N-4 1 initialregstmt.htm LINCOLN CHOICEPLUS FUSION INITIAL REG STMT initialregstmt.htm

As filed with the Securities and Exchange Commission on May 20, 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. 274/X/

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

Lincoln ChoicePlus FusionSM

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 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 subject to certain conditions. 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 expiration date of a guaranteed period.
 
We do offer variable annuity contracts that have lower fees.
 
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:
 
AllianceBernstein Variable Products Series Fund (Class B): 
Delaware VIP ® Trust (Service Class): 
   AllianceBernstein VPS Global Thematic Growth Portfolio 
Delaware VIP ® Diversified Income Series 
   AllianceBernstein VPS International Value Portfolio 
Delaware VIP ® Emerging Markets Series 
   AllianceBernstein VPS Small/Mid Cap Value Portfolio 
Delaware VIP ® Limited-Term Diversified Income Series 
American Funds Insurance SeriesSM (Class 2): 
Delaware VIP ® REIT Series 
   American Funds Global Growth Fund 
Delaware VIP ® Small Cap Value Series 
   American Funds Global Small Capitalization Fund 
Delaware VIP ® Smid Cap Growth Series 
   American Funds Growth Fund 
Delaware VIP ® U.S. Growth Series 
   American Funds Growth-Income Fund 
Delaware VIP ® Value Series 
   American Funds International Fund 
DWS Variable Series II (Class B): 
BlackRock Variable Series Funds, Inc. (Class III): 
DWS Alternative Asset Allocation Plus VIP Portfolio 
   BlackRock Global Allocation V.I. Fund 
 


1
 
[Missing Graphic Reference]
Fidelity ® Variable Insurance Products (Service Class 2): 
LVIP SSgA Emerging Markets 100 Fund 
   Fidelity ® VIP Contrafund ® Portfolio 
LVIP SSgA Global Tactical Allocation Fund 
   Fidelity ® VIP Growth Portfolio 
LVIP SSgA International Index Fund 
   Fidelity ® VIP Mid Cap Portfolio 
LVIP SSgA Large Cap 100 Fund 
Franklin Templeton Variable Insurance Products Trust (Class 2): 
LVIP SSgA Moderate Index Allocation Fund 
   FTVIPT Franklin Income Securities Fund 
LVIP SSgA Moderate Structured Allocation Fund 
   FTVIPT Mutual Shares Securities Fund 
LVIP SSgA Moderately Aggressive Index Allocation Fund 
Goldman Sachs Variable Insurance Trust (Service Class): 
LVIP SSgA Moderately Aggressive Structured Allocation Fund 
   Goldman Sachs VIT Large Cap Value Fund 
LVIP SSgA Small/Mid Cap 200 Fund 
Lincoln Variable Insurance Products Trust (Service Class): 
LVIP SSgA S&P 500 Index Fund* 
   LVIP Baron Growth Opportunities Fund 
LVIP SSgA Small-Cap Index Fund 
   LVIP BlackRock Inflation Protected Bond Fund 
LVIP T. Rowe Price Growth Stock Fund 
   LVIP Capital Growth Fund 
LVIP T. Rowe Price Structured Mid-Cap Growth Fund 
   LVIP Cohen & Steers Global Real Estate Fund 
LVIP Templeton Growth Fund 
   LVIP Columbia Value Opportunities Fund 
LVIP Total Bond Fund 
   LVIP Delaware Bond Fund 
LVIP Turner Mid-Cap Growth Fund 
   LVIP Delaware Diversified Floating Rate Fund 
LVIP Vanguard Domestic Equity ETF Fund 
   LVIP Delaware Social Awareness Fund 
LVIP Vanguard International Equity ETF Fund 
   LVIP Delaware Special Opportunities Fund 
LVIP Wells Fargo Intrinsic Value Fund 
   LVIP Dimensional Non-U.S. Equity Fund 
LVIP Conservative Profile Fund 
   LVIP Dimensional U.S. Equity Fund 
LVIP Moderate Profile Fund 
   LVIP Global Income Fund 
LVIP Moderately Aggressive Profile Fund 
   LVIP J.P. Morgan High Yield Fund 
MFS ® Variable Insurance TrustSM (Service Class): 
   LVIP Janus Capital Appreciation Fund 
MFS ® VIT Growth Series 
   LVIP MFS International Growth Fund 
MFS ® VIT Utilities Series 
   LVIP MFS Value Fund 
*"S&P 500" is a trademark of The McGraw-Hill Companies, Inc. and has 
   LVIP Mid-Cap Value Fund 
been licensed for use by Lincoln Variable Insurance Products Trust and its 
   LVIP Mondrian International Value Fund 
affiliates. The product is not sponsored, endorsed, sold or promoted by 
   LVIP Money Market Fund 
Standard & Poor's and Standard & Poor's makes no representation regarding 
   LVIP SSgA Bond Index Fund 
the advisability of purchasing the product. (Please see the Statement of 
   LVIP SSgA Conservative Index Allocation Fund 
Additional Information which sets forth additional disclaimers and 
   LVIP SSgA Conservative Structured Allocation Fund 
limitations of liability on behalf of S&P.) 
   LVIP SSgA Developed International 150 Fund 
 


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 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
12 
14 
15 
16 
20 
21 
28 
29 
30 
33 
     Death Benefit 
34 
38 
39 
39 
48 
54 
58 
     Annuity Payouts 
61 
69 
72 
73 
78 
     Voting Rights 
78 
78 
78 
79 
 
80 


3
 
 
 

 
Special Terms
 
In this prospectus, the following terms have the indicated meanings:
 
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 (or initial purchase payment if i4LIFE ® Advantage is purchased at contract issue), less any applicable premium taxes. During the Access Period, the Account Value on a valuation date equals the total value of all of the contractowner's accumulation units plus the contractowner's value in the fixed account, reduced by regular income pay- ments, 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 annuity payout option which com- bines 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, regardless of the invest- ment performance of the contract and provided certain condi- tions are met.
 
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 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 Requirements.
 
Purchase payments - Amounts paid into the contract.
 
Selling group individuals - A contractowner who meets the following criterion at the time of the contract purchase and who purchases the contract without the assistance of a sales repre- sentative under contract with us:
 
·  
Employees and registered representatives of any member of the selling group (broker-dealers who have selling agreements with us) and their spouses and minor children.
 
4
 
 
 

 
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.
 
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.
 
                                                                                                       Contractowner Transaction Expenses:
 
 
Surrender charge (as a percentage of purchase payments surrendered/withdrawn):1 
1.00% 


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.
 
1     
The surrender charge percentage is reduced over time. The later the redemption occurs, the lower the surrender charge with respect to that surrender or withdrawal. We may reduce or waive this charge in certain situations. See Charges and Other Deductions - Surrender Charge.
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.
 
                                                                                                     Periodic Charges for the Base Contract:
 
Annual Account Fee:1 
$50 
Annual Premium Based Charge (as a percentage of purchase payments)2 
0.70% 
Separate Account Annual Expenses (as a percentage of average daily net assets in the subaccounts): 
 
Account Value Death Benefit 
 
   Mortality and Expense Risk Charge 
0.70% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
0.80% 
Guarantee of Principal Death Benefit 
 
   Mortality and Expense Risk Charge 
0.75% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
0.85% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
 
   Mortality and Expense Risk Charge 
1.00% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
1.10% 
Estate Enhancement Benefit (EEB) 
 
   Mortality and Expense Risk Charge 
1.20% 
   Administrative Charge 
0.10% 
   Total Separate Account Expenses 
1.30% 


1     
The account fee will be waived if your contract value is $50,000 or more at the end of any particular contract year. This account fee may be less in some states and will be waived after the fifteenth contract year. The account fee will also be deducted upon full surrender of the contract if the contract value is less than $50,000.
 
2     
The Premium Based Charge is an annual charge payable each year for seven years and deducted quarterly (0.1750%). The charge reflected is the maximum charge percentage. The Premium Based Charge percentage may decrease as total purchase payment amounts increase. A portion of the Premium Based Charge will be deducted on withdrawals above the Premium Based Charge Free Amount. If the contract is fully surrendered prior to the end of any Premium Based Charge period, any of the remaining Premium Based Charge due will be deducted from the surrender value. See Charges and Deductions - Premium Based Charge for further information.
6
 
 
 

 
                                                                               Optional Living Benefit Rider Charges are set forth below.
   
Optional Living Benefit Rider Charges – Other Than i4LIFE ® Advantage: 
Single Life 
Joint Life 
Only one Living Benefit rider may be elected from this grouping. These charges are added to the periodic 
   
charges for the base contract described above. 
   
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% 


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. See Charges and Other Deductions – Lincoln Lifetime IncomeSM Advantage 2.0 Charge for a discussion of these charges to the Income Base. 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. See Charges and Other Deductions - Lincoln SmartSecurity ® Advantage Charge for further information.
Optional Living Benefit Rider Charges - i4LIFE ® Advantage. i4LIFE ® Advantage can be elected with or without one of the fol- lowing Guaranteed Income Benefits. It cannot be elected with any other Living Benefit rider except as set forth below.
 
i4LIFE ® Advantage Without Guaranteed Income Benefit (version 4):* These charges replace the Separate Account Annual Expenses for the base contract.
 
Account Value Death Benefit 
1.20% 
Guarantee of Principal Death Benefit 
1.25% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
1.50% 


*As an annualized percentage of Account Value (initial purchase payment or contract value depending on the effective date of i4LIFE ® Advantage), computed daily. This charge is assessed only on and after the periodic income commencement date. See Charges and Other Deductions - i4LIFE ® Advantage Charge for further information.
 
i4LIFE ® Advantage With Guaranteed Income Benefit (version 4):* 
   
These charges replace the Separate Account Annual Expenses for the base contract. 
   
 
Single Life 
Joint Life 
Account Value Death Benefit 
   
   Guaranteed Maximum Charge 
3.20% 
3.20% 
   Current Charge 
1.85% 
2.05% 
Guarantee of Principal Death Benefit 
   
   Guaranteed Maximum Charge 
3.25% 
3.25% 
   Current Charge 
1.90% 
2.10% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB) 
   
   Guaranteed Maximum Charge 
3.50% 
3.50% 
   Current Charge 
2.15% 
2.35% 


*As an annualized percentage of Account Value, computed daily. This charge is assessed only on and after the periodic income commencement date. The per- centage charge will change to the current charge in effect at the time of an automatic step-up of the Guaranteed Income Benefit, not to exceed the guaranteed maximum charge percentage. See Charges and Other Deductions - i4LIFE ® Advantage with Guaranteed Income Benefit Charge for further information.
 
7
 
 
 

 
i4LIFE ® Advantage With Guaranteed Income Benefit (version 4) for purchasers who previously purchased Lincoln Lifetime 
Single Life 
Joint Life 
IncomeSM Advantage 2.0: 
   
These charges replace the Separate Account Annual Expenses for the base contract. 
   
Account Value Death Benefit* 
0.80% 
0.80% 
   Plus i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) Guaranteed Maximum Charge**
Plus 2.00% 
Plus 2.00% 
Guarantee of Principal Death Benefit* 
0.85% 
0.85% 
   Plus i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) Guaranteed Maximum Charge** 
Plus 2.00% 
Plus 2.00% 
Enhanced Guaranteed Minimum Death Benefit (EGMDB)* 
1.10% 
1.10% 
   Plus i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) Guaranteed Maximum Charge** 
Plus 2.00% 
Plus 2.00% 


*As a percentage of average daily net assets in the subaccounts. This charge is assessed on and after the periodic income commencement date. See Charges and Other Deductions - i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers who previously purchased Lincoln Lifetime IncomeSM Advantage 2.0.
 
**As an annualized percentage of the greater of the Income Base carried over from Lincoln Lifetime IncomeSM Advantage 2.0 (less the Guaranteed Annual Income amounts paid since the last Step-Up) or contract value prior to electing i4LIFE ® Advantage. For previous purchasers of Lincoln Lifetime IncomeSM Advantage 2.0, the current charges for i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) are 1.05% for the single life and 1.25% for the joint life option. This charge is deducted from Account Value on a quarterly basis 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. See Charges and Other Deductions - i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers who previously purchased Lincoln Lifetime IncomeSM Advantage 2.0.
 
The next table describes the separate account annual expenses (as a percentage of average daily net assets in the subaccounts) you pay on and after the annuity commencement date:
 
Periodic Charges for the Base Contract:
 
Mortality and expense risk charge and administrative charge 
0.80% 


Contractowner Transaction Expenses:
 
The next table describes the maximum Unscheduled Payment charge for the Lincoln SmartIncomeSM Inflation on and after the annuity commencement date:
 
Maximum Lincoln SmartIncomeSM Inflation Unscheduled Payment charge (as a percentage of the Unscheduled Payment) 
7.0% 


The Unscheduled Payment charge percentage is reduced over time. The later the Unscheduled Payment occurs, the lower the charge with respect to that Unscheduled Payment. 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 Charges and Other Deductions - Charges for Lincoln SmartIncomeSM Inflation. See The Contracts - Annuity Payouts for a detailed description of Lincoln SmartIncomeSM Inflation.
 
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.
 
 
Minimum 
Maximum 
 
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): 
 
 
2.58% 
   
 
Total Annual Fund Operating Expenses 
   
(after contractual waivers/reimbursements*): 
0.55% 
2.14% 


*36 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):
 
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) 
 
AllianceBernstein VPS Global Thematic Growth Portfolio 
0.75% 
 
0.25% 
 
0.24% 
 
0.00% 
 
1.24% 
   
 
AllianceBernstein VPS International Value Portfolio 
0.75 
 
0.25 
 
0.10 
 
0.00 
 
1.10 
   
AllianceBernstein VPS Small/Mid Cap Value Portfolio 
0.75 
 
0.25 
 
0.09 
 
0.00 
 
1.09 
   
American Funds Global Growth Fund 
0.53 
 
0.25 
 
0.03 
 
0.00 
 
0.81 
   
 
American Funds Global Small Capitalization Fund 
0.71 
 
0.25 
 
0.04 
 
0.00 
 
1.00 
   
American Funds Growth Fund 
0.32 
 
0.25 
 
0.02 
 
0.00 
 
0.59 
   
American Funds Growth-Income Fund 
0.27 
 
0.25 
 
0.02 
 
0.00 
 
0.54 
   
 
American Funds International Fund 
0.49 
 
0.25 
 
0.04 
 
0.00 
 
0.78 
   
BlackRock Global Allocation V.I. Fund 
0.65 
 
0.25 
 
0.06 
 
0.02 
 
0.98 
   
Delaware VIP ® Diversified Income Series(1) 
0.60 
 
0.30 
 
0.10 
 
0.00 
 
1.00 
-0.05% 
0.95% 
Delaware VIP ® Emerging Markets Series(1) 
1.25 
 
0.30 
 
0.15 
 
0.00 
 
1.70 
-0.05 
1.65 
Delaware VIP ® Limited-Term Diversified Income Series(1) 
0.50 
 
0.30 
 
0.10 
 
0.00 
 
0.90 
-0.05 
0.85 
Delaware VIP ® REIT Series(1) 
0.75 
 
0.30 
 
0.12 
 
0.00 
 
1.17 
-0.05 
1.12 
Delaware VIP ® Small Cap Value Series(1) 
0.73 
 
0.30 
 
0.10 
 
0.00 
 
1.13 
-0.05 
1.08 
Delaware VIP ® Smid Cap Growth Series(1) 
0.75 
 
0.30 
 
0.14 
 
0.00 
 
1.19 
-0.05 
1.14 
Delaware VIP ® U.S. Growth Series(1) 
0.65 
 
0.30 
 
0.10 
 
0.00 
 
1.05 
-0.05 
1.00 
Delaware VIP ® Value Series(1) 
0.65 
 
0.30 
 
0.10 
 
0.00 
 
1.05 
-0.05 
1.00 
DWS Alternative Asset Allocation Plus VIP Portfolio(2) 
0.24 
 
0.25 
 
0.70 
 
1.39 
 
2.58 
-0.44 
2.14 
Fidelity ® VIP Contrafund ® Portfolio(3) 
0.56 
 
0.25 
 
0.09 
 
0.00 
 
0.90 
   
Fidelity ® VIP Growth Portfolio 
0.56 
 
0.25 
 
0.11 
 
0.00 
 
0.92 
   
Fidelity ® VIP Mid Cap Portfolio(4) 
0.56 
 
0.25 
 
0.10 
 
0.00 
 
0.91 
   
FTVIPT Franklin Income Securities Fund 
0.45 
 
0.25 
 
0.02 
 
0.00 
 
0.72 
   
 
FTVIPT Mutual Shares Securities Fund 
0.60 
 
0.25 
 
0.14 
 
0.00 
 
0.99 
   
Goldman Sachs VIT Large Cap Value Fund 
0.75 
 
0.25 
 
0.05 
 
0.00 
 
1.05 
   
LVIP Baron Growth Opportunities Fund(5) 
1.00 
 
0.25 
 
0.09 
 
0.00 
 
1.34 
-0.05 
1.29 
LVIP BlackRock Inflation Protected Bond Fund 
0.45 
 
0.25 
 
0.10 
 
0.02 
 
0.82 
   
LVIP Capital Growth Fund 
0.72 
 
0.25 
 
0.09 
 
0.00 
 
1.06 
   
LVIP Cohen & Steers Global Real Estate Fund(6) 
0.95 
 
0.25 
 
0.15 
 
0.00 
 
1.35 
-0.22 
1.13 
LVIP Columbia Value Opportunities Fund(7) 
1.05 
 
0.25 
 
0.21 
 
0.00 
 
1.51 
-0.09 
1.42 
LVIP Delaware Bond Fund 
0.32 
 
0.35 
 
0.07 
 
0.00 
 
0.74 
   
LVIP Delaware Diversified Floating Rate Fund 
0.60 
 
0.25 
 
0.18 
 
0.00 
 
1.03 
   
 
LVIP Delaware Social Awareness Fund 
0.39 
 
0.35 
 
0.08 
 
0.00 
 
0.82 
   
LVIP Delaware Special Opportunities Fund 
0.40 
 
0.35 
 
0.08 
 
0.00 
 
0.83 
   
LVIP Dimensional Non-U.S. Equity Fund(8) 
0.25 
 
0.25 
 
0.55 
 
0.48 
 
1.53 
-0.50 
1.03 
LVIP Dimensional U.S. Equity Fund(8) 
0.25 
 
0.25 
 
0.55 
 
0.29 
 
1.34 
-0.50 
0.84 
LVIP Global Income Fund(9) 
0.65 
 
0.25 
 
0.15 
 
0.00 
 
1.05 
-0.05 
1.00 
LVIP Janus Capital Appreciation Fund(11) 
0.75 
 
0.25 
 
0.09 
 
0.00 
 
1.09 
-0.08 
1.01 
LVIP J.P. Morgan High Yield Fund(10) 
0.65 
 
0.25 
 
0.21 
 
0.00 
 
1.11 
-0.04 
1.07 
LVIP MFS International Growth Fund(12) 
0.90 
 
0.25 
 
0.15 
 
0.00 
 
1.30 
-0.05 
1.25 
LVIP MFS Value Fund 
0.64 
 
0.25 
 
0.07 
 
0.00 
 
0.96 
   
LVIP Mid-Cap Value Fund(13) 
0.94 
 
0.25 
 
0.14 
 
0.00 
 
1.33 
-0.04 
1.29 
LVIP Mondrian International Value Fund 
0.74 
 
0.25 
 
0.11 
 
0.00 
 
1.10 
   
 
LVIP Money Market Fund 
0.36 
 
0.25 
 
0.06 
 
0.00 
 
0.67 
   


9
 
[Missing Graphic Reference]
                     
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 SSgA Bond Index Fund(14) 
0.40% 
 
0.25% 
 
0.09% 
 
0.01% 
 
0.75% 
-0.09% 
0.66% 
LVIP SSgA Conservative Index Allocation Fund(15) 
0.25 
 
0.25 
 
0.50 
 
0.16 
 
1.16 
-0.55 
0.61 
LVIP SSgA Conservative Structured Allocation Fund(15) 
0.25 
 
0.25 
 
0.18 
 
0.17 
 
0.85 
-0.23 
0.62 
LVIP SSgA Developed International 150 Fund(16) 
0.75 
 
0.25 
 
0.18 
 
0.00 
 
1.18 
-0.38 
0.80 
LVIP SSgA Emerging Markets 100 Fund(17) 
1.09 
 
0.25 
 
0.21 
 
0.00 
 
1.55 
-0.72 
0.83 
LVIP SSgA Global Tactical Allocation Fund 
0.25 
 
0.25 
 
0.14 
 
0.63 
 
1.27 
   
LVIP SSgA International Index Fund(18) 
0.40 
 
0.25 
 
0.24 
 
0.00 
 
0.89 
-0.03 
0.86 
LVIP SSgA Large Cap 100 Fund(19) 
0.52 
 
0.25 
 
0.07 
 
0.00 
 
0.84 
-0.18 
0.66 
LVIP SSgA Moderate Index Allocation Fund(20) 
0.25 
 
0.25 
 
0.27 
 
0.17 
 
0.94 
-0.32 
0.62 
LVIP SSgA Moderate Structured Allocation Fund(20) 
0.25 
 
0.25 
 
0.07 
 
0.17 
 
0.74 
-0.12 
0.62 
LVIP SSgA Moderately Aggressive Index Allocation Fund(20) 
0.25 
 
0.25 
 
0.21 
 
0.18 
 
0.89 
-0.26 
0.63 
LVIP SSgA Moderately Aggressive Structured Allocation 
                     
   Fund(20) 
0.25 
 
0.25 
 
0.10 
 
0.18 
 
0.78 
-0.15 
0.63 
LVIP SSgA Small/Mid Cap 200 Fund(21) 
0.69 
 
0.25 
 
0.12 
 
0.00 
 
1.06 
-0.29 
0.77 
LVIP SSgA S&P 500 Index Fund 
0.22 
 
0.25 
 
0.08 
 
0.00 
 
0.55 
   
 
LVIP SSgA Small-Cap Index Fund 
0.32 
 
0.25 
 
0.12 
 
0.00 
 
0.69 
   
 
LVIP T. Rowe Price Growth Stock Fund 
0.71 
 
0.25 
 
0.08 
 
0.00 
 
1.04 
   
LVIP T. Rowe Price Structured Mid-Cap Growth Fund 
0.74 
 
0.25 
 
0.09 
 
0.00 
 
1.08 
   
 
LVIP Templeton Growth Fund 
0.73 
 
0.25 
 
0.10 
 
0.00 
 
1.08 
   
LVIP Total Bond Fund(22) 
0.25 
 
0.25 
 
0.55 
 
0.19 
 
1.24 
-0.50 
0.74 
LVIP Turner Mid-Cap Growth Fund(23) 
0.88 
 
0.25 
 
0.18 
 
0.00 
 
1.31 
-0.08 
1.23 
LVIP Vanguard Domestic Equity ETF Fund(24) 
0.25 
 
0.25 
 
0.55 
 
0.14 
 
1.19 
-0.50 
0.69 
LVIP Vanguard International Equity ETF Fund(24) 
0.25 
 
0.25 
 
0.55 
 
0.26 
 
1.31 
-0.50 
0.56 
LVIP Wells Fargo Intrinsic Value Fund(25) 
0.75 
 
0.25 
 
0.09 
 
0.00 
 
1.09 
-0.05 
1.04 
LVIP Conservative Profile Fund 
0.25 
 
0.25 
 
0.05 
 
0.65 
 
1.20 
   
 
LVIP Moderate Profile Fund 
0.25 
 
0.25 
 
0.03 
 
0.73 
 
1.26 
   
LVIP Moderately Aggressive Profile Fund 
0.25 
 
0.25 
 
0.04 
 
0.76 
 
1.30 
   
MFS ® VIT Growth Series 
0.75 
 
0.25 
 
0.10 
 
0.00 
 
1.10 
   
MFS ® VIT Utilities Series 
0.73 
 
0.25 
 
0.08 
 
0.00 
 
1.06 
   


(1)     
The Service Class shares are subject to a 12b-1 fee of 0.30% of average daily net assets. The Series' distributor, Delaware Distributors, L.P., has contracted to limit the 12b-1 fees to no more than 0.25% of average daily net assets from April 29, 2011 to April 30, 2012.
 
(2)     
Through April 30, 2012, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's operating expenses at 0.75% for Class B shares, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and acquired funds (underlying funds) fees and expenses (estimated at 1.39%). The agreement may be terminated with the consent of the fund's Board.
 
(3)     
A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been 0.90% for Service Class 2. These offsets may be discontinued at any time.
(4)     
A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the funds' custodian, credits realized as a result of uninvested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been 0.91% for Service Class 2. These offsets may be discontinued at any time.
 
(5)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Service 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.
 
(6)     
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.
10
 
[Missing Graphic Reference]
(7)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.09% on the first $60 million of average daily net assets of the Fund. The agreement will continue at least through April 30, 2012.
 
(8)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses) exceed 0.55% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012. Other Expenses are based on estimated amounts for the current fiscal year.
 
(9)     
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.
 
(10)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses exceed 1.07% 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: 0.15% 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.
 
(12)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to waive the following portion of its advisory fee for the fund: 0.05% on the first $400 million 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: 0.05% 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 Service 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.
 
(14)     
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.
 
(15)     
Other Expenses and AFFE 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 through April 30, 2012. LIA has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses (excluding acquired 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.
 
(16)     
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.
 
(17)     
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.
(18)     
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 $500 million of average daily net assets of the fund and 0.05% of average daily net assets of the fund in excess of $500 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: 0.12% 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.
 
(20)     
Other Expenses and AFFE 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 through April 30, 2012. LIA has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses (excluding acquired 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.
 
(21)     
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.
 
(22)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses) exceed 0.55% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012. Other Expenses are based on estimated amounts for the current fiscal year.
 
(23)     
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.
 
(24)     
Lincoln Investment Advisors Corporation (LIA) has contractually agreed to reimburse the fund's Service Class to the extent that the Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses) exceed 0.55% of average daily net assets of the fund. The agreement will continue at least through April 30, 2012. Other Expenses are based on estimated amounts for the current fiscal year.
 
(25)     
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.
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 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, contract fees, separate account annual expenses, and fund fees and expenses.
 
11
 
[Missing Graphic Reference]
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 
$1,186 
$2,287 
$3,501 
$6,603 


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 
$666 
$2,007 
$3,361 
$6,603 


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, Guaranteed Income Benefit with i4LIFE ® 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? This contract is an individual deferred flexible premium variable annuity contract between you and Lincoln Life. You may allocate your purchase payments to the VAA or to the fixed account. This prospectus primarily describes the variable side of the contract. See The Contracts. This contract and certain 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 provi- sions. 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, Lincoln SmartSecurity ® Advantage, or i4LIFE ® Advantage with the Guaranteed Income Benefit, you will be subject to certain requirements for your subaccount investments. You will be limited in how much you can invest in certain subaccounts. The fixed account will not be available except for dollar cost averaging purposes. See The Contracts - Investment Requirements.
 
What are my investment choices? You may allocate your purchase payments to the VAA or to the fixed account. 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 expense risk charge. The charges for any riders applicable to your contract will also be deducted from your contract value or Account Value if i4LIFE ® Advantage is elected. See Charges and Other Deductions.
 
A Premium Based Charge will be deducted from your contract value on each quarterly contract anniversary for a total of 28 quarterly contract anniversaries. Each purchase payment receives its own Premium Based Charge percentage. A portion of the Premium Based Charge attributable to a withdrawal above the Premium Based Charge Free Amount may be deducted from the contract value at the time of the withdrawal. This will reduce the dollar amount of the Premium Based Charge that is assessed quarterly going forward. If the contract is fully surrendered prior to the end of the Premium Based Charge period, any of the remaining Premium Based Charge due will be deducted from the surrender value. See Charges and Other Deductions - Premium Based Charge.
 
12
 
[Missing Graphic Reference]
If you withdraw purchase payments, you pay a surrender charge from 0% to 1.00% of the surrendered or withdrawn purchase pay- ment, depending upon how long those payments have been invested in the contract. We may waive surrender charges in certain situ- ations. See Charges and Other Deductions-Surrender Charge.
 
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 certain restrictions. Generally, transfers made before the annuity commencement date are restricted to no more than twelve (12) per contract year. The minimum amount that can be transferred to the fixed account is $2,000 (unless the total amount in the subaccounts is less than $2,000). If transferring funds from the fixed account to the subaccounts, you may only transfer 25% of the total value invested in the fixed account in any 12-month period. The minimum amount that may be transferred is $300. Transfers from the fixed account may be subject to an interest adjustment. If permitted by your contract, we may discontinue accepting trans- fers 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 Annuity Commencement Date. For further information, see also the Fixed Side of the Contract and Guaranteed Periods.
 
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 offer either a minimum withdrawal benefit (Lincoln SmartSecurity ® Advantage and Lincoln Lifetime IncomeSM Advantage 2.0) or a minimum annuity payout (i4LIFE ® Advan- tage). 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 Guar- anteed Income Benefit). 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. These riders are discussed in detail in this prospectus. In addi- tion, an overview of these riders is provided as an appendix to 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
 
13
 
[Missing Graphic Reference]
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.
 
What is i4LIFE ® Advantage? i4LIFE ® Advantage is an annuity payout option, available for purchase at an additional charge, that pro- vides 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. See The Contracts - Investment Require- ments. 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. As an alternative, 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. See The Contracts - i4LIFE ® Advantage Guaranteed Income Benefit, and Lincoln Lifetime IncomeSM Advantage 2.0 - i4LIFE ® Advantage option.
 
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. If you surrender the con- tract or make a withdrawal, certain charges may apply. See Charges and Other Deductions. A portion of surrender or withdrawal pro- ceeds may be taxable. In addition, if you decide to take a distribution before age 59½, a 10% Internal Revenue Service (IRS) tax pen- alty 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.
 
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,
 
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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.
 
15
 
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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 funds, each investment adviser receives a fee from the funds which is accrued daily and paid monthly. This fee is based on the net assets of each fund, as defined in the prospectuses for the funds.
 
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 0.25%, 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.
 
The Funds offered as part of this contract make payments to us under their distribution plans (12b-1 plans). The payment rates range up to 0.35% based on the amount of assets invested in those funds. Payments made out of the assets of the fund will reduce the amount of assets that otherwise would be available for investment, and will reduce the fund's investment return. The dollar amount of future asset-based fees is not predictable because these fees are a percentage of the fund's average net assets, which can fluctuate over time. If, however, the value of the fund goes up, then so would the payment to us (or our affiliates). Conversely, if the value of the funds goes down, payments to us or our affiliates would decrease.
 
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.
 
16
 
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Following are brief summaries of the fund descriptions. More detailed information may be obtained from the current prospectus for each 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.
 
AllianceBernstein Variable Products Series Fund, advised by AllianceBernstein, L.P.
 
·  
AllianceBernstein VPS Global Thematic Growth Portfolio: Long-term growth of capital.
·  
AllianceBernstein VPS International Value Portfolio: Long-term growth of capital.
·  
AllianceBernstein VPS Small/Mid Cap Value Portfolio: Long-term growth of capital.
 
American Funds Insurance SeriesSM, advised by Capital Research and Management Company
 
·  
Global Growth Fund: Long-term growth.
·  
Global Small Capitalization Fund: Long-term growth.
·  
Growth Fund: Long-term growth.
·  
Growth-Income Fund: Long-term growth and income.
·  
International Fund: Long-term growth.
 
BlackRock Variable Series Funds, Inc.,advised by BlackRock Advisors, LLC and subadvised by BlackRock Investment Management, LLC
 
* BlackRock Global Allocation V.I. Fund: High total investment return.
 
Delaware VIP ® Trust, advised by Delaware Management Company*
 
·  
Diversified Income Series: Long-term total return.
·  
Emerging Markets Series: Long-term capital appreciation.
·  
Limited-Term Diversified Income Series: Long-term total return.
·  
REIT Series: Total return.
·  
Small Cap Value Series: Capital appreciation.
·  
Smid Cap Growth Series: Long-term capital appreciation.
·  
U.S. Growth Series: Long-term capital appreciation.
·  
Value Series: Capital appreciation.
 
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: Capital appreciation; a fund of funds.
 
Fidelity ® Variable Insurance Products, advised by Fidelity Management and Research Company and subadvised by FMR CO., Inc.
 
·  
Contrafund ® Portfolio: Long-term capital appreciation.
·  
Growth Portfolio: Capital appreciation.
·  
Mid Cap Portfolio: Long-term growth of capital.
 
Franklin Templeton Variable Insurance Products Trust, advised by Franklin Advisers, Inc. for the Franklin Income Securities Fund and by Franklin Mutual Advisers, LLC for the Mutual Shares Securities Fund.
 
·  
Franklin Income Securities Fund: Maximize income.
·  
Mutual Shares Securities Fund: Capital appreciation.
 
Goldman Sachs Variable Insurance Products Trust, advised by Goldman Sachs Asset Management, L.P. * Goldman Sachs VIT Large Cap Value Fund: Long-term capital appreciation.
 
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: Maximize real return. (Subadvised by BlackRock Financial Management, Inc.)
 
17
 
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·  
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 U.S. Equity Fund: Capital appreciation; a fund of funds.
·  
LVIP Dimensional Non-U.S. Equity Fund: Capital appreciation; a fund of funds.
·  
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)*
·  
LVIP SSgA Bond Index Fund: Replicate Barclays Aggregate Bond Index (Sub-advised by SSgA Funds Management, Inc.)
·  
LVIP SSgA Conservative Index Allocation Fund: Current income with growth of capital; a fund of funds.
·  
LVIP SSgA Conservative Structured Allocation Fund: Current income with growth of capital; a fund of funds.
·  
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: Long-term growth of capital; a fund of funds. (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 Moderate Index Allocation Fund: Current income with growth of capital; a fund of funds.
·  
LVIP SSgA Moderate Structured Allocation Fund: Current income with growth of capital; a fund of funds.
·  
LVIP SSgA Moderately Aggressive Index Allocation Fund: Current income with growth of capital; a fund of funds.
·  
LVIP SSgA Moderately Aggressive Structured Allocation Fund: Current income with growth of capital; a fund of funds.
 
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·  
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)
·  
LVIP Total Bond Fund: Total return consistent with capital appreciation.
·  
LVIP Turner Mid-Cap Growth Fund: Capital appreciation. (Subadvised by Turner Investment Partners, Inc.)
·  
LVIP Vanguard Domestic Equity ETF Fund: Capital appreciation; a fund of funds.
·  
LVIP Vanguard International Equity ETF Fund: Capital appreciation; a fund of funds.
·  
LVIP Wells Fargo Intrinsic Value Fund: Income. (Subadvised by Metropolitan West Capital Management, LLC)
·  
LVIP Conservative Profile Fund: Current income; a fund of funds.
·  
LVIP Moderate Profile Fund: Growth and income; a fund of funds.
·  
LVIP Moderately Aggressive Profile Fund: Growth and income; a fund of funds.
 
MFS ® Variable Insurance TrustSM, advised by Massachusetts Financial Services Company
 
·  
Growth Series: Capital appreciation.
·  
Utilities Series: Total return.
 
*Investments in Delaware Investments VIP Series, Delaware Funds, LVIP Delaware Funds or Lincoln Life accounts managed by Delaware Investment Advisors, a series of Delaware Management Business Trust, are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46008 583 542 and its holding companies, including their subsidiaries or related companies, and are subject to investment risk, including possible delays in prepayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Series or Funds or accounts, the repayment of capital from the Series or Funds or account, or any particular rate of 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.
 
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.
 
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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.
 
The risks we assume include:
 
·  
the risk that annuitants receiving annuity payouts, including Lincoln SmartIncomeSM Inflation payouts, 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 lifetime payments to individuals from Lincoln SmartSecurity ® Advantage or Lincoln Lifetime IncomeSM Advantage 2.0 will exceed the contract value;
·  
the risk that death benefits paid will exceed the actual contract value;
·  
the risk that more owners than expected will qualify for waivers of the surrender charge;
·  
the risk that, if the i4LIFE ® Advantage with the Guaranteed Income Benefit is in effect, the required 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).
 
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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 
1.20% 
1.00% 
0.75% 
0.70% 
* Administrative charge 
0.10% 
0.10% 
0.10% 
0.10% 
* Total annual charge for each 
       
 subaccount 
1.30% 
1.10% 
0.85% 
0.80% 
 
Premium Based Charge 
       


A Premium Based Charge applies to all initial and subsequent purchase payments made to your contract, and is calculated separately for each purchase payment. The Premium Based Charge equals a percentage of each purchase payment and is determined by multi- plying the total amount of all purchase payments by the associated Premium Based Charge percentage, shown in the table below.
 
Once a Premium Based Charge percentage is established for a purchase payment, that percentage is fixed and will not be reduced even if additional purchase payments are made. The Premium Based Charge will be assessed on every quarterly contract anniversary for a total of 28 quarterly contract anniversaries (7 years). If the contract is fully surrendered prior to the end of any Premium Based Charge period, any remaining Premium Based Charge due will be deducted from the surrender value.
 
Total Purchase Payment Amount 
Premium Based Charge Percentage Per Quarter 
Annual Equivalent of Premium Based Charge Percentage 
Less than $50,000 
0.1750% 
0.70% 
50,000 -  
0.1600% 
0.64% 
100,000 
-  
0.1250% 
0.50% 
250,000 
-  
0.0875% 
0.35% 
500,000 
-  
0.0625% 
0.25% 
1,000,000 + 
0.0375% 
0.15% 


For example, if you make an initial purchase payment of $25,000 during the first contract quarter, on the quarterly anniversary, the Premium Based Charge percentage will be based on a total purchase payment amount of $25,000 (0.1750%). For each subsequent purchase payment allocated to the contract, the Premium Based Charge percentage for each subsequent payment is based on the sum of all purchase payments previously received, including the newest subsequent purchase payment. For example, assuming your initial purchase payment of $25,000, you make a subsequent purchase payment of $25,000, the Premium Based Charge percentage for that subsequent purchase payment will be based on your total purchase payments of $50,000 (0.16%).
 
The same dollar amount of the Premium Based Charge due will be deducted each quarter unless a withdrawal above the Premium Based Charge free withdrawal amount occurs (referred to as the Premium Based Charge Free Amount). Prior to the seventh contract anniversary, the Premium Based Charge Free Amount equals 10% of the greater of the total purchase payments or the current con- tract value. After the seventh contract anniversary, the Premium Based Charge Free Amount equals the greatest of (i) 10% of total purchase payments, (ii) 10% of current contract value, or (iii) the sum of all purchase payments outside of the Premium Based Charge Period (reduced by withdrawals on a first in-first out basis) plus investment gains. Withdrawals may also be subject to a sur- render charge (see Charges and Other Deductions – Surrender Charge). If you take a withdrawal above the Premium Based Charge Free Amount, a portion of the Premium Based Charge attributable to the withdrawal amount above the Premium Based Charge Free Amount will be deducted from your Contract Value at the time of the withdrawal. The deduction taken is the ratio of the amount above the Premium Based Charge Free Amount to [the total amount of all purchase payments within a Premium Based Charge period, minus the total amount of all prior withdrawals taken above the Premium Based Charge Free Amount] which is multiplied by the uncollected Premium Based Charge. On or after the seventh contract anniversary, the ratio is the withdrawal above the Premium Based Charge Free Amount to the total amount of all purchase payments within a Premium Based Charge period. Since a portion of the Premium Based Charge amount due will be deducted early due to the withdrawal above the Premium Based Charge Free Amount, this will reduce the dollar amount of the Premium Based Charge that is assessed quarterly going forward.
 
The Premium Based Charge is deducted from the subaccounts and the fixed account (if allowed by your state) in which there is Con- tract Value on the date the Premium Based Charge is due. The following example shows how the Premium Based Charge is applied to
 
21
 
[Missing Graphic Reference]
purchase payments and how the portion of the Premium Based Charge is charged with a withdrawal above the Premium Based Charge Free Amount:
 
1/1/11 
Initial Purchase Payment Made 
$ 25,000 
3/31/11 
Premium Based Charge Percentage on the Quarterly Anniversary 
0.1750% 
3/31/11 
Premium Based Charge Amount on the Quarterly Anniversary 
$ 43.75 
 
Total Premium Based Charge due on the $25,000 purchase payment (deducted 
$1,225.00 
 
over 28 quarters) 
 
6/30/11 
Premium Based Charge Amount on the Quarterly Anniversary 
$ 43.75 
7/1/11 
Second Purchase Payment Made 
$ 50,000 
9/30/11 
Premium Based Charge Percentage for Second Purchase Payment on the 
0.1600% 
 
Quarterly Anniversary 
 
9/30/11 
Premium Based Charge Amount for the Second Purchase Payment on the 
$ 80.00 
 
Quarterly Anniversary 
 
 
Total Premium Based Charge due on the $50,000 purchase payment (deducted 
$2,240.00 
 
over 28 quarters) 
 
9/30/11 
Total Premium Based Charge on the Third Quarterly Anniversary (First 
$ 123.75 
 
Purchase Payment: $43.75; Second Purchase Payment: $80.00) 
 
7/1/12 
Total Purchase Payments 
$ 75,000 
7/1/12 
Current Account Value 
$ 80,000 
7/1/12 
Withdrawal 
$ 20,000 
7/1/12 
Premium Based Charge Free Amount (10% of Greater of Total Purchase 
$ 8,000 
 
Payments ($75,000) and Account Value ($80,000) 
 
7/1/12 
Withdrawal above Premium Based Charge Free Amount ($20,000-$8,000) 
$ 12,000 
7/1/12 
Portion of Premium Based Charge Deduction attributable to withdrawal 
$ 461.20 
 
(Amount of withdrawal above Premium Based Charge Free Amount/(sum of 
 
 
purchase payments within Premium Based Charge period - total of all prior 
 
 
withdrawals above Premium Based Charge Free Amount)) * total uncollected 
 
 
Premium Based Charge ($12,000 / $75,000) * $2,882.50 
 
7/1/12 
Recalculated Premium Based Charge Amount for First Purchase Payment 
$ 36.75 
 
(Deducted for 22 more quarters) 
 
 
Current Quarterly Premium Based Amount * [1 - (withdrawal above Premium 
 
 
Based Charge Free Amount/(sum of purchase payments within Premium Based 
 
 
Charge period - total of all prior withdrawals above Premium Based Charge 
 
 
Free Amount))] 
 
7/1/12 
Recalculated Premium Based Charge Amount for Second Purchase Payment 
$ 67.20 
 
(Deducted for 24 more quarters) 
 


The deduction of the Premium Based Charge associated with a withdrawal above the Premium Based Charge Free Amount does not apply to:
 
·  
Withdrawals equal to or below the Premium Based Charge Free Amount;
·  
Regular income payments made under i4LIFE ® Advantage including any payments to provide the i4LIFE ® Guaranteed Income Benefit;
·  
Withdrawals up to the Maximum Annual Withdrawal amount under Lincoln SmartSecurity ® Advantage, or the Guaranteed Annual Income amount under Lincoln Lifetime IncomeSM Advantage 2.0;
·  
Any portion of the contract value that is annuitized.
·  
A surrender or withdrawal of any purchase payments after the onset of a permanent and total disability of the original contractowner as defined in Section 22(e)(3) of the tax code, if the disability occurred after the effective date of the contract and before the 65th birthday of the contractowner. For contracts issued in the State of New Jersey, a different definition of permanent and total disability applies;
·  
A surrender or withdrawal of any purchase payments as a result of the diagnosis of a terminal illness of the original contractowner that is after the effective date of the contract and results in a life expectancy of less than one year as determined by a qualified professional medical practitioner;
·  
A surrender or withdrawal of any purchase payments as a result of admittance of the original contractowner into an accredited nursing home or equivalent health care facility, where the admittance into such facility occurs after the effective date of the con- tract and the owner has been confined for at least 90 consecutive days;
·  
A surrender or withdrawal as a result of the death of the owner or annuitant, provided the annuitant has not been changed for any reason other than the death of a prior named annuitant, unless a surviving spouse assumes ownership.
 
22
 
[Missing Graphic Reference]
The Premium Based Charge does not apply:
 
·  
Beyond the 28th quarterly contract anniversary of any purchase payment;
·  
On or after the annuity commencement date; or
·  
To a surrender or withdrawal as a result of the death of the owner or annuitant (unless the surviving spouse assumes ownership of the contract as a result of the death of the original owner).
 
If you intend to make additional purchase payments within 90 days from the date you purchase the contract, you might be able to lower the Premium Based Charge you pay by indicating at the time of application, the total amount of purchase payments you intend to make in the 90 days from the date you purchase your contract. On the date you purchase your contract, we will determine your Premium Based Charge percentage based on the total amount you plan to invest over the following 90 days (rather than on the amount of the actual purchase payment), if that Premium Based Charge is less than the Premium Based Charge based on your initial purchase payment. For example, if your initial purchase payment is $90,000, and you have indicated your intent to invest an additional $10,000 during the next 90 days (for total purchase payments equal to $100,000), the Premium Based Charge will be calculated based on the assumed $100,000 investment (which qualifies for a quarterly Premium Based Charge of 0.1250%) instead of your actual initial purchase payment of $90,000 (which qualifies for a quarterly Premium Based Charge of 0.1600%) and a quarterly charge of 0.1250% for the $10,000 purchase payment. If you do not make the amount of purchase payments stated at the time of application during the 90 day period, we will recalculate the Premium Based Charge based on the actual amount of purchase payments we received in the 90 day period. We reserve the right to discontinue this option at any time after providing notice to you.
 
Surrender Charge
 
A surrender charge applies (except as described below) to surrenders and withdrawals of purchase payments that have been invested for the periods indicated as follows:
 
 
Number of contract anniversaries since 
 
purchase payment was invested 
 
0
1
Surrender charge as a percentage of the surrendered or 
1 % 
0 % 
withdrawn purchase payments 
   


A surrender charge does not apply to:
 
·  
A surrender or withdrawal of a purchase payment beyond the first anniversary since the purchase payment was invested;
·  
Withdrawals of contract value during a contract year to the extent that the total contract value withdrawn during the current con- tract year does not exceed the free amount which is equal to 10% of the greater of total purchase payments or the current con- tract value. The free amount does not apply upon surrender of the contract;
·  
When the surviving spouse assumes ownership of the contract as a result of the death of the original owner (however, the sur- render charge schedule of the original contract will continue to apply to the spouse's contract);
·  
A surrender or withdrawal of any purchase payments as a result of admittance of the original contractowner into an accredited nursing home or equivalent health care facility, where the admittance into such facility occurs after the effective date of the con- tract and the owner has been confined for at least 90 consecutive days;
·  
A surrender of the contract as a result of the death of the contractowner, joint owner or annuitant, provided the annuitant has not been changed for any reason other than the death of a prior named annuitant;
·  
Purchase payments when used in the calculation of the initial periodic income payment and the initial Account Value under the i4LIFE ® Advantage option or the contract value applied to calculate the benefit amount under any annuity payout option made available by us;
·  
Regular income payments made under i4LIFE ® Advantage including any payments to provide the i4LIFE ® Guaranteed Income Benefits or periodic payments made under any annuity payout option made available by us;
·  
A surrender or withdrawal of any purchase payments after the onset of a permanent and total disability of the original contractowner as defined in Section 22(e)(3) of the tax code, if the disability occurred after the effective date of the contract and before the 65th birthday of the contractowner. For contracts issued in the State of New Jersey, a different definition of permanent and total disability applies;
·  
A surrender or withdrawal of any purchase payments as a result of the diagnosis of a terminal illness of the original contractowner that is after the effective date of the contract and results in a life expectancy of less than one year as determined by a qualified professional medical practitioner;
·  
Withdrawals up to the Maximum Annual Withdrawal amount under Lincoln SmartSecurity ® Advantage, or the Guaranteed Annual Income amount under Lincoln Lifetime IncomeSM Advantage 2.0, subject to certain conditions.
 
For purposes of calculating the surrender charge on withdrawals, we assume that:
 
1. The free amount will be withdrawn from purchase payments on a "first in-first out (FIFO)" basis.
 
23
 
[Missing Graphic Reference]
2.     
Prior to the first anniversary of the contract, any amount withdrawn above the free amount during a contract year will be with- drawn in the following order:
 
   
from purchase payments (on a FIFO basis) until exhausted; then
 
   
from earnings until exhausted.
 
3.     
On or after the first anniversary of the contract, any amount withdrawn above the free amount during a contract year will be with- drawn in the following order:
 
   
from purchase payments (on a FIFO basis) to which a surrender charge no longer applies until exhausted; then
 
   
from earnings until exhausted; then
 
   
from purchase payments (on a FIFO basis) to which a surrender charge still applies until exhausted.
We apply the surrender charge as a percentage of purchase payments, which means that you would pay the same surrender charge at the time of surrender regardless of whether your contract value has increased or decreased. The surrender charge is calculated sepa- rately for each purchase payment. The surrender charges associated with surrender or withdrawal are paid to us to compensate us for the loss we experience on contract distribution costs when contractowners surrender or withdraw before distribution costs have been recovered.
 
If the contractowner is a corporation or other non-individual (non-natural person), the annuitant or joint annuitant will be considered the contractowner or joint owner for purposes of determining when a surrender charge does not apply.
 
Account Fee
 
During the accumulation period, we will deduct $50 from the contract value on each contract anniversary to compensate us for the administrative services provided to you; this $50 account fee will also be deducted from the contract value upon surrender. This fee may be lower in certain states, if required, and will be waived after the fifteenth contract year. The account fee will be waived for any contract with a contract value that is equal to or greater than $50,000 on the contract anniversary. There is no account fee on con- tracts issued to selling group individuals.
 
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 (initial purchase payment if purchased at contract issue, or contract value at the time of election) as increased for subsequent purchase payments, Automatic Annual Step-ups, 5% Enhancements, 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 pro- portion 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 percentage 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 10 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
 
24
 
[Missing Graphic Reference]
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 thereafter (if an Enhancement would cause your percentage charge to increase) if you do not want the 5% Enhancement.
 
The rider percentage charge will increase to the then current rider percentage charge, if after the first Benefit Year anniversary, cumu- lative purchase payments 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 - Single Life option; or
 
2)     
0.80% of the Guaranteed Amount (0.2000% quarterly) for the Lincoln SmartSecurity ® Advantage - 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 (initial purchase payment, if purchased at contract issue, or contract value at the time of election) as increased for subsequent purchase payments and step-ups and decreased for 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 effective date of the Rider. This deduction will be made in proportion to the value in the fixed account and each subaccount of the contract on the valuation date the Rider charge is assessed. 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 Guar- anteed Amount.
 
Under the Lincoln SmartSecurity ® Advantage 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.
 
i4LIFE ® Advantage Charge. i4LIFE ® Advantage is subject to a charge, computed daily of the Account Value. The initial Account Value is the contract value on the valuation date i4LIFE ® Advantage is effective (or initial purchase payment if i4LIFE ® Advantage is pur- chased at contract issue), less any applicable premium taxes. During the Access Period, the Account Value equals the total value of all of the contractowner's accumulation units plus the contractowner's value in the fixed account and will be reduced by regular income payments and Guaranteed Income Benefits made as well as any withdrawals taken. The annual rate of the i4LIFE ® Advantage charge is: 1.20% for i4LIFE ® Advantage Account Value death benefit; 1.25% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 1.50% 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 con- tract, 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 and the beginning of the Access Period. Refer to the i4LIFE ® Advantage section for explanations of the Access Period, Account Value and Periodic Income Commencement Date. 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 with Guaranteed Income Benefit Charge. The Guaranteed Income Benefit (version 4) which is available for pur- chase with i4LIFE ® Advantage is subject to a current annual charge of 0.65% of the Account Value, which is added to the i4LIFE ®
 
25
 
[Missing Graphic Reference]
Advantage charge for a total current percentage charge of the Account Value, computed daily as follows: 1.85% for i4LIFE ® Advantage Account Value death benefit; 1.90% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 2.15% for the i4LIFE ® Advan- tage 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: 2.05% for the i4LIFE ® Account Value death benefit, 2.10% for the i4LIFE ® Advantage Guarantee of Principal death benefit; and 2.35% 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 (the i4LIFE ® Advantage charge will not change). If we automatically administer the step-up for you and your percentage charge is increased, we will notify you in writing. You may contact us at the tele- phone number listed on the first page of this prospectus to reverse the step-up 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 current 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, but the i4LIFE ® Advantage charge will continue.
 
i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) for purchasers who previously purchased 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 i4LIFE ® Advantage with Guaranteed Income Benefit (version 4) is equal to an annual rate of 1.05% (0.2625% quarterly) for the single life option and 1.25% (0.3125 quarterly) for the joint life option. The charge is a percentage of the greater of the Income Base carried over from Lincoln Lifetime IncomeSM Advantage 2.0 (less the Guaranteed Annual Income amounts paid since the last automatic Step- up) or contract value immediately prior to electing i4LIFE ® Advantage. This is the charge for i4LIFE ® Advantage with Guaranteed Income Benefit for previous purchasers of Lincoln Lifetime IncomeSM Advantage 2.0. Refer to Lincoln Lifetime IncomeSM Advantage 2.0 for a description of the Income Base. This charge is in addition to the daily mortality and expense risk and administrative charge for your death benefit option set out under Deductions from the VAA. Purchasers of Lincoln 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.
 
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 (described later in the i4LIFE ® Advantage section of the prospectus). At such time, the charge will increase by an amount equal to the charge assessed prior to the automatic step-up multiplied by the percentage increase to the Guaranteed Income Benefit and by the percentage increase to the Lincoln Lifetime IncomeSM Advantage 2.0 current charge, if any. This means that the charge may change annually. The charge may also be reduced if a withdrawal above the Regular Income Payment is taken. Upon each of these types of withdrawals, the rider charge will be reduced in the same proportion that the withdrawal reduced the Account Value.
 
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 
 


26
 
[Missing Graphic Reference]
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 (due to Account Value increase) 
$ 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)) Prior charge * [ratio of increased 
 
 
Guaranteed Income Benefit to prior Guaranteed Income Benefit] 
 


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,we will notify you in writing. You may contact us at the telephone number listed on the first page of this prospectus to reverse the step-up within 30 days after the date on which the step-up occurred. If we receive this notice, we will decrease the percentage charge, on a going forward basis, 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. 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.
 
After the periodic income commencement date, if the Guaranteed Income Benefit is terminated, i4LIFE ® Advantage will also be termi- nated and the i4LIFE ® Advantage and Guaranteed Income Benefit Charges will cease.
 
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 0.80% 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. Among these deductions and expenses are 12b-1 fees which reimburse us or an affiliate for certain expenses incurred in connection with certain administrative and distribution support services provided to the funds.
 
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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.
 
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,
 
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[Missing Graphic Reference]
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.
 
Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatical arrangement, or other similar investment scheme. The contract may not be resold, traded on any stock exchange, or sold on any secondary market.
 
Since you are purchasing the contract through a tax-favored arrangement, including traditional IRAs and Roth IRAs, you should con- sider 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 for selling group individuals is $1500. 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 purchase payment is submitted that does not meet the minimum amount, we will contact you to ask whether additional money will be sent, or whether we should return the purchase payment to you. Purchase payments totaling $2 million or more are subject to Home Office approval. If you stop making purchase payments, the contract will remain in force ,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.
 
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.
 
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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 (for example, when separate account assets are less than $1,000), 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. These transfer rights and restrictions also apply during the i4LIFE ® Advantage Access Period (the time period during which you may make withdrawals from the i4LIFE ® Advantage Account Value). See i4LIFE ® Advantage.
 
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.
 
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.
 
30
 
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You may also transfer part of the contract value from a fixed account to the variable subaccount(s) subject to the following restric- tions:
 
·  
the sum of the percentages of fixed account transfers is limited to 25% of the value of that fixed account in any 12-month period; and
·  
the minimum amount that can be transferred is $300 or, if less, the amount in the fixed account.
 
Because of these restrictions, it may take several years to transfer all of the contract value in the fixed accounts to the variable subaccounts. Transfers of all or a portion of a fixed account (other than automatic transfer programs and i4LIFE ® Advantage trans- fers) may be subject to interest adjustments, if applicable. For a description of the interest adjustment, see the Fixed Side of the Con- tract - Guaranteed Periods and Interest Adjustment.
 
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 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.
 
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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.
 
Once elected, the fixed annuity payment is irrevocable.
 
These provisions also apply during the i4LIFE ® Advantage Lifetime Income Period. See i4LIFE ® Advantage.
 
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. We reserve the right to approve all ownership and annuitant changes. Nonqualified contracts may not be sold, discounted, or pledged as collateral for a loan or for any other purpose. Qualified contracts are not trans- ferable unless allowed under applicable law. Non-qualified contracts may not be collaterally assigned. An assignment affects the death benefit and living benefits calculated under the contract. We assume no responsibility for the validity or effect of any assignment. Con- sult 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, however we reserve the right to approve all annuitant changes. The new annuitant must be
 
32
 
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under age 86 as of the effective date of the change. This change may cause a reduction in the death benefits or living benefits. 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 owners. On or after the annuity commencement date, the annuitant or joint annui- tants may not be changed and contingent annuitant designations 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. SecureLine ® is a service we offer to help you manage your surrender proceeds. With SecureLine ® , an interest bearing draft account is established from the proceeds payable on a policy or contract administered by us. You are the owner of the account, and are the only one authorized to transfer proceeds from the account. Instead of mailing you a check, we will send a check- book so that you will have access to the account by writing a check. You may choose to leave the proceeds in this account, or you may begin writing checks right away. If you decide you want the entire proceeds immediately, you may write one check for the entire account balance. 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 applied to 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 balance in your SecureLine ® account starts earning interest the day your account is opened and will continue to earn interest until all funds are withdrawn. The interest rate is based on an analysis of interest rates cred- ited to funds left on deposit at other financial institutions. Interest is compounded daily and credited to your account on the last day of each month. The interest rate will be updated monthly and we may increase or decrease the rate at our discretion. The interest rate credited to your SecureLine ® account may be more or less than the rate earned on funds held in our general account. The interest rate is not necessarily that offered by the fixed account. There are no monthly fees. You may be charged a fee if you stop a payment or if you present a check for payment without sufficient funds.
 
There are charges associated with surrender of a contract or withdrawal of contract value. You may specify whether these charges are deducted from the amount you request to be withdrawn or from the remaining contract value. If the charges are deducted from the remaining contract value, the amount of the total withdrawal will increase according to the impact of the applicable surrender charge percentage; consequently, the dollar amount of the surrender charge associated with the withdrawal will also increase. In other words, the dollar amount deducted to cover the surrender charge is also subject to a surrender charge.
 
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 after appropriate notice to contractowners. 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.
 
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The automatic withdrawal service (AWS) provides for an automatic periodic withdrawal of your contract value. Withdrawals under AWS are subject to applicable surrender charges and interest adjustments. See Charges and Other Deductions – Surrender Charge and Fixed Side of the Contract – Interest Adjustment.
 
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.
 
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 death benefit terminates if you elect i4LIFE ® Advantage 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.
 
34
 
[Missing Graphic Reference]
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.)
 
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 (surrender charges for example) and premium taxes, if any.
 
The Guarantee of Principal Death Benefit may be discontinued 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 Account Value Death Benefit will apply. We will deduct the charge for the Account Value Death Benefit as of that date. See Charges and Other Deductions.
 
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 (surrender charges for example) 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 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 on any contract anniversary (including the inception date) prior to the 81st birthday of the deceased contractowner, joint owner (if applicable), 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 increased by purchase payments and is decreased by withdrawals subsequent to that 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.
 
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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 (surrender charges for example) and premium taxes, if any.
 
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 benefits may be in effect at any one time. These benefits terminate if you elect i4LIFE ® Advantage (which provides a death benefit) or if you elect an annuitization option.
 
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).
 
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[Missing Graphic Reference]
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 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 1.10%
 
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 death benefit is over $10,000, the proceeds will be placed into a SecureLine ® account in the recipient's name as the owner of the account. SecureLine ® is a service we offer to help the recipient manage the death benefit proceeds. With SecureLine ® , an interest bearing account is established from the proceeds payable on a policy or contract administered by us. The recipient is the owner of the account, and is the only one authorized to transfer proceeds from the account. Instead of mailing the recipient a check, we will send a checkbook so that the recipient will have access to the account by writing a check. The recipient may choose to leave the proceeds in this account, or may begin writing checks right away. If the recipient decides he or she wants the entire proceeds immediately, the recipient may write one check for the entire account balance. The recipient can write as many checks as he or she wishes. We may at our discretion set minimum withdrawal amounts per check. The total of all checks written cannot exceed the account balance. 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 may request that surrender proceeds be paid directly to him or her instead of applied to 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 the recipient consult a tax advisor to determine the tax consequences associated with the payment of interest on amounts in the SecureLine ® account. The balance in the recipient's SecureLine ® account starts earning interest the day
 
37
 
[Missing Graphic Reference]
the account is opened and will continue to earn interest until all funds are withdrawn. Interest is compounded daily and credited to the recipient's account on the last day of each month. The interest rate is based on an analysis of interest rates credited to funds left on deposit at other financial institutions. The interest rate will be updated monthly and we may increase or decrease the rate at our dis- cretion. The interest rate credited to the recipient's SecureLine ® account may be more or less than the rate earned on funds held in our general account. The interest rate offered with a SecureLine ® account is not necessarily that offered by the fixed account.
 
There are no monthly fees. The recipient may be charged a fee for a stop payment or if a check is returned for insufficient funds.
 
Investment Requirements
 
If you purchase a Living Benefit rider (Lincoln Lifetime IncomeSM Advantage 2.0 Lincoln SmartSecurity ® Advantage, or the Guaran- teed 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. You must comply with the Investment Requirements during the period of time you own the rider (the minimum time period for ownership, if any, is specified in the termination section of each rider.) After that period, if you no longer comply with the Investment Requirements, the rider will be terminated. 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 Investment Requirements for this rider in the future.
 
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 (or Account Value if i4LIFE ® Advantage with the Guaranteed Income Benefit 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 minimum 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
 
Investments must be at least 30% of contract value or Account Value (if i4LIFE ® Advantage with the Guaranteed Income Benefit is in effect)
 
1. LVIP Delaware Bond Fund
 
Group 2
 
Investments cannot exceed 70% of contract value or Account Value (if i4LIFE ® Advantage with the Guaranteed Income Benefit is in effect)
 
Any of the funds offered under the contract, except for funds in Groups 1 and 3 and the fixed account.
 
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[Missing Graphic Reference]
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 (if i4LIFE ® Advantage with the Guaranteed Income Benefit is in effect)
 
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
 
 
6.     
AllianceBernstein VPS Global Thematic Growth Portfolio
 
 
7.     
DWS Alternative Asset Allocation Plus VIP Portfolio
 
As an alternative to satisfy these Investment Requirements, you may allocate 100% of your contract value among the funds listed below. If you allocate less than 100% of contract value or i4LIFE ® Advantage Account Value among these funds, then the funds listed below that are also listed in Group 1 will be subject to Group 1 restrictions. Any remaining funds listed below that are not listed in Group 1 will fall into Group 2 and be subject to Group 2 restrictions. 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 Conservative Profile Fund 
LVIP SSgA Bond Index Fund 
LVIP Moderate Profile Fund 
LVIP SSgA Global Tactical Allocation Fund 
LVIP 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) - are described in the following sec- tions. 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). 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 Requirements (unless you elect i4LIFE ® Advantage without the Guaranteed Income Benefit (version 4)). The overview chart provided as an appendix to 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 pre- mature termination of those benefits or of those riders. If you are not certain how an excess withdrawal will reduce your future guar- anteed 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:
 
39
 
[Missing Graphic Reference]
·  
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 the 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 original contractowner or original contractowner's bank account (or to the original annuitant or the original 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 will termi- nate the rider 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 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 origi- nal contractowner or original contractowner's bank account (or to the original annuitant or the original annuitant's bank account, if the owner is a non-natural person) (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 rider and the contract if the Income Base is reduced to zero. Withdrawals will also negatively impact the availability of the 5% Enhancement. Surrender charges are waived on cumulative withdrawals less than or equal to the Guaranteed Annual Income amount. 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). You may not elect the rider if you have also elected i4LIFE ® Advantage or Lincoln SmartIncomeSM Advantage, both annuity payout options. You must wait at least 12 months after terminating Lincoln SmartSecurity ® Advantage before electing Lincoln Lifetime IncomeSM Advantage 2.0. See The Contracts- Lincoln SmartSecurity ® Advantage, i4LIFE ® Advantage and Annuity Payouts - Lincoln SmartIncomeSM Inflation for more information. There is no guarantee that the Lincoln Life- time IncomeSM Advantage 2.0 will be available for new purchasers in the future as we reserve the right to discontinue this benefit at any time. The availability of this rider will depend upon your state's approval of this rider. Check with your registered representative regarding availability.
 
40
 
[Missing Graphic Reference]
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 available 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 guaranteed amounts under the Living Benefit riders of all Lincoln Life contracts (or contracts issued by our affiliates) in which you (and/or spouse if joint life option) are the covered lives. See The Contracts - 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.
 
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. 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 the Enhancement Period. The Enhancement Period is a 10-year period that begins on the effective date of the rider. A new Enhancement Period begins immediately following an Automatic Annual Step-up. If during any Enhancement Period there are no Automatic Annual Step-ups the 5% Enhancements will stop at the end of the Enhance- ment Period and will not restart until the next Benefit Year anniversary following the Benefit Year anniversary upon which an Auto- matic 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 10 Benefit Years, you will continue to be eligible for the 5% Enhancements through the end of the current Enhancement Period, but the Lincoln Lifetime IncomeSM Advantage 2.0 charge could increase to the then current charge at the time of 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.
 
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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 10 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 10th 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 - Rider Charges - Lincoln Lifetime IncomeSM Advantage 2.0 Charge.
 
If your percentage charge for this rider is increased due to a 5% Enhancement that occurs after the 10th Benefit 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 an Enhancement would cause your percentage charge to increase) 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.
 
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 surrender charges, the rider charge and account fee), 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 - Rider Charges - Lincoln Lifetime IncomeSM Advan- tage 2.0 Charge.
 
Each time the Automatic Annual Step-up occurs a new 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 10 Benefit Years, you will continue to be eligible for the 5% Enhancements through the end of the current Enhancement Period, but the Lincoln Lifetime IncomeSM Advantage 2.0 charge could increase to the then current charge at the time of any 5% Enhancements after the 10th Benefit Year anniversary. You will have the option to opt out of the Enhancements after the 10th