advantage 2.0 are guaranteed the ability in the future to purchase i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) even if it is no longer available for sale. They are also guaranteed that the Guaranteed Income Benefit percentage and Access Period requirements will be at least as favorable as those at the time they purchase Lincoln Lifetime IncomeSM Advantage 2.0. If you choose to drop your rider and elect i4LIFE ® Advantage with Guaranteed Income Ben- efit (version 4) prior to the 5th Benefit Year anniversary, the election must be made before the Annuity Commencement Date and by
 
41
 
[Missing Graphic Reference]
age 95 for nonqualified contracts or age 80 for qualified contracts. Elections made prior to the 5th Benefit Year anniversary will result in a minimum Access Period of the greater of 20 years or age 90. If you choose to drop the rider and elect i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) after the 5th Benefit Year anniversary the election must be made before the Annuity Com- mencement Date and by age 86 for qualified contracts or age 99 for nonqualified contracts. Elections made after the 5th Benefit Year anniversary will result in a minimum Access Period of the greater of 15 years or age 85. See i4LIFE ® Advantage with Guaranteed Income Benefit (version 4).
 
For nonqualified contracts, the contractowner must elect the levelized option for regular income payments. While i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) is in effect, the contractowner cannot change the payment mode elected or decrease the length of the Access Period.
 
When deciding whether to drop Lincoln Lifetime IncomeSM Advantage 2.0 and purchase i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) you should consider that depending on a person's age and the selected length of the Access Period, i4LIFE ® Advantage may provide a higher payout than the Guaranteed Annual Income amounts under Lincoln Lifetime IncomeSM Advantage 2.0. You should consider electing i4LIFE ® Advantage when you are ready to immediately start receiving i4LIFE ® Advantage payments whereas with Lincoln Lifetime IncomeSM Advantage 2.0 you may defer taking withdrawals until a later date. Payments from a nonqualified contract that a person receives under the i4LIFE ® Advantage rider are treated as "amounts received as an annuity" under section 72 of the Internal Revenue Code because the payments occur after the annuity starting date. These payments are subject to an "exclusion ratio" as provided in section 72(b) of the Code, which means a portion of each annuity payout is treated as income (taxable at ordinary income tax rates), and the remainder is treated as a nontaxable return of purchase payments. In contrast, withdrawals under Lincoln Lifetime IncomeSM Advantage 2.0 are not treated as amounts received as an annuity because they occur prior to the annuity starting date. As a result, such withdrawals are treated first as a return of any existing gain in the contract (which is the mea- sure of the extent to which the contract value exceeds purchase payments), and then as a nontaxable return of purchase payments.
 
The initial charge for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) will be equal to the current annual rate in effect for your Lincoln Lifetime IncomeSM Advantage 2.0 rider. The charge is calculated based upon the greater of the value of the Income Base or contract value as of the last valuation date under Lincoln Lifetime IncomeSM Advantage 2.0 prior to election of i4LIFE ® Advan- tage with Guaranteed Income Benefit (version 4). During the Access Period, this charge is deducted from the i4LIFE ® Advantage Account Value on a quarterly basis with the first deduction occurring on the valuation date on or next following the three month anni- versary of the effective date of i4LIFE ® Advantage with Guaranteed Income Benefit (version 4). During the Lifetime Income Period, this charge is deducted annually. The initial charge may increase annually upon a step-up of the Guaranteed Income Benefit by an amount equal to the prior charge rate (or initial charge rate if the first anniversary of the rider's effective date) multiplied by the per- centage increase, if any, to the Guaranteed Income Benefit and the percentage increase if any to the Lincoln Lifetime IncomeSM Advan- tage 2.0 current charge. If an Excess Withdrawal occurs, the charge will decrease by the same percentage as the percentage change to the Account Value.
 
Impact to Withdrawal Calculations of Death Benefits before the Annuity Commencement Date. The death benefit calculation for certain death benefit options in effect prior to the annuity commencement date may change for contractowners with an active Lincoln Lifetime IncomeSM Advantage 2.0. Certain death benefit options provide that all withdrawals reduce the death benefit in the same pro- portion that the withdrawals reduce the contract value. If you elect the Lincoln Lifetime IncomeSM Advantage 2.0, withdrawals less than or equal to the Guaranteed Annual Income will reduce the sum of all purchase payments option of the death benefit on a dollar for dollar basis. This applies to the Guarantee of Principal Death Benefit, and only the sum of all purchase payments alternative of the EGMDB, whichever is in effect. See The Contracts – Death Benefits. Any Excess Withdrawals will reduce the sum of all purchase pay- ments in the same proportion that the withdrawals reduced the contract value under any death benefit option in which proportionate withdrawals are in effect. This change has no impact on death benefit options in which all withdrawals reduce the death benefit calcu- lation on a dollar for dollar basis. The terms of your contract will describe which method is in effect for your contract while this rider is in effect.
 
The following example demonstrates how a withdrawal will reduce the death benefit if both the EGMDB and the Lincoln Lifetime IncomeSM Advantage 2.0 are in effect when the contractowner dies. Note that this calculation applies only to the sum of all purchase payments calculation and not for purposes of reducing the highest anniversary contract value under the EGMDB:
 
Contract value before withdrawal $80,000
 
Guaranteed Annual Income amount $5,000
 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) values before withdrawal is the greatest of a), b), or c) described in detail in the EGMDB section of your prospectus:
 
a)     
Contract value $80,000
 
 
b)     
Sum of purchase payments $100,000
 
 
c)     
Highest anniversary contract value $150,000
 
Withdrawal of $9,000 will impact the death benefit calculation as follows:
 
42
 
[Missing Graphic Reference]
a)     
$80,000 - $9,000 = $71,000 (Reduction $9,000)
 
 
b)     
$100,000 - $5,000 = $95,000 (reduction by the amount of the Guaranteed Annual Income amount)
 
($95,000 - $5,067 = $89,932 [$95,000 times ($4,000/$75,000) = $5,067] Proportional reduction of Excess Withdrawal. Total reduction = $10,067.
 
c)     
$150,000 - $16,875 = $133,125 [$150,000 times $9,000/$80,000 = $16,875]. The entire $9,000 withdrawal reduced the death benefit option proportionally. Total reduction = $16,875.
Item c) provides the largest death benefit of $133,125.
 
Lincoln SmartSecurity ® Advantage
 
The Lincoln SmartSecurity ® Advantage is a Rider that is available for purchase with your variable annuity contract. This benefit pro- vides a minimum guaranteed amount (Guaranteed Amount) that you will be able to withdraw, in installments, from your contract. The Guaranteed Amount is equal to the initial purchase payment (or contract value if elected after contract issue) adjusted for subsequent purchase payments, step-ups and withdrawals in accordance with the provisions set forth below.
 
With the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, the Guaranteed Amount will automatically step-up to the contract value, if higher, on each Benefit Year anniversary through the 10th anniversary. With the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, the contractowner can also initiate additional ten-year periods of automatic step-ups.
 
You may access this Guaranteed Amount through periodic withdrawals which are based on a percentage of the Guaranteed Amount. With the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up Single Life or Joint Life options, you also have the option to receive periodic withdrawals for your lifetime or for the lifetimes of you and your spouse (when available in your state). These options are discussed below in detail.
 
By purchasing this Rider, you will be limited in how much you can invest in certain subaccounts. See The Contracts - Investment Requirements. We offer other optional riders available for purchase with variable annuity contracts. These riders, which are fully dis- cussed in this prospectus, provide different methods to take income from your contract value and may provide certain guarantees. There are differences between the riders in the features provided as well as the charge structure. In addition, the purchase of one rider may impact the availability of another rider. In particular, before you elect the Lincoln SmartSecurity ® Advantage, you may want to compare it to Lincoln Lifetime IncomeSM Advantage 2.0, which provides minimum guaranteed, periodic withdrawals for life. See The Contracts - Lincoln Lifetime IncomeSM Advantage 2.0 - Compare to Lincoln SmartSecurity ® Advantage.
 
If the benefit is elected at contract issue, then the Rider will be effective on the contract's effective date. If the benefit is elected after the contract is issued (by sending a written request to our Home Office), the Rider will be effective on the next valuation date follow- ing approval by us.
 
Benefit Year. The Benefit Year is the 12-month period starting with the effective date of the Rider and starting with each anniversary of the Rider effective date after that. If the contractowner elects to step-up the Guaranteed Amount (this does not include automatic annual step-ups within a ten-year period), the Benefit Year will begin on the effective date of the step-up and each anniversary of the effective date of the step-up after that. The step-up will be effective on the next valuation date after notice of the step-up is approved by us.
 
Guaranteed Amount. The Guaranteed Amount is a value used to calculate your withdrawal benefit under this Rider. The Guaranteed Amount is not available to you as a lump sum withdrawal or a death benefit. The initial Guaranteed Amount varies based on when and how you elect the benefit. If you elect the benefit at the time you purchase the contract, the Guaranteed Amount will equal your initial purchase payment. If you elect the benefit after we issue the contract, the Guaranteed Amount will equal the contract value on the effective date of the Rider. The maximum Guaranteed Amount is $10,000,000 for Lincoln SmartSecurity ® Advantage - 1 Year Auto- matic Step-up. This maximum takes into consideration the combined Guaranteed Amount under Lincoln SmartSecurity ® Advantage or the Income Base under Lincoln Lifetime IncomeSM Advantage 2.0 of all Lincoln Life contracts (or contracts issued by our affiliates) owned by you (or on which you or your spouse if joint owner are the annuitant).
 
Additional purchase payments automatically increase the Guaranteed Amount by the amount of the purchase payment (not to exceed the maximum); for example, a $10,000 additional purchase payment will increase the Guaranteed Amount by $10,000. We will allow purchase payments into your annuity contract after the first anniversary of the Rider effective date if the cumulative additional pur- chase payments exceed $100,000 only with prior Home Office approval. Additional purchase payments will not be allowed if the con- tract value is zero.
 
Each withdrawal reduces the Guaranteed Amount as discussed below.
 
Since the charge for the Rider is based on the Guaranteed Amount, the cost of the Rider increases when additional purchase pay- ments and step-ups are made, and the cost decreases as withdrawals are made because these transactions all adjust the Guaranteed Amount.
 
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[Missing Graphic Reference]
Step-ups of the Guaranteed Amount. Under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, the Guaranteed Amount will automatically step-up to the contract value on each Benefit Year anniversary up to and including the tenth Benefit Year if:
 
a.     
the contractowner or joint owner is still living; and
 
 
b.     
the contract value as of the valuation date, after the deduction of any withdrawals (including interest adjustments) and the Rider charge plus any purchase payments made on that date is greater than the Guaranteed Amount immediately preceding the valuation date.
 
After the tenth Benefit Year anniversary, you may initiate another ten-year period of automatic step-ups by electing (in writing) to step-up the Guaranteed Amount to the greater of the Contract Value or the current Guaranteed Amount if:
 
a.     
each contractowner and annuitant is under age 81; and
 
 
b.     
the contractowner or joint owner is still living.
 
If you choose, we will administer this election for you automatically, so that a new ten-year period of step-ups will begin at the end of each prior ten-year step-up period.
 
Following is an example of how the step-ups work in the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up, (assuming no withdrawals or additional purchase payments):
 
   
Guaranteed 
 
Contract Value 
Amount 
* Initial purchase payment $50,000 
$50,000 
$50,000 
* 1st Benefit Year Anniversary 
$54,000 
$54,000 
* 2nd Benefit Year Anniversary 
$53,900 
$54,000 
* 3rd Benefit Year Anniversary 
$57,000 
$57,000 


Annual step-ups, if the conditions are met, will continue until (and including) the 10th Benefit Year Anniversary. If you had elected to have the next ten-year period of step-ups begin automatically after the prior ten-year period, annual step-ups, if conditions are met, will continue beginning on the 11th Benefit Year Anniversary.
 
Contractowner elected step-ups (other than automatic step-ups) will be effective on the next valuation date after we receive your request and a new Benefit Year will begin. Purchase payments and withdrawals made after a step-up adjust the Guaranteed Amount. In the future, we may limit your right to step-up the Guaranteed Amount to your Benefit Year anniversary dates. All step-ups are sub- ject to the maximum Guaranteed Amount.
 
A contractowner elected step-up (including contractowner step-ups that we administer for you to begin a new ten-year step-up period) may cause a change in the percentage charge for this benefit. There is no change in the percentage charge when automatic, annual step-ups occur during a ten-year period. See Charges and Other Deductions - Rider Charges - Lincoln SmartSecurity ® Advantage Charge.
 
Withdrawals. You will have access to your Guaranteed Amount through periodic withdrawals up to the Maximum Annual Withdrawal amount each Benefit Year until the Guaranteed Amount equals zero.
 
On the effective date of the Rider, the Maximum Annual Withdrawal amount is 5% of the Guaranteed Amount.
 
If you do not withdraw the entire Maximum Annual Withdrawal amount during a Benefit Year, there is no carryover of the extra amount into the next Benefit Year. The Maximum Annual Withdrawal amount is increased by 5% of any additional purchase payments. For example, if the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up option with a Maximum Annual Withdrawal amount of $2,500 (5% of $50,000 Guaranteed Amount) is in effect and an additional purchase payment of $10,000 is made, the new Maximum Annual Withdrawal amount is $3,000 ($2,500 + 5% of $10,000). Step-ups of the Guaranteed Amount (both automatic step- ups and step-ups elected by you) will step-up the Maximum Annual Withdrawal amount to the greater of:
 
a.     
the Maximum Annual Withdrawal amount immediately prior to the step-up; or
 
 
b.     
5% of the new (stepped-up) Guaranteed Amount.
 
If the cumulative amounts withdrawn from the contract during the Benefit Year (including the current withdrawal) are within the Maxi- mum Annual Withdrawal amount, then:
 
1.     
the withdrawal will reduce the Guaranteed Amount by the amount of the withdrawal on a dollar-for-dollar basis, and
 
 
2.     
the Maximum Annual Withdrawal amount will remain the same.
 
Withdrawals within the Maximum Annual Withdrawal Amount are not subject to the interest adjustment on the amount withdrawn from the fixed account if applicable. See The Contracts - Fixed Side of the Contract. If the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up is in effect, withdrawals from IRA contracts will be treated as within the Maximum Annual Withdrawal
 
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[Missing Graphic Reference]
amount (even if they exceed the 5% Maximum Annual Withdrawal amount) only if the withdrawals are taken in the form of systematic monthly or quarterly installments, as calculated by Lincoln, of the amount needed to satisfy the required minimum distribution rules under Internal Revenue Code Section 401(a)(9) for this contract value. Distributions from qualified contracts are generally taxed as ordinary income. In nonqualified contracts, withdrawals of contract value that exceed purchase payments are taxed as ordinary income. See Federal Tax Matters.
 
When cumulative amounts withdrawn from the contract during the Benefit Year (including the current withdrawal) exceed the Maxi- mum Annual Withdrawal amount:
 
1.     
The Guaranteed Amount is reduced to the lesser of:
 
 
   
the contract value immediately following the withdrawal, or
 
 
   
the Guaranteed Amount immediately prior to the withdrawal, less the amount of the withdrawal.
 
 
2.     
The Maximum Annual Withdrawal amount will be the least of:
 
 
   
the Maximum Annual Withdrawal amount immediately prior to the withdrawal; or
 
 
   
the greater of:
 
 
     
5% of the reduced Guaranteed Amount immediately following the withdrawal (as specified above when withdrawals exceed the Maximum Annual Withdrawal amount); or
 
 
     
5% of the contract value immediately following the withdrawal; or
 
 
   
the new Guaranteed Amount.
 
The following example of the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up demonstrates the impact of a with- drawal in excess of the Maximum Annual Withdrawal amount on the Guaranteed Amount and the Maximum Annual Withdrawal amount. A $7,000 withdrawal caused a $32,000 reduction in the Guaranteed Amount.
 
Prior to Excess Withdrawal: Contract Value = $60,000 Guaranteed Amount = $85,000
 
Maximum Annual Withdrawal = $5,000 (5% of the initial Guaranteed Amount of $100,000)
 
After a $7,000 Withdrawal:
 
Contract Value = $53,000
 
Guaranteed Amount = $53,000
 
Maximum Annual Withdrawal = $2,650
 
The Guaranteed Amount was reduced to the lesser of the contract value immediately following the withdrawal ($53,000) or the Guar- anteed Amount immediately prior to the withdrawal, less the amount of the withdrawal ($85,000 - $7,000 = $78,000).
 
The Maximum Annual Withdrawal amount was reduced to the least of:
 
1)     
Maximum Annual Withdrawal amount prior to the withdrawal ($5,000); or
 
 
2)     
The greater of 5% of the new Guaranteed Amount ($2,650) or 5% of the contract value following the withdrawal ($2,650); or
 
 
3)     
The new Guaranteed Amount ($53,000).
 
The least of these three items is $2,650.
 
In a declining market, withdrawals that exceed the Maximum Annual Withdrawal amount may substantially deplete or eliminate your Guaranteed Amount and reduce your Maximum Annual Withdrawal amount.
 
Withdrawals in excess of the Maximum Annual Withdrawal amount will be subject to an interest adjustment on the amount withdrawn from the fixed account. Refer to the Statement of Additional Information for an example of the interest adjustment calculation.
 
Lifetime Withdrawals. Payment of the Maximum Annual Withdrawal amount will be guaranteed for your (contractowner) lifetime (if you purchase the Single Life option) or for the lifetimes of you (contractowner) and your spouse (if the Joint Life option is pur- chased), as long as:
 
1)     
No withdrawals are made before you (and your spouse if a Joint Life) are age 65; and
 
 
2)     
An excess withdrawal (described above) has not reduced the Maximum Annual Withdrawal amount to zero.
 
If the lifetime withdrawal is not in effect, the Maximum Annual Withdrawal amount will last only until the Guaranteed Amount equals zero.
 
If any withdrawal is made prior to the time you (or both spouses) are age 65, the Maximum Annual Withdrawal amount will not last for the lifetime(s), except in the two situations described below:
 
45
 
[Missing Graphic Reference]
1)     
If a step-up of the Guaranteed Amount after age 65 causes the Maximum Annual Withdrawal amount to equal or increase from the immediately prior Maximum Annual Withdrawal amount. This typically occurs if the contract value equals or exceeds the highest, prior Guaranteed Amount. If this happens, the new Maximum Annual Withdrawal amount will automatically be available for the speci- fied lifetime(s); or
 
 
2)     
The contractowner makes a one-time election to reset the Maximum Annual Withdrawal amount to 5% of the current Guaranteed Amount. This reset will occur on the first valuation date following the Benefit Year anniversary and will be based on the Guaranteed Amount as of that valuation date. This will reduce your Maximum Annual Withdrawal amount. A contractowner would only choose this if the above situation did not occur. To reset the Maximum Annual Withdrawal amount, the following must occur:
 
 
a.     
the contractowner (and spouse if applicable) is age 65;
 
 
b.     
the contract is currently within a ten-year automatic step-up period described above (or else a contractowner submits a step-up request to start a new ten-year automatic step-up period) (the contractowner must be eligible to elect a step-up; i.e., all contractowners and the annuitant must be alive and under age 81); and
 
 
c.     
you have submitted this request to us in writing at least 30 days prior to the end of the Benefit Year.
 
As an example of these two situations, if you purchased the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up Single Life with $100,000, your initial Guaranteed Amount is $100,000 and your initial Maximum Annual Withdrawal amount is $5,000. If you make a $5,000 withdrawal at age 62, your Guaranteed Amount will decrease to $95,000. Since you did not satisfy the age 65 requirement, you do not have a lifetime Maximum Annual Withdrawal amount. If a step-up of the Guaranteed Amount after age 65 (either automatic or owner-elected) causes the Guaranteed Amount to equal or exceed $100,000, then the Maximum Annual With- drawal amount of $5,000 (or greater) will become a lifetime payout. This is the first situation described above. However, if the Guaran- teed Amount has not been reset to equal or exceed the highest prior Guaranteed Amount, then you can choose the second situation described above if you are age 65 and the contract is within a ten-year automatic step-up period. This will reset the Maximum Annual Withdrawal amount to 5% of the current Guaranteed Amount; 5% of $95,000 is $4,750. This is your new Maximum Annual With- drawal amount which can be paid for your lifetime unless excess withdrawals are made.
 
The tax consequences of withdrawals and annuity payments are discussed in Federal Tax Matters.
 
All withdrawals you make, whether or not within the Maximum Annual Withdrawal amount, will decrease your contract value. If the contract is surrendered, the contractowner will receive the contract value (less any applicable charges, fees, and taxes) and not the Guaranteed Amount.
 
If your contract value is reduced to zero because of market performance, withdrawals equal to the Maximum Annual Withdrawal amount will continue for the life of you (and your spouse if applicable) if the lifetime withdrawals are in effect. If not, the Maximum Annual Withdrawal amount will continue until the Guaranteed Amount equals zero. You may not withdraw the remaining Guaranteed Amount in a lump sum.
 
Guaranteed Amount Annuity Payout Option. If you desire to annuitize your Guaranteed Amount, the Guaranteed Amount Annuity Payout Option is available.
 
The Guaranteed Amount Annuity Payment Option is a fixed annuitization in which the contractowner (and spouse if applicable) will receive the Guaranteed Amount in annual annuity payments equal to the current 5% Maximum Annual Withdrawal amount, including the lifetime Maximum Annual Withdrawals if in effect (this option is different from other annuity payment options discussed in this prospectus, including i4LIFE ® Advantage, which are based on your contract value). Payment frequencies other than annual may be available. Payments will continue until the Guaranteed Amount equals zero and may continue until death if the lifetime Maximum Annual Withdrawal is in effect. This may result in a partial, final payment. You would consider this option only if your contract value is less than the Guaranteed Amount (and you don't believe the contract value will ever exceed the Guaranteed Amount) and you do not wish to keep your annuity contract in force other than to pay out the Guaranteed Amount. You will have no other contract features other than the right to receive annuity payments equal to the Maximum Annual Withdrawal amount until the Guaranteed Amount equals zero.
 
If the contract value is zero and you have a remaining Guaranteed Amount, you may not withdraw the remaining Guaranteed Amount in a lump sum, but must elect the Guaranteed Amount Annuity Payment Option.
 
Death Prior to the Annuity Commencement Date. There is no provision for a lump sum payout of the Guaranteed Amount upon death of the contractowners or annuitant. At the time of death, if the contract value equals zero, no death benefit will be paid other than any applicable Maximum Annual Withdrawal amounts. All death benefit payments must be made in compliance with Internal Revenue Code Sections 72(s) or 401(a)(9) as applicable as amended from time to time. See The Contracts - Death Benefit.
 
Upon the death of the Single Life under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up-Single Life option, the lifetime payout of the Maximum Annual Withdrawal amount, if in effect, will end. If the contract is continued as discussed below, the Maximum Annual Withdrawal amount will continue until the Guaranteed Amount, if any, is zero. In the alternative, the surviving spouse can choose to become the new Single Life, if the surviving spouse is under age 81. This will cause a reset of the Guaranteed
 
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Amount and the Maximum Annual Withdrawal amount. The new Guaranteed Amount will equal the contract value on the date of the reset and the new Maximum Annual Withdrawal amount will be 5% of the new Guaranteed Amount. This also starts a new 10 year period of automatic step-ups. At this time, the charge for the Rider will become the current charge in effect for new purchases of the Single Life option. The surviving spouse will need to be 65 before taking withdrawals to qualify for a lifetime payout. In deciding whether to make this change, the surviving spouse should consider: 1) the change a reset would cause to the Guaranteed Amount and the Maximum Annual Withdrawal amount; 2) whether it is important to have Maximum Annual Withdrawal amounts for life ver- sus the remainder of the prior Guaranteed Amount; and 3) the cost of the Single Life option.
 
Upon the first death under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up-Joint Life option, the lifetime payout of the Maximum Annual Withdrawal amount, if in effect, will continue for the life of the surviving spouse. Upon the death of the sur- viving spouse, the lifetime payout of the Maximum Annual Withdrawal amount will end. However, if the spouse's beneficiary elects to take the annuity death benefit in installments over life expectancy, the Maximum Annual Withdrawal amount will continue until the Guaranteed Amount, if any, is zero (see below for a non-spouse beneficiary). As an alternative, after the first death, the surviving spouse may choose to change from the Joint Life option to the Single Life option, if the surviving spouse is under age 81. This will cause a reset of the Guaranteed Amount and the Maximum Annual Withdrawal amount. The new Guaranteed Amount will equal the contract value on the date of the reset and the new Maximum Annual Withdrawal amount will be 5% of the new Guaranteed Amount. This also starts a new 10 year period of automatic step-ups. At this time, the charge for the Rider will become the current charge in effect for new purchases of the Single Life option. In deciding whether to make this change, the surviving spouse should consider: 1) if the reset will cause the Guaranteed Amount and the Maximum Annual Withdrawal amount to decrease and 2) if the cost of the Single Life option is less than the cost of the Joint Life option.
 
If the surviving spouse of the deceased contractowner continues the contract, the remaining automatic step-ups under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up will apply to the spouse as the new contractowner.
 
If a non-spouse beneficiary elects to receive the death benefit in installments over life expectancy (thereby keeping the contract in force), the beneficiary may continue the Lincoln SmartSecurity ® Advantage if desired. Automatic step-ups under the Lincoln SmartSecurity ® Advantage - 1 Year Automatic Step-up will not continue and elective step-ups of the Guaranteed Amount under both options will not be permitted. In the event the contract value declines below the Guaranteed Amount (as adjusted for withdrawals of death benefit payments), the beneficiary is assured of receiving payments equal to the Guaranteed Amount (as adjusted). Deduc- tions for the Rider charge will continue on a quarterly basis and will be charged against the remaining Guaranteed Amount. Note: there are instances where the required installments of the death benefit, in order to be in compliance with the Internal Revenue Code as noted above, may exceed the Maximum Annual Withdrawal amount, thereby reducing the benefit of this Rider. If there are multiple beneficiaries, each beneficiary will be entitled to continue a share of the Lincoln SmartSecurity ® Advantage equal to his or her share of the death benefit.
 
Impact of Divorce on Joint Life Option. In the event of a divorce, the contractowner may change from a Joint Life Option to a Single Life Option (if the contractowner is under age 81) at the current Rider charge for new sales of the Single Life Option. At the time of the change, the Guaranteed Amount will be reset to the current contract value and the Maximum Annual Withdrawal amount will equal 5% of this new Guaranteed Amount.
 
After a divorce, the contractowner may keep the Joint Life Option to have the opportunity to receive lifetime payouts for the lives of the contractowner and a new spouse. This is only available if no withdrawals were made from the contract after the effective date of the Rider up to and including the date the new spouse is added to the Rider.
 
Termination. After the later of the fifth anniversary of the effective date of the Rider or the fifth anniversary of the most recent contractowner-elected step-up, including any step-up we administered for you, of the Guaranteed Amount, the contractowner may terminate the Rider by notifying us in writing. Lincoln SmartSecurity ® Advantage will automatically terminate:
 
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on the annuity commencement date (except payments under the Guaranteed Amount Annuity Payment Option will continue if applicable);