-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GlEC0Tk0qoIRzrhyiLUyqX/PbdnvKIsn4pJx8LQwjuBgJKND+hDClu0jg1rpOn55 104De++NPOhgMqkrNN9zPA== 0001193125-08-100574.txt : 20080502 0001193125-08-100574.hdr.sgml : 20080502 20080502144646 ACCESSION NUMBER: 0001193125-08-100574 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20080502 DATE AS OF CHANGE: 20080502 EFFECTIVENESS DATE: 20080502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Genworth Life & Annuity VA Separate Account 1 CENTRAL INDEX KEY: 0000822616 IRS NUMBER: 540283385 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-31172 FILM NUMBER: 08798380 BUSINESS ADDRESS: STREET 1: 6610 WEST BROAD STREET CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 804-281-6000 MAIL ADDRESS: STREET 1: 6610 WEST BROAD STREET CITY: RICHMOND STATE: VA ZIP: 23230 FORMER COMPANY: FORMER CONFORMED NAME: GE LIFE & ANNUITY ASSURANCE CO IV DATE OF NAME CHANGE: 19981231 FORMER COMPANY: FORMER CONFORMED NAME: LIFE OF VIRGINIA SEPARATE ACCOUNT 4 DATE OF NAME CHANGE: 19920703 0000822616 S000009727 Genworth Life & Annuity VA Separate Account 1 C000026714 Foundation VA 497 1 d497.txt 497 Genworth Life & Annuity VA Separate Account 1 Prospectus For Flexible Premium Variable Deferred Annuity Contracts Form P1154 4/00 Issued by: Genworth Life and Annuity Insurance Company Home Office: 6610 West Broad Street Richmond, Virginia 23230 Telephone: (800) 352-9910 - -------------------------------------------------------------------------------- This prospectus, dated May 1, 2008, describes a flexible premium variable deferred annuity contract (the "contract" or "contracts") issued on or after the later of May 1, 2003 or the date on which state insurance authorities approve applicable contract modifications. The contract may be issued to individuals and qualified and nonqualified retirement plans. Genworth Life and Annuity Insurance Company (the "Company," "we," "us," or "our") issues the contract. This contract may be referred to as "Foundation" in our marketing materials. This prospectus gives details about the contract, Genworth Life & Annuity VA Separate Account 1 (the "Separate Account") and the Guarantee Account that you should know before investing. Please read this prospectus carefully before investing and keep it for future reference. The contract offers you the opportunity to accumulate Contract Value and provides for the payment of periodic annuity benefits. We may pay these annuity benefits on a variable or fixed basis. You may allocate your purchase payments to the Separate Account, the Guarantee Account, or both. Each Subaccount of the Separate Account invests in shares of Portfolios of the Funds listed below: AIM Variable Insurance Funds: AIM V.I. Capital Appreciation Fund -- Series I shares AIM V.I. Global Real Estate Fund -- Series II shares AIM V.I. Large Cap Growth Fund -- Series I shares AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B AllianceBernstein Growth and Income Portfolio -- Class B AllianceBernstein Large Cap Growth Portfolio -- Class B American Century Variable Portfolios, Inc.: VP Income & Growth Fund -- Class I VP International Fund -- Class I VP Ultra(R) Fund -- Class I VP Value Fund -- Class I American Century Variable Portfolios II, Inc.: VP Inflation Protection Fund -- Class II Dreyfus: Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares Dreyfus Variable Investment Fund -- Money Market Portfolio The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares/1/ DWS Variable Series II: DWS Dreman High Return Equity VIP -- Class B Shares DWS Dreman Small Mid Cap Value VIP -- Class B Shares DWS Technology VIP -- Class B Shares Eaton Vance Variable Trust: VT Floating-Rate Income Fund VT Worldwide Health Sciences Fund Fidelity(R) Variable Insurance Products Fund: VIP Contrafund(R) Portfolio -- Service Class 2 VIP Equity-Income Portfolio -- Service Class 2 VIP Mid Cap Portfolio -- Service Class 2 Franklin Templeton Variable Insurance Products Trust: Franklin Income Securities Fund -- Class 2 Shares Franklin Large Cap Growth Securities Fund -- Class 2 Shares Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares Mutual Shares Securities Fund -- Class 2 Shares /1/ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares will only be available to contracts purchased through particular financial institutions or brokerage firms effective May 1, 2003. 1 Templeton Foreign Securities Fund -- Class 2 Shares Templeton Global Asset Allocation Fund -- Class 2 Shares Templeton Growth Securities Fund -- Class 2 Shares GE Investments Funds, Inc.: Total Return Fund -- Class 1 Shares/1/ Total Return Fund -- Class 3 Shares/1/ JPMorgan Insurance Trust: JPMorgan Insurance Trust Balanced Portfolio -- Class 1 JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 MFS(R) Variable Insurance Trust: MFS(R) Investors Growth Stock Series -- Service Class Shares MFS(R) Strategic Income Series -- Service Class Shares MFS(R) Total Return Series -- Service Class Shares Oppenheimer Variable Account Funds: Oppenheimer Capital Appreciation Fund/VA -- Service Shares Oppenheimer Main Street Fund/VA -- Service Shares Oppenheimer Main Street Small Cap Fund/VA -- Service Shares PIMCO Variable Insurance Trust: High Yield Portfolio -- Administrative Class Shares Low Duration Portfolio -- Administrative Class Shares The following Portfolios are not available to contracts issued on or after May 1, 2006: JPMorgan Series Trust II: JPMorgan Bond Portfolio JPMorgan International Equity Portfolio JPMorgan Mid Cap Value Portfolio JPMorgan Small Company Portfolio JPMorgan U.S. Large Cap Core Equity Portfolio Not all of these Portfolios may be available in all states or in all markets. The Securities and Exchange Commission ("SEC") has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Your contract: . Is NOT a bank deposit . Is NOT FDIC insured . Is NOT insured or endorsed by a bank or any federal government agency . Is NOT available in every state . MAY go down in value Except for amounts in the Guarantee Account, both the value of a contract before the Annuity Commencement Date and the amount of monthly income afterwards will depend upon the investment performance of the Portfolio(s) you select. You bear the investment risk of investing in the Portfolios. This contract has optional benefits, for an additional charge, available to contact owners. Not all benefits may be available in all states or in all markets. Should you not be able to obtain a certain feature explained in this prospectus through your current representative, please contact our Home Office at the telephone number or address listed below to inquire as to whether a particular optional benefit is available in your state and if so, for a list of firms that will permit such an optional benefit for sale. Please note that some optional benefits may have requirements that differ from or are in addition to the base contract. Before deciding to invest in an optional benefit, you should weigh its costs and benefits against the possibility that, had you not purchased the optional benefit, your Contract Value may have been higher. The contract is also offered to customers of various financial institutions and brokerage firms. No financial institution or brokerage firm is responsible for the guarantees under the contract. Guarantees under the contract are the sole responsibility of the Company. We may offer other contracts with features that are substantially similar to those offered in this contract and in this prospectus. These other contracts may be priced differently and may be offered exclusively to customers of one or more particular financial institutions or brokerage firms. /1/ The Subaccount invests in Class 1 shares of the Total Return Fund for contracts issued before May 1, 2006. Class 1 shares of the Total Return Fund are not available for contracts issued on or after May 1, 2006. The Subaccount invests in Class 3 shares of the Total Return Fund for contracts issued on or after May 1, 2006. 2 In the future, additional portfolios managed by certain financial institutions or brokerage firms may be added to the Separate Account. These portfolios may be offered exclusively to purchasing customers of the particular financial institution or brokerage firm. This contract may be used with certain tax qualified retirement plans. The contract includes attributes such as tax deferral on accumulated earnings. Qualified retirement plans provide their own tax deferral benefit; the purchase of this contract does not provide additional tax deferral benefits beyond those provided in the qualified retirement plan. If you are purchasing this contract as a Qualified Contract, you should consider purchasing this contract for its death benefit, income benefits and other non-tax-related benefits. Please consult a tax adviser for information specific to your circumstances in order to determine whether this contract is an appropriate investment for you. A Statement of Additional Information, dated May 1, 2008, which contains additional information about the contract has been filed with the SEC and is incorporated by reference into this prospectus. A table of contents for the Statement of Additional Information appears on the last page of this prospectus. If you would like a free copy, call us at: (800) 352-9910; or write us at: 6610 West Broad Street Richmond, Virginia 23230 The Statement of Additional Information and other material incorporated by reference can be found on the SEC's website at: www.sec.gov This prospectus does not constitute an offering in any jurisdiction in which such offering may not lawfully be made. 3 Table of Contents Definitions........................................................... 7 Fee Tables............................................................ 9 Examples........................................................... 15 Synopsis.............................................................. 17 Condensed Financial Information....................................... 20 Financial Statements.................................................. 20 The Company........................................................... 20 The Separate Account.................................................. 21 The Portfolios..................................................... 21 Subaccounts........................................................ 22 Voting Rights...................................................... 29 Asset Allocation Program........................................... 29 The Guarantee Account................................................. 37 Charges and Other Deductions.......................................... 38 Transaction Expenses............................................... 38 Surrender Charge............................................... 38 Exceptions to the Surrender Charge............................. 39 Deductions from the Separate Account............................... 39 Charges for the Living Benefit Rider Options....................... 39 Charges for the Death Benefit Rider Options........................ 42 Other Charges...................................................... 43 The Contract.......................................................... 43 Purchase of the Contract........................................... 43 Ownership.......................................................... 44 Assignment......................................................... 45 Purchase Payments.................................................. 45 Valuation Day and Valuation Period................................. 45 Allocation of Purchase Payments.................................... 45 Valuation of Accumulation Units.................................... 46 Transfers............................................................. 46 Transfers Before the Annuity Commencement Date..................... 46 Transfers from the Guarantee Account to the Subaccounts............ 47 Transfers from the Subaccounts to the Guarantee Account............ 47 Transfers Among the Subaccounts.................................... 47 Telephone/Internet Transactions.................................... 48 Confirmation of Transactions....................................... 49 Special Note on Reliability........................................ 49 Transfers by Third Parties......................................... 49 Special Note on Frequent Transfers................................. 49 Dollar Cost Averaging Program...................................... 51 Defined Dollar Cost Averaging Program.............................. 52 Portfolio Rebalancing Program...................................... 52 Guarantee Account Interest Sweep Program........................... 53
4 Surrenders and Partial Withdrawals........................................ 53 Surrenders and Partial Withdrawals..................................... 53 Restrictions on Distributions from Certain Contracts................... 54 Systematic Withdrawal Program.......................................... 54 Guaranteed Minimum Withdrawal Benefit Rider Options.................... 55 Lifetime Income Plus 2008.......................................... 56 Lifetime Income Plus 2007.......................................... 68 Lifetime Income Plus (for contracts issued on or after the later of May 1, 2006, or the date of state insurance department approval)............................................. 75 Lifetime Income Plus (for contracts issued prior to May 1, 2006, or prior to the date of state insurance department approval)........................................................ 81 Guaranteed Withdrawal Advantage.................................... 87 Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options............................................ 91 Annuity Cross Funding Program.......................................... 92 Death of Owner and/or Annuitant........................................... 93 Distribution Provisions Upon Death of Owner or Joint Owner............. 93 Death Benefit at Death of Any Annuitant Before Annuity Commencement Date.................................................... 94 Basic Death Benefit.................................................... 94 Annual Step-Up Death Benefit Rider Option.............................. 94 5% Rollup Death Benefit Rider Option................................... 95 Earnings Protector Death Benefit Rider Option.......................... 96 The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option........................................... 97 Termination of Death Benefit Rider Options When Contract Assigned or Sold.............................................................. 97 How to Claim Proceeds and/or Death Benefit Payments.................... 97 Distribution Rules..................................................... 100 Income Payments........................................................... 100 Income Payments and the Annuity Commencement Date...................... 100 Optional Payment Plans................................................. 102 Variable Income Payments............................................... 103 Transfers After the Annuity Commencement Date.......................... 103 Guaranteed Income Advantage............................................ 103 Payment Protection Rider Options....................................... 111 Payment Optimizer Plus............................................. 111 Principal Protection Advantage..................................... 120 Tax Matters............................................................... 126 Introduction........................................................... 126 Taxation of Non-Qualified Contracts.................................... 126 Section 1035 Exchanges................................................. 129 Qualified Retirement Plans............................................. 129 Federal Income Tax Withholding......................................... 132 State Income Tax Withholding........................................... 132 Tax Status of the Company.............................................. 132 Federal Estate Taxes................................................... 132 Generation-Skipping Transfer Tax....................................... 132 Annuity Purchases by Residents of Puerto Rico.......................... 133 Annuity Purchases by Nonresident Aliens and Foreign Corporations....... 133 Foreign Tax Credits.................................................... 133 Changes in the Law..................................................... 133
5 Requesting Payments................................................... 133 Sale of the Contracts................................................. 134 Additional Information................................................ 135 Owner Questions.................................................... 135 Return Privilege................................................... 135 State Regulation................................................... 135 Evidence of Death, Age, Gender, Marital Status or Survival......... 135 Records and Reports................................................ 135 Other Information.................................................. 135 Legal Proceedings.................................................. 136 Appendix A -- Examples of the Available Death Benefits................ A-1 Appendix B -- Condensed Financial Information......................... B-1 Table of Contents for Statement of Additional Information
6 DEFINITIONS The following terms are used throughout the prospectus: Accumulation Unit -- An accounting unit of measure we use to calculate the value in the Separate Account before the income payments commence. Annuitant/Joint Annuitant -- The person(s) named in the contract upon whose age and, where appropriate, gender, we determine monthly income benefits. Annuity Commencement Date -- The date on which your income payments will commence, if any Annuitant is living on that date. The Annuity Commencement Date is stated in your contract, unless changed by you in writing in a form acceptable to us. Annuity Unit -- An accounting unit of measure we use to calculate the amount of the second and each subsequent variable income payment. Asset Allocation Model -- A component of the Investment Strategy for the Payment Protection Rider Options and the Guaranteed Minimum Withdrawal Benefit Rider Options. Benefit Date -- For the Guaranteed Minimum Withdrawal Benefit Rider Options, the date that will be the later of the Contract Date and the Valuation Day of the most recent reset. Benefit Year -- For the Guaranteed Minimum Withdrawal Benefit Rider Options, each one year period following the Benefit Date and each anniversary of that date. Code -- The Internal Revenue Code of 1986, as amended. Contract Date -- The date we issue your contract and your contract becomes effective. Your Contract Date is shown in your contract. We use the Contract Date to determine contract years and anniversaries. Contract Value -- The total value of all your Accumulation Units in the Subaccounts and any amounts you hold in the Guarantee Account. Designated Subaccounts -- The Subaccounts or Model Portfolios available under the Investment Strategy for the Payment Protection Rider Options and the Guaranteed Minimum Withdrawal Benefit Rider Options. Fund -- Any open-end management investment company or any unit investment trust in which the Separate Account invests. Funding Annuity -- This variable deferred annuity issued by Genworth Life and Annuity Insurance Company; this contract becomes a Funding Annuity when it is purchased on the same date as a Scheduled Purchase Payment Variable Deferred Annuity Contract issued by Genworth Life and Annuity Insurance Company. The assets of this Funding Annuity are withdrawn and immediately allocated to the Scheduled Purchase Payment Variable Deferred Annuity Contract. General Account -- Assets of the Company other than those allocated to the Separate Account or any other segregated asset account of the Company. GIS Subaccount -- A division of the Separate Account that invests exclusively in shares of the GE Investments Funds, Inc. -- Total Return Fund. This Subaccount is only available when Guaranteed Income Advantage is elected at the time of application. Purchase payments may not be made directly to the GIS Subaccount. Allocations must be made pursuant to scheduled transfers from all other Subaccounts in which you have allocated assets. Any remaining transfers will come from the Guarantee Account. Gross Withdrawal -- For Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008, an amount withdrawn from Contract Value, including any surrender charge, any taxes withheld and any premium taxes assessed. Guarantee Account -- Part of our General Account that provides a guaranteed interest rate for a specified interest rate guarantee period. The Guarantee Account is not part of and does not depend on the investment performance of the Separate Account. The Guarantee Account is not available to contract owners who have elected Payment Optimizer Plus for as long as the rider is in effect. Guaranteed Income Advantage -- The marketing name for the Guaranteed Income Rider. This rider may be referred to by either name in this prospectus. Guaranteed Withdrawal Advantage -- The marketing name for the Guaranteed Minimum Withdrawal Benefit Rider, which is one of the Guaranteed Minimum Withdrawal Benefit Rider Options discussed in this prospectus. This rider may be referred to by either name in this prospectus. Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. Home Office -- Our office located at 6610 West Broad Street, Richmond, Virginia 23230. Income Start Date -- For Guaranteed Income Advantage, the date income payments begin from one or more segments pursuant to the terms of Guaranteed Income Advantage. For Principal Protection Advantage, the date income payments begin from one or more Payment Protection Plans pursuant to the terms of Principal Protection Advantage. 7 Income Start Value -- For Principal Protection Advantage, the portion of Contract Value applied to a Payment Protection Plan that provides for monthly income as of the Income Start Date. Investment Strategy -- The Designated Subaccounts and/or Asset Allocation Model required for the Payment Protection Rider Options and the Guaranteed Minimum Withdrawal Benefit Rider Options. The Investment Strategy is required in order to receive the full benefit under these rider options. Lifetime Income Plus -- The marketing name for one of the Guaranteed Minimum Withdrawal Benefit for Life Riders, which is one of the Guaranteed Minimum Withdrawal Benefit Rider Options discussed in this prospectus. This rider may be referred to by either name in this prospectus. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. Lifetime Income Plus 2007 -- The marketing name for one of the Guaranteed Minimum Withdrawal Benefit for Life Riders, which is one of the Guaranteed Minimum Withdrawal Benefit Rider Options discussed in this prospectus. This rider may be referred to by either name in this prospectus. Lifetime Income Plus 2008 -- The marketing name for one of the Guaranteed Minimum Withdrawal Benefit for Life Riders, which is one of the Guaranteed Minimum Withdrawal Benefit Rider Options discussed in the prospectus. This rider may be referred to by either name in this prospectus. The rider may be issued with or without the Principal Protection Death Benefit. For purposes of this prospectus, references to Lifetime Income Plus 2008 include a rider issued with or without the Principal Protection Death Benefit, as applicable, unless stated otherwise. Payment Optimizer Plus -- The marketing name for the Payment Protection with Commutation Immediate and Deferred Variable Annuity Rider, which is one of the Payment Protection Rider Options discussed in this prospectus. This rider may be referred to by either name in this prospectus. Payment Protection Plan -- A series of variable income payments that are provided pursuant to the terms of Payment Protection Advantage. Portfolio -- A division of a Fund, the assets of which are separate from other Portfolios that may be available in the Fund. Each Portfolio has its own investment objective. Not all Portfolios may be available in all states or markets. Principal Protection Advantage -- The marketing name for the Payment Protection Rider, which is one of the Payment Protection Rider Options discussed in this prospectus. This rider may be referred to by either name in this prospectus. Principal Protection Advantage is not available for contracts issued on or after May 1, 2007. Principal Protection Death Benefit -- The death benefit provided under Lifetime Income Plus 2008, if elected at the time of application, for an additional charge. Rider Death Benefit -- The death benefit payable under Lifetime Income Plus or Lifetime Income Plus 2007. Roll-Up Value -- An amount used to calculate the Withdrawal Limit for benefits provided under Lifetime Income Plus 2007 and Lifetime Income Plus 2008. Separate Account -- Genworth Life & Annuity VA Separate Account 1, a separate investment account we established to receive Subaccount allocations. The Separate Account is divided into Subaccounts, each of which invests in shares of a separate Portfolio. Subaccount -- A division of the Separate Account which invests exclusively in shares of a designated Portfolio. Not all Subaccounts may be available in all states or markets. A Subaccount may be referred to as an Investment Subdivision in your contract and/or marketing materials. Surrender Value -- The value of your contract as of the date we receive your written request to surrender at our Home Office, less any applicable premium tax, annual contract charge, optional benefit charge and surrender charge. Valuation Day -- Each day on which the New York Stock Exchange is open for regular trading, except for days that the Subaccount's corresponding Portfolio does not value its shares. Valuation Period -- The period that starts at the close of regular trading on the New York Stock Exchange on any Valuation Day and ends at the close of regular trading on the next succeeding Valuation Day. Withdrawal Base -- An amount used to establish the Withdrawal Limit for benefits provided under the Guaranteed Minimum Withdrawal Benefit Rider Options. Withdrawal Factor -- The percentage used to establish the Withdrawal Limit for benefits provided under the Guaranteed Minimum Withdrawal Benefit Rider Options. Withdrawal Limit -- The total amount that you may withdraw in a Benefit Year without reducing the benefit provided under the Guaranteed Minimum Withdrawal Benefit Rider Options. 8 FEE TABLES The following tables describe fees and expenses that you will pay when buying, owning or partially withdrawing assets or fully surrendering the contract. The first table describes the fees and expenses that you will pay when you buy the contract, take a partial withdrawal, fully surrender your contract, or transfer assets among the investment options. State premium taxes may also be deducted.
Contract Owner Transaction Expenses - --------------------------------------------------------------------------------------------------- Surrender Charge (as a percentage of purchase Number of Completed Years Surrender Charge as payments partially withdrawn or surrendered) Since We Received the a Percentage of the Purchase Payment Purchase Payment Partially Withdrawn or Surrendered/1,2/ ------------------------------------------------ 0 6% 1 6% 2 6% 3 6% 4 5% 5 4% 6 or more 0% - --------------------------------------------------------------------------------------------------- Transfer Charge $10.00/3/ - ---------------------------------------------------------------------------------------------------
/1/A surrender charge is not assessed on any amounts representing gain. In addition, you may withdraw the greater of 10% of your total purchase payments or any amount withdrawn to meet minimum distribution requirements under the Code each contract year without incurring a surrender charge. If you are making a withdrawal from this contract to meet annual minimum distribution requirements under the Code, and the minimum distribution amount attributable to this contract for the calendar year ending at or before the last day of the contract year exceeds the free withdrawal amount, you may withdraw the difference free of surrender charges. The free withdrawal amount is not cumulative from contract year to contract year. The surrender charge will be taken from the amount withdrawn unless otherwise requested. If you purchase Payment Optimizer Plus, after the Annuity Commencement Date you may request to terminate your contract and the rider and receive the commuted value of your income payments in a lump sum (the "commutation value"). In calculating the commutation value, we assess a commutation charge. The amount of the commutation charge will be the surrender charge that would otherwise apply under the contract, in accordance with the surrender charge schedule. /2/Any partial withdrawals that are immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program are not subject to a surrender charge. /3/We currently do not assess a transfer charge. However, we reserve the right to assess a transfer charge for each transfer among the Subaccounts. 9 The next table describes the fees and expenses that you will pay periodically during the time you own the contract, not including Portfolio fees and expenses. The following charges apply to contracts issued on or after the later of May 1, 2006, or the date on which state insurance authorities approve applicable contract modifications.
Periodic Charges Other Than Portfolio Expenses - ----------------------------------------------------------------------------------------------------------------- Annual Contract Charge $30.00/1/ - ----------------------------------------------------------------------------------------------------------------- Separate Account Annual Expenses (as a percentage of your average daily net assets in the Separate Account) - ----------------------------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge 1.30% - ----------------------------------------------------------------------------------------------------------------- Administrative Expense Charge 0.15% - ----------------------------------------------------------------------------------------------------------------- Living Benefit Rider Options/2/ (as a percentage of your average daily net assets in the Separate Account) - ----------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge/3/ -------------------------------- Guaranteed Withdrawal Advantage/4/ 0.50% 1.00% - ----------------------------------------------------------------------------------------------------------------- Lifetime Income Plus/5/ Single Annuitant Contract 0.60% 2.00% ------------------------------- Joint Annuitant Contract 0.75% 2.00% - ----------------------------------------------------------------------------------------------------------------- Lifetime Income Plus 2007 Single Annuitant Contract 0.75% 2.00% ------------------------------- Joint Annuitant Contract 0.85% 2.00% - ----------------------------------------------------------------------------------------------------------------- Guaranteed Income Advantage 0.50% 0.50% - ----------------------------------------------------------------------------------------------------------------- Principal Protection Advantage/6/ 0.40% 1.00% - ----------------------------------------------------------------------------------------------------------------- Payment Optimizer Plus Single Annuitant Contract 0.50% 1.25% ------------------------------- Joint Annuitant Contract 0.65% 1.25% - -----------------------------------------------------------------------------------------------------------------
Living Benefit Rider Options/2,7/ - -------------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge/3/ ------------------------------------------------------- Lifetime Income Plus 2008 without the Principal Protection Death Benefit Single Annuitant Contract 0.75% of benefit base 2.00% of benefit base ------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base 2.00% of benefit base ------------------------------------------------------- Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 45-70 Single Annuitant Contract 0.75% of benefit base plus 2.00% of benefit base plus 0.15% of value of Principal 0.50% of value of Principal Protection Death Benefit Protection Death Benefit ------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 2.00% of benefit base plus 0.15% of value of Principal 0.50% of value of Principal Protection Death Benefit Protection Death Benefit ------------------------------------------------------- Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 71-85 Single Annuitant Contract 0.75% of benefit base plus 2.00% of benefit base plus 0.40% of value of Principal 0.50% of value of Principal Protection Death Benefit Protection Death Benefit ------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 2.00% of benefit base plus 0.40% of value of Principal 0.50% of value of Principal Protection Death Benefit Protection Death Benefit - --------------------------------------------------------------------------------------------------------------------
10 Death Benefit Rider Options/8/ (as a percentage of your Contract Value at the time the charge is taken)/9/ - ------------------------------------------------------------------------------------------------------------------------ Current Charge Maximum Charge/3/ -------------------------------- Annual Step-Up Death Benefit Rider Option 0.20% 0.20% - ------------------------------------------------------------------------------------------------------------------------ 5% Rollup Death Benefit Rider Option 0.30% 0.30% - ------------------------------------------------------------------------------------------------------------------------ Earnings Protector Death Benefit Rider Option 0.30% 0.30% - ------------------------------------------------------------------------------------------------------------------------ Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option 0.70% 0.70% - ------------------------------------------------------------------------------------------------------------------------ Current Maximum -------------------------------- Maximum Total Separate Account Annual Expenses/10/ 2.90% 4.15% - ------------------------------------------------------------------------------------------------------------------------
/1/This charge is taken on each contract anniversary and at the time the contract is surrendered. We will not assess this charge if your Contract Value is more than $40,000 at the time the charge is assessed. /2/None of the living benefit rider options may be elected together or in any combination. Only one may be elected and it must be elected at the time of application. Not all riders may be available in all states or in all markets. We reserve the right to discontinue offering these riders at any time and for any reason. /3/The maximum charge reflects the charge that the rider is guaranteed never to exceed. /4/Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. /5/Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. /6/Principal Protection Advantage is not available for contracts issued on or after May 1, 2007. /7/You may purchase Lifetime Income Plus 2008 with or without the Principal Protection Death Benefit. We assess a charge for the guaranteed minimum withdrawal benefit provided by the rider. The charge for the guaranteed minimum withdrawal benefit is calculated quarterly as a percentage of the benefit base, as defined and determined under the rider, and deducted quarterly from the Contract Value. On the Contract Date, the benefit base equals Contract Value. The benefit base will change and may be higher than the Contract Value on any given day. If you purchase Lifetime Income Plus 2008 with the Principal Protection Death Benefit, another charge will be assessed for the Principal Protection Death Benefit. The charge for the Principal Protection Death Benefit is calculated quarterly as a percentage of the value of the Principal Protection Death Benefit, as defined and determined under the rider, and deducted quarterly from the Contract Value. On the Contract Date, the value of the Principal Protection Death Benefit equals the initial purchase payment. The charge for the Principal Protection Death Benefit is higher if any Annuitant is age 71 or older at the time of application or when an Annuitant is added to the contract. The charges for the rider will be deducted at the end of the calendar quarter. /8/The Annual Step-Up Death Benefit Rider may be elected with Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008 at the time of application. None of the other death benefit rider options are available with Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008. You may purchase the Earnings Protector Death Benefit Rider with either the Annual Step-Up Death Benefit Rider or the 5% Rollup Death Benefit Rider. You may not, however, purchase the Annual Step-Up Death Benefit Rider and the 5% Rollup Death Benefit Rider together or in any combination. The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider may not be purchased with any other death benefit rider option. /9/All charges for the death benefit rider options are taken in arrears on each contract anniversary and at the time the contract is surrendered. /10/The Maximum Total Separate Account Annual Expenses for the current charges assume that the owner elects the Annual Step-Up Death Benefit Rider and Lifetime Income Plus 2008 with the Principal Protection Death Benefit, and that the owner purchases the contract as a Joint Annuitant contract with an Annuitant that is age 71 or older. The Maximum Total Separate Account Annual Expenses for the maximum charges assume that the owner elects the Annual Step-Up Death Benefit Rider and Lifetime Income Plus 2008 with the Principal Protection Death Benefit, and that the owner purchases the contract as a Joint Annuitant contract. If another combination of optional benefits is elected, or if no optional benefit is elected, the total Separate Account annual expenses would be lower. Additionally, please note that "Maximum Total Separate Account Annual Expenses" reflect the sum of (i) charges that are based on assets in the Separate Account, (ii) death benefit rider option charges that are based on Contract Value, and (iii) for Lifetime Income Plus 2008, charges that are based on the benefit base, as defined and determined in the rider. While "Maximum Total Separate Account Annual Expenses" sums the amounts of applicable charges for ease of reference and possible comparison with other variable annuity contracts, your actual total expenses may be different. 11 The next table describes the fees and expenses that you will pay periodically during the time you own the contract, not including Portfolio fees and expenses. The following charges apply to contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, but prior to May 1, 2006, or prior to the date on which state insurance authorities approve applicable contract modifications.
Periodic Charges Other Than Portfolio Expenses - -------------------------------------------------------------------------------------------------------------------------- Annual Contract Charge $30.00/1/ - -------------------------------------------------------------------------------------------------------------------------- Separate Account Annual Expenses (as a percentage of your average daily net assets in the Separate Account) - -------------------------------------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge 1.30% - -------------------------------------------------------------------------------------------------------------------------- Administrative Expense Charge 0.15% - -------------------------------------------------------------------------------------------------------------------------- Living Benefit Rider Option/2/ (as a percentage of your average daily net assets in the Separate Account) - -------------------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge/3/ -------------------------------- Guaranteed Withdrawal Advantage 0.50% 1.00% - -------------------------------------------------------------------------------------------------------------------------- Lifetime Income Plus 0.60% 2.00% - -------------------------------------------------------------------------------------------------------------------------- Guaranteed Income Advantage 0.50% 0.50% - -------------------------------------------------------------------------------------------------------------------------- Principal Protection Advantage 0.40% 1.00% - -------------------------------------------------------------------------------------------------------------------------- Death Benefit Rider Options/4/ (as a percentage of your Contract Value at the time the charge is taken)/5/ - -------------------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge -------------------------------- Annual Step-Up Death Benefit Rider Option 0.20% 0.20% - -------------------------------------------------------------------------------------------------------------------------- 5% Rollup Death Benefit Rider Option 0.30% 0.30% - -------------------------------------------------------------------------------------------------------------------------- Earnings Protector Death Benefit Rider Option 0.30% 0.30% - -------------------------------------------------------------------------------------------------------------------------- Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option 0.70% 0.70% - -------------------------------------------------------------------------------------------------------------------------- Current Maximum -------------------------------- Maximum Total Separate Account Annual Expenses/6/ 2.65% 3.65% - --------------------------------------------------------------------------------------------------------------------------
/1/This charge is taken on each contract anniversary and at the time the contract is surrendered. We will not assess this charge if your Contract Value is more than $40,000 at the time the charge is assessed. /2/None of the living benefit rider options may be elected together or in any combination. Only one may be elected and it must be elected at the time of application. Not all riders may be available in all states or in all markets. We reserve the right to discontinue offering these riders at any time and for any reason. /3/The maximum charge reflects the charge that the rider is guaranteed never to exceed. /4/The Annual Step-Up Death Benefit Rider may be elected with Lifetime Income Plus at the time of application. None of the other death benefit rider options are available with Lifetime Income Plus. /5/All charges for the optional death benefit riders are taken in arrears on each contract anniversary and at the time the contract is surrendered. /6/The Maximum Total Separate Account Annual Expenses for the current charges assume that the owner elects the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider and either Guaranteed Withdrawal Advantage or Guaranteed Income Advantage. The Maximum Total Separate Account Annual Expenses for the maximum charges assume that the owner elects the Annual Step-Up Death Benefit Rider and Lifetime Income Plus. If another combination of optional benefits is elected, or if no optional benefit is elected, the total Separate Account annual expenses would be lower. 12 The next table describes the fees and expenses that you will pay periodically during the time you own the contract, not including Portfolio fees and expenses. The following charges apply to contracts issued on or after the later of May 1, 2003, or the date on which state insurance authorities approve applicable contract modifications, but prior to April 29, 2005 or the date on which state insurance authorities approve applicable contract modifications.
Periodic Charges Other Than Portfolio Expenses - ----------------------------------------------------------------------------------------------------------------------------- Annual Contract Charge $30.00/1/ - ----------------------------------------------------------------------------------------------------------------------------- Separate Account Annual Expenses (as a percentage of your average daily net assets in the Separate Account) - ----------------------------------------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge 1.30% - ----------------------------------------------------------------------------------------------------------------------------- Administrative Expense Charge 0.15% - ----------------------------------------------------------------------------------------------------------------------------- Living Benefit Rider Options/2/ (as a percentage of your average daily net assets in the Separate Account) - ----------------------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge/3/ -------------------------------- Guaranteed Withdrawal Advantage 0.50% 1.00% - ----------------------------------------------------------------------------------------------------------------------------- Guaranteed Income Advantage 0.40% 0.50% - ----------------------------------------------------------------------------------------------------------------------------- Principal Protection Advantage 0.40% 1.00% - ----------------------------------------------------------------------------------------------------------------------------- Death Benefit Rider Options (as a percentage of your Contract Value at the time the charge is taken)/4/ - ----------------------------------------------------------------------------------------------------------------------------- Current Charge Maximum Charge -------------------------------- Annual Step-Up Death Benefit Rider Option 0.20% 0.20% - ----------------------------------------------------------------------------------------------------------------------------- 5% Rollup Death Benefit Rider Option/5/ 0.30% 0.30% - ----------------------------------------------------------------------------------------------------------------------------- Earnings Protector Death Benefit Rider Option 0.30% 0.30% - ----------------------------------------------------------------------------------------------------------------------------- Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option/5/ 0.70% 0.70% - ----------------------------------------------------------------------------------------------------------------------------- Current Maximum -------------------------------- Maximum Total Separate Account Annual Expenses/6/ 2.65% 3.15% - -----------------------------------------------------------------------------------------------------------------------------
/1/This charge is taken on each contract anniversary and at the time the contract is surrendered. We will not assess this charge if your Contract Value is more than $40,000 at the time the charge is assessed. /2/None of the living benefit rider options may be elected together or in any combination. Only one may be elected and it must be elected at the time of the application. Not all riders may be available in all states or in all markets. We reserve the right to discontinue offering these riders at any time and for any reason. /3/The maximum charge reflects the charge that the rider is guaranteed never to exceed. /4/All charges for the death benefit rider options are taken in arrears on each contract anniversary and at the time the contract is surrendered. /5/The 5% Rollup Death Benefit Rider Option and the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option are not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. The Annuity Cross Funding Program is not available to contracts issued on or after August 17, 2004. /6/The Maximum Total Separate Account Annual Expenses for the current charges assume that the owner elects the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider and Guaranteed Withdrawal Advantage. The Maximum Total Separate Account Annual Expenses for the maximum charges assume that the owner elects the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Rider and either Guaranteed Withdrawal Advantage or Principal Protection Advantage. If another combination of optional benefits is elected, or if no optional benefit is elected, the total Separate Account annual expenses would be lower. For information concerning compensation paid for the sale of the contract, see the "Sale of the Contracts" provision of the prospectus. 13 The next item shows the minimum and maximum total annual operating expenses charged by the Portfolios that you may pay periodically during the time that you own the contract. These are expenses that are deducted from Portfolio assets, which may include management fees, distribution and/or service (12b-1) fees, and other expenses. More detail concerning each Portfolio's fees and expenses appears in the prospectus for each Portfolio.
Annual Portfolio Expenses/1/ Minimum Maximum - ------------------------------------------------------------------------------------------------ Total Annual Portfolio Operating Expenses (before fee waivers or reimbursements) 0.53% 1.88% - ------------------------------------------------------------------------------------------------
/1/The Portfolio expenses used to prepare this table were provided to the Company by the Funds. The Company has not independently verified such information. The expenses shown are those incurred for the year ended December 31, 2007. Current or future expenses may be greater or less than those shown. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Portfolios have agreed to waive their fees and/or reimburse the Portfolios' expenses in order to keep the Portfolios' expenses below specified limits. In some cases, these expense limitations are contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. The minimum and maximum Total Annual Portfolio Operating Expenses for all the Portfolios after all fee waivers and expense reimbursements (whether voluntary or contractual) are 0.40% and 1.61%, respectively. Please see the prospectus for each Portfolio for information regarding the expenses for each Portfolio, including fee reduction and/or expense reimbursement arrangements, if applicable. 14 Examples For contracts issued on or after the later of May 1, 2006, or the date on which state insurance authorities approve applicable contract modifications, the following Examples apply: These Examples are intended to help you compare the costs of investing in the contract with the costs of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract and optional rider charges, and Portfolio fees and expenses. The Examples show the dollar amount of expenses you would bear directly or indirectly if you: . invested $10,000 in the contract for the time periods indicated; . earned a 5% annual return on your investment; . elected Lifetime Income Plus 2008 with the Principal Protection Death Benefit; . elected the Annual Step-Up Death Benefit Rider; and . surrendered your contract at the end of the stated period. Each Example assumes that the maximum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below. The Example does not include any taxes or tax penalties that may be assessed upon surrender of the contract.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $1,180 $2,478 $3,722 $6,832
The next Example uses the same assumptions as the prior Example, except that it assumes you decide to annuitize your contract or that you decide not to surrender your contract at the end of the stated time period.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $598 $1,918 $3,269 $6,791
Please remember that you are looking at Examples and not a representation of past or future expenses. Your rate of return may be higher or lower than 5%, which is not guaranteed. The Examples do not assume that any Portfolio expense waivers or fee reimbursement arrangements are in effect for the periods presented. The above Examples assume: . Separate Account charges of 1.45% (deducted daily at an effective annual rate of the assets in the Separate Account); . an annual contract charge of $30 (assumed to be equivalent to 0.30% of the Contract Value); and . for Lifetime Income Plus 2008 with the Principal Protection Death Benefit, a charge of 2.00% of benefit base plus a charge of 0.50% of the value of the Principal Protection Death Benefit (deducted quarterly from Contract Value); and . a charge of 0.20% for the Annual Step-Up Death Benefit Rider (deducted annually as a percentage of the Contract Value). If the optional rider is not elected, the expense figures shown above would be lower. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, but prior to May 1, 2006, or prior to the date on which state insurance authorities approve applicable contract modifications, the following Examples apply: These Examples are intended to help you compare the costs of investing in the contract with the costs of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract and optional rider charges, and Portfolio fees and expenses. The Examples show the dollar amount of expenses you would bear directly or indirectly if you: . invested $10,000 in the contract for the time periods indicated; . earned a 5% annual return on your investment; . elected Lifetime Income Plus; . elected the Annual Step-Up Death Benefit Rider Option; and . surrendered your contract at the end of the stated period. Each Example assumes that the maximum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below. The Example does not include any taxes or tax penalties that may be assessed upon surrender of the contract.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $1,117 $2,257 $3,292 $5,607
15 The next Example uses the same assumptions as the prior Example, except that it assumes you decide to annuitize your contract or that you decide not to surrender your contract at the end of the stated time period.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $532 $1,682 $2,814 $5,561
Please remember that you are looking at Examples and not a representation of past or future expenses. Your rate of return may be higher or lower than 5%, which is not guaranteed. The Examples do not assume that any Portfolio expense waivers or fee reimbursement arrangements are in effect for the periods presented. The above Examples assume: . Separate Account charges of 1.45% (deducted daily at an effective annual rate of the assets in the Separate Account); . an annual contract charge of $30 (assumed to be equivalent to 0.30% of the Contract Value); . a maximum charge of 2.00% for Lifetime Income Plus (deducted daily at an effective annual rate of the assets in the Separate Account); and . a charge of 0.20% for the Annual Step-Up Death Benefit Rider Option (deducted annually as a percentage of Contract Value). If the rider options are not elected, the expense figures shown above would be lower. For contracts issued on or after the later of May 1, 2003, or the date on which state insurance authorities approve applicable contract modifications, but prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, the following Examples apply: These Examples are intended to help you compare the costs of investing in the contract with the costs of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract and optional rider charges, and Portfolio fees and expenses. The Examples show the dollar amount of expenses you would bear directly or indirectly if you: . invested $10,000 in the contract for the time periods indicated; . earned a 5% annual return on your investment; . elected Guaranteed Withdrawal Advantage or Principal Protection Advantage; . elected the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option; and . surrendered your contract at the end of the stated period. Each Example assumes that the maximum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below. The Example does not include any taxes or tax penalties that may be assessed upon surrender of the contract.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $1,073 $2,134 $3,099 $5,271
The next Example uses the same assumptions as the prior Example, except that it assumes you decide to annuitize your contract or that you decide not to surrender your contract at the end of the stated time period.
Costs Based on Maximum Annual Portfolio Expenses - ------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $434 $1,500 $2,558 $5,173
Please remember that you are looking at Examples and not a representation of past or future expenses. Your rate of return may be higher or lower than 5%, which is not guaranteed. The Examples do not assume that any Portfolio expense waivers or fee reimbursement arrangements are in effect for the periods presented. The above Examples assume: . Separate Account Annual Expenses of 1.45% (deducted daily at an effective annual rate of the assets in the Separate Account); . an annual contract charge of $30 (assumed to be equivalent to 0.30% of the Contract Value); . a charge of 1.00% for Guaranteed Withdrawal Advantage or Principal Protection Advantage (deducted daily at an effective annual rate of the assets in the Separate Account); and . a charge of 0.70% for the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option (deducted annually as a percentage of the Contract Value). If the rider options are not elected, the expense figures shown above would be lower. 16 SYNOPSIS What type of contract am I buying? The contract is an individual flexible premium variable deferred annuity contract. We may issue it as a contract qualified ("Qualified Contract") under the Code, or as a contract that is not qualified under the Code ("Non-Qualified Contract"). Because this contract may be used with certain tax qualified retirement plans that offer their own tax deferral benefit, you should consider purchasing the contract for a reason other than tax deferral if you are purchasing this contract as a Qualified Contract. This prospectus only provides disclosure about the contract. Certain features described in this prospectus may vary from your contract. See "The Contract" provision of this prospectus. How does the contract work? Once we approve your application, we will issue a contract to you. During the accumulation period you can use your purchase payments to buy Accumulation Units in the Separate Account or interests in the Guarantee Account. Should you decide to receive income payments (annuitize the contract or a portion thereof), we will convert all or a portion of the contract being annuitized from Accumulation Units to Annuity Units. You can choose fixed or variable income payments, unless you are taking income payments from the GIS Subaccount(s) pursuant to the election of Guaranteed Income Advantage or you are taking income payments pursuant to the election of one of the Payment Protection Rider Options. All income payments made from the GIS Subaccount(s) will be made in accordance with the terms of Guaranteed Income Advantage. All income payments made from a Payment Protection Rider Option will be made in accordance with the terms of the applicable Payment Protection Rider Option. If you choose variable income payments, we will base each periodic income payment upon the number of Annuity Units to which you became entitled at the time you decided to annuitize and on the value of each unit on the date the payment is determined. See "The Contract," the "Income Payments -- Guaranteed Income Advantage," and the "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. If only a portion of the contract is being annuitized, monthly income payments will be taxed as partial withdrawals, rather than income payments. See the "Tax Treatment of Guaranteed Income Advantage," and "Tax Treatment of Principal Protection Advantage" provisions of this prospectus. What is the Separate Account? The Separate Account is a segregated asset account established under Virginia insurance law, and registered with the SEC as a unit investment trust. We allocate the assets of the Separate Account to one or more Subaccounts in accordance with your instructions. We do not charge the assets in the Separate Account with liabilities arising out of any other business we may conduct. Amounts you allocate to the Separate Account will reflect the investment performance of the Portfolios you select. You bear the risk of investment gain or loss with respect to amounts allocated to the Separate Account. See "The Separate Account" provision of this prospectus. What are my variable investment choices? Through its Subaccounts, the Separate Account uses your purchase payments to purchase shares, at your direction, in one or more of the Portfolios. In turn, each Portfolio holds securities consistent with its own particular investment objective. See "The Separate Account" provision of this prospectus. What is the Guarantee Account? We offer fixed investment choices through our Guarantee Account. The Guarantee Account is part of our General Account and pays interest at declared rates we guarantee for selected periods of time. We also guarantee the principal, after any deductions of applicable contract charges. Since the Guarantee Account is part of the General Account, we assume the risk of investment gain or loss on amounts allocated to it. The Guarantee Account is not part of and does not depend on the investment performance of the Separate Account. You may transfer assets between the Guarantee Account and the Separate Account subject to certain restrictions. The Guarantee Account may not be available in all states or all markets. In addition, the Guarantee Account is not available to contract owners who have elected Payment Optimizer Plus for as long as the rider is in effect. See the "Transfers" and "The Guarantee Account" provisions of this prospectus. What charges are associated with this contract? Should you take a partial withdrawal or totally surrender your contract before your purchase payments have been in your contract for six full years, we will assess a surrender charge ranging from 6% to 2%, depending upon how many full years those payments have been in the contract. If your purchase payments have been in your contract for six full years, the surrender charge reduces to 0%. You may also partially withdraw up to the greater of 10% of purchase payments or any amount withdrawn to meet minimum distribution requirements under the Code each contract year without being assessed a surrender charge. If you are making a withdrawal from this contract to meet annual minimum distribution requirements under the Code, and the minimum distribution amount attributable to this contract for the calendar year ending at or before the last day of the contract year exceeds the free withdrawal amount, you may withdraw the difference free of surrender charges. We will deduct amounts surrendered first from any gain in the contract and then from purchase 17 payments made. We do not assess a surrender charge on any amounts withdrawn that represent gain. We may also waive the surrender charge in certain circumstances. See the "Surrender Charge" provision of this prospectus. We assess annual charges in the aggregate at an effective annual rate of 1.45% against the daily net asset value of the Separate Account. These charges consist of an administrative expense charge of 0.15% and a mortality and expense risk charge of 1.30%. There is also a $30 annual contract charge which we waive if the Contract Value is more than $40,000 at the time the charge is assessed. We also charge for the optional riders. For a complete discussion of the charges associated with the contract, see the "Charges and Other Deductions" provision of this prospectus. If your state assesses a premium tax with respect to your contract, then at the time we incur the tax (or at such other time as we may choose), we will deduct those amounts from purchase payments or the Contract Value, as applicable. See the "Charges and Other Deductions" and the "Deductions for Premium Taxes" provisions of this prospectus. There are also expenses associated with the Portfolios. These include management fees and other expenses associated with the daily operation of each Portfolio as well as 12b-1 fees or service share fees, if applicable. See the "Fee Tables" provision of this prospectus. A Portfolio may also impose a redemption charge on Subaccount assets that are redeemed from the Portfolio in connection with a transfer. Portfolio expenses, including any redemption charges, are more fully described in the prospectus for each Portfolio. We pay compensation to broker-dealers who sell the contracts. For a discussion of this compensation, see the "Sale of the Contracts" provision of this prospectus. We offer other variable annuity contracts through the Separate Account (and our other separate accounts) that which also invest in the same Portfolios (or many of the same) offered under the contract. These other contracts have different charges and may offer different benefits more suitable to your needs. To obtain more information about these contracts, including a prospectus, contact your registered representative or call (800) 352-9910. How much must I pay and how often? Subject to certain minimum and maximum payments, the amount and frequency of purchase payments are flexible. See "The Contract -- Purchase Payments" provision of this prospectus. How will my income payments be calculated? We will pay you a monthly income beginning on the Annuity Commencement Date (or the earlier of the Income Start Date and the Annuity Commencement Date if Guaranteed Income Advantage or Principal Protection Advantage is elected at the time of application) provided any Annuitant is still living on that date. You may also decide to take income payments under one of the Optional Payment Plans. We will base your initial payment on the Contract Value and other factors. See the "Income Payments" provision of this prospectus. What happens if I die before the Annuity Commencement Date? Before the Annuity Commencement Date, if an owner, joint owner or Annuitant dies while the contract is in force, we will treat the designated beneficiary as the sole owner of the contract, subject to certain distribution rules. We may pay a death benefit to the designated beneficiary. See the "Death of Owner and/or Annuitant" provision of this prospectus. May I transfer assets among Subaccounts and to and from the Guarantee Account? Yes, however there are limitations imposed by your contract on both the number of transfers that may be made per calendar year, as well as limitations on allocations. Riders elected by the contract owner may impose additional limitations on transfer rights. The minimum transfer amount is currently $100 or the entire balance in the Subaccount if the transfer will leave a balance of less than $100. Transfers among the Subaccounts, as well as to and from the Guarantee Account, may be subject to certain restrictions. See the "Transfers," "Income Payments -- Transfers After the Annuity Commencement Date," "Income Payments -- Guaranteed Income Advantage," and "The Guarantee Account" provisions of this prospectus. In addition, if you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), the benefits you receive under those riders may be reduced if, after a transfer, your assets are not allocated in accordance with the Investment Strategy as outlined in your rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. See the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options," and "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. May I surrender the contract or take partial withdrawals? Yes, subject to contract requirements and restrictions imposed under certain retirement plans. If you surrender the contract or take a partial withdrawal, we may assess a surrender charge as discussed above. In addition, you may be subject to income tax and, if you are younger than age 59 1/2 at the time of the surrender or partial withdrawal, a 10% IRS penalty tax. A surrender or a partial withdrawal may also be subject to tax withholding. See the "Tax Matters" provision of this prospectus. A partial withdrawal may reduce 18 the death benefit by the proportion that the partial withdrawal (including any applicable surrender charge and premium tax) reduces your Contract Value. See the "Death of Owner and/or Annuitant" provision of this prospectus for more information. In addition, if you elect Guaranteed Income Advantage and you take a withdrawal from the GIS Subaccount(s), you will lose your right to make any additional scheduled transfers to that segment and your guaranteed income floor will be adjusted to reflect the withdrawal made. See the "Income Payments -- Guaranteed Income Advantage" provision of this prospectus. If you elect one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options, partial withdrawals may affect the benefit you receive under that rider. See the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options," and the "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. Do I get a free look at this contract? Yes, you have the right to return the contract to us at our Home Office at the address listed on page 1 of this prospectus, and have us cancel the contract within a certain number of days (usually 10 days from the date you receive the contract, but some states require different periods). If you exercise this right, we will cancel the contract as of the Valuation Day we receive your request and send you a refund equal to your Contract Value plus any charges we have deducted from purchase payments prior to their allocation to the Separate Account (and excluding any charges the Portfolios may have deducted) on or before the Valuation Day we received the returned contract at our Home Office. Or, if required by the law of your state, we will refund your purchase payments (less any withdrawals previously taken). See the "Return Privilege" provision of this prospectus for more information. What optional benefits are available under this contract? We offer several optional benefits by rider under this prospectus. The riders may not be available in all states or markets. The "Living Benefit Rider Options." We currently offer four "living benefit rider options" under this prospectus. You may not purchase the riders together or in any combination. Three other living benefit riders, Guaranteed Withdrawal Advantage, Lifetime Income Plus and Principal Protection Advantage, are no longer offered for sale. Four Guaranteed Minimum Withdrawal Benefit Rider Options are discussed in this prospectus: Guaranteed Withdrawal Advantage, Lifetime Income Plus, Lifetime Income Plus 2007 and Lifetime Income Plus 2008. Lifetime Income Plus, Lifetime Income Plus 2007 and Lifetime Income Plus 2008 provide guaranteed withdrawals until the last death of an Annuitant, at least equal to purchase payments, with upside potential, provided you meet certain conditions. Guaranteed Withdrawal Advantage provides a guaranteed return of purchase payments through a series of withdrawals, with upside potential, provided you meet certain conditions. Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. To receive the full benefit provided by each of the Guaranteed Minimum Withdrawal Benefit Rider Options, you must allocate all purchase payments and assets in your contract in accordance with the Investment Strategy prescribed by the particular rider. If you purchase Lifetime Income Plus 2008, you must always allocate assets in accordance with the Investment Strategy prescribed by that rider. Please see the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options" provision of this prospectus for more information about the riders and their features. We also offer Guaranteed Income Advantage, which provides a guaranteed income benefit that is based on the amount of assets you invest in the GIS Subaccount(s). You may not allocate purchase payments or assets in your contract directly into the GIS Subaccount(s). Rather, allocations to the GIS Subaccount(s) must be made through a series of scheduled transfers from other Subaccounts in which you have allocated assets. Please see the "Income Payments -- Guaranteed Income Advantage" provision of this prospectus for more information about the riders and their features. Finally, we discuss two Payment Protection Rider Options in this prospectus: Payment Optimizer Plus and Principal Protection Advantage. These riders provide for a guaranteed income benefit that is based on the amount of purchase payments you make to your contract. Principal Protection Advantage, however, is not available for contracts issued on or after May 1, 2007. To receive the full benefit provided by either of the Payment Protection Rider Options, you must allocate all purchase payments and assets in your contract in accordance with the Investment Strategy prescribed by the particular rider. Please see the "Income Payments -- Payment Protection Rider Options" provision of this prospectus for more information about the rider and its features. Each of the riders offered in this prospectus is available at an additional charge if elected when you apply for the contract. The Death Benefit Rider Options. We offer the following four optional death benefits by rider in addition to the Basic Death Benefit available under the contract: (i) the Annual Step-Up Death Benefit Rider; (ii) the 5% Rollup Death Benefit Rider; (iii) the Earnings Protector Death Benefit Rider; and 19 (iv) the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider. Each of these optional death benefit riders is available at an additional charge if elected when you apply for the contract. The Basic Death Benefit is provided to you automatically and at no additional charge. Please see "The Death Benefit" provision of this prospectus for more information about these optional death benefit riders and their features. When are my allocations effective when purchasing this contract? Within two business days after we have received all of the information necessary to process your purchase order, we will allocate your initial purchase payment directly to the Guarantee Account and/or the Subaccounts that correspond to the Portfolios you choose. For contract owners that have elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), all purchase payments must be allocated in accordance with the Investment Strategy as outlined in each rider in order to receive the full benefit provided by the rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. For contract owners that have elected Guaranteed Income Advantage, purchase payments may not be allocated directly to the GIS Subaccount(s), but must be made pursuant to scheduled transfers from all other Subaccounts in which you have allocated assets. Any remaining transfers will come from the Guarantee Account. See "The Contract --Allocation of Purchase Payments," the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options," the "Income Payments -- Guaranteed Income Advantage," and the "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. What are the Federal tax implications of my investment in the contract? Generally, all investment earnings under the contract are tax-deferred until withdrawn or until income payments begin. A distribution from the contract, which includes a full surrender or partial withdrawal or payment of a death benefit, will generally result in taxable income if there has been an increase in the Contract Value. In certain circumstances, a 10% penalty tax may also apply. All amounts includable in income with respect to the contract are taxed as ordinary income; no amounts are taxed at the special lower rates applicable to long term capital gains and corporate dividends. See the "Tax Matters" provision of this prospectus. CONDENSED FINANCIAL INFORMATION The value of an Accumulation Unit is determined on the basis of changes in the per share value of the Portfolios and the assessment of Separate Account charges which may vary from contract to contract. Please refer to the Statement of Additional Information for more information on the calculation of Accumulation Unit values. Please see Appendix B of this prospectus for tables of Accumulation Unit values. FINANCIAL STATEMENTS The consolidated financial statements for Genworth Life and Annuity Insurance Company and subsidiaries, as well as the financial statements for the Separate Account, are located in the Statement of Additional Information. If you would like a free copy of the Statement of Additional Information, call (800) 352-9910 or write to our Home Office at the address listed on page 1 of this prospectus. In addition, the Statement of Additional Information is available on the SEC's website at http://www.sec.gov. THE COMPANY We are a stock life insurance company operating under a charter granted by the Commonwealth of Virginia on March 21, 1871. We principally offer life insurance policies and annuity contracts. We do business in 49 states and the District of Columbia. Our principal offices are at 6610 West Broad Street, Richmond, Virginia 23230. We are obligated to pay all amounts promised under the contract. Capital Brokerage Corporation serves as principal underwriter for the contracts and is a broker/dealer registered with the SEC. Genworth North America Corporation (formerly, GNA Corporation) directly owns the stock of Capital Brokerage Corporation and the Company. Genworth North America Corporation is directly owned by Genworth Financial, Inc., a public company. We are a charter member of the Insurance Marketplace Standards Association ("IMSA"). We may use the IMSA membership logo and language in our advertisements, as outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities. 20 THE SEPARATE ACCOUNT We established the Separate Account as a separate investment account on August 19, 1987. The Separate Account may invest in mutual funds, unit investment trusts, managed separate accounts, and other portfolios. We use the Separate Account to support the contract as well as for other purposes permitted by law. Currently, there are multiple Subaccounts of the Separate Account available under the contract. Each Subaccount invests exclusively in shares representing an interest in a separate corresponding Portfolio of the Funds. The assets of the Separate Account belong to us. Nonetheless, we do not charge the assets in the Separate Account attributable to the contracts with liabilities arising out of any other business which we may conduct. The assets of the Separate Account will, however, be available to cover the liabilities of our General Account to the extent that the assets of the Separate Account exceed its liabilities arising under the contracts supported by it. Income and both realized and unrealized gains or losses from the assets of the Separate Account are credited to or charged against the Separate Account without regard to the income, gains, or losses arising out of any other business we may conduct. Guarantees made under the contract, including any rider options, are based on the claims paying ability of the Company to the extent that the amount of the guarantee exceeds the assets available in the Separate Account. We registered the Separate Account with the SEC as a unit investment trust under the Investment Company Act of 1940 ("1940 Act"). The Separate Account meets the definition of a separate account under the Federal securities laws. Registration with the SEC does not involve supervision of the management or investment practices or policies of the Separate Account by the SEC. You assume the full investment risk for all amounts you allocate to the Separate Account. If permitted by law, we may deregister the Separate Account under the 1940 Act in the event registration is no longer required; manage the Separate Account under the direction of a committee; or combine the Separate Account with one of our other separate accounts. Further, to the extent permitted by applicable law, we may transfer the assets of the Separate Account to another separate account. The Portfolios There is a separate Subaccount which corresponds to each Portfolio of a Fund offered in this contract. You select the Subaccounts to which you allocate purchase payments. In addition, you currently may change your future purchase payment allocation without penalty or charges. If you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), however, the benefits you receive under that rider may be reduced if your assets are not allocated in accordance with the Investment Strategy outlined in each rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. In addition, there are limitations on the number of transfers that may be made each calendar year. See the "Transfers" provision of this prospectus for additional information. Each Fund is registered with the SEC as an open-end management investment company under the 1940 Act. The assets of each Portfolio are separate from other portfolios of a Fund and each Portfolio has separate investment objectives and policies. As a result, each Portfolio operates as a separate Portfolio and the investment performance of one Portfolio has no effect on the investment performance of any other Portfolio. Before choosing a Subaccount to allocate your purchase payments and assets, carefully read the prospectus for each Portfolio, along with this prospectus. You may obtain the most recent prospectus for each Portfolio by calling us at (800) 352-9910, or writing us at 6610 West Broad Street, Richmond, Virginia 23230. You may also obtain copies of the prospectus for each Portfolio on our website at www.gefinancialpro.com. We summarize the investment objectives of each Portfolio below. There is no assurance that any Portfolio will meet its objective. We do not guarantee any minimum value for the amounts allocated to the Separate Account. You bear the investment risk of investing in the Subaccounts. The investment objectives and policies of certain Portfolios are similar to the investment objectives and policies of other portfolios that may be managed by the same investment adviser or manager. The investment results of the Portfolios, however, may be higher or lower than the results of such other portfolios. There can be no assurance, and no representation is made, that the investment results of any of the Portfolios will be comparable to the investment results of any other portfolio, even if the other portfolio has the same investment adviser or manager, or if the other portfolio has a similar name. 21 Subaccounts You may invest in the Subaccounts of the Portfolios listed below in addition to the Guarantee Account at any one time. For contract owners that have elected Guaranteed Income Advantage, you may not allocate purchase payments directly to the GIS Subaccount(s). Such allocations must be made pursuant to scheduled transfers from all other Subaccounts in which you have allocated assets. Any remaining transfers will come from the Guarantee Account. See the "Income Payments -- Guaranteed Income Advantage" provision of this prospectus. If you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), the benefits you receive under the rider may be reduced if your assets are not allocated in accordance with the Investment Strategy outlined in each rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. See the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options" and "Income Payments -- Payment Protection Rider Options" provisions of this prospectus.
Adviser (and Sub-Adviser(s), Subaccount Investing In Investment Objective as applicable) ---------------------------------------------------------------------------------------------------------- AIM VARIABLE AIM V.I. Capital Appreciation Growth of capital. Invesco AIM Advisors, Inc. INSURANCE FUNDS Fund -- Series I shares (formerly, A I M Advisors, Inc.) (subadvised by AIM Funds Management Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited) ---------------------------------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund High total return through growth of Invesco AIM Advisors, Inc. -- Series II shares capital and current income. (formerly, A I M Advisors, Inc.) (subadvised by INVESCO Institutional (N.A.), Inc.; AIM Funds Management Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited) ---------------------------------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund Long-term growth of capital Invesco AIM Advisors, Inc. -- Series I shares (formerly, A I M Advisors, Inc.) (subadvised by AIM Funds Management Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited) ----------------------------------------------------------------------------------------------------------
22
Subaccount Investing In Investment Objective ---------------------------------------------------------------------------- ALLIANCEBERNSTEIN AllianceBernstein Balanced Seeks to maximize total return VARIABLE PRODUCTS Wealth Strategy Portfolio -- consistent with the adviser's SERIES FUND, INC. Class B determination of reasonable risk. ---------------------------------------------------------------------------- AllianceBernstein Growth and Long-term growth of capital. Income Portfolio -- Class B ---------------------------------------------------------------------------- AllianceBernstein Large Cap Long-term growth of capital. Growth Portfolio -- Class B ---------------------------------------------------------------------------- AMERICAN CENTURY VP Income & Growth Fund -- Seeks capital growth. Income is a VARIABLE PORTFOLIOS, Class I secondary objective. INC. ---------------------------------------------------------------------------- VP International Fund -- Class I Seeks capital growth. ---------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I Seeks long-term capital growth. ---------------------------------------------------------------------------- VP Value Fund -- Class I Seeks long-term capital growth. Income is a secondary objective. ---------------------------------------------------------------------------- AMERICAN CENTURY VP Inflation Protection Fund -- Pursues long-term total return using a VARIABLE PORTFOLIOS II, Class II strategy that seeks to protect against INC. U.S. inflation. ---------------------------------------------------------------------------- DREYFUS Dreyfus Investment Portfolios Seeks investment returns that are MidCap Stock Portfolio -- Initial greater than the total return Shares performance of publicly traded common stocks of medium-size domestic companies in the aggregate as represented by the Standard & Poor's 400 MidCap Index. ---------------------------------------------------------------------------- Dreyfus Variable Investment Fund Seeks as high a level of current income -- Money Market Portfolio as is consistent with the preservation of capital./1/ ---------------------------------------------------------------------------- The Dreyfus Socially Responsible Seeks capital growth, with current Growth Fund, Inc. -- Initial income as a secondary objective. Shares ---------------------------------------------------------------------------- DWS VARIABLE DWS Dreman High Return Equity Seeks to achieve a high rate of total SERIES II VIP -- Class B Shares return. ---------------------------------------------------------------------------- DWS Dreman Small Mid Cap Seeks long-term capital appreciation. Value VIP -- Class B Shares ---------------------------------------------------------------------------- DWS Technology VIP -- Class B Seeks growth of capital. Shares ---------------------------------------------------------------------------- EATON VANCE VARIABLE VT Floating-Rate Income Fund To provide a high level of current TRUST income. ---------------------------------------------------------------------------- VT Worldwide Health Sciences Seeks long-term capital growth by Fund investing in a worldwide and diversified portfolio of health sciences companies. ---------------------------------------------------------------------------- FIDELITY(R) VARIABLE VIP Contrafund(R) Portfolio -- Seeks long-term capital appreciation. INSURANCE PRODUCTS Service Class 2 FUND ----------------------------------------------------------------------------
Adviser (and Sub-Adviser(s), Investment Objective as applicable) - -------------------------------------------------------------------------- Seeks to maximize total return AllianceBernstein, L.P. consistent with the adviser's determination of reasonable risk. - -------------------------------------------------------------------------- Long-term growth of capital. AllianceBernstein, L.P. - -------------------------------------------------------------------------- Long-term growth of capital. AllianceBernstein, L.P. - -------------------------------------------------------------------------- Seeks capital growth. Income is a American Century Investment secondary objective. Management, Inc. - -------------------------------------------------------------------------- Seeks capital growth. American Century Global Investment Management, Inc. - -------------------------------------------------------------------------- Seeks long-term capital growth. American Century Investment Management, Inc. - -------------------------------------------------------------------------- Seeks long-term capital growth. American Century Investment Income is a secondary objective. Management, Inc. - -------------------------------------------------------------------------- Pursues long-term total return using a American Century Investment strategy that seeks to protect against Management, Inc. U.S. inflation. - -------------------------------------------------------------------------- Seeks investment returns that are The Dreyfus Corporation greater than the total return performance of publicly traded common stocks of medium-size domestic companies in the aggregate as represented by the Standard & Poor's 400 MidCap Index. - -------------------------------------------------------------------------- Seeks as high a level of current income The Dreyfus Corporation as is consistent with the preservation of capital./1/ - -------------------------------------------------------------------------- Seeks capital growth, with current The Dreyfus Corporation income as a secondary objective. - -------------------------------------------------------------------------- Seeks to achieve a high rate of total Deutsche Asset Management return. Americas Inc (subadvised by Dreman Value Management L.L.C.) - -------------------------------------------------------------------------- Seeks long-term capital appreciation. Deutsche Asset Management Americas Inc (subadvised by Dreman Value Management L.L.C.) - -------------------------------------------------------------------------- Seeks growth of capital. Deutsche Asset Management Americas Inc - -------------------------------------------------------------------------- To provide a high level of current Eaton Vance Management income. - -------------------------------------------------------------------------- Seeks long-term capital growth by OrbiMed Advisors, LLC investing in a worldwide and diversified portfolio of health sciences companies. - -------------------------------------------------------------------------- Seeks long-term capital appreciation. FMR (subadvised by FMRC, FRAC, FMR U.K., FIIA, FIIA(U.K.)L, and FIJ) - --------------------------------------------------------------------------
/1/ An investment in the portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this portfolio. 23
Adviser (and Sub-Adviser(s), Subaccount Investing In Investment Objective as applicable) ------------------------------------------------------------------------------------------------------------ VIP Equity-Income Portfolio -- Seeks reasonable income. The fund FMR (subadvised by FMRC, FRAC, Service Class 2 will also consider the potential for FMR U.K., FIIA, FIIA(U.K.)L, and capital appreciation. The fund's goal is FIJ) to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500/SM/ Index (S&P 500(R)). ------------------------------------------------------------------------------------------------------------ VIP Mid Cap Portfolio -- Seeks long-term growth of capital. FMR (subadvised by FMRC, FRAC, Service Class 2 FMR U.K., FIIA, FIIA(U.K.)L, and FIJ) ------------------------------------------------------------------------------------------------------------ FRANKLIN TEMPLETON Franklin Income Securities Seeks to maximize income while Franklin Advisers, Inc. VARIABLE INSURANCE Fund -- Class 2 Shares maintaining prospects for capital PRODUCTS TRUST appreciation. The fund normally invests in both equity and debt securities. The fund seeks income by investing in corporate, foreign and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. ------------------------------------------------------------------------------------------------------------ Franklin Large Cap Growth Seeks capital appreciation. The fund Franklin Advisers, Inc. Securities Fund -- Class 2 Shares normally invests at least 80% of its net assets in investments of large capitalization companies and normally invests predominantly in equity securities. ------------------------------------------------------------------------------------------------------------ Franklin Templeton VIP Founding Seeks capital appreciation, with Franklin Templeton Services, LLC Funds Allocation Fund -- Class 2 income as a secondary goal. The fund (the fund's administrator) Shares/1/ normally invests equal portions in Class 1 shares of Franklin Income Securities Fund; Mutual Shares Securities Fund; and Templeton Growth Securities Fund. ------------------------------------------------------------------------------------------------------------ Mutual Shares Securities Fund -- Seeks capital appreciation, with Franklin Mutual Advisers, LLC Class 2 Shares income as a secondary goal. The fund normally invests primarily in U.S. and foreign equity securities that the manager believes are undervalued. The fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. ------------------------------------------------------------------------------------------------------------ Templeton Foreign Securities Seeks long-term capital growth. The Templeton Investment Counsel, LLC Fund -- Class 2 Shares fund normally invests at least 80% of its net assets in investments of issuers located outside the U.S., including those in emerging markets, and normally invests predominantly in equity securities. ------------------------------------------------------------------------------------------------------------ Templeton Global Asset Allocation Seeks high total return. The fund Templeton Investment Counsel, LLC Fund -- Class 2 Shares normally invests in equity securities of companies of any country, debt securities of companies and governments of any country, and in money market securities. The fund normally invests substantially to primarily in equity securities. ------------------------------------------------------------------------------------------------------------
/1/ Please see the provision below under the heading "Information about the Franklin Templeton VIP Founding Funds Allocation Fund" for important information about this fund. 24
Subaccount Investing In Investment Objective ----------------------------------------------------------------------------- Templeton Growth Securities Seeks long-term capital growth. The Fund -- Class 2 Shares fund normally invests primarily in equity securities of companies located anywhere in the world, including those in the U.S. and in emerging markets. ----------------------------------------------------------------------------- GE INVESTMENTS Total Return Fund/1/ Seeks the highest total return, FUNDS, INC. composed of current income and capital appreciation, as is consistent with prudent investment risk. ----------------------------------------------------------------------------- JPMORGAN INSURANCE JPMorgan Insurance Trust Seeks to provide total return while TRUST Balanced Portfolio -- Class 1 preserving capital. ----------------------------------------------------------------------------- JPMorgan Insurance Trust Core Seeks to maximize total return by Bond Portfolio -- Class 1 investing primarily in a diversified portfolio of intermediate- and long- term debt securities. ----------------------------------------------------------------------------- JPMorgan Insurance Trust Seeks to provide high total return from Diversified Equity Portfolio -- a portfolio of selected equity securities. Class 1 ----------------------------------------------------------------------------- JPMorgan Insurance Trust Seeks growth of capital and, Diversified Mid Cap Portfolio -- secondarily, current income by Class 1 investing primarily in equity securities. ----------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Seeks investment results that Index Portfolio -- Class 1 correspond to the aggregate price and dividend performance of securities in the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index). ----------------------------------------------------------------------------- JPMorgan Insurance Trust Seeks a high level of current income Government Bond Portfolio -- with liquidity and safety of principal. Class 1 ----------------------------------------------------------------------------- JPMorgan Insurance Trust Seeks to provide long-term capital Intrepid Growth Portfolio -- growth. Class 1 ----------------------------------------------------------------------------- JPMorgan Insurance Trust Seeks long-term capital growth by Intrepid Mid Cap Portfolio -- investing primarily in equity securities Class 1 of companies with intermediate capitalizations. ----------------------------------------------------------------------------- MFS(R) VARIABLE MFS(R) Investors Growth Stock The fund's investment objective is to INSURANCE TRUST Series -- Service Class Shares seek capital appreciation. The fund's objective may be changed without shareholder approval. ----------------------------------------------------------------------------- MFS(R) Strategic Income Series -- The fund's investment objective is to Service Class Shares seek total return with an emphasis on high current income, but also considering capital appreciation. The fund's objective may be changed without shareholder approval. ----------------------------------------------------------------------------- MFS(R) Total Return Series -- The fund's investment objective is to Service Class Shares seek total return. The fund's objective may be changed without shareholder approval. -----------------------------------------------------------------------------
Adviser (and Sub-Adviser(s), Investment Objective as applicable) - ------------------------------------------------------------------------------- Seeks long-term capital growth. The Templeton Global Advisors Limited fund normally invests primarily in equity securities of companies located anywhere in the world, including those in the U.S. and in emerging markets. - ------------------------------------------------------------------------------- Seeks the highest total return, GE Asset Management Incorporated composed of current income and capital appreciation, as is consistent with prudent investment risk. - ------------------------------------------------------------------------------- Seeks to provide total return while JPMorgan Investment Advisors Inc, preserving capital. an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. - ------------------------------------------------------------------------------- Seeks to maximize total return by JPMorgan Investment Advisors Inc, investing primarily in a diversified an indirect, wholly-owned subsidiary portfolio of intermediate- and long- of JPMorgan Chase & Co. term debt securities. - ------------------------------------------------------------------------------- Seeks to provide high total return from JPMorgan Investment Advisors Inc, a portfolio of selected equity securities. an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. - ------------------------------------------------------------------------------- Seeks growth of capital and, JPMorgan Investment Advisors Inc, secondarily, current income by an indirect, wholly-owned subsidiary investing primarily in equity securities. of JPMorgan Chase & Co. - ------------------------------------------------------------------------------- Seeks investment results that JPMorgan Investment Advisors Inc, correspond to the aggregate price and an indirect, wholly-owned subsidiary dividend performance of securities in of JPMorgan Chase & Co. the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index). - ------------------------------------------------------------------------------- Seeks a high level of current income JPMorgan Investment Advisors Inc, with liquidity and safety of principal. an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. - ------------------------------------------------------------------------------- Seeks to provide long-term capital JPMorgan Investment Advisors Inc, growth. an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. - ------------------------------------------------------------------------------- Seeks long-term capital growth by JPMorgan Investment Advisors Inc, investing primarily in equity securities an indirect, wholly-owned subsidiary of companies with intermediate of JPMorgan Chase & Co. capitalizations. - ------------------------------------------------------------------------------- The fund's investment objective is to Massachusetts Financial Services seek capital appreciation. The fund's Company objective may be changed without shareholder approval. - ------------------------------------------------------------------------------- The fund's investment objective is to Massachusetts Financial Services seek total return with an emphasis on Company high current income, but also considering capital appreciation. The fund's objective may be changed without shareholder approval. - ------------------------------------------------------------------------------- The fund's investment objective is to Massachusetts Financial seek total return. The fund's objective Services Company may be changed without shareholder approval. - -------------------------------------------------------------------------------
/1/ For contracts issued on or after May 1, 2006, only Class 3 Shares of the Total Return Fund will be available. If your contract was issued prior to May 1, 2006, Class 1 Shares of the Total Return Fund are available. 25
Adviser (and Sub-Adviser(s), Subaccount Investing In Investment Objective as applicable) ----------------------------------------------------------------------------------------------------- OPPENHEIMER VARIABLE Oppenheimer Capital Seeks capital appreciation by investing OppenheimerFunds, Inc. ACCOUNT FUNDS Appreciation Fund/VA -- Service in securities of well-known established Shares companies. ----------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/ Seeks high total return (which includes OppenheimerFunds, Inc. VA -- Service Shares growth in the value of its shares as well as current income) from equity and debt securities. ----------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Seeks capital appreciation. OppenheimerFunds, Inc. Cap Fund/VA -- Service Shares ----------------------------------------------------------------------------------------------------- PIMCO VARIABLE High Yield Portfolio -- Seeks maximum total return, Pacific Investment Management INSURANCE TRUST Administrative Class Shares consistent with preservation of capital Company LLC and prudent investment management. Invests at least 80% of its assets in a diversified portfolio of high yield securities ("junk bonds") rated below investment grade but rated at least Caa by Moody's or CCC by S&P, or, if unrated, determined by PIMCO to be of comparable quality, subject to a maximum of 5% of its total assets in securities rated Caa by Moody's or CCC by S&P, or, if unrated, determined by PIMCO to be of comparable quality. ----------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Seeks maximum total return, Pacific Investment Management Administrative Class Shares consistent with preservation of capital Company LLC and prudent investment management. -----------------------------------------------------------------------------------------------------
The following Portfolios are not available to contracts issued on or after May 1, 2006:
Adviser (and Sub-Adviser(s), Subaccount Investing In Investment Objective as applicable) ------------------------------------------------------------------------------------------------------- JPMORGAN SERIES JPMorgan Bond Portfolio Seeks high total return consistent with J.P. Morgan Investment TRUST II moderate risk of capital and Management, Inc., an indirect, maintenance of liquidity. wholly-owned subsidiary of JPMorgan Chase & Co. ------------------------------------------------------------------------------------------------------- JPMorgan International Equity Seeks to provide high total return from J.P. Morgan Investment Portfolio a portfolio of equity securities of Management, Inc., an indirect, foreign companies. Total return wholly-owned subsidiary of consists of capital growth and current JPMorgan Chase & Co. income. ------------------------------------------------------------------------------------------------------- JPMorgan Mid Cap Value Seeks growth from capital J.P. Morgan Investment Portfolio appreciation. Management, Inc., an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. ------------------------------------------------------------------------------------------------------- JPMorgan Small Company Seeks to provide high total return from J.P. Morgan Investment Portfolio a portfolio of small company stocks. Management, Inc., an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. ------------------------------------------------------------------------------------------------------- JPMorgan U.S. Large Cap Core Seeks to provide high total return from J.P. Morgan Investment Equity Portfolio a portfolio of selected equity securities. Management, Inc., an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. -------------------------------------------------------------------------------------------------------
26 Not all of these Portfolios may be available in all states or in all markets. We will purchase shares of the Portfolios at net asset value and direct them to the appropriate Subaccounts. We will redeem sufficient shares of the appropriate Portfolios at net asset value to pay death benefits, surrender proceeds and partial withdrawals; to make income payments; or for other purposes described in the contract. We automatically reinvest all dividend and capital gain distributions of the Portfolios in shares of the distributing Portfolios at their net asset value on the date of distribution. In other words, we do not pay Portfolio dividends or Portfolio distributions out to owners as additional units, but instead reflect them in unit values. Shares of the Portfolios are not sold directly to the general public. They are sold to us, and they may also be sold to other insurance companies that issue variable annuity contracts and variable life insurance policies. In addition, they may be sold to retirement plans. When a Fund sells shares in any of its Portfolios both to variable annuity and to variable life insurance separate accounts, it engages in mixed funding. When a Fund sells shares in any of its Portfolios to separate accounts of unaffiliated life insurance companies, it engages in shared funding. Each Fund may engage in mixed and shared funding. Therefore, due to differences in redemption rates or tax treatment, or other considerations, the interests of various shareholders participating in a Fund could conflict. A Fund's Board of Directors will monitor for the existence of any material conflicts, and determine what action, if any, should be taken. See the prospectuses for the Portfolios for additional information. We reserve the right, within the law, to make additions, deletions and substitutions for the Portfolios of the Funds. We may substitute shares of other portfolios for shares already purchased, or to be purchased in the future, under the contract. This substitution might occur if shares of a Portfolio should no longer be available, or if investment in any Portfolio's shares should become inappropriate for the purposes of the contract, in the judgment of our management. The new Portfolios may have higher fees and charges than the ones they replaced. No substitution or deletion will be made without prior notice to you in accordance with the 1940 Act. We also reserve the right to establish additional Subaccounts, each of which would invest in a separate Portfolio of a Fund, or in shares of another investment company, with a specified investment objective. We may also eliminate one or more Subaccounts if, in our sole discretion, marketing, tax, or investment conditions warrant. We will not eliminate a Subaccount without prior notice to you and, if required, before approval of the SEC. Not all Subaccounts may be available to all classes of contracts. There are a number of factors that are considered when deciding what Portfolios are made available in your variable annuity contract. Such factors include: (1) the investment objective of the Portfolio; (2) the Portfolio's performance history; (3) the Portfolio's holdings and strategies it uses to try and meet its objectives; and (4) the Portfolio's servicing agreement. The investment objective is critical because we want to have an array of Portfolios with diverse objectives so that an investor may diversify his or her investment holdings from a conservative to an aggressive investment portfolio depending on the advice of his or her investment adviser and risk assessment. When selecting a Portfolio for our products, we also want to make sure that the Portfolio has a strong performance history in comparison with its peers and that its holdings and strategies are consistent with its objectives. Finally, it is important for us to be able to provide you with a wide array of the services that facilitate your investment program relating to your allocation in Subaccounts that invest in the underlying Portfolios. We have entered into agreements with either the investment adviser or distributor of each of the Funds and/or, in certain cases, a Portfolio, under which the Portfolio, the adviser or distributor may make payments to us and/or to certain of our affiliates. These payments may be made in connection with certain administrative and other services we provide relating to the Portfolios. Such administrative services we provide include but are not limited to: accounting transactions for variable owners and then providing one daily purchase and sale order on behalf of each Portfolio; providing copies of Portfolio prospectuses, Statements of Additional Information and any supplements thereto; mailing proxy voting information, gathering the information and providing vote totals to the Portfolio on behalf of our owners; and providing customer service on behalf of the Portfolios. The fees are based upon a percentage of the average annual aggregate net amount we have invested in the Portfolio on behalf of the Separate Account and other separate accounts funding certain variable insurance contracts that we and our affiliates issue. These percentages differ, and some Portfolios, investment advisers or distributors pay us a greater percentage than other advisers or distributors based on the level of administrative and other services provided. 27 We will not realize a profit from payments received directly from a Portfolio, but we may realize a profit from payments received from the adviser and/or the distributor. If we do, we may use such profit for any corporate purpose, including payment of expenses (i) that we and/or our affiliates incur in promoting, marketing and administering the contracts, and (ii) that we incur, in our role as intermediary, in promoting, marketing and administering the Fund Portfolios. The amount received from certain Portfolios for the assets allocated to the Portfolios from the Separate Account during 2007 ranged from 0.10% to 0.25%. The Portfolios that pay a service fee to us are: Eaton Vance Variable Trust: VT Floating-Rate Income Fund VT Worldwide Health Sciences Fund GE Investments Funds, Inc.: Total Return Fund -- Class 1 Shares PIMCO Variable Insurance Trust: High Yield Portfolio -- Administrative Class Shares Low Duration Portfolio -- Administrative Class Shares As noted above, an investment adviser or sub-adviser of a Portfolio, or its affiliates, may make payments to us and/or certain of our affiliates. These payments may be derived, in whole or in part, from the profits the investment adviser or sub-adviser receives on the advisory fee deducted from Portfolio assets. Contract owners, through their indirect investment in the Portfolios, bear the costs of these advisory fees (see the prospectuses for the Portfolios for more information). The amount received from the adviser and/or the distributor for the assets allocated to the Portfolios from the Separate Account during 2007 ranged from 0.05% to 0.40%. Payment of these amounts is not an additional charge to you by the Funds or by us, but comes from the Fund's investment adviser or distributor. In addition to the asset-based payments for administrative and other services described above, the investment adviser or the distributor of the Fund may also pay us, or our affiliate Capital Brokerage Corporation, to participate in periodic sales meetings, for expenses relating to the production of promotional sales literature and for other expenses or services. The amount paid to us, or our affiliate Capital Brokerage Corporation, may be significant. Payments to participate in sales meetings may provide a Fund's investment adviser or distributor with greater access to our internal and external wholesalers to provide training, marketing support and educational presentations. In consideration of services provided and expenses incurred by Capital Brokerage Corporation in distributing shares of the Funds, Capital Brokerage Corporation also receives 12b-1 fees from AIM Variable Insurance Funds, AllianceBernstein Variable Products Series Fund, Inc., American Century Variable Portfolios II, Inc., DWS Variable Series II, Eaton Vance Variable Trust, Fidelity Variable Insurance Products Fund, Franklin Templeton Variable Insurance Products Trust, GE Investments Funds, Inc., MFS(R) Variable Insurance Trust, Oppenheimer Variable Account Funds and PIMCO Variable Insurance Trust. See the "Fee Tables" section of this prospectus and the Fund prospectuses. These payments range up to 0.30% of Separate Account assets invested in the particular Portfolio. Information about the Franklin Templeton VIP Founding Funds Allocation Fund. The Franklin Templeton VIP Founding Funds Allocation Fund (the "Allocation Fund") invests in Class 1 shares of three other series of the Franklin Templeton Variable Insurance Products Trust: Franklin Income Securities Fund, Mutual Shares Securities Fund and Templeton Growth Securities Fund (the "underlying funds"). The Allocation Fund seeks to maintain equal investments in each of the three underlying funds. The investment results of the underlying funds will vary. Because of this, the Allocation Fund's administrator, Franklin Templeton Services, LLC, will monitor the Allocation Fund's investments in the underlying funds and will seek to rebalance those investments when they are more than three percent above or below the goal of equal allocations to each of these underlying funds. The Allocation Fund pays Franklin Templeton Services, LLC a monthly fee equal to an annual rate of 0.10% of the Allocation Fund's average daily net assets for its services, including the monitoring of the Allocation Fund's investments in the underlying funds and the rebalancing of those investments. Franklin Templeton Services, LLC may receive assistance, at no charge to the Allocation Fund, from its corporate affiliate, Franklin Advisers, Inc., in monitoring the underlying funds and the Allocation Fund's investment in the underlying funds. Because the Allocation Fund pursues its goals by investing in the underlying funds, you will bear a proportionate share of the Allocation Fund's operating expenses and, also, indirectly, the operating expenses of the underlying funds. The Allocation Fund, as a shareholder in the underlying funds, will indirectly bear its proportionate share of any management fees and other expenses paid by the underlying funds. More information about the Allocation Fund and the underlying funds, including information about the fees and expenses of the Allocation Fund and the underlying funds, can be found in the prospectus for the Allocation Fund. 28 Voting Rights As required by law, we will vote the shares of the Portfolios held in the Separate Account at special shareholder meetings based on instructions from you. However, if the law changes and we are permitted to vote in our own right, we may elect to do so. Whenever a Fund calls a shareholder meeting, owners with voting interests in a Portfolio will be notified of issues requiring the shareholders' vote as soon as possible before the shareholder meeting. Persons having a voting interest in the Portfolio will be provided with proxy voting materials, reports, other materials, and a form with which to give voting instructions. We will determine the number of votes which you have the right to cast by applying your percentage interest in a Subaccount to the total number of votes attributable to the Subaccount. In determining the number of votes, we will recognize fractional shares. We will vote Portfolio shares for which no instructions are received (or instructions are not received timely) in the same proportion to those that are received. Therefore, because of proportional voting, a small number of contract owners may control the outcome of a vote. We will apply voting instructions to abstain on any item to be voted on a pro-rata basis to reduce the number of votes eligible to be cast. Asset Allocation Program The following is a general description of the Asset Allocation Program available under the contract. A complete description is available in the brochure for the program. The program may be referred to as "Efficient Edge" in the brochure or other materials. General The Asset Allocation Program is an asset allocation service that we make available at no additional charge for use within the contract. Asset allocation is an investment strategy for distributing assets among asset classes to help attain an investment goal. For your contract, the Asset Allocation Program can help with decisions you need to make about how to allocate your Contract Value among available Subaccounts (and their corresponding Portfolios). The theory behind an asset allocation strategy is that diversification among asset classes can help reduce volatility over the long term. Genworth Financial Asset Management, Inc. (doing business as Genworth Financial Wealth Management, Inc.) ("GFWM"), one of our affiliates, provides investment advice for the Asset Allocation Program. GFWM is an investment adviser that is registered under the Investment Advisers Act of 1940. As part of the Asset Allocation Program, GFWM has developed five asset allocation models ("Asset Allocation Models" or "Models"), each based on different profiles of an investor's investment time horizon and willingness to accept investment risk. Another Asset Allocation Model is a "build your own" Asset Allocation Model. We will refer to this Asset Allocation Model as the "Build Your Own Asset Allocation Model" when necessary to distinguish it from the other Asset Allocation Models. The distinguishing features of the Build Your Own Asset Allocation Model are discussed in the "Build Your Own Asset Allocation Model" provision below. The Asset Allocation Models are designed for use in two different circumstances, as discussed below. . Certain of the optional riders available for purchase under the contract are designed to provide protection against market downturns. To ensure that contract owners' assets protected under one of these riders are invested in accordance with an investment strategy involving an appropriate level of risk, we require the assets to be invested only in an Investment Strategy. For contract owners that purchase Lifetime Income Plus 2008, the contract owner may elect Asset Allocation Model A, B, C, or D or the Build Your Own Asset Allocation Model (or invest in one or more of the Designated Subaccounts) as the Investment Strategy. A contract owner, however, may not elect Asset Allocation Model E. For contract owners that purchase one of the other Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options, the contract owner may elect only Asset Allocation Model C (or invest in one or more of the Designated Subaccounts). Asset Allocation Model A, B, D, and E and the Build Your Own Asset Allocation Model are not available as Investment Strategies for these contract owners. . Contract owners that do not purchase one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options may also elect to participate in the Asset Allocation Program. These contract owners may choose Asset Allocation Model A, B, C, D or E. The Build Your Own Asset Allocation Model, however, is not available to these contract owners. The Asset Allocation Program is not available to contract owners who have elected Guaranteed Income Advantage. If you elect to participate in the Asset Allocation Program, your initial purchase payment will be allocated to the Subaccounts corresponding to the Portfolios in the Asset Allocation Model 29 you select. Any subsequent purchase payments you make will also be allocated accordingly, unless you instruct us otherwise in writing. The Build Your Own Asset Allocation Model works a little differently, as discussed in the "Build Your Own Asset Allocation Model" provision below. If you participate in the Asset Allocation Program, GFWM will serve as your investment adviser solely for the purposes of the development of the Asset Allocation Models (except for the Build Your Own Asset Model) and periodic updates of the Models. On a periodic basis (generally annually), unless determined to be necessary or appropriate by GFWM), the Asset Allocation Models are updated as discussed below. If you elect to participate in the Asset Allocation Program, we will reallocate your Contract Value or purchase payments, as applicable, in accordance with the Model you select as it is updated from time to time based on limited discretionary authority that you grant to us, unless you instruct us otherwise. For more information on GFWM's role as investment adviser for the Asset Allocation Program, you may review GFWM's disclosure brochure, which will be delivered to you at the time you apply for a contract. Please contact us if you would like to receive a copy of this brochure. We may change the investment adviser that we use to develop and periodically update the Asset Allocation Models, or to the extent permissible under applicable law, use no investment adviser at all. We may perform certain administrative functions on behalf of GFWM. However, we are not registered as an investment adviser and are not providing any investment advice in making the Asset Allocation Program available to contract owners. The Asset Allocation Models There are six Asset Allocation Models, each comprised of a carefully selected combination of Portfolios offered under the contract. Development of the Asset Allocation Models involves a multi-step process designed to optimize the selection of Portfolios, for a given level of risk tolerance, in an effort to maximize returns and limit the effects of market volatility. The discussion in this section generally applies to all of the Asset Allocation Models, although certain distinguishing features of the Build Your Own Asset Allocation Model are discussed in the "Build Your Own Asset Allocation Model" provision below. Asset allocation strategies reflect the theory that diversification among asset classes can help reduce volatility and potentially enhance returns over the long term. An asset class may be a category of investments having similar characteristics, such as stocks and other equity investments, and bonds and other fixed income investments. There may also be further divisions within asset classes, such as divisions according to the size of the issuer (e.g., large cap, mid cap, or small cap), the type of issuer (e.g., government, municipal, or corporate), or the location of the issuer (e.g., domestic or foreign). GFWM has identified target allocations, between equities and fixed income investments, for the level of risk, investment time horizon and investment objective specified for Asset Allocation Model A, B, C, D and E. In addition to these allocations, GFWM also conducts an optimization analysis to determine the appropriate further breakdown of asset classes for each of these Asset Allocation Models. Next, after the asset class exposures are known for each Asset Allocation Model, a determination is made as to how available Portfolios can be used to implement the asset class allocations. The Portfolios are selected by evaluating asset classes represented by each Portfolio and combining Portfolios to arrive at the desired asset class exposures. GFWM considers various factors in selecting the Portfolios for each Asset Allocation Model, which may include historical style analysis and asset performance and multiple regression analyses, as well as qualitative assessments of a Portfolio's portfolio manager and expected future market and economic conditions. In addition, GFWM may consider (but is not obligated to follow) recommendations we may make regarding what Portfolios to use. These recommendations may be based on various factors, including whether the investment adviser or distributor of a Portfolio pays us a fee in connection with certain administrative and other services we provide relating to the Portfolio, and whether our affiliate Capital Brokerage Corporation receives 12b-1 fees from the Portfolio. Based on this analysis, Portfolios are selected in a manner that is intended to optimize potential returns of each Model, given a particular level of risk tolerance. This process could, in some cases, result in the inclusion of a Portfolio in a Model based on its specific asset class exposure or other specific optimization factors, even when another Portfolio may have better investment performance. In addition, this may also result in the inclusion of Portfolios with higher fees that may adversely affect performance. Build Your Own Asset Allocation Model. The Build Your Own Asset Allocation Model allows for more flexibility than the other five Asset Allocation Models, enabling you, in consultation with your registered representative, to construct your own asset allocation that you believe best meets your individual investment objectives. We have constructed the Build Your Own Asset Allocation Model to require that you invest between 20% and 80% of your assets in the "Core" asset class, between 20% and 60% of your assets in the "Fixed Income" asset class, and no more than 20% of your assets in the "Specialty" asset class, for a total of 100% of assets invested in accordance with the Model. In constructing the parameters for the Build Your Own Asset Allocation Model, we defined the 30 asset classes among which assets should be allocated, and determined an appropriate percentage range for each asset class. In making these determinations, our goal is to permit any asset allocation that is appropriate for contract owners with moderately conservative to moderately aggressive risk tolerance levels. GFWM's role for the Build Your Own Asset Allocation Model is to make determinations as to how available Portfolios fit within each asset class. GFWM considers various factors in assigning Portfolios to an asset class, which may include historical style analysis and asset performance and multiple regression analyses. As with the other Asset Allocation Models, GFWM may be subject to certain conflicts of interests in categorizing the Portfolio for the Build Your Own Asset Allocation Model, including recommendations from us on which Portfolios to include in the Model or a specific asset class based on the fees we receive in connection with a Portfolio (see the discussion in "The Asset Allocation Models" provision above) and the need by certain Portfolios for additional assets (see the discussion in the "Risks" provision below). It is possible that such conflicts of interest could affect, among other matters, GFWM's decisions as to which asset class to categorize a Portfolio. Periodic Updates of Asset Allocation Models and Notices of Updates Each of the Asset Allocation Models is evaluated periodically (generally annually) to assess whether the combination of Portfolios within each Model should be changed to better seek to optimize the potential return for the level of risk tolerance intended for the Model. As a result of such periodic analysis, each Model may change, such as by revising the percentages allocated to such Portfolio. In addition, Portfolios may be added to a Model (including Portfolios not currently available in the contract), or Portfolios may be deleted from a Model. We evaluate the Build Your Own Asset Allocation Model periodically to assess whether the asset allocation parameters should be changed to better ensure that resulting asset allocations are in an appropriate risk tolerance range. If, as a result of such periodic analysis, we determine that the Build Your Own Asset Allocation Model must change (for example by adding, removing or modifying asset classes or by changing the percentage range of investments allocable to an asset class), then we will make a new Build Your Own Asset Allocation Model available for new contract owners. GFWM will also evaluate the Build Your Own Asset Allocation Model to assess whether the Portfolios are appropriately categorized within each asset class. As a result of this evaluation, GFWM may determine that certain Portfolios should be placed in a different asset class or, perhaps, removed from the Model, or that other Portfolios should be added to the Model (including Portfolios not currently available in the contract). When your Asset Allocation Model is updated (as described below), we will reallocate your Contract Value (and subsequent purchase payments, if applicable) in accordance with any changes to the Model you have selected. This means the allocation of your Contract Value, and potentially the Portfolios in which you are invested, will change and your Contract Value (and subsequent purchase payments, if applicable) will be reallocated among the Portfolios in your updated Model (independently of monthly rebalancing, as discussed below). As discussed below, in the case of the Build Your Own Asset Allocation Model, it is possible that a change may be made to the Build Your Own Asset Allocation Model that will require a contract owner to provide us with new allocation instructions. When Asset Allocation Models are to be updated, we will send you written notice of the updates to the Models at least 30 days in advance of the date the updated version of the Model is intended to be effective. Contract owners purchasing contracts who elect to participate in the Asset Allocation Program within the two week period prior to a date that Asset Allocation Models are to be updated, will be provided with information regarding the composition of both the current Asset Allocation Model as well as the proposed changes to the Model. You should carefully review these notices. If you wish to accept the changes to your selected Model, you will not need to take any action, as your Contract Value (and subsequent purchase payments, if applicable) will be reallocated in accordance with the updated Model. If you do not wish to accept the changes to your selected Model, you have the following alternatives. If you elected one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008, as discussed below) or one of the Payment Protection Rider Options, you can transfer your Contract Value to one or more of the Designated Subaccounts (as described in the sections of this prospectus discussing the riders), or you can notify us in writing that you have elected to reject the change. If you reject the change and, as a result, your total Contract Value is no longer invested in accordance with the prescribed Investment Strategy, your benefits under the applicable rider will be reduced by 50%. If you elected Lifetime Income Plus 2008, you must transfer your Contract Value to one or more of the Designated Subaccounts (as described in the sections of this prospectus discussing the riders), or one of the other available Asset Allocation Models. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy, and any attempt to allocate assets otherwise will be considered not in good order and rejected. 31 Please note, also, that changes may be made to the Build Your Own Asset Allocation Model that will require contract owners whose existing allocations will not meet the parameters of the revised Model to provide us with new allocation instructions. For example, a Portfolio may be moved from one asset class to another or shares of a Portfolio may become unavailable under the contract or in the Model. If we do not receive new allocation instructions from the contract owner in these circumstances in a timely manner after we request such new instructions, the contract owner's assets will be re-allocated to Asset Allocation Model C until we receive new instructions. When a Portfolio in which your assets are invested is closed to new investments but remains in your contract, your investment in that Portfolio at the time of the closing will remain, and you will not be re-allocated to Asset Allocation Model C. However, any subsequent purchase payments or transfers requesting an allocation to such a Portfolio will be considered not in good order, and you will be asked to provide us with updated allocation instructions. If you did not elect one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options, you may change to a different Asset Allocation Model or reject the change. If you choose to reject a change in an Asset Allocation Model in accordance with the procedures described above, you create your own portfolio (a "self-directed portfolio"), you have terminated your advisory relationship with GFWM and GFWM provides no investment advice related to the creation of a self-directed portfolio. Further, once you have rejected a change in a Model, you are considered to have elected to reject all future changes in the Model. Therefore, if you reject a Model change and thereby create a self-directed portfolio, you will not receive a periodic review of or changes to your portfolio, as would be provided by GFWM with respect to the Asset Allocation Models. You will, however, continue to receive a quarterly statement with information about your Contract Value, as well as written materials from GFWM about any changes proposed to be made to the Models, and you can notify us in writing to allocate your Contract Value in accordance with such changes. Selecting An Asset Allocation Model For contract owners who have not elected one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options. If you purchase one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008, as discussed below) or one of the Payment Protection Rider Options and elect to participate in the Asset Allocation Program, you are required to allocate your Contract Value (and subsequent purchase payments, if applicable) to Asset Allocation Model C. If you purchased Lifetime Income Plus 2008 and elect to participate in the Asset Allocation program, you must allocate your Contract Value (and subsequent purchase payments, if applicable) to Asset Allocation Model A, B, C, or D or the Build Your Own Asset Allocation Model. If you elect to participate in the Asset Allocation Program and you have not elected one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options, you must choose Asset Allocation Model A, B, C, D or E for your allocations. We will not make this decision, nor will GFWM. The following paragraph provides some information you may want to consider in making this decision. You should consult with your registered representative and/or your financial adviser on your decision regarding which Asset Allocation Model to select. Your registered representative can assist you in determining which Model may be best suited to your financial needs, investment time horizon, and willingness to accept investment risk, and can help you complete the proper forms to participate in the Asset Allocation Program. You should also periodically review these factors with your registered representative to consider whether you should change Models (or, if you have purchased one of the Guaranteed Minimum Withdrawal Benefit Rider Options or one of the Payment Protection Rider Options, whether you should transfer your Contract Value to one or more of the Designated Subaccounts) to reflect any changes in your personal circumstances. Your registered representative can help you complete the proper forms to change to a different Model or transfer to Designated Subaccounts. In light of our potential payment obligations under the riders, we will not permit contract owners who have selected a rider to allocate their assets in either a highly aggressive or highly conservative manner. In deciding whether to purchase a rider, you and your registered representative should consider whether an asset allocation not permitted under the rider would best meet your investment objectives. You may, in consultation with your registered representative, utilize an investor profile questionnaire we make available, which asks questions intended to help you or your registered representative assess your financial needs, investment time horizon, and willingness to accept investment risk. However, even if you utilize the investor profile questionnaire, it is your decision, in consultation with your registered representative, which Model to choose initially or whether to change to a different Model or transfer to Designated Subaccounts, as the case may be, at a later time. Neither we nor GFWM bear any responsibility for this decision. You may change to a different 32 Model or transfer to Designated Subaccounts, as the case may be, at any time with a proper written request or by telephone or electronic instructions, provided a valid telephone/electronic authorization is on file with us. Monthly Rebalancing Each calendar month (on the "monthly anniversary" of your Contract Date), and on any Valuation Day after any transaction involving a withdrawal, receipt of a purchase payment or a transfer of Contract Value, we rebalance your Contract Value to maintain the Subaccounts and their corresponding Portfolios, and the relative percentages of the Subaccounts, for your selected Asset Allocation Model. This monthly rebalancing takes account of: . increases and decreases in Contract Value in each Subaccount due to Subaccount performance; and . increases and decreases in Contract Value in each Subaccount due to Subaccount transfers, withdrawals (particularly if taken from specific Subaccounts you have designated), and purchase payments (particularly if allocated to specific Subaccounts you have designated). The first monthly rebalancing will occur on the first "monthly anniversary" of the Contract Date. We will not rebalance self-directed portfolios (discussed above) unless the contract owner elects the Portfolio Rebalancing program. For self-directed portfolios, future purchase payments for which no specific allocation instructions are received will be allocated in accordance with the last allocation instructions we received, which may have been a prior version of their Asset Allocation Model. Accordingly, if you have a self-directed portfolio you should consider providing specific allocation instructions with each purchase payment or contacting us to update your default allocation instructions. Quarterly Reports If you elect to participate in the Asset Allocation Program, you will be sent quarterly reports that provide information about the Subaccounts within your Model, as part of your usual quarterly statement. Information concerning the current Models is provided below. Risks Although the Asset Allocation Models are designed to optimize returns given the various levels of risk, there is no assurance that a Model portfolio will not lose money or not experience volatility. Investment performance of your Contract Value could be better or worse by participating in an Asset Allocation Model than if you had not participated. A Model may perform better or worse than any single Portfolio, Subaccount or asset class or other combinations of Portfolios, Subaccounts or asset classes. Model performance is dependent upon the performance of the component Portfolios. Your Contract Value will fluctuate, and when redeemed, may be worth more or less than the original cost. An Asset Allocation Model may not perform as intended. Although the Models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the Models are based, which could cause the Models to be ineffective or less effective in reducing volatility. Periodic updating of the Asset Allocation Models can cause the underlying Portfolios to incur transactional expenses to raise cash for money flowing out of the Portfolios or to buy securities with money flowing into the Portfolios. These expenses can adversely affect performance of the related Portfolios and the Models. GFWM may be subject to competing interests that have the potential to influence its decision making with regard to the Asset Allocation Program. For example, GFWM's affiliates (including us) may believe that certain Portfolios could benefit from additional assets or could be harmed by redemptions. In addition, the Portfolios underlying the Subaccounts may invest, depending upon their investment objective and decisions by their investment managers, in securities issued by Genworth Financial, Inc., GFWM's ultimate parent, or its affiliates. GFWM will not have any role in determining whether a Portfolio should purchase or sell Genworth securities. GFWM may allocate portions of the Asset Allocation Models to Portfolios which have held, hold or may hold Genworth securities. GFWM's decision to allocate a percentage of a Model to such a Portfolio will be based on the merits of investing in such a Portfolio and a determination that such an investment is appropriate for the Model. 33 The Models Information concerning the Asset Allocation Models is provided on the following pages. You should review this information carefully before selecting or changing a Model.
Moderately Moderately Conservative Conservative Moderate Aggressive Aggressive Allocation Allocation Allocation Allocation Allocation "Model A" "Model B" "Model C" "Model D" "Model E" - -------------------------------------------------------------------------------------------------------- Investor Profile - -------------------------------------------------------------------------------------------------------- Investor is willing Investor is willing Investor is willing Investor is willing Investor is willing to accept a low to accept a low to to accept a to accept a to accept a high level of risk, has moderate level of moderate level of moderate to high level of risk, has a short term (less risk, has a risk, has a level of risk, has a long term (more than five years) moderately short moderately long a long term (15 to than 15 years) investment time term (less than ten term (10 to 20 20 years) investment time horizon and is years) investment years) investment investment time horizon and has the looking for an time horizon and is time horizon and is horizon and is temperament to ride investment that is looking for an looking for an looking for a out market swings. relatively stable investment to keep investment with the growth oriented in value. pace with inflation. opportunity for investment. long term moderate growth. - -------------------------------------------------------------------------------------------------------- Investor Objective - -------------------------------------------------------------------------------------------------------- High level of Growth and current Growth of capital Growth of capital Growth of capital. current income with income. Target with a low to but without the Target allocation preservation of allocation mix is moderate level of price swings of an mix is 100% capital. Target 40% equities and current income. all equity equities. allocation mix is 60% fixed income. Target allocation portfolio. Target 20% equities and mix is 60% equities allocation mix is 80% fixed income. and 40% fixed 80% equities and income. 20% fixed income. - --------------------------------------------------------------------------------------------------------
Build Your Own Asset Allocation Model - ---------------------------------------------------------------------------------------- The Build Your Own Asset Allocation Model is constructed, generally, to allow for the creation of an equity to fixed income allocation that ranges between 40% equities/60% fixed income to a 80% equities/20% fixed income. These ranges generally fall within the Investor Profile and Investor Objective for Asset Allocation Model B (Moderately Conservative Allocation) on one end of the spectrum and for Asset Allocation Model D (Moderately Aggressive Allocation) on the other. Of course, the Investor Profile and Investor Objective that your allocation will most closely correspond to will depend on your actual allocation. - ----------------------------------------------------------------------------------------
34 MODEL PERCENTAGE ALLOCATIONS AND PORTFOLIO SELECTIONS
Portfolios Model A Model B Model C Model D - ---------------------------------------------------------------------------------------------------------------------------------- Equities - ---------------------------------------------------------------------------------------------------------------------------------- Large Cap Value Franklin Templeton Variable Insurance Products Trust -- Mutual Shares Securities Fund -- Class 2 Shares 2% 3% 5% 6% ------------------------------------------------------------------------------------------------------ Fidelity(R) Variable Insurance Products Fund -- VIP Equity-Income Portfolio -- Service Class 2 1% 3% 4% 6% - ---------------------------------------------------------------------------------------------------------------------------------- Large Cap Blend JPMorgan Insurance Trust -- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 1% 3% 4% 5% ------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust -- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 1% 2% 3% 5% - ---------------------------------------------------------------------------------------------------------------------------------- Large Cap Growth Fidelity(R) Variable Insurance Products Fund -- VIP Contrafund Portfolio -- Service Class 2 1% 3% 5% 7% ------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust -- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 2% 4% 5% 7% - ---------------------------------------------------------------------------------------------------------------------------------- Mid Cap Core JPMorgan Insurance Trust -- JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 2% 2% 4% 4% - ---------------------------------------------------------------------------------------------------------------------------------- Small Cap Core Oppenheimer Variable Account Funds -- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 1% 2% 3% 4% - ---------------------------------------------------------------------------------------------------------------------------------- International Value Franklin Templeton Variable Insurance Products Trust -- Templeton Foreign Securities Fund -- Class 2 Shares 5% 9% 14% 18% - ---------------------------------------------------------------------------------------------------------------------------------- International Growth American Century Variable Portfolios, Inc. -- VP International Fund -- Class I 4% 8% 12% 16% - ---------------------------------------------------------------------------------------------------------------------------------- Specialty -- Real Estate AIM Variable Insurance Funds -- AIM V.I. Global Real Estate Fund -- Series II shares 0% 1% 1% 2% - ---------------------------------------------------------------------------------------------------------------------------------- Total % Equities 20% 40% 60% 80% - ---------------------------------------------------------------------------------------------------------------------------------- Fixed Income - ---------------------------------------------------------------------------------------------------------------------------------- Short Term Bonds PIMCO Variable Insurance Trust -- Low Duration Portfolio -- Administrative Class Shares 44% 33% 22% 11% - ---------------------------------------------------------------------------------------------------------------------------------- Government Bonds JPMorgan Insurance Trust -- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 14% 10% 7% 3% - ---------------------------------------------------------------------------------------------------------------------------------- Intermediate Term Bonds JPMorgan Insurance Trust -- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 14% 11% 7% 4% - ---------------------------------------------------------------------------------------------------------------------------------- Bank Loan -- Fixed Income Eaton Vance Variable Trust -- VT Floating-Rate Income Fund 8% 6% 4% 2% - ---------------------------------------------------------------------------------------------------------------------------------- Total % Fixed Income 80% 60% 40% 20% - ----------------------------------------------------------------------------------------------------------------------------------
Portfolios Model E - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust -- Mutual Shares Securities Fund -- Class 2 Shares 8% - ----------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Fund -- VIP Equity-Income Portfolio -- Service Class 2 7% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 6% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 6% - ----------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Fund -- VIP Contrafund Portfolio -- Service Class 2 8% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 9% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 6% - ----------------------------------------------------------------------------- Oppenheimer Variable Account Funds -- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 5% - ----------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust -- Templeton Foreign Securities Fund -- Class 2 Shares 23% - ----------------------------------------------------------------------------- American Century Variable Portfolios, Inc. -- VP International Fund -- Class I 20% - ----------------------------------------------------------------------------- AIM Variable Insurance Funds -- AIM V.I. Global Real Estate Fund -- Series II shares 2% - ----------------------------------------------------------------------------- 100% - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- PIMCO Variable Insurance Trust -- Low Duration Portfolio -- Administrative Class Shares 0% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 0% - ----------------------------------------------------------------------------- JPMorgan Insurance Trust -- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 0% - ----------------------------------------------------------------------------- Eaton Vance Variable Trust -- VT Floating-Rate Income Fund 0% - ----------------------------------------------------------------------------- 0% - -----------------------------------------------------------------------------
35 MODEL PERCENTAGE ALLOCATIONS AND PORTFOLIO SELECTIONS BUILD YOUR OWN ASSET ALLOCATION MODEL
Core Asset Class Fixed Income Asset (20% to 80%) Specialty Asset Class (0% to 20%) Class (20% to 60%) - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares AIM V.I. Capital Appreciation Fund -- JPMorgan Insurance Trust AllianceBernstein Balanced Wealth Strategy Portfolio -- Series I shares Core Bond Portfolio -- Class B AIM V.I. Global Real Estate Fund -- Class 1 American Century VP Income & Growth Fund -- Class I Series II shares JPMorgan Insurance Trust American Century VP Value Fund -- Class I AllianceBernstein Global Technology Government Bond The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Portfolio -- Class B Portfolio -- Class 1 Shares American Century VP Inflation PIMCO VIT Low Duration DWS Dreman High Return Equity VIP -- Class B Shares Protection Fund -- Class II Portfolio -- Fidelity VIP Contrafund(R) Portfolio -- Service Class 2 American Century VP International Fund Administrative Class Fidelity VIP Equity-Income Portfolio -- Service Class 2 -- Class I Shares Franklin Templeton VIP Founding Funds Allocation Fund -- American Century VP Ultra(R) Fund -- Class 2 Shares Class I Franklin Templeton VIP Franklin Income Securities Fund -- Dreyfus Investment Portfolios -- MidCap Class 2 Shares Stock Portfolio -- Initial Shares Franklin Templeton VIP Large Cap Growth Securities Fund -- DWS Dreman Small Mid Cap Value VIP -- Class 2 Shares Class B Shares Franklin Templeton VIP Mutual Shares Securities Fund -- Class DWS Technology VIP -- Class B Shares 2 Shares Eaton Vance VT Floating-Rate Income Fund Franklin Templeton VIP Templeton Foreign Securities Fund -- Fidelity VIP Mid Cap Portfolio -- Class 2 Shares Service Class 2 Franklin Templeton VIP Templeton Global Asset Allocation JPMorgan Insurance Trust Diversified Fund -- Class 2 Shares Mid Cap Portfolio -- Class 1 Franklin Templeton VIP Templeton Growth Securities Fund -- JPMorgan Insurance Trust Intrepid Mid Class 2 Shares Cap Portfolio -- Class 1 GE Investments Funds Total Return Fund -- Class 3 Shares MFS(R) Strategic Income Series -- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 Service Class Shares JPMorgan Insurance Trust Diversified Equity Portfolio -- Oppenheimer Main Street Small Cap Class 1 Fund/VA -- Service Shares JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 PIMCO VIT High Yield Portfolio -- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 Administrative Class Shares MFS(R) Total Return Series -- Service Class Shares Oppenheimer Capital Appreciation Fund/VA -- Service Shares Oppenheimer Main Street Fund/VA -- Service Shares
36 THE GUARANTEE ACCOUNT Amounts in the Guarantee Account are held in, and are part of, our General Account. The General Account consists of our assets other than those allocated to this and other Separate Accounts. Subject to statutory authority, we have sole discretion over the investment of assets of the General Account. The assets of the General Account are chargeable with liabilities arising out of any business we may conduct. Due to certain exemptive and exclusionary provisions of the Federal securities laws, we have not registered interests in the Guarantee Account under the Securities Act of 1933 (the "1933 Act"), and we have not registered either the Guarantee Account or our General Account as an investment company under the 1940 Act. Accordingly, neither our Guarantee Account nor our General Account is generally subject to regulation under the 1933 Act and the 1940 Act. Disclosures relating to the interests in the Guarantee Account and the General Account may, however, be subject to certain generally applicable provisions of the Federal securities laws relating to the accuracy of statements made in a registration statement. The Guarantee Account may not be available in all states or markets. Generally, you may allocate your purchase payments and/or transfer assets to the Guarantee Account. For contracts issued on or after the later of September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications, we may limit the amount that may be allocated to the Guarantee Account. Currently, for such contracts, no more than 25% of your Contract Value, as determined at the time of allocation, may be allocated to the Guarantee Account. In addition, where permitted by state law, we will refuse new purchase payments or transfers into the Guarantee Account when your assets in the Guarantee Account are equal to or greater than 25% of your Contract Value at the time of allocation. We generally exercise our right to limit or refuse allocations to the Guarantee Account when interest rate periods are low for prolonged periods of time. Amounts allocated to the Guarantee Account are credited interest (as described below). In addition, the Guarantee Account is not available to contract owners who have elected one of the Guaranteed Minimum Withdrawal Benefit Rider Options or Payment Protection Rider Options for as long as the rider is in effect. Assets in the Guarantee Account are subject to some, but not all, of the charges we assess in connection with your contract. See the "Charges and Other Deductions" provision of this prospectus. Each time you allocate purchase payments or transfer assets to the Guarantee Account, we establish an interest rate guarantee period. For each interest rate guarantee period, we guarantee an interest rate for a specified period of time. At the end of an interest rate guarantee period, a new interest rate will become effective, and a new interest rate guarantee period will commence for the remaining portion of that particular allocation. We determine the interest rates at our sole discretion. The determination made will be influenced by, but not necessarily correspond to, interest rates available on fixed income investments which we may acquire with the amounts we receive as purchase payments or transfers of assets under the contracts. You will have no direct or indirect interest in these investments. We also will consider other factors in determining interest rates for a guarantee period including, but not limited to, regulatory and tax requirements, sales commissions, and administrative expenses borne by us, general economic trends, and competitive factors. Amounts you allocate to the Guarantee Account will not share in the investment performance of our General Account. We cannot predict or guarantee the level of interest rates in future guarantee periods. However, the interest rates for any interest rate guarantee period will be at least the guaranteed interest rate shown in your contract. We will notify you in writing at least 5 days prior to the expiration date of any interest rate guarantee period about the then currently available interest rate guarantee periods and the guaranteed interest rates applicable to such interest rate guarantee periods. A new one year interest rate guarantee period will commence automatically unless we receive written notice prior to the end of the 30-day period following the expiration of the interest rate guarantee period ("30-day window") of your election of a different interest rate guarantee period from among those being offered by us at that time, or instructions to transfer all or a portion of the remaining amount to one or more Subaccounts, subject to certain restrictions. See the "Transfers" provision of this prospectus. During the 30-day window, the allocation will accrue interest at the new interest rate guarantee period's interest rate. To the extent permitted by law, we reserve the right at any time to offer interest rate guarantee periods that differ from those available when we issued the contract, and to credit a higher rate of interest on purchase payments allocated to the Guarantee Account participating in a Dollar Cost Averaging program that would otherwise be credited if not participating in a Dollar Cost Averaging program. See the "Dollar Cost Averaging Program" provision. Such a program may not be available to all contracts and is not available if you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options and your assets are allocated in accordance with the Investment Strategy as prescribed by each rider. We also reserve the right, at any time, to stop accepting purchase payments or transfers of assets to a particular interest rate guarantee period. Since the specific interest rate guarantee periods available may change periodically, please contact our Home Office to determine the interest rate guarantee periods currently being offered. 37 CHARGES AND OTHER DEDUCTIONS We sell the contracts through registered representatives of broker-dealers. These registered representatives are also appointed and licensed as insurance agents of the Company. We pay commissions to the broker-dealers for selling the contracts. We intend to recover commissions, marketing, administrative and other costs of contract benefits, and other incentives we pay, through fees and charges imposed under the contracts and other corporate revenue. See the "Sale of the Contracts" provision of this prospectus. All of the charges described in this section apply to assets allocated to the Separate Account. Assets in the Guarantee Account are subject to all of the charges described in this section except for the mortality and expense risk charge and the administrative expense charge. We will deduct the charges described below to cover our costs and expenses, services provided, and risks assumed under the contracts. We incur certain costs and expenses for the distribution and administration of the contracts and for providing the benefits payable thereunder. Our administrative services include: . processing applications for and issuing the contracts; . maintaining records; . administering income payments; . furnishing accounting and valuation services (including the calculation and monitoring of daily Subaccount values); . reconciling and depositing cash receipts; . providing contract confirmations and periodic statements; . providing toll-free inquiry services; and . furnishing telephone and internet transaction services. The risks we assume include: . the risk that the death benefit will be greater than the Surrender Value; . the risk that the actual life-span of persons receiving income payments under the contract will exceed the assumptions reflected in our guaranteed rates (these rates are incorporated in the contract and cannot be changed); . the risk that more owners than expected will qualify for waivers of the surrender charges; and . the risk that our costs in providing the services will exceed our revenues from contract charges (which cannot be changed by us). The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge. For example, the surrender charge we collect may not fully cover all of the sales and distribution expenses we actually incur. We also may realize a profit on one or more of the charges. We may use any such profits for any corporate purpose, including the payment of sales expenses. Transaction Expenses Surrender Charge We assess a surrender charge on partial withdrawals and surrenders of purchase payments taken within the first six years of receipt, unless you meet an available exception as described below. You pay this charge to compensate us for the losses we experience on contract distribution costs. We calculate the surrender charge separately for each purchase payment. For purposes of calculating this charge, we assume that you withdraw purchase payments on a first-in, first-out basis. We deduct the surrender charge proportionately from the Subaccounts (excluding the GIS Subaccount(s) if Guaranteed Income Advantage is elected at the time of application). However, if there are insufficient assets in the Separate Account (excluding the GIS Subaccount(s) if Guaranteed Income Advantage is elected), we will deduct the charge proportionately from all assets in the Guarantee Account. The charge will be taken first from any six year interest rate guarantee periods to which you have allocated purchase payment and then from the one year interest rate guarantee periods on a first-in, first-out basis. If Guaranteed Income Advantage is elected, any remaining withdrawals will then be deducted from the GIS Subaccount(s) from the segment that has been in effect for the shortest period of time. The surrender charge is as follows:
Surrender Charge Number of Completed as a Percentage of Years Since We the Surrendered or Received the Withdrawn Purchase Payment Purchase Payment - -------------------------------------- 0 6% 1 6% 2 6% 3 6% 4 5% 5 4% 6 or more 0% - --------------------------------------
38 Exceptions to the Surrender Charge We do not assess the surrender charge: . on amounts of Contract Value representing gain (as defined below); . on free withdrawal amounts (as defined below); . on surrenders or partial withdrawals taken under Optional Payment Plan 1, Optional Payment Plan 2 (for a period of 5 or more years), or Optional Payment Plan 5; or . if a waiver of surrender charge provision applies. You may withdraw any gain in your contract free of any surrender charge. We calculate gain in the contract as: (a) plus (b) minus (c) minus (d), but not less than zero where: (a) is the Contract Value on the Valuation Day we receive your partial withdrawal or surrender request; (b) is the total of any withdrawals previously taken, including surrender charges assessed; (c) is the total of purchase payments made; and (d) is the total of any gain previously withdrawn. In addition to any gain, you may withdraw an amount equal to the greater of 10% of your total purchase payments or any amount withdrawn to meet minimum distribution requirements under the Code each contract year without a surrender charge (the "free withdrawal amount"). If you are making a withdrawal from this contract to meet annual minimum distribution requirements under the Code, and the minimum distribution amount attributable to this contract for the calendar year ending at or before the last day of the contract year exceeds the free withdrawal amount, you may withdraw the difference free of surrender charges. We will deduct amounts surrendered first from any gain in the contract and then from purchase payments made. The free withdrawal amount is not cumulative from contract year to contract year. The free withdrawal amount will not apply to commutation value taken under Payment Optimizer Plus. Further, we will waive the surrender charge if you annuitize the contract under Optional Payment Plan 1 (Life Income with Period Certain), Optional Payment Plan 2 (Income for a Fixed Period) provided that you select a fixed period of 5 years or more, or Optional Payment Plan 5 (Joint Life and Survivor Income). In addition, we will waive the surrender charges if you take income payments from the GIS Subaccount(s) pursuant to the terms of Guaranteed Income Advantage or if you take income payments pursuant to the terms of one of the Payment Protection Rider Option. We may also waive surrender charges for certain withdrawals made pursuant to one of the Guaranteed Minimum Withdrawal Benefit Rider Options. See the "Optional Payment Plans," "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options," "Income Payments -- Guaranteed Income Advantage," and "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. We also will waive surrender charges arising from a surrender occurring before income payments begin if, at the time we receive the surrender request, we have received due proof that the Annuitant has a qualifying terminal illness, or has a qualifying confinement to a state licensed or legally operated hospital or inpatient nursing facility for a minimum period as set forth in the contract (provided the confinement began, or the illness was diagnosed, at least one year after the Contract Date). If you surrender the contract under the terminal illness waiver, please remember that we will pay your Contract Value, which could be less than the death benefit otherwise available. All Annuitants must be age 80 or younger on the Contract Date to be eligible for this waiver. The terms and conditions of the waivers are set forth in your contract. In addition, any partial withdrawals that are immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program are not subject to a surrender charge. Deductions from the Separate Account We deduct from the Separate Account an amount, computed daily, equal to an annual rate of 1.45% of the daily net assets of the Separate Account. The charge consists of an administrative expense charge at an effective annual rate of 0.15% and a mortality and expense risk charge at an effective annual rate of 1.30%. These deductions from the Separate Account are reflected in your Contract Value. Charges for the Living Benefit Rider Options Charge for Guaranteed Income Advantage We charge you for expenses related to Guaranteed Income Advantage, if you elect this option at the time of application. This charge is deducted from the Separate Account, computed daily. For contracts issued on or after the later of April 29, 2005 or the date on which state insurance authorities approve applicable contract modifications, the charge currently is equal to (and will never exceed) an annual rate of 0.50% of the daily net assets of the Separate Account. For contracts issued on or after the later of May 1, 2003 or the date on which state insurance authorities approve applicable contract modifications, but prior to April 29, 2005 or the date on which 39 state insurance authorities approve applicable contract modifications, the charge currently is equal to an annual rate of 0.40% (0.50% maximum) of the daily net assets of the Separate Account. The deduction from the Separate Account is reflected in your Contract Value. You may elect to receive monthly income under this rider or you may elect to transfer the value in the GIS Subaccount(s) to another investment option under your contract and receive income payments. If you elect to transfer the value in the GIS Subaccount(s) to another investment option and receive income payments, the rider charge will end. Guaranteed Income Advantage may not be available in all states or in all markets. We reserve the right to discontinue offering Guaranteed Income Advantage at any time and for any reason. Charges for the Guaranteed Minimum Withdrawal Benefit Rider Options We charge you for expenses related to Guaranteed Withdrawal Advantage, Lifetime Income Plus, Lifetime Income Plus 2007 and Lifetime Income Plus 2008. Each rider is a separate rider with a separate charge. You cannot purchase these riders together or in any combination. If you wish to elect any of the riders, you must do so at the time of application. Guaranteed Withdrawal Advantage We assess a charge for Guaranteed Withdrawal Advantage equal to an annualized rate of 0.50% of the daily net assets of the Separate Account. The deduction from the Separate Account is reflected in your Contract Value. The charge for this rider continues even if you do not allocate assets in accordance with the prescribed Investment Strategy and the benefits you are eligible to receive are reduced. If you reset your benefit and allocate assets in accordance with the prescribed Investment Strategy available at that time, we will reset the charge for the rider, which may be higher than your previous charge, but will never exceed an annualized rate of 1.00% of your daily net assets in the Separate Account. Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. Lifetime Income Plus For contracts issued on or after the later of October 7, 2005 or the date on which state insurance authorities approve applicable contract modifications, but prior to May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications, we assess a charge for Lifetime Income Plus currently equal to an annualized rate of 0.60% of the daily net assets of the Separate Account. For contracts issued on or after the later of May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications, we assess a charge for Lifetime Income Plus currently equal to an annualized rate of 0.60% of the daily net assets of the Separate Account for single Annuitant contracts and 0.75% of the daily net assets of the Separate Account for Joint Annuitant contracts. Once a contract is a Joint Annuitant contract, and the Joint Annuitant rider charge is applied, the Joint Annuitant rider charge will continue while the rider is in effect. The deduction for the rider charge from the Separate Account is reflected in your Contract Value. The charge for this rider continues even if you do not allocate assets in accordance with the prescribed Investment Strategy and the benefits you are eligible to receive are reduced. If you reset your benefit and allocate assets in accordance with the prescribed Investment Strategy available at that time, we will reset the charge for the rider, which may be higher than your previous charge, but will never exceed an annualized rate of 2.00% of your daily net assets in the Separate Account. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. Lifetime Income Plus 2007 We assess a charge for Lifetime Income Plus 2007 currently equal to an annualized rate of 0.75% of the daily net assets of the Separate Account for single Annuitant contracts and 0.85% of the daily net assets of the Separate Account for Joint Annuitant contracts. Once a contract is a Joint Annuitant contract, and the Joint Annuitant rider charge is applied, the Joint Annuitant rider charge will continue while the rider is in effect. The deduction for the rider charge from the Separate Account is reflected in your Contract Value. The charge for this rider continues even if you do not allocate assets in accordance with the prescribed Investment Strategy and the benefits you are eligible to receive are reduced. If you reset your benefit and allocate assets in accordance with the prescribed Investment Strategy available at that time, we will reset the charge for the rider, which may be higher than your previous charge, but will never exceed an annualized rate of 2.00% of your daily net assets in the Separate Account. Lifetime Income Plus 2007 may not be available in all states and markets. We reserve the right to discontinue offering Lifetime Income Plus 2007 at any time and for any reason. Lifetime Income Plus 2008 You may purchase Lifetime Income Plus 2008 with or without the Principal Protection Death Benefit. We assess a charge for the guaranteed minimum withdrawal benefit provided by the 40 rider. The charge for the guaranteed minimum withdrawal benefit is calculated quarterly as a percentage of the benefit base, as defined and determined under the rider, and deducted quarterly from the Contract Value. On the Contract Date, the benefit base equals Contract Value. The benefit base will change and may be higher than the Contract Value on any given day. If you purchase Lifetime Income Plus 2008 with the Principal Protection Death Benefit, then you will be assessed a charge for the Principal Protection Death Benefit that is in addition to the charge for the guaranteed minimum withdrawal benefit under the rider. The charge for the Principal Protection Death Benefit is calculated quarterly as a percentage of the value of the Principal Protection Death Benefit, as defined and determined under the rider, and deducted quarterly from the Contract Value. On the Contract Date, the value of the Principal Protection Death Benefit equals the initial purchase payment. The charge for the Principal Protection Death Benefit is higher if any Annuitant is age 71 or older at the time of application. We also apply different charges for the rider for a contract that is a single Annuitant contract and a contract that is a Joint Annuitant contract. Once a contract is a Joint Annuitant contract and the Joint Annuitant rider charge is applied, the Joint Annuitant rider charge will continue while the rider is in effect. If a spouse is added as Joint Annuitant after the contract is issued, new charges may apply. These new charges may be higher than the charges previously applicable to your contract. If you reset your benefits under the rider, we will reset the charges for the rider, which may be higher than your previous charges. We currently assess the following charges for the rider, calculated and deducted as described above: Lifetime Income Plus 2008 without the Principal Protection Death Benefit Single Annuitant Contract 0.75% of benefit base ----------------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base - ------------------------------------------------------------------------ Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 45-70 Single Annuitant Contract 0.75% of benefit base plus 0.15% of value of Principal Protection Death Benefit ----------------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 0.15% of value of Principal Protection Death Benefit - ------------------------------------------------------------------------
Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 71-85 Single Annuitant Contract 0.75% of benefit base plus 0.40% of value of Principal Protection Death Benefit ----------------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 0.40% of value of Principal Protection Death Benefit - ------------------------------------------------------------------------
The charges for Lifetime Income Plus 2008 without the Principal Protection Death Benefit will never exceed 2.00% of benefit base. The charges for Lifetime Income Plus 2008 with the Principal Protection Death Benefit will never exceed 2.00% of benefit base plus 0.50% of the value of the Principal Protection Death Benefit. On the day the rider and/or the contract terminates, the charges for this rider will be calculated, pro rata, and deducted. Lifetime Income Plus 2008 and the Principal Protection Death Benefit may not be available in all states and markets. We reserve the right to discontinue offering Lifetime Income Plus 2008 and/or the Principal Protection Death Benefit at any time and for any reason. Charges for the Payment Protection Rider Options We charge you for expenses related to Principal Protection Advantage and Payment Optimizer Plus. Each rider is a separate rider with a separate charge. You cannot purchase both riders together. If you wish to elect either Principal Protection Advantage or Payment Optimizer Plus, you must do so at the time of application. Principal Protection Advantage We assess a charge for Principal Protection Advantage currently equal to an annualized rate of 0.40% of the daily net assets of the Separate Account. The deduction for the rider charge from the Separate Account is reflected in your Contract Value and the value of your Annuity Units. The charge for this rider continues even if you do not allocate assets in accordance with the prescribed Investment Strategy and the benefits you are eligible to receive are reduced. If you reset your benefit and allocate assets in accordance with the prescribed Investment Strategy available at that time, we will reset the charge for the rider, which may be higher than your previous charge, but will never exceed an annual rate of 1.00%. Principal Protection Advantage is not available for contracts issued on or after May 1, 2007. 41 Payment Optimizer Plus We assess a charge for Payment Optimizer Plus currently equal to an annualized rate of 0.50% of the daily net assets of the Separate Account for single Annuitant contracts and 0.65% of the daily net assets of the Separate Account for Joint Annuitant contracts. Once a contract is a Joint Annuitant contract, and the Joint Annuitant rider charge is applied, the Joint Annuitant rider charge will continue while the rider is in effect. The deduction for the rider charge from the Separate Account is reflected in your Contract Value and the value of your Annuity Units. The charge for this rider continues even if you do not allocate assets in accordance with the prescribed Investment Strategy and the benefits you are eligible to receive are reduced. If you reset your benefit and allocate assets in accordance with the prescribed Investment Strategy available at that time, we will reset the charge for the rider, which may be higher than your previous charge, but will never exceed an annual rate of 1.25%. If you purchase Payment Optimizer Plus, after the Annuity Commencement Date you may request to terminate your contract and the rider and (assuming the right to cancel period has ended) receive the commuted value of your income payments in a lump sum (the "commutation value"). In calculating the commutation value, we assess a commutation charge. The amount of the commutation charge will be the surrender charge that would otherwise apply under the contract, in accordance with the surrender charge schedule. Charges for the Death Benefit Rider Options Charge for the Annual Step-Up Death Benefit Rider Option We charge you for expenses related to the Annual Step-Up Death Benefit Rider Option if you elect this option at the time of application. The Annual Step-Up Death Benefit Rider Option may not be elected if any Annuitant is 85 or older. We deduct this charge against your assets in the Separate Account at each contract anniversary and at surrender to compensate us for the increased risks and expenses associated with providing this death benefit rider. We will allocate the charge for the Annual Step-Up Death Benefit Rider Option among the Subaccounts in the same proportion that your assets in each Subaccount bear to your total assets in the Separate Account at the time we take the charge. If your assets in the Separate Account are not sufficient to cover the charge, we will deduct the charge first from your assets in the Separate Account, if any, and then from your assets in the Guarantee Account from the amounts that have been in the Guarantee Account for the longest period of time. At surrender, we will charge you a pro-rata portion of the annual charge. The charge for the Annual Step-Up Death Benefit Rider Option is an annual rate of 0.20% of your Contract Value at the time of the deduction. Charge for the 5% Rollup Death Benefit Rider Option We charge you for expenses related to the 5% Rollup Death Benefit Rider Option if you elect this option at the time of application. We deduct this charge against your assets in the Separate Account at each contract anniversary and at surrender to compensate us for the increased risks and expenses associated with providing this death benefit rider. We will allocate the charge for the 5% Rollup Death Benefit Rider Option among the Subaccounts in the same proportion that your assets in each Subaccount bear to your total assets in the Separate Account at the time we take the charge. If your assets in the Separate Account are not sufficient to cover the charge, we will deduct the charge first from your assets in the Separate Account, if any, and then from your assets in the Guarantee Account from the amounts that have been in the Guarantee Account for the longest period of time. At surrender, we will charge you a pro-rata portion of the annual charge. The charge for the 5% Rollup Death Benefit Rider Option is 0.30% of your Contract Value at the time of the deduction. The 5% Rollup Death Benefit Rider Option is not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. Charge for the Earnings Protector Death Benefit Rider Option We charge you for expenses related to the Earnings Protector Death Benefit Rider Option if you elect this option at the time of application. We deduct this charge against your assets in the Separate Account on each contract anniversary and at surrender to compensate us for the increased risks and expenses associated with providing this death benefit rider. We will allocate the charge for the Earnings Protector Death Benefit Rider Option among the Subaccounts in the same proportion that your assets in each Subaccount bear to your total assets in the Separate Account at the time we take the charge. If your assets in the Separate Account are not sufficient to cover the charge, we will deduct the charge first from your assets in the Separate Account, if any, and then from your assets in the Guarantee Account from the amounts that have been in the Guarantee Account for the longest period of time. At surrender we will charge you a pro-rata portion of the annual charge. The charge for the Earnings Protector Death Benefit Rider Option is 0.30% of your Contract Value at the time of the deduction. 42 Charge for Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option We charge you for expenses related to the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option if you elect this option at the time of application. We deduct this charge against your assets in the Separate Account on each contract anniversary and at surrender to compensate us for the increased risks and expenses associated with providing this death benefit rider. We will allocate the charge for the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option among the Subaccounts in the same proportion that your assets in each Subaccount bear to your total assets in the Separate Account at the time we take the charge. If your assets in the Separate Account are not sufficient to cover the charge, we will deduct the charge first from your assets in the Separate Account, if any, and then from your assets in the Guarantee Account from the amounts that have been in the Guarantee Account for the longest period of time. At surrender, we will charge you a pro-rata portion of the annual charge. The charge for the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option is 0.70% of your Contract Value at the time of the deduction. The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option is not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. Other Charges Annual Contract Charge We will deduct an annual contract charge of $30 from your Contract Value to compensate us for certain administrative expenses incurred in connection with the contract. We will deduct the charge at each contract anniversary and at surrender. We will waive this charge if your Contract Value at the time of deduction is more than $40,000. We will allocate the annual contract charge among the Subaccounts in the same proportion that your assets in each Subaccount bear to your total assets in the Separate Account at the time the charge is taken. If there are insufficient assets allocated to the Separate Account, we will deduct any remaining portion of the charge from the Guarantee Account proportionately from all assets in the Guarantee Account. Deductions for Premium Taxes We will deduct charges for any premium tax or other tax levied by any governmental entity from purchase payments or the Contract Value when the premium tax is incurred or when we pay proceeds under the contract (proceeds include surrenders, partial withdrawals, income payments and death benefit payments). 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 taxes generally depend upon the law of your state of residence. The tax generally ranges from 0.0% to 3.5%. Other Charges and Deductions Each Portfolio incurs certain fees and expenses. To pay for these expenses, the Portfolio makes deductions from its assets. The deductions are described more fully in each Portfolio's prospectus. In addition, we reserve the right to impose a charge of up to $10 per transfer. This charge is at our cost with no profit to us. THE CONTRACT The contract is an individual flexible premium variable deferred annuity contract. We describe your rights and benefits below and in the contract. There may be differences in your contract (such as differences in fees, charges, and benefits) because of requirements of the state where we issued your contract. We will include any such differences in your contract. Purchase of the Contract If you wish to purchase a contract, you must apply for it through an authorized sales representative. The sales representative will send your completed application to us, and we will decide whether to accept or reject it. If we accept your application, our legally authorized officers prepare and execute a contract. We then send the contract to you either directly or through your sales representative. See the "Sale of the Contracts" provision of this prospectus. If we receive a completed application and all other information necessary for processing a purchase order, we will apply your initial purchase payment no later than two business days after we receive the order. While attempting to finish an incomplete application, we may hold your initial purchase payment for no more than five business days. If the incomplete application cannot be completed within those five days, we will inform you of the reasons, and will return your purchase payment immediately, unless you specifically authorize us to keep it until the application is complete. Once you complete your application, we must apply the initial purchase payment within 43 two business days. We will apply any additional purchase payments you make on the Valuation Day we receive them at our Home Office. There may be delays in our receipt of an application that are outside of our control (for example, because of the failure of the selling broker-dealer or authorized sales representative to forward the application to us promptly). Any such delays will affect when your contract can be issued and your purchase payment applied. To apply for a contract, you must be of legal age in a state where we may lawfully sell the contracts and, if part of a plan, you must also be eligible to participate in any of the qualified or non-qualified retirement plans for which we designed the contracts. The Annuitant(s) cannot be older than age 85, unless we approve a different age. Various firms and financial institutions that sell our products have their own guidelines on when certain products are suitable and may impose issue age restrictions that are younger than those stated in our contracts and/or riders. We neither influence, nor agree or disagree with the age restrictions imposed by firms and financial institutions. This contract may be used with certain tax qualified retirement plans. The contract includes attributes such as tax deferral on accumulated earnings. Qualified retirement plans provide their own tax deferral benefit; the purchase of this contract does not provide additional tax deferral benefits beyond those provided in the qualified retirement plan. If you are purchasing this contract as a Qualified Contract, you should consider purchasing this contract for its death benefit, income benefits and other non-tax-related benefits. Please consult a tax adviser for information specific to your circumstances in order to determine whether this contract is an appropriate investment for you. Purchasing the contract through a tax-free "Section 1035" exchange. Section 1035 of the Code generally permits you to exchange one annuity contract for another in a "tax-free exchange." Therefore, you can use the proceeds from another annuity contract to make purchase payments for this contract. Before making an exchange to acquire this contract, you should carefully compare this contract to your current contract. You may have to pay a surrender charge under your current contract to exchange it for this contract and this contract has its own surrender charges which would apply to you. The fees and charges under this contract may be higher (or lower), and the benefits may be different, than those of your current contract. In addition, you may have to pay federal income and penalty taxes on the exchange if it does not qualify for Section 1035 treatment. You should not exchange another contract for this contract unless you determine, after evaluating all of the facts, that the exchange is in your best interest. Please note that the person who sells you this contract generally will earn a commission on the sale. Ownership As owner, you have all rights under the contract, subject to the rights of any irrevocable beneficiary. Two persons may apply as joint owners for a Non-Qualified contract. Joint owners have equal undivided interests in their contract. That means that each may exercise any ownership rights on behalf of the other, except ownership changes. Joint owners also have the right of survivorship. This means if a joint owner dies, his or her interest in the contract passes to the surviving owner. You must have our approval to add a joint owner after we issue the contract. We may require additional information if joint ownership is requested after the contract is issued. Subject to certain restrictions imposed by electable rider options and as otherwise stated below, before the Annuity Commencement Date, you may change: . your Annuity Commencement Date to any date at least ten years after your last purchase payment; . your Optional Payment Plan; . the allocation of your investments among the Subaccounts and/or the Guarantee Account (subject to certain restrictions listed in your contract and in the "Transfers" provision); and . the owner, joint owner, primary beneficiary, and contingent beneficiary (unless the primary beneficiary or contingent beneficiary is named as an irrevocable beneficiary) upon written notice to our Home Office if you reserved this right and the Annuitant(s) is living at the time of the request. If you change a beneficiary, your plan selection will no longer be in effect unless you request that it continue. In addition, during the Annuitant's life, you can change any non-natural owner to another non-natural owner. Changing the owner or joint owner may have tax consequences and you should consult a tax adviser before doing so. Neither the Annuitant nor the Joint Annuitant can be changed. We must receive your request for a change at our Home Office in a form satisfactory to us. The change will take effect as of the date you sign the request. The change will be subject to any payment made before we recorded the change. Please note that if you elect Guaranteed Income Advantage at the time of application, you may not change your scheduled income start date or your Optional Payment Plan. In addition withdrawals and/or transfers from the GIS Subaccount(s) will lower your guaranteed income floor and cause you to lose your right to continue to make scheduled transfers into the segment from which the withdrawal and/or transfer was made. If you elect one of the Payment Protection Rider Options or one of the 44 Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008) at the time of application, the benefits you receive under such rider may be reduced if your assets are not allocated in accordance with the Investment Strategy prescribed by your rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. If you elect the Payment Protection Rider, you may change the Income Start Date as long as the new Income Start Date occurs on a contract anniversary at least 36 months after the latest reset date of the benefit base or 36 months after the date we receive your last purchase payment. You may not however, change the Optional Payment Plan once elected at the time of application. Assignment An owner of a Non-Qualified Contract may assign some or all of his or her rights under the contract. However, an assignment may terminate certain benefits provided by rider option. An assignment must occur before any income payments begin and while the Annuitant is still living. Once proper notice of the assignment is recorded by our Home Office, the assignment will become effective as of the date the written request was signed. Qualified Contracts, IRAs and Tax Sheltered Annuities may not be assigned, pledged or otherwise transferred except where allowed by law. If you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options, our Home Office must approve any assignment, unless such assignment was made pursuant to a court order. Guaranteed Income Advantage will terminate upon assignment of the contract unless such assignment is a result of legal process. Upon termination of Guaranteed Income Advantage, all assets in the GIS Subaccount(s) will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio as of the Valuation Day the assignment is received. If the assignment is received on a non-Valuation Day, the assets will be transferred on the next Valuation Day. We are not responsible for the validity or tax consequences of any assignment. We are not liable for any payment or settlement made before the assignment is recorded. Assignments will not be recorded until our Home Office receives sufficient direction from the owner and the assignee regarding the proper allocation of contract rights. Amounts pledged or assigned will be treated as distributions and will be included in gross income to the extent that the Contract Value exceeds the investment in the contract for the taxable year in which it was pledged or assigned. Assignment of the entire Contract Value may cause the portion of the contract exceeding the total investment in the contract and previously taxed amounts to be included in gross income for federal income tax purposes each year that the assignment is in effect. Amounts assigned may be subject to an IRS tax penalty equal to 10% of the amount included in gross income. Purchase Payments You may make purchase payments at any frequency and in the amount you select, subject to certain restrictions, including restrictions that may be imposed by the terms of elected riders. You must obtain our approval before you make total purchase payments for an Annuitant age 79 or younger that exceed $2,000,000 in the aggregate in any variable annuity contracts issued by the Company or any of its affiliates. If any Annuitant is age 80 or older at the time of payment, the total amount not subject to prior approval is $1,000,000 in the aggregate in any variable annuity contracts issued by the Company or any of its affiliates. Purchase payments may be made at any time prior to the Annuity Commencement Date, the surrender of the contract, or the death of the owner (or joint owner, if applicable), whichever comes first. We reserve the right to refuse to accept a purchase payment for any lawful reason and in a manner that does not unfairly discriminate against similarly situated purchasers. The minimum initial purchase payment is $5,000 ($2,000 if your contract is an IRA contract). We may accept a lower initial purchase payment in the case of certain group sales. Each additional purchase payment must be at least $500 for Non-Qualified Contracts ($200 if paid by electronic fund transfers), $50 for IRA contracts and $100 for other Qualified Contracts. If a Non-Qualified Contract is being used to fund another deferred annuity as a Funding Annuity pursuant to an approved Annuity Cross Funding Program, the minimum additional purchase payment is $100. See the "Annuity Cross Funding Program" provision of this prospectus. Valuation Day and Valuation Period We will value Accumulation and Annuity Units once daily as of the close of regular trading (currently 4:00 p.m. Eastern Time) for each day the New York Stock Exchange is open, except for days on which a Portfolio does not value its shares. If a Valuation Period contains more than one day, the unit values will be the same for each day in the Valuation Period. Allocation of Purchase Payments We place purchase payments into the Subaccounts, each of which invests in shares of a corresponding Portfolio and/or the Guarantee 45 Account, according to your instructions. You may allocate purchase payments to the Subaccounts plus the Guarantee Account at any one time. If you have elected Guaranteed Income Advantage, you may not allocate purchase payments directly to the GIS Subaccount(s); such allocations to the GIS Subaccount(s) must be made by scheduled transfers pursuant to pro rata scheduled transfers from all other Subaccounts in which you have assets. Any remaining allocations will come from the Guarantee Account. If you have elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), you must allocate all purchase payments in accordance with the Investment Strategy prescribed by the rider in order to obtain the full benefit of the rider. The benefits you receive under the rider may be reduced if your purchase payments are not allocated in accordance with the Investment Strategy. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. See the "Surrenders and Partial Withdrawals -- Guaranteed Minimum Withdrawal Benefit Rider Options" and "Income Payments -- Payment Protection Rider Options" provisions of this prospectus. The percentage of purchase payment that you can put into any one Subaccount or guarantee period must equal a whole percentage and cannot be less than $100. For contracts issued on or after the later of September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications we may limit the amount that may be allocated to the Guarantee Account. Currently, no more than 25% of your Contract Value, as determined at the time of allocation, may be allocated to the Guarantee Account. In addition, the Guarantee Account is not available to contract owners who have elected Payment Optimizer Plus for as long as the rider is in effect. Upon allocation to the appropriate Subaccounts, we convert purchase payments into Accumulation Units. We determine the number of Accumulation Units credited by dividing the amount allocated to each Subaccount by the value of an Accumulation Unit for that Subaccount on the Valuation Day on which we receive any additional purchase payment at our Home Office. The number of Accumulation Units determined in this way is not changed 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 Portfolio's investments perform, but also upon the charges of the Separate Account and the Portfolios. You may change the allocation of subsequent purchase payments at any time, without charge, by sending us acceptable notice. The new allocation will apply to any purchase payments made after we receive notice of the change at our Home Office. Valuation of Accumulation Units Partial withdrawals, surrenders and/or payment of the death benefit all result in the cancellation of an appropriate number of Accumulation Units. We cancel Accumulation Units as of the end of the Valuation Period in which we receive notice or instructions with regard to the partial withdrawal, surrender or payment of a death benefit. The Accumulation Unit value at the end of every Valuation Day equals the Accumulation Unit value at the end of the preceding Valuation Day multiplied by the net investment factor (described below). We arbitrarily set the Accumulation Unit value at the inception of the Subaccount at $10. On any Valuation Day, we determine your Subaccount value by multiplying the number of Accumulation Units attributable to your contract by the Accumulation Unit value for that day. The net investment factor is an index used to measure the investment performance of a Subaccount from one Valuation Period to the next. The net investment factor for any Subaccount for any Valuation Period reflects the change in the net asset value per share of the Portfolio held in the Subaccount from one Valuation Period to the next, adjusted for the daily deduction of the administrative expense charges, mortality and expense risk charges, and any applicable optional rider charges (but not any optional death benefit rider charges) from assets in the Subaccount. The charges for Lifetime Income Plus 2008 and the Death Benefit Rider Options, however, are deducted from your Contract Value. If any "ex-dividend" date occurs during the Valuation Period, we take into account the per share amount of any dividend or capital gain distribution so that the unit value is not impacted. Also, if we need to reserve money for taxes, we take into account a per share charge or credit for any taxes reserved for which we determine to have resulted from the operations of the Subaccount. The value of an Accumulation Unit may increase or decrease based on the net investment factor. Changes in the net investment factor may not be directly proportional to changes in the net asset value of the Portfolio because of the deduction of Separate Account charges. Though the number of Accumulation Units will not change as a result of investment experience, the value of an Accumulation Unit may increase or decrease from Valuation Period to Valuation Period. See the Statement of Additional Information for more details. TRANSFERS Transfers Before the Annuity Commencement Date All owners may transfer all or a portion of their assets between and among the Subaccounts of the Separate Account and the Guarantee Account on any Valuation Day prior to the Annuity Commencement Date, subject to certain conditions that are stated below. Owners may not, however, transfer assets in the Guarantee Account from one interest rate guarantee period to another interest rate guarantee period. In addition, if you elect 46 Guaranteed Income Advantage, once you make a transfer from a segment that corresponds to a GIS Subaccount, you may not make subsequent purchase payments or transfers to that segment corresponding to that GIS Subaccount. If you elect one of the Payment Protection Rider Options, or one of the Guaranteed Minimum Withdrawal Benefit Rider Options (except for Lifetime Income Plus 2008), the benefits you receive under such rider may be reduced if, after your transfer, your assets are not allocated in accordance with the prescribed Investment Strategy. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. We process transfers among the Subaccounts and between the Subaccounts and the Guarantee Account as of the end of the Valuation Period that we receive the transfer request in good order at our Home Office. There may be limitations placed on multiple transfer requests made at different times during the same Valuation Period involving the same Subaccounts and/or the Guarantee Account. We may postpone transfers to, from or among the Subaccounts and/or the Guarantee Account under certain circumstances. See the "Requesting Payments" provision of this prospectus. Transfers from the Guarantee Account to The Subaccounts We may limit and/or restrict transfers from the Guarantee Account to the Subaccounts. For any allocation from the Guarantee Account to the Subaccounts, the limited amount will not be less than any accrued interest on that allocation plus 25% of the original amount of that allocation. Unless you are participating in a Dollar Cost Averaging program (see the "Dollar Cost Averaging Program" provision), you may make such transfers only during the 30 day period beginning with the end of the preceding interest rate guarantee period applicable to that particular allocation. We also may limit the amount that you may transfer to the Subaccounts. Transfers from the Subaccounts to the Guarantee Account We may restrict certain transfers from the Subaccounts to the Guarantee Account. For contracts issued on or after the later of September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications, we may also limit the amount that may be allocated to the Guarantee Account to no more than 25% of your Contract Value, as determined at the time of allocation. In addition, where permitted by state law, we will refuse new purchase payments or transfers into the Guarantee Account when your assets in the Guarantee Account are equal to or greater than 25% of your Contract Value at the time of allocation. We generally exercise our right to limit or refuse allocations to the Guarantee Account when interest rate periods are low for prolonged periods of time. In addition, we reserve the right to prohibit or limit transfers from the Subaccounts to the Guarantee Account during the six month period following the transfer of any amount from the Guarantee Account to any Subaccount. Transfers Among the Subaccounts All owners may submit 12 Subaccount transfers each calendar year by voice response, Internet, telephone, facsimile, U.S. Mail or overnight delivery service. Once such 12 Subaccount transfers have been executed, a letter will be sent notifying owners that they may submit additional transfers only in writing by U.S. Mail or by overnight delivery service. Transfer requests sent by same day mail, courier service, Internet, telephone or facsimile will not be accepted under any circumstances. Once we receive your mailed transfer request at our Home Office, such transfer cannot be cancelled. We also will not cancel transfer requests that have not yet been received, i.e., you may not call to cancel a transfer request sent by U.S. Mail or overnight delivery service. If you wish to change a transfer request sent by U.S. Mail or overnight delivery service, such change must also be sent in writing by U.S. Mail or by overnight delivery service. We will process that transfer request as of the Valuation Day the new transfer request is received at our Home Office. Currently, we do not charge for transfers. However, we reserve the right to assess a charge of up to $10 for each transfer. The minimum transfer amount is $100 or the entire balance in the Subaccount or interest rate guarantee period if the transfer will leave a balance of less than $100. We also reserve the right to not honor your transfer request if your transfer is a result of more than one trade involving the same Subaccount within a 30 day period. We will generally invoke this right when either the Portfolio(s) or we see a pattern of frequent transfers between the same Portfolios within a short period of time (i.e., transfers among the same Subaccounts occur within five to 15 days of each other). In addition, we may not honor transfers made by third parties. See the "Transfers by Third Parties" provision of this prospectus. If a transfer request is not processed, a letter will be sent notifying you that your transfer request was not honored. If we do not honor a transfer request, we will not count that request as a transfer for purposes of the 12 transfers allowed each calendar year as described in the previous paragraphs. 47 When thinking about a transfer of assets, you should consider the inherent risks involved. Frequent transfers based on short-term expectations may increase the risk that you will make a transfer at an inopportune time. Also, because certain restrictions on transfers are applied at the discretion of the Portfolios in which the Subaccount invests, it is possible that owners will be treated differently and there could be inequitable treatment among owners if a Portfolio does not apply equal treatment to all shareholders. See the "Special Note on Frequent Transfers" provision of this prospectus. These restrictions will apply to all owners and their designated third party(ies), unless such transfer is being made pursuant to: (1) a Dollar Cost Averaging program; (2) a Portfolio Rebalancing program; (3) the terms of an approved Fund substitution or Fund liquidation; or (4) a Portfolio's refusal to allow the purchase of shares, either on behalf of an individual owner or the entire Separate Account, in which case, the Portfolio's refusal to allow the purchase of shares will not be considered a transfer for calculation of the 12 transfers allowed per calendar year by voice response, Internet, telephone, facsimile, U.S. Mail or overnight delivery service. In addition, the restrictions and charges listed above do not apply to any: (1) scheduled transfers made to the GIS Subaccount(s) pursuant to the terms of Guaranteed Income Advantage; or (2) transfers made among the Subaccounts pursuant to automatic rebalancing of assets made under the terms of one of the Payment Protection Rider Options, or one of the Guaranteed Minimum Withdrawal Benefit Rider Options. Sometimes, we will not honor transfer requests. We will not honor a transfer request if: (1) any Subaccount that would be affected by the transfer is unable to purchase or to redeem shares of the Portfolio in which the Subaccount invests; or (2) the transfer would adversely affect unit values. The affected Portfolio(s) determine whether these items apply. We will treat all owners equally with respect to transfer requests. Telephone/Internet Transactions All owners may make their first 12 transfers in any calendar year among the Subaccounts or between the Subaccounts and the Guarantee Account by calling or electronically contacting us. Transactions that can be conducted over the telephone and Internet include, but are not limited to: (1) the first 12 transfers of assets among the Subaccounts or between the Subaccounts and the Guarantee Account in any calendar year (this includes any changes in purchase payment allocations when such changes include a transfer of assets); (2) Dollar Cost Averaging; and (3) Portfolio Rebalancing. We employ reasonable procedures to confirm that instructions we receive are genuine. Such procedures may include, but are not limited to: (1) requiring you or a third party to provide some form of personal identification before we act on the telephone/Internet instructions; (2) confirming the telephone/Internet transaction in writing to you or a third party you authorized; and/or (3) tape recording telephone instructions or retaining a record of your electronic request. We reserve the right to limit or prohibit telephone and Internet transactions. We will delay making a payment or processing a transfer request if: (1) the disposal or valuation of the Separate Account's assets is not reasonably practicable because the New York Stock Exchange is closed; (2) on nationally recognized holidays, trading is restricted by the New York Stock Exchange; (3) an emergency exists making the disposal or valuation of securities held in the Separate Account impracticable; or (4) the SEC by order permits postponement of payment to protect our owners. Rules and regulations of the SEC will govern as to when the conditions described in (3) and (4) above exist. If we are closed on days when the New York Stock Exchange is open, Contract Value may be affected since owners will not have access to their account. 48 Confirmation of Transactions We will not be liable for following instructions that we reasonably determine to be genuine. We will send you a confirmation of any transfer we process. You are responsible for verifying transfer confirmations and notifying us of any errors within 30 days of receiving the confirmation statement. Special Note on Reliability Please note that the Internet or our telephone system may not always be available. Any computer system or telephone system, whether it is ours, yours, your service provider's, or your registered representative's, can experience unscheduled outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you can make your transaction request by writing our Home Office. Transfers by Third Parties As a general rule and as a convenience to you, we allow you to give third parties the right to conduct transfers on your behalf. However, when the same third party possesses this ability on behalf of many owners, the result can be simultaneous transfers involving large amounts of assets. Such transfers can disrupt the orderly management of the Portfolios underlying the contract, can result in higher costs to owners, and are generally not compatible with the long-range goals of owners. We believe that such simultaneous transfers effected by such third parties are not in the best interests of all beneficial shareholders of the Portfolios, and the management of the Portfolios share this position. We have procedures to assure that the transfer requests that we receive have, in fact, been made by the owners in whose names they are submitted. Consequently, we may refuse transfers made by third parties on behalf of an owner in a number of circumstances, which include but are not limited to: (1) transfers made on behalf of many owners by one third party (or several third parties who belong to the same firm) where the transfer involves the same Subaccounts and large amounts of assets; (2) when we have not received adequate authorization from the owner allowing a third party to make transfers on his or her behalf; and (3) when we believe, under all facts and circumstances received, that the owner or his or her authorized agent is not making the transfer. We require documentation to provide sufficient proof that the third party making the trade is in fact duly authorized by the owner. This information includes, but is not limited to: (1) documentation signed by the owner or a court authorizing a third party to act on the owner's behalf; (2) passwords and encrypted information; (3) additional owner verification when appropriate; and (4) recorded conversations. We will not be held liable for refusing a transfer made by a third party when we have a reasonable basis for believing such third party is not authorized to make a transfer on the owner's behalf or we have a reasonable basis for believing the third party is acting in a fraudulent manner. Special Note on Frequent Transfers The Separate Account does not accommodate frequent transfers of Contract Value among Subaccounts. When owners or someone on their behalf submit requests to transfer all or a portion of their assets between Subaccounts, the requests result in the purchase and redemption of shares of the Portfolios in which the Subaccounts invest. Frequent Subaccount transfers, therefore, cause corresponding frequent purchases and redemptions of shares of the Portfolios. Frequent purchases and redemptions of shares of the Portfolios can dilute the value of a Portfolio's shares, disrupt the management of the Portfolio's investment portfolio, and increase brokerage and administrative costs. Accordingly, when an owner or someone on their behalf engages in frequent Subaccount transfers, other owners and persons with rights under the contracts (such as the beneficiaries) may be harmed. The Separate Account discourages frequent transfers, purchases and redemptions. To discourage frequent Subaccount transfers, we adopted the policy described in the "Transfers Among the Subaccounts" section. This policy requires owners who request more than 12 Subaccount transfers in a calendar year to submit such requests in writing by U.S. Mail or by overnight delivery service (the "U.S. Mail requirement"). The U.S. Mail requirement creates a delay of at least one day between the time transfer decisions are made and the time such transfers are processed. This delay is intended to discourage frequent Subaccount transfers by limiting the effectiveness of abusive "market timing" strategies (in particular, "time-zone" arbitrage) that rely on "same-day" processing of transfer requests. 49 In addition, we will not honor transfer requests if any Subaccount that would be affected by the transfer is unable to purchase or redeem shares of the Portfolio in which the Subaccount invests or if the transfer would adversely affect Accumulation Unit values. Whether these restrictions apply is determined by the affected Portfolio(s), and although we apply the restrictions uniformly when we receive information from the Portfolio(s), we cannot guarantee that the Portfolio(s) will apply their policies and procedures in a uniform basis. There can be no assurance that the U.S. Mail requirement will be effective in limiting frequent Subaccount transfers or that we can prevent all frequent Subaccount transfer activity that may adversely affect owners, other persons with material rights under the contracts, or Portfolio shareholders generally. For instance, imposing the U.S. Mail requirement after 12 Subaccount transfers may not be restrictive enough to deter owners seeking to engage in abusing market timing strategies. We may revise our frequent Subaccount transfer policy and related procedures, at our sole discretion, at any time and without prior notice, as we deem necessary or appropriate to better detect and deter frequent transfer activity that may adversely affect owners, other persons with material rights under the contracts, or Portfolio shareholders generally, to comply with state or federal regulatory requirements, or to impose additional or alternative restrictions on owners engaging in frequent Subaccount transfers. For example, we may invoke our right to refuse transfers if the transfer involves the same Subaccount within a 30 day period and/or we may change our procedures to monitor for a different number of transfers within a specified time period or to impose a minimum time period between each transfer. There are inherent risks that changing our policies and procedures in the future may not be effective in limiting frequent Subaccount transfers. We will not implement any policy and procedure at the contract level that discriminates among owners; however, we may be compelled to adopt policies and procedures adopted by the Portfolios on behalf of the Portfolios and we will do so unless we cannot service such policies and procedures or we believe such policies and procedures contradict state or federal regulations or such policies and procedures contradict with the terms of your contract. As stated in the previous paragraph, each of the Portfolios in which the Subaccounts invest may have its own policies and procedures with respect to frequent purchases and redemption of Portfolio shares. The prospectuses for the Portfolios describe any such policies and procedures. For example, a Portfolio may assess redemption fees (which we reserve the right to collect) on shares held for a relatively short period of time. The frequent trading policies and procedures of a Portfolio may be different, and more or less restrictive, than the frequent trading policies and procedures of other Portfolios and the policies and procedures we have adopted to discourage frequent Subaccount transfers. Owners should be aware that we may not have the operational capability to monitor owners' Subaccount transfer requests and apply the frequent trading policies and procedures of the respective Portfolios that would be affected by the transfers. Accordingly, owners and other persons who have material rights under the contracts should assume that the sole protection they may have against potential harm from frequent Subaccount transfers is the protection, if any, provided by the policies and procedures we have adopted to discourage frequent Subaccount transfers. Under rules recently adopted by the SEC, we are required to enter into a written agreement with each Portfolio or its principal underwriter that will obligate us to provide promptly, upon request by the Portfolio, certain information to the Portfolio about the trading activity of individual contract owners. We must then execute any instructions from the Portfolio to restrict or prohibit further purchases or transfers by a specific contract owner of Accumulation Units or Annuity Units of the Subaccount that invests in that Portfolio, where such contract owner has been identified by the Portfolio as having engaged in transactions (indirectly through such Subaccount) that violate policies established by the Portfolio for the purpose of eliminating or reducing any dilution of the value of the outstanding shares of the Portfolio. We will inform any contract owners whose future purchases and transfers of a Subaccount's units have been restricted or prohibited by a Portfolio. Owners and other persons with material rights under the contracts also should be aware that the purchase and redemption orders received by the Portfolios generally are "omnibus" orders from intermediaries such as retirement plans or separate accounts funding variable insurance contracts. These 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 Portfolios' ability to apply their respective frequent trading policies and procedures. We cannot guarantee that the Portfolios will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that may invest in the Portfolios. In addition, if a Portfolio believes an omnibus order we submit may reflect one or more Subaccount transfer requests from owners engaged in frequent transfer activity, the Portfolio may reject a portion of or the entire omnibus order. If a Portfolio rejects part of an omnibus order it believes is attributable to transfers that exceed its market timing policies and procedures, it will return the amount to us, and we will credit the amount to the owner as of 50 the Valuation Day of our receipt of the amount. You may realize a loss if the unit value on the Valuation Day we credit the amount back to your account has increased since the original date of your transfer. We apply our policies and procedures without exception, waiver, or special arrangement. Dollar Cost Averaging Program The Dollar Cost Averaging program permits you to systematically transfer on a monthly or quarterly basis a set dollar amount from the Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio and/or the Guarantee Account to any combination of other Subaccounts (as long as the total number of Subaccounts used does not exceed the maximum number allowed under the contract). The Dollar Cost Averaging method of investment is designed to reduce the risk of making purchases only when the price of units is high, but you should carefully consider your financial ability to continue the program over a long enough period of time to purchase Accumulation Units when their value is low as well as when it is high. Dollar Cost Averaging does not assure a profit or protect against a loss. You may participate in the Dollar Cost Averaging program: (1) by electing it on your application; (2) by contacting an authorized sales representative; or (3) by calling us at (800) 352-9910. To use the program, you must transfer at least $100 from the Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio and/or interest rate guarantee period with each transfer. The Dollar Cost Averaging program will begin 30 days after we receive all required forms with your instructions and any necessary purchase payment, unless we allow an earlier date. We will discontinue your participation in the Dollar Cost Averaging program: . on the business day we receive your request to discontinue the program in writing or by telephone (assuming we have your telephone authorization form on file); or . when the assets in the Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio and/or interest rate guarantee period from which transfers are being made are depleted. If you Dollar Cost Average from the Guarantee Account, we reserve the right to determine the amount of each automatic transfer. We reserve the right to transfer any remaining portion of an allocation used for Dollar Cost Averaging to a new guarantee period upon termination of the Dollar Cost Averaging program for that allocation. You may not transfer from one interest rate guarantee period to another interest rate guarantee period. We also reserve the right to credit a higher rate of interest on purchase payments allocated to the Guarantee Account that participate in the Dollar Cost Averaging program. We refer to this higher rate of interest as Enhanced Dollar Cost Averaging. The Dollar Cost Averaging program and/or Enhanced Dollar Cost Averaging program may not be available in all states and in all markets or through all broker-dealers who sell the contracts. If you terminate the Dollar Cost Averaging program prior to the depletion of assets from the Guarantee Account, we have the right to credit the remaining assets in the Guarantee Account the current interest rate being credited to all other Guarantee Account assets not participating in the Enhanced Dollar Cost Averaging program as of that Valuation Day. In addition, for contracts issued on or after the later of September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications, if you terminate your Dollar Cost Averaging program prior to the depletion of assets in the Guarantee Account, we may limit the amount that may allocated to the Guarantee Account. If we exercise this right, we guarantee that the amount limited will be the same as the amount limited for those contracts not participating in a Dollar Cost Averaging program as of the date you terminate your Dollar Cost Averaging program. There is no additional charge for Dollar Cost Averaging. A transfer under this program is not a transfer for purposes of assessing a transfer charge or calculating the minimum number of transfers we may allow in a calendar year. We may, from time to time, offer various Dollar Cost Averaging programs. We reserve the right to discontinue new Dollar Cost Averaging programs or to modify such programs at any time and for any reason. We also reserve the right to prohibit simultaneous Dollar Cost Averaging and Systematic Withdrawals. Dollar Cost Averaging is not available if you have elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options and you are allocating assets in accordance with the prescribed Investment Strategy. If you have elected Lifetime Income Plus 2008 or Payment Optimizer Plus, you can, however, participate in the Defined Dollar Cost Averaging program, as described below. Owners considering participating in a Dollar Cost Averaging program should call (800) 352-9910 or an authorized sales representative to verify the availability of Dollar Cost Averaging. 51 Defined Dollar Cost Averaging Program The Defined Dollar Cost Averaging program permits you to systematically transfer a fixed dollar amount on a monthly basis for twelve months from the Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to an Asset Allocation Model or, if you have elected Lifetime Income Plus 2008 or Payment Optimizer Plus, from the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to one of the other available Investment Strategy options. The Dollar Cost Averaging method of investment is designed to reduce the risk of making purchases only when the price of units is high, but you should carefully consider your financial ability to continue the program over a long enough period of time to purchase Accumulation Units when their value is low as well as when it is high. Dollar Cost Averaging does not assure a profit or protect against a loss. You may participate in the Defined Dollar Cost Averaging program only if you elect it when you apply for the contract. To use the program, you must transfer at least $100 from the Subaccount (or Designated Subaccount) investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio. If elected at application, the Defined Dollar Cost Averaging program will begin 30 days after the Contract Date. You may accelerate the amount you transfer. You may also terminate the program at any time. We will discontinue your participation in the Dollar Cost Averaging program at the first instance of one of the following events: (1) on the business day we receive your request to discontinue the program in writing or by telephone (assuming we have your telephone authorization form on file); (2) when the assets in the Subaccount (or Designated Subaccount) investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio are depleted; or (3) at the end of the twelfth month following the Contract Date. Upon termination of the program, any remaining assets in the Subaccount (or Designated Subaccount) investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio will be transferred to the specified Asset Allocation Model or Investment Strategy option. There is no additional charge to participate in the Defined Dollar Cost Averaging program. A transfer under this program is not a transfer for purposes of assessing a transfer charge or for calculating the maximum number of transfers we may allow in a calendar year. Any withdrawals taken from your contract while the Defined Dollar Cost Averaging program is in effect will be applied on a pro rata basis from all investments, including the Dreyfus Variable Investment Fund -- Money Market Portfolio. If you request a withdrawal from a specific Portfolio, however, we will terminate your Defined Dollar Cost Averaging program and treat the transfer as a transfer for purposes of assessing a transfer charge or for calculating the maximum number of transfers we may allow in a calendar year. We reserve the right to discontinue the Defined Dollar Cost Averaging program or to modify the program at any time and for any reason. Portfolio Rebalancing Program Once your purchase payment has been allocated among the Subaccounts, the performance of each Subaccount may cause your allocation to shift. You may instruct us to automatically rebalance on a quarterly, semi-annual or annual basis your assets among the Subaccounts to return to the percentages specified in your allocation instructions. Your percentage allocations must be in whole percentages. The program does not include allocations to the Guarantee Account. You may elect to participate in the Portfolio Rebalancing program at any time by submitting a completed Portfolio Rebalancing form to our Home Office. You may not participate in the Portfolio Rebalancing program if you have elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options and you are allocating assets in accordance with the prescribed Investment Strategy. Subsequent changes to your percentage allocations may be made at any time by written or telephone instructions to our Home Office. Once elected, Portfolio Rebalancing remains in effect from the date we receive your written request until you instruct us to discontinue Portfolio Rebalancing. There is no additional charge for using Portfolio Rebalancing, and we do not consider Portfolio Rebalancing a transfer for purposes of assessing a transfer charge or calculating the maximum number of transfers permitted in a calendar year. We reserve the right to discontinue or modify the Portfolio Rebalancing program at any time and for any reason. We also reserve the right to exclude specific Subaccounts from Portfolio Rebalancing. We will discontinue your participation in Portfolio Rebalancing if: . you elected one of the Payment Protection Rider Options, or one of the Guaranteed Minimum Withdrawal Benefit Rider Options at the time of application; and . you reset your benefit by reallocating assets in accordance with a prescribed Investment Strategy 52 following a period of allocating assets outside of the prescribed Investment Strategy. We will discontinue your participation as of the Valuation Day the reset occurs. Portfolio Rebalancing does not guarantee a profit or protect against a loss. Guarantee Account Interest Sweep Program You may instruct us to transfer interest earned on your assets in the Guarantee Account (if available) to the Subaccounts to which you are allocating purchase payments, in accordance with your allocation instructions in effect on the date of the transfer any time before the Annuity Commencement Date. You must specify the frequency of the transfers (either monthly, quarterly, semi-annually, or annually). The minimum amount in the Guarantee Account required to elect this option is $1,000, but may be reduced at our discretion. The transfers under this program will take place on the last calendar day of each period. You may participate in the interest sweep program at the same time you participate in either the Dollar Cost Averaging program or the Portfolio Rebalancing program. If any interest sweep transfer is scheduled for the same day as a Portfolio Rebalancing transfer, we will process the interest sweep transfer first. We may limit the amount you may transfer from the Guarantee Account to the Subaccounts for any particular allocation. See the "Transfers" provision of this prospectus. We will not process an interest sweep transfer if that transfer would exceed the amount permitted to be transferred. You may cancel your participation in the interest sweep program at any time by writing or calling our Home Office at the address or telephone number listed on page 1 of this prospectus. We will automatically cancel your participation in the program if your assets in the Guarantee Account are less than $1,000 or such lower amount as we may determine. You may not participate in the Guarantee Account Interest Sweep program if you have elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options and you are allocating assets in accordance with the prescribed Investment Strategy. We will discontinue your participation in the Guarantee Account Interest Sweep program if: . you elected one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options at the time of application; and . you reset your benefit by reallocating assets in accordance with a prescribed Investment Strategy following a period of allocating assets outside the prescribed Investment Strategy. There is no additional charge for the interest sweep program. We do not consider interest sweep transfers a transfer for purposes of assessing a transfer charge or for calculating the maximum number of transfers permitted in a calendar year. The interest sweep program does not assure a profit or protect against a loss. SURRENDERS AND PARTIAL WITHDRAWALS Surrenders and Partial Withdrawals We will allow you to surrender your contract or to withdraw a portion of your Contract Value at any time before the Annuity Commencement Date upon your written request, subject to the conditions discussed below. We will not permit a partial withdrawal that is less than $100 or a partial withdrawal that would reduce your Contract Value to less than $1,000. If your partial withdrawal request would reduce your Contract Value to less than $1,000, we will surrender your contract in full. Different limits and other restrictions may apply to Qualified Contracts. The amount payable on surrender of the contract is the Surrender Value at the end of the Valuation Period during which we receive the request. The Surrender Value equals: (1) the Contract Value (after deduction of any charge for the optional rider(s) and annual contract charge, if applicable) on the Valuation Day we receive a request for surrender; less (2) any applicable surrender charge; less (3) any applicable premium tax. We may pay the Surrender Value in a lump sum or under one of the Optional Payment Plans specified in the contract, based on your instructions. If you are taking a partial withdrawal, you may indicate, in writing, electronically, or by calling our Home Office, from which Subaccounts or interest rate guarantee periods we are to take your partial withdrawal. If you do not so specify, we will deduct the amount of the partial withdrawal first from the Subaccounts (excluding the GIS Subaccount(s) if Guaranteed Income Advantage is elected at the time of application) on a pro-rata basis, in proportion to your assets in the Separate Account. We will deduct any remaining amount from the Guarantee Account. We will take deductions from the Guarantee Account from the amounts (including any interest 53 credited to such amounts) which have been in the Guarantee Account for the longest period of time. If you elect one of the Payment Protection Rider Options or one of the Guaranteed Minimum Withdrawal Benefit Rider Options and take a partial withdrawal, we will rebalance the Contract Value to the Subaccounts in accordance with the allocation of Contract Value in effect prior to the partial withdrawal, unless you instruct us otherwise. If, after a partial withdrawal and such instructions, your Contract Value is not allocated in accordance with the prescribed Investment Strategy, the benefit you receive under the rider may be reduced. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. If Guaranteed Income Advantage is elected at the time of application, withdrawals will then be deducted from the GIS Subaccount(s) from the segment that has been in effect for the shortest period of time. A Portfolio may impose a redemption charge. The charge is retained by or paid to the Portfolio. The charge is not retained by or paid to us. The redemption charge may affect the number and/or value of Accumulation Units withdrawn from the Subaccount that invests in that Portfolio and may affect Contract Value. When taking a partial surrender, any applicable surrender charges and/or applicable premium tax will be taken from the amount surrendered, unless otherwise requested. We will delay making a payment if: (1) the disposal or valuation of the Separate Account's assets is not reasonably practicable because the New York Stock Exchange is closed; (2) on nationally recognized holidays, trading is restricted by the New York Stock Exchange; (3) an emergency exists making the disposal or valuation of securities held in the Separate Account impracticable; or (4) the SEC by order permits postponement of payment to protect our owners. Rules and regulations of the SEC will govern as to when the conditions described in (3) and (4) above exist. If we are closed on days when the New York Stock Exchange is open, Contract Value may be affected since owners will not have access to their account. For contracts issued on or after the later of September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications, partial withdrawals from the Subaccounts may further reduce or restrict the amount that may be allocated to the Guarantee Account. See "The Guarantee Account" provision of this prospectus. Please remember that partial withdrawals (including partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Option) will reduce your death benefit by the proportion that the partial withdrawal (including any applicable surrender charges and premium taxes assessed) reduces your Contract Value. See the "Death of Owner and/or Annuitant" provision of this prospectus. Partial withdrawals and surrenders may also be subject to income tax and, if taken prior to age 59 1/2, a 10% additional IRS penalty tax. See the "Tax Matters" provision of this prospectus. Restrictions on Distributions from Certain Contracts Section 830.105 of the Texas Government Code permits participants in the Texas Optional Retirement Program to withdraw their interest in a variable annuity contract issued under the Texas Optional Retirement Program only upon: (1) termination of employment in the Texas public institutions of higher education; (2) retirement; (3) death; or (4) the participant's attainment of age 70 1/2. If your contract is issued to a Texas Optional Retirement Plan, you must furnish us proof that one of these four events has occurred before we distribute any amounts from your contract. Systematic Withdrawal Program The Systematic Withdrawal program allows you to take Systematic Withdrawals of a specified dollar amount (in equal installments of at least $100) on a monthly, quarterly, semi-annual or annual basis. Your payments can begin at any time after 30 days from the date your contract is issued (unless we allow an earlier date). To participate in the program, your Contract Value must initially be at least $5,000 and you must submit a completed Systematic Withdrawal form to our Home Office. You can obtain the form from an authorized sales representative or our Home Office. Your Systematic Withdrawals in a contract year may not exceed the amount which is not subject to a surrender charge. See the "Surrender Charge" provision of this prospectus. We will deduct the Systematic Withdrawal amounts first from any gain 54 in the contract and then from purchase payments made. You may provide specific instructions as to the Subaccounts (excluding the GIS Subaccount(s) if Guaranteed Income Advantage is elected at the time of application) and/or interest rate guarantee periods from which we are to take the Systematic Withdrawals. If you have not provided specific instructions, or if your specific instructions cannot be carried out, we will process the withdrawals by cancelling Accumulation Units on a pro-rata basis from all of the Subaccounts (excluding the GIS Subaccount(s) if Guaranteed Income Advantage is elected at the time of application) in which you have an interest. To the extent that your assets in the Separate Account are not sufficient to accomplish the withdrawal, we will take the withdrawal from any assets you have in the Guarantee Account. We will take deductions from the Guarantee Account from the amounts (including interest credited to such amounts) that have been in the Guarantee Account for the longest period of time. If Guaranteed Income Advantage is elected at the time of application, any remaining amounts will be taken from the GIS Subaccount(s) from the segment that has been in effect for the shortest period of time. After your Systematic Withdrawals begin, you may change the frequency and/or amount of your payments, subject to the following: . you may request only one such change in a calendar quarter; and . if you did not elect the maximum amount you could withdraw under this program at the time you elected the current series of Systematic Withdrawals, then you may increase the remaining payments up to the maximum amount. A Systematic Withdrawal program will terminate automatically when a Systematic Withdrawal would cause the remaining Contract Value to be less than $1,000. If a Systematic Withdrawal would cause the Contract Value to be less than $1,000, then we will not process that Systematic Withdrawal transaction. If any of your Systematic Withdrawals would be or become less than $100, we reserve the right to reduce the frequency of payments to an interval that would result in each payment being at least $100. You may discontinue Systematic Withdrawals at any time by notifying us in writing at our Home Office or by telephone. You may request that we pay any remaining payments in a lump sum. See the "Requesting Payments" provision of this prospectus. Each Systematic Withdrawal is subject to Federal income taxes on any portion considered gain for tax purposes. In addition, you may be assessed a 10% IRS penalty tax on Systematic Withdrawals if you are under age 59 1/2 at the time of the withdrawal. Both partial withdrawals at your specific request and withdrawals under a Systematic Withdrawal program will count toward the limit of the amount that you may withdraw in any contract year free of any surrender charges under the free withdrawal privilege. See the "Surrender Charge" provision of this prospectus. In addition, if you elect one of the Guaranteed Minimum Withdrawal Benefit Rider Options, partial withdrawals and withdrawals under a Systematic Withdrawal program may reduce the amount of the guaranteed minimum withdrawal benefit you are eligible to receive under the terms of the rider. See the "Guaranteed Minimum Withdrawal Benefit Rider Options" provision below. Your Systematic Withdrawal amount may be affected if you take an additional partial withdrawal. Systematic Withdrawals (including any Systematic Withdrawal immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Option) will reduce your death benefit by the proportion that each Systematic Withdrawal (including any applicable surrender charges and premium taxes assessed) reduces your Contract Value. See the "Death of Owner and/or Annuitant" provision of this prospectus. For contracts issued on or after September 2, 2003, or the date on which state insurance authorities approve applicable contract modifications, taking systematic withdrawals from the Subaccounts may further reduce or restrict the amount that may be allocated to the Guarantee Account (see "The Guarantee Account" provision of this prospectus). There is no charge for participation in the Systematic Withdrawal program, however, we reserve the right to prohibit participation in Systematic Withdrawal and Dollar Cost Averaging programs at the same time. We also reserve the right to discontinue and/or modify the Systematic Withdrawal program upon 30 days written notice to owners. Guaranteed Minimum Withdrawal Benefit Rider Options We currently offer two Guaranteed Minimum Withdrawal Benefit Rider Options under this prospectus: Lifetime Income Plus 2007 and Lifetime Income Plus 2008. Two other Guaranteed Minimum Withdrawal Benefit Riders, Guaranteed Withdrawal Advantage and Lifetime Income Plus, are no longer available for contracts issued on or after May 1, 2007 and May 1, 2008, respectively. We have designed the Guaranteed Minimum Withdrawal Benefit Rider Options to protect you from outliving your Contract Value by providing for a guaranteed minimum withdrawal benefit that is not affected by 55 the market performance of the Subaccounts in which your assets are allocated. Prior to the Annuity Commencement Date, if you meet the conditions of the respective rider, as discussed more fully below, you will be eligible to make withdrawals from your contract over a period of time at least equal to the amount of the purchase payments you made to the contract. These Guaranteed Minimum Withdrawal Benefit Rider Options are discussed in separate sections below. Lifetime Income Plus 2008 Lifetime Income Plus 2008 provides guaranteed withdrawals for the life of the Annuitant(s), at least equal to purchase payments, with upside potential, provided you meet certain conditions. First, you must allocate all Contract Value to the prescribed Investment Strategy. You must also limit total Gross Withdrawals in each Benefit Year to an amount no greater than the Withdrawal Limit. Then, you will be eligible to receive total Gross Withdrawals in each Benefit Year equal to the Withdrawal Limit until the last death of an Annuitant. You may purchase Lifetime Income Plus 2008 with or without the Principal Protection Death Benefit. The Principal Protection Death Benefit is a feature available only with Lifetime Income Plus 2008. It cannot be elected separately from Lifetime Income Plus 2008. We assess a charge for the guaranteed minimum withdrawal benefit provided by the rider. If you purchase Lifetime Income Plus 2008 with the Principal Protection Death Benefit, a charge will be assessed for the Principal Protection Death Benefit that is in addition to the charge for the guaranteed minimum withdrawal benefit under the rider. Lifetime Income Plus 2008 and the Principal Protection Death Benefit may not be available in all states or markets. We reserve the right to discontinue offering Lifetime Income Plus 2008 and the Principal Protection Death Benefit at any time and for any reason. If you wish to elect Lifetime Income Plus 2008, with or without the Principal Protection Death Benefit, you must do so at the time of application. Lifetime Income Plus 2008, with or without the Principal Protection Death Benefit, may be purchased with the Annual Step-Up Death Benefit Rider, but not with any of the other death benefit rider options. References to Lifetime Income Plus 2008 include a rider issued with or without the Principal Protection Death Benefit, as applicable, unless stated otherwise. You may terminate this rider without terminating the contract on any contract anniversary on or after the fifth contract anniversary. Investment Strategy for Lifetime Income Plus 2008. In order to receive the full benefit provided by Lifetime Income Plus 2008, you must invest all purchase payments and allocations in accordance with a prescribed Investment Strategy. Investment Strategies may change from time to time. You may allocate your assets in accordance with your Investment Strategy prescribed at the time the contract was issued, or in accordance with the Investment Strategy in effect at the time you reset your benefit. Therefore, you may have assets allocated to an Investment Strategy that is different than the Investment Strategy described in this prospectus. Your ability to choose different Investment Strategies is limited, as described below. The Investment Strategy includes Designated Subaccounts and five of the Asset Allocation Models (Asset Allocation Models A, B, C and D and the Build Your Own Asset Allocation Model). Under this Investment Strategy, contract owners may allocate assets to either one of the four available Asset Allocation Models or to one or more Designated Subaccounts or to the Build Your Own Asset Allocation Model. Contract owners, however, may elect to participate in the Defined Dollar Cost Averaging program, which permits the owner to systematically transfer a fixed dollar amount on a monthly basis for twelve months from the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to one of the available Investment Strategy options. The Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio is only available as part of the Defined Dollar Cost Averaging program. For more information about the Defined Dollar Cost Averaging program, the Asset Allocation Models and the Subaccounts comprising each of the Asset Allocation Models and the Designated Subaccounts, please see the "Defined Dollar Cost Averaging Program," "Subaccounts" and "Asset Allocation Program" provisions of this prospectus. On a monthly basis, we will rebalance your Contract Value to the Subaccounts in accordance with the percentages that you have chosen to invest in the Designated Subaccounts or the Build Your Own Asset Allocation Model or in accordance with the allocations that comprise the applicable Asset Allocation Model. In addition, we will also rebalance your Contract Value on any Valuation Day after any transaction involving a withdrawal, receipt of a purchase payment or a transfer of Contract Value, unless you instruct us otherwise. If you are participating in the Defined Dollar Cost Averaging program, rebalancing will not affect the assets allocated to the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio. Your allocation instructions must always comply with the Investment Strategy. Shares of a Portfolio may become unavailable under the contract for new purchase payments, transfers and asset rebalancing. As a result, shares of a Portfolio may also become unavailable under your Investment Strategy. Investment Strategies may be modified to respond to such events by removing unavailable Portfolios and 56 adding new Portfolios as appropriate. Because such changes may affect your allocation instructions, you will need to provide updated allocation instructions to comply with the modified Investment Strategy. If you do not provide updated allocation instructions, any subsequent purchase payments or transfers requesting payment to an unavailable Portfolio will be considered not in good order. Assets will remain invested as allocated at the time the Portfolio became unavailable, except in a situation where the affected Portfolio is removed. In that case, the assets that were invested in the removed Portfolio will be invested in a new Portfolio consistent with SEC precedent (appropriate no-action relief, substitution order, etc.), unless you are invested in the Build Your Own Asset Allocation Model. If you are invested in the Build Your Own Asset Allocation Model, all of the assets you have invested in the Build Your Own Asset Allocation Model will be moved from the Model to Asset Allocation Model C. Your assets will remain in Asset Allocation Model C, and any subsequent purchase payments or transfer requests will be applied accordingly. You will need to provide us with updated allocation instructions if you want to invest in the Build Your Own Asset Allocation Model or another available Investment Strategy option. Periodic rebalancing to unavailable Portfolios will cease until we receive updated allocation instructions that comply with the modified Investment Strategy. The current Investment Strategy for Lifetime Income Plus 2008 is as follows: (1) owners may allocate assets to the following Designated Subaccounts: AllianceBernstein Variable Products Series Fund, Inc. -- AllianceBernstein Balanced Wealth Strategies Portfolio -- Class B; Franklin Templeton Variable Insurance Products Trust -- Franklin Income Securities Fund -- Class 2 Shares; Franklin Templeton Variable Insurance Products Trust -- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares; GE Investments Funds, Inc. -- Total Return Fund -- Class 3 Shares; and/or MFS(R) Variable Insurance Trust -- MFS(R) Total Return Series -- Service Class Shares; OR (2) owners may allocate assets to Asset Allocation Model A, B, C or D; OR (3) owners may allocate assets to the Build Your Own Asset Allocation Model. Contract owners may elect to participate in the Defined Dollar Cost Averaging program when they apply for the contract. Defined Dollar Cost Averaging permits the owner to systematically transfer a fixed dollar amount on a monthly basis for twelve months from the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to one of the available Investment Strategy options. The Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio is only available as part of the Defined Dollar Cost Averaging program. Withdrawal Limit. The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit is the benefit base multiplied by the Withdrawal Factor. On each Valuation Day, the benefit base is the greatest of the Contract Value on the prior contract anniversary, the Withdrawal Base, and the Roll-Up Value. The Withdrawal Factor is established based on the age of the younger Annuitant on the earlier of the Valuation Day of the first Gross Withdrawal and the Valuation Day when the Contract Value is reduced to $100. The Withdrawal Factor percentages will be provided in your contract. Withdrawal Base. Your initial Withdrawal Base is equal to your initial purchase payment received and is adjusted when any subsequent purchase payment is received, as described in the "Purchase Payments" provision. It may also change as a result of a withdrawal or reset, as described below. Roll-Up Value. Your initial Roll-Up Value is equal to your initial purchase payment received. We will increase your Roll-Up Value on each day. The new Roll-Up Value is equal to the sum of (a) and (b), multiplied by (c), where: (a) is the Roll-Up Value on the prior day; (b) is any purchase payment(s) made on the prior Valuation Day; and (c) is the daily roll-up factor, as shown in your contract. On each contract anniversary, if the Withdrawal Base is greater than the current Roll-Up Value, the Roll-Up Value will be increased to the Withdrawal Base. The Roll-Up Value will continue to increase until the date of the first withdrawal or the later of the tenth anniversary of the Contract Date and the date the older Annuitant turns age 65. The Roll-Up Value will not increase after this date. On any Valuation Day you make a Gross Withdrawal, if that Gross Withdrawal plus all prior Gross Withdrawals in a Benefit 57 Year is in excess of the Withdrawal Limit, your Roll-Up Value will be reduced to zero. The Roll-Up Value will not increase after this date. When requesting an excess withdrawal, you will be asked if you understand the implications of the excess withdrawal and if you would like to proceed with the request. Purchase Payments. Any purchase payment applied to your contract will be added to your Withdrawal Base and your Principal Protection Death Benefit (if applicable), and may be added to your Roll-Up Value as described in the "Roll-Up Value" provision above. You must allocate all assets to the prescribed Investment Strategy. Important Note. We reserve the right to not adjust the Withdrawal Base, Principal Protection Death Benefit (if applicable), and/or Roll-Up Value for any subsequent purchase payments received. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Lifetime Income Plus 2008 that would be associated with such additional purchase payments. For example, since the Withdrawal Base would not be adjusted for such subsequent purchase payments, you would not be guaranteed to be eligible to make withdrawals from your contract over a period of time at least equal to the amount of such purchase payments. In addition, if you make purchase payments that are not included in the calculation of your Withdrawal Base, Principal Protection Death Benefit (if applicable) or Roll-Up Value, you will pay higher rider charges to the extent that the purchase payments increase the Contract Value and, in turn, increase the benefit base and/or the value of the Principal Protection Death Benefit, upon which such charges are imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Lifetime Income Plus 2008, because it is less likely that your Contract Value will be less than the Withdrawal Base or Roll-Up Value. Before making purchase payments that do not increase the Withdrawal Base, Principal Protection Death Benefit (if applicable) or Roll-Up Value, you should consider that: (i) the guaranteed amounts provided by the Withdrawal Base, Principal Protection Death Benefit (if applicable) and Roll-Up Value will not include such purchase payments; (ii) any such purchase payments make it less likely that you will receive a benefit in the form of an additional amount even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the Withdrawal Base, Principal Protection Death Benefit (if applicable) and Roll-Up Value. Reset of the Benefit. You may reset your Withdrawal Base on an annual anniversary of the Contract Date when your Contract Value is higher than the Withdrawal Base. If such contract anniversary is not a Valuation Day, the reset will occur on the next Valuation Day. On the Valuation Day you reset your benefit, we will reset the Investment Strategy to the current Investment Strategy and reset the charges for this rider. For Lifetime Income Plus without the Principal Protection Death Benefit, the new charges, which may be higher than your previous charges, will never exceed 2.00% of the benefit base. For Lifetime Income Plus with the Principal Protection Death Benefit, the new charges, which may be higher than your previous charges, will never exceed 2.00% of the benefit base plus 0.50% of the value of the Principal Protection Death Benefit. The reset date must be at least 12 months after the later of the Contract Date and the last reset date. Resets will occur automatically unless such automatic resets are or have been terminated. Any change to the charges or to the required Investment Strategy for this rider will be communicated to you in writing prior to the contract anniversary date. Upon reset, these changes will apply. The reset provision is not available on or after the latest permitted Annuity Commencement Date. Automatic resets will continue until and unless: (a) the owner (or owners) submits a written request to our Home Office to terminate automatic resets (such a request must be received at least 15 days prior to the contract anniversary date); (b) the Investment Strategy changes, allocations are affected, and we do not receive confirmation of new allocations from you at our Home Office; (c) income payments begin via annuitization; or (d) ownership of the contract changes. If automatic resets have terminated, you may later reinstate automatic resets for any future contract anniversary by submitting a written request to do so; provided you are following the Investment Strategy and income payments have not begun. Please note that an automatic reset will occur on a contract anniversary if Contract Value is even nominally higher than the Withdrawal Base (e.g., as little as $1.00 higher) and, therefore, an automatic reset may not be in your best interest because: (i) the charges for this rider may be higher than your previous charges and (ii) the Investment Strategy will be reset to the current Investment Strategy (the Investment Strategy offered on the reset date). Please carefully consider the impact of automatic resets when you elect Lifetime Income Plus 2008 and while the rider is in effect. Impact of Withdrawals. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Withdrawal Base, Principal Protection 58 Death Benefit (if applicable) and Roll-Up Value are reduced. The new Withdrawal Base equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Withdrawal Base minus the Gross Withdrawal. The new Principal Protection Death Benefit (if applicable) equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Principal Protection Death Benefit minus the Gross Withdrawal. The new Roll-Up Value will be zero. Additional purchase payments will not increase the Roll-Up Value. If the total Gross Withdrawals in a Benefit Year are less than or equal to the Withdrawal Limit, we will waive any surrender charge on the Gross Withdrawal. The Withdrawal Limit will be increased for any Benefit Year to the extent necessary to meet any minimum distribution requirements under federal tax law. This increase applies only to the required minimum distribution based on the Contract Value for the calendar year ending within the Benefit Year. You should carefully manage withdrawals because excess withdrawals will have adverse consequences on the benefits provided under Lifetime Income Plus 2008, particularly in down markets. Over the period of time during which you take withdrawals, there is the risk that you may need funds in excess of the Withdrawal Limit and, if you do not have other sources of income available, you may need to take (excess) withdrawals that will reduce your Withdrawal Base (and, consequently, your Withdrawal Limit), the Principal Protection Death Benefit (if applicable), and your Roll-Up Value. You also should carefully consider when to begin taking withdrawals if you elected Lifetime Income Plus 2008. The longer you wait before beginning to take withdrawals, the higher the Withdrawal Factor will be, which is one of the components used to determine the amount of your Withdrawal Limit. If you delay taking withdrawals too long, however, you may limit the number of years available for you to take withdrawals in the future (due to life expectancy) and you may be paying for a benefit you are not using. Your Contract Value after taking a withdrawal may be less than the amount required to keep your contract in effect. In this event, or if your Contract Value is reduced to $100, the following will occur: . If the Withdrawal Limit is less than $100, we will pay you the greatest of the following: (a) the Contract Value; (b) a lump sum equal to the present value of future lifetime payments in the amount of the Withdrawal Limit calculated using the 2000 Annuity Mortality Table and an interest rate of 3%; and (c) the Principal Protection Death Benefit (if applicable). . If the Withdrawal Limit is greater than $100, we will begin income payments. We will make payments of a fixed amount for the life of the Annuitant or, if there are Joint Annuitants, the last surviving Annuitant. The fixed amount payable annually will equal the most recently calculated Withdrawal Limit. We will make payments monthly or on another periodic basis agreed by us. If the monthly amount is less than $100, we will reduce the frequency so that the payment will be at least $100. The Principal Protection Death Benefit (if applicable) will continue under this provision. The Principal Protection Death Benefit will be reduced by each payment. The Principal Protection Death Benefit, if any, will be payable on the death of the last surviving Annuitant. Principal Protection Death Benefit. You may purchase Lifetime Income Plus 2008 with the Principal Protection Death Benefit. The Principal Protection Death Benefit is a feature available only with Lifetime Income Plus 2008. It cannot be elected separately from Lifetime Income Plus 2008. The Principal Protection Death Benefit is used to determine the death benefit, if any, payable under the contract and rider as described in the "Death Provisions" section below. The Principal Protection Death Benefit on the Contract Date is equal to the initial purchase payment. Purchase payments in a Benefit Year increase the Principal Protection Death Benefit. Gross Withdrawals in a Benefit Year decrease the Principal Protection Death Benefit. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is less than or equal to the Withdrawal Limit, the Principal Protection Death Benefit will be reduced by the Gross Withdrawal. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Principal Protection Death Benefit will equal the lesser of (a) and (b), where: 59 (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Principal Protection Death Benefit minus the Gross Withdrawal. Death Provisions. At the death of the last surviving Annuitant, a death benefit may be payable under this contract and rider. The amount of any death benefit payable will be the greatest of (a), (b) and (c), where: (a) is the death benefit as calculated under the base contract; (b) is the Principal Protection Death Benefit (if applicable); and (c) is any amount payable by any other optional death benefit rider (if applicable). The death benefit payable will be paid according to the distribution rules under the contract. If the designated beneficiary is a surviving spouse who is not an Annuitant, whose age is 45 through 85, and who elects to continue the contract as the new owner, this rider will continue. The Withdrawal Base and Roll-Up Value for the new owner will be the death benefit determined as of the first Valuation Day we receive at our Home Office due proof of death and all required forms. The Withdrawal Factor for the new owner will be based on the age of that owner on the date of the first Gross Withdrawal for that owner. If the designated beneficiary is a surviving spouse who is an Annuitant and who elects to continue the contract as the owner, this rider will continue. The Withdrawal Base and Roll-Up Value will be the same as it was under the contract for the deceased owner. If no withdrawals were taken prior to the first Valuation Day we receive due proof of death and all required forms at our Home Office, the Withdrawal Factor for the surviving spouse will be established based on the attained age of the surviving spouse on the date of the first Gross Withdrawal for the surviving spouse. Otherwise, the Withdrawal Factor will continue as it was under the contract for the deceased owner. If the surviving spouse cannot continue the rider, the rider and the rider charges will terminate. The charges for this rider will be calculated, pro rata, and deducted. Proceeds that were transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio upon the death of the owner will be reallocated to the Investment Strategy and the asset percentages then in effect at the time of the death of the owner. Such reallocations will not be counted as a transfer for the purpose of the number of transfers allowed under the contract in a calendar year. Considerations. While the rider is designed to provide life-time withdrawal benefits and the return of purchase payments, these benefits are only guaranteed to the extent you comply with the limits, conditions and restrictions set forth in the contract. There can be no assurance that you will receive more than a return of purchase payments. Rider Charge. We assess a charge for the guaranteed minimum withdrawal benefit provided by the rider. The charge for the guaranteed minimum withdrawal benefit is calculated quarterly as a percentage of the benefit base, as defined and determined under the rider, and deducted quarterly from the Contract Value. Please note that, if your benefit base increases, the amount deducted from your Contract Value will increase. If you purchase Lifetime Income Plus 2008 with the Principal Protection Death Benefit, a charge will be assessed for the Principal Protection Death Benefit that is in addition to the charge for the guaranteed minimum withdrawal benefit under the rider. The charge for the Principal Protection Death Benefit is calculated quarterly as a percentage of the value of the Principal Protection Death Benefit, as defined and determined under the rider, and deducted quarterly from the Contract Value. Please note that, if the value of the Principal Protection Death Benefit increases through additional purchase payments, the amount deducted from your Contract Value will increase. The charge for the Principal Protection Death Benefit is higher if any annuitant is age 71 or older at the time of application. We also apply different charges for the rider for a contract that is a single Annuitant contract and a contract that is a Joint Annuitant contract. Once a contract is a Joint Annuitant contract and the Joint Annuitant rider charge is applied, the Joint Annuitant rider charge will continue while the rider is in effect. If a spouse is added as Joint Annuitant after the contract is issued, new charges may apply. These new charges may be higher than the charges previously applicable to your contract. If you reset your benefits under the rider, we will reset the charges for the rider, which may be higher than your previous charges. 60 We currently assess the following charges for the rider, calculated and deducted as described above: Lifetime Income Plus 2008 without the Principal Protection Death Benefit Single Annuitant Contract 0.75% of benefit base ------------------------------------------------------------ Joint Annuitant Contract 0.85% of benefit base - ------------------------------------------------------------------------
Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 45-70 Single Annuitant Contract 0.75% of benefit base plus 0.15% of value of Principal Protection Death Benefit ----------------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 0.15% of value of Principal Protection Death Benefit - ------------------------------------------------------------------------ Lifetime Income Plus 2008 with the Principal Protection Death Benefit -- Annuitant Age 71-85 Single Annuitant Contract 0.75% of benefit base plus 0.40% of value of Principal Protection Death Benefit ----------------------------------------------------------------- Joint Annuitant Contract 0.85% of benefit base plus 0.40% of value of Principal Protection Death Benefit - ------------------------------------------------------------------------
The charges for Lifetime Income Plus 2008 without the Principal Protection Death Benefit will never exceed 2.00% of benefit base. The charges for Lifetime Income Plus 2008 with the Principal Protection Death Benefit will never exceed 2.00% of benefit base plus 0.50% of the value of the Principal Protection Death Benefit. On the day the rider and/or the contract terminates, the charges for this rider will be calculated, pro rata, and deducted. Please note that you will begin paying the rider charge (including the applicable charge associated with the Principal Protection Death Benefit if you have elected that option) as of the date the rider takes effect, even if you do not begin taking withdrawals under the rider for many years, or ever. We will not refund the charges you have paid under the rider if you never choose to take withdrawals and/or if you never receive any payments under the rider; nor will we refund charges if the Principal Protection Death Benefit feature under a contract does not pay out. When the Rider is Effective If available, Lifetime Income Plus 2008 and the Principal Protection Death Benefit must be elected at application. The rider will remain in effect while the contract is in force and before the Annuity Commencement Date. You may terminate this rider (without terminating the contract) on any contract anniversary on or after the 5th contract anniversary. Otherwise this rider and the corresponding charges will terminate on the Annuity Commencement Date. At any time before the Annuity Commencement Date, you can elect to annuitize under current annuity rates in lieu of continuing Lifetime Income Plus 2008. This may provide a higher income amount and/or more favorable tax treatment than payments made under this rider. Change of Ownership We must approve any assignment or sale of this contract unless the assignment is a court ordered assignment. General Provisions For purposes of this rider: . A non-natural entity owner must name an Annuitant and may name the Annuitant's spouse as a Joint Annuitant. . An individual owner must also be an Annuitant and may name his or her spouse as a Joint Annuitant at issue. . A joint owner must be the owner's spouse. . If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. 61 Examples The following examples show how Lifetime Income Plus 2008 works based on hypothetical values. The examples are for illustrative purposes only and are not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The examples assume current rider charges for all periods shown. If an owner resets the benefits under the rider, we reset the charges for the rider, which may be higher than the previous charges. Higher rider charges would produce lower values in the examples. This example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 without the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 52 at issue, waits 13 years to take a withdrawal, and has a Withdrawal Factor of 5.5%; (4) the Roll-Up Value increases until age 65; (5) the contract earns a net return of -2%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) The Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 53 $100,000 -- $97,205 $100,000 $106,000 $106,000 $100,000 54 97,205 -- 94,418 100,000 112,360 112,360 100,000 55 94,418 -- 91,637 100,000 119,102 119,102 100,000 56 91,637 -- 88,857 100,000 126,248 126,248 100,000 57 88,857 -- 86,076 100,000 133,823 133,823 100,000 58 86,076 -- 83,291 100,000 141,852 141,852 100,000 59 83,291 -- 80,497 100,000 150,363 150,363 100,000 60 80,497 -- 77,692 100,000 159,385 159,385 100,000 61 77,692 -- 74,871 100,000 168,948 168,948 100,000 62 74,871 -- 72,030 100,000 179,085 179,085 100,000 63 72,030 -- 69,166 100,000 189,830 189,830 100,000 64 69,166 -- 66,274 100,000 201,220 201,220 100,000 65 66,274 $11,731 51,617 100,000 213,293 213,293 81,482 66 51,617 11,731 37,224 100,000 213,293 213,293 61,956 67 37,224 11,731 23,119 100,000 213,293 213,293 41,101 68 23,119 11,731 9,296 100,000 213,293 213,293 18,170 69 9,296 11,731 -- 100,000 213,293 213,293 -- 70 -- 11,731 -- 100,000 213,293 213,293 -- 71 -- 11,731 -- 100,000 213,293 213,293 -- 72 -- 11,731 -- 100,000 213,293 213,293 -- 73 -- 11,731 -- 100,000 213,293 213,293 -- 74 -- 11,731 -- 100,000 213,293 213,293 -- 75 -- 11,731 -- 100,000 213,293 213,293 -- 76 -- 11,731 -- 100,000 213,293 213,293 -- 77 -- 11,731 -- 100,000 213,293 213,293 -- 78 -- 11,731 -- 100,000 213,293 213,293 -- 79 -- 11,731 -- 100,000 213,293 213,293 -- 80 -- 11,731 -- 100,000 213,293 213,293 -- 81 -- 11,731 -- 100,000 213,293 213,293 -- 82 -- 11,731 -- 100,000 213,293 213,293 -- 83 -- 11,731 -- 100,000 213,293 213,293 -- 84 -- 11,731 -- 100,000 213,293 213,293 -- 85 -- 11,731 -- 100,000 213,293 213,293 -- 86 -- 11,731 -- 100,000 213,293 213,293 -- 87 -- 11,731 -- 100,000 213,293 213,293 -- 88 -- 11,731 -- 100,000 213,293 213,293 -- 89 -- 11,731 -- 100,000 213,293 213,293 -- 90 -- 11,731 -- 100,000 213,293 213,293 -- - -------------------------------------------------------------------------------------------------------------
62 This example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 with the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 52 at issue, waits 13 years to take a withdrawal, and has a Withdrawal Factor of 5.5%; (4) the Roll-Up Value increases until age 65; (5) the contract earns a net return of -2%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) The Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 53 $100,000 -- $97,055 $100,000 $106,000 $106,000 $100,000 54 97,055 -- 94,121 100,000 112,360 112,360 100,000 55 94,121 -- 91,196 100,000 119,102 119,102 100,000 56 91,196 -- 88,275 100,000 126,248 126,248 100,000 57 88,275 -- 85,356 100,000 133,823 133,823 100,000 58 85,356 -- 82,435 100,000 141,852 141,852 100,000 59 82,435 -- 79,508 100,000 150,363 150,363 100,000 60 79,508 -- 76,573 100,000 159,385 159,385 100,000 61 76,573 -- 73,624 100,000 168,948 168,948 100,000 62 73,624 -- 70,658 100,000 179,085 179,085 100,000 63 70,658 -- 67,672 100,000 189,830 189,830 100,000 64 67,672 -- 64,659 100,000 201,220 201,220 100,000 65 64,659 $11,731 49,903 100,000 213,293 213,293 88,269 66 49,903 11,731 35,429 100,000 213,293 213,293 76,538 67 35,429 11,731 21,262 100,000 213,293 213,293 64,807 68 21,262 11,731 7,397 100,000 213,293 213,293 53,076 69 7,397 11,731 -- 100,000 213,293 213,293 41,344 70 -- 11,731 -- 100,000 213,293 213,293 29,613 71 -- 11,731 -- 100,000 213,293 213,293 17,882 72 -- 11,731 -- 100,000 213,293 213,293 6,151 73 -- 11,731 -- 100,000 213,293 213,293 -- 74 -- 11,731 -- 100,000 213,293 213,293 -- 75 -- 11,731 -- 100,000 213,293 213,293 -- 76 -- 11,731 -- 100,000 213,293 213,293 -- 77 -- 11,731 -- 100,000 213,293 213,293 -- 78 -- 11,731 -- 100,000 213,293 213,293 -- 79 -- 11,731 -- 100,000 213,293 213,293 -- 80 -- 11,731 -- 100,000 213,293 213,293 -- 81 -- 11,731 -- 100,000 213,293 213,293 -- 82 -- 11,731 -- 100,000 213,293 213,293 -- 83 -- 11,731 -- 100,000 213,293 213,293 -- 84 -- 11,731 -- 100,000 213,293 213,293 -- 85 -- 11,731 -- 100,000 213,293 213,293 -- 86 -- 11,731 -- 100,000 213,293 213,293 -- 87 -- 11,731 -- 100,000 213,293 213,293 -- 88 -- 11,731 -- 100,000 213,293 213,293 -- 89 -- 11,731 -- 100,000 213,293 213,293 -- 90 -- 11,731 -- 100,000 213,293 213,293 -- - -------------------------------------------------------------------------------------------------------------
63 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 without the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 72 at issue, waits 10 years to take a withdrawal, and has a Withdrawal Factor of 7%; (4) the Roll-Up Value increases for 10 years; (5) the contract earns a net return of -2%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) The Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 73 $100,000 -- $97,205 $100,000 $106,000 $106,000 $100,000 74 97,205 -- 94,418 100,000 112,360 112,360 100,000 75 94,418 -- 91,637 100,000 119,102 119,102 100,000 76 91,637 -- 88,857 100,000 126,248 126,248 100,000 77 88,857 -- 86,076 100,000 133,823 133,823 100,000 78 86,076 -- 83,291 100,000 141,852 141,852 100,000 79 83,291 -- 80,497 100,000 150,363 150,363 100,000 80 80,497 -- 77,692 100,000 159,385 159,385 100,000 81 77,692 -- 74,871 100,000 168,948 168,948 100,000 82 74,871 $12,536 59,494 100,000 179,085 179,085 82,596 83 59,494 12,536 44,426 100,000 179,085 179,085 64,419 84 44,426 12,536 29,628 100,000 179,085 179,085 45,266 85 29,628 12,536 15,126 100,000 179,085 179,085 24,752 86 15,126 12,536 915 100,000 179,085 179,085 1,683 87 915 12,536 -- 100,000 179,085 179,085 -- 88 -- 12,536 -- 100,000 179,085 179,085 -- 89 -- 12,536 -- 100,000 179,085 179,085 -- 90 -- 12,536 -- 100,000 179,085 179,085 -- - -------------------------------------------------------------------------------------------------------------
64 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 with the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 72 at issue, waits 10 years to take a withdrawal, and has a Withdrawal Factor of 7%; (4) the Roll-Up Value increases for 10 years; (5) the contract earns a net return of -2%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) The Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 73 $100,000 -- $96,805 $100,000 $106,000 $106,000 $100,000 74 96,805 -- 93,626 100,000 112,360 112,360 100,000 75 93,626 -- 90,460 100,000 119,102 119,102 100,000 76 90,460 -- 87,304 100,000 126,248 126,248 100,000 77 87,304 -- 84,155 100,000 133,823 133,823 100,000 78 84,155 -- 81,008 100,000 141,852 141,852 100,000 79 81,008 -- 77,860 100,000 150,363 150,363 100,000 80 77,860 -- 74,707 100,000 159,385 159,385 100,000 81 74,707 -- 71,546 100,000 168,948 168,948 100,000 82 71,546 $12,536 55,886 100,000 179,085 179,085 87,464 83 55,886 12,536 40,590 100,000 179,085 179,085 74,928 84 40,590 12,536 25,619 100,000 179,085 179,085 62,392 85 25,619 12,536 10,998 100,000 179,085 179,085 49,856 86 10,998 12,536 -- 100,000 179,085 179,085 37,320 87 -- 12,536 -- 100,000 179,085 179,085 24,784 88 -- 12,536 -- 100,000 179,085 179,085 12,248 89 -- 12,536 -- 100,000 179,085 179,085 -- 90 -- 12,536 -- 100,000 179,085 179,085 -- - -------------------------------------------------------------------------------------------------------------
65 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 without the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 65 at issue and has a Withdrawal Factor of 5.5%; (4) the Roll-Up Value increases for 1 year; (5) the contract earns a net return of 8%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) the Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 66 $100,000 $5,830 $101,375 $100,000 $106,000 $106,000 $101,375 67 101,375 5,830 102,860 101,375 106,000 106,000 102,860 68 102,860 5,830 104,464 102,860 106,000 106,000 104,464 69 104,464 5,830 106,196 104,464 106,000 106,000 106,196 70 106,196 5,841 108,054 106,196 106,000 106,196 108,054 71 108,054 5,943 109,945 108,054 106,000 108,054 109,945 72 109,945 6,047 111,869 109,945 106,000 109,945 111,869 73 111,869 6,153 113,827 111,869 106,000 111,869 113,827 74 113,827 6,260 115,819 113,827 106,000 113,827 115,819 75 115,819 6,370 117,846 115,819 106,000 115,819 117,846 76 117,846 6,482 119,908 117,846 106,000 117,846 119,908 77 119,908 6,595 122,007 119,908 106,000 119,908 122,007 78 122,007 6,710 124,142 122,007 106,000 122,007 124,142 79 124,142 6,828 126,314 124,142 106,000 124,142 126,314 80 126,314 6,947 128,525 126,314 106,000 126,314 128,525 81 128,525 7,069 130,774 128,525 106,000 128,525 130,774 82 130,774 7,193 133,062 130,774 106,000 130,774 133,062 83 133,062 7,318 135,391 133,062 106,000 133,062 135,391 84 135,391 7,447 137,760 135,391 106,000 135,391 137,760 85 137,760 7,577 140,171 137,760 106,000 137,760 140,171 86 140,171 7,709 142,624 140,171 106,000 140,171 142,624 87 142,624 7,844 145,120 142,624 106,000 142,624 145,120 88 145,120 7,982 147,660 145,120 106,000 145,120 147,660 89 147,660 8,121 150,244 147,660 106,000 147,660 150,244 90 150,244 8,263 152,873 150,244 106,000 150,244 152,873 - -------------------------------------------------------------------------------------------------------------
66 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000 and elects Lifetime Income Plus 2008 with the Principal Protection Death Benefit; (2) the owner makes no additional purchase payments; (3) the owner is age 65 at issue and has a Withdrawal Factor of 5.5%; (4) the Roll-Up Value increases for 1 year; (5) the contract earns a net return of 8%, before rider charges are deducted; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the benefit base) for the rest of the owner's life; (7) the Withdrawal Base is reset annually on the contract anniversary; and (8) the owner dies upon reaching age 90.
Contract Value - Withdrawals End of Year - Withdrawal Roll-Up Death Age - Contract Value - Taken - After Rider Base - Value - Benefit Base - Benefit - End of Year Beginning of Year End of Year Charges End of Year End of Year End of Year End of Year - ------------------------------------------------------------------------------------------------------------- 66 $100,000 $5,830 $101,223 $100,000 $106,000 $106,000 $101,223 67 101,223 5,830 102,541 101,223 106,000 106,000 102,541 68 102,541 5,830 103,963 102,541 106,000 106,000 103,963 69 103,963 5,830 105,496 103,963 106,000 106,000 105,496 70 105,496 5,830 107,148 105,496 106,000 106,000 107,148 71 107,148 5,893 108,859 107,148 106,000 107,148 108,859 72 108,859 5,987 110,596 108,859 106,000 108,859 110,596 73 110,596 6,083 112,361 110,596 106,000 110,596 112,361 74 112,361 6,180 114,153 112,361 106,000 112,361 114,153 75 114,153 6,278 115,974 114,153 106,000 114,153 115,974 76 115,974 6,379 117,824 115,974 106,000 115,974 117,824 77 117,824 6,480 119,703 117,824 106,000 117,824 119,703 78 119,703 6,584 121,611 119,703 106,000 119,703 121,611 79 121,611 6,689 123,550 121,611 106,000 121,611 123,550 80 123,550 6,795 125,519 123,550 106,000 123,550 125,519 81 125,519 6,904 127,520 125,519 106,000 125,519 127,520 82 127,520 7,014 129,552 127,520 106,000 127,520 129,552 83 129,552 7,125 131,616 129,552 106,000 129,552 131,616 84 131,616 7,239 133,712 131,616 106,000 131,616 133,712 85 133,712 7,354 135,842 133,712 106,000 133,712 135,842 86 135,842 7,471 138,005 135,842 106,000 135,842 138,005 87 138,005 7,590 140,203 138,005 106,000 138,005 140,203 88 140,203 7,711 142,435 140,203 106,000 140,203 142,435 89 142,435 7,834 144,702 142,435 106,000 142,435 144,702 90 144,702 7,959 147,005 144,702 106,000 144,702 147,005 - -------------------------------------------------------------------------------------------------------------
67 Lifetime Income Plus 2007 Lifetime Income Plus 2007 may not be available in all states and markets. We reserve the right to discontinue offering the rider at any time and for any reason. If you wish to elect the rider, you must do so at the time of application. Lifetime Income Plus 2007 may be elected with the Annual Step-Up Death Benefit Rider but not with any of the other death benefit rider options. Lifetime Income Plus 2007 provides guaranteed withdrawals for the life of the Annuitant(s), at least equal to purchase payments, with upside potential, provided you meet certain conditions. If you: . allocate all Contract Value to the prescribed Investment Strategy; and . limit total Gross Withdrawals in each Benefit Year to an amount no greater than the Withdrawal Limit; then you will be eligible to receive total Gross Withdrawals in each Benefit Year equal to the Withdrawal Limit until the last death of an Annuitant. For important information about the Investment Strategy, please see the "Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options" provision below. Withdrawal Limit. The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit is (a) multiplied by (b) where: (a) is the greatest of: (1) the Contract Value on the prior contract anniversary; (2) the Withdrawal Base; and (3) the Roll-Up Value; and (b) is the Withdrawal Factor. The Withdrawal Base and the Roll-Up Value are amounts used to calculate and establish the Withdrawal Limit. The Withdrawal Factor is established based on the age of the younger Annuitant on the earlier of the Valuation Day of the first Gross Withdrawal and the Valuation Day when the Contract Value is reduced to $100. Withdrawal Base. Your initial Withdrawal Base is equal to your initial purchase payment received and is adjusted when any subsequent purchase payment is received, as described in the "Purchase Payments" provision. Roll-Up Value. Your initial Roll-Up Value is equal to your initial purchase payment received. On each Valuation Day your Roll-Up Value will be adjusted. The new Roll-Up Value will equal (a) plus (b) plus (c), where: (a) is the Roll-Up Value on the prior Valuation Day; (b) is any purchase payment made on the current Valuation Day; (c) is the daily roll-up rate, as shown in your contract, multiplied by the cumulative purchase payments. The Roll-Up Value will continue to increase until the earlier of (i) the "last roll-up date" or (ii) the date of the first withdrawal. The "last roll-up date" is the later of the fifth contract anniversary or the first contract anniversary on or after the day the older Annuitant turns 70 years old. On the last roll-up date or the date of the first withdrawal, whichever comes first, the Roll-Up Value will equal the Roll-Up Value on the prior Valuation Day. After this date, additional purchase payments will not increase the Roll-Up Value. On any Valuation Day you make a Gross Withdrawal, if that Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Roll-Up Value will be reduced to zero. After this date, additional purchase payments will not increase the Roll-Up Value. Purchase Payments. Any purchase payment applied to your contract will adjust your Withdrawal Base and your Rider Death Benefit, and may adjust your Roll-Up Value as described in the "Roll-Up Value" provision above. In order to obtain the full benefit provided by this rider, you must allocate all assets to the prescribed Investment Strategy from the Benefit Date. Except as noted below, if you have allocated all assets to the Investment Strategy from the Benefit Date, any subsequent purchase payment will be added to the Withdrawal Base and the Rider Death Benefit and may be added to the Roll-Up Value. If you have not allocated all assets to the Investment Strategy, the purchase payment will be added to the Withdrawal Base and, if applicable, the Roll-Up Value, but the Rider Death Benefit will be increased only by 50% of the purchase payment. Important Note. We reserve the right to not adjust the Withdrawal Base, Rider Death Benefit, and/or Roll-Up Value for any subsequent purchase payments received. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Lifetime Income Plus 2007 that would be associated with such additional purchase payments. For example, since the Withdrawal Base would not be adjusted for such subsequent purchase payments, you would not be guaranteed to be eligible to make withdrawals from your contract over a period of time at least equal to the amount of such purchase payments. In addition, if you make purchase payments that are not included in the calculation of your Withdrawal Base, Rider Death Benefit or Roll-Up Value, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is 68 assessed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Lifetime Income Plus 2007, because it is less likely that your Contract Value will be less than the Withdrawal Base or Roll-Up Value. Before making purchase payments that do not increase the Withdrawal Base, Rider Death Benefit or Roll-Up Value, you should consider that: (i) the guaranteed amounts provided by the Withdrawal Base, Rider Death Benefit and Roll-Up Value will not include such purchase payments; (ii) any such purchase payments make it less likely that you will receive a benefit in the form of an additional amount even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the Withdrawal Base, Rider Death Benefit and Roll-Up Value. Impact of Violating the Investment Strategy on the Withdrawal Factor and Rider Death Benefit. Beginning on the first Valuation Day after you choose not to follow the Investment Strategy, your Withdrawal Factor and Rider Death Benefit will be reduced by 50%. You may elect to resume participation in the Investment Strategy, as described in the "Restoration or Reset of the Benefit" provision below, provided we receive notice of your election in a form acceptable to us. We will not reduce your Withdrawal Factor or Rider Death Benefit if you are not following the Investment Strategy due to a Portfolio liquidation or a Portfolio dissolution and the assets are transferred from the liquidated or dissolved Portfolio to another Portfolio. Restoration or Reset of the Benefit Restoration. If your Withdrawal Factor and Rider Death Benefit have been reduced because you have not allocated all assets to the prescribed Investment Strategy, you will have a one-time opportunity to restore your Withdrawal Factor and Rider Death Benefit on a contract anniversary. If such contract anniversary is not a Valuation Day, the restoration will occur on the next Valuation Day. The restore feature under this rider may be used only once and is not available on or after the latest permitted Annuity Commencement Date. On the Valuation Day we restore your benefit, we will: (a) restore the Withdrawal Factor to 100% of the Withdrawal Factor established as of the date of the first withdrawal; (b) calculate your Rider Death Benefit to equal the lesser of (i) the total purchase payments less Gross Withdrawals and (ii) current Contract Value; (c) calculate your Withdrawal Base to equal the lesser of (i) the Withdrawal Base as of the date of the restore, determined as if you have not allocated outside of the prescribed Investment Strategy and (ii) the current Contract Value; (d) allocate your assets to the Investment Strategy in effect as of the last Benefit Date prior to the reduction in benefits, in accordance to your instructions; and (e) assess a rider charge equal to the charge that was in effect as of your last Benefit Date prior to the reduction in benefits. If you want to restore your benefit, we must receive notice of your election at our Home Office in a form acceptable to us at least 15 days prior to your next contract anniversary. Reset. You may reset your Withdrawal Base on an annual anniversary of the Contract Date when your Contract Value is higher than the Withdrawal Base. If such contract anniversary is not a Valuation Day, the reset will occur on the next Valuation Day. The reset date must be at least 12 months after the later of the Contract Date and the last reset date. Resets will occur automatically unless such automatic resets are or have been terminated. On the Valuation Day we reset your benefit, we will: (a) reset the Withdrawal Factor to 100% of the Withdrawal Factor established as of the date of first withdrawal; (b) reset the Rider Death Benefit to the lesser of (i) the total purchase payments less Gross Withdrawals and (ii) current Contract Value; (c) reset the Withdrawal Base to your Contract Value; (d) reset the Investment Strategy to the current Investment Strategy; and (e) reset the charge for this rider (the new charge, which may be higher than your previous charge, will never exceed 2.00%). Any change to the charge or to the required Investment Strategy for this rider will be communicated to you in writing prior to the contract anniversary date. The reset provision is not available on or after the latest permitted Annuity Commencement Date. Automatic resets will continue until and unless: (a) the owner (or owners) submits a written request to our Home Office to terminate automatic resets (such a request must be received at least 15 days prior to the contract anniversary date); 69 (b) the Investment Strategy is violated; (c) the Investment Strategy changes, allocations are affected, and we do not receive confirmation of new allocations from you at our Home Office; (d) income payments begin via annuitization; or (e) ownership of the contract changes. If automatic resets have terminated, you may later reinstate automatic resets for any future contract anniversary by submitting a written request to our Home Office to do so; provided you are following the Investment Strategy and income payments have not begun. Please note that an automatic reset will occur on a contract anniversary if contract value is even nominally higher than the Withdrawal Base (e.g., as little as $1.00 higher) and, therefore, an automatic reset may not be in your best interest because: (i) the charge for this rider may be higher than your previous charge and (ii) the Investment Strategy will be reset to the current Investment Strategy (the Investment Strategy offered on the reset date). Please carefully consider the impact of automatic resets when you elect Lifetime Income Plus 2007 and while the rider is in effect. Withdrawals. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Withdrawal Base, Rider Death Benefit and Roll-Up Value are reduced. The new Withdrawal Base equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Withdrawal Base minus the Gross Withdrawal. The new Rider Death Benefit equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Rider Death Benefit minus the Gross Withdrawal. The new Roll-Up Value will be zero. Additional purchase payments will not increase the Roll-Up Value. If the total Gross Withdrawals in a Benefit Year are less than or equal to the Withdrawal Limit, we will waive any surrender charge on such total Gross Withdrawals. If all Contract Value is allocated to the Investment Strategy, the Withdrawal Limit will be increased for any Benefit Year to the extent necessary to meet any minimum distribution requirements under federal tax law. This increase applies only to the required minimum distribution based on the Contract Value. You should carefully consider when to begin taking withdrawals if you elected Lifetime Income Plus 2007. The longer you wait before beginning to take withdrawals, the higher the Withdrawal Factor will be, which is one of the components used to determine the amount of your Withdrawal Limit. If you delay taking withdrawals too long, however, you may limit the number of years available for you to take withdrawals in the future (due to life expectancy) and you may be paying for a benefit you are not using. Your Contract Value after taking a withdrawal may be less than the amount required to keep your contract in effect. In this event, or if your Contract Value is reduced to $100, the following will occur: . If the Withdrawal Limit is less than $100, we will pay you the greatest of the Rider Death Benefit, the Contract Value and the present value of the Withdrawal Limit in a lump sum, calculated using the Annuity 2000 Mortality Table and an interest rate of 3%. . If the Withdrawal Limit is greater than $100, we will begin income payments. We will make payments of a fixed amount for the life of the Annuitant or, if there are Joint Annuitants, the last surviving Annuitant. The fixed amount payable annually will equal the most recently calculated Withdrawal Limit. We will make payments monthly or on another periodic basis agreed by us. If the monthly amount is less than $100, we will reduce the frequency so that the payment will be at least $100. The Rider Death Benefit will continue under this provision. The Rider Death Benefit will be reduced by each payment. The Rider Death Benefit, if any, will be payable on the death of the last surviving Annuitant. Death Provisions. At the death of the last surviving Annuitant, a death benefit may be payable under this contract and rider. The amount of any death benefit payable will be the greatest of (a), (b) and (c), where: (a) is the death benefit as calculated under the base Contract; (b) is the Rider Death Benefit; and (c) is any amount payable by any other optional death benefit rider. The death benefit payable will be paid according to the distribution rules under the contract. 70 If the designated beneficiary is a surviving spouse who is not an Annuitant, whose age is 45 through 85, and who elects to continue the contract as the new owner, this rider will continue. The Withdrawal Base and Roll-Up Value for the new owner will be the death benefit determined as of the first Valuation Day we receive at our Home Office due proof of death and all required forms. The Withdrawal Factor for the new owner will be based on the age of that owner on the date of the first Gross Withdrawal for that owner. If the designated beneficiary is a surviving spouse who is an Annuitant and who elects to continue the contract as the owner, this rider will continue. The Withdrawal Base and Roll-Up Value will be the same as it was under the contract for the deceased owner. If no withdrawals were taken prior to the first Valuation Day we receive due proof of death and all required forms at our Home Office, the Withdrawal Factor for the surviving spouse will be established based on the attained age of the surviving spouse on the date of the first Gross Withdrawal for the surviving spouse. Otherwise, the Withdrawal Factor will continue as it was under the contract for the deceased Owner. If the surviving spouse cannot continue the rider, the rider and the rider charge will terminate on the next contract anniversary. Proceeds that were transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio upon the death of the owner will be reallocated to the Investment Strategy, if applicable, and the asset percentages then in effect at the time of the death of the owner. Such reallocations will not be counted as a transfer for the purpose of the number of transfers allowed under the contract in a calendar year. Rider Death Benefit. This rider provides for a death benefit (the "Rider Death Benefit") that, on the Contract Date, is equal to the initial purchase payment. The Rider Death Benefit is used to determine the death benefit, if any, payable upon the death of the last surviving Annuitant as described in the "Death Provisions" section above. Purchase payments applied to your contract in a Benefit Year increase the Rider Death Benefit. If you have allocated all assets to the Investment Strategy from the Benefit Date, any subsequent purchase payment will be added to the Rider Death Benefit. Otherwise, the Rider Death Benefit will be increased only by 50% of the purchase payment. Gross Withdrawals in a Benefit Year decrease the Rider Death Benefit. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is less than or equal to the Withdrawal Limit, the Rider Death Benefit will be reduced by the Gross Withdrawal. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Rider Death Benefit will equal the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Rider Death Benefit minus the Gross Withdrawal. If you choose not to follow the Investment Strategy, your Rider Death Benefit will be reduced as described in the "Impact of Violating the Investment Strategy on the Withdrawal Factor and Rider Death Benefit" provision above. Considerations. While the rider is designed to provide life-time withdrawal benefits and the return of purchase payments, these benefits are only guaranteed to the extent you comply with the limits, conditions and restrictions set forth in the contract. There can be no assurance that you will receive more than a return of purchase payments. When the Rider is Effective If available, Lifetime Income Plus 2007 must be elected at application. The rider will remain in effect while the contract is in force and before the Annuity Commencement Date. The rider may not be terminated prior to the Annuity Commencement Date. On the Annuity Commencement Date, the rider, and the benefits you are eligible to receive thereunder, will terminate. At any time before the Annuity Commencement Date, you can elect to annuitize under current annuity rates in lieu of continuing Lifetime Income Plus 2007. This may provide a higher income amount and/or more favorable tax treatment than payments made under this rider. Change of Ownership We must approve any assignment or sale of this contract unless the assignment is a court ordered assignment. General Provisions For purposes of this rider: . A non-natural entity owner must name an Annuitant and may name the Annuitant's spouse as a Joint Annuitant. . An individual owner must also be an Annuitant and may name his or her spouse as a Joint Annuitant at issue. . A joint owner must be the owner's spouse. . If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. 71 Examples The following examples show how Lifetime Income Plus 2007 works based on hypothetical values. The examples are for illustrative purposes only and are not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. This example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 62 at issue, waits 8 years to take a withdrawal, and has a Withdrawal Factor of 6%; (5) the Roll-Up Value increases until age 70; (6) the contract earns a net return of - 2%; (7) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Contract Value as of the prior contract anniversary, the Withdrawal Base and the Rollup Value) for the rest of the owner's life; and (8) the owner dies upon reaching age 90.
Roll-Up Rider Withdrawals Withdrawal Value - Death Age - Contract Value - Taken - Contract Value -- Base - End of Benefit - End of Year Beginning of Year End of Year End of Year End of Year Year End of Year - -------------------------------------------------------------------------------------------- 63 $100,000 $ -- $98,000 $100,000 $105,000 $100,000 64 98,000 -- 96,040 100,000 110,000 100,000 65 96,040 -- 94,119 100,000 115,000 100,000 66 94,119 -- 92,237 100,000 120,000 100,000 67 92,237 -- 90,392 100,000 125,000 100,000 68 90,392 -- 88,584 100,000 130,000 100,000 69 88,584 -- 86,813 100,000 135,000 100,000 70 86,813 8,400 76,676 100,000 140,000 91,600 71 76,676 8,400 66,743 100,000 140,000 83,200 72 66,743 8,400 57,008 100,000 140,000 74,800 73 57,008 8,400 47,468 100,000 140,000 66,400 74 47,468 8,400 38,088 100,000 140,000 58,000 75 38,088 8,400 28,897 100,000 140,000 49,600 76 28,897 8,400 19,889 100,000 140,000 41,200 77 19,889 8,400 11,061 100,000 140,000 32,800 78 11,061 8,400 2,410 100,000 140,000 24,400 79 2,410 8,400 -- 100,000 140,000 16,000 80 -- 8,400 -- 100,000 140,000 7,600 81 -- 8,400 -- 100,000 140,000 -- 82 -- 8,400 -- 100,000 140,000 -- 83 -- 8,400 -- 100,000 140,000 -- 84 -- 8,400 -- 100,000 140,000 -- 85 -- 8,400 -- 100,000 140,000 -- 86 -- 8,400 -- 100,000 140,000 -- 87 -- 8,400 -- 100,000 140,000 -- 88 -- 8,400 -- 100,000 140,000 -- 89 -- 8,400 -- 100,000 140,000 -- 90 -- 8,400 -- 100,000 140,000 -- - --------------------------------------------------------------------------------------------
72 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 77 at issue, waits 5 years to take a withdrawal, and has a Withdrawal Factor of 7%; (5) the Roll-Up Value increases for 5 years; (6) the contract earns a net return of -2%; (7) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Contract Value as of the prior contract anniversary, the Withdrawal Base and the Rollup Value) for the rest of the owner's life; and (8) the owner dies upon reaching age 90.
Rider Withdrawals Withdrawal Roll-Up Death Age - Contract Value - Taken - Contract Value - Base - Value - Benefit - End of Year Beginning of Year End of Year End of Year End of Year End of Year End of Year - ---------------------------------------------------------------------------------------------- 78 $100,000 $ -- $98,000 $100,000 $105,000 $100,000 79 98,000 -- 96,040 100,000 110,000 100,000 80 96,040 -- 94,119 100,000 115,000 100,000 81 94,119 -- 92,237 100,000 120,000 100,000 82 92,237 8,750 81,642 100,000 125,000 91,250 83 81,642 8,750 71,259 100,000 125,000 82,500 84 71,259 8,750 61,084 100,000 125,000 73,750 85 61,084 8,750 51,112 100,000 125,000 65,000 86 51,112 8,750 41,340 100,000 125,000 56,250 87 41,340 8,750 31,733 100,000 125,000 47,500 88 31,733 8,750 22,319 100,000 125,000 38,750 89 22,319 8,750 13,092 100,000 125,000 30,000 90 13,092 8,750 4,050 100,000 125,000 21,250 - ----------------------------------------------------------------------------------------------
73 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 65 at issue and has a Withdrawal Factor of 5.5%; (5) the Roll-Up Value increases for 1 year; (6) the contract earns a net return of 8%; (7) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Contract Value as of the prior contract anniversary, the Withdrawal Base and the Rollup Value) for the rest of the owner's life; (8) the Withdrawal Base is systematically reset annually on the contract anniversary; and (9) the owner dies upon reaching age 90.
Withdrawals Withdrawal Roll-Up Rider Death Age - Contract Value - Taken - Contract Value - Base - Value - Benefit - End of Year Beginning of Year End of Year End of Year End of Year End of Year End of Year - ---------------------------------------------------------------------------------------------- 66 $100,000 $5,775 $102,225 $100,000 $105,000 $102,225 67 102,225 5,775 104,628 102,225 105,000 104,628 68 104,628 5,775 107,223 104,628 105,000 107,223 69 107,223 5,897 109,904 107,223 105,000 109,904 70 109,904 6,045 112,651 109,904 105,000 112,651 71 112,651 6,196 115,468 112,651 105,000 115,468 72 115,468 6,351 118,354 115,468 105,000 118,354 73 118,354 6,509 121,313 118,354 105,000 121,313 74 121,313 6,672 124,346 121,313 105,000 124,346 75 124,346 6,839 127,455 124,346 105,000 127,455 76 127,455 7,010 130,641 127,455 105,000 130,641 77 130,641 7,185 133,907 130,641 105,000 133,907 78 133,907 7,365 137,255 133,907 105,000 137,255 79 137,255 7,549 140,686 137,255 105,000 140,686 80 140,686 7,738 144,203 140,686 105,000 144,203 81 144,203 7,931 147,808 144,203 105,000 147,808 82 147,808 8,129 151,504 147,808 105,000 151,504 83 151,504 8,333 155,291 151,504 105,000 155,291 84 155,291 8,541 159,174 155,291 105,000 159,174 85 159,174 8,755 163,153 159,174 105,000 163,153 86 163,153 8,973 167,232 163,153 105,000 167,232 87 167,232 9,198 171,412 167,232 105,000 171,412 88 171,412 9,428 175,698 171,412 105,000 175,698 89 175,698 9,663 180,090 175,698 105,000 180,090 90 180,090 9,905 184,592 180,090 105,000 184,592 - ----------------------------------------------------------------------------------------------
74 Lifetime Income Plus For contracts issued on or after the later of May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications. The disclosure for Lifetime Income Plus in this section applies to contracts issued on or after the later of May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications. For contracts issued prior to that date, please see the disclosure for Lifetime Income Plus in the following section. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. Lifetime Income Plus provides guaranteed withdrawals for the life of the Annuitant(s), at least equal to purchase payments, with upside potential, provided you meet certain conditions. If you: . allocate all Contract Value to the prescribed Investment Strategy; and . limit total Gross Withdrawals in each Benefit Year to an amount no greater than the Withdrawal Limit; then you will be eligible to receive total Gross Withdrawals in each Benefit Year equal to the Withdrawal Limit until the last death of an Annuitant. For important information about the Investment Strategy, please see the "Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options" provision below. Withdrawal Limit. The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit is (a) multiplied by (b) where: (a) is the greater of the Contract Value on the prior contract anniversary and the Withdrawal Base; and (b) is the Withdrawal Factor. Withdrawal Base. The Withdrawal Base is an amount used to establish the Withdrawal Limit. The Withdrawal Factor is established based on the attained age of the younger Annuitant on the earlier of the Valuation Day of the first Gross Withdrawal and the Valuation Day when the Contract Value is reduced to zero. Your initial Withdrawal Base is equal to your initial purchase payment received and is adjusted when any subsequent purchase payment is received, as described in the "Purchase Payments" provision. Purchase Payments. Any purchase payment applied to your contract will adjust your Withdrawal Base and your Rider Death Benefit. In order to obtain the full benefit provided by this rider, you must allocate all assets to the prescribed Investment Strategy since the Benefit Date. If you have allocated all assets to the prescribed Investment Strategy since the Benefit Date, any subsequent purchase payment will be added to the Withdrawal Base and the Rider Death Benefit. If you have not allocated all assets to the prescribed Investment Strategy, the Withdrawal Base still will be increased by the amount of the purchase payment, but the Rider Death Benefit will be increased only by 50% of the purchase payment. Important Note. We reserve the right to not adjust the Withdrawal Base and/or the Rider Death Benefit for any subsequent purchase payments received. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Lifetime Income Plus that would be associated with such additional purchase payments. For example, since the Withdrawal Base would not be adjusted for such subsequent purchase payments, you would not be guaranteed to be eligible to make withdrawals from your contract over a period of time at least equal to the amount of such purchase payments. In addition, if you make purchase payments that are not included in the calculation of your Withdrawal Base or the Rider Death Benefit, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Lifetime Income Plus, because it is less likely that your Contract Value will be less than the Withdrawal Base. Before making purchase payments that do not increase the Withdrawal Base or Rider Death Benefit, you should consider that: (i) the guaranteed amounts provided by the Withdrawal Base and the Rider Death Benefit will not include such purchase payments; (ii) any such purchase payments make it less likely that you will receive a benefit in the form of an additional amount even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the Withdrawal Base and the Rider Death Benefit. Impact of Violating the Investment Strategy on the Withdrawal Factor and Rider Death Benefit. Beginning on the first Valuation Day after you choose not to follow the Investment Strategy, your Withdrawal Factor and Rider Death Benefit will be reduced by 50%. You may elect to resume participation in the Investment Strategy, as described in the "Restoration or Reset of the Benefit" provision below, provided we receive notice of your election at our Home Office in a form acceptable to us. We will not reduce your Withdrawal Factor or Rider Death Benefit if you are not following the Investment Strategy due 75 to a Portfolio liquidation or a Portfolio dissolution and the assets are transferred from the liquidated or dissolved Portfolio to another Portfolio. Restoration or Reset of the Benefit Restoration. If your Withdrawal Factor and Rider Death Benefit have been reduced because you have not allocated all assets to the prescribed Investment Strategy, you will have a one-time opportunity to restore your Withdrawal Factor and Rider Death Benefit. Reset. For contracts issued on or after November 6, 2006. If all of the Annuitants are age 50 through 85, you may choose to reset your Withdrawal Base on an annual anniversary of the Contract Date that is at least 12 months after the later of the Contract Date and the last reset date. For contracts issued prior to November 6, 2006. If all of the Annuitants are age 50 through 59, you may choose to reset your Withdrawal Base on an annual anniversary of the Contract Date that is at least 12 months after the later of the Contract Date and the last reset date. If the older of the Annuitants is age 60 through 85, you may choose to reset your Withdrawal Base on an annual anniversary of the Contract Date that is at least 36 months after the later of the Contract Date and the last reset date. If you do reset your Withdrawal Base, as of that date, we will: . reset the Withdrawal Base to your Contract Value; . reset the charge for this rider. The new charge, which may be higher than your previous charge, will never exceed 2.00% annually; and . reset the Investment Strategy to the current Investment Strategy. There are similarities as well as distinct differences between restoring your Withdrawal Factor and resetting your Withdrawal Base and Withdrawal Factor. The following provides a comparison of those similarities and differences: ------------------------------------------------------------- Restore Provision Reset Provision ------------------------------------------------------------- You may restore on a contract You may reset on a contract anniversary once during the anniversary periodically life of this rider. after your Benefit Date. ------------------------------------------------------------- You must allocate all assets You must allocate all assets to the prescribed Investment to the prescribed Investment Strategy in effect as of the Strategy available as of the last Benefit Date prior to date of the reset. the reduction in benefits. ------------------------------------------------------------- Your rider charge assessed Your rider charge may will remain the same as the increase, not to exceed an charge that was in effect as annualized rate of 2.00% of of your last Benefit Date assets in the Separate prior to the reduction in Account, calculated on a benefits. daily basis. ------------------------------------------------------------- Your Withdrawal Base will be Your Withdrawal Base will be the lesser of the current reset to equal your Contract Contract Value and your prior Value as of the date you Withdrawal Base. reset your benefit. ------------------------------------------------------------- The Withdrawal Factor will be The Withdrawal Factor will be restored to 100% of the reset to 100% of the original original age Withdrawal age Withdrawal Factor. Factor. ------------------------------------------------------------- The Rider Death Benefit will The Rider Death Benefit will be the lesser of Contract be the lesser of Contract Value and total purchase Value and total purchase payments less Gross payments less Gross Withdrawals. Withdrawals. ------------------------------------------------------------- For either a restoration of your Withdrawal Factor, or a reset of your Withdrawal Base, we must receive notice of your election in writing at our Home Office, at least 15 days prior to your next contract anniversary. You may restore your Withdrawal Factor and Rider Death Benefit once during the life of your contract. You may not use the restore or reset provision if any Annuitant is older than age 85 on the contract anniversary. We reserve the right to limit the restoration date to a contract anniversary on or after three complete years from the Benefit Date. Systematic Resets. You may elect to reset your Withdrawal Base automatically on an available contract anniversary (a "systematic reset"). If you have not previously elected to systematically reset your benefit, or if your election has terminated, we must receive written notice of your election to systematically reset your benefit at our Home Office at least 15 days prior to your next contract anniversary. A systematic reset of your Withdrawal Base will occur when your contract value is higher than the Withdrawal Base as of the available contract anniversary or, if the contract anniversary is not a Valuation Day, as of the next Valuation Day. By 76 "available contract anniversary" we mean a contract anniversary on which you are eligible to reset your benefit, as such requirements (age and otherwise) are described herein. Systematic resets will continue until and unless: (a) the Investment Strategy is violated; (b) the owner (or owners) submits a written request to our Home Office to terminate systematic resets; (c) income payments begin via annuitization; (d) the Investment Strategy changes, allocations are affected, and we do not receive confirmation from you at our Home Office of new allocations; or (e) ownership changes. Please note that a systematic reset will occur on an available contract anniversary if contract value is even nominally higher than the Withdrawal Base (e.g., as little as $1.00 higher) and, therefore, a systematic reset may not be in your best interest because: (i) the charge for this rider may be higher than your previous charge; (ii) the Investment Strategy will be reset to the current Investment Strategy (the Investment Strategy offered on the reset date); and (iii) if your contract restricts resets to a frequency of three years, you will not be able to again reset your benefit for three years. Please carefully consider whether it is in your best interest to elect to systematically reset your Withdrawal Base. Withdrawals. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Withdrawal Base and Rider Death Benefit are reduced. The new Withdrawal Base equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Withdrawal Base minus the Gross Withdrawal. The new Rider Death Benefit equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Rider Death Benefit minus the Gross Withdrawal. If the total Gross Withdrawals in a Benefit Year are less than or equal to the Withdrawal Limit, we will waive any surrender charge on such total Gross Withdrawals. If all Contract Value is allocated to the Investment Strategy, the Withdrawal Limit will be increased for any Benefit Year to the extent necessary to meet any minimum distribution requirements under federal tax law. This increase applies only to the required minimum distribution based on the Contract Value. You should carefully consider when to begin taking withdrawals if you elected Lifetime Income Plus. The longer you wait before beginning to take withdrawals, the higher the Withdrawal Factor will be, which is one of the components used to determine the amount of your Withdrawal Limit. If you delay taking withdrawals too long, however, you may limit the number of years available for you to take withdrawals in the future (due to life expectancy) and you may be paying for a benefit you are not using. Your Contract Value after taking a withdrawal may be less than the amount required to keep your contract in effect. In this event or if your Contract Value becomes zero, your contract and all riders and endorsements, including this rider, will terminate and the following will occur: . If the Withdrawal Limit is less than $100, we will pay you the greatest of the Rider Death Benefit, Contract Value and the present value of the Withdrawal Limit in a lump sum calculated using the Annuity 2000 Mortality Table and an interest rate of 3%. . If the Withdrawal Limit is greater than $100, we will issue you a supplemental contract. We will continue to pay you the Withdrawal Limit until the last death of an Annuitant. We will make payments monthly or on another periodic basis agreed to by us. If the monthly amount is less than $100, we will reduce the frequency so that the payment will be at least $100. The Rider Death Benefit will continue under the supplemental contract. The Rider Death Benefit will be reduced by each payment made under the supplemental contract. The Rider Death Benefit, if any, will be payable on the last death of an Annuitant. Rider Death Benefit. This rider provides for a death benefit (the "Rider Death Benefit") that, on the Contract Date, is equal to the initial purchase payment. The Rider Death Benefit is used to determine the death benefit payable upon the death of the last Annuitant as described in the "Death Provisions" section below. Purchase payments applied to your contract in a Benefit Year increase the Rider Death Benefit. If you have allocated all assets to the Investment Strategy since the Benefit Date, any subsequent purchase payment will be added to the Rider Death Benefit. Otherwise, the Rider Death Benefit will be increased only by 50% of the purchase payment. 77 Gross Withdrawals in a Benefit Year decrease the Rider Death Benefit. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is less than or equal to the Withdrawal Limit, the Rider Death Benefit will be reduced by the Gross Withdrawal. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Rider Death Benefit will equal the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Rider Death Benefit minus the Gross Withdrawal. If you choose not to follow the Investment Strategy, your Rider Death Benefit will be reduced as described in the "Impact of Violating the Investment Strategy on the Withdrawal Factor and Rider Death Benefit" provision above. Considerations. While the rider is designed to provide life-time withdrawal benefits and the return of purchase payments, these benefits are only guaranteed to the extent you comply with the limits, conditions and restrictions set forth in the contract. There can be no assurance that you will receive more than a return of purchase payments. When the Rider is Effective Lifetime Income Plus must be elected at application. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. The rider will remain in effect while the contract is in force and before the Annuity Commencement Date. The rider may not be terminated prior to the Annuity Commencement Date. On the Annuity Commencement Date, the rider, and the benefits you are eligible to receive thereunder, will terminate. At any time before the Annuity Commencement Date, you can elect to annuitize under current annuity rates in lieu of continuing Lifetime Income Plus. This may provide a higher income amount and/or more favorable tax treatment than payments made under this rider. Change of Ownership We must approve any assignment or sale of this contract unless the assignment is a court ordered assignment. General Provisions For purposes of this rider: . A non-natural entity owner must name an Annuitant and may name the Annuitant's spouse as a Joint Annuitant. . An individual owner must also be an Annuitant. . You may name only your spouse as a joint owner. . If there is only one owner, that owner may name only his or her spouse as a Joint Annuitant at issue. . If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. Death Provisions At the death of the last Annuitant, a death benefit may be payable under this contract and rider. The amount of any death benefit payable will be the greatest of (a), (b) and (c), where: (a) is the death benefit as calculated under the base Contract; (b) is the Rider Death Benefit; and (c) is any amount payable by any other optional death benefit rider. The death benefit payable will be paid according to the distribution rules under the contract. If the designated beneficiary is a surviving spouse who is not an Annuitant, whose age is 50 through 85, and who elects to continue the contract as the new owner, this rider will continue. The Withdrawal Base for the new owner will be the death benefit determined as of the first Valuation Day we have receipt of due proof of death and all required forms at our Home Office. The Withdrawal Factor for the new owner will be based on the age of that owner on the date of the first Gross Withdrawal for that owner. If the designated beneficiary is a surviving spouse who is an Annuitant and who elects to continue the contract as the owner, this rider will continue. The Withdrawal Base will be the same as it was under the contract for the deceased owner. If no withdrawals were taken prior to the first Valuation Day we receive due proof of death and all required forms at our Home Office, the Withdrawal Factor for the surviving spouse will be established based on the attained age of the surviving spouse on the date of the first Gross Withdrawal for the surviving spouse. Otherwise, the Withdrawal Factor will continue as it was under the contract for the deceased Owner. If the surviving spouse cannot continue the rider, the rider and the rider charge will terminate on the next contract anniversary. Proceeds that were transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio upon the death of the owner will be reallocated to the Investment Strategy, if applicable, and the asset percentages then in effect at the time of the death of the owner. Such reallocations will not be counted as a transfer for the purpose of the number of transfers allowed under the contract in a calendar year. 78 Examples The following examples show how Lifetime Income Plus works based on hypothetical values. It is not intended to depict investment performance of the contract. This example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 65 at issue and has a Withdrawal Factor of 5.5%; (5) the contract earns a net return of -2%; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Contract Value as of the prior contract anniversary and the Withdrawal Base) until the Contract Value reduces to zero, at which time a supplemental contract is issued which pays the Withdrawal Limit for the rest of the owner's life; and (7) the owner dies upon reaching age 90.
Withdrawals Withdrawal Rider Death Contract Value - Taken - Contract Value - Base - Benefit - Age Beginning of Year End of Year End of Year End of Year End of Year -------------------------------------------------------------------------- 65 $100,000 $5,500 $92,500 $100,000 $94,500 66 92,500 5,500 85,150 100,000 89,000 67 85,150 5,500 77,947 100,000 83,500 68 77,947 5,500 70,888 100,000 78,000 69 70,888 5,500 63,970 100,000 72,500 70 63,970 5,500 57,191 100,000 67,000 71 57,191 5,500 50,547 100,000 61,500 72 50,547 5,500 44,036 100,000 56,000 73 44,036 5,500 37,625 100,000 50,500 74 37,625 5,500 31,343 100,000 45,000 75 31,343 5,500 25,186 100,000 39,500 76 25,186 5,500 19,152 100,000 34,000 77 19,152 5,500 13,239 100,000 28,500 78 13,239 5,500 7,444 100,000 23,000 79 7,444 5,500 1,766 100,000 17,500 80 1,766 5,500 -- 100,000 12,000 81 -- 5,500 -- 100,000 6,500 82 -- 5,500 -- 100,000 1,000 83 -- 5,500 -- 100,000 -- 84 -- 5,500 -- 100,000 -- 85 -- 5,500 -- 100,000 -- 86 -- 5,500 -- 100,000 -- 87 -- 5,500 -- 100,000 -- 88 -- 5,500 -- 100,000 -- 89 -- 5,500 -- 100,000 -- --------------------------------------------------------------------------
79 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 65 at issue and has a Withdrawal Factor of 5.5%; (5) the contract earns a net return of 8%; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Contract Value as of the prior contract anniversary and the Withdrawal Base) for the rest of the owner's life; (7) the owner resets the Withdrawal Base every contract anniversary; and (8) the owner dies upon reaching age 90.
Withdrawals Withdrawal Rider Death Contract Value - Taken - Contract Value - Base - Benefit - Age Beginning of Year End of Year End of Year Beginning of Year End of Year - -------------------------------------------------------------------------------- 65 $100,000 $5,500 $102,500 $100,000 $94,500 66 102,500 5,638 105,063 102,500 88,863 67 105,063 5,778 107,689 105,063 83,084 68 107,689 5,923 110,381 107,689 77,161 69 110,381 6,071 113,141 110,381 71,090 70 113,141 6,223 115,969 113,141 64,867 71 115,969 6,378 118,869 115,969 58,489 72 118,869 6,538 121,840 118,869 51,951 73 121,840 6,701 124,886 121,840 45,250 74 124,886 6,869 128,008 124,886 38,381 75 128,008 7,040 131,209 128,008 31,341 76 131,209 7,216 134,489 131,209 24,124 77 134,489 7,397 137,851 134,489 16,728 78 137,851 7,582 141,297 137,851 9,146 79 141,297 7,771 144,830 141,297 1,374 80 144,830 7,966 148,451 144,830 -- 81 148,451 8,165 152,162 148,451 -- 82 152,162 8,369 155,966 152,162 -- 83 155,966 8,578 159,865 155,966 -- 84 159,865 8,793 163,862 159,865 -- 85 163,862 9,012 167,958 163,862 -- 86 167,958 9,238 172,157 167,958 -- 87 172,157 9,469 176,461 172,157 -- 88 176,461 9,705 180,873 176,461 -- 89 180,873 9,948 185,394 180,873 -- - --------------------------------------------------------------------------------
80 Lifetime Income Plus For contracts issued prior to May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications. The disclosure for Lifetime Income Plus in this section applies to contracts issued prior to May 1, 2006 or the date on which state insurance authorities approve applicable contract modifications. For contracts issued after that date, please see the disclosure for Lifetime Income Plus in the previous section. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. Lifetime Income Plus provides guaranteed withdrawals until the first death of an Annuitant, at least equal to purchase payments, with upside potential, provided you meet certain conditions. If you: . allocate all Contract Value to the prescribed Investment Strategy; and . limit total Gross Withdrawals in each Benefit Year to an amount no greater than the Withdrawal Limit; then you will be eligible to receive total Gross Withdrawals in each Benefit Year equal to the Withdrawal Limit until the first death of an Annuitant. For important information about the Investment Strategy, please see the "Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options" provision below. Withdrawal Limit. The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit is (a) multiplied by (b) where: (a) is the greater of the Contract Value on the prior contract anniversary and the Withdrawal Base; and (b) is the Withdrawal Factor. Withdrawal Base. The Withdrawal Base is an amount used to establish the Withdrawal Limit. The Withdrawal Factor is based on the age of the younger Annuitant on the earlier of the Valuation Day of the first Gross Withdrawal or the Valuation Day when the Contract Value is reduced to zero. Age will be determined as of the later of the Contract Date and the previous contract anniversary. Your initial Withdrawal Base is equal to your initial purchase payment received and is adjusted when any subsequent purchase payment is received (see "Purchase Payments" below). Your Withdrawal Base can never exceed $2,000,000. This maximum amount applies to all contracts that you own with us and our affiliated companies. Death Provisions Under Lifetime Income Plus. This rider provides a death benefit equal to purchase payments, minus Gross Withdrawals (the "Rider Death Benefit"). At the death of any Annuitant, a death benefit is payable under the contract. The death benefit payable is the greatest of (a), (b), and (c), where: (a) is the death benefit as calculated under the base contract; (b) is the Rider Death Benefit; (c) is any amount payable by any other optional death benefit rider. The death benefit payable will be paid in accordance with the distribution rules under the contract. (See the "Distribution Rules When Death Occurs Before Income Payments Begin" in this prospectus.) If the designated beneficiary is a surviving spouse whose age is at least 60 and not more than 85 on the date of the death of the first Annuitant, and such spouse elects to continue the contract as the new owner, this rider will continue. As of the first Valuation Day on which we have receipt of due proof of death and all required forms at our Home Office, the Withdrawal Base for the new owner will be the equal to the death benefit as calculated in the paragraph above. The new Withdrawal Factor for the new owner will be based on the age of that owner on the date of the first Gross Withdrawal for that owner. If the surviving spouse cannot or does not, continue the rider, or if the designated beneficiary is not a spouse, the rider and the rider charge will terminate on the next contract anniversary. Purchase Payments. Any purchase payment applied to your contract will adjust your Withdrawal Base and your Rider Death Benefit. In order to obtain the full benefit provided by this rider, you must allocate all assets to the prescribed Investment Strategy since the Benefit Date. If you have allocated all assets to the prescribed Investment Strategy since the Benefit Date, any subsequent purchase payment will be added to the Withdrawal Base and the Rider Death Benefit. Beginning on the first Valuation Day after you choose not to follow the Investment Strategy, your Withdrawal Factor and Rider Death Benefit will be reduced by 50%. We will not reduce your Withdrawal Factor or Rider Death Benefit if you are not following the Investment Strategy due to a Portfolio liquidation or a Portfolio dissolution and the assets are transferred from the liquidated or dissolved Portfolio to another Portfolio. 81 If you have not allocated assets to a prescribed Investment Strategy, which consequently caused a reduction in your Withdrawal Factor and Rider Death Benefit and then you make a subsequent purchase payment, only 50% of the subsequent purchase payment will be added to the Withdrawal Base and the Rider Death Benefit. Important Note. We reserve the right to not adjust the Withdrawal Base and/or the Rider Death Benefit for any subsequent purchase payments received. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Lifetime Income Plus that would be associated with such additional purchase payments. For example, since the Withdrawal Base would not be adjusted for such subsequent purchase payments, you would not be guaranteed to be eligible to make withdrawals from your contract over a period of time at least equal to the amount of such purchase payments. In addition, if you make purchase payments that are not included in the calculation of your Withdrawal Base or the Rider Death Benefit, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Lifetime Income Plus, because it is less likely that your Contract Value will be less than the Withdrawal Base. Before making purchase payments that do not increase the Withdrawal Base or Rider Death Benefit, you should consider that: (i) the guaranteed amounts provided by the Withdrawal Base and the Rider Death Benefit will not include such purchase payments; (ii) any such purchase payments make it less likely that you will receive a benefit in the form of an additional amount even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the Withdrawal Base and the Rider Death Benefit. Restoration or Reset of the Benefit. If your Withdrawal Factor and Rider Death Benefit have been reduced because you have not allocated all assets to the prescribed Investment Strategy, you will have a one-time opportunity to restore your Withdrawal Factor and Rider Death Benefit. You may also reset your Withdrawal Base to the Contract Value as of the contract anniversary, at least three years after your Benefit Date. We may assess an increased charge, not to exceed an annualized rate of 2.00% of your assets in the Separate Account. There are similarities as well as distinct differences between restoring your Withdrawal Factor and resetting your Withdrawal Base and Withdrawal Factor. The following provides a comparison of those similarities and differences: ------------------------------------------------------------- Restore Provision Reset Provision ------------------------------------------------------------- May only be restored one time May be reset on any contract and must be restored on a anniversary at least three contract anniversary years after your Benefit Date ------------------------------------------------------------- You must allocate all assets You must allocate all assets to the prescribed Investment to the prescribed Investment Strategy in effect as of the Strategy available as of the last Benefit Date prior to date of the reset the reduction in benefits ------------------------------------------------------------- Your rider charge assessed Your rider charge may will remain the same as the increase, not to exceed an charge that was in effect as annualized rate of 2.00% of of your last Benefit Date assets in the Separate prior to the reduction in Account, calculated on a benefits daily basis ------------------------------------------------------------- Your Withdrawal Base will be Your Withdrawal Base will be the lesser of the current reset to equal your Contract Contract Value and your prior Value as of the date you Withdrawal Base reset your benefit ------------------------------------------------------------- The Withdrawal Factor will be The Withdrawal Factor will be restored to 100% of the reset to 100% of the original original age Withdrawal Factor age Withdrawal Factor ------------------------------------------------------------- The Rider Death Benefit will The Rider Death Benefit will be the lesser of Contract be the lesser of Contract Value and total purchase Value and total purchase payments, less Gross payments, less Gross Withdrawals Withdrawals ------------------------------------------------------------- For either a restoration of your Withdrawal Factor, or a reset of a new Withdrawal Base, we must receive notice of your election in writing at our Home Office, at least 15 days prior to your next contract anniversary. You may restore your Withdrawal Factor and Rider Death Benefit only once during the life of your contract. You may not use the restore or reset provision if any Annuitant is age 86 or older on the contract anniversary prior to the receipt of that request. We reserve the right to limit the next available restoration date to a contract anniversary on or after three complete years from the Benefit Date. 82 Systematic Resets. You may elect to reset your Withdrawal Base automatically on an available contract anniversary (a "systematic reset"). If you have not previously elected to systematically reset your benefit, or if your election has terminated, we must receive written notice of your election to systematically reset your benefit at our Home Office at least 15 days prior to your next contract anniversary. A systematic reset of your Withdrawal Base will occur when your contract value is higher than the Withdrawal Base as of the available contract anniversary or, if the contract anniversary is not a Valuation Day, as of the next Valuation Day. By "available contract anniversary" we mean a contract anniversary on which you are eligible to reset your benefit, as such requirements (age and otherwise) are described herein. Systematic resets will continue until and unless: (a) the Investment Strategy is violated; (b) the owner (or owners) submits a written request to terminate systematic resets; (c) income payments begin via annuitization; (d) the Investment Strategy changes, allocations are affected, and we do not receive confirmation of new allocations; or (e) ownership changes. Please note that a systematic reset will occur on an available contract anniversary if contract value is even nominally higher than the Withdrawal Base (e.g., as little as $1.00 higher) and, therefore, a systematic reset may not be in your best interest because: (i) the charge for this rider may be higher than your previous charge; (ii) the Investment Strategy will be reset to the current Investment Strategy (the Investment Strategy offered on the reset date); and (iii) you will not be able to again reset your benefit for three years. Please carefully consider whether it is in your best interest to elect to systematically reset your Withdrawal Base. Withdrawals. If a Gross Withdrawal, plus all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit, your Withdrawal Base and Rider Death Benefit are reduced. The new Withdrawal Base equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Withdrawal Base minus the Gross Withdrawal. The new Rider Death Benefit equals the lesser of (a) and (b), where: (a) is the Contract Value on the Valuation Day after the Gross Withdrawal; and (b) is the prior Rider Death Benefit minus the Gross Withdrawal. If the total Gross Withdrawals in a Benefit Year are less than or equal to the Withdrawal Limit, we will waive any surrender charge on such total Gross Withdrawals. The Withdrawal Limit will be increased for any Benefit Year to the extent necessary to meet any minimum distribution requirements under federal tax law. This increase applies only to the required minimum distribution based on the Contract Value. You should carefully consider when to begin taking withdrawals if you elected Lifetime Income Plus. The longer you wait before beginning to take withdrawals, the higher the Withdrawal Factor will be, which is one of the components used to determine the amount of your Withdrawal Limit. If you delay taking withdrawals too long, however, you may limit the number of years available for you to take withdrawals in the future (due to life expectancy) and you may be paying for a benefit you are not using. Your Contract Value after taking a withdrawal may be less than the amount required to keep your contract in effect. In this event your contract, all riders and endorsements, including this rider, will terminate and the following will occur: . If the Withdrawal Limit is less than $100, we will pay you the greatest of the Rider Death Benefit, the Contract Value and the present value of the Withdrawal Limit in a lump sum calculated using the Annuity 2000 Mortality Table and an interest rate of 3%. . If the Withdrawal Limit is greater than $100, we will issue you a supplemental contract. We will continue to pay you the Withdrawal Limit until the first death of an Annuitant. We will make payments monthly or on another periodic basis agreed to by us. If the monthly amount is less than $100, we will reduce the frequency so that the payment will be at least $100. Considerations. While the rider is designed to provide life-time withdrawal benefits and the return of purchase payments, these benefits are only guaranteed to the extent you comply 83 with the limits, conditions and restrictions set forth in the contract. There can be no assurance that you will receive more than a return of purchase payments. When the Rider is Effective Lifetime Income Plus must be elected at application. Lifetime Income Plus is not available for contracts issued on or after May 1, 2008. The rider will remain in effect while the contract is in force and before income payments begin. The rider may not be terminated prior to the Annuity Commencement Date. On the Annuity Commencement Date, the rider, and the benefits you are eligible to receive thereunder, will terminate. At any time before the Annuity Commencement Date, you can elect to annuitize under current annuity rates in lieu of continuing Lifetime Income Plus. This may provide a higher income amount and/or more favorable tax treatment than payments made under this rider. Ownership and Change of Ownership We must approve any assignment or sale of this contract unless the assignment is a court ordered assignment. If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. Spousal Continuation If the designated beneficiary is a surviving spouse who elects to continue the contract as the new owner, this rider will continue. Proceeds that were transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio upon the death of the owner will be reallocated to the Investment Strategy, if applicable, and the asset percentages then in effect at the time of the death of the owner. Such reallocations will not be counted as a transfer for the purpose of the number of transfers allowed under the contract in a calendar year. 84 Examples The following examples show how Lifetime Income Plus works based on hypothetical values. The examples are for illustrative purposes only and are not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. This example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 65 at issue and has a Withdrawal Factor of 5%; (5) the contract earns a net return of -2%; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Withdrawal Base and the Contract Value as of the prior contract anniversary) until the Contract Value reduces below $1,000, at which time a supplemental contract is issued which pays the Withdrawal Limit for the rest of the owner's life; and (7) the owner dies upon reaching age 90.
Withdrawals Withdrawal Rider Death Contract Value - Taken - Contract Value - Base - Benefit - Age Beginning of Year End of Year End of Year End of Year End of Year -------------------------------------------------------------------------- 65 $100,000 $5,000 $93,000 $100,000 $95,000 66 93,000 5,000 86,140 100,000 90,000 67 86,140 5,000 79,417 100,000 85,000 68 79,417 5,000 72,829 100,000 80,000 69 72,829 5,000 66,372 100,000 75,000 70 66,372 5,000 60,045 100,000 70,000 71 60,045 5,000 53,844 100,000 65,000 72 53,844 5,000 47,767 100,000 60,000 73 47,767 5,000 41,812 100,000 55,000 74 41,812 5,000 35,945 100,000 50,000 75 35,945 5,000 30,197 100,000 45,000 76 30,197 5,000 24,563 100,000 40,000 77 24,563 5,000 19,041 100,000 35,000 78 19,041 5,000 13,631 100,000 30,000 79 13,631 5,000 8,328 100,000 25,000 80 8,328 5,000 3,131 100,000 20,000 81 3,131 5,000 -- 100,000 15,000 82 -- 5,000 -- 100,000 10,000 83 -- 5,000 -- 100,000 5,000 84 -- 5,000 -- 100,000 -- 85 -- 5,000 -- 100,000 -- 86 -- 5,000 -- 100,000 -- 87 -- 5,000 -- 100,000 -- 88 -- 5,000 -- 100,000 -- 89 -- 5,000 -- 100,000 -- --------------------------------------------------------------------------
85 This next example assumes: (1) the owner, who is also the Annuitant, purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the owner is age 65 at issue and has a Withdrawal Factor of 5%; (5) the contract earns a net return of 8%; (6) the owner takes partial withdrawals equal to the Withdrawal Limit (which is the Withdrawal Factor multiplied by the greater of the Withdrawal Base and the Contract Value as of the prior contract anniversary) for the rest of the owner's life; (7) the owner dies upon reaching age 90; and (8) the Withdrawal Base is reset every three contract anniversaries.
Withdrawals Withdrawal Rider Death Contract Value - Taken - Contract Value - Base - Benefit - Age Beginning of Year End of Year End of Year End of Year End of Year -------------------------------------------------------------------------- 65 $100,000 $ 5,000 $103,000 $100,000 $95,000 66 103,000 5,150 106,090 100,000 89,850 67 106,090 5,305 109,273 100,000 84,546 68 109,273 5,464 112,551 109,273 79,082 69 112,551 5,628 115,927 109,273 73,454 70 115,927 5,796 119,405 109,273 67,658 71 119,405 5,970 122,987 119,405 61,688 72 122,987 6,149 126,677 119,405 55,538 73 126,677 6,334 130,477 119,405 49,204 74 130,477 6,524 134,392 130,477 42,681 75 134,392 6,720 138,423 130,477 35,961 76 138,423 6,921 142,576 130,477 29,040 77 142,576 7,129 146,853 142,576 21,911 78 146,853 7,343 151,259 142,576 14,568 79 151,259 7,563 155,797 142,576 7,005 80 155,797 7,790 160,471 155,797 -- 81 160,471 8,024 165,285 155,797 -- 82 165,285 8,264 170,243 155,797 -- 83 170,243 8,512 175,351 170,243 -- 84 175,351 8,768 180,611 170,243 -- 85 180,611 9,031 186,029 170,243 -- 86 186,029 9,301 191,610 186,029 -- 87 191,610 9,581 197,359 186,029 -- 88 197,359 9,868 203,279 186,029 -- 89 203,279 10,164 209,378 203,279 -- --------------------------------------------------------------------------
86 Guaranteed Withdrawal Advantage Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. The Guaranteed Withdrawal Advantage provides a guaranteed return of purchase payments through a series of withdrawals, with upside potential, provided you meet certain conditions. If you: . allocate all Contract Value to the prescribed Investment Strategy; and . limit total Gross Withdrawals in each Benefit Year to an amount less than or equal to the Withdrawal Limit; you will be eligible to receive total Gross Withdrawals at least equal to your protected amount, even if your Contract Value reduces to zero. For important information about the Investment Strategy, please see the "Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options" provision below. Withdrawal Limit. The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit is equal to (a) multiplied by (b), where: (a) is the protected amount; and (b) is the Withdrawal Factor for the wait period. The wait period is the number of completed months from the later of the Benefit Date and the Valuation Day of the most recent purchase payment to the Valuation Day of the first withdrawal after that date. Protected Amount. Your protected amount is used to calculate the Withdrawal Limit, which is the total amount you may withdraw in a Benefit Year without reducing the benefits provided under this rider. Your initial protected amount equals purchase payments applied to the contract on the Contract Date. The protected amount does not change unless: . an additional purchase payment is applied to your protected amount; or . you elect to reset the protected amount. Your protected amount can never exceed $2,000,000. This maximum amount applies to all contracts that you own with us and our affiliated companies. Your initial remaining amount is equal to your initial protected amount. Subsequent Purchase Payments. Any additional purchase payment applied to your contract will adjust your protected amount and remaining amount. If you have allocated assets in accordance with the prescribed Investment Strategy since the Benefit Date, the protected amount and remaining amount will be increased by the subsequent purchase payment. Otherwise, both the protected amount and the remaining amount will be increased only by 50% of the purchase payment. Important Note. We reserve the right to not adjust protected amounts and remaining amounts for any additional purchase payments. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by the Guaranteed Minimum Withdrawal Benefit Rider that would be associated with such additional purchase payments. For example, since your protected amount and remaining amount would not be adjusted for such subsequent purchase payments, you would not be guaranteed to be eligible to make withdrawals from your contract over a period of time at least equal to the amount of such purchase payments. In addition, if you make purchase payments that are not included in the calculation of your protected amount and remaining amount, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under the Guaranteed Minimum Withdrawal Benefit Rider, because it is less likely that your Contract Value will be less than the protected amount or remaining amount, as the case may be. Before making purchase payments that do not increase the protected amount and remaining amount, you should consider that: (i) the guaranteed amounts provided by the protected amount and remaining amount will not include such purchase payments; (ii) any such purchase payments make it less likely that you will receive a benefit in the form of an additional amount even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the protected amount and remaining amount. Reset. On any monthly anniversary after five complete years from your Benefit Date, you may elect to reset your benefit and to participate in the Investment Strategy available at that time, provided we receive written notice of your election at our Home Office. If you do, we will as of that reset date: . reset the protected amount and remaining amount to equal your Contract Value; . reset the charge for this rider (the new charge, which may be higher than your previous charge, will never exceed an annual rate of 1.00%); and . reset the Investment Strategy to the current Investment Strategy. 87 We reserve the right to limit the next available reset date to an anniversary on or after five complete years from the Benefit Date. Withdrawals. If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is less than or equal to the Withdrawal Limit, the remaining amount is reduced by the Gross Withdrawal. If a Gross Withdrawal, plus all prior Gross Withdrawals in a Benefit Year, is in excess of the Withdrawal Limit, your remaining amount is reduced, causing a reduction in your total benefits provided under this rider. The new remaining amount equals the lesser of (a) and (b), where: (a) is the Contract Value after the Gross Withdrawal; and (b) is the prior remaining amount less the Gross Withdrawal. If the total Gross Withdrawals in a Benefit Year is less than or equal to the Withdrawal Limit, we will waive any surrender charge on such total Gross Withdrawals. Reduction in Contract Value. Your Contract Value after taking a withdrawal may be less than the amount required to keep your contract in effect. In this event, your contract and any other riders and endorsements will terminate and the following will occur: . If the Withdrawal Limit is less than $100, we will pay you the greater of the remaining amount or Contract Value in a lump sum. . If the Withdrawal Limit is greater than or equal to $100, we will issue you a supplemental contract. We will continue to pay you the Withdrawal Limit until you have received the greater of the remaining amount or Contract Value as determined on the Valuation Day the supplemental contract was issued. We will make payments monthly unless agreed otherwise. If the monthly amount is less than $100, we will reduce the frequency so that the payment received will be at least $100. Considerations. While the rider is designed to provide the return of purchase payments, this benefit is only guaranteed to the extent you comply with the limits, conditions and restrictions set forth in the contract. There can be no assurance that you will receive more than a return of purchase payments. When the Rider is Effective Guaranteed Withdrawal Advantage must be elected at application. Guaranteed Withdrawal Advantage is not available for contracts issued on or after May 1, 2007. The rider will remain in effect while the contract is in force and before income payments begin. The rider may not be terminated prior to the Annuity Commencement Date. On the Annuity Commencement Date, the rider, and the benefits you are eligible to receive thereunder, will terminate. Ownership and Change of Ownership We must approve any assignment or sale of this contract unless the assignment is a court ordered assignment. If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. Spousal Continuation If the designated beneficiary is a surviving spouse who elects to continue the contract as the new owner, this rider will continue. Proceeds that were transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio upon the death of the owner will be reallocated to the Investment Strategy, if applicable, and the asset percentages then in effect at the time of the death of the owner. Such reallocations will not be counted as a transfer for the purpose of the number of transfers allowed under the contract in a calendar year. 88 Examples The following examples show how the Guaranteed Minimum Withdrawal Benefit Rider works based on hypothetical values. The examples are for illustrative purposes only and are not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The first example assumes: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the contract earns a net return of -2%; and (5) the owner takes withdrawals equal to the Withdrawal Limit (which is $7,000, or 7% of the protected amount) beginning in each Benefit Year until the remaining amount is exhausted.
Withdrawals Contract Value - Taken - Contract Value - Protected Remaining Beginning of Year End of Year End of Year Amount Amount ----------------------------------------------------------------------- $100,000 $7,000 $91,000 $100,000 $ 93,000 91,000 7,000 82,180 86,000 82,180 7,000 73,536 79,000 73,536 7,000 65,066 72,000 65,066 7,000 56,764 65,000 56,764 7,000 48,629 58,000 48,629 7,000 40,656 51,000 40,656 7,000 32,813 44,000 32,813 7,000 25,127 37,000 25,127 7,000 17,595 30,000 17,595 7,000 10,213 23,000 10,213 7,000 2,978 16,000 2,978 7,000 -- 9,000 -- 7,000 -- 2,000 -- 2,000 -- -- Total Received $100,000 -----------------------------------------------------------------------
89 This next example assumes: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) all Contract Value is allocated in accordance with the prescribed Investment Strategy at all times; (4) the contract earns a net return of -2%; and (5) the owner takes no withdrawals in the first five Benefit Years and then takes withdrawals equal to the Withdrawal Limit (which is $10,000, or 10% of the protected amount) beginning in the sixth Benefit Year until the remaining amount is exhausted.
Withdrawals Contract Value - Taken - Contract Value - Protected Remaining Beginning of Year End of Year End of Year Amount Amount ----------------------------------------------------------------------- $100,000 -- $98,000 $100,000 $100,000 98,000 -- 96,040 100,000 96,040 -- 94,119 100,000 94,119 -- 92,237 100,000 92,237 -- 90,392 100,000 90,392 $10,000 78,584 90,000 78,584 10,000 67,013 80,000 67,013 10,000 55,672 70,000 55,672 10,000 44,559 60,000 44,559 10,000 33,638 50,000 33,638 10,000 22,935 40,000 22,935 10,000 12,446 30,000 12,446 10,000 2,167 20,000 2,167 10,000 -- 10,000 -- 10,000 -- -- Total Received $100,000 -----------------------------------------------------------------------
90 Investment Strategy for the Guaranteed Minimum Withdrawal Benefit Rider Options In order to receive the full benefit provided by each of the Guaranteed Minimum Withdrawal Benefit Rider Options, you must invest all purchase payments and allocations in accordance with a prescribed Investment Strategy. Except for Lifetime Income Plus 2008, if you do not allocate all assets in accordance with a prescribed Investment Strategy, your benefit under the rider will be reduced by 50%. Even if your benefit is reduced, you will continue to pay the full amount charged for the rider. Contract owners that own Lifetime Income Plus 2008 must always allocate assets in accordance with the Investment Strategy. The Investment Strategy for Lifetime Income Plus 2008 is discussed above in the "Lifetime Income Plus 2008" provision of this prospectus. Investment Strategies may change from time to time. You may allocate your assets in accordance with your Investment Strategy prescribed at the time the contract was issued, or in accordance with the Investment Strategy in effect at the time you reset your benefit. Therefore, you may have assets allocated to an Investment Strategy that is different than the Investment Strategy described in this prospectus. Your ability to choose different Investment Strategies is limited, as described below. For contracts issued on or after May 1, 2007 and for contract owners who reset their benefit under the rider on or after May 1, 2007, the Investment Strategy includes Designated Subaccounts and Asset Allocation Model C. Under this Investment Strategy, contract owners may allocate assets to either Asset Allocation Model C or to one or more Designated Subaccounts. Contract owners may not allocate assets to Asset Allocation Model C and one or more Designated Subaccounts. For more information about Asset Allocation Model C and the Subaccounts comprising Asset Allocation Model C and the Designated Subaccounts, please see the "Subaccounts" and "Asset Allocation Program" provisions of this prospectus. On a monthly basis, we will rebalance your Contract Value to the Subaccounts in accordance with the percentages that you have chosen to invest in the Designated Subaccounts or in accordance with the allocations that comprise Asset Allocation Model C. In addition, we will also rebalance your Contract Value on any Valuation Day after any transaction involving a withdrawal, receipt of a purchase payment or a transfer of Contract Value, unless you instruct us otherwise. Shares of a Portfolio may become unavailable under the contract for new purchase payments, transfers and asset rebalancing. As a result, shares of a Portfolio may also become unavailable under your Investment Strategy. Investment Strategies may be modified to respond to such events by removing unavailable Portfolios and adding new Portfolios as appropriate. Because such changes may affect your allocation instructions, you will need to provide updated allocation instructions to comply with the modified Investment Strategy. If you do not provide updated allocation instructions, any subsequent purchase payments or transfers requesting payment to an unavailable Portfolio will be considered not in good order. Periodic rebalancing to unavailable Portfolios will cease and any imbalances in percentages due to lack of asset rebalancing will not cause a reduction in your benefit. If you request a transfer or send a subsequent purchase payment with allocation instructions to a Portfolio that is not part of the prescribed Investment Strategy, we will honor your instructions. Please be aware, however, that your total Contract Value will not be invested in accordance with the prescribed Investment Strategy and the guaranteed amount available for withdrawal will be reduced by 50%, resulting in a reduction in your benefit. You may reset your benefit on the next available reset date as described in the "Restoration or Reset of the Benefit" provision for the applicable Guaranteed Minimum Withdrawal Benefit Rider Option. The current Investment Strategy is as follows: (1) owners may allocate assets to the following Designated Subaccounts: AllianceBernstein Variable Products Series Fund, Inc. -- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B; Franklin Templeton Variable Insurance Products Trust -- Franklin Income Securities Fund -- Class 2 Shares; Franklin Templeton Variable Insurance Products Trust -- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares; GE Investments Funds, Inc. -- Total Return Fund -- Class 3 Shares; and/or MFS(R) Variable Insurance Trust -- MFS(R) Total Return Series -- Service Class Shares; OR (2) owners may allocate assets to Asset Allocation Model C. 91 Annuity Cross Funding Program The Annuity Cross Funding Program is not available to contracts issued on or after August 17, 2004. This section of the prospectus describes a program that may permit you (if you are eligible) to purchase this contract and use it to make payments to a Scheduled Purchase Payment Variable Deferred Annuity issued by Genworth Life and Annuity Insurance Company. We refer to the program as the "Annuity Cross Funding Program" because you systematically withdraw amounts from this annuity contract (referred to as the "Funding Annuity") to make payments to the Scheduled Purchase Payment Variable Deferred Annuity Contract. What is the Annuity Cross Funding Program? Subject to our prior approval, you may arrange to take Systematic Withdrawals and immediately allocate that withdrawal to the Scheduled Purchase Payment Variable Deferred Annuity Contract issued by us. We will not assess surrender charges on withdrawals that are allocated to the Scheduled Purchase Payment Variable Deferred Annuity as part of the Annuity Cross Funding Program, however, such withdrawals will reduce proportionally any death benefit available. See the "Death Benefit" provision. Systematic Withdrawals that are used in conjunction with the Annuity Cross Funding Program do not count toward the limit that you may withdraw in any contract year pursuant to your free withdrawal privilege. How does the Annuity Cross Funding Program work? To participate in the Annuity Cross Funding Program, you must satisfy certain eligibility requirements and receive our prior approval. This contract, as the Funding Annuity, must be issued on the same date as the Scheduled Purchase Payment Variable Deferred Annuity and have the same Annuity Commencement Date. There is no charge for participating in the Annuity Cross Funding Program. The Annuity Cross Funding Program will terminate automatically when the Systematic Withdrawals from this Funding Annuity cause the Contract Value in this Funding Annuity to be less than $100. You may discontinue the Annuity Cross Funding Program at any time by notifying us in writing at our Home Office. Discontinuing the Annuity Cross Funding Program could cause you to lose your guarantee under the Scheduled Purchase Payment Variable Deferred Annuity if the scheduled purchase payments are not completed under the terms of that contract. Once you discontinue participation in the Annuity Cross Funding Program, you may not reinstate it. The actual performance of this Funding Annuity may directly affect the amount of purchase payments that must be allocated to this Funding Annuity in order to make all required Scheduled Installments for the Scheduled Purchase Payment Variable Deferred Annuity Contract. If the Subaccounts of the Funding Annuity in which you have allocated assets do not perform as anticipated, it may be necessary to make additional purchase payments to either this Funding Annuity or to the Scheduled Purchase Payment Variable Deferred Annuity so that you do not lose your right to Guaranteed Minimum Income Payments under the Scheduled Purchase Payment Variable Deferred Annuity Contract. The Scheduled Purchase Payment Variable Deferred Annuity is offered by a separate prospectus. Only variable annuity contracts issued by us, or one of our affiliated companies, and offered for use in an approved Annuity Cross Funding Program could be purchased as a Funding Annuity. The Scheduled Purchase Payment Variable Deferred Annuity Contract is not offered by this prospectus. The Scheduled Purchase Payment Variable Deferred Annuity Contract is offered only by the current prospectus for the Scheduled Purchase Payment Variable Deferred Annuity Contract. Annuity Cross Funding Program -- tax treatment of the annuity contracts. Under an Annuity Cross Funding Program we will treat transfers from this Funding Annuity to the Scheduled Purchase Payment Variable Deferred Annuity contract as non-taxable transfers within a single annuity contract for Federal tax purposes only if this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity each satisfy certain requirements upon issue. Our ability to continue to treat transfers from this Funding Annuity to the Scheduled Purchase Payment Variable Deferred Annuity as non-taxable transfers within a single annuity contract for Federal tax purposes may be adversely affected if certain changes are made to either contract after issue. Changing the Annuity Commencement Date for this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity once a Cross Funding Program has begun may have adverse tax consequences, and you should consult a tax adviser before making any such change. In addition, changing the Annuity Commencement Date on this Funding Annuity may cause you to lose your rights to guaranteed minimum income payments under the terms of the Scheduled Purchase Payment Variable Deferred Annuity contract. Both contracts must have the same owner, joint owner if any, Annuitant, and Joint Annuitant, if any. The beneficiaries need not be the same. Changing any owner, any Annuitant, or beneficiary may have adverse tax consequences. You should consult a tax adviser before making such a change. This contract permits you for a limited period to return it for a refund as described under the "Return Privilege" section of this prospectus. The Scheduled Purchase Payment Variable 92 Deferred Annuity we offer may also provide a return privilege. You may choose to return either this Funding Annuity, the Scheduled Purchase Payment Variable Deferred Annuity, or both contracts in accordance with the applicable return privilege. Returning either this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity in accordance with the applicable return privilege without also returning the other contact may result in adverse tax consequences and you should consult a tax adviser before returning only one contract. Transfers from the Scheduled Purchase Payment Variable Deferred Annuity to the Funding Annuity are not permitted. While surrender charges applicable to this Funding Annuity may decline over certain periods, amounts transferred from this Funding Annuity to the Scheduled Purchase Payment Variable Deferred Annuity may be subject to surrender charges and/or a market value adjustment (which may be positive or negative) upon a partial withdrawal or surrender from the Scheduled Purchase Payment Variable Deferred Annuity. The surrender charge applicable to amounts transferred to the Scheduled Purchase Payment Variable Deferred Annuity may be higher than those applicable to such amounts had they remained invested in this Funding Annuity; market value adjustments applicable to amounts transferred to the Scheduled Purchase Payment Variable Deferred Annuity would not have been applicable to such amounts had they remained invested in this Funding Annuity. If you request a partial withdrawal or surrender while participating in an Annuity Cross Funding Program, you must designate whether the partial withdrawal or surrender is to be made from this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity. Surrender charges and any other applicable charges will be assessed according to the provisions of the contract from which the partial withdrawal or surrender is made and as disclosed in the prospectus for that contract. You should be aware that the tax treatment of partial withdrawals or surrenders from either this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity Contract will be affected by partial withdrawals or surrenders as well as gains or losses with respect to the other contract. You should consult a tax adviser before requesting partial withdrawals or surrenders from this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity while participating in an Annuity Cross Funding Program. Death benefits will be calculated and paid separately in accordance with the provisions of this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity as the case may be, and as disclosed in the prospectus for the respective contract. Income payments will be calculated and paid according to the provisions of this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity (including the respective annuity tables of such contracts) and the provisions of the respective prospectuses for and administrative procedures applicable to each such contract. However, this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity Contract will be aggregated and treated as one contract for purposes of the tax treatment of such annuity payments. You should consult a tax adviser before requesting annuity payments to start under this Funding Annuity and/or the Scheduled Purchase Payment Variable Deferred Annuity Contract and before commuting any income payments before the payment date for such payment. This discussion of the Annuity Cross Funding Program does not attempt to address the tax and other treatment of every transaction that could be effected under this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity Contract in connection with an Annuity Cross Funding Program. You should consult a tax adviser before you purchase this contract and/or the Scheduled Purchase Payment Variable Deferred Annuity Contract in connection with an Annuity Cross Funding Program. DEATH OF OWNER AND/OR ANNUITANT Distribution Provisions Upon Death of Owner or Joint Owner In certain circumstances, Federal tax law requires that distributions be made under this contract. Except as described below in the "Distribution Rules" provision, a distribution is required upon the death of: (1) an owner or joint owner; or (2) the Annuitant or Joint Annuitant, if any owner or joint owner is a non-natural entity. The amount of proceeds payable upon the death of an owner or joint owner (or the Annuitant or Joint Annuitant if an owner or joint owner is a non-natural entity) and the methods available for distributing such proceeds are also described in the provision below. If any owner or joint owner (who is not also an Annuitant or Joint Annuitant) dies prior to the Annuity Commencement Date, the amount of proceeds payable will be the Contract Value as of the first Valuation Day we have receipt of the request for surrender or choice of applicable payment option, due proof of death and any required forms at our Home Office. 93 Death Benefit at Death of Any Annuitant Before Annuity Commencement Date If any Annuitant dies before income payments begin, regardless of whether the Annuitant is also an owner or joint owner, the amount of proceeds payable is the death benefit. Upon receipt at our Home Office of due proof of an Annuitant's death and all required forms (generally, due proof of death is a certified copy of the death certificate or a certified copy of the decree of a court of competent jurisdiction as to the finding of death), a death benefit will be paid in accordance with your instructions, subject to distribution rules and termination of contract provisions discussed in the contract and elsewhere in this prospectus. The death benefit choices we offer are: (1) the Basic Death Benefit; (2) the Annual Step-Up Death Benefit Rider Option; (3) the 5% Rollup Death Benefit Rider Option; (4) the Earnings Protector Death Benefit Rider Option; and (5) the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option. We automatically provide the Basic Death Benefit to you. The death benefit rider options are available to you for an additional charge and must be elected at the time of application. The 5% Rollup Death Benefit Rider Option and the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option are not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. The Annual Step-Up Death Benefit Rider may be elected with Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008 at the time of application. None of the other death benefit rider options are available with Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008. You may elect the Earnings Protector Death Benefit Rider with either the Annual Step-Up Death Benefit Rider or the 5% Rollup Death Benefit Rider. You may not, however, elect the Annual Step-Up Death Benefit Rider and the 5% Rollup Death Benefit Rider together or in any combination. The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider may not be elected with any other death benefit rider. The death benefit varies based on: (1) the Annuitant's age on the date the contract is issued; (2) the Annuitant's age on the date of his or her death; (3) the number of contract years that elapse from the date the contract is issued until the date of the Annuitant's death; and (4) whether any premium taxes are due at the time the death benefit is paid. Basic Death Benefit The Basic Death Benefit available for all contracts issued is equal to the greater of: (a) purchase payments adjusted for any partial withdrawals and any applicable premium tax, calculated as of the Valuation Day we receive due proof of death and all required forms; and (b) the Contract Value on the Valuation Day we receive due proof of death and all required forms. Partial withdrawals (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as any partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Rider Option) reduce the death benefit proportionally by the same percentage that the partial withdrawal (including any applicable surrender charges and any premium tax assessed) reduces the Contract Value. Please see Appendix A for an example of the Basic Death Benefit calculation. Annual Step-Up Death Benefit Rider Option The Annual Step-Up Death Benefit Rider adds an extra feature to the Basic Death Benefit. Under the Annual Step-Up Death Benefit Rider, the amount of death benefit proceeds we will pay upon receipt of due proof of death of any Annuitant and all required forms at our Home Office will be the greater of: . the Basic Death Benefit; and . the Annual Step-Up Death Benefit Rider Option described below. The following is the Annual Step-Up Death Benefit if all Annuitant(s) are age 80 or younger on the date the contract is issued: The Annual Step-Up Death Benefit on the Contract Date is the initial purchase payment. The Annual Step-Up Death Benefit will be reset on each contract anniversary, up to and including the later of the fifth contract anniversary and the contract anniversary next following or coincident with the 80th birthday 94 of the older Annuitant and on the Valuation Day that we receive due proof of death and all required forms at our Home Office. At each reset date, the Annual Step-Up Death Benefit equals the greater of (a) and (b) where: (a) is the Contract Value; and (b) is the Annual Step-Up Death Benefit on the last reset date, plus purchase payments made since the last reset date, adjusted for any partial withdrawals taken and premium tax paid since the last reset date. Partial withdrawals (including partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as any partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Rider Option) reduce the Annual Step-Up Death Benefit proportionally by the same percentage that the partial withdrawal (including any applicable surrender charges and premium tax assessed) reduces the Contract Value. The following is the Annual Step-Up Death Benefit if any Annuitant is older than age 80 on the date the contract is issued: The Annual Step-Up Death Benefit on the Contract Date is the initial purchase payment. The Annual Step-Up Death Benefit will be reset on each contract anniversary, up to and including the contract anniversary next following or coincident with the 85th birthday of the older Annuitant and on the Valuation Day that we receive due proof of death and all required forms at our Home Office. At each reset date, the Annual Step-Up Death Benefit equals the greater of (a) and (b) where: (a) is the Contract Value; and (b) is the Annual Step-Up Death Benefit on the last reset date, plus purchase payments made since the last reset date, adjusted for any partial withdrawals taken and premium tax paid since the last reset date. Partial withdrawals (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as any partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Rider Option) reduce the Annual Step-Up Death Benefit proportionally by the same percentage that the partial withdrawal (including any applicable surrender charges and any applicable premium tax assessed) reduces the Contract Value. You may only elect the Annual Step-Up Death Benefit Rider Option at the time of application. Once elected, it may not be terminated and it will remain in effect while this contract is in force until income payments begin. On the Annuity Commencement Date, this rider and its corresponding charge will terminate. The Annual Step-Up Death Benefit Rider Option may not be available in all states or in all markets. We charge an additional amount for this benefit. This charge will not exceed an annual rate of 0.20% of your Contract Value at the time of the deduction. See the "Fee Tables" provision of this prospectus for additional information. Please refer to Appendix A for an example of the calculation of the Annual Step-Up Death Benefit Rider Option. 5% Rollup Death Benefit Rider Option The 5% Rollup Death Benefit Rider adds an extra feature to the Basic Death Benefit. Under the 5% Rollup Death Benefit Rider, the amount of death benefit proceeds we will pay upon receipt of due proof of death of any Annuitant and all required forms at our Home Office will be the greater of: . the Basic Death Benefit; and . the 5% Rollup Death Benefit Rider Option described below. The 5% Rollup Death Benefit Rider Option is available only to contracts where all Annuitants are age 75 or younger on the date the contract is issued. The 5% Rollup Death Benefit on the Contract Date is the initial purchase payment. At the end of each Valuation Period after the Contract Date, the 5% Rollup Death Benefit is equal to the lesser of (a) and (b) where: (a) is 200% of purchase payments; and (b) is the Rollup Death Benefit at the end of the last Valuation Period increased by a daily interest factor, equivalent to a 5% annual effective interest rate, plus purchase payments made during the current Valuation Period and adjusted for any partial withdrawals taken and premium taxes paid during the current Valuation Period. Partial withdrawals each contract year (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program), up to 5% of purchase payments, calculated at the time of the partial withdrawal, reduce the 5% Rollup Death Benefit by the same amount that the partial withdrawal, including any surrender charges and premium taxes paid, reduces the Contract Value. If partial withdrawals greater than 5% of purchase payments are taken in 95 any contract year (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program), the 5% Rollup Death Benefit is reduced proportionally for that partial withdrawal and all future partial withdrawals by the same percentage that the partial withdrawal, including any surrender charges and premium tax paid, reduces the Contract Value. Timing of partial withdrawals may have unintended consequences to your 5% Rollup Death Benefit. This benefit increases daily at a compounded rate of 5%. Because of this, any partial withdrawals in a contract year that exceed the accumulated rollup interest, up to an amount equal to 5% of purchase payments, will reduce the death benefit amount below the value at the start of that contract year. You may only elect the 5% Rollup Death Benefit Rider Option at the time of application. Once elected, it may not be terminated and it will remain in effect while this contract is in force until income payments begin. On the Annuity Commencement Date, this rider and its corresponding charge will terminate. The 5% Rollup Death Benefit Rider Option may not be available in all states or in all markets. In addition, the 5% Rollup Death Benefit Rider Option is not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. We charge an additional amount for this benefit. This charge will not exceed an annual rate of 0.30% of your Contract Value at the time of the deduction. See the "Fee Tables" provision of this prospectus for additional information. Please refer to Appendix A for an example of the calculation of the 5% Rollup Death Benefit Rider Option. Earnings Protector Death Benefit Rider Option The Earnings Protector Death Benefit Rider adds an extra feature to your death benefit. The Earnings Protector Death Benefit Rider is available only to contracts where all Annuitants are age 75 or younger on the date the contract is issued. The following is the Earnings Protector Death Benefit if all Annuitant(s) are age 70 or younger on the date the contract is issued: The Earnings Protector Death Benefit is equal to 40% of earnings which are defined as (a) minus (b) where: (a) is the Contract Value as of the first Valuation Day we have receipt of due proof of death and all required forms at our Home Office; and (b) is the sum of all purchase payments paid and not previously withdrawn. The Earnings Protector Death Benefit cannot exceed 70% of purchase payments adjusted for partial withdrawals (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of Guaranteed Withdrawal Advantage). Purchase payments, other than the initial purchase payment, paid within 12 months of the date of the Annuitant's death (or Joint Annuitant's death, if applicable), are not included in this calculation. The Earnings Protector Death Benefit will never be less than zero. The following is the Earnings Protector Death Benefit if any Annuitant is older than age 70 on the date the contract is issued: The Earnings Protector Death Benefit is equal to 25% of earnings which are defined as (a) minus (b) where: (a) is the Contract Value as of the first Valuation Day we have receipt of due proof of death and all required forms at our Home Office; and (b) is the sum of all purchase payments paid and not previously withdrawn. The Earnings Protector Death Benefit cannot exceed 40% of purchase payments paid as adjusted for partial withdrawals (including any partial withdrawals immediately allocated to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of Guaranteed Withdrawal Advantage). Purchase payments, other than the initial purchase payment, paid within 12 months of the date of the Annuitant's death (or Joint Annuitant's death, if applicable), are not included in this calculation. The Earnings Protector Death Benefit will never be less than zero. Under both age scenarios listed above, partial withdrawals (including partial withdrawals immediately allocated to a Scheduled Purchase Payment Deferred Variable Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of Guaranteed Withdrawal Advantage) are taken first from gain and then from purchase payments made. For purposes of this rider, gain is calculated as (a) plus (b) minus (c) minus (d), but not less than zero, where: (a) is the Contract Value on the Valuation Day we receive your partial withdrawal or surrender request; (b) is the total of any partial withdrawals, excluding any surrender charges; 96 (c) is the total of purchase payments paid; and (d) is the total of any gain previously withdrawn. You may only elect the Earnings Protector Death Benefit Rider Option at the time of application. Once elected, it may not be terminated and it will remain in effect while the contract is in force until income payments begin. On the Annuity Commencement Date, this rider and its corresponding charge will terminate. The Earnings Protector Death Benefit Rider Option may not be available in all states or in all markets. We charge an additional amount for this benefit. This charge will not exceed an annual rate of 0.30% of your Contract Value at the time of the deduction. See the "Fee Tables" provision of this prospectus for additional information. Please refer to Appendix A for an example of the calculation of the Earnings Protector Death Benefit Rider Option. There are important things you should consider before you purchase the Earnings Protector Death Benefit Rider Option. These include: . The Earnings Protector Death Benefit Rider Option does not guarantee that any amounts under the benefit will become payable at death. Market declines resulting in your Contract Value being less than your purchase payments paid and not previously withdrawn may result in no additional amount being payable. . Once you elect the Earnings Protector Death Benefit Rider Option, you cannot terminate it. This means that regardless of any changes in your circumstances, we will continue to assess a charge for the Earnings Protector Death Benefit Rider Option. . Please take advantage of the guidance of a qualified financial adviser in evaluating the Earnings Protector Death Benefit Rider Option, as well as the other aspects of the contracts. The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option combines the Greater of the Annual Step-Up and 5% Rollup Death Benefit Rider Option plus the Earnings Protector Death Benefit Rider Option. Under this rider option, the amount of death benefit proceeds we will pay upon receipt of due proof of death of any Annuitant and all required forms at our Home Office will be the greatest of: . the Basic Death Benefit; . the Annual Step-Up Death Benefit Rider Option described above; and . the 5% Rollup Death Benefit Rider Option described above; plus . the Earnings Protector Death Benefit Rider Option described above. You may only elect the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option at the time of application. Once elected, it may not be terminated and it will remain in effect while this contract is in force until income payments begin. On the Annuity Commencement Date, this rider and its corresponding charge will terminate. The Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option may not be available in all states or in all markets. In addition, the Earnings Protector and Greater of Annual Step-Up and 5% Rollup Death Benefit Rider Option is not available for contracts issued on or after September 2, 2003 as a Funding Annuity under the Annuity Cross Funding Program. We charge an additional amount for this benefit. This charge will not exceed an annual rate of 0.70% of your Contract Value at the time of the deduction. See the "Fee Tables" provision of this prospectus for additional information. Termination of Death Benefit Rider Options When Contract Assigned or Sold Your death benefit rider options will terminate in the event that you assign your contract, unless your contract is assigned pursuant to a court order. How to Claim Proceeds and/or Death Benefit Payments At the death of: (1) an owner or joint owner; or (2) the Annuitant or Joint Annuitant (if any owner or joint owner is a non-natural entity); the person or entity first listed below who is alive or in existence on the date of that death will become the designated beneficiary: (1) owner or joint owner; (2) primary beneficiary; (3) contingent beneficiary; (4) owner's or joint owner's estate. 97 The designated beneficiary will be treated thereafter as the sole owner of the contract. The designated beneficiary may choose one of the payment choices described below, or a default payment choice will apply if no such election is made. For purposes of this provision, if there is more than one primary beneficiary named, each one will be treated separately with respect to their portion of the contract. Thus, in cases where there are multiple designated beneficiaries, once all required information is received, each designated beneficiary will be allocated their share of the proceeds in accordance with the terms of the contract and as specified by the owner. Then, each designated beneficiary may elect one of the payment choices below or have the default payment choice apply. If there is no primary beneficiary(ies) alive or in existence at the time of the death, all proceeds will be then payable to any named contingent beneficiary(ies). We should be notified immediately by telephone upon the death of an owner, joint owner, Annuitant or Joint Annuitant. We have the right to request that all notifications of death be immediately followed by written notification. Upon notification, no additional purchase payments will be accepted (unless the designated beneficiary is the spouse of the deceased and that spousal designated beneficiary has elected to continue the contract). Upon such notification of death, we will transfer all assets in the Separate Account to the Dreyfus Variable Investment Fund -- Money Market Portfolio until receipt of due proof of death and any required forms. Due proof of death consists of a death certificate issued by a government jurisdiction or a court of law. Any required forms can consist of information necessary in order to pay any named designated beneficiary(ies) and any other information necessary to process applicable proceeds. In cases where there are multiple designated beneficiaries, once all required information is received, each designated beneficiary will be allocated their share of the proceeds in accordance with the terms of the contract and as specified by the owner. At such time, once allocated their share of the proceeds, each designated beneficiary may elect to: (1) receive the proceeds in a lump sum; (2) receive the proceeds over a period of five years following the date of death. At the end of the five year period, any remaining amounts will be distributed in a lump sum (if the designated beneficiary dies before all payments have been distributed, the remaining proceeds will be paid to the person or entity named or by the designated beneficiary or his or her estate if no person or entity is named); (3) elect Optional Payment Plan 1 or 2 as described in the Optional Payment Plans section. If elected, payments must commence no later than one year after the date of death. In addition, if Optional Payment Plan 1 is chosen, the period certain cannot exceed the designated beneficiary's life expectancy, and if Optional Payment Plan 2 is chosen, the fixed period cannot exceed the designated beneficiary's life expectancy; or (4) if the designated beneficiary is the spouse of a decreased owner, he or she may continue the contract as stated in the "Distribution Rules" provision. The following payment choice is available to designated beneficiaries of Non-Qualified Contracts: A designated beneficiary of a Non-Qualified Contract may apply the death proceeds of the contract to provide for an annual payment equal to the Minimum Annual Income, described below, for the life expectancy of the designated beneficiary. The first income payment must be made no later than 350 days after the original owner's date of death. The income payment period must be a period not exceeding the designated beneficiary's life expectancy. Payments will continue annually on the distribution date until the death of the designated beneficiary or the Contract Value is reduced to $0. Upon death of the designated beneficiary, the person or entity named by the designated beneficiary or, if no one is named, the designated beneficiary's estate may receive the remaining Contract Value. The recipient may take the Contract Value as a lump sum or continue to receive the annual payment on the distribution date equal to the Minimum Annual Income, or until the Contract Value is reduced to $0. The Minimum Annual Income is the amount withdrawn each year to satisfy Section 72(s)(2)(B) of the Code. The Minimum Annual Income will be re-determined each year for the designated beneficiary's life expectancy using the Single Life Table in Section 1.401(a)(9)-9 A-1 of the Income Tax Regulations, as amended. After death, the Minimum Annual Income is calculated using the designated beneficiary's remaining life expectancy. We may offer alternative calculations of Minimum Annual Income based on amortization or annuitization calculations methods described in guidance published by the Internal Revenue Service. Special rules for this payment choice only: . This payment choice cannot be selected if the Minimum Annual Income would be less than $100. 98 . The designated beneficiary must elect a distribution date on which payments will be made. The first distribution date must be no later than 350 days after the owner's date of death. . Amounts paid to satisfy the Minimum Annual Income will not be subject to surrender charges. Surrender charges will apply to amounts withdrawn above the Minimum Annual Income. . Optional living benefit and death benefit riders are not available with this payment choice. . Additional purchase payments may not be added with this payment choice. Under this payment choice, the contract will terminate upon payment of the entire Contract Value. The following payment choice is available to designated beneficiaries of Qualified Contracts or any beneficiary receiving death proceeds from any other individual retirement plan: An inherited owner may apply death proceeds to provide for an annual payment equal to the Minimum Annual Income, described below. For purposes of this provision, an inherited owner is any designated beneficiary receiving death proceeds from a Qualified Contract or any beneficiary receiving death proceeds from any other individual retirement plan. A surviving spouse may elect to be treated as an inherited owner in lieu of exercising spousal continuation. The inherited owner will be named the Annuitant at election of the payment choice. Payments under this payment choice will continue annually on the distribution date selected by the inherited owner, subject to the special rules stated below, until the death of the inherited owner or the Contract Value is reduced to $0. Upon death of the inherited owner, the person or entity named by the inherited owner or, if no one is named, the inherited owner's estate may receive the remaining Contract Value. The recipient may take the Contract Value as a lump sum or continue to receive the annual payment on the distribution date equal to the Minimum Annual Income until the Contract Value is reduced to $0. The Minimum Annual Income is the amount withdrawn each year to satisfy Section 408(b)(3) of the Code. The Minimum Annual Income will be based on the applicable distribution period for required minimum distributions after death, as provided in Section 1.401(a)(9)-5 A-5 of the Income Tax Regulations. Special rules for this payment choice only: . This payment choice cannot be selected if the Minimum Annual Income would be less than $100. . The inherited owner must elect a distribution date on which payments will be made. If the inherited owner is the surviving spouse of the original IRA owner within the meaning of Section 401(a)(9)(B)(iv) of the Code, then the first distribution date elected must be the later of either: (i) December 15th of the year in which the deceased would have been age 70 1/2 or (ii) December 15th of the year following the original IRA owner's death. If the inherited owner is not the surviving spouse of the original IRA owner, then the first distribution date elected must be within 350 days from the date of death. If the surviving spouse dies before the first distribution date, the first distribution date under this rider will be determined by treating death of the surviving spouse as death of the original IRA owner and the surviving spouse's designated beneficiary as the inherited owner. . Amounts paid to satisfy the Minimum Annual Income will not be subject to surrender charges. Surrender charges will apply to amounts withdrawn above the Minimum Annual Income. . Optional living benefit and death benefit riders are not available with this payment choice. . Additional purchase payments may not be added with this payment choice Under this payment choice, the contract will terminate upon payment of the entire Contract Value. If a designated beneficiary makes no election within 60 days following receipt of due proof of death and all required forms at our Home Office, proceeds will be paid over a period of five years following the date of death. Spendthrift Provision. An owner may, by providing written notice to our Home Office in a manner acceptable to the Company, choose the method of payment of death proceeds under the contract by selecting any payment choice, including any Optional Payment Plan, that a designated beneficiary may have chosen. A designated beneficiary cannot change the payment choice that the owner has selected. If the owner makes a payment choice for the surviving spouse, the spouse may not continue the contract in accordance with the "Distribution Rules" provision of the prospectus. The owner may also specify at the time of electing an income payment option that any payments remaining to be made at the owner's death cannot be commuted or assigned. While living, the owner may revoke any such limitations on the rights of the designated beneficiary by providing written notice of such revocation to our Home Office in a manner acceptable to the Company. If the payment choice selected by the owner does not apply to a designated beneficiary, 99 the limitations imposed by this paragraph shall not apply to such designated beneficiary. For example, a payment choice based on an individual's life does not apply to the owner's estate and the estate would be free to make its own payment choice as designated beneficiary after the owner's death. Distribution Rules When Death Occurs Before the Annuity Commencement Date The distribution rules below apply to Non-Qualified Contracts that are generally treated as annuity contracts under the Code. These rules do not apply to Qualified Contracts and may not apply to contracts held by certain entities. Contracts that are not subject to these rules may be subject to other distribution rules, however. See the "Tax Matters" provision of this prospectus. If the sole designated beneficiary is the surviving spouse of the deceased owner, the surviving spouse may elect to continue the contract with the surviving spouse as the owner. If the deceased owner was also an Annuitant or Joint Annuitant, the surviving spouse will automatically become the new sole Annuitant. As the new named owner and Annuitant, the surviving spouse may exercise all rights as stated in the contract. Any other surviving Joint Annuitant will be removed from the contract. Should the surviving spouse remarry, the new spouse may not exercise this provision at the death of the surviving spouse. If the surviving spouse is one of multiple designated beneficiaries, the surviving spouse may only continue the contract with the proportion allocated to him or her by the owner as stated on the application or later in writing in a form acceptable to us. If the designated beneficiary(ies) is not the surviving spouse of the deceased, the designated beneficiary(ies) may not continue the contract indefinitely. Instead, the proceeds from the contract must be distributed within five years of the date of death in accordance with payment choice 1 or 2, unless payment choice 3 is timely elected, in which case, payments will begin within one year of the date of the deceased owner's death and extend over the designated beneficiary's life or a period not longer than the designated beneficiary's life expectancy. When Death Occurs On or After the Annuity Commencement Date On or after the Annuity Commencement Date, if an owner, joint owner, Annuitant, or designated beneficiary dies while the contract is in force, payments that are already being made under the contract will be made at least as rapidly as under the method of distribution in effect at the time of such death, notwithstanding any other provision of the contract. This means that unless accelerated in accordance with contract terms, income payments will continue to the beneficiary under the distribution method in effect at the applicable death. INCOME PAYMENTS Income Payments and the Annuity Commencement Date The Annuity Commencement Date is the date income payments begin under the contract, provided the Annuitant is still living on that date. (If Guaranteed Income Advantage or Principal Protection Advantage is elected, income payments may begin on a different date under the terms of the rider. See the "Guaranteed Income Advantage" and "Principal Protection Advantage" provisions in this section.) The Annuity Commencement Date must be a date at least thirteen months from the date the contract is issued, unless you have elected Payment Optimizer Plus. If you have elected Payment Optimizer Plus, you may elect to receive income payments within the first year of the contract. The owner selects the contract's initial Annuity Commencement Date at issue. Thereafter, until income payments begin, the owner may elect to extend the Annuity Commencement Date in one-year increments, so long as the new Annuity Commencement Date is not a date beyond the latest permitted Annuity Commencement Date. The latest Annuity Commencement Date we currently permit may not be a date beyond the younger Annuitant's 90th birthday, unless we consent to a later date. We reserve the right to discontinue to allow the deferral of the Annuity Commencement Date at any time and without prior notice. Any consent for a new Annuity Commencement Date will be provided on a non-discriminatory basis. An owner may request to change the Annuity Commencement Date by sending written notice to our Home Office prior to the Annuity Commencement Date then in effect. If you change the Annuity Commencement Date, the Annuity Commencement Date will mean the new Annuity Commencement Date selected, provided such Annuity Commencement Date is not a date beyond the latest permitted Annuity Commencement Date. If income payments have not commenced upon reaching the latest permitted Annuity Commencement Date, we will begin making payments to the named payee. In this circumstance: (i) if Guaranteed Withdrawal Advantage applies, income payments will be made in the form of Life Income with a 10 Year Period Certain; (ii) if Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008 applies, income payments will be made pursuant to Optional Payment Plan 6, Fixed Income for Life; (iii) if Guaranteed Income Advantage applies, 100 income payments will be made in the form of Life Income with a 10 Year Period Certain; or (iv) if one of the Payment Protection Rider Options applies, income payments will be made in the form of a Life Income. If, however, at the latest permitted Annuity Commencement Date these riders do not apply, income payments will be made in the form of a Life Income with a 10 Year Period Certain. An Annuity Commencement Date that occurs or is scheduled to occur at an advanced age (e.g., past age 85) may, in certain circumstances, have adverse income tax consequences. See the "Tax Matters" provision of this prospectus. Contracts issued to qualified retirement plans provide for income payments to start on the date and under the option specified by the plan. We will pay a monthly income benefit to the owner beginning on the Annuity Commencement Date provided the Annuitant(s) is still living. Unless you have elected one of the Payment Protection Rider Options, we will pay the monthly income benefit in the form of a Life Income with 10 Years Certain plan or a Joint Life and Survivor Income with 10 Years Certain plan, both with variable income payments, using the gender (where appropriate) and settlement age of the Annuitant instead of the payee, unless you make another election as described below. If you elected one of the Payment Protection Rider Options, we will pay monthly income over the life of the Annuitant(s). As described in your contract, the settlement age may be less than the Annuitant's age. This means that payments may be lower than they would have been without the adjustment. You may also choose to receive the the Surrender Value of your contract on the date immediately preceding the Annuity Commencement Date in a lump sum, in which case, we will cancel the contract. See the "Requesting Payments" provision of this prospectus. Payments will continue for the life of the Annuitant under the Life Income with 10 Years Certain plan, if he or she lives longer than 10 years. If the Annuitant dies before the end of 10 years, we will discount the remaining payments for the 10 year period at the same rate used to calculate the monthly income payment. If the remaining payments are variable income payments, we will assume the amount of each payment that we discount equals the payment amount on the date we receive due proof of death. We will pay this discounted amount in a lump sum. Payments will continue for the life of the Surviving Annuitant under the Joint Life and Survivor Life with 10 Years Certain plan, if any Annuitant lives longer than 10 years. If both Annuitants die before the end of 10 years, the remaining payments for the 10 year period will be discounted at the same rate used to calculate the monthly income payment. If the remaining payments are variable income payments, we will assume the amount of each payment that we discount equals the payment amount on the date we receive due proof of death. We will pay the discounted amount in a lump sum. The contract also provides optional forms of income payments ("Optional Payment Plans"), each of which is payable on a fixed basis. Optional Payment Plan 1 and Optional Payment Plan 5 also are available on a variable basis. If you elect fixed income payments, the guaranteed amount payable will be computed using interest at a minimum rate of 3% compounded yearly. We may increase the interest rate, which will increase the amount we pay to you or the payee. If you elect variable income payments, the dollar amount of the first variable income payment will depend on the annuity purchase rates described in your contract for the Optional Payment Plan you choose. These rates vary based on the Annuitant's settlement age and gender, and upon the settlement age and gender of a second person you designate (if applicable). Under such tables, the longer the life expectancy of the Annuitant or the longer the period for which we guarantee to make payments under the option, the smaller the amount the first variable income payment will be. After your first income payment, the dollar amount of your income payments will vary based on the investment performance of the Subaccount(s) in which you invest and the contract's assumed interest rate. The assumed interest rate is an assumption we make regarding the investment performance of the Portfolios you select. This rate is simply the total return, after expenses, you need to keep your variable income payments level. We assume an effective annual rate of 3%. This means that if the annualized investment performance, after expenses, of your Subaccounts, measured between the day that the last payment was made and the day on which we are calculating the new payment, is less than 3%, then the dollar amount of your variable income payment will decrease. Conversely, if the annualized investment performance, after expenses, of your Subaccounts, measured between the day that the last payment was made and the day on which we are calculating the new payment, is greater than 3%, then the dollar amount of your income payment will increase. We will make income payments monthly unless you elect to receive payments quarterly, semi-annually or annually. Under the monthly income benefit and all of the Optional Payment Plans, if any payment made more frequently than annually would be or becomes less than $100, we reserve the right to reduce the frequency of payments to an interval that would result in each payment being at least $100. If the annual payment payable at maturity is less than $20, we will pay the Surrender Value in a lump sum. See the "Requesting Payments" provision of this prospectus. Upon making such a payment, we will have no future obligation under the contract. 101 The amount of your income payments will depend on four things: . your Surrender Value on the Valuation Day immediately preceding your Annuity Commencement Date; . the settlement age on the Annuity Commencement Date, and if applicable, the gender of the Annuitant(s); . the specific payment plan you choose; and . if you elect variable income payments, the investment performance of the Portfolios selected. As provided in your contract, we may adjust the age used to determine income payments, and we may deduct premium taxes from your payments. Optional Payment Plans The following Optional Payment Plans are available under the contract, unless you have fully annuitized under Guaranteed Income Advantage or one of the Payment Protection Rider Options: Optional Payment Plan 1 -- Life Income with Period Certain. This option guarantees periodic monthly payments for the lifetime of the payee with a minimum number of years of payments. If the payee lives longer than the minimum period, payments will continue for his or her life. The minimum period can be 10, 15, or 20 years. The payee selects the designated period. If the payee dies during the minimum period, we will discount the amount of the remaining guaranteed payments at the same rate used in calculating income payments. We will pay the discounted amount in a lump sum to the payee's estate, unless otherwise provided. Optional Payment Plan 2 -- Income for a Fixed Period. This option provides for periodic payments to be made for a fixed period not longer than 30 years. Payments can be made annually, semi-annually, quarterly, or monthly. If the payee dies, we will discount the amount of the remaining guaranteed payments to the date of the payee's death at the same rate used in calculating income payments. We will pay the discounted amount in a lump sum to the payee's estate, unless otherwise provided. Optional Payment Plan 3 -- Income of a Definite Amount. This option provides periodic payments of a definite amount to be paid. Payments can be made annually, semi-annually, quarterly, or monthly. The amount paid each year must be at least $120 for each $1,000 of proceeds. Payments will continue until the proceeds are exhausted. The last payment will equal the amount of any unpaid proceeds. If the payee dies, we will pay the amount of the remaining proceeds with earned interest in a lump sum to the payee's estate, unless otherwise provided. Optional Payment Plan 4 -- Interest Income. This option provides for periodic payments of interest earned from the proceeds left with us. Payments can be made annually, semi-annually, quarterly, or monthly. If the payee dies, we will pay the amount of remaining proceeds and any earned, but unpaid interest, in a lump sum to the payee's estate, unless otherwise provided. This plan is not available to contracts issued as Qualified Contracts. Optional Payment Plan 5 -- Joint Life and Survivor Income. This option provides for us to make monthly payments to two payees for a guaranteed minimum of 10 years. Each payee must be at least 35 years old when payments begin. Payments will continue as long as either payee is living. If both payees die before the end of the minimum period, we will discount the amount of the remaining payments for the 10 year period at the same rate used in calculating income payments. We will pay the discounted amount in a lump sum to the survivor's estate, unless otherwise provided. Optional Payment Plan 6 -- Fixed Income for Life. This option provides for us to make monthly payments of a fixed amount for the life of the Annuitant or, if there are Joint Annuitants, the last surviving Annuitant. If Lifetime Income Plus, Lifetime Income Plus 2007 or Lifetime Income Plus 2008 has been elected and the contract has reached the latest permitted Annuity Commencement Date, the fixed amount payable annually will be greater than or equal to the most recently calculated Withdrawal Limit. If the last surviving Annuitant dies, no amount will be payable under this option. If the payee is not a natural person, our consent must be obtained before selecting an Optional Payment Plan. Fixed income payments, if selected, will begin on the date we receive due proof of the Annuitant's death or on the Annuity Commencement Date. Variable income payments will begin within seven days after the date payments would begin under the corresponding fixed option. Payments under Optional Payment Plan 4 (Interest Income) will begin at the end of the first interest period after the date proceeds are otherwise payable. All payments under Optional Payment Plan 2 (Income for a Fixed Period), Optional Payment Plan 3 (Income of a Definite Amount) and Optional Payment Plan 4 (Interest Income) may be redeemed by the payee upon written request to our Home Office. Payments made under Optional Payment Plan 1 (Life Income with Period Certain) and Optional Payment Plan 5 102 (Joint Life and Survivor Income) are not redeemable. If a request for redemption is received for Optional Payment Plan 2, Optional Payment Plan 3 or Optional Payment Plan 4 in good order, the payment will generally be made within seven days, however, some states require us to reserve the right to defer payments from the Guarantee Account for up to six months from the date we receive the request for payment. If your contract is a Qualified Contract, Optional Payment Plans 2, 3, and 4 may not satisfy minimum required distribution rules. Consult a tax adviser before electing one of these options. Variable Income Payments The monthly amount of your first variable income payment will equal your Surrender Value on the Valuation Day immediately preceding your Annuity Commencement Date, less any premium taxes, multiplied by the monthly payment rate for the payment plan you choose (at an assumed interest rate of 3%), divided by 1,000. We determine subsequent payments based on Annuity Units. On the Annuity Commencement Date, we determine the number of Annuity Units for each Subaccount. This number will not change unless you make a transfer. On the Annuity Commencement Date, the number of Annuity Units for a Subaccount is the portion of the first payment from that Subaccount divided by the Annuity Unit value for that Subaccount on the day the first payment is due. Each subsequent variable income payment will equal the sum of payments for each Subaccount. The payment for a Subaccount is the number of Annuity Units for that Subaccount multiplied by the Annuity Unit value for that Subaccount seven days before the monthly anniversary of the Annuity Commencement Date. Following the Annuity Commencement Date, the Annuity Unit value of each Subaccount for any Valuation Period will equal the Annuity Unit value for the preceding Valuation Period multiplied by the product of (a) and (b), where: (a) is the net investment factor for the Valuation Period for which we are calculating the Annuity Unit value; and (b) is an assumed interest rate factor equal to .99991902 raised to a power equal to the number of days in the Valuation Period. The assumed interest rate factor in (b) above is the daily equivalent of dividing by one plus the assumed investment interest rate of 3%. We may offer a plan that has a different assumed investment interest rate. If we do, the assumed interest rate factor we use in (b) above would change. If you have elected Payment Optimizer Plus, the assumed interest rate will be 4% and the assumed interest rate factor in (b) will equal .99989255 raised to a power equal to the number of days in the Valuation Period. Transfers After the Annuity Commencement Date If we are making variable income payments, the payee may change the Subaccounts from which we are making the payments three times each calendar year. If you elect one of the Payment Protection Rider Options, the benefits you receive under such rider may be reduced if, after a transfer, your assets (Annuity Units) are not allocated in accordance with the prescribed Investment Strategy. Transfers may not be made if income payments are being received pursuant to the terms of Guaranteed Income Advantage. The transfer will be effective as of the end of the Valuation Period during which we receive the written transfer request at our Home Office. However, we reserve the right to limit the number of transfers, if necessary, for the contract to continue to be treated as an annuity under the Code. We also reserve the right to refuse to execute any transfer if any of the Subaccounts that would be affected by the transfer is unable to purchase or redeem shares of the Portfolio in which the Subaccount invests or if the transfer would adversely affect Annuity Unit values. If the number of Annuity Units remaining in a Subaccount after a transfer is less than 1, we will transfer the remaining balance in addition to the amount requested for the transfer. We will not allow a transfer into any Subaccount unless the number of Annuity Units of that Subaccount after the transfer is at least 1. The amount of the income payments as of the date of the transfer will not be affected by the transfer. We will not charge for transfers made after the Annuity Commencement Date. We do not permit transfers between the Subaccounts and the Guarantee Account after the Annuity Commencement Date. We also do not permit transfers in the Guarantee Account from one interest rate guarantee period to another interest rate guarantee period. Guaranteed Income Advantage Guaranteed Income Advantage provides a guaranteed income benefit that is based on the amount of assets you invest in the GIS Subaccount(s). Under the rider, you will receive a series of monthly income payments determined on the earlier of the date you designate payments from the GIS Subaccount(s) to begin (the "Income Start Date") or the date you annuitize the contract (the "Annuity Commencement Date"). Each series of monthly income payments is referred to as a segment. The guaranteed income benefit may be comprised of one or more segments. If you meet the conditions of the rider, as discussed more fully below, the amount of your monthly income payment, for each segment, will have a guaranteed income floor, and the 103 guaranteed income floor will not vary based on the market performance of the Subaccounts in which your assets are allocated. There is an extra charge for this rider. You may not allocate purchase payments or assets in your contract directly to the GIS Subaccount(s). Payments to the GIS Subaccount(s) must be made through a series of scheduled transfers. As discussed in the "Scheduled Transfers" section below, for contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, scheduled transfers may be made in advance of their due date. In other words, for these contracts, you will have the ability to "pre-pay" transfers into the GIS Subaccount(s). Guaranteed Income Advantage may not be available in all states or in all markets. We reserve the right to discontinue offering Guaranteed Income Advantage at any time and for any reason. Each segment has its own effective date, Income Start Date, series of scheduled transfers, monthly income plan and guaranteed annual income factor. If you wish to elect this rider, you must do so at the time of application. You may add additional segments on any contract monthly anniversary for a maximum of five segments, provided the Annuitant is age 70 or younger at the time the segment is elected. We reserve the right to allow additional segments in the future. Scheduled Transfers The first scheduled transfer is made to the GIS Subaccount(s) as of the effective date of the segment. Scheduled transfers if due will continue to be made on each monthly anniversary of that date until the earlier of the Income Start Date or the Annuity Commencement Date. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, scheduled transfers may be made in advance of the monthly anniversaries on which they become due. If any month ends before the monthly anniversary or on a day that is not a Valuation Day, the next Valuation Day will be treated as the monthly anniversary for that month. Only scheduled transfers can be made into the GIS Subaccount(s). Purchase payments may not be made directly to the GIS Subaccount(s). Scheduled transfers are made first to the GIS Subaccount(s) of the segment that has been in effect for the longest period of time. Scheduled transfers will first be made on a prorata basis from the Subaccounts to which you have allocated assets, excluding the GIS Subaccount(s). Scheduled transfers will then be made from any Guarantee Account to the extent that the value in the Subaccounts is insufficient to cover the scheduled transfer amount. Scheduled transfers from the Guarantee Account will be taken from amounts that have been in the Guarantee Account for the longest period of time. There is a minimum scheduled transfer of $100. If amounts available for transfer on the date of the scheduled transfer are not enough to make the scheduled transfer, that scheduled transfer and any future scheduled transfers will not be made with respect to that segment. Your guaranteed income floor for that segment will be based upon scheduled transfers made to that date. Withdrawals and Transfers You may take a withdrawal or make transfers from the GIS Subaccount(s) at any time prior to the earlier of the Income Start Date or the Annuity Commencement Date. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, except for the annual contract charge and any transfer charge (if applicable), any rider charge and contract charge not taken as an asset based charge from the GIS Subaccount(s) will be treated as withdrawals for purposes of calculating the guaranteed income floor and scheduled transfers made. Once you take a withdrawal or make a transfer from a segment, you will not be permitted to make any additional scheduled transfers to that segment. Your guaranteed income floor will be adjusted to reflect the amount withdrawn or transferred by using a recalculation of scheduled transfers made as described below. For contracts issued prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, after such withdrawal or transfer, the number of scheduled transfers made will equal (a) multiplied by (b) divided by (c), where: (a) is the number of scheduled transfers made prior to such withdrawal or transfer; (b) is the value of the applicable GIS Subaccount(s) after such withdrawal or transfer; and (c) is the value of the applicable GIS Subaccount(s) before such withdrawal or transfer. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, after such withdrawals or transfer, the scheduled transfers made will equal (a) multiplied by (b) divided by (c), where: (a) is the scheduled transfers made prior to such withdrawal or transfer; 104 (b) is the value of the applicable GIS Subaccount(s) after such withdrawal or transfer; and (c) is the value of the applicable GIS Subaccount(s) before such withdrawal or transfer. Unless you instruct otherwise, withdrawals will first be deducted from the Subaccounts in which you have allocated assets, excluding the GIS Subaccount(s). These deductions will be taken on a prorata basis. Then withdrawals will be deducted from amounts allocated to the Guarantee Account for the longest period of time. Finally, withdrawals will be deducted from the GIS Subaccount(s) from the segment that has been in effect for the shortest period of time. Transfers from the GIS Subaccount(s) will be subject to the provisions stated in the "Transfers" provision of this prospectus. Monthly Income You may elect to receive monthly income under this rider or you may elect to transfer the value in the GIS Subaccount(s) to another investment option under your contract and receive income payments. If you elect to transfer the value in the GIS Subaccount(s) to another investment option, you will lose the guaranteed income benefit for that segment. On the Income Start Date, we will begin making monthly income payments in accordance with the monthly income plan chosen by you. The Income Start Date for the first segment is determined at application. The Income Start Date for each additional segment is determined at the time that segment is added to the contract. Once established, these Income Start Dates cannot be changed. For a single Annuitant, monthly income will be based on a Life Income with a 10 Year Period Certain plan. For Joint Annuitants, monthly income will be based on a Joint Life and Survivor Income with a 10 Year Period Certain plan. Different options may be elected prior to the effective date of the segment and must be approved by us. Please note that all Optional Payment Plans listed may not be available. See "Optional Payment Plans" in the "Income Payments" provision of this prospectus for additional information on available payment options. Once monthly income payments begin, we will allocate payments to the investment options in which you have allocated assets at that time, excluding the GIS Subaccount(s), unless you choose to have monthly income payments made directly to you. Monthly income payments that are allocated to the investment options will not be subject to a contingent deferred sales charge if those payments are subsequently withdrawn or surrendered from the contract. Monthly income is calculated as of the first Valuation Day of each annuity year. If the first day of the annuity year does not begin on a Valuation Day, payments will be calculated on the next succeeding Valuation Day. Monthly income from the segment will not change from month to month during an annuity year; however, if another segment begins monthly payments after payments have already begun from other segments, your total monthly payments may increase due to the fact payments are being made from multiple segments. How Income Payments are Calculated Initial Income Payment. The initial annual income amount under any applicable payment plan is calculated by taking (a) multiplied by (b), divided by (c), where: (a) is the annual income rate per $1,000 in the contract for the income payment plan elected and the gender(s) and settlement age(s) of the Annuitant(s) as shown in the rider as of the Income Start Date; (b) is the value in the applicable GIS Subaccount(s) as of the Income Start Date, less any applicable premium tax; and (c) is $1,000. Income rates, for purposes of Guaranteed Income Advantage, are based on the Annuity 2000 Mortality Tables, using an assumed interest rate of 3.5%. The initial monthly income is the greater of the level income amount and the guaranteed income floor. We determine the level income amount by applying the annual income amount to a 12 month, period certain, single payment immediate annuity. For contracts issued prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, the guaranteed income floor is equal to (a) multiplied by (b) multiplied by (c), where: (a) is the scheduled transfer; (b) is the guaranteed annual income factor divided by 12; and (c) is the number of scheduled transfers made, adjusted for withdrawals and transfers. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, the guaranteed income floor is equal to (a) multiplied by (b), where: (a) is the scheduled transfers made into the GIS Subaccount(s), adjusted for withdrawals and transfers; and (b) is the guaranteed annual income factor divided by 12. 105 Subsequent Income Payments. Subsequent income payments are determined by Annuity Units. The amount of any subsequent annual income amount may be greater or less than the initial amount. For contracts issued prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, the number of Annuity Units is determined by dividing the dollar amount of the initial annual income amount by the Annuity Unit values as of the Income Start Date. Your number of Annuity Units under a particular segment remains fixed. The dollar amount of each subsequent annual income amount is determined by multiplying your number of Annuity Units by the Annuity Unit value as of the Valuation Day each annuity year begins. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, the number of Annuity Units for each Subaccount is determined by dividing the portion of the initial annual income amount attributable to that Subaccount by the Annuity Unit value for that Subaccount as of the Income Start Date. The dollar amount of each subsequent annual income amount is the sum of the amounts from each Subaccount. The amount is determined by multiplying your number of Annuity Units in each Subaccount by the Annuity Unit value for that Subaccount as of the Valuation Day each annuity year begins. An adjustment account is established on the Income Start Date. The adjustment account tracks the difference between the level income amount and the guaranteed income floor when the level income amount is less than the guaranteed income floor. You will not receive monthly income above the guaranteed income floor unless future performance of the underlying Subaccount(s) is sufficient to reduce the adjustment account to zero. Therefore, poor long-term performance of the underlying Subaccount(s) may result in monthly income equal to the guaranteed income floor, even if the underlying Subaccount(s) performs well in a particular year. The value of the adjustment account will be the greater of (a) and (b), where: (a) is zero; and (b) is 12 multiplied by the guaranteed income floor minus 12 multiplied by the initial level income amount. The actual monthly income in subsequent annuity years is the greater of (a) and (b), where: (a) is the subsequent level income amount minus any value in the adjustment account as of the date the last monthly income was made divided by 12; and (b) is the guaranteed income floor. For monthly income in subsequent annuity years, the value of the adjustment account will be the greater of (a) and (b) where: (a) is zero; and (b) is the value of the adjustment account as of the date that the last monthly income was made, plus 12 multiplied by the actual subsequent monthly income, minus 12 multiplied by the subsequent level income amount. On the Income Start Date, if any monthly income would be $100 or less, we reserve the right to reduce the frequency of transfers or payments to an interval that would result in each amount being at least $100. If the annual amount is less than $100, we will pay you the value in the applicable GIS Subaccount as of the Income Start Date and that segment will terminate. On the Annuity Commencement Date, no further scheduled transfers can be added to the GIS Subaccount(s). On this date, monthly income will be included as part of income payments in accordance with your income payment plan selected. Death Provisions The following provisions apply to any and all segments with regard to the death of any Annuitant. Special Distribution Rules When Death Occurs Before Income Start Date and Annuity Commencement Date For a surviving spouse who is an Annuitant and a designated beneficiary, the following will apply: (1) Upon notification of death: (a) the value of all Subaccounts, excluding the value of the GIS Subaccount(s), will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio; and (b) scheduled transfers if due will continue to be made. (2) If the surviving spouse elects to continue the contract, on receipt of proof of death and all required forms at our Home Office: (a) the death benefit under the contract will be allocated on a prorata basis to the investment options in which assets are then allocated; (b) all current segments will continue; and (c) the surviving spouse may elect to fund new segments on a contract monthly anniversary, if then eligible. 106 For a surviving spouse, who is the designated beneficiary of any portion of the contract but not an Annuitant, the following will apply: (1) Upon notification of death: (a) the value of all Subaccounts, including the GIS Subaccount(s), will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio; and (b) all existing segments will terminate. (2) If the surviving spouse elects to continue the contract, on receipt of proof of death and all required forms at our Home Office: (a) we will allocate the death benefit under the contract on a prorata basis to the investment options in which assets are then allocated; and (b) the surviving spouse may elect to fund new segments on a contract monthly anniversary, if then eligible. Special Distribution Rules When Death Occurs On or After Income Start Date and Before Annuity Commencement Date If any Annuitant dies on the Income Start Date, the death benefit is reduced prorata by the same proportion that the value in the GIS Subaccount(s) is to the total Contract Value. If any Annuitant dies after the Income Start Date but before the Annuity Commencement Date, proceeds will be paid under this rider, unless the surviving spouse continues the contract. The amount of proceeds payable under this rider will be the greater of (a) and (b), where: (a) is the commuted value of the remaining period certain of the guaranteed income floor; and (b) is the commuted value of the remaining period certain of the annual income amount. Commuted values will be calculated at a rate not greater than 1% above the rate at which the payments and Annuity Units were calculated. We will calculate the commuted values on the date that we receive proof of death and all required forms at our Home Office. For a surviving spouse who is an Annuitant and designated beneficiary, the following will apply: (1) Upon notification of death: (a) the value of all Subaccounts, excluding the value of the GIS Subaccount(s), will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio; and (b) scheduled transfers if due will continue to be made. (2) If the surviving spouse elects to continue the contract, on receipt of proof of death and all required forms at our Home Office: (a) the death benefit will be allocated on a prorata basis to the investment options in which assets are then allocated including any rider segments that are in effect prior to the Income Start Date; (b) all current segments will continue; and (c) the surviving spouse may elect to fund new segments on any contract monthly anniversary, provided he or she meets the eligibility requirements. For a surviving spouse, who is the designated beneficiary of any portion of the contract but not an Annuitant, the following will apply; (1) Upon notification of death; (a) all value of the Subaccounts will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio; and (b) all existing segments not past the Income Start Date will terminate. (2) If the surviving spouse elects to continue the contract, on receipt of proof of death and all required forms at our Home Office: (a) the death benefit will be allocated on a prorata basis to the investment options in which assets are then allocated; (b) any segment past its Income Start Date will continue any remaining period certain payments; and (c) the surviving spouse may elect to fund new segments on any contract monthly anniversary, provided he or she meets the eligibility requirements. The surviving spouse will become the named designated Annuitant. Other Contract Charges Any rider and contract charges not taken on a daily basis will first be deducted on a prorata basis from all Subaccounts, excluding the GIS Subaccount(s). If the assets in the Subaccounts are insufficient to cover the charges, the remaining 107 amount will be deducted from any Guarantee Account. Deductions from the Guarantee Account will be taken first from the amounts that have been in the Guarantee Account for the longest period of time. For contracts issued prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, any remaining charges will be deducted prorata from the GIS subaccount(s) in the oldest segment(s) that have not reached their Income Start Date(s). For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, any remaining charges will be deducted from the GIS Subaccount(s) of the segments beginning with the segment that has been in effect for the shortest period of time and that has not reached its Income Start Date. For these contracts, except for the annual contract charge and any transfer charge (if applicable), any rider charge and contract charge not taken as an asset based charge from the GIS Subaccount(s) will be treated as withdrawals for purposes of calculating the guaranteed income floor and scheduled transfers made. Termination of Rider For contracts issued prior to April 29, 2005, or prior to the date on which state insurance authorities approve applicable contract modifications, this rider will terminate on the contract anniversary following the first date that there are no segments, unless the Annuitant and any Joint Annuitant are eligible to buy a segment on that date. For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, this rider will terminate on the contract anniversary following the first date that there are no segments, unless you are eligible to buy a segment on that date. Ownership and Change of Ownership On the date that the contract is assigned or sold, unless under an involuntary assignment effected by legal process, all amounts in the GIS Subaccount(s) will be transferred to the Dreyfus Variable Investment Fund -- Money Market Portfolio. If you marry after the Contract Date, you may add your spouse as a Joint Owner and Joint Annuitant or as a Joint Annuitant only, subject to our approval. For purposes of this rider: . a non-natural owner must name an Annuitant and may name a Joint Annuitant; . a natural individual owner must also be an Annuitant; . if there is only one natural owner, that owner may name his or her spouse as a Joint Annuitant. 108 Examples The following example shows how Guaranteed Income Advantage works based on hypothetical values. The example is for illustrative purposes only and is not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The example assumes that an owner purchases a contract with a male Annuitant age 60 at the time of issue and has elected a Life Income with 10 Years Certain payment plan. In addition, the example assumes that: (1) the owner purchases the contract for $96,000; (2) the owner makes no additional purchase payments; (3) the owner purchases only one segment; (4) the contract, including the GIS Subaccount investing in shares of the GE Investments Funds, Inc. -- Total Return Fund, earns a net return of 5%; (5) the owner makes scheduled transfers of $800 at the first of every month (for a total of $9,600 per year) for 10 years; and (6) the owner annuitizes the GIS Subaccount at the end of the 10th year.
Value of Value of Guaranteed Subaccounts Value of GIS Value of GIS Minimum at Scheduled Subaccounts Subaccount Scheduled Subaccount Annual Beginning Transfers at End at Beginning Transfers at End Payment Year of Year Made of Year of Year Made of Year Accrued - ------------------------------------------------------------------------------------- 1 $96,000 $9,600 $90,778 $ 0 $9,600 $ 9,849 $ 956 2 90,778 9,600 85,303 9,849 9,600 20,173 1,913 3 85,303 9,600 79,565 20,173 9,600 30,995 2,869 4 79,565 9,600 73,551 30,995 9,600 42,339 3,825 5 73,551 9,600 67,247 42,339 9,600 54,230 4,781 6 67,247 9,600 60,639 54,230 9,600 66,695 5,738 7 60,639 9,600 53,712 66,695 9,600 79,761 6,694 8 53,712 9,600 46,452 79,761 9,600 93,457 7,650 9 46,452 9,600 38,841 93,457 9,600 107,814 8,606 10 38,841 9,600 30,864 107,814 9,600 122,863 9,563 - -------------------------------------------------------------------------------------
Assuming the above, we will make guaranteed payments of $9,563 (annually) to the owner for the life of the Annuitant or for 10 years, whichever is longer. The table below shows how calculated payments and the adjustment account may vary and affect the payment to the owner.
Adjustment Calculated Guaranteed Payment Account Year Payment Payment to Owner Balance - ---------------------------------------------- 11 $ 9,436 $9,563 $ 9,563 $127 12 9,557 9,563 9,563 132 13 9,679 9,563 9,563 16 14 9,803 9,563 9,787 0 15 9,928 9,563 9,928 0 16 10,055 9,563 10,055 0 17 10,184 9,563 10,184 0 18 10,314 9,563 10,314 0 19 10,446 9,563 10,446 0 20 10,579 9,563 10,579 0 - ----------------------------------------------
109 For contracts issued on or after the later of April 29, 2005, or the date on which state insurance authorities approve applicable contract modifications, the following example also applies: The following example shows how Guaranteed Income Advantage works based on hypothetical values. The example is for illustrative purposes only and is not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The example assumes that an owner purchases a contract with a male Annuitant age 60 at the time of issue and has elected a Life Income with 10 Years Certain payment plan. In addition, the example assumes that: (1) the owner purchases the contract for $96,000; (2) the owner makes no additional purchase payments; (3) the owner purchases only one segment; (4) the contract, including the GIS Subaccount investing in shares of the GE Investments Funds, Inc. -- Total Return Fund, earns a net return of 5%; (5) the owner transfers the entire $96,000 into the GIS Subaccount at the beginning of year 1; and (6) the owner annuitizes the GIS Subaccount at the end of the 10th year.
Value of Value of Guaranteed Subaccounts Value of GIS Value of GIS Minimum at Scheduled Subaccounts Subaccount Scheduled Subaccount Annual Beginning Transfers at End at Beginning Transfers at End Payment Year of Year Made of Year of Year Made of Year Accrued - ------------------------------------------------------------------------------------- 1 $96,000 $96,000 $0 $ 0 $96,000 $100,630 $9,563 2 0 0 0 100,630 0 105,484 9,563 3 0 0 0 105,484 0 110,572 9,563 4 0 0 0 110,572 0 115,905 9,563 5 0 0 0 115,905 0 121,495 9,563 6 0 0 0 121,495 0 127,355 9,563 7 0 0 0 127,355 0 133,498 9,563 8 0 0 0 133,498 0 139,937 9,563 9 0 0 0 139,937 0 146,687 9,563 10 0 0 0 146,687 0 153,762 9,563 - -------------------------------------------------------------------------------------
Assuming the above, we will make guaranteed payments of $9,563 (annually) to the owner for the life of the Annuitant or for 10 years, whichever is longer. The table below shows how calculated payments and the adjustment account may vary and affect the payment to the owner.
Adjustment Calculated Guaranteed Payment Account Year Payment Payment to Owner Balance - ---------------------------------------------- 11 $11,809 $9,563 $11,809 $0 12 11,960 9,563 11,960 0 13 12,113 9,563 12,113 0 14 12,268 9,563 12,268 0 15 12,425 9,563 12,425 0 16 12,584 9,563 12,584 0 17 12,745 9,563 12,745 0 18 12,908 9,563 12,908 0 19 13,073 9,563 13,073 0 20 13,240 9,563 13,240 0 - ----------------------------------------------
110 Tax Treatment of Guaranteed Income Advantage Monthly income payments allocated to investment options under the contract and other transfers to investment options are generally not subject to tax. However, if you have elected to have monthly income payments paid to you and subsequently direct that they be allocated to investment options under the contract, monthly income payments so allocated may continue to be subject to tax under certain circumstances. If you have elected to have monthly income payments paid to you, you should consult a tax adviser before changing that election. Monthly income payments and other distributions you receive before the Annuity Commencement Date are subject to tax as partial withdrawals. If your contract is a Non-Qualified Contract, this means that you will pay tax at ordinary income tax rates on the amount you receive to the extent that your Contract Value before the monthly income payment exceeds your "investment in the contract," i.e., generally, the total of your purchase payments under the contract reduced by any amounts you previously received from the contract that you did not include in your income. (It is important to note that the taxation of each payment is determined based on the total Contract Value and total investment in the contract, not the value in a particular segment or the purchase payments that may be considered to have been allocated to that segment.) The Code imposes a higher rate of tax on ordinary income than it does on capital gains. Monthly income payments you receive before the Annuity Commencement Date may also be subject to a penalty tax equal to 10% of the amount of such payments that are included in you gross income. Monthly income payments you receive on or after the Annuity Commencement Date will be subject to tax as income payments. A portion of each payment will be treated as nontaxable recovery of your "investment in the contract" (see above) and the remainder will be taxed at ordinary income tax rates. We will notify you annually of the taxable amount of your income payments. If income payments cease because of the death of the Annuitant(s) and before the total amount of the "investment in the contract" has been recovered, the unrecovered amount generally will be deductible. Persons intending to purchase Guaranteed Income Advantage in connection with a qualified retirement plan should obtain advice from a tax adviser. For further information on the tax treatment of partial withdrawals and income payments, see the " Tax Matters" provision below. Payment Protection Rider Options We currently offer one Payment Protection Rider Option under this prospectus: Payment Optimizer Plus. Principal Protection Advantage is not available for contracts issued on or after May 1, 2007. These Payment Protection Rider Options are discussed in separate sections below. There is an extra charge for each of the Payment Protection Rider Options. Payment Optimizer Plus Payment Optimizer Plus provides for a guaranteed income benefit that is based on the amount of purchase payments you make to your contract. Under the rider, you will receive a series of monthly income payments determined on the Annuity Commencement Date. If you meet the conditions of the rider, as discussed more fully below, the amount of your monthly income payment will have a guaranteed payment floor, and the guaranteed payment floor will not vary based on the market performance of the Subaccounts in which your assets are allocated. In addition, you will be eligible to receive at least the value of your purchase payments in monthly income or additional death proceeds, even if your Contract Value reduces to zero. The rider includes an "immediate annuitization" feature that provides you the opportunity to receive monthly income payments within the first year of the contract. Under the rider, you also may request to terminate your contract and rider at any time after the Annuity Commencement Date and receive the commuted value of your income payments, minus a commutation charge, in a lump sum, so long as the termination is after the right to cancel period under your contract. These and other features of the rider are more fully discussed below. Please note that the commutation feature in Payment Optimizer Plus may not be available in all states. Please review the features of Payment Optimizer Plus available in the contract issued in your state before making a decision to elect the rider. This rider may not be available in all states or in all markets. We reserve the right to discontinue offering the rider at any time and for any reason. If you wish to elect this rider, you must do so at the time of application. Investment Strategy In order to receive the full benefit provided by this rider, you must invest all purchase payments and allocations in accordance with a prescribed Investment Strategy. If you do not allocate all assets in accordance with a prescribed Investment Strategy, your benefit will be reduced by 50%. Even if your benefit is reduced, you will continue to pay the full amount charged for the rider. If you have elected this rider, you may not allocate assets to the Guarantee Account for as long as this rider is in effect. Investment Strategies may change from time to time. You may allocate your assets in accordance with your Investment Strategy prescribed at the time the contract was issued, or in 111 accordance with the Investment Strategy in effect at the time you reset your benefit. Therefore, you may have assets allocated to an Investment Strategy that is different than the Investment Strategy described in this prospectus. Your ability to choose different Investment Strategies is limited, as described below. For contracts issued on or after May 1, 2007 and for contract owners who reset their benefit under the rider on or after May 1, 2007, the Investment Strategy includes Designated Subaccounts and Asset Allocation Model C. Under this Investment Strategy, contract owners may allocate assets to either Asset Allocation Model C or to one or more Designated Subaccounts. Contract owners may not allocate assets to Asset Allocation Model C and one or more Designated Subaccounts. Contract owners, however, may elect to participate in the Defined Dollar Cost Averaging program, which permits the owner to systematically transfer a fixed dollar amount on a monthly basis for twelve months from the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to one of the available Investment Strategy options. The Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio is only available as part of the Defined Dollar Cost Averaging program. For more information about Asset Allocation Model C, the Subaccounts comprising Asset Allocation Model C and the Designated Subaccounts, and the Defined Dollar Cost Averaging program, please see the "Subaccounts," "Asset Allocation Program" and "Defined Dollar Cost Averaging Program" provisions of this prospectus. On a monthly basis, we will rebalance your Contract Value to the Subaccounts in accordance with the percentages that you have chosen to invest in the Designated Subaccounts or in accordance with the allocations that comprise Asset Allocation Model C. In addition, we will also rebalance your Contract Value on any Valuation Day after any transaction involving a withdrawal, receipt of a purchase payment or a transfer of Contract Value, unless you instruct us otherwise. If you are participating in the Defined Dollar Cost Averaging program, rebalancing will not affect the assets allocated to the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio. Shares of a Portfolio may become unavailable under the contract for new purchase payments, transfers, and asset rebalancing. As a result, shares of a Portfolio may also become unavailable under your Investment Strategy. Investment Strategies may be modified to respond to such events by removing unavailable Portfolios and adding new Portfolios as appropriate. Because such changes may affect your allocation instructions, you will need to provide updated allocation instructions to comply with the modified Investment Strategy. If you do not provide updated allocation instructions, any subsequent purchase payments or transfers requesting payment to an unavailable Portfolio will be considered not in good order. Periodic rebalancing to unavailable Portfolios will cease and any imbalances in percentages due to lack of asset rebalancing will not cause a reduction in your benefit. If you request a transfer or send a subsequent purchase payment with allocation instructions to a Portfolio that is not part of the prescribed Investment Strategy, we will honor your instructions. Please be aware, however, that your total Contract Value will not be invested in accordance with the prescribed Investment Strategy, and your benefit base will be reduced by 50%, resulting in a reduction in your benefit. You may elect to resume participation in the prescribed Investment Strategy at your next available reset date, as described in the "Reset of Benefit Base" provision below, provided we receive written notice of your election at our Home Office at least 15 days prior to that date. If you elect to participate in the Investment Strategy, your benefit base will be reset to your Contract Value as of that date. At that time, the charge for this rider will also be reset. The new charge, which may be higher than your previous charge, is guaranteed not to exceed an annual rate of 1.25%. The current Investment Strategy is as follows: (1) owners may allocate assets to the following Designated Subaccounts: AllianceBernstein Variable Products Series Fund, Inc. -- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B; Franklin Templeton Variable Insurance Products Trust -- Franklin Income Securities Fund -- Class 2 Shares; Franklin Templeton Variable Insurance Products Trust -- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares; GE Investments Funds, Inc. -- Total Return Fund -- Class 3 Shares; and/or MFS(R) Variable Insurance Trust -- MFS(R) Total Return Series -- Service Class Shares; OR (2) owners may allocate assets to Asset Allocation Model C. Contract owners may elect to participate in the Defined Dollar Cost Averaging program when they apply for the contract. Defined Dollar Cost Averaging permits the owner to 112 systematically transfer a fixed dollar amount on a monthly basis for twelve months from the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio to one of the available Investment Strategy options. The Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio is only available as part of the Defined Dollar Cost Averaging program. If, on the Annuity Commencement Date, you are allocating assets in accordance with the prescribed Investment Strategy and you later choose to allocate the value of Annuity Units without following the Investment Strategy, your income base will be reduced by 50% and the benefits you are eligible to receive under the rider will be reduced. However, if your benefit base was reduced due to not following the Investment Strategy and then not reset before your Annuity Commencement Date, this adjustment does not apply. On a monthly basis, we will rebalance the value of Annuity Units to the Subaccounts in accordance with the percentages that you have chosen for the Designated Subaccounts or in accordance with the allocations that comprises Asset Allocation Model C. If you are participating in the Defined Dollar Cost Averaging program, rebalancing will not affect the assets allocated to the Designated Subaccount investing in the Dreyfus Variable Investment Fund -- Money Market Portfolio. We will not reduce your benefit base or income base if you are not following the Investment Strategy due to a Portfolio liquidation or a Portfolio dissolution and the assets are transferred from the liquidated or dissolved Portfolio to another Portfolio. Benefit Base and Income Base Benefit base is used to calculate income base. Income base is used to calculate the guaranteed amount of monthly income. Income base is also used to calculate any additional death proceeds. If benefit base or income base is reduced, the benefits you are eligible for under this rider also will be reduced. The initial benefit base is equal to the sum of all purchase payments received on the Contract Date. The benefit base remains in effect until adjusted as described below. If you have allocated assets in accordance with the prescribed Investment Strategy from the later of the Contract Date and the date on which benefit base was reset, as described in the "Reset of Benefit Base" provision below, any additional purchase payments applied will be added to the benefit base as of the prior Valuation Day. Important Note. We reserve the right to exclude additional purchase payments from being applied to the benefit base. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Payment Optimizer Plus that would be associated with such additional purchase payments. For example, since your benefit base would not be increased for such subsequent purchase payments, the monthly income payments associated with such purchase payments would not have a guaranteed payment floor and such purchase payments would not increase the income base for purposes of calculating the amount of any additional death proceeds. In addition, if you make purchase payments that are not included in the calculation of your benefit base, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Payment Optimizer Plus, because it is less likely that your Contract Value will be less than the benefit base or income base, as applicable. Before making purchase payments that do not increase the benefit base, you should consider that: (i) the guaranteed payment floor, additional death proceeds, and other guarantees provided by this rider will not reflect such purchase payments; (ii) any such purchase payments make it less likely that you will receive any such benefits even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the benefit amount. If your benefit base was reduced due to not following the Investment Strategy and then not reset, any additional purchase payments applied will increase the benefit base on the prior Valuation Day by 50% of the purchase payment. We reserve the right to exclude additional purchase payments from being applied to the benefit base. All withdrawals, including any surrender charges, reduce the benefit base. The new benefit base is equal to (a) multiplied by (b) divided by (c), where: (a) is the benefit base as of the prior Valuation Day, adjusted for any additional purchase payments received; (b) is the Contract Value following the withdrawal; and (c) is the Contract Value before the withdrawal. On the Annuity Commencement Date, the income base is set equal to the benefit base. Any withdrawal that occurs on the Annuity Commencement Date will be processed before benefit base is converted to income base. Reset of Benefit Base. If all of the Annuitants are ages 50 through 85, you may choose to reset your benefit base on an annual anniversary of the Contract Date that is at least 12 months after the later of the Contract Date and the last reset date. 113 We must receive written notice of your election to reset your benefit base at our Home Office at least 15 days prior to the reset date. If you do reset your benefit base, as of that date, we will: . reset the benefit base to your Contract Value; . reset the charge for this rider. The new charge, which may be higher than your previous charge, will never exceed 1.25% annually; and . reset the Investment Strategy to the current Investment Strategy. You may not reset your benefit base after the Annuity Commencement Date. If on any contract anniversary any Annuitant is older than age 85, you may not reset your benefit base. Because the Annuity Commencement Date is determined by when you begin taking income payments, you should carefully consider when to start taking income payments if you elected Payment Optimizer Plus. The longer you wait before beginning to take income payments, the more opportunities you may have to reset the benefit base and thereby potentially increase the amount of income payments. If you delay starting to take income payments too long, however, you may limit the number of years available for you to take income payments in the future (due to life expectancy) and you may be paying for a benefit you are not using. Systematic Resets. You may elect to reset your benefit base automatically on an available contract anniversary (a "systematic reset"). If you have not previously elected to systematically reset your benefit, or if your election has terminated, we must receive written notice of your election to systematically reset your benefit at our Home Office at least 15 days prior to your next contract anniversary. A systematic reset of your benefit base will occur when your contract value is higher than the benefit base as of the available contract anniversary or, if the contract anniversary is not a Valuation Day, as of the next Valuation Day. By "available contract anniversary" we mean a contract anniversary on which you are eligible to reset your benefit, as such requirements (age and otherwise) are described herein. Systematic resets will continue until and unless: (a) the Investment Strategy is violated; (b) the owner (or owners) submits a written request to our Home Office to terminate systematic resets; (c) income payments begin via annuitization; (d) the Investment Strategy changes, allocations are affected, and we do not receive confirmation from you at our Home Office of new allocations; or (e) ownership changes. Please note that a systematic reset will occur on an available contract anniversary if contract value is even nominally higher than the benefit base (e.g., as little as $1.00 higher) and, therefore, a systematic reset may not be in your best interest because: (i) the charge for this rider may be higher than your previous charge; and (ii) the Investment Strategy will be reset to the current Investment Strategy (the Investment Strategy offered on the reset date). Please carefully consider whether it is in your best interest to elect to systematically reset your benefit base. Monthly Income. The Annuity Commencement Date under this rider may be any Valuation Day after the first Valuation Day under the Contract. Prior to the date that monthly income begins, the Annuity Commencement Date may be changed to any Valuation Day after the first Valuation Day under the Contract. On the Annuity Commencement Date, we will begin the payment process for your monthly income payments. Monthly income will be paid to you over the life of the Annuitant(s), unless you elect otherwise. Beginning on the Annuity Commencement Date, monthly income will be calculated annually as of the first Valuation Day of each annuity year. An annuity year is the one-year period beginning on the Annuity Commencement Date or on the annual anniversary of the Annuity Commencement Date. If the first day of an annuity year does not begin on a Valuation Day, the next Valuation Day will be used in calculating the monthly income for that annuity year. Monthly income will not vary during an annuity year. The amount may increase or decrease from annuity year to annuity year. How Income Payments are Calculated Guaranteed Payment Floor. The guaranteed payment floor is the guaranteed amount of each monthly income. The guaranteed payment floor is equal to (a) multiplied by (b) divided by (c), where: (a) is the income base; (b) is the guaranteed payment floor percentage for the attained age of the Annuitant for a single Annuitant contract or the attained age for younger living Annuitant for a Joint Annuitant contract on the Annuity Commencement Date (as specified in the contract); and (c) is 12. For purposes of this rider, the benefits under this rider, and the rider charge, once a contract is a Joint Annuitant contract, it will remain a Joint Annuitant contract while the contract and rider are in effect. 114 Initial Monthly Income. The initial monthly income is the greater of the level income amount and the guaranteed payment floor. The annual income amount is used to determine the level income amount. We determine the level income amount by applying the annual income amount to a 12 month, period certain, single payment immediate annuity. The initial annual income amount is equal to (a) multiplied by (b), where: (a) is the payment rate based upon the gender(s), when applicable, and settlement age(s) of the Annuitant(s) as shown in the rider, the Contract Value on the Valuation Day prior to the Annuity Commencement Date and the income base as of the Annuity Commencement Date; and (b) is the Contract Value on the Valuation Day prior to the Annuity Commencement Date less any premium tax. For purposes of this rider only, the payment rates are based on the Annuity 2000 Mortality Table, using an assumed interest rate of 4%. These annuity rates may not be as favorable as the current rates we would use to calculate payments under the "Life Income with Period Certain" annuity payment option available under this contract on the Annuity Commencement Date, and your Contract Value on the Annuity Commencement Date would be higher than under this rider because there would be no associated rider charge. Accordingly, payments under such an annuity payment option may be greater than payments under this rider. However, payments under such an annuity payment option would not have a guaranteed payment floor. In addition, you would not be guaranteed to be eligible to receive at least the value of your purchase payments in monthly income payments or additional death proceeds even if your Contract Value reduces to zero, although payments under life income with period certain annuity payment options may also provide certain death proceeds. You should carefully consider which annuity payment option is right for you. Monthly Age Adjustment: The settlement age(s) is the Annuitant(s)'s age last birthday on the date monthly income begins, minus an age adjustment from the table below. The actual age adjustment may be less than the numbers shown.
Year Payments Begin Maximum -------------------- Age After Prior To Adjustment -------------------- 2005 2011 5 2010 2026 10 2025 -- 15
On the Annuity Commencement Date, if any monthly income payment would be $100 or less, we reserve the right to reduce the frequency of payments to an interval that would result in each amount being at least $100. If the annual payment would be less than $100, we will pay the Contract Value on the Valuation Day prior to the Annuity Commencement Date and the contract will terminate on the Annuity Commencement Date. Subsequent Monthly Income. Subsequent annual income amounts are determined by means of Annuity Units. The amount of any subsequent annual income amount may be greater or less than the initial payment. We guarantee that each subsequent payment will not be affected by variations in mortality experience from the mortality assumptions on which the first payment is based. The number of Annuity Units will be determined on the Annuity Commencement Date. The number will not change unless a transfer is made. The number of Annuity Units for a Subaccount is determined by dividing the initial annual income amount attributable to that Subaccount by the Annuity Unit value for that Subaccount as of the Annuity Commencement Date. The dollar amount of each subsequent annual income amount is the sum of the payments from each Subaccount. The payment is determined by multiplying your number of Annuity Units in each Subaccount by the Annuity Unit value for that Subaccount as of the Valuation Day each annuity year starts. An adjustment account is established on the Annuity Commencement Date. The adjustment account tracks the difference between the level income amount and the guaranteed payment floor when the level income amount is less than the guaranteed payment floor. You will not receive monthly income above the guaranteed payment floor unless future performance of the underlying Subaccount(s) is sufficient to reduce the adjustment account to zero. Therefore, poor long-term performance of the underlying Subaccount(s) may result in monthly income equal to the guaranteed payment floor, even if the underlying Subaccount(s) performs well in a particular year. The value of the adjustment account on the Annuity Commencement Date will be the greater of (a) and (b), where: (a) is zero; and (b) is 12 multiplied by the guaranteed payment floor, minus 12 multiplied by the initial level income amount. Monthly income in subsequent annuity years will be calculated annually as of the first Valuation Day of each annuity year. The actual monthly income in subsequent annuity years is the greater of (a) and (b), where: (a) is the subsequent level income amount, minus any value in the adjustment account as of the date the last monthly income was paid divided by 12; and 115 (b) is the guaranteed payment floor. For monthly income in subsequent annuity years, the value of the adjustment account will be the greater of (a) and (b), where: (a) is zero; and (b) is the value of the adjustment account as of the prior annuity year, plus 12 multiplied by the actual subsequent monthly income for the current annuity year, minus 12 multiplied by the subsequent level income amount for the current annuity year. Commutation Provision After the Annuity Commencement Date, you may request to terminate your contract and this rider. If the right to cancel period as defined under the contract has ended, you will receive the commuted value of your income payments in a lump sum, calculated as described below (the "commutation value"). After this lump sum payment, income payments will end. Please note that the commutation feature in Payment Optimizer Plus may not be available in all states. Please review the features of Payment Optimizer Plus available in the contract issued in your state before making a decision to elect the rider. Commutation Value: The commutation value will be the lesser of (a) and (b) but not less than zero, where: (a) is (i) minus (ii) minus (iii), where: (i) is the income base less any premium tax; (ii) the commutation charge; and (iii) is the sum of all monthly income paid; (b) is (i) minus (ii) minus (iii) plus (iv), where: (i) is the commutation base, which is described below, less any premium tax; (ii) is the commutation charge; (iii) is the adjustment account value; and (iv) is the level income amount multiplied by the number of months remaining in the current annuity year. The amount of the commutation charge will be the surrender charge that would otherwise apply under the contract, in accordance with the surrender charge schedule. Commutation Base: On any day that is a Valuation Day, the commutation base in a Subaccount is determined by multiplying the number of commutation units in that Subaccount by the value of the commutation unit for that Subaccount. The commutation base is equal to the sum of the commutation base amounts for each Subaccount. Commutation Units: On the Valuation Day prior to the Annuity Commencement Date, the commutation units in a Subaccount will be equal to the number of Accumulation Units for that Subaccount. The number of commutation units is reduced at the beginning of each annuity year. The reduction for each Subaccount equals (a) divided by (b), where: (a) is the annual income amount for the Subaccount; and (b) is the value of the commutation unit for the Subaccount on the first Valuation Day of the annuity year. Other events that will reduce the number of commutation units of a Subaccount are as follows: (1) transfers out of the Subaccount; (2) payment of commutation proceeds; (3) payment of death proceeds; and (4) deduction of applicable contract charges. Commutation units are canceled as of the end of the Valuation Period in which we receive notice in a form acceptable to us regarding an event that reduces commutation units. Transfers: When we perform Subaccount transfers after the Annuity Commencement Date, we will redeem the commutation units from the current Subaccount and purchase commutation units from the new Subaccount. The commutation base on the date of the transfer will not be affected by the transfer. The number of commutation units added to the new Subaccount is (a) multiplied by (b), divided by (c), where: (a) is the number of commutation units transferred out of the current Subaccount; (b) is the value of a commutation unit of the current Subaccount; and (c) is the value of a commutation unit of the new Subaccount. Value of Commutation Units: The initial value of a commutation unit for each Subaccount is the initial value of the Accumulation Unit for that Subaccount. Thereafter, the value of a commutation unit at the end of every Valuation Day is the value of the commutation unit at the end of the previous Valuation Day multiplied by the net investment factor, as described in the contract. The value of a commutation unit may change from one Valuation Period to the next. 116 Note on Calculation of Commutation Value. If you elect to terminate your contract and the rider and receive the commutation value, the commutation value is based on the commuted value of your income payments in a lump sum. The amount of income payments on which the commutation value is based on either (a) income base, which is a measure of purchase payments (and Contract Value, if there is a reset) applied under the contract, and is used to calculate the guaranteed payment floor; and (b) commutation base, which is a measure of Contract Value had the contract not been "annuitized," and reflects the effect of market performance. In addition, the commutation value reflects the deduction of any applicable commutation charge. If you elect to terminate your contract after income payments have begun and receive the commutation value, you will receive the lesser of the adjusted income base and the adjusted commutation base (but not less than zero), as described in the calculation provided above. You should be aware that income base will not reflect any positive investment performance unless, on or before the Annuity Commencement Date, there was a reset of benefit base capturing such performance. As a result, the commutation value you receive will always be less than the income base (adjusted for any premium tax, commutation charge and monthly income paid) and will never reflect any of the positive investment performance experienced after a reset or after the Annuity Commencement Date. This rider is primarily designed to provide a guaranteed income payment with upside potential and, therefore, this rider may not make sense for you if you believe you may elect to terminate the contract and receive the commutation value after your contract has experienced positive investment performance. In addition, the total amount of commuted income payments you receive if you terminate the contract may be less than the total amount of income payments and additional death proceeds you would be guaranteed to receive if you did not terminate the contract. Death Provisions The following provisions apply to the rider. Special Distribution Rules When Death Occurs Before Monthly Income Starts If the designated beneficiary is a surviving spouse who elects to continue the contract as the new owner, this rider will continue. Special Distribution Rules When the Last Annuitant Dies On or After Monthly Income Starts If the last Annuitant dies after an Annuity Commencement Date, there may be additional death proceeds paid under this rider to the designated beneficiary in a lump sum. The amount of any additional death proceeds will be the greater of (a) and (b), where: (a) is (i) minus (ii), where: (i) is the income base; (ii) is the sum of all monthly income paid; and (b) is zero. When this Rider is Effective The effective date of the rider is the Contract Date. This rider may be terminated only when the contract is terminated. Change of Ownership We must approve any assignment or sale of this contract unless the assignment is made pursuant to a court order. General Provisions For purposes of this rider: . a non-natural owner must name an Annuitant and may name the Annuitant's spouse as a Joint Annuitant; . an individual owner must also be an Annuitant; . if there is only one owner, that owner may name only his or her spouse as a Joint Annuitant -- at issue; and . If you marry after issue, but prior to the Annuity Commencement Date, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to Home Office approval. 117 Examples The following examples show how Payment Optimizer Plus works based on hypothetical values. The examples are for illustrative purposes only and are not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The examples assume that an owner purchases the contract with a male Annuitant, age 65, at the time of issue. The first examples assumes that: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments or withdrawals; (3) all Contract Value is allocated to the prescribed Investment Strategy at all times; (4) the contract earns a net return of 0%; (5) the benefit base is reset on each contract anniversary; (6) the Annuity Commencement Date is the third contract anniversary; (7) the guaranteed payment floor percentage is 7%; (8) the 12 month, period certain, single payment immediate annuity rate is 0%; and (9) there is no premium tax. On the Annuity Commencement Date, the income base is set equal to the benefit base.
Additional Monthly Death Annual Level Guaranteed Proceeds Annuity Income Income Payment Monthly Adjustment (Beginning Year Amount Amount Floor Income Account of Year) --------------------------------------------------------------- 1 $6,517 $543 $583 $583 $ 483 $100,000 2 6,266 522 583 583 1,217 93,000 3 6,025 502 583 583 2,191 86,000 4 5,794 483 583 583 3,398 79,000 5 5,571 464 583 583 4,827 72,000 ---------------------------------------------------------------
The annual income amount for annuity year 1 is determined by multiplying the Contract Value by a payment rate (in this example, $100,000 x .06517 = $6,517). The level income amount is determined by dividing the annual income amount by 12. In this example, for annuity year 1, the level income amount is $543 ($6,517 / 12). The guaranteed payment floor is determined by multiplying the income base by the guaranteed payment floor percentage and dividing that product by 12 (in this example, ($100,000 x .07) / 12 = $583). Monthly income is the greater of the guaranteed payment floor and the level income amount, which, for annuity year 1, is the greater of $583 and $543. The additional death proceeds equal to the income base minus the sum of all monthly income paid. 118 This next examples assumes that: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments or withdrawals; (3) all Contract Value is allocated to the prescribed Investment Strategy at all times; (4) the contract earns a net return of 8%; (5) the benefit base is reset on the first contract anniversary; (6) the Contract Value at the end of the first contract year is $108,000; (7) the Annuity Commencement Date is the first contract anniversary; (8) the guaranteed payment floor percentage is 7%; and (9) there is no premium tax.
Income Base, Less Commutation Charge, Less Annual Monthly Commutation Adjustment Monthly Income Commutation Annuity Income Income Base - Account - Paid - End of Value - Year Amount Paid End of Year End of Year Year End of Year ---------------------------------------------------------------------------- 1 $6,806 $7,560 $109,289 $ 754 $94,440 $94,440 2 7,068 7,560 110,399 1,246 86,880 86,880 3 7,340 7,560 111,304 1,466 79,320 79,320 4 7,622 7,560 111,977 1,404 72,760 72,760 5 7,915 7,560 112,386 1,049 66,200 66,200 6 8,220 7,560 112,500 389 62,640 62,640 ----------------------------------------------------------------------------
The commutation base at the end of annuity year 1 (contract year 2) is determined by multiplying the Contract Value at the end of the first contract year less the annual income amount for annuity year 1 by 1.08 (($108,000 - $6,806) x 1.08 = $109,289). The commutation value at the end of annuity year 1 is equal to the lesser of (i) the income base, less the commutation charge, less monthly income paid ($108,000 - 6% x $100,000 - $7,560 = $94,440) and (ii) the commutation base less the commutation charge, less the value of the adjustment account ($109,289 - 6% x $100,000 - $754 = $102,535). The commutation base at the end of annuity year 2 (contract year 3) is determined by multiplying the commutation base at the end of annuity year 1 less the annual income amount for annuity year 2 by 1.08 (($109,289 - $7,068) x 1.08 = $110,399). Beginning in annuity year 6 (contract year 7), the contract has no surrender charge and, therefore, the commutation value is not reduced by a commutation charge. The commutation value at the end of annuity year 6 is $62,640, which is equal to the lesser of (i) the income base less monthly income paid ($108,000 - $45,360 = $62,640) and (ii) the commutation base less the value of the adjustment account ($112,500 - $389 = $112,111). 119 Principal Protection Advantage Principal Protection Advantage provides for a guaranteed income benefit that is based on the amount of purchase payments you make to your contract. Under the rider, you will receive a series of monthly income payments (a "Payment Protection Plan") determined on the date you elect to take such payments (the "Income Start Date"). If you meet the conditions of the rider, as discussed more fully below, the amount of your monthly income payment, for each Payment Protection Plan, will have a guaranteed payment floor, and the guaranteed payment floor will not vary based on the market performance of the Subaccounts in which your assets are allocated. In addition, you will be eligible to receive at least the value of your purchase payments in monthly income or additional death proceeds, even if your Contract Value reduces to zero. Principal Protection Advantage is not available for contracts issued on or after May 1, 2007. Investment Strategy In order to receive the full benefit provided by this rider, you must invest all purchase payments and allocations in accordance with a prescribed Investment Strategy. If you do not allocate all assets in accordance with a prescribed Investment Strategy, your benefit will be reduced by 50%. Even if your benefit is reduced, you will continue to pay the full amount charged for the rider. Investment Strategies may change from time to time. You may allocate your assets in accordance with your Investment Strategy prescribed at the time the contract was issued, or in accordance with the Investment Strategy in effect at the time you reset your benefit. Therefore, you may have assets allocated to an Investment Strategy that is different than the Investment Strategy described in this prospectus. In addition, if you are taking income payments and still have Contract Value in the contract, you may have assets allocated to different Investment Strategies. Your ability to choose different Investment Strategies is limited, as described below. For contracts issued on or after May 1, 2007 and for contract owners who reset their benefit under the rider on or after May 1, 2007, the Investment Strategy includes Designated Subaccounts and Asset Allocation Model C. Under this Investment Strategy, contract owners may allocate assets to either Asset Allocation Model C or to one or more Designated Subaccounts. Contract owners may not allocate assets to Asset Allocation Model C and one or more Designated Subaccounts. For more information about Asset Allocation Model C and the Subaccounts comprising Asset Allocation Model C and the Designated Subaccounts, please see the "Subaccounts" and "Asset Allocation Program" provisions of this prospectus. On a monthly basis, we will rebalance your Contract Value to the Subaccounts in accordance with the percentages that you have chosen to invest in the Designated Subaccounts or in accordance with the allocations that comprise Asset Allocation Model C. In addition, we will also rebalance your Contract Value on any Valuation Day after any transaction involving a withdrawal, receipt of a purchase payment or a transfer of Contract Value, unless you instruct us otherwise. Shares of a Portfolio may become unavailable under the contract for new purchase payments, transfers, and asset rebalancing. As a result, shares of a Portfolio may also become unavailable under your Investment Strategy. Investment Strategies may be modified to respond to such events by removing unavailable Portfolios and adding new Portfolios as appropriate. Because such changes may affect your allocation instructions, you will need to provide updated allocation instructions to comply with the modified Investment Strategy. If you do not provide updated allocation instructions, any subsequent purchase payments or transfers requesting payment to an unavailable Portfolio will be considered not in good order. Periodic rebalancing to unavailable Portfolios will cease and any imbalances in percentages due to lack of asset rebalancing will not cause a reduction in your benefit. If you request a transfer or send a subsequent purchase payment with allocation instructions to a Portfolio that is not part of the prescribed Investment Strategy, we will honor your instructions. Please be aware, however, that your total Contract Value will not be invested in accordance with the prescribed Investment Strategy, and your benefit base will be reduced by 50%, resulting in a reduction in your benefit. At least 15 days prior to your next contract anniversary, you may elect to reset your benefit base, as described in the "Reset of Benefit Base" provision below, and to resume participation in the prescribed Investment Strategy available that time, provided we receive written notice of your election at our Home Office. If you elect to participate in the Investment Strategy, your benefit base will be reset to your Contract Value as of that contract anniversary. At that time, the charge for this rider will also be reset. The new charge, which may be higher than your previous charge, is guaranteed not to exceed an annual rate of 1.00%. The current Investment Strategy is as follows: (1) owners may allocate assets to the following Designated Subaccounts: AllianceBernstein Variable Products Series Fund, Inc. -- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B; 120 Franklin Templeton Variable Insurance Products Trust -- Franklin Income Securities Fund -- Class 2 Shares; Franklin Templeton Variable Insurance Products Trust -- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares; GE Investments Funds, Inc. -- Total Return Fund -- Class 3 Shares; and/or MFS(R) Variable Insurance Trust -- MFS(R) Total Return Series -- Service Class Shares; OR (2) owners may allocate assets to Asset Allocation Model C. If, on the Income Start Date, you are allocating assets in accordance with the prescribed Investment Strategy and you later choose to allocate the value of Annuity Units without following the Investment Strategy, your income base will be reduced by 50% and the benefits you are eligible to receive under the rider will be reduced. However, if your benefit base was reduced due to not following the Investment Strategy and then not reset before your Income Start Date, this adjustment does not apply. On a monthly basis, we will rebalance the value of Annuity Units to the Subaccounts in accordance with the percentages that you have chosen for the Designated Subaccounts or in accordance with the allocations that comprises Asset Allocation Model C. Benefit Base and Income Base Benefit base is used to calculate income base. Income base is used to calculate the guaranteed amount of monthly income for a Payment Protection Plan. Income base is also used to calculate any additional death proceeds. If benefit base or income base is reduced, the benefits you are eligible for under this rider also will be reduced. The initial benefit base is equal to the sum of all purchase payments received on the Contract Date. The benefit base remains in effect until adjusted as described below. If you have allocated assets in accordance with the prescribed Investment Strategy from the later of the Contract Date and the date on which benefit base was reset as described in the "Reset of Benefit Base" provision below, any additional purchase payments applied will be added to the benefit base on the prior Valuation Day. Important Note. We reserve the right to exclude additional purchase payments from being applied to the benefit base. As a result, it is possible that you would not be able to make subsequent purchase payments after the initial purchase payment to take advantage of the benefits provided by Principal Protection Advantage that would be associated with such additional purchase payments. For example, since your benefit base would not be increased for such subsequent purchase payments, the monthly income payments associated with such purchase payments would not have a guaranteed payment floor and such purchase payments would not increase the income base for purposes of calculating the amount of any additional death proceeds. In addition, if you make purchase payments that are not included in the calculation of your benefit base, you will pay a higher rider charge to the extent that the purchase payments increase the Contract Value upon which the charge is imposed. Also, to the extent your Contract Value is increased by such purchase payments, you are less likely to realize any benefit under Principal Protection Advantage, because it is less likely that your Contract Value will be less than the benefit base or income base, as applicable. Before making purchase payments that do not increase the benefit base, you should consider that: (i) the guaranteed payment floor, additional death proceeds, and other guarantees provided by this rider will not reflect such purchase payments; (ii) any such purchase payments make it less likely that you will receive any such benefits even if your Contract Value has declined; and (iii) this rider may not make sense for you if you intend to make purchase payments that will not increase the benefit amount. If your benefit base was reduced due to not following the Investment Strategy and then not reset on your next contract anniversary, any additional purchase payments applied will be reduced by 50%, and then will be added to the benefit base on the prior Valuation Day. We reserve the right to exclude additional purchase payments from being applied to the benefit base. All withdrawals, including any surrender charges and any premium tax assessed, reduce the benefit base. The new benefit base is equal to (a) multiplied by (b) divided by (c), where: (a) is the benefit base on the prior Valuation Day, adjusted for any additional purchase payments received; (b) is the Contract Value following the withdrawal; and (c) is the Contract Value before the withdrawal. On the Income Start Date, benefit base is converted to income base. Any withdrawal that occurs on the Income Start Date will be processed before benefit base is converted to income base. If 121 the portion of Contract Value applied to a Payment Protection Plan to provide for monthly income (the "Income Start Value") is equal to the total Contract Value, 100% of the benefit base is converted into income base. Otherwise only a portion of the benefit base is converted to income base. The new benefit base is equal to (a) multiplied by (b) divided by (c), where: (a) is the benefit base on the prior Valuation Day, adjusted for any partial withdrawals; (b) is the Contract Value following the conversion; and (c) is the Contract Value before the conversion. The income base allocated to each Payment Protection Plan is equal to (a) multiplied by (b) divided by (c), where: (a) is the benefit base on the prior Valuation Day, adjusted for partial withdrawals; (b) is the Income Start Value; and (c) is the Contract Value before the conversion of benefit base to income base. Reset of Benefit Base. You may choose to reset your benefit base on any contract anniversary. If you do, as of that date (or if that date occurs on a day that is not a Valuation Day, on the next Valuation Day), we will: . reset the benefit base to your Contract Value; . reset the charge for this rider (the new charge, which may be higher than your previous charge, is guaranteed never to exceed an annual rate of 1.00%); and . reset the Investment Strategy to the current Investment Strategy. You must wait at least 36 months after the last of any reset of your benefit base before you may begin your monthly income. If on any contract anniversary any Annuitant is older than age 85, you may not reset your benefit base. You should carefully consider when to start taking income payments under a Payment Protection Plan if you elected Principal Protection Advantage. The longer you wait before beginning to take income payments, the more opportunities you may have to reset the benefit base and thereby potentially increase the amount of income payments. If you delay starting to take income payments too long, however, you may limit the number of years available for you to take income payments in the future (due to life expectancy) and you may be paying for a benefit you are not using. Monthly Income On the Income Start Date, we will begin making monthly income payments. The Income Start Date must be a contract anniversary and must occur at least 36 months after the latest of the Contract Date, the last reset of benefit base, or the date the last purchase payment is received. The Income Start Value will then be applied to a Payment Protection Plan. Beginning on the Income Start Date, monthly income will be calculated annually as of the first Valuation Day of each annuity year. An annuity year is the one-year period beginning on the Income Start Date or on the annual anniversary of the Income Start Date. If the first day of an annuity year does not begin on a Valuation Day, the next Valuation Day will be used in calculating the monthly income for that annuity year. Monthly income will not vary during an annuity year. The amount may increase or decrease from annuity year to annuity year. Monthly income will be paid to you over the life of the Annuitant unless you elect otherwise. If you are receiving monthly income, your contract will be deemed to have reached its Annuity Commencement Date on the day your Contract Value equals zero. If Contract Value is greater than zero, you may elect to transfer monthly income within the contract on a pro rata basis to the investment options in which Contract Value is then allocated. If you have elected to transfer monthly income within the contract and Contract Value falls to zero, the transfers of monthly income will end and monthly income will be paid to you. In that event, your contract will be deemed to have reached its Annuity Commencement Date on the day your Contract Value equaled zero. How Income Payments are Calculated Initial Income Payment. The initial annual income amount for each Payment Protection Plan is equal to (a) multiplied by (b), where: (a) is the payment rate based upon the gender(s) and settlement age(s) of the Annuitant(s) as shown in the rider, the Income Start Value and the income base as of the Income Start Date; and (b) is the Income Start Value less any premium tax. For purposes of this rider only, the payment rates are based on the Annuity 2000 Mortality Table, using an assumed interest rate of 3%. These annuity rates may not be as favorable as the current rates we would use to calculate payments under the "Life Income with Period Certain" annuity payment option available under this contract on the Income Start Date, and your Contract Value on the Income Start Date would be higher than under this rider because there would be no associated rider charge. Accordingly, payments under such an annuity payment option may be greater than payments under this rider. However, payments under such an annuity payment option would not have a guaranteed payment floor. In addition, you would not be guaranteed to be eligible to receive such at least the value of 122 your purchase payments in monthly income payments or additional death proceeds even if your Contract Value reduces to zero, although payments under life income with period certain annuity payment options may also provide certain death proceeds. You should carefully consider which annuity payment option is right for you. The initial monthly income is the greater of the level income amount and the guaranteed payment floor. We determine the level income amount by applying the annual income amount to a 12 month, period certain, single payment immediate annuity. The guaranteed payment floor is the guaranteed amount of each monthly income for a Payment Protection Plan. The guaranteed payment floor is equal to (a) multiplied by (b) divided by (c), where: (a) is the income base; (b) is the guaranteed payment floor percentage for the attained age of the single Annuitant or the younger of the Joint Annuitants on the Income Start Date; and (c) is 12. Subsequent Income Payments. The subsequent annual income amounts under the applicable Payment Protection Plan are determined by means of Annuity Units. The amount of any subsequent annual income amount may be greater or less than the initial payment. We guarantee that each subsequent payment will not be affected by variations in mortality experience from the mortality assumptions on which the first payment is based. The number of Annuity Units is determined by dividing the portion of the initial annual income amount attributable to that Subaccount by the Annuity Unit value for that Subaccount as of the Income Start Date. The dollar amount of each subsequent annual income amount is the sum of the payments from each Subaccount. The payment is determined by multiplying your number of Annuity Units in each Subaccount by the Annuity Unit value for that Subaccount as of the Valuation Day each annuity year starts. An adjustment account is established on the Income Start Date. The adjustment account tracks the difference between the level income amount and the guaranteed payment floor when the level income amount is less than the guaranteed payment floor. You will not receive monthly income above the guaranteed payment floor unless future performance of the underlying Subaccount(s) is sufficient to reduce the adjustment account to zero. Therefore, poor long-term performance of the underlying Subaccount(s) may result in monthly income equal to the guaranteed payment floor, even if the underlying Subaccount(s) performs well in a particular year. The value of the adjustment account will be the greater of (a) and (b), where: (a) is zero; and (b) is 12 times the guaranteed payment floor, minus 12 times the initial level income amount. The actual monthly income in subsequent annuity years is the greater of (a) and (b), where: (a) is the subsequent level income amount, minus any value in the adjustment account as of the date the last monthly income was made divided by 12; and (b) is the guaranteed payment floor. For monthly income in subsequent annuity years, the value of the adjustment account will be the greater of (a) and (b), where: (a) is zero; and (b) is the value of the adjustment account as of the date that the last monthly income was made, plus 12 multiplied by the actual subsequent monthly income, minus 12 multiplied by the subsequent level income amount. On the Income Start Date, if any monthly income would be $100 or less, we reserve the right to reduce the frequency of payments to an interval that would result in each amount being at least $100. If the annual amount is less than $100, we will pay you annually. Death Provisions The following provisions apply to the rider. Special Distribution Rules When an Owner Dies Before Monthly Income Starts. Spousal Continuation -- If the designated beneficiary is a surviving spouse who elects to continue the contract as the new owner and Annuitant, this rider will continue at the current benefit base, rider charge and Investment Strategy. Regardless of whether monthly income had started, the preceding sentence will apply if Contract Value remains at the owner's death. On the next rider anniversary, the spouse may elect to reset the benefit base as described in the "Reset of Benefit Base" section above. If the designated beneficiary is a surviving spouse who does not elect to continue the contract as the new owner or is a non-spouse, this rider will terminate and proceeds under the contract must be distributed within five years of death. Special Distribution Rules When the Last Annuitant Dies On or After Monthly Income Starts. On the Income Start Date, the death benefit is adjusted. The new death benefit is (a) multiplied by (b) divided by (c), where: (a) is the death benefit prior to the conversion of benefit base to income base; (b) is the Contract Value after the conversion; and 123 (c) is the Contract Value before the conversion. If the last surviving Annuitant dies after an Income Start Date, there may be additional death proceeds paid under this rider to the designated beneficiary in a lump sum. Under each Payment Protection Plan, the amount of any additional death proceeds will be the greater of (a) and (b), where: (a) is (i) minus (ii), where: (i) is the income base less any premium tax; (ii) is the sum of all monthly income paid; and (b) is zero. When this Rider is Effective The effective date of the rider is the Contract Date. This rider may not be terminated. Ownership and Change of Ownership We must approve any assignment or sale of this contract unless the assignment is made pursuant to a court order. If you marry after issue, you may add your spouse as a joint owner and Joint Annuitant or as a Joint Annuitant only, subject to Home Office approval. For purposes of this rider: . a non-natural owner must name an Annuitant and may name a Joint Annuitant; . a natural individual owner must also be an Annuitant; and . if there is only one natural owner, that owner may name his or her spouse as a Joint Annuitant. 124 Example The following example shows how Principal Protection Advantage works based on hypothetical values. The example is for illustrative purposes only and is not intended to depict investment performance of the contract and, therefore, should not be relied upon in making a decision to invest in the rider or contract. The example assumes that an owner purchases the contract with a male Annuitant, age 65, at the time of issue. In addition, the example assumes that: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments or withdrawals; (3) all Contract Value is allocated to the prescribed Investment Strategy at all times; (4) the contract earns a net return of 0%; (5) the Income Start Date is the third contract anniversary; (6) the guaranteed payment floor percentage is 5%; and (7) the 12 month, period certain, single payment immediate annuity rate is 0%. On the Income Start Date, Contract Value of $100,000 is converted to Income Start Value and benefit base of $100,000 is converted to income base.
Additional Monthly Death Annual Level Guaranteed Proceeds Annuity Income Income Payment Monthly Adjustment (Beginning Year Amount Amount Floor Income Account of Year) --------------------------------------------------------------- 1 $6,373 $531 $417 $531 $0 $100,000 2 6,188 516 417 516 0 93,627 3 6,008 501 417 501 0 87,439 4 5,833 486 417 486 0 81,431 5 5,663 472 417 472 0 75,599 ---------------------------------------------------------------
The annual income amount for annuity year 1 is determined by multiplying the Income Start Value by a payment rate (in this example, $100,000 x .06373 = $6,373). The monthly level income amount is determined by dividing the annual income amount by 12. In this example, for annuity year 1, the monthly level income amount is $531 ($6,373 /12). The guaranteed payment floor is determined by multiplying the income base by the guaranteed payment floor percentage and dividing that product by 12 (in this example ($100,000 x .05) /12 = $417). Monthly income is the greater of the guaranteed payment floor and the monthly level income amount, which, for annuity year 1, is the greater of $417 and $531. The additional death benefit is the income base minus the sum of all monthly income paid. 125 Tax Treatment of Principal Protection Advantage Monthly income payments allocated to investment options under the contract and other transfers to investment options are generally not subject to tax. However, if monthly payments are to be paid to you and you subsequently direct that they be allocated to investment options under the contract, monthly income payments so allocated may continue to be subject to tax under certain circumstances. If monthly income payments are to be paid to you, you should consult a tax adviser before electing to have monthly income allocated to investment options under the contract. Monthly income payments and other distributions you receive before the Annuity Commencement Date are subject to tax as partial withdrawals. If your contract is a Non-Qualified Contract, this means that you will pay tax at ordinary income tax rates on the amount you receive to the extent that your Contract Value before the monthly income payment exceeds your "investment in the contract," i.e., generally, the total of your purchase payments under the contract reduced by any amounts you previously received from the contract that you did not include in your income. (It is important to note that the taxation of each payment is determined based on the total Contract Value and total investment in the contract, not the value in a particular Payment Protection Plan or the purchase payments that may be considered to have been allocated to that Payment Protection Plan.) The Code imposes a higher rate of tax on ordinary income than it does on capital gains. Monthly income payments you receive before the Annuity Commencement Date may also be subject to a penalty tax equal to 10% of the amount of such payments that are included in your gross income. Monthly income payments you receive on or after the Annuity Commencement Date will be subject to tax as income payments. A portion of each payment will be treated as nontaxable recovery of your "investment in the contract" (see above) and the remainder will be taxed at ordinary income tax rates. We will notify you annually of the taxable amount of your income payments. Once you have recovered the total amount of your "investment in the contract," you will pay tax on the full amount of your income payments. If income payments cease because of the death of the Annuitant(s) and before the total amount of the "investment in the contract" has been recovered, the unrecovered amount generally will be deductible. Persons intending to purchase Principal Protection Advantage in connection with a qualified retirement plan should obtain advice from a tax adviser. For further information on the tax treatment of partial withdrawals and income payments, see the "Tax Matters" provision of this prospectus. TAX MATTERS Introduction This part of the prospectus discusses the Federal income tax treatment of the contract. The Federal income tax treatment of the contract is complex and sometimes uncertain. The Federal income tax rules may vary with your particular circumstances. This discussion does not address all of the Federal income tax rules that may affect you and your contract. This discussion also does not address other Federal tax consequences, or state or local tax consequences, associated with a contract. As a result, you should always consult a tax adviser about the application of tax rules to your individual situation. Taxation of Non-Qualified Contracts This part of the discussion describes some of the Federal income tax rules applicable to Non-Qualified Contracts. A Non-Qualified Contract is a contract not issued in connection with a qualified retirement plan receiving special tax treatment under the Code, such as an individual retirement annuity or a Section 401(k) plan. Tax deferral on earnings. The Federal income tax law generally does not tax any increase in an owner's Contract Value until there is a distribution from the contract. However, certain requirements must be satisfied in order for this general rule to apply, including: . an individual must own the contract (or the tax law must treat the contract as owned by an individual); . the investments of the Separate Account must be "adequately diversified" in accordance with Internal Revenue Service ("IRS") regulations; . the owner's right to choose particular investments for a contract must be limited; and . the contract's Annuity Commencement Date must not occur near the end of the Annuitant's life expectancy. Contracts not owned by an individual -- no tax deferral and loss of interest deduction. As a general rule, the Code does not treat a contract that is owned by an entity (rather than an individual) as an annuity contract for Federal income tax purposes. The entity owning the contract pays tax each year on the annual increase in Contract Value. Contracts issued to a corporation or a trust are examples of contracts where the owner is currently taxed on the contract's earnings. There are several exceptions to this rule. For example, the Code treats a contract as owned by an individual if the nominal owner 126 is a trust or other entity that holds the contract as an agent for an individual. However, this exception does not apply in the case of any employer that owns a contract to provide non-qualified deferred compensation for its employees. In the case of a contract issued after June 8, 1997 to a taxpayer that is not an individual, or a contract held for the benefit of an entity, the entity will lose its deduction for a portion of its otherwise deductible interest expenses. This disallowance does not apply if the nonnatural owner pays tax on the annual increase in the Contract Value. Entities that are considering purchasing the contract, or entities that will benefit from someone else's ownership of a contract, should consult a tax adviser. Investments in the Separate Account must be diversified. For a contract to be treated as an annuity contract for Federal income tax purposes, the investments of the Separate Account must be "adequately diversified." The IRS has issued regulations that prescribe standards for determining whether the investments of the Separate Account, including the assets of each Portfolio in which the Separate Account invests, are adequately diversified. If the Separate Account fails to comply with these diversification standards, the owner could be required to pay tax for the year of such failure and each subsequent year on the untaxed income accumulated in the contract. Although we do not control the investments of all of the Funds, we expect that the Funds will comply with the IRS regulations so that the Separate Account will be considered "adequately diversified." Restrictions on the extent to which an owner can direct the investment of assets. In some circumstances, owners of variable contracts who possess excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets and may be subject to tax on income produced by those assets. Although published guidance in this area does not address certain aspects of the contract, we believe that the owner of a contract should not be treated as the owner of the Separate Account assets. We reserve the right to modify the contract to bring it into conformity with applicable standards should such modifications be necessary to prevent an owner of the contract from being treated as the owner of the underlying Separate Account assets. However, there is no assurance such efforts would be successful. Age at which income payments must begin. Federal income tax rules do not expressly identify a particular age by which income payments must begin. However, those rules do require that an annuity contract provide for amortization, through income payments of the contract's purchase payments and earnings. If income payments begin or are scheduled to begin at a date that the IRS determines does not satisfy these rules, interest and gains under the contract could be taxable each year as they accrue. No guarantees regarding tax treatment. We make no guarantees regarding the tax treatment of any contract or of any transaction involving a contract. However, the remainder of this discussion assumes that your contract will be treated as an annuity contract for Federal income tax purposes and that the tax law will not impose tax on any increase in your Contract Value until there is a distribution from your contract. Partial withdrawals and surrenders. A partial withdrawal occurs when you receive less than the total amount of the contract's Surrender Value. In the case of a partial withdrawal, you will pay tax on the amount you receive to the extent your Contract Value before the partial withdrawal exceeds your "investment in the contract." (This term is explained below.) This income (and all other income from your contract) is ordinary income. The Code imposes a higher rate of tax on ordinary income than it does on capital gains. A surrender occurs when you receive the total amount of the contract's Surrender Value. In the case of a surrender, you will pay tax on the amount you receive to the extent it exceeds your "investment in the contract." Your "investment in the contract" generally equals the total of your purchase payments under the contract, reduced by any amounts you previously received from the contract that you did not include in your income. Your contract imposes charges relating to the death benefit, including any death benefit provided under an optional rider. It is possible that all or a portion of these charges could be treated as withdrawals from the contract. In the case of Systematic Withdrawals, the amount of each Systematic Withdrawal should be considered a distribution and taxed in the same manner as a partial withdrawal from the contract. Any withdrawals taken pursuant to one of the Guaranteed Minimum Withdrawal Benefit Rider Options are subject to tax as partial withdrawals. Any monthly income payments and other distributions received before the Annuity Commencement Date pursuant to Guaranteed Income Advantage or Principal Protection Advantage are also subject to tax as partial withdrawals. Assignments and pledges. The Code treats any assignment or pledge of (or agreement to assign or pledge) any portion of your Contract Value as a withdrawal of such amount or portion. 127 Gifting a contract. If you transfer ownership of your contract -- without receiving full and adequate consideration -- to a person other than your spouse (or to your former spouse incident to divorce), you will pay tax on your Contract Value to the extent it exceeds your "investment in the contract." In such a case, the new owner's "investment in the contract" will be increased to reflect the amount included in your income. Taxation of income payments. The Code imposes tax on a portion of each income payment (at ordinary income tax rates) and treats a portion as a nontaxable return of your "investment in the contract." Withdrawals taken pursuant to one of the Guaranteed Minimum Withdrawal Benefit Rider Options and any monthly income payments and other distributions received before the Annuity Commencement Date pursuant to Guaranteed Income Advantage or Principal Protection Advantage are generally not taxed as income payments for federal income tax purposes. As discussed above, these payments should be considered distributions and taxed in the same manner as a partial withdrawal from the contract. We will notify you annually of the taxable amount of your income payment. Pursuant to the Code, you will pay tax on the full amount of your income payments once you have recovered the total amount of the "investment in the contract." If income payments cease because of the death of the Annuitant(s) and before the total amount of the "investment in the contract" has been recovered, the unrecovered amount generally will be deductible. If proceeds are left with us (Optional Payment Plan 4), they are taxed in the same manner as a surrender. The owner must pay tax currently on the interest credited on these proceeds. This treatment could also apply to Optional Payment Plan 3 depending on the relationship of the amount of the periodic payments to the period over which they are paid. Taxation of Cross Funded Annuity Contracts. You may authorize partial withdrawals from this annuity to be applied to satisfy the scheduled installments into the Scheduled Purchase Payment Variable Deferred Annuity. In that event, based on a Private Letter Ruling issued by the IRS on July 30, 2002 (PLR 200243047), we believe that the tax treatment set forth below will apply to Non-Qualified Contracts and we will report relevant transactions to the IRS on the basis that: (1) this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity will be aggregated and treated as a single annuity contract for tax purposes; (2) amounts transferred from this Funding Annuity to the Scheduled Purchase Payment Variable Deferred Annuity will not be treated as a taxable distribution, but instead as a non-taxable transfer of assets within a single variable deferred annuity contract; (3) if amounts are distributed from either this Funding Annuity or the Scheduled Purchase Payment Variable Deferred Annuity before the Annuity Commencement Date, such amounts will be taxed to the extent there is any aggregate gain in this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity; and (4) distributions from this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity beginning on the Annuity Commencement Date will be aggregated and taxed on a pro rata basis. A portion of each aggregate distribution on or after the Annuity Commencement Date will be treated as a non-taxable return of the aggregate investment in this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity and the remaining portion of such aggregate distribution will be treated as taxable, until all such aggregate investment in this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity has been recovered. After that, all distributions from this Funding Annuity and the Scheduled Purchase Payment Variable Deferred Annuity will be fully taxable. For Non-Qualified Contracts, if the Annuity Commencement Date of this Funding Annuity is changed so that this annuity and the Scheduled Purchase Payment Variable Deferred Annuity have different Annuity Commencement Dates, the resulting tax consequences will be uncertain and possibly less favorable than those set forth above. Except as otherwise required by law, transfers of assets between contracts with different Annuity Commencement Dates and different withdrawals of assets from such contracts will be treated as taxable withdrawals, with gain determined on an aggregate basis in accordance with Section 72(e)(11). Taxation of the death benefit. We may distribute amounts from your contract because of the death of an owner, a joint owner, or an Annuitant. The tax treatment of these amounts depends on whether the owner, joint owner, or Annuitant (or Joint Annuitant, if applicable) dies before or after the Annuity Commencement Date. Taxation of Death Benefit if Paid Before the Annuity Commencement Date: . The death benefit is taxed in the same manner as an income payment if received under an Optional Payment Plan. 128 . If not received under an Optional Payment Plan, the death benefit is taxed in the same manner as a surrender or a partial withdrawal, depending on the manner in which the death benefit is paid. Taxation of Death Benefit if Paid After the Annuity Commencement Date: . The death benefit is includible in income to the extent that it exceeds the unrecovered "investment in the contract." Penalty taxes payable on partial withdrawals, surrenders, or income payments. The Code may impose a penalty tax equal to 10% of the amount of any payment from your contract that is included in your gross income. The Code does not impose the 10% penalty tax if one of several exceptions applies. These exceptions include partial withdrawals and total surrenders or income payments that: . you receive on or after you reach age 59 1/2; . you receive because you became disabled (as defined in the tax law); . are received on or after the death of an owner; or . you receive as a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the taxpayer. It is uncertain whether Systematic Withdrawals will qualify for this last exception. If they do, any modification of the Systematic Withdrawals, including additional withdrawals apart from the Systematic Withdrawals, could result in certain adverse tax consequences. In addition, transfers among the Subaccounts may result in payments not qualifying for this exception. Special rules if you own more than one contract. In certain circumstances, you may have to combine some or all of the Non-Qualified Contracts you own in order to determine the amount of an income payment, a surrender, or a partial withdrawal that you must include in income. For example: . if you purchase a contract offered by this prospectus and also purchase at approximately the same time an immediate annuity, the IRS may treat the two contracts as one contract; . if you purchase two or more deferred annuity contracts from the same life insurance company (or its affiliates) during any calendar year, the Code treats all such contracts as one contract for certain purposes. The effects of such aggregation are not clear. However, it could affect: . the amount of a surrender, a partial withdrawal or an income payment that you must include in income; and . the amount that might be subject to the penalty tax. Section 1035 Exchanges Under Section 1035 of the Code, the exchange of one annuity contract for another annuity contract generally is not taxed (unless cash is distributed). To qualify as a nontaxable exchange however, certain conditions must be satisfied, e.g., the obligee(s) under the new annuity contract must be the same obligee(s) as under the original contract. Upon the death of a non-spousal joint owner, the contract provides the surviving joint owner with the option of using the proceeds of this contract to purchase a separate annuity contract with terms and values that are substantially similar to those of this contract. Exercise of this option will not qualify as a tax-free exchange under Section 1035. Qualified Retirement Plans We also designed the contracts for use in connection with certain types of retirement plans that receive favorable treatment under the Code. Contracts issued to or in connection with retirement plans that receive special tax treatment are called "Qualified Contracts." We may not offer all of the types of Qualified Contracts described herein in the future. Prospective purchasers should contact our Home Office for information on the availability of Qualified Contracts at any given time. The Federal income tax rules applicable to qualified retirement plans are complex and varied. As a result, this prospectus makes no attempt to provide more than general information about use of the contract with the various types of qualified retirement plans. Persons intending to use the contract in connection with a qualified retirement plan should obtain advice from a tax adviser. The contract includes attributes such as tax deferral on accumulated earnings. Qualified retirement plans provide their own tax deferral benefit. The purchase of this contract as an investment of a qualified retirement plan does not provide additional tax deferral benefits beyond those provided in the qualified retirement plan. If you are purchasing this contract as a Qualified Contract, you should consider purchasing this contract for its death benefits, income benefits and other non-tax benefits. Please consult a tax adviser for information specific to 129 your circumstances in order to determine whether this contract is an appropriate investment for you. Types of Qualified Contracts. The types of Qualified Contracts currently being offered include: . Traditional Individual Retirement Annuities (IRAs) permit individuals to make annual contributions of up to the lesser of a specified dollar amount for the year or the amount of compensation includible in the individual's gross income for the year. Certain employers may establish Simplified Employee Pensions (SEPs), which have higher contribution limits, on behalf of their employees. The Internal Revenue Service has not reviewed the contract for qualification as an IRA, and has not addressed in a ruling of general applicability whether death benefits such as those in the contract comport with IRA qualification requirements. . Roth IRAs permit certain eligible individuals to make non-deductible contributions to a Roth IRA. Distributions from a Roth IRA generally are not taxed, except that, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% IRS penalty tax may apply to distributions made: (1) before age 59 1/2 (subject to certain exceptions); or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA. A 10% IRS penalty tax may apply to amounts attributable to a conversion from an IRA if they are distributed during the five taxable years beginning with the year in which the conversion was made. . Corporate pension and profit-sharing plans under Section 401(a) of the Code allow corporate employers to establish various types of retirement plans for employees, and self-employed individuals to establish qualified plans ("H.R. 10 or Keough plans") for themselves and their employees. . 403(b) Plans allow employees of certain tax-exempt organizations and public schools to exclude from their gross income the purchase payments made, within certain limits, to a contract that will provide an annuity for the employee's retirement. Distributions of (1) salary reduction contributions made in years beginning after December 31, 1998; (2) earnings on those contributions; and (3) earnings on amounts held as of the last year beginning before January 1, 1989, are not allowed prior to age 59 1/2, severance from employment, death or disability. Salary reduction contributions (but not earnings) may also be distributed upon hardship, but would generally be subject to a 10% penalty tax. For contracts issued after 2008, amounts attributable to nonelective contributions may be subject to distribution restrictions specified in the employer's 403(b) Plan. Terms of qualified retirement plans and Qualified Contracts. The terms of a qualified retirement plan may affect your rights under a Qualified Contract. When issued in connection with a qualified retirement plan, we will amend a contract as generally necessary to conform to the requirements of the type of plan. However, the rights of any person to any benefits under qualified retirement plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the contract. In addition, we are not bound by the terms and conditions of qualified retirement plans to the extent such terms and conditions contradict the contract, unless we consent. Employer qualified plans. Qualified plans sponsored by an employer or employee organization are governed by the provisions of the Code and the Employee Retirement Income Security Act, as amended ("ERISA"). ERISA is administered primarily by the U.S. Department of Labor. The Code and ERISA include requirements that various features be contained in an employer qualified plan with respect to: participation; vesting; funding; nondiscrimination; limits on contributions and benefits; distributions; penalties; duties of fiduciaries; prohibited transactions; withholding; reporting and disclosure. In the case of certain qualified plans, if a participant is married at the time benefits become payable, unless the participant elects otherwise with written consent of the spouse, the benefits must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is an annuity payable for the life of the participant with a survivor annuity for the life of the spouse in an amount that is not less than one-half of the amount payable to the participant during his or her lifetime. In addition, a married participant's beneficiary must be the spouse, unless the spouse consents in writing to the designation of a different beneficiary. If this contract is purchased as an investment of a qualified plan, the owner will be either an employee benefit trust or the plan sponsor. Plan participants and beneficiaries will have no ownership rights in the contract. Only the owner, acting through its authorized representative(s) may exercise contract rights. Participants and beneficiaries must look to the plan fiduciaries for satisfaction of their rights to benefits under the terms of the qualified plan. Where a contract is purchased by an employer-qualified plan, we assume no responsibility regarding whether the contract's terms and benefits are consistent with the requirements of the Code and ERISA. It is the responsibility of the employer, plan trustee, plan administrator and/or other plan fiduciaries to satisfy the requirements of the Code and ERISA applicable to the qualified plan. This prospectus does not provide detailed tax or ERISA information. Various tax disadvantages, including 130 penalties, may result from actions that conflict with requirements of the Code or ERISA, and the regulations pertaining to those laws. Federal tax laws and ERISA are continually under review by Congress. Any changes in the laws or in the regulations pertaining to the laws may affect the tax treatment of amounts contributed to employer qualified plans and the fiduciary actions required by ERISA. IRAs and Roth IRAs. The Code permits individuals to make annual contributions to IRAs of up to the lesser of a specified dollar amount for the year or the amount of compensation includible in the individual's gross income for the year. The contributions may be deductible in whole or in part, depending on the individual's income. The Code also permits certain eligible individuals to make non-deductible contributions to a Roth IRA in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA is generally subject to tax and other special rules apply. You should consult a tax adviser before combining any converted amounts with any other Roth IRA contributions, including any other conversion amounts from other tax years. The Internal Revenue Service has not reviewed the contract for qualification as an IRA, and has not addressed in a ruling of general applicability whether a death benefit provision such as the provision in this contract comports with IRA qualification requirements. You will be the owner of a contract issued as an IRA or Roth IRA, and will be responsible for exercising your rights as owner in accordance with applicable tax rules, including limitations for contributions and distributions. The death benefit and Qualified Contracts. Pursuant to IRS regulations, IRAs and 403(b) plans may not invest in life insurance contracts. We do not believe that these regulations prohibit the death benefit, including that provided by any death benefit rider option, from being provided under the contracts when we issue the contracts as Traditional IRAs, Roth IRAs, SEPs or 403(b) plans. However, the law is unclear and it is possible that the presence of the death benefit under a contract issued as a Traditional IRA, Roth IRA or a SEP could disqualify a contract and result in increased taxes to the owner. It is also possible that the death benefit could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in currently taxable income to purchasers. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified retirement plans, such as in connection with a Section 403(b) plan. Even if the death benefit under the contract were characterized as an incidental death benefit, it is unlikely to violate those limits unless the purchaser also purchases a life insurance contract in connection with such plan. Treatment of Qualified Contracts compared with Non-Qualified Contracts. Although some of the Federal income tax rules are the same for both Qualified and Non- Qualified Contracts, many of the rules are different. For example: . the Code generally does not impose tax on the earnings under either Qualified or Non-Qualified Contracts until the earnings are distributed; . the Code does not limit the amount of purchase payments and the time at which purchase payments can be made under Non-Qualified Contracts. However, the Code does limit both the amount and frequency of purchase payments made to Qualified Contracts; . the Code does not allow a deduction for purchase payments made for Non-Qualified Contracts, but sometimes allows a deduction or exclusion from income for purchase payments made to a Qualified Contract; . Under most qualified retirement plans, the owner must begin receiving payments from the contract in certain minimum amounts by a certain date, generally April 1 of the calendar year following the calendar year in which the owner attains age 70 1/2 for Traditional IRAs and SEPs and April 1 of the calendar year following the later of the calendar year in which the employee (except for a 5 percent owner) retires or attains age 70 1/2 for other Qualified Contracts. Roth IRAs do not require any distributions during the owner's lifetime. The death benefit under your contract and certain other benefits provided by the living benefit riders may increase the amount of the minimum required distribution that must be taken from your contract. The Federal income tax rules applicable to qualified retirement plans and Qualified Contracts vary with the type of plan and contract. For example, Federal tax rules limit the amount of purchase payments that can be made, and the tax deduction or exclusion that may be allowed for the purchase payments. These limits vary depending on the type of qualified retirement plan and the circumstances of the plan participant, e.g., the participant's compensation. Amounts received under Qualified Contracts. Federal income tax rules generally include distributions from a Qualified Contract in your income as ordinary income. Purchase payments that are deductible or excludible from income do not create "investment in the contract." Thus, under many Qualified Contracts there will be no "investment in the contract" and you include the total amount you receive in your income. There are exceptions. For example, you do not include amounts received from a Roth IRA if certain conditions are satisfied. In addition, failure to comply with the minimum distribution rules applicable to certain qualified retirement 131 plans, will result in the imposition of an excise tax. This excise tax generally equals 50% of the amount by which a minimum required distribution exceeds the actual distribution from the qualified retirement plan. Federal penalty taxes payable on distributions. The Code may impose a penalty tax equal to 10% of the amount of any payment from your Qualified Contract that is includible in your income. The Code does not impose the penalty tax if one of several exceptions apply. The exceptions vary depending on the type of Qualified Contract you purchase. For example, in the case of an IRA, exceptions provide that the penalty tax does not apply to a partial withdrawal, surrender, or annuity payment: . received on or after the owner reaches age 59 1/2; . received on or after the owner's death or because of the owner's disability (as defined in the tax law); . received as a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the taxpayer; or . received as reimbursement for certain amounts paid for medical care. These exceptions, as well as certain others not described here, generally apply to taxable distributions from other qualified retirement plans. However, the specific requirements of the exception may vary. Moving money from one Qualified Contract or qualified retirement plan to another. Rollovers and transfers: In many circumstances you may move money between Qualified Contracts and qualified retirement plans by means of a rollover or a transfer. Recent legislation has expanded these rollover options, including permitting the rollover of your after-tax contributions. Special rules apply to such rollovers and transfers. If you do not follow the applicable rules, you may suffer adverse Federal income tax consequences, including paying taxes which you might not otherwise have had to pay. You should always consult a qualified tax adviser before you move or attempt to move assets between any Qualified Contract or plan and another Qualified Contract or plan. Direct rollovers: The direct rollover rules apply to certain payments (called "eligible rollover distributions") from Section 401(a) plans, Section 403(b) plans, H.R. 10 plans, and Qualified Contracts used in connection with these types of plans. The direct rollover rules do not apply to distributions from IRAs. The direct rollover rules require Federal income tax equal to 20% of the taxable portion of an eligible rollover distribution to be withheld from the amount of the distribution, unless the owner elects to have the amount directly transferred to certain Qualified Contracts or plans. Certain restrictions apply to the ability to rollover any after-tax amounts. Prior to receiving an eligible rollover distribution from us, we will provide you with a notice explaining these requirements and the procedure for avoiding 20% withholding by electing a direct rollover. Federal Income Tax Withholding We will withhold and remit to the IRS a part of the taxable portion of each distribution made under a contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. In certain circumstances, Federal income tax rules may require us to withhold tax. At the time you request a partial withdrawal or surrender, or income payment, we will send you forms that explain the withholding requirements. State Income Tax Withholding If required by the law of your state, we will also withhold state income tax from the taxable portion of each distribution made under the contract, unless you make an available election to avoid withholding. If permitted under state law, we will honor your request for voluntary state withholding. Tax Status of the Company Under existing Federal income tax laws, we do not pay tax on investment income and realized capital gains of the Separate Account. We do not anticipate that we will incur any Federal income tax liability on the income and gains earned by the Separate Account. We, therefore, do not impose a charge for Federal income taxes. If Federal income tax law changes and we must pay tax on some or all of the income and gains earned by the Separate Account, we may impose a charge against the Separate Account to pay the taxes. Federal Estate Taxes While no attempt is being made to discuss the Federal estate tax implications of the Contract, a purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent's gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning adviser for more information. Generation-Skipping Transfer Tax Under certain circumstances, the Code may impose a "generation skipping transfer tax" when all or part of an annuity 132 contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the owner. Regulations issued under the Code may require us to deduct the tax from your contract, or from any applicable payment, and pay it directly to the IRS. Annuity Purchases by Residents of Puerto Rico The IRS recently announced that income received by residents of Puerto Rico under life insurance or annuity contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States Federal income tax. Annuity Purchases by Nonresident Aliens and Foreign Corporations The discussion above provides general information regarding U.S. Federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. Federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding U.S. state, and foreign taxation with respect to an annuity contract purchase. Foreign Tax Credits We may benefit from any foreign tax credits attributable to taxes paid by certain funds to foreign jurisdictions to the extent permitted under Federal tax law. Changes in the Law This discussion is based on the Code, IRS regulations, and interpretations existing on the date of this prospectus. Congress, the IRS, and the courts may modify these authorities, however, sometimes retroactively. REQUESTING PAYMENTS To request a payment, you must provide us with notice in a form satisfactory to us. We will ordinarily pay any partial withdrawal or surrender proceeds from the Separate Account within seven days after receipt at our Home Office of a request in good order. We also will ordinarily make payment of lump sum death benefit proceeds from the Separate Account within seven days from the receipt of due proof of death and all required forms. We will determine payment amounts as of the end of the Valuation Period during which our Home Office receives the payment request or due proof of death and all required forms. In most cases, when we pay the death benefit in a lump sum, we will pay these proceeds either: (1) to your designated beneficiary directly in the form of a check; or (2) by establishing an interest bearing draft account, called the "Secure Access Account," for the designated beneficiary, in the amount of the death benefit. When establishing the Secure Access Account we will send the designated beneficiary a draftbook within seven days after we receive all the required documents, and the designated beneficiary will have immediate access to the account simply by writing a draft for all or any part of the amount of the death benefit payment. The Secure Access 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 Secure Access Account. If we do not receive instructions from the designated beneficiary with regard to the form of death benefit payment, we will automatically establish the Secure Access Account for proceeds of $10,000 or more, unless state law requires a positive election. The Secure Access Account is not available in all states. We will delay making a payment from the Subaccount or applying Subaccount value to a payment plan if: (1) the disposal or valuation of the Subaccount is not reasonably practicable because: . the SEC declares that an emergency exists (due to the emergency the disposal or valuation of the Separate Account's assets is not reasonably practicable); . the New York Stock Exchange is closed for other than a regular holiday or weekend; . trading is restricted by the SEC; or (2) the SEC, by order, permits postponement of payment to protect our owners. State law requires that we reserve the right to defer payments from the Guarantee Account for a partial withdrawal or surrender for up to six months from the date we receive your payment request at our Home Office. We also may defer making any payments attributable to a check or draft that has not cleared until we are satisfied that the check or draft has been paid by the bank on which it is drawn. 133 If mandated under applicable law, we may be required to reject a purchase payment and/or block an owner's account and thereby refuse any requests for transfers, partial withdrawals, surrenders, or death benefits until instructions are received from the appropriate regulators. We also may be required to provide additional information about you or your account to government regulators. SALE OF THE CONTRACTS We have entered into an underwriting agreement with Capital Brokerage Corporation (doing business in Indiana as Genworth Financial Brokerage Corporation) (collectively, "Capital Brokerage Corporation") for the distribution and sale of the contracts. Pursuant to this agreement, Capital Brokerage Corporation serves as principal underwriter for the contracts, offering them on a continuous basis. Capital Brokerage Corporation is located at 6620 West Broad Street, Building 2, Richmond, Virginia 23230. Capital Brokerage Corporation will use its best efforts to sell the contracts, but is not required to sell any specific number or dollar amount of contracts. Capital Brokerage Corporation was organized as a corporation under the laws of the state of Washington in 1981 and is an affiliate of ours. Capital Brokerage Corporation is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority ("FINRA") (formerly, NASD, Inc.). Capital Brokerage Corporation offers the contracts through its registered representatives who are registered with FINRA and with the states in which they do business. More information about Capital Brokerage Corporation and the registered representatives is available at http://www.finra.org or by calling (800) 289-9999. You also can obtain an investor brochure from FINRA describing its Public Disclosure Program. Registered representatives with Capital Brokerage Corporation are also licensed as insurance agents in the states in which they do business and are appointed with the Company. Capital Brokerage Corporation also enters into selling agreements with an affiliated broker-dealer and unaffiliated broker-dealers to sell the contracts. The registered representatives of these selling firms are registered with FINRA and with the states in which they do business, are licensed as insurance agents in the states in which they do business and are appointed with us. We pay compensation to Capital Brokerage Corporation for promotion and sales of the contracts by its registered representatives as well as by affiliated and unaffiliated selling firms. This compensation consists of sales commissions and other cash and non-cash compensation. The maximum commission we may pay for the sale of the contract is 11.0% of a contract owner's aggregate purchase payments. The maximum commission consists of three parts -- commissions paid to internal and external wholesalers of Capital Brokerage Corporation ("wholesalers" are individuals employed by the Company and registered with Capital Brokerage Corporation that promote the offer and sale of the contracts), commissions paid to the affiliated and unaffiliated brokerage firm ("selling firms") that employs the registered representative who sold your contract, and an amount paid to the selling firm for marketing allowances and other payments related to the sale of the contract. Wholesalers with Capital Brokerage Corporation each may receive a maximum commission of 1.4% of purchase payments. After commission is paid to the wholesalers of Capital Brokerage Corporation, a commission is then paid to the selling firm. A maximum commission of 8.6% of purchase payments is paid to the selling firm. The exact amount of commission paid to the registered representative who sold you your contract is determined by the brokerage firm that employs the representative. All selling firms receive commissions as described above based on the sale of, and receipt of purchase payments, on the contract. Unaffiliated selling firms receive additional compensation, including marketing allowances and other payments. The maximum marketing allowance paid to a selling firm on the sale of a contract is 1.0% of Contract Value. At times, Capital Brokerage Corporation may make other cash and non-cash payments to selling firms, as well as receive payments from selling firms, for expenses relating to the recruitment and training of personnel, periodic sales meetings, the production of promotional sales literature and similar expenses. These expenses may also relate to the synchronization of technology between the Company, Capital Brokerage Corporation and the selling firm in order to coordinate data for the sale and maintenance of the contract. In addition, registered representatives may be eligible for non-cash compensation programs offered by Capital Brokerage Corporation or an affiliated company, such as conferences, trips, prizes and awards. The amount of other cash and non-cash compensation paid by Capital Brokerage Corporation or its affiliated companies ranges significantly among the selling firms. Likewise, the amount received by Capital Brokerage Corporation from the selling firms ranges significantly. The commissions listed above are maximum commissions paid, and reflect situations where we pay a higher commission for a short period of time for a special promotion. 134 No specific charge is assessed directly to contract owners or the Separate Account to cover commissions and other incentives or payments described above. We do, however, intend to recoup commissions and other sales expenses and incentives we pay through fees and charges deducted under the contract and any other corporate revenue. All commissions, special marketing allowances and other payments made or received by Capital Brokerage Corporation to or from selling firms come from or are allocated to the general assets of Capital Brokerage Corporation or one of its affiliated companies. Therefore, regardless of the amount paid or received by Capital Brokerage Corporation or one of its affiliated companies, the amount of expenses you pay under the contract do not vary because of such payments to or from such selling firms. Even though your contract costs are not determined based on amounts paid to or received from Capital Brokerage Corporation or the selling firm, the prospect of receiving, or the receipt of, additional compensation as described above may create an incentive for selling firms and/or their registered representative to sell you this product versus another product with respect with which a selling firm does not receive additional compensation, or a lower level of additional compensation. You may wish to take such compensation arrangements into account when considering and evaluating any recommendation relating to the contracts. During 2007, 2006 and 2005, $140.1 million, $110.5 million and $62.0 million, respectively, was paid to Capital Brokerage Corporation for the sale of contracts in the Separate Account and any new purchase payments received. In 2007, 2006 and 2005, no underwriting commissions were paid to Capital Brokerage Corporation. Although neither we nor Capital Brokerage Corporation anticipate discontinuing the offering of the contracts, we do reserve the right to discontinue offering the contracts at any time. ADDITIONAL INFORMATION Owner Questions The obligations to owners under the contracts are ours. Please direct your questions and concerns to us at our Home Office. Return Privilege Within 10 days after you receive the contract (or such longer period as may be required by applicable law), you may cancel it for any reason by delivering or mailing it postage prepaid, to: Genworth Life and Annuity Insurance Company Annuity New Business 6610 West Broad Street Richmond, Virginia 23230 If you cancel your contract, it will be void. Unless state law requires that we return your purchase payments, the amount of the refund you receive will equal the Contract Value as of the Valuation Day our Home Office receives the returned contract plus any adjustments required by applicable law or regulation on the date we receive the contract, but without reduction for any surrender charge. If state law requires that we return your purchase payments, the amount of the refund will equal the purchase payments made less any partial withdrawals you previously made. In certain states, you may have more than 10 days to return the contract for a refund. State Regulation As a life insurance company organized and operated under the laws of the Commonwealth of Virginia, we are subject to provisions governing life insurers and to regulation by the Virginia Commissioner of Insurance. Our books and accounts are subject to review and examination by the State Corporation Commission of the Commonwealth of Virginia at all times. That Commission conducts a full examination of our operations at least every five years. Evidence of Death, Age, Gender, Marital Status or Survival We may require proof of the age, gender, marital status or survival of any person or persons before acting on any applicable contract provision. Records and Reports As presently required by the 1940 Act and applicable regulations, we are responsible for maintaining all records and accounts relating to the Separate Account. At least once each year, we will send you a report showing information about your contract for the period covered by the report. The report will show the total Contract Value and a breakdown of the assets in each Subaccount and the Guarantee Account. The report also will show purchase payments and charges made during the statement period. We also will send you an annual and a semi-annual report for each portfolio underlying a Subaccount to which you have allocated assets, as required by the 1940 Act. In addition you will receive a written confirmation when you make purchase payments, transfers, or take partial withdrawals. Other Information We have filed a Registration Statement with the SEC, under the Securities Act of 1933 as amended, for the contracts being offered by this prospectus. This prospectus does not contain all the information in the Registration Statement, its amendments 135 and exhibits. Please refer to the Registration Statement for further information about the Separate Account, the Company, and the contracts offered. Statements in this prospectus about the content of contracts and other legal instruments are summaries. For the complete text of those contracts and instruments, please refer to those documents as filed with the SEC and available on the SEC's website at http://www.sec.gov. Legal Proceedings We face a significant risk of litigation and regulatory investigations and actions in the ordinary course of operating our businesses, including the risk of class action lawsuits. Our pending legal and regulatory actions include proceedings specific to us and others generally applicable to business practices in the industries in which we operate. In our insurance operations, we are, have been, or may become subject to class actions and individual suits alleging, among other things, issues relating to sales or underwriting practices, payment of contingent or other sales commissions, claims payments and procedures, product design, product disclosure, administration, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, recommending unsuitable products to customers and breaching fiduciary or other duties to customers. Plaintiffs in class action and other lawsuits against us may seek very large or indeterminate amounts, including punitive and treble damages, which may remain unknown for substantial periods of time. In our investment-related operations, we are subject to litigation involving commercial disputes with counterparties. We are also subject to litigation arising out of our general business activities such as our contractual and employment relationships. We are also subject to various regulatory inquiries, such as information requests, subpoenas, books and record examinations and market conduct and financial examinations, from state and federal regulators and other authorities. A substantial legal liability or a significant regulatory action against us could have an adverse effect on our business, financial condition and results of operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant reputational harm, which could have an adverse effect on our business, financial condition and results of operations. We cannot ensure that the current investigations and proceedings will not have a material adverse effect on our business, financial condition or results of operations. In addition, it is possible that related investigations and proceedings may be commenced in the future, and we could become subject to further investigations and have lawsuits filed against us. In addition, increased regulatory scrutiny and any resulting investigations or proceedings could result in new legal precedents and industry-wide regulations or practices that could adversely affect our business, financial condition and results of operations. The Company shall, and may through insurance coverage, indemnify any directors or officers who are a party to any proceeding by reason of the fact that he or she was or is a director or officer of the Company against any liability incurred by him or her in connection with such proceeding unless he or she engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law. Such indemnification covers all judgments , settlements, penalties, fines and reasonable expenses incurred with respect to such proceeding. If the person involved is not a director or officer of the Company, the board of directors may cause the Company to indemnify, or contract to indemnify, to the same extent allowed for its directors and officers, such person who was, is or may become a party to any proceeding, by reason of the fact that he or she is or was an employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the depositor pursuant to the foregoing provisions, or otherwise, the depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the depositor of expenses incurred or paid by a director, officer or controlling person of the depositor in successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Capital Brokerage Corporation is not in any pending or threatened lawsuits that are reasonably likely to have a material adverse impact on us or on the Separate Account. Although it is not anticipated that these developments will have an adverse impact on us, the Separate Account, or on the ability of Capital Brokerage Corporation to perform under its principal underwriting agreement, there can be no assurance at this time. 136 APPENDIX A Examples of the Available Death Benefits Basic Death Benefit The purpose of this example is to show how the Basic Death Benefit works based on purely hypothetical values and is not intended to depict investment performance of the contract. Example: Assuming an owner: (1) purchases a contract for $100,000; (2) makes no additional purchase payments and takes no partial withdrawals; (3) is not subject to premium taxes; and (4) the Annuitant is age 75 on the Contract Date then:
Annuitant's End of Contract Basic Age Year Value Death Benefit - ----------------------------------------- 76 1 $103,000 $103,000 77 2 112,000 112,000 78 3 90,000 100,000 79 4 135,000 135,000 80 5 130,000 130,000 81 6 150,000 150,000 82 7 125,000 125,000 83 8 145,000 145,000 - -----------------------------------------
Partial withdrawals (including partial withdrawals taken for purposes of allocation to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Rider Option) will reduce the Basic Death Benefit by the proportion that the partial withdrawal (including any applicable surrender charge and any premium tax assessed) reduces your Contract Value. For example:
Purchase Contract Basic Date Payment Value Death Benefit - --------------------------------------- 3/31/08 $10,000 $10,000 $10,000 3/31/16 20,000 20,000 3/31/17 14,000 10,000 - ---------------------------------------
If a partial withdrawal of $7,000 is made on March 31, 2017, the Basic Death Benefit immediately after the partial withdrawal will be $10,000 ($20,000 to $10,000) since the Contract Value is reduced 50% after the partial withdrawal ($14,000 to $7,000). This is true only if the Basic Death Benefit immediately prior to the partial withdrawal (as calculated above) is not the Contract Value on the date we receive due proof of the Annuitant's death. It also assumes that both the Annuitant and Joint Annuitant are younger than age 80 at the time of death, that no surrender charge applies, and that no premium tax applies to the partial withdrawal. This example is based on purely hypothetical values and is not intended to depict investment performance of the contract. Annual Step-Up Death Benefit Rider Option The following example shows how the Annual Step-Up Death Benefit works based on hypothetical values. It is not intended to depict investment performance of the contract. The example assumes that an owner purchases a contract with an Annuitant age 75 at the time of issue. In addition, the example assumes that: (1) the owner purchases the contract for $100,000; (2) the owner makes no additional purchase payments; (3) the owner takes no partial withdrawals; then
End of Annuitant's Contract Death Year Age Value Benefit Amount - ------------------------------------------ 1 76 $103,000 $103,000 2 77 112,000 112,000 3 78 90,000 112,000 4 79 135,000 135,000 5 80 130,000 135,000 6 81 150,000 150,000 7 82 125,000 135,000 8 83 145,000 145,000 - ------------------------------------------
Partial withdrawals (including partial withdrawals taken for purposes of allocation to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program, as well as partial withdrawals taken pursuant to the terms of a Guaranteed Minimum Withdrawal Benefit Rider Option) will reduce the Annual Step-Up Death Benefit by the proportion that the partial withdrawal (including any surrender charge and any premium tax assessed) reduces your Contract Value. 5% Rollup Death Benefit Rider Option The following example shows how the 5% Rollup Death Benefit Rider Option works based on hypothetical values. It is not intended to depict investment performance of the contract. The example assumes that an owner purchases a contract with an Annuitant age 70 at the time of issue. In addition, the example assumes that: (1) the owner purchases the contract for $100,000; (2) the contract earns a 0% net return (-3.05% net of fees for the mortality and expense risk charge, A-1 administrative expense charge, underlying portfolio expenses and the 5% Rollup Death Benefit Rider Option); (3) the owner makes no additional purchase payments; (4) the owner takes annual partial withdrawals equal to 5% of purchase payments at end of the contract year; and (5) the contract is not subject to premium taxes.
Partial End of Annuitant's Withdrawal Contract 5% Rollup Year Age Amount Value Death Benefit - ---------------------------------------------------- 70 -- $100,000 $100,000 1 71 $5,000 95,000 100,000 2 72 5,000 90,000 100,000 3 73 5,000 85,000 100,000 4 74 5,000 80,000 100,000 5 75 5,000 75,000 100,000 6 76 5,000 70,000 100,000 7 77 5,000 65,000 100,000 8 78 5,000 60,000 100,000 9 79 5,000 55,000 100,000 - ----------------------------------------------------
Partial withdrawals (including partial withdrawals taken for purposes of allocation to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program) amounting to 5% or less of purchase payments annually will reduce the 5% Rollup Death Benefit on a non pro-rata (dollar-for-dollar) basis. Therefore, in the example above, though a $5,000 partial withdrawal is taken at the end of year 1, the 5% Rollup Death Benefit immediately after the partial withdrawal is still equal to $100,000 since the benefit is reduced only by the same dollar amount of the partial withdrawal. Partial withdrawals (including partial withdrawals taken for purposes of allocation to a Scheduled Purchase Payment Variable Deferred Annuity through an approved Annuity Cross Funding Program) exceeding 5% of purchase payments in any year will reduce the 5% Rollup Death Benefit on a pro-rata basis by the proportion that the partial withdrawal, including any surrender charges, and any premium taxes assessed, reduces your Contract Value. All partial withdrawals that exceed the 5% threshold will reduce the 5% Rollup Death Benefit on a pro-rata basis. For example:
5% Rollup Death Benefit Option Purchase Contract Before Any Date Payment Value Withdrawals - --------------------------------------- 3/31/08 $10,000 $10,000 $10,000 3/31/16 -- 20,000 10,600 3/31/17 -- 14,000 11,236 - ---------------------------------------
Therefore, if a $7,000 partial withdrawal is taken on March 31, 2017, the 5% Rollup Death Benefit immediately after the partial withdrawal will be $5,618 (50% of $11,236) since the Contract Value ($14,000) is reduced by 50% by the partial withdrawal ($7,000). This is true only if the 5% Rollup Death Benefit immediately prior to the partial withdrawal (as calculated above) is not the Contract Value on the date we receive due proof of the Annuitant's death. It also assumes that no surrender charges and no premium taxes apply to the partial withdrawal. Earnings Protector Death Benefit Rider Option The following example shows how the Earnings Protector Death Benefit works based on purely hypothetical values. It is not intended to depict investment performance of the contract. This example assumes an owner purchases a contract with an Annuitant age 65 at the time of issue, and that he or she takes no partial withdrawals before the Annuitant's death.
Purchase Contract Death Earnings Protector Date Payment Value Gain Benefit Death Benefit -------------------------------------------------------------- 8/01/08 $100,000 $100,000 $ 0 $100,000 $ 0 8/01/23 300,000 200,000 300,000 70,000 --------------------------------------------------------------
The Annuitant's death and notification of the death occur on August 1, 2023. At that time, 40% of the earnings or "gain" ($200,000) is $80,000. However, since the Earnings Protector Death Benefit under this age scenario cannot exceed 70% of the purchase payments ($100,000) under this age scenario, the Earnings Protector Death Benefit in this example will be $70,000. A-2 APPENDIX B Condensed Financial Information The value of an Accumulation Unit is determined on the basis of changes in the per share value of the Portfolios and the assessment of Separate Account charges. The Accumulation Unit Values and the number of Accumulation Units outstanding for each Subaccount for the periods shown are as follows: No Optional Benefits Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $14.49 $16.00 150,802 2007 13.83 14.49 150,196 2006 12.90 13.83 119,902 2005 12.27 12.90 123,237 2004 10.00 12.27 56,467 2003 - ------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 16.11 14.96 6,195 2007 11.49 16.11 2,948 2006 10.00 11.49 608 2005 - ------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.20 11.63 2,692 2007 10.00 10.20 2,805 2006 - ------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.19 35,481 2007 - ------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 16.02 16.56 1,161,727 2007 13.90 16.02 1,321,281 2006 13.48 13.90 1,394,830 2005 12.30 13.48 1,164,217 2004 10.00 12.30 564,218 2003 - ------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 13.61 15.23 245,430 2007 13.90 13.61 258,397 2006 12.28 13.90 211,436 2005 11.50 12.28 155,295 2004 10.00 11.50 73,654 2003 - ------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 16.39 16.14 3,463 2007 14.20 16.39 3,567 2006 13.77 14.20 2,577 2005 12.37 13.77 -- 2004 10.00 12.37 -- 2003 - ------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 19.60 22.80 58,810 2007 15.91 19.60 24,142 2006 14.25 15.91 60 2005 12.58 14.25 -- 2004 10.00 12.58 -- 2003 - ------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 12.36 14.74 292 2007 12.97 12.36 403 2006 12.88 12.97 244 2005 11.81 12.88 106 2004 10.00 11.81 -- 2003 - ------------------------------------------------------------------------------------------------------------------------
B-1
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I $16.94 $15.84 12,183 14.49 16.94 8,879 14.00 14.49 2,335 12.42 14.00 1,208 10.00 12.42 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.97 10.76 134,037 9.96 9.97 101,291 10.00 9.96 43,718 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 16.27 16.27 8,169 15.32 16.27 8,393 14.24 15.32 1,413 12.62 14.24 98 10.00 12.62 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.27 14.63 -- 9.96 10.27 4,373 9.84 9.96 5,886 9.93 9.84 -- 10.00 9.93 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund -- Initial Shares 13.77 10.61 4,802 12.79 13.77 -- 12.53 12.79 -- 11.97 12.53 -- 10.00 11.97 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 17.74 17.10 4,221 15.23 17.74 4,295 14.37 15.23 558 12.83 14.37 401 10.00 12.83 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small MidCap Value VIP -- Class B Shares 22.37 22.64 3,581 18.22 22.37 2,852 16.84 18.22 634 13.61 16.84 -- 10.00 13.61 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 13.28 14.90 744 13.42 13.28 716 13.18 13.42 244 13.18 13.18 -- 10.00 13.18 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.94 10.95 1,613,412 10.52 10.94 1,363,954 10.27 10.52 1,312,530 10.14 10.27 1,074,991 10.00 10.14 352,412 - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 12.96 13.56 302,797 13.15 12.96 317,128 12.47 13.15 308,758 11.91 12.47 219,226 10.00 11.91 126,289 - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund -- Initial Shares 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- DWS Dreman Small MidCap Value VIP -- Class B Shares 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 2006 2005 2004 2003 - ---------------------------------------------------------------------------------
B-2
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds - -------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 $17.76 $20.53 3,591,394 2007 16.17 17.76 2,996,410 2006 14.07 16.17 2,161,311 2005 12.40 14.07 1,335,660 2004 10.00 12.40 413,897 2003 - -------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 16.96 16.93 1,885,441 2007 14.35 16.96 1,723,960 2006 13.79 14.35 1,564,566 2005 12.58 13.79 1,271,270 2004 10.00 12.58 570,477 2003 - -------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 22.05 25.06 1,735,774 2007 19.90 22.05 1,725,960 2006 17.11 19.90 1,629,294 2005 13.93 17.11 1,213,459 2004 10.00 13.93 573,236 2003 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 12.13 12.40 5,591,420 2007 10.41 12.13 3,118,807 2006 10.00 10.41 719,943 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 13.92 14.57 43,257 2007 12.74 13.92 26,433 2006 12.79 12.74 2,518 2005 12.02 12.79 97 2004 10.00 12.02 -- 2003 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.92 229,024 2007 - -------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 16.91 17.24 781,507 2007 14.49 16.91 409,907 2006 13.30 14.49 4,503 2005 11.98 13.30 -- 2004 10.00 11.98 -- 2003 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 19.92 22.66 69,629 2007 16.64 19.92 34,219 2006 15.33 16.64 1,373 2005 13.12 15.33 381 2004 10.00 13.12 -- 2003 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund -- Class 2 Shares 17.54 19.01 10,605 2007 14.69 17.54 10,563 2006 14.40 14.69 118 2005 12.62 14.40 -- 2004 10.00 12.62 -- 2003 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.05 11.15 833,001 2007 10.00 11.05 241,867 2006 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 13.97 15.37 9,577,406 2007 12.46 13.97 10,502,752 2006 12.19 12.46 9,561,715 2005 11.44 12.19 5,993,939 2004 10.00 11.44 1,658,489 2003 - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.62 11.68 4,539,551 2007 10.00 10.62 1,592,533 2006 - --------------------------------------------------------------------------------------------------------------------------------
B-3
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Series Trust II - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Bond Portfolio $10.71 $10.69 23,757 2007 10.43 10.71 22,758 2006 10.29 10.43 11,518 2005 10.02 10.29 1,580 2004 10.00 10.02 -- 2003 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan International Equity Portfolio 20.29 21.86 437 2007 16.86 20.29 420 2006 15.46 16.86 -- 2005 13.26 15.46 -- 2004 10.00 13.26 -- 2003 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Mid Cap Value Portfolio 18.20 18.38 6,104 2007 15.81 18.20 6,006 2006 14.69 15.81 3,226 2005 12.31 14.69 62 2004 10.00 12.31 -- 2003 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Small Company Portfolio 19.09 17.74 1,517 2007 16.84 19.09 1,797 2006 16.52 16.84 1,147 2005 13.19 16.52 96 2004 10.00 13.19 -- 2003 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan U.S. Large Cap Core Equity Portfolio 14.98 15.01 683 2007 13.04 14.98 1,026 2006 13.05 13.04 209 2005 12.10 13.05 -- 2004 10.00 12.10 -- 2003 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.71 11.20 -- 2007 10.00 10.71 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.44 10.94 102,076 2007 10.00 10.44 39,585 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 11.01 11.98 12,004 2007 10.00 11.01 399 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 10.00 11.56 1,350 2007 10.00 10.00 431 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.87 11.26 10,978 2007 10.00 10.87 1,226 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.44 11.06 85,804 2007 10.00 10.44 32,227 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.22 11.24 15,520 2007 10.00 10.22 416 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.28 10.42 14,410 2007 10.00 10.28 939 2006 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Investors Growth Stock Series -- Service Class Shares 13.38 14.64 357,900 2007 12.65 13.38 412,880 2006 12.32 12.65 372,448 2005 11.47 12.32 337,869 2004 10.00 11.47 164,342 2003 - ------------------------------------------------------------------------------------------------------------------------------
B-4
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares $11.58 $11.81 6,569 2007 11.05 11.58 4,108 2006 11.03 11.05 302 2005 10.41 11.03 -- 2004 10.00 10.41 -- 2003 - -------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 13.69 14.02 464,954 2007 12.44 13.69 305,222 2006 12.30 12.44 118,192 2005 11.24 12.30 112 2004 10.00 11.24 -- 2003 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 14.18 12.46 467,159 2007 13.37 14.18 465,214 2006 12.93 13.37 409,421 2005 12.31 12.93 347,394 2004 10.00 12.31 183,859 2003 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 15.33 22.52 1,295,128 2007 13.56 15.33 849,833 2006 13.01 13.56 560,885 2005 12.09 13.01 473,776 2004 10.00 12.09 194,738 2003 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 19.67 15.74 793,874 2007 17.41 19.67 837,530 2006 16.10 17.41 691,830 2005 13.71 16.10 493,066 2004 10.00 13.71 162,753 2003 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 12.94 13.19 1,369,045 2007 12.03 12.94 1,583,136 2006 11.73 12.03 1,432,605 2005 10.86 11.73 1,256,665 2004 10.00 10.86 695,216 2003 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.24 10.83 2,276,810 2007 9.99 10.24 288,926 2006 10.00 9.99 186,590 2005 - --------------------------------------------------------------------------------------------------------------------
B-5 Guaranteed Withdrawal Advantage Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $11.98 $13.15 -- 11.48 11.98 -- 10.77 11.48 -- 10.00 10.77 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II Shares 15.97 14.75 567 11.45 15.97 -- 10.00 11.45 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.17 11.53 -- 10.00 10.17 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 12.71 13.07 32,862 11.08 12.71 35,068 10.81 11.08 32,113 10.00 10.81 12,931 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 11.97 13.33 10,062 12.28 11.97 11,534 10.91 12.28 13,560 10.00 10.91 3,602 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 12.30 12.05 -- 10.71 12.30 -- 10.00 10.71 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 14.14 16.37 6,213 11.54 14.14 4,441 10.00 11.54 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.37 12.30 -- 10.93 10.37 -- 10.00 10.93 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 12.49 11.61 -- 10.73 12.49 764 10.00 10.73 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.89 10.62 6,723 9.93 9.89 9,975 10.00 9.93 5,577 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 12.09 12.03 -- 11.45 12.09 -- 10.00 11.45 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.33 12.26 -- 10.07 10.33 15,105 10.00 10.07 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, inc. -- Initial Shares 11.60 10.61 -- 10.83 11.60 -- 10.00 10.83 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II Shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 2005 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, inc. -- Initial Shares 2007 2006 2005 - ---------------------------------------------------------------------------------
B-6
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- DWS Variable Series II - -------------------------------------------------------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares $12.50 $11.99 -- 2007 10.79 12.50 -- 2006 10.00 10.79 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 14.05 14.14 -- 11.50 14.05 -- 2007 10.00 11.50 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 11.37 12.69 -- 2007 11.55 11.37 -- 2006 10.00 11.55 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - -------------------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.60 10.56 19,009 2007 10.24 10.60 -- 2006 10.06 10.24 -- 2005 10.00 10.06 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 10.28 10.70 -- 2007 10.48 10.28 -- 2006 9.99 10.48 -- 2005 10.00 9.99 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - -------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 13.89 15.98 15,626 2007 12.71 13.89 10,250 2006 11.12 12.71 -- 2005 10.00 11.12 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 13.35 13.25 49,089 2007 11.35 13.35 33,400 2006 10.97 11.35 34,287 2005 10.00 10.97 15,898 2004 - -------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 15.55 17.59 45,905 2007 14.11 15.55 52,427 2006 12.20 14.11 44,142 2005 10.00 12.20 16,419 2004 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 12.02 12.23 931,787 2007 10.37 12.02 902,617 2006 10.00 10.37 391,077 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 12.78 12.97 3,217 2007 10.00 12.78 11,264 2006 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 12.48 13.46 -- 2007 10.51 12.48 -- 2006 10.00 10.51 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.02 11.06 -- 2007 10.00 11.02 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 12.07 13.22 4,539,507 2007 10.83 12.07 4,927,279 2006 10.65 10.83 4,782,115 2005 10.00 10.65 1,783,009 2004 - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.58 11.58 447,292 2007 10.00 10.58 401,526 2006 - --------------------------------------------------------------------------------------------------------------------------------
B-7
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------- J.P. Morgan Series Trust II - --------------------------------------------------------------------------------------------------------------------- JPMorgan Bond Portfolio $10.28 $10.21 -- 2007 10.00 10.28 -- 2006 10.00 10.06 -- 2005 - --------------------------------------------------------------------------------------------------------------------- JPMorgan International Equity Portfolio 13.49 14.46 -- 2007 10.00 13.49 -- 2006 10.00 11.27 -- 2005 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Mid Cap Value Portfolio 12.46 12.51 -- 2007 10.00 12.46 -- 2006 10.00 10.87 -- 2005 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Small Company Portfolio 12.79 11.83 -- 2007 10.00 12.79 -- 2006 10.00 11.34 -- 2005 - --------------------------------------------------------------------------------------------------------------------- JPMorgan U.S. Large Cap Core Equity Portfolio 11.84 11.80 -- 2007 10.00 11.84 -- 2006 10.00 10.36 -- 2005 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Investment Trust - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Balanced Portfolio -- Class 1 10.68 11.11 -- 2007 10.00 10.68 -- 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Core Bond Portfolio -- Class 1 10.40 10.84 5,419 2007 10.00 10.40 6,826 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Diversified Equity Portfolio -- Class 1 10.97 11.88 2,788 2007 10.00 10.97 -- 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Diversified Mid Cap Portfolio -- Class 1 9.97 11.46 -- 2007 10.00 9.97 -- 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Equity Index Portfolio -- Class 1 10.84 11.17 2,227 2007 10.00 10.84 -- 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Government Bond Portfolio -- Class 1 10.41 10.97 5,350 2007 10.00 10.41 6,813 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Intrepid Growth Portfolio -- Class 1 10.19 11.14 3,715 2007 10.00 10.19 -- 2006 - --------------------------------------------------------------------------------------------------------------------- JPMorgan Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.24 10.33 3,210 2007 10.00 10.24 -- 2006 - --------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 11.66 12.69 2,301 2007 11.08 11.66 5,822 2006 10.84 11.08 5,106 2005 10.00 10.84 627 2004 - --------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.58 10.72 -- 2007 10.14 10.58 -- 2006 10.00 10.14 -- 2005 - --------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 11.27 11.48 271,670 2007 10.30 11.27 238,327 2006 10.00 10.30 198,345 2005 - --------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - --------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 11.59 12.23 361,706 2007 10.97 11.59 2,043 2006 10.68 10.97 -- 2005 10.00 10.68 -- 2004 - ---------------------------------------------------------------------------------------------------------------------
B-8
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares $12.59 $15.51 -- 2007 11.18 12.59 25,611 2006 10.79 11.18 -- 2005 10.00 10.79 -- 2004 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 14.24 12.86 -- 2007 12.66 14.24 34,807 2006 11.77 12.66 27,464 2005 10.00 11.77 8,840 2004 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 11.79 11.97 36,138 2007 11.03 11.79 52,678 2006 10.80 11.03 35,042 2005 10.00 10.80 10,569 2004 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.15 10.68 219,958 2007 9.96 10.15 144,277 2006 10.00 9.96 91,098 2005 - --------------------------------------------------------------------------------------------------------------------
B-9 Guaranteed Income Advantage Elected For contracts issued on or after May 1, 2003 or the date on which state insurance authorities approve applicable contract modifications but prior to April 29, 2005 or the date on which state insurance authorities approve applicable contract modifications.
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $11.24 $12.35 16,161 10.77 11.24 18,026 10.08 10.77 20,210 10.00 10.08 19,798 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 16.00 14.79 -- 11.45 16.00 -- 10.00 11.45 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.18 11.55 -- 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 12.38 12.74 36,166 10.78 12.38 53,104 10.50 10.78 51,261 10.00 10.50 50,807 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 11.38 12.69 1,272 11.67 11.38 1,343 10.35 11.67 1,385 10.00 10.35 1,392 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 12.64 12.39 -- 10.99 12.64 -- 10.71 10.99 -- 10.00 10.71 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 14.50 16.80 -- 11.81 14.50 -- 10.63 11.81 -- 10.00 10.63 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 9.93 11.80 -- 10.46 9.93 -- 10.43 10.46 -- 10.00 10.43 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 13.04 12.14 -- 11.19 13.04 -- 10.86 11.19 -- 10.00 10.86 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.91 10.65 -- 9.93 9.91 -- 10.00 9.93 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 12.28 12.23 -- 11.61 12.28 -- 10.84 11.61 -- 10.00 10.84 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 2005 2004 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 2005 2004 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 2005 2004 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 2004 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 2004 - ---------------------------------------------------------------------------------
B-10
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ----------------------------------------------------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio $10.23 $11.59 -- 2007 9.96 10.23 -- 2006 9.89 9.96 -- 2005 10.00 9.89 -- 2004 - ----------------------------------------------------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 10.96 10.52 -- 2007 10.22 10.96 -- 2006 10.05 10.22 -- 2005 10.00 10.05 -- 2004 - ----------------------------------------------------------------------------------------------------------------------------- DWS Variable Series II - ----------------------------------------------------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 13.18 12.65 -- 2007 11.36 13.18 -- 2006 10.77 11.36 -- 2005 10.00 10.77 -- 2004 - ----------------------------------------------------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 15.27 15.39 -- 2007 12.48 15.27 -- 2006 11.59 12.48 -- 2005 10.00 11.59 -- 2004 - ----------------------------------------------------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 9.57 10.69 -- 2007 9.70 9.57 -- 2006 9.58 9.70 -- 2005 10.00 9.58 -- 2004 - ----------------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - ----------------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.63 10.60 65,325 2007 10.27 10.63 76,477 2006 10.07 10.27 78,201 2005 10.00 10.07 82,722 2004 - ----------------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 10.13 10.56 15,031 2007 10.32 10.13 31,583 2006 9.83 10.32 25,538 2005 10.00 9.83 27,141 2004 - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - ----------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 13.72 15.80 189,104 2007 12.55 13.72 207,851 2006 10.96 12.55 214,346 2005 10.00 10.96 201,915 2004 - ----------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 12.90 12.82 65,446 2007 10.96 12.90 76,780 2006 10.57 10.96 71,098 2005 10.00 10.57 73,504 2004 - ----------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 14.82 16.78 99,547 2007 13.44 14.82 130,317 2006 11.60 13.44 129,199 2005 10.00 11.60 121,775 2004 - ----------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - ----------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 12.05 12.27 57,445 2007 10.38 12.05 22,125 2006 10.00 10.38 8,768 2005 - ----------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 10.99 11.46 -- 2007 10.10 10.99 -- 2006 10.18 10.10 -- 2005 10.00 10.18 -- 2004 - -----------------------------------------------------------------------------------------------------------------------------
B-11
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares $10.00 $ 9.90 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 13.53 13.74 17,640 2007 11.64 13.53 3,453 2006 10.73 11.64 -- 2005 10.00 10.73 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 14.18 16.07 -- 2007 11.89 14.18 -- 2006 11.00 11.89 -- 2005 10.00 11.00 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund -- Class 2 Shares 13.02 14.06 -- 2007 10.95 13.02 -- 2006 10.78 10.95 -- 2005 10.00 10.78 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.03 11.07 16,356 2007 10.00 11.03 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 11.79 12.92 1,590,891 2007 10.56 11.79 1,872,708 2006 10.37 10.56 2,133,325 2005 10.00 10.37 1,854,113 2004 - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.59 11.60 812 2007 10.00 10.59 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- J.P. Morgan Series Trust II - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Bond Portfolio 10.45 10.40 -- 2007 10.22 10.45 -- 2006 10.14 10.22 -- 2005 10.00 10.14 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan International Equity Portfolio 14.42 15.47 -- 2007 12.03 14.42 -- 2006 11.08 12.03 -- 2005 10.00 11.08 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Mid Cap Value Portfolio 14.02 14.10 -- 2007 12.22 14.02 -- 2006 11.41 12.22 -- 2005 10.00 11.41 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Small Company Portfolio 13.82 12.80 -- 2007 12.24 13.82 -- 2006 12.06 12.24 -- 2005 10.00 12.06 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan U.S. Large Cap Core Equity Portfolio 11.82 11.80 -- 2007 10.33 11.82 -- 2006 10.39 10.33 -- 2005 10.00 10.39 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.68 11.13 -- 2007 10.00 10.68 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.41 10.86 -- 2007 10.00 10.41 -- 2006 - -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.98 11.90 -- 2007 10.00 10.98 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------
B-12
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 $ 9.98 $11.48 -- 2007 10.00 9.98 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.85 11.19 -- 2007 10.00 10.85 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.42 10.99 -- 2007 10.00 10.42 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.20 11.16 -- 2007 10.00 10.20 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.25 10.35 -- 2007 10.00 10.25 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Investors Growth Stock Series -- Service Class Shares 11.07 12.07 12,486 2007 10.51 11.07 14,647 2006 10.28 10.51 17,590 2005 10.00 10.28 19,506 2004 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Strategic Income Series -- Service Class Shares 10.91 11.07 -- 2007 10.44 10.91 -- 2006 10.47 10.44 -- 2005 10.00 10.47 -- 2004 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Total Return Series -- Service Class Shares 11.70 11.94 10,391 2007 10.68 11.70 91,111 2006 10.60 10.68 96,024 2005 10.00 10.60 -- 2004 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund/VA -- Service Shares 11.07 12.28 18,653 2007 10.47 11.07 48,760 2006 10.17 10.47 39,961 2005 10.00 10.17 48,453 2004 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Main Street Fund/VA -- Service Shares 12.09 14.86 89,764 2007 10.73 12.09 26,070 2006 10.34 10.73 29,165 2005 10.00 10.34 31,368 2004 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 13.37 12.36 22,358 2007 11.88 13.37 41,048 2006 11.03 11.88 34,602 2005 10.00 11.03 26,875 2004 - ------------------------------------------------------------------------------------------------------------------------------ PIMCO Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ High Yield Portfolio -- Administrative Class Shares 11.69 11.87 44,835 2007 10.92 11.69 70,526 2006 10.68 10.92 69,800 2005 10.00 10.68 63,238 2004 - ------------------------------------------------------------------------------------------------------------------------------ Low Duration Portfolio -- Administrative Class Shares 10.17 10.71 6,621 2007 9.96 10.17 2,181 2006 10.00 9.96 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------
B-13 Principal Payment Advantage Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $12.01 $13.20 -- 11.50 12.01 -- 10.77 11.50 -- 10.00 10.77 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.18 11.55 -- 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 12.75 13.12 43,163 11.10 12.75 51,636 10.81 11.10 44,753 10.00 10.81 27,125 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 12.00 13.38 16,976 12.30 12.00 27,161 10.91 12.30 27,223 10.00 10.91 11,112 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 12.32 12.08 -- 10.72 12.32 -- 10.00 10.72 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 14.17 16.41 787 11.54 14.17 731 10.00 11.54 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.39 12.34 3,623 10.94 10.39 4,065 10.00 10.94 3,538 - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 12.51 11.64 -- 10.73 12.51 126 10.00 10.73 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.91 10.65 15,144 9.93 9.91 15,453 10.00 9.93 12,057 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 12.11 12.07 -- 11.45 12.11 817 10.00 11.45 804 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.35 12.29 -- 10.07 10.35 4,477 10.00 10.07 4,252 - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 11.62 10.64 3,443 10.83 11.62 -- 10.00 10.83 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 12.52 12.02 -- 10.79 12.52 -- 10.00 10.79 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 2005 2004 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 2005 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 2005 - ---------------------------------------------------------------------------------
B-14
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares $14.08 $14.18 -- 2007 11.51 14.08 -- 2006 10.00 11.51 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 11.39 12.73 -- 2007 11.56 11.39 -- 2006 10.00 11.56 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - -------------------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.63 10.59 22,144 2007 10.25 10.63 -- 2006 10.06 10.25 -- 2005 10.00 10.06 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 10.31 10.74 947 2007 10.50 10.31 -- 2006 10.00 10.50 -- 2005 10.00 10.00 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - -------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 13.93 16.04 18,695 2007 12.73 13.93 2,811 2006 11.13 12.73 -- 2005 10.00 11.13 -- 2004 - -------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 13.39 13.30 76,753 2007 11.37 13.39 51,616 2006 10.97 11.37 59,468 2005 10.00 10.97 17,355 2004 - -------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 15.60 17.65 58,504 2007 14.14 15.60 62,439 2006 12.20 14.14 60,009 2005 10.00 12.20 29,081 2004 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 12.05 12.27 780,809 2007 10.38 12.05 821,215 2006 10.00 10.38 595,181 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 11.32 11.80 -- 2007 10.40 11.32 1,847 2006 10.00 10.40 1,209 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 12.80 13.00 413 2007 11.02 12.80 3,106 2006 10.00 11.02 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 13.30 15.07 1,001 2007 11.16 13.30 2,279 2006 10.00 11.16 1,584 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund -- Class 2 Shares 12.50 13.49 -- 2007 10.51 12.50 -- 2006 10.00 10.51 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 12.11 13.27 8,727,561 2007 10.84 12.11 9,520,799 2006 10.66 10.84 8,996,013 2005 10.00 10.66 2,646,694 2004 - --------------------------------------------------------------------------------------------------------------------------------
B-15
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------------ Total Return Fund -- Class 3 Shares $10.59 $11.60 285,072 2007 10.00 10.59 271,049 2006 - ------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Series Trust II - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Bond Portfolio 10.29 10.24 -- 2007 10.07 10.29 1,213 2006 10.00 10.07 1,157 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan International Equity Portfolio 13.51 14.50 4,127 2007 11.28 13.51 4,355 2006 10.00 11.28 4,865 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Mid Cap Value Portfolio 12.48 12.55 2,549 2007 10.88 12.48 2,472 2006 10.00 10.88 2,645 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Small Company Portfolio 12.81 11.86 -- 2007 11.35 12.81 -- 2006 10.00 11.35 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan U.S. Large Cap Core Equity Portfolio 11.86 11.83 -- 2007 10.36 11.86 -- 2006 10.00 10.36 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.68 11.13 -- 2007 10.00 10.68 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.41 10.86 701 2007 10.00 10.41 1,122 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.98 11.90 361 2007 10.00 10.98 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 9.98 11.48 -- 2007 10.00 9.98 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.85 11.19 289 2007 10.00 10.85 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.42 10.99 692 2007 10.00 10.42 1,120 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.20 11.16 482 2007 10.00 10.20 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.25 10.35 416 2007 10.00 10.25 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Investors Growth Stock Series -- Service Class Shares 11.69 12.74 16,613 2007 11.10 11.69 18,013 2006 10.85 11.10 15,815 2005 10.00 10.85 2,119 2004 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Strategic Income Series -- Service Class Shares 10.59 10.75 -- 2007 10.15 10.59 -- 2006 10.00 10.15 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Total Return Series -- Service Class Shares 11.29 11.51 429,371 2007 10.30 11.29 558,317 2006 10.00 10.30 465,085 2005 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund/VA -- Service Shares 11.62 12.28 353,889 2007 10.99 11.62 335 2006 10.68 10.99 -- 2005 10.00 10.68 -- 2004 - ------------------------------------------------------------------------------------------------------------------------------
B-16
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares $12.63 $15.56 -- 2007 11.20 12.63 7,042 2006 10.80 11.20 -- 2005 10.00 10.80 -- 2004 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 14.28 12.91 630 2007 12.68 14.28 32,296 2006 11.78 12.68 32,893 2005 10.00 11.78 6,730 2004 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 11.82 12.01 40,777 2007 11.04 11.82 48,700 2006 10.81 11.04 39,094 2005 10.00 10.81 13,214 2004 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.17 10.71 278,129 2007 9.96 10.17 177,748 2006 10.00 9.96 130,107 2005 - --------------------------------------------------------------------------------------------------------------------
B-17 Guaranteed Income Advantage Elected For contracts issued on or after the later of April 29, 2005 or the date on which state insurance authorities approve applicable contract modifications.
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $12.01 $13.19 -- 11.52 12.01 -- 10.00 11.52 18 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 15.97 14.75 -- 11.45 15.97 -- 10.00 11.45 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. International Growth Fund -- Series II shares 14.91 16.73 7,631 11.89 14.91 8,684 10.00 11.89 915 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 12.18 12.52 14,029 10.62 12.18 14,847 10.00 10.62 7,585 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 12.00 13.36 -- 12.31 12.00 -- 10.00 12.31 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 12.30 12.05 -- 10.71 12.30 -- 10.00 10.71 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.89 10.62 1,010 9.93 9.89 1,186 10.00 9.93 750 - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 14.14 16.37 -- 11.53 14.14 -- 10.00 11.53 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.37 12.30 -- 10.93 10.37 -- 10.00 10.93 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 12.49 11.61 -- 10.73 12.49 -- 10.00 10.73 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 12.09 12.03 -- 11.44 12.09 -- 10.00 11.44 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.33 12.26 -- 10.06 10.33 -- 10.00 10.06 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 11.60 10.61 -- 10.83 11.60 -- 10.00 10.83 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. International Growth Fund -- Series II shares 2007 2006 2005 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 2005 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 2005 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 2005 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 2006 2005 - ---------------------------------------------------------------------------------
B-18
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- DWS Variable Series II - -------------------------------------------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares $12.50 $11.99 -- 2007 10.78 12.50 -- 2006 10.00 10.78 -- 2005 - -------------------------------------------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 14.05 14.14 -- 2007 11.50 14.05 -- 2006 10.00 11.50 -- 2005 - -------------------------------------------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 11.37 12.69 -- 2007 11.54 11.37 -- 2006 10.00 11.54 -- 2005 - -------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - -------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.49 10.44 4,573 2007 10.13 10.49 3,982 2006 10.00 10.13 3,813 2005 - -------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 11.00 11.45 1,429 2007 11.22 11.00 625 2006 10.00 11.22 77 2005 - -------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - -------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 12.96 14.91 67,084 2007 11.86 12.96 71,914 2006 10.00 11.86 44,814 2005 - -------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 12.81 12.71 6,563 2007 10.89 12.81 7,924 2006 10.00 10.89 9,849 2005 - -------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 13.32 15.06 15,964 2007 12.08 13.32 16,107 2006 10.00 12.08 9,512 2005 - -------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 12.02 12.23 82,265 2007 10.37 12.02 54,434 2006 10.00 10.37 20,314 2005 - -------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 11.30 11.77 -- 2007 10.39 11.30 -- 2006 10.00 10.39 -- 2005 - -------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 -- 2007 - -------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 12.78 12.97 5,930 2007 11.00 12.78 2,258 2006 10.00 11.00 -- 2005 - -------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 13.28 15.03 -- 2007 11.15 13.28 -- 2006 10.00 11.15 -- 2005 - -------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund -- Class 2 Shares 12.48 13.46 -- 2007 10.50 12.48 -- 2006 10.00 10.50 -- 2005 - -------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.02 11.06 6,719 2007 10.00 11.02 2,675 2006 - -------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 11.83 12.95 1,026,719 2007 10.60 11.83 2,121,338 2006 10.00 10.60 3,352,669 2005 - --------------------------------------------------------------------------------------------------------------------
B-19
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------------ Total Return Fund -- Class 3 Shares $10.58 $11.58 244,197 2007 10.00 10.58 276,682 2006 - ------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Series Trust II - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Bond Portfolio 10.28 10.21 -- 2007 10.06 10.28 -- 2006 10.00 10.06 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan International Equity Portfolio 13.49 14.46 -- 2007 11.27 13.49 -- 2006 10.00 11.27 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Mid Cap Value Portfolio 12.46 12.51 -- 2007 10.87 12.46 -- 2006 10.00 10.87 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Small Company Portfolio 12.79 11.83 -- 2007 11.34 12.79 -- 2006 10.00 11.34 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan U.S. Large Cap Core Equity Portfolio 11.84 11.80 -- 2007 10.35 11.84 -- 2006 10.00 10.35 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.68 11.11 -- 2007 10.00 10.68 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.40 10.84 -- 2007 10.00 10.40 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.97 11.88 -- 2007 10.00 10.97 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 9.97 11.46 -- 2007 10.00 9.97 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.84 11.17 -- 2007 10.00 10.84 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.41 10.97 -- 2007 10.00 10.41 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.19 11.14 -- 2007 10.00 10.19 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.24 10.33 -- 2007 10.00 10.24 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Investors Growth Stock Series -- Service Class Shares 11.56 12.58 1,750 2007 10.98 11.56 2,829 2006 10.00 10.98 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Strategic Income Series -- Service Class Shares 10.58 10.72 -- 2007 10.13 10.58 -- 2006 10.00 10.13 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Total Return Series -- Service Class Shares 11.27 11.48 11,111 2007 10.30 11.27 11,109 2006 10.00 10.30 9,494 2005 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund/VA -- Service Shares 11.47 11.51 3,992 2007 10.86 11.47 2,858 2006 10.00 10.86 2,746 2005 - ------------------------------------------------------------------------------------------------------------------------------
B-20
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares $12.24 $14.29 33,032 2007 10.88 12.24 10,632 2006 10.00 10.88 233 2005 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 13.27 12.50 10,497 2007 11.81 13.27 17,891 2006 10.00 11.81 2,225 2005 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 11.22 11.38 4,521 2007 10.49 11.22 4,735 2006 10.00 10.49 3,325 2005 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.15 10.68 162 2007 9.96 10.15 733 2006 10.00 9.96 278 2005 - --------------------------------------------------------------------------------------------------------------------
B-21 Lifetime Income Plus Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $11.05 $12.12 -- 10.60 11.05 -- 10.00 10.60 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 14.94 13.79 4,450 10.72 14.94 -- 10.00 10.72 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.16 11.51 -- 10.00 10.16 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.17 72,023 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 12.03 12.35 51,181 10.50 12.03 51,524 10.00 10.50 14,249 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 10.64 11.84 61,952 10.93 10.64 61,038 10.00 10.93 9,845 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 11.79 11.54 6,273 10.28 11.79 6,173 10.00 10.28 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 13.06 15.10 52,774 10.66 13.06 55,886 10.00 10.66 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.02 11.87 905 10.57 10.02 1,107 10.00 10.57 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 12.27 11.40 -- 10.55 12.27 8,445 10.00 10.55 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 9.95 10.67 45,817 10.00 9.95 78,258 10.00 10.00 6,011 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 11.08 11.01 1,007 10.49 11.08 964 10.00 10.49 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.28 11.88 236 10.03 10.28 24,770 10.00 10.03 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 11.25 10.55 40,048 10.52 11.25 258 10.00 10.52 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 12.16 11.65 4,884 10.50 12.16 4,653 10.00 10.50 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 2005 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 2005 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 2005 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 2005 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 2005 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 2006 2005 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 2005 - ---------------------------------------------------------------------------------
B-22
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares $12.60 $12.66 629 2007 10.32 12.60 638 2006 10.00 10.32 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 10.46 11.66 -- 2007 10.63 10.46 -- 2006 10.00 10.63 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - -------------------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.38 10.33 572,455 2007 10.03 10.38 -- 2006 10.00 10.03 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 10.43 10.85 -- 2007 10.65 10.43 -- 2006 10.00 10.65 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - -------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 11.66 13.40 552,539 2007 10.68 11.66 331,204 2006 10.00 10.68 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 12.35 12.25 571,156 2007 10.52 12.35 96,727 2006 10.00 10.52 11,565 2005 - -------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 11.74 13.26 335,559 2007 10.66 11.74 129,788 2006 10.00 10.66 27,751 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 11.49 11.68 20,564,415 2007 9.92 11.49 15,040,191 2006 10.00 9.92 2,130,020 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 11.24 11.69 4,877 2007 10.34 11.24 45,970 2006 10.00 10.34 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 211,566 2007 - -------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 12.07 12.26 27,466 2007 10.42 12.07 320,994 2006 10.00 10.42 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 12.35 13.96 68,264 2007 10.37 12.35 65,204 2006 10.00 10.37 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund -- Class 2 Shares 12.08 13.01 -- 2007 10.18 12.08 -- 2006 10.00 10.18 -- 2005 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.01 11.04 -- 2007 10.00 11.01 1,569 2006 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 1 Shares 11.57 12.65 11,426,157 2007 10.38 11.57 12,265,586 2006 10.00 10.38 3,862,617 2005 - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.58 11.56 20,581,875 2007 10.00 10.58 13,865,027 2006 - --------------------------------------------------------------------------------------------------------------------------------
B-23
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - ------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan Series Trust II - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Bond Portfolio $10.20 $10.13 4,863 2007 10.00 10.20 4,450 2006 10.00 10.00 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan International Equity Portfolio 12.58 13.47 4,124 2007 10.52 12.58 4,228 2006 10.00 10.52 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Mid Cap Value Portfolio 11.89 11.94 4,688 2007 10.39 11.89 4,779 2006 10.00 10.39 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Small Company Portfolio 11.67 10.78 -- 2007 10.36 11.67 -- 2006 10.00 10.36 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan U.S. Large Cap Core Equity Portfolio 11.77 11.72 -- 2007 10.30 11.77 -- 2006 10.00 10.30 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.67 11.09 -- 2007 10.00 10.67 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.40 10.83 40,300 2007 10.00 10.40 73,873 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.97 11.86 20,771 2007 10.00 10.97 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Diversified Mid Cap Portfolio -- Class 1 9.96 11.44 -- 2007 10.00 9.96 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.83 11.15 16,595 2007 10.00 10.83 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.40 10.95 39,792 2007 10.00 10.40 73,743 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.24 11.12 27,760 2007 10.00 10.24 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ JPMorgan Insurance Trust Intrepid Mid Cap Growth Portfolio -- Class 1 10.18 10.31 23,932 2007 10.00 10.18 -- 2006 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Variable Insurance Trust - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Investors Growth Stock Series -- Service Class Shares 10.97 11.93 30,609 2007 10.44 10.97 33,287 2006 10.00 10.44 2,989 2005 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Strategic Income Series -- Service Class Shares 10.45 10.59 -- 2007 10.44 10.45 -- 2006 10.00 10.44 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ MFS(R) Total Return Series -- Service Class Shares 11.13 11.33 2,029,328 2007 10.18 11.13 1,736,437 2006 10.00 10.18 406,333 2005 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund/VA -- Service Shares 11.15 11.07 1,025,946 2007 10.57 11.15 22,924 2006 10.00 10.57 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Main Street Fund/VA -- Service Shares 11.76 12.68 -- 2007 10.46 11.76 735,944 2006 10.00 10.46 -- 2005 - ------------------------------------------------------------------------------------------------------------------------------
B-24
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares $11.88 $12.00 5,242 2007 10.58 11.88 100,378 2006 10.00 10.58 22,254 2005 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.80 10.95 119,840 2007 10.11 10.80 47,316 2006 10.00 10.11 21,085 2005 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.18 10.70 3,942,268 2007 9.99 10.18 640,783 2006 10.00 9.99 140,073 2005 - --------------------------------------------------------------------------------------------------------------------
B-25 Payment Optimizer Plus (for Single Annuitant contracts) Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $ 9.85 $10.82 -- 10.00 9.85 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 12.73 11.76 3,695 10.00 12.73 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.17 11.53 -- 10.00 10.17 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.18 23,457 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 11.04 11.35 -- 10.00 11.04 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 9.88 11.00 -- 10.00 9.88 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 11.03 10.81 -- 10.00 11.03 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 10.78 12.47 44,990 10.00 10.78 13,794 - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 9.67 11.47 -- 10.00 9.67 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 11.17 10.39 490 10.00 11.17 2,027 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 10.15 10.90 1,430 10.00 10.15 6,595 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 9.77 9.72 -- 10.00 9.77 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.19 11.11 -- 10.00 10.19 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 10.52 10.47 -- 10.00 10.52 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 11.13 10.67 -- 10.00 11.13 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small Mid Cap Value VIP -- Class B Shares 10.49 10.56 -- 10.00 10.49 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 9.87 11.02 -- 10.00 9.87 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.23 10.18 144,475 10.00 10.23 -- - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 10.13 10.55 -- 10.00 10.13 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 2006 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 2006 - ---------------------------------------------------------------------------------
B-26
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Funds - --------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 $10.25 $11.79 157,333 2007 10.00 10.25 36,406 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 11.00 10.92 133,299 2007 10.00 11.00 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 9.80 11.08 58,346 2007 10.00 9.80 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - --------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 11.07 11.26 2,389,628 2007 10.00 11.07 551,805 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 11.15 2,064 2007 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 495,032 2007 - --------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 10.88 11.04 21,713 2007 10.00 10.88 34,599 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 12.24 53,374 2007 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 11.72 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.02 11.06 -- 2007 10.00 11.02 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - --------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.58 11.58 4,058,682 2007 10.00 10.58 1,286,973 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.68 11.11 -- 2007 10.00 10.68 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.40 10.84 31,984 2007 10.00 10.40 16,159 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.97 11.88 14,606 2007 10.00 10.97 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio -- Class 1 9.97 11.46 -- 2007 10.00 9.97 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.84 11.17 11,675 2007 10.00 10.84 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.41 10.97 31,603 2007 10.00 10.41 16,132 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.19 11.14 19,503 2007 10.00 10.19 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Mid Cap Portfolio -- Class 1 10.24 10.33 16,835 2007 10.00 10.24 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.26 11.17 -- 2007 10.00 10.26 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.40 10.55 -- 2007 10.00 10.40 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.68 10.88 196,785 2007 10.00 10.68 43,330 2006 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Accounts Funds - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 10.18 10.94 72,022 2007 10.00 10.18 5,495 2006 - ---------------------------------------------------------------------------------------------------------------------------------
B-27
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares $10.70 $11.01 -- 2007 10.00 10.70 78,861 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 9.94 10.92 4,507 2007 10.00 9.94 -- 2006 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.50 10.66 2,062 2007 10.00 10.50 35,748 2006 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.21 10.75 815,414 2007 10.00 10.21 -- 2006 - --------------------------------------------------------------------------------------------------------------------
B-28 Lifetime Income Plus (for Joint Annuitant contracts) Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $ 9.84 $10.77 -- 10.00 9.84 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 12.71 11.71 1,550 10.00 12.71 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.15 11.48 -- 10.00 10.15 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.17 1,903 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 11.02 11.30 -- 10.00 11.02 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 9.86 10.96 -- 10.00 9.86 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 11.02 10.76 -- 10.00 11.02 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 10.76 12.42 18,096 10.00 10.76 9,053 - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 9.65 11.42 -- 10.00 9.65 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 10.14 10.35 -- 10.00 10.14 4,351 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 11.16 10.86 -- 10.00 11.16 1,333 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 9.75 9.68 -- 10.00 9.75 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.17 11.07 -- 10.00 10.17 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 10.50 10.43 10,109 10.00 10.50 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 11.11 10.63 -- 10.00 11.11 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small Mid Cap Value VIP -- Class B Shares 10.47 10.51 -- 10.00 10.47 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 9.85 10.97 -- 10.00 9.85 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.21 10.14 62,163 10.00 10.21 -- - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 10.11 10.50 -- 10.00 10.11 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 2006 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 2006 - ---------------------------------------------------------------------------------
B-29
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Funds - --------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 $10.24 $11.74 67,055 2007 10.00 10.24 34,925 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 10.98 10.87 57,460 2007 10.00 10.98 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 9.78 11.04 25,174 2007 10.00 9.78 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - --------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 11.05 11.21 1,760,165 2007 10.00 11.05 1,041,563 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 10.68 11.10 -- 2007 10.00 10.68 6,229 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.89 30,853 2007 - --------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 10.86 10.99 8,492 2007 10.00 10.86 33,182 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 10.79 12.18 21,697 2007 10.00 10.79 9,677 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 10.85 11.68 -- 2007 10.00 10.85 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.00 11.01 -- 2007 10.00 11.00 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - --------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.57 11.53 2,574,597 2007 10.00 10.57 1,511,287 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.66 11.06 -- 2007 10.00 10.66 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.39 10.80 12,246 2007 10.00 10.39 10,653 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.96 11.83 6,329 2007 10.00 10.96 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio -- Class 1 9.95 11.41 -- 2007 10.00 9.95 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.82 11.12 5,060 2007 10.00 10.82 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.39 10.92 12,102 2007 10.00 10.39 10,641 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.17 11.10 8,478 2007 10.00 10.17 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Mid Cap Portfolio -- Class 1 10.23 10.29 7,300 2007 10.00 10.23 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.25 11.12 -- 2007 10.00 10.25 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.39 10.50 -- 2007 10.00 10.39 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.66 10.83 99,857 2007 10.00 10.66 43,333 2006 - ---------------------------------------------------------------------------------------------------------------------------------
B-30
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Accounts Funds - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares $10.16 $10.89 49,179 2007 10.00 10.16 3,619 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 10.68 10.96 -- 2007 10.00 10.68 75,692 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 9.93 10.88 -- 2007 10.00 9.93 -- 2006 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.48 10.61 -- 2007 10.00 10.48 34,294 2006 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.20 10.70 350,943 2007 10.00 10.20 -- 2006 - --------------------------------------------------------------------------------------------------------------------
B-31 Payment Optimizer Plus (for Joint Annuitant contracts) Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $ 9.84 $10.79 -- 10.00 9.84 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 12.72 11.73 1,361 10.00 12.72 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.16 11.50 -- 10.00 10.16 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.17 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 11.03 11.32 -- 10.00 11.03 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 9.87 10.97 -- 10.00 9.87 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 11.02 10.78 -- 10.00 11.02 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 10.76 12.44 23,039 10.00 10.76 3,115 - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 9.66 11.44 -- 10.00 9.66 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 11.16 10.37 1,330 10.00 11.16 458 - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 10.14 10.87 3,851 10.00 10.14 1,496 - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 9.76 9.70 -- 10.00 9.76 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.51 11.09 -- 10.00 10.51 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, inc. -- Initial Shares 10.18 10.44 -- 10.00 10.18 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 11.12 10.65 -- 10.00 11.12 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small Mid Cap Value VIP -- Class B Shares 10.48 10.53 -- 10.00 10.48 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 9.86 10.99 -- 10.00 9.86 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.22 10.16 41,688 10.00 10.22 -- - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 10.12 10.52 -- 10.00 10.12 -- - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 2006 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 2006 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 2006 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 2006 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, inc. -- Initial Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 2006 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 2006 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 2006 - ---------------------------------------------------------------------------------
B-32
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Funds - --------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 $10.24 $11.76 47,096 2007 10.00 10.24 6,282 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 10.99 10.89 38,291 2007 10.00 10.99 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 9.79 11.06 16,074 2007 10.00 9.79 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - --------------------------------------------------------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 11.06 11.23 646,787 2007 10.00 11.06 91,057 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 10.69 11.12 5,596 2007 10.00 10.69 2,141 2006 - --------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.90 101,504 2007 - --------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 10.87 11.01 9,873 2007 10.00 10.87 5,972 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 10.80 12.21 26,893 2007 10.00 10.80 3,329 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 10.86 11.70 -- 2007 10.00 10.86 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 11.01 11.03 -- 2007 10.00 11.01 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - --------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.57 11.55 901,953 2007 10.00 10.57 140,284 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 10.67 11.08 -- 2007 10.00 10.67 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.39 10.82 20,266 2007 10.00 10.39 3,662 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.96 11.85 5,462 2007 10.00 10.96 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio -- Class 1 9.96 11.43 -- 2007 10.00 9.96 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.83 11.14 4,367 2007 10.00 10.83 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.40 10.94 20,023 2007 10.00 10.40 3,654 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.18 11.11 7,305 2007 10.00 10.18 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Mid Cap Portfolio -- Class 1 10.23 10.31 6,299 2007 10.00 10.23 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.25 11.14 -- 2007 10.00 10.25 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.39 10.52 -- 2007 10.00 10.39 -- 2006 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.67 10.85 16,899 2007 10.00 10.67 3,795 2006 - ---------------------------------------------------------------------------------------------------------------------------------
B-33
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Accounts Funds - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares $10.17 $10.91 106,352 2007 10.00 10.17 1,243 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 10.69 10.98 -- 2007 10.00 10.69 13,614 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 9.93 10.90 5,768 2007 10.00 9.93 -- 2006 - -------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.49 10.63 2,637 2007 10.00 10.49 6,161 2006 - -------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.20 10.72 234,624 2007 10.00 10.20 -- 2006 - --------------------------------------------------------------------------------------------------------------------
B-34 Lifetime Income Plus 2007 (for Single Annuitants) Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $10.00 $10.77 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 10.00 11.71 1,550 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.00 11.48 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.17 1,903 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 10.00 11.30 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 10.00 10.96 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 10.00 10.76 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 10.00 12.42 18,096 - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.00 11.42 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 10.00 10.35 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Protection Fund -- Class II 10.00 10.86 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 10.00 9.68 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.00 11.07 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 10.00 10.43 10,109 - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 10.00 10.63 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small Mid Cap Value VIP -- Class B Shares 10.00 10.51 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 10.00 10.97 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.00 10.14 62,163 - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 10.00 10.50 -- - ------------------------------------------------------------------------------------------------------------------------------ Fidelity(R) Variable Insurance Products Funds - ------------------------------------------------------------------------------------------------------------------------------ VIP Contrafund(R) Portfolio -- Service Class 2 10.00 11.74 67,055 - ------------------------------------------------------------------------------------------------------------------------------ VIP Equity-Income Portfolio -- Service Class 2 10.00 10.87 57,460 - ------------------------------------------------------------------------------------------------------------------------------ VIP Mid Cap Portfolio -- Service Class 2 10.00 11.04 25,174 - ------------------------------------------------------------------------------------------------------------------------------ Franklin Templeton Variable Insurance Products Trust - ------------------------------------------------------------------------------------------------------------------------------ Franklin Income Securities Fund -- Class 2 Shares 10.00 11.21 1,760,165 - ------------------------------------------------------------------------------------------------------------------------------ Franklin Large Cap Growth Securities Fund -- Class 2 Shares 10.00 11.10 -- - ------------------------------------------------------------------------------------------------------------------------------ Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.89 30,853 - ------------------------------------------------------------------------------------------------------------------------------ Mutual Shares Securities Fund -- Class 2 Shares 10.00 10.99 8,492 - ------------------------------------------------------------------------------------------------------------------------------ Templeton Foreign Securities Fund -- Class 2 Shares 10.00 12.18 21,697 - ------------------------------------------------------------------------------------------------------------------------------ Templeton Global Assets Allocation Fund -- Class 2 Shares 10.00 11.68 -- - ------------------------------------------------------------------------------------------------------------------------------ Templeton Growth Securities Fund -- Class 2 Shares 10.00 11.01 -- - ------------------------------------------------------------------------------------------------------------------------------ GE Investments Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Total Return Fund -- Class 3 Shares 10.00 11.53 2,574,597 - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 2007 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 - --------------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Funds - --------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - --------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- GE Investments Funds, Inc. - --------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 2007 - ---------------------------------------------------------------------------------
B-35
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 $10.00 $11.06 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.00 10.80 12,246 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.00 11.83 6,329 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio -- Class 1 10.00 11.41 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.00 11.12 5,060 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.00 10.92 12,102 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.00 11.10 8,478 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Mid Cap Portfolio -- Class 1 10.00 10.29 7,300 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.00 11.12 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.00 10.50 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.00 10.83 99,857 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Accounts Funds - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 10.00 10.89 49,179 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 10.00 10.96 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 10.00 10.88 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.00 10.61 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.00 10.70 350,943 2007 - ---------------------------------------------------------------------------------------------------------------------------------
B-36 Lifetime Income Plus 2007 (for Joint Annuitants) Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - -------------------------------------------------------------------------------------------------------------------------------- AIM Variable Insurance Funds - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares $10.00 $10.39 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 10.00 10.36 2,301 2007 - -------------------------------------------------------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - -------------------------------------------------------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 10.17 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 10.00 9.90 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 10.00 10.80 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - -------------------------------------------------------------------------------------------------------------------------------- VP Inflation Protection Fund -- Class II 10.00 10.55 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Eaton Vance Variable Trust - -------------------------------------------------------------------------------------------------------------------------------- VT Floating-Rate Income Fund 10.00 9.79 1,618 2007 - -------------------------------------------------------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 10.00 9.64 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - -------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 10.00 10.99 1,800 2007 - -------------------------------------------------------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 10.00 9.40 1,676 2007 - -------------------------------------------------------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 10.00 10.57 751 2007 - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - -------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.89 21,624 2007 - -------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 10.00 9.61 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 10.00 10.45 78,715 2007 - -------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.00 10.42 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.00 9.76 6,687 2007 - -------------------------------------------------------------------------------------------------------------------------------- MFS(R) Utilities Series -- Service Class Shares 10.00 10.97 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - -------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 10.00 10.60 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 10.00 9.76 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 10.00 9.02 1,306 2007 - -------------------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - -------------------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.00 9.86 -- 2007 - -------------------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.00 10.41 9,150 2007 - --------------------------------------------------------------------------------------------------------------------------------
B-37 Lifetime Income Plus 2008 Elected
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I shares $10.00 $ 9.72 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Global Real Estate Fund -- Series II shares 10.00 9.20 -- - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Large Cap Growth Fund -- Series I shares 10.00 9.79 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products Series Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 10.00 9.78 6,264 - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Growth and Income Portfolio -- Class B 10.00 9.72 -- - ------------------------------------------------------------------------------------------------------------------------------ AllianceBernstein Large Cap Growth Portfolio -- Class B 10.00 9.79 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Income & Growth Fund -- Class I 10.00 9.66 -- - ------------------------------------------------------------------------------------------------------------------------------ VP International Fund -- Class I 10.00 9.68 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Ultra(R) Fund -- Class I 10.00 9.83 -- - ------------------------------------------------------------------------------------------------------------------------------ VP Value Fund -- Class I 10.00 9.57 -- - ------------------------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios II, Inc. - ------------------------------------------------------------------------------------------------------------------------------ VP Inflation Fund -- Class II 10.00 10.16 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 10.00 9.66 -- - ------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 10.00 9.75 -- - ------------------------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund -- Money Market Portfolio 10.00 10.02 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Variable Series II - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman High Return Equity VIP -- Class B Shares 10.00 9.62 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Dreman Small Mid Cap Value VIP -- Class B Shares 10.00 9.57 -- - ------------------------------------------------------------------------------------------------------------------------------ DWS Technology VIP -- Class B Shares 10.00 9.77 -- - ------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Variable Trust - ------------------------------------------------------------------------------------------------------------------------------ VT Floating-Rate Income Fund 10.00 10.02 20,473 - ------------------------------------------------------------------------------------------------------------------------------ VT Worldwide Health Sciences Fund 10.00 9.58 -- - ------------------------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products Funds - ------------------------------------------------------------------------------------------------------------------------------ VIP Contrafund(R) Portfolio -- Service Class 2 10.00 9.80 33,245 - ------------------------------------------------------------------------------------------------------------------------------ VIP Equity-Income Portfolio -- Service Class 2 10.00 9.64 27,601 - ------------------------------------------------------------------------------------------------------------------------------ VIP Mid Cap Portfolio -- Service Class 2 10.00 9.78 11,593 - ------------------------------------------------------------------------------------------------------------------------------ Franklin Templeton Variable Insurance Products Trust - ------------------------------------------------------------------------------------------------------------------------------ Franklin Income Securities Fund -- Class 2 Shares 10.00 9.87 99,758 - ------------------------------------------------------------------------------------------------------------------------------ Franklin Large Cap Growth Securities Fund -- Class 2 Shares 10.00 9.66 -- - ------------------------------------------------------------------------------------------------------------------------------ Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 10.00 9.73 110,261 - ------------------------------------------------------------------------------------------------------------------------------ Mutual Shares Securities Fund -- Class 2 Shares 10.00 9.68 -- - ------------------------------------------------------------------------------------------------------------------------------ Templeton Foreign Securities Fund -- Class 2 Shares 10.00 9.78 -- - ------------------------------------------------------------------------------------------------------------------------------ Templeton Global Assets Allocation Fund -- Class 2 Shares 10.00 9.82 -- - ------------------------------------------------------------------------------------------------------------------------------ Templeton Growth Securities Fund -- Class 2 Shares 10.00 9.64 -- - ------------------------------------------------------------------------------------------------------------------------------ GE Investments Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Total Return Fund -- Class 3 Shares 10.00 9.82 450,066 - ------------------------------------------------------------------------------------------------------------------------------
Subaccounts Year - --------------------------------------------------------------------------------- AIM Variable Insurance Funds - --------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund -- Series I shares 2007 - --------------------------------------------------------------------------------- AIM V.I. Global Real Estate Fund -- Series II shares 2007 - --------------------------------------------------------------------------------- AIM V.I. Large Cap Growth Fund -- Series I shares 2007 - --------------------------------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc. - --------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Growth and Income Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- AllianceBernstein Large Cap Growth Portfolio -- Class B 2007 - --------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. - --------------------------------------------------------------------------------- VP Income & Growth Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP International Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP Ultra(R) Fund -- Class I 2007 - --------------------------------------------------------------------------------- VP Value Fund -- Class I 2007 - --------------------------------------------------------------------------------- American Century Variable Portfolios II, Inc. - --------------------------------------------------------------------------------- VP Inflation Fund -- Class II 2007 - --------------------------------------------------------------------------------- Dreyfus - --------------------------------------------------------------------------------- Dreyfus Investment Portfolios -- MidCap Stock Portfolio -- Initial Shares 2007 - --------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth Fund, Inc. -- Initial Shares 2007 - --------------------------------------------------------------------------------- Dreyfus Variable Investment Fund -- Money Market Portfolio 2007 - --------------------------------------------------------------------------------- DWS Variable Series II - --------------------------------------------------------------------------------- DWS Dreman High Return Equity VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- DWS Dreman Small Mid Cap Value VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- DWS Technology VIP -- Class B Shares 2007 - --------------------------------------------------------------------------------- Eaton Vance Variable Trust - --------------------------------------------------------------------------------- VT Floating-Rate Income Fund 2007 - --------------------------------------------------------------------------------- VT Worldwide Health Sciences Fund 2007 - --------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds - --------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- VIP Equity-Income Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- VIP Mid Cap Portfolio -- Service Class 2 2007 - --------------------------------------------------------------------------------- Franklin Templeton Variable Insurance Products Trust - --------------------------------------------------------------------------------- Franklin Income Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Franklin Large Cap Growth Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Franklin Templeton VIP Founding Funds Allocation Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Mutual Shares Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Foreign Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Global Assets Allocation Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 Shares 2007 - --------------------------------------------------------------------------------- GE Investments Funds, Inc. - --------------------------------------------------------------------------------- Total Return Fund -- Class 3 Shares 2007 - ---------------------------------------------------------------------------------
B-38
Number of Accumulation Accumulation Accumulation Unit Values at Unit Values at Units at Subaccounts Beginning of Period End of Period End of Period Year - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Balanced Portfolio -- Class 1 $10.00 $ 9.78 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Core Bond Portfolio -- Class 1 10.00 10.10 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Equity Portfolio -- Class 1 10.00 9.71 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio -- Class 1 10.00 9.71 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Equity Index Portfolio -- Class 1 10.00 9.69 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Government Bond Portfolio -- Class 1 10.00 10.07 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Growth Portfolio -- Class 1 10.00 9.71 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- JPMorgan Insurance Trust Intrepid Mid Cap Portfolio -- Class 1 10.00 9.66 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Investors Growth Stock Series -- Service Class Shares 10.00 9.79 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Strategic Income Series -- Service Class Shares 10.00 10.03 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series -- Service Class Shares 10.00 9.84 11,646 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund/VA -- Service Shares 10.00 9.71 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund/VA -- Service Shares 10.00 9.68 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund/VA -- Service Shares 10.00 9.63 19,553 2007 - --------------------------------------------------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust - --------------------------------------------------------------------------------------------------------------------------------- High Yield Portfolio -- Administrative Class Shares 10.00 10.03 -- 2007 - --------------------------------------------------------------------------------------------------------------------------------- Low Duration Portfolio -- Administrative Class Shares 10.00 10.07 122,592 2007 - ---------------------------------------------------------------------------------------------------------------------------------
B-39
TABLE OF CONTENTS Statement of Additional Information The Company.......................................................................................................... B-3 The Separate Account................................................................................................. B-3 Additional Information About the Guarantee Account................................................................... B-3 The Contracts........................................................................................................ B-4 Transfer of Annuity Units......................................................................................... B-4 Net Investment Factor............................................................................................. B-4 Termination of Participation Agreements.............................................................................. B-4 Calculation of Performance Data...................................................................................... B-5 Subaccounts Investing in GE Investments Funds, Inc. -- Money Market Fund and the Dreyfus Variable Investment Fund -- Money Market Portfolio....................................................................................... B-5 Other Subaccounts................................................................................................. B-6 Other Performance Data............................................................................................ B-7 Tax Matters.......................................................................................................... B-7 Taxation of Genworth Life and Annuity Insurance Company........................................................... B-7 IRS Required Distributions........................................................................................ B-8 General Provisions................................................................................................... B-8 Using the Contracts as Collateral................................................................................. B-8 The Beneficiary................................................................................................... B-8 Non-Participating................................................................................................. B-8 Misstatement of Age or Gender..................................................................................... B-8 Incontestability.................................................................................................. B-8 Statement of Values............................................................................................... B-8 Trust as Owner or Beneficiary..................................................................................... B-9 Written Notice.................................................................................................... B-9 Legal Developments Regarding Employment-Related Benefit Plans........................................................ B-9 Regulation of Genworth Life and Annuity Insurance Company............................................................ B-9 Experts.............................................................................................................. B-9 Financial Statements................................................................................................. B-9
Genworth Life and Annuity Insurance Company 6610 West Broad Street Richmond, Virginia 23230 A Statement of Additional Information containing more detailed information about the contract and the Separate Account is available free by writing us at the address below or by calling (800) 352-9910. Genworth Life and Annuity Insurance Company Annuity New Business 6610 West Broad Street Richmond, Virginia 23230 Please mail a copy of the Statement of Additional Information for the Separate Account Contract Form P1154 4/00 (RetireReady/SM/ Choice/Foundation) to: Name: __________________________________________________________________________ Address: _______________________________________________________________________ Street ________________________________________________________________________________ City State Zip Signature of Requestor: ________________________________________________________ Date -----END PRIVACY-ENHANCED MESSAGE-----