N-4/A 1 visionn4a.htm VISION_N-4A FILING 04-07-2011 visionn4a.htm

N-4/A
File Nos. 333-171427
Allianz Vision POS
811-05618
 
UNITED STATES
 
 
SECURITIES AND EXCHANGE COMMISSION
 
 
WASHINGTON, D.C. 20549
 
 
FORM N-4
 
     
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
Pre-Effective Amendment No.
1
 
X
Post-Effective Amendment No.
     
and/or
 
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
 
Amendment No.
298
 
X
 
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
(Exact Name of Registrant)
 
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
(Name of Depositor)
 
5701 Golden Hills Drive, Minneapolis, MN 55416-1297
(Address of Depositor's Principal Executive Offices) (Zip Code)
 
(763) 765-2913
(Depositor's Telephone Number, including Area Code)
 
Stewart D. Gregg, Senior Securities Counsel
Allianz Life Insurance Company of North America
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
(Name and Address of Agent for Service)
 
Approximate Date of the Proposed Public Offering: As soon as practicable after the effective date of this filing.
 
Titles of Securities Being Registered:
Individual Flexible Purchase Payment Variable Deferred Annuity Contract
 
 
The Registrant hereby amends this  Registration  Statement on such date or dates as may be necessary to delay its effective date until the Registrant  shall file a further amendment which specifically  states that this Registration  Statement shall thereafter  become  effective  in  accordance  with  Section  8(a) of the Securities  Act of  1933  or  until  the  Registration Statement  shall  become effective on such date as the Commission,  acting pursuant to said Section 8(a), may determine.

 
 

 

 
 
PART A – PROSPECTUS


 
THE ALLIANZ VISIONSM
 
 
VARIABLE ANNUITY CONTRACT
 
 
ISSUED BY
 
 
ALLIANZ LIFE® VARIABLE ACCOUNT B AND
 
 
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
 
The information in this prospectus is not complete and may be changed. We cannot sell the Allianz Vision Variable Annuity until the Registration Statement filed with the Securities and Exchange Commission for this Contract is effective. This prospectus is not an offer to sell the Contract and is not soliciting an offer to buy the Contract in any state where the offer or sale is not permitted.
 

This prospectus describes an individual flexible purchase payment variable deferred annuity contract (Contract) issued by Allianz Life Insurance Company of North America (Allianz Life, we, us, our).
 
The Base Contract offers you, the Owner, standard features including: a seven-year withdrawal charge period, multiple variable investment options (Investment Options) and annuitization options (Annuity Options), a free withdrawal privilege, and a death benefit (Traditional Death Benefit). The Contract offers optional benefits, for an additional charge:
 
Bonus Option provides a 6% bonus on the money you put into the Contract (Purchase Payments). Bonus annuity contracts generally have higher charges than contracts without a bonus and therefore, the charges may be greater than the bonus.
 
Short Withdrawal Charge Option shortens the withdrawal charge period to four years.
 
No Withdrawal Charge Option eliminates the withdrawal charge.
 
Quarterly Value Death Benefit locks in any quarterly investment gains (Quarterly Anniversary Value) to provide a potentially increased death benefit.
 
Income Protector provides guaranteed lifetime income payments (Lifetime Plus Payments) with continued access to both your investment value (Contract Value) and death benefit for a period of time.
 
Investment Protector provides a level of protection for your principal and any annual investment gains (Target Value), on a specific date in the future, assuming you hold the Contract for the required period.
 
Investment Plus provides:
 
·
guaranteed lifetime income payments (Lifetime Income Payments, similar to Lifetime Plus Payments) with continued access to both Contract Value and a death benefit for a period of time, and/or
 
·
before Lifetime Income Payments begin, a level of protection for your principal and any quarterly investment gains on a specific date in the future, assuming you hold the Contract for the required period (Protected Investment Value, similar to Target Value).
 
Income Protector, Investment Protector and Investment Plus are subject to certain date and/or age restrictions for adding and exercising the benefits. For optional benefit availability, see section 11, Selection of Optional Benefits and check with your Financial Professional, the person who provided you advice regarding this Contract.
 
Please read this prospectus before investing and keep it for future reference. It contains important information about your annuity and Allianz Life that you ought to know before investing. This prospectus is not an offering in any state, country, or jurisdiction in which we are not authorized to sell the Contracts. You should rely only on the information contained in this prospectus. We have not authorized anyone to give you different information.
 
Allianz Life Variable Account B is the Separate Account that holds the assets that underlie the Contract. Additional information about the Separate Account has been filed with the Securities and Exchange Commission (SEC) and is available upon written or oral request without charge on the EDGAR database on the SEC’s website (http://www.sec.gov). A Statement of Additional Information (SAI) dated the same date as this prospectus includes additional information about the annuity offered by this prospectus. The SAI is incorporated by reference into this prospectus. The SAI is filed with the SEC and is available without charge by contacting us at the telephone number or address listed at the back of this prospectus. The SAI’s table of contents appears after the Privacy and Security Statement in this prospectus. The prospectus, SAI and other Contract information are also available on the EDGAR database.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
1

 

The 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. An investment in this Contract is not a deposit of a bank or financial institution and is not federally insured or guaranteed by the Federal Deposit Insurance Corporation or any other federal government agency. An investment in this Contract involves investment risk including the possible loss of principal. Variable annuity contracts are complex insurance and investment vehicles. Before you invest, be sure to ask your Financial Professional about the Contract’s features, benefits, risks and fees, and whether the Contract is appropriate for you based upon your financial situation and objectives.
 
Dated: May 1, 2011
 
These are the currently available Investment Options. If you select Income Protector, Investment Protector, or Investment Plus, we restrict your Investment Option selection and allocations, and rebalance your Contract Value quarterly. See section 11.a, Income Protector, section 11.b, Investment Protector and section 11.c, Investment Plus. Currently, all of the Investment Options are available under Investment Protector, but only the Investment Options indicated by the * below are available under Income Protector and Investment Plus.
 

 
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
 

ALLIANZ FUND OF FUNDS
FRANKLIN TEMPLETON (continued)
AZL Balanced Index StrategySM Fund*
Mutual Global Discovery Securities Fund
AZL FusionSM Balanced Fund*
Mutual Shares Securities Fund
AZL FusionSM Conservative Fund*
Templeton Global Bond Securities Fund*
AZL FusionSM Growth Fund
Templeton Growth Securities Fund
AZL FusionSM Moderate Fund*
 
AZL Growth Index StrategySM Fund*
GATEWAY
 
AZL® Gateway Fund*
ALLIANZ GLOBAL INVESTORS CAPITAL
 
AZL® Allianz AGIC Opportunity Fund
INVESCO
 
AZL® Invesco Equity and Income Fund*
BLACKROCK
AZL® Invesco Growth and Income Fund
AZL® BlackRock Capital Appreciation Fund
AZL® Invesco International Equity Fund
AZL® International Index Fund
 
AZL® Mid Cap Index Fund
J.P. MORGAN
AZL® Money Market Fund*
AZL® JPMorgan International Opportunities Fund
AZL® S&P 500 Index Fund
AZL® JPMorgan U.S. Equity Fund
AZL® Small Cap Stock Index Fund
 
BlackRock Global Allocation V.I. Fund*
MFS
 
AZL® MFS Investors Trust Fund
COLUMBIA
 
AZL® Columbia Mid Cap Value Fund
MORGAN STANLEY
AZL® Columbia Small Cap Value Fund
AZL® Morgan Stanley Global Real Estate Fund
 
AZL® Morgan Stanley Mid Cap Growth Fund
DAVIS
 
AZL® Davis NY Venture Fund
PIMCO
Davis VA Financial Portfolio
PIMCO EqS Pathfinder Portfolio
 
PIMCO VIT All Asset Portfolio*
DREYFUS
PIMCO VIT CommodityRealReturn® Strategy Portfolio
AZL® Dreyfus Equity Growth Fund
PIMCO VIT Emerging Markets Bond Portfolio*
 
PIMCO VIT Global Advantage Strategy Bond Portfolio*
EATON VANCE
PIMCO VIT Global Bond Portfolio (Unhedged)*
AZL® Eaton Vance Large Cap Value Fund
PIMCO VIT Global Multi-Asset Portfolio*
 
PIMCO VIT High Yield Portfolio*
FIDELITY
PIMCO VIT Real Return Portfolio*
Fidelity VIP FundsManager 50% Portfolio*
PIMCO VIT Total Return Portfolio*
Fidelity VIP FundsManager 60% Portfolio*
PIMCO VIT Unconstrained Bond Portfolio*
   
FRANKLIN TEMPLETON
SCHRODER
AZL® Franklin Small Cap Value Fund
AZL® Schroder Emerging Markets Equity Fund
AZL® Franklin Templeton Founding Strategy Plus Fund*
 
Franklin High Income Securities Fund*
TURNER
Franklin Income Securities Fund*
AZL® Turner Quantitative Small Cap Growth Fund
Franklin Templeton VIP Founding Funds Allocation Fund
 
Franklin U.S. Government Fund*
 

 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
2

 

 
TABLE OF CONTENTS
 
Glossary
4
 
Waiver of Withdrawal Charge Benefit
35
Fee Tables
7
 
Suspension of Payments or Transfers
35
 
Owner Transaction Expenses
7
9.
The Annuity Phase
36
 
Owner Periodic Expenses
7
 
Calculating Your Annuity Payments
36
 
Annual Operating Expenses of the Investment Options
8
 
Variable or Fixed Annuity Payments
36
 
Examples
9
 
Annuity Payment Options
37
1.
The Variable Annuity Contract
10
 
When Annuity Payments Begin
37
 
State Specific Contract Restrictions
10
 
Partial Annuitization
38
 
When the Contract Ends
11
10.
Death Benefit
39
2.
Ownership
11
 
Traditional Death Benefit
39
 
Owner
11
 
Death of the Owner and/or Annuitant
39
 
Joint Owner
11
 
Death Benefit Payment Options During The
 
 
Annuitant
11
 
Accumulation Phase
39
 
Beneficiary
12
11.
Selection of Optional Benefits
41
 
Covered Person(s)
12
 
Replacing Optional Benefits
41
 
Payee
13
11.a
Income Protector
43
 
Assignment, Changes of Ownership and
   
Selecting Income Protector
43
 
OtherTransfers of a Contract
13
 
Removing Income Protector
43
3.
Purchasing the Contract
14
 
Lifetime Plus Payment Overview
44
 
Purchase  Requirements
14
 
Benefit Base
44
 
Faxed Applications
15
 
Quarterly Anniversary Value
45
 
Allocation of Purchase Payments
15
 
Annual Increase
45
 
Automatic Investment Plan (AIP)
15
 
Requesting Lifetime Plus Payments
46
 
Dollar Cost Averaging (DCA) Program
15
 
Calculating Your Lifetime Plus Payments
47
 
Free Look/Right-to-Examine Period
16
 
Automatic Annual Lifetime Plus Payment Increases
48
4.
Valuing Your Contract
17
 
Taxation of Lifetime Plus Payments
48
 
Accumulation Units
17
 
Investment Option Allocation and Transfer Restrictions
 
 
Computing the Contract Value and Bonus Value
17
 
and Quarterly Rebalancing
48
5.
Investment Options
18
 
When Income Protector Ends
49
 
Substitution and Limitation on Further Investments
24
11.b
Investment Protector
50
 
Transfers Between Investment Options
24
 
Selecting Investment Protector
51
 
Electronic Investment Option Transfer and
   
Removing Investment Protector
51
 
Allocation Instructions
25
 
Target Value Dates
51
 
Excessive Trading and Market Timing
25
 
Target Value
51
 
Flexible Rebalancing Program
27
 
Investment Option Allocation and Transfer Restrictions
 
 
Financial Advisers – Asset Allocation Programs
27
 
and Quarterly Rebalancing
52
 
Voting Privileges
28
 
When the Investment Protector Ends
53
6.
Our General Account
28
11.c
Investment Plus
58
7.
Expenses
28
 
Selecting Investment Plus
59
 
Mortality and Expense Risk (M&E) Charge
28
 
Removing Investment Plus
59
 
Rider Charge
29
 
Protected Investment Dates
60
 
Contract Maintenance Charge
29
 
Protected Investment Value
61
 
Withdrawal Charge
30
 
Lifetime Income Payment Overview
62
 
Transfer Fee
32
 
Lifetime Income Value
62
 
Premium Tax
32
 
Quarterly Anniversary Value
62
 
Income Tax
32
 
Requesting Lifetime Income Payments
63
 
Investment Option Expenses
32
 
Calculating Your Lifetime Income Payments
65
8.
Access to Your Money
33
 
Automatic Annual Lifetime Income Payment Increases
65
 
Free Withdrawal Privilege
34
 
Taxation of Lifetime Income Payments
65
 
Systematic Withdrawal Program
35
 
Investment Option Allocation and Transfer Restrictions
 
 
The Minimum Distribution Program and Required
   
and Quarterly Rebalancing
65
 
Minimum Distribution (RMD) Payments
35
 
When Investment Plus Ends
66


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
3

 


11.d
Quarterly Value Death Benefit
67
 
Administration/Allianz Service Center
73
11.e
Bonus Option
68
 
Legal Proceedings
73
11.f
Short Withdrawal Charge Option
69
 
Financial Statements
73
11.g
No Withdrawal Charge Option
69
 
Status Pursuant to Securities Exchange Act of 1934
73
12.
Taxes
69
14.
Privacy and Security Statement
74
 
Qualified and Non-Qualified Contracts
69
15.
Table of Contents of the Statement of Additional
 
 
Taxation of Annuity Contracts
70
 
Information (SAI)
75
 
Tax-Free Section 1035 Exchanges
71
Appendix A – Annual Operating Expenses for Each
 
13.
Other Information
71
 
Investment Option
76
 
Allianz Life
71
Appendix B – Effects of Partial Withdrawals and Lifetime
 
 
The Separate Account
71
 
Payments on the Values Available Under the Contract
78
 
Distribution
71
For Service or More Information
79
 
Additional Credits for Certain Groups
72
     
           

 
 
GLOSSARY
 

This prospectus is written in plain English. However, there are some technical words or terms that are capitalized throughout the prospectus. For your convenience, we included this glossary to define these terms.
 
Accumulation Phase – the initial phase of your Contract before you apply your total Contract Value to Annuity Payments. The Accumulation Phase begins on the Issue Date and may occur at the same time as the Annuity Phase if you take Partial Annuitizations.
 
 
Annual Increase – an amount used to determine the Benefit Base under Income Protector.
 
Annuitant – the individual upon whose life we base the Annuity Payments. Subject to our approval, the Owner designates the Annuitant, and can add a joint Annuitant for the Annuity Phase if they take a Full Annuitization.
 
Annuity Options – the annuity income options available to you under the Contract.
 
Annuity Payments – payments made by us to the Payee pursuant to the chosen Annuity Option.
 
Annuity Phase – the phase the Contract is in once Annuity Payments begin. This may occur at the same time as the Accumulation Phase if you take a Partial Annuitization.
 
Base Contract – the Contract without any optional benefits.
 
Beneficiary – unless otherwise required by the Contract, the person(s) or entity the Owner designates to receive any death benefit.
 
Benefit Anniversary – a twelve-month anniversary of the Benefit Date or Benefit Election Date (as applicable), or any subsequent twelve-month Benefit Anniversary.
 
Benefit Base – the amount we use to calculate the initial annual maximum Lifetime Plus Payment.
 
Benefit Date – the date you begin receiving Lifetime Plus Payments.
 
Benefit Election Date – the date you request to begin Lifetime Income Payments and you lock in the initial payment percentage based on the current treasury rate, which is the Ten-year U.S. Constant Maturity Treasury rate.
 
Benefit Year – any period of twelve months beginning on the Benefit Date or Benefit Election Date (as applicable), or on a subsequent Benefit Anniversary.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
4

 

Bonus Option – an optional benefit that may be available for an additional charge that provides a 6% bonus on Purchase Payments we receive before the older Owner’s 81st birthday (subject to a three-year vesting schedule). This benefit has an additional M&E charge and a higher and longer withdrawal charge schedule.
 
Bonus Value – the total Contract Value plus any unvested bonus amounts.
 
Business Day – each day on which the New York Stock Exchange is open for trading, except when an Investment Option does not value its shares. Allianz Life is open for business on each day that the New York Stock Exchange is open. Our Business Day closes when regular trading on the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern Time.
 
Contract – the deferred annuity contract described by this prospectus.
 
Contract Anniversary – a twelve-month anniversary of the Issue Date or any subsequent twelve-month Contract Anniversary.
 
Contract Value – on any Business Day it is equal to the sum of the values in your selected Investment Options. The Contract Value reflects the deduction of any contract maintenance charge, transfer fee, M&E charge and rider charge, but does not reflect the deduction of any withdrawal charge. It does not include amounts applied to a Partial Annuitization. If you have a Bonus Option Contract, Contract Value includes only vested bonus amounts; it does not include unvested bonus amounts.
 
Contract Year – any period of twelve months beginning on the Issue Date or a subsequent Contract Anniversary.
 
Covered Person(s) – the person(s) upon whose age and lifetime(s) we base Lifetime Plus Payments or Lifetime Income Payments.
 
Excess Withdrawal – if you select Income Protector or Investment Plus, this is the amount of any withdrawal you take while you are receiving Lifetime Plus Payments or Lifetime Income Payments that, when added to other withdrawals taken during the Benefit Year, is greater than your annual maximum permitted payment.
 
Financial Professional – the person who advises you regarding the Contract.
 
Full Annuitization – the application of the total Contract Value to Annuity Payments.
 
Good Order – a request is in “Good Order” if it contains all of the information we require to process the request. If we require information to be provided in writing, “Good Order” also includes provision of information on the correct form, with any required certifications or guarantees, received at the correct mailing address. If you have questions about the information we require, please contact the Service Center.
 
Income Date – the date we begin making Annuity Payments to the Payee from the Contract. Because the Contract allows for Partial Annuitizations, there may be multiple Income Dates.
 
Income Protector – an optional benefit that may be available for an additional charge that is intended to provide a payment stream for life in the form of partial withdrawals.
 
Investment Options – the variable investments available to you under the Contract whose performance is based on the securities in which they invest.
 
Investment Plus – an optional benefit that may be available for an additional charge. It is intended to provide a level of protection for your principal and any annual investment gains on a specific date in the future, and can also provide a payment stream for life in the form of partial withdrawals.
 
Investment Protector – an optional benefit that may be available for an additional charge. It is intended to provide a level of protection for your principal and any annual investment gains on a specific date in the future.
 
Issue Date – the date shown on the Contract that starts the first Contract Year. Contract Anniversaries and Contract Years are measured from the Issue Date.
 
Joint Owners – two Owners who own a Contract.
 
Lifetime Income Payment – the payment we make to you under Investment Plus.
 
Lifetime Income Value – the amount we use to calculate the initial annual maximum Lifetime Income Payment.
 
Lifetime Plus Payment – the payment we make to you under Income Protector.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
5

 

Non-Qualified Contract – a Contract that is not purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code.
 
No Withdrawal Charge Option – an optional benefit that may be available for an additional charge that eliminates the Base Contract’s seven-year withdrawal charge.
 
Owner – “you,” “your” and “yours.” The person(s) or entity designated at Contract issue and named in the Contract who may exercise all rights granted by the Contract.
 
Partial Annuitization – the application of only part of the Contract Value to Annuity Payments.
 
Payee – the person or entity you designate (subject to our approval) to receive Annuity Payments during the Annuity Phase.
 
Payment Date – the date Lifetime Income Payments begin.
 
Protected Investment Date – the date on which we guarantee your Contract Value cannot be less than the Protected Investment Value.
 
Protected Investment Value – an amount used to determine the guarantee on the Protected Investment Date.
 
Purchase Payment – the money you put into the Contract.
 
Qualified Contract – a Contract purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code (for example, 401(a) and 401(k) plans), Individual Retirement Annuities (IRAs), or Tax-Sheltered Annuities (referred to as TSA or 403(b) contracts). Currently, we issue Qualified Contracts that may include, but are not limited to Roth IRAs, Traditional IRAs and Simplified Employee Pension (SEP) IRAs.
 
Quarterly Anniversary – the day that occurs three calendar months after the Issue Date or any subsequent Quarterly Anniversary.
 
Quarterly Anniversary Value – an amount used to determine the Quarterly Value Death Benefit, Benefit Base, Protected Investment Value, and Lifetime Income Value.
 
Quarterly Value Death Benefit – an optional benefit that may be available for an additional charge that is intended to provide an increased death benefit.
 
Rider Anniversary Value – an amount used to determine the Target Value.
 
Separate Account – Allianz Life Variable Account B is the Separate Account that issues your Contract. It is a separate investment account of Allianz Life. The Separate Account holds the assets invested in the Investment Options that underlie the Contracts. The Separate Account is divided into subaccounts, each of which invests exclusively in a single Investment Option.
 
Service Center – the Allianz Service Center. Our Service Center address and telephone number are listed at the back of this prospectus. The address for sending applications for new Contracts is listed on the application.
 
Short Withdrawal Charge Option – an optional benefit that may be available for an additional charge that shortens the Base Contract’s withdrawal charge period to four years.
 
Target Value – an amount used to determine the guarantee on the Target Value Date.
 
Target Value Date – the date on which we guarantee your Contract Value cannot be less than the Target Value.
 
Traditional Death Benefit – the death benefit provided by the Base Contract.
 
Withdrawal Charge Basis – the total amount under your Contract that is subject to a withdrawal charge.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
6

 

 
 
FEE TABLES
 

These tables describe the fees and expenses you pay when purchasing, owning and taking a withdrawal from the Contract. For more information, see section 7, Expenses.
 
 
OWNER TRANSACTION EXPENSES
 
 
Withdrawal Charge During Your Contract’s Initial Phase, the Accumulation Phase(1),(2)
(as a percentage of each Purchase Payment withdrawn)
 
Number of Complete Years Since Purchase Payment
Withdrawal Charge Amount
Base Contract(3)
Bonus Option(4),(5)
Short Withdrawal
Charge Option(4)
No Withdrawal
Charge Option(4)
0
8.5%
8.5%
8.5%
0%
1
8.5%
8.5%
7.5%
0%
2
7.5%
8.5%
5.5%
0%
3
6.5%
8%
3%
0%
4
5%
7%
0%
0%
5
4%
6%
0%
0%
6
3%
5%
0%
0%
7
0%
4%
0%
0%
8
0%
3%
0%
0%
9 years or more
0%
0%
0%
0%

 
Transfer Fee(6)………………………………….......
$25 for each transfer after twelve.
Premium Tax(7)……………………………………...
0% to 3.5%
(as a percentage of each Purchase Payment)
 
 
OWNER PERIODIC EXPENSES
 
Contract Maintenance Charge(8)………………...
$50
(per Contract per year)
 
 
(1)
Each Contract Year you can withdraw 12% of your total Purchase Payments without incurring a withdrawal charge. This free withdrawal privilege is not available while you are receiving Lifetime Plus Payments (if applicable). Any unused free withdrawal privilege in one Contract Year is not added to the amount available next year. For more information, see section 8, Access to Your Money – Free Withdrawal Privilege.
 
(2)
The amount subject to a withdrawal charge is the Withdrawal Charge Basis. It is equal to total Purchase Payments, less any Purchase Payments withdrawn (excluding any penalty-free withdrawals), less any withdrawal charges. For more information, see section 7, Expenses – Withdrawal Charge.
 
(3)
In Mississippi, the withdrawal charge is 8.5%, 7.5%, 6.5%, 5.5%, 5%, 4%, 3%, and 0% for the time periods referenced.
 
(4)
Some optional benefits may not be available to you; check with your Financial Professional and see section 11, Selection of Optional Benefits.
 
(5)
Not available in Connecticut or Oregon. In Mississippi, the withdrawal charge is 8%, 8%, 8%, 8%, 7%, 6%, 5%, 3.5%, 1.5% and 0% for the time periods referenced. For more information, see section 7, Expenses – Withdrawal Charge.
 
( 6)
The first twelve transfers in a Contract Year are free. We count all transfers made in the same Business Day as one transfer. Program and benefit related transfers are not subject to the transfer fee and do not count against the free transfers we allow. Currently, we deduct this fee only during the Accumulation Phase, but we reserve the right to deduct it during the Annuity Phase. For more information, see section 7, Expenses – Transfer Fee.
 
(7)
We do not currently deduct this tax from your Contract Value, but we reserve the right to do so in the future. For more information, see section 7, Expenses – Premium Tax.
 
( 8)
We waive this charge if the Contract Value is at least $100,000 at the time we are to deduct the charge. For more information, see section 7, Expenses – Contract Maintenance Charge.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
7

 

 
CONTRACT ANNUAL EXPENSES
 
 
 
Mortality and Expense Risk (M&E) Charge(9)
Rider Charge(10) during the
Accumulation Phase
 
Accumulation Phase
Annuity
Phase(11)
Current(12)
Maximum
BASE CONTRACT
1.40%
1.40%
   
Additional Charges for Optional Benefits(13)
       
Quarterly Value Death Benefit
0.30%
     
Bonus Option(14)
0.30%
0.30%
   
Short Withdrawal Charge Option
0.25%
     
No Withdrawal Charge Option
0.35%
     
Income Protector
Single Lifetime Plus Payments
Joint Lifetime Plus Payments
   
1.05%
1.20%
2.50%
2.75%
Investment Protector
   
0.90%
2.50%
Investment Plus
Single Lifetime Income Payments
Joint Lifetime Income Payments
   
1.50%
1.50%
2.50%
2.50%
 
(9)
The M&E charge is an annualized rate that is calculated and assessed on a daily basis as a percentage of each Investment Option’s net asset value. We assess the M&E charge during the Accumulation Phase and on amounts you apply to variable Annuity Payments during the Annuity Phase. For more information, see section 7, Expenses – Mortality and Expense Risk (M&E) Charge.
 
(10)
The rider charge is an annualized rate that is calculated and accrued on a daily basis and deducted quarterly. The charge is calculated as a percentage of the Benefit Base under Income Protector, or as a percentage of the Target Value under Investment Protector, or as a percentage of the Lifetime Income Value under Investment Plus. The Benefit Base, Target Value and Lifetime Income Value are initially equal to the Contract Value and then fluctuate with additional Purchase Payments, withdrawals, and quarterly or annual increases. The rider charge reduces the Contract Value, but not any guaranteed values such as the Traditional Death Benefit value. For more information, see section 7, Expenses – Rider Charge.
 
(11)
The Contract allows Partial Annuitization. It is possible for the Contract to be in both the Accumulation and Annuity Phases simultaneously and have different M&E charges. For example, if you select the Quarterly Value Death Benefit and request a variable Partial Annuitization we assess an annual M&E charge of 1.40% on the annuitized part of the Contract, and an annual M&E charge of 1.70% on the accumulation part. For more information, see section 9, The Annuity Phase – Partial Annuitization.
 
(12)
We reserve the right to increase or decrease the rider charge on each Quarterly Anniversary subject to the maximum set out above and the minimum stated in section 7, Expenses – Rider Charge. However, in any twelve-month period we cannot increase or decrease the rider charge for Income Protector or Investment Plus more than 0.50%, or more than 0.35% for Investment Protector. If we increase your rider charge, we notify you in writing at least 30 days in advance to allow you to remove the benefit before the charge increases. For more information, see section 7, Expenses – Rider Charge.
 
(13)
We assess the additional M&E charge during the Accumulation Phase while your benefit is in effect and your Contract Value is positive.
 
(14)
Not available in Connecticut or Oregon. If you take variable Annuity Payments during the Annuity Phase, the Bonus Option’s additional M&E charge continues until your Contract ends.
 
 
ANNUAL OPERATING EXPENSES OF THE INVESTMENT OPTIONS
 
Following are the minimum and maximum total annual operating expenses charged by any of the Investment Options for the period ended December 31, 2010, before the effect of any contractual expense reimbursement or fee waiver. We show the expenses as a percentage of an Investment Option’s average daily net assets.
 
 
Minimum
Maximum
Total annual Investment Option operating expenses*
(including management fees, distribution or 12b-1 fees, and other expenses)
before fee waivers and expense reimbursements
0.54%
1.70%
 
*
Some of the Investment Options or their affiliates may also pay service fees to us or our affiliates. Amounts may be different for each Investment Option. The maximum current fee is 0.25%. If these fees are deducted from Investment Option assets, they are reflected in the above table and disclosed in Appendix A. Appendix A contains annual operating expense details for each Investment Option.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
8

 

 
EXAMPLES
 
These examples are intended to help you compare the cost of investing in this Contract with the costs of other variable annuity contracts. These examples assume you make a $10,000 investment and your selected Investment Options earn a 5% annual return. They also assume the maximum potential fees and charges for each period and are not a representation of past or future expenses. Your Contract expenses may be more or less than the examples below, depending on the Investment Option(s) and optional benefits you select, and whether and when you take withdrawals.
 
We deduct the $50 contract maintenance charge in the examples at the end of each year during the Accumulation Phase. Please note that we may waive this charge during the Accumulation Phase and Annuity Phase (when we make regular periodic payments, called Annuity Payments based on the life a person you designate, called the Annuitant), as described in section 7, Expenses – Contract Maintenance Charge. A transfer fee may apply, but is not reflected in these examples (see section 7, Expenses – Transfer Fee).
 
The combination of benefits that produces the maximum potential fees and charges may vary from period to period due to the effect of the withdrawal charge. The Base Contract with Bonus Option has a withdrawal charge and the Base Contract with No Withdrawal Charge Option does not.
 
 
1)
If you surrender your Contract (take a full withdrawal) at the end of each time period.
 
Total annual Investment Option operating expenses
before any fee waivers or expense reimbursements of:
1 Year
3 Years
5 Years
10 Years
1.70% (the maximum Investment Option operating expense)
$1,547*
$2,982*
$4,316*
$7,528**
0.54% (the minimum Investment Option operating expense)
$1,435*
$2,664*
$3,815*
$6,692**
 
 
2)
If you apply your total Contract Value to Annuity Payments (take a Full Annuitization) at the end of each time period. The earliest available date Annuity Payments can begin (Income Date) is one year after the date we issue the Contract (Issue Date) for Florida, and two years after the Issue Date in all other states.
 
Total annual Investment Option operating expenses
before any fee waivers or expense reimbursements of:
1 Year
3 Years
5 Years
10 Years
1.70% (the maximum Investment Option operating expense)
$   702**
$2,145**
$3,637**
$7,494**
0.54% (the minimum Investment Option operating expense)
$   590**
$1,828**
$3,138**
$6,692**

 
 
3)
If you do not surrender your Contract.
 
Total annual Investment Option operating expenses
before any fee waivers or expense reimbursements of:
1 Year
3 Years
5 Years
10 Years
1.70% (the maximum Investment Option operating expense)
$   702**
$2,145**
$3,637**
$7,494**
0.54% (the minimum Investment Option operating expense)
$   590**
$1,828**
$3,138**
$6,692**
 
*
This expense is for the Base Contract with Bonus Option, Quarterly Value Death Benefit and Income Protector with joint Lifetime Plus Payments, assuming an 8% simple interest for the Annual Increase under the Benefit Base (8.5% declining withdrawal charge, 2.0% M&E charge, and maximum rider charge of 2.75%). The current rider charge is 1.20%.
 
**
This expense is for the Base Contract with No Withdrawal Charge Option, Quarterly Value Death Benefit and Income Protector with joint Lifetime Plus Payments, assuming an 8% simple interest for the Annual Increase under the Benefit Base (2.05% M&E charge and maximum rider charge of 2.75%).The current rider charge is 1.20%.
 
As of May 1, 2011 , no Contracts offered by this prospectus had been sold. Therefore, we have not included any condensed financial information.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
9

 

 
1.
THE VARIABLE ANNUITY CONTRACT
 
An annuity is a contract between you as the Owner, and an insurance company (in this case Allianz Life), where you make payments to us and the money is invested in a contract on a tax-deferred basis. Tax deferral means you are not taxed on any earnings or appreciation on the assets in your Contract until you take money out of your Contract. (For more information, see section 12, Taxes.) Depending upon market conditions, your Contract can gain or lose value based on your selected Investment Options’ performance. When you take Annuity Payments, we promise to make regular periodic payments to you or someone you designate (the Payee). We do not make any changes to your Contract without your permission except as may be required by law.
 
The Contract has an Accumulation Phase and an Annuity Phase. During the Accumulation Phase, you can take withdrawals, and subject to certain restrictions, you can make additional Purchase Payments. During the Accumulation Phase you may be able to select one of the following optional benefits:
 
·
Income Protector provides guaranteed lifetime income payments called Lifetime Plus Payments. You can choose when Lifetime Plus Payments begin (the Benefit Date) subject to certain restrictions.
 
·
Investment Protector provides a level of protection for your principal and any annual investment gains, at a future point you select called the Target Value Date.
 
·
Investment Plus offers flexibility by providing a level of protection for your principal and any Quarterly Anniversary investment gains, at a future point you select called the Protected Investment Date (similar to Investment Protector’s Target Value Date) before beginning guaranteed lifetime income payments called Lifetime Income Payments (similar to Income Protector’s Lifetime Plus Payments). Quarterly Anniversaries occur three calendar months after the Issue Date or any subsequent Quarterly Anniversary. You choose when Lifetime Income Payments begin. The principal protection feature of this benefit is not available once you request Lifetime Income Payments.
 
For more information on optional benefits, see section 11, Selection of Optional Benefits.
 
The Accumulation Phase begins on the Issue Date and ends upon the earliest of the following.
 
·
The Business Day before the Income Date that you take a Full Annuitization.
 
·
The Business Day we process your request for a full withdrawal.
 
·
The death of any Owner (or the Annuitant if the Contract is owned by a non-individual). The Accumulation Phase ends on the Business Day we receive in Good Order at our Service Center, both due proof of death and an election of the death benefit payment option, unless the surviving spouse continues the Contract.
 
A Business Day is any day the New York Stock Exchange is open, except when an Investment Option does not value its shares. A request is in “Good Order” when it contains all the information we require to process it. “Service Center” means the Allianz Service Center whose address and telephone number are listed at the back of this prospectus.
 
During the Annuity Phase, we make Annuity Payments to the Payee. You can choose when Annuity Payments begin (the Income Date), subject to certain restrictions. We base Annuity Payments on your Contract Value and the payout rates for the Annuity Option you select. If you select variable Annuity Payments, your payments may change based on your selected Investment Options’ performance. If you select fixed Annuity Payments, your payments generally do not change unless an Annuitant dies. The Annuity Phase ends when we make the last Annuity Payment under your selected Annuity Option. For more information, see section 9, The Annuity Phase.
 
STATE SPECIFIC CONTRACT RESTRICTIONS
If you purchase a Contract, it is subject to the law of the state in which it is issued. Some of the features of your Contract may differ from the features of a Contract issued in another state because of state-specific legal requirements. Features for which there may be state-specific Contract provisions may include the following.
 
·
The withdrawal charge schedule.
·
Availability of Investment Options, Annuity Options, endorsements, and/or riders.
·
Free look rights.
·
Selection of certain Income Dates.
·
Restrictions on your ability to make additional Purchase Payments.
·
Selection of certain assumed investment rates for variable Annuity Payments.
·
Our ability to restrict transfer rights.

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
10

 

All material state variations in the Contract are disclosed in this prospectus. If you would like more information regarding state-specific Contract provisions, you should contact your Financial Professional or contact our Service Center at the toll-free telephone number listed at the back of this prospectus.
 
NOTE: Contracts issued in Massachusetts with Investment Protector are issued as individual limited purchase payment variable deferred annuity contracts.
 
WHEN THE CONTRACT ENDS
 
The Contract ends when:
 
·
all applicable phases of the Contract (Accumulation Phase and Annuity Phase) have ended, and/or
 
·
all applicable death benefit payments have been made.
 
For example, if you purchase a Contract and later take a full withdrawal of the total Contract Value, both the Accumulation Phase and the Contract end even though the Annuity Phase never began and we did not make any death benefit payments.
 
 
2.
OWNERSHIP
 
OWNER
 
You, as the Owner, have all the rights under the Contract. The Owner is designated at Contract issue. Any change of ownership is subject to our approval. Qualified Contracts, which are Contracts purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code, can only have one Owner and there may be Internal Revenue Service (IRS) or other restrictions on changing the ownership of a Qualified Contract. Upon our approval, any ownership change is effective as of the date you sign the request. A change of ownership does not automatically change the Annuitant or the person you designate to receive any death benefit (the Beneficiary). Changing ownership may be a taxable event. You should consult with your tax adviser before doing this.
 
JOINT OWNER
 
A Contract that is not purchased under a pension or retirement plan qualified under sections of the Internal Revenue Code (Non-Qualified Contract) can be owned by up to two Owners. You can change Joint Owners under the same conditions as described for an Owner. If a Contract has Joint Owners, we generally require the signature of both Owners on any forms that are submitted to our Service Center.
 
NOTE: Partial Annuitizations (applying only part of your Contract Value to Annuity Payments) are not available to Joint Owners. There can be only one Owner, the Owner must be the Annuitant, and we do not allow the Owner to add a joint Annuitant.
 
ANNUITANT
 
The Annuitant is the individual on whose life we base Annuity Payments. Subject to our approval, you designate an Annuitant when you purchase a Contract. For Qualified Contracts, before the Income Date the Owner must be the Annuitant unless the Contract is owned by a qualified plan or is part of a custodial arrangement. You can change the Annuitant on an individually owned Non-Qualified Contract at any time before the Income Date, but you cannot change the Annuitant if the Owner is a non-individual (for example, a qualified plan or trust). Subject to our approval, you can add a joint Annuitant on the Income Date if you take a Full Annuitization. For Qualified Contracts, the ability to add a joint Annuitant is subject to any plan requirements associated with the Contract. If the Annuitant of a jointly, individually owned Contract dies before the Income Date, the younger Owner automatically becomes the new Annuitant, but the Owner can subsequently name another Annuitant.
 
Designating different persons as Owner(s) and Annuitant(s) can have important impacts on whether a death benefit is paid, and on who receives it. For example, if a sole Owner dies during the Accumulation Phase of the Contract, we pay a death benefit to the Beneficiary(s). If the Annuitant is not an Owner and he/she dies during the Accumulation Phase of the Contract, the Owner can name a new Annuitant (subject to our approval) and we do not pay a death benefit. If a sole Owner who is not an Annuitant dies during the Annuity Phase, the Beneficiary becomes the Owner, Annuity Payments continue and we do not pay a death benefit. If an Annuitant dies after a Full Annuitization under an Annuity Option with a guaranteed period, Annuity Payments to the Payee continue until the Contract ends and are paid at least as rapidly as they were being paid at the time of the Annuitant’s death. Use care when designating Owners and Annuitants, and consult your Financial Professional if you have questions.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
11

 

 
BENEFICIARY
 
The Beneficiary is the person(s) or entity you designate at Contract issue to receive any death benefit. You can change the Beneficiary or contingent Beneficiary at any time before your death unless you name an irrevocable Beneficiary. If you do not designate a Beneficiary, we pay any death benefit to your estate.
 
NOTE: For jointly owned Contracts, the sole primary Beneficiary is the surviving Joint Owner. Spousal Joint Owners may also appoint contingent Beneficiaries. If both spousal Joint Owners die before we pay the death benefit, we pay the death benefit to the named contingent Beneficiaries, or to the estate of the Joint Owner who died last if there are no named contingent Beneficiaries. If both spousal Joint Owners die simultaneously, state law may dictate who receives the death benefit. However, Joint Owners who are not spouses may not appoint contingent Beneficiaries. If both Joint Owners who are not spouses die before we pay the death benefit, we pay the death benefit to the estate of the Joint Owner who died last.
 
COVERED PERSON(S)
 
If you select Income Protector or Investment Plus, we base Lifetime Plus Payments or Lifetime Income Payments on the lives of the Covered Person(s). Their ages determine availability of the benefit, when lifetime payments can begin and the initial annual maximum lifetime payment. When you select a benefit, you choose whether you want payments based on your life (single Lifetime Plus Payments or single Lifetime Income Payments), or the lifetime of you and your spouse (joint Lifetime Plus Payments or joint Lifetime Income Payments). Joint Covered Persons must be spouses within the meaning of federal law, both when we issue the Contract and during the Income Phase. Joint Lifetime Plus Payments or joint Lifetime Income Payments are not available if there is more than a 30-year age difference between spouses. Based on your payment selection, we determine the Covered Persons as follows.
 
For single Lifetime Plus Payments or single Lifetime Income Payments and:
 
·
solely owned Contracts, the Covered Person is the Owner.
 
·
jointly owned Contracts, you can choose which Owner is the Covered Person.
 
·
Contracts owned by a non-individual, the Covered Person is the Annuitant.
 
 
For joint Lifetime Plus Payments or joint Lifetime Income Payments, Covered Persons must be spouses and:
·
Non-Qualified Contracts:
 
 
spouses must be Joint Owners; or
 
 
one spouse must be the sole Owner and Annuitant and the other spouse must be the sole primary Beneficiary.
 
·
Qualified Contracts:
 
 
one spouse must be the sole Owner and Annuitant and the other spouse must be the sole primary Beneficiary; or
 
 
if the owner is a non-individual, then one spouse must be the Annuitant and the other spouse must be the sole primary Beneficiary; or
 
 
if the owner is a non-individual and we require the non-individual Owner to also be the sole primary Beneficiary, then one spouse must be the Annuitant and the other spouse must be the sole contingent Beneficiary.
 
After the rider effective date, you cannot add or replace a Covered Person. However, you can remove a joint Covered Person on a Contract Anniversary or a Benefit Anniversary by completing the appropriate form and sending it to us within 30 days before the anniversary. A Contract Anniversary is a twelve-month anniversary of your Contract’s Issue Date. A Benefit Anniversary is a twelve-month anniversary of the date Lifetime Plus Payments begin under Income Protector, or the date you request Lifetime Income Payments under Investment Plus. We process your request on the Contract Anniversary* (or Benefit Anniversary*) that occurs immediately after we receive your request in Good Order at our Service Center. Removing a joint Covered Person does not change Lifetime Plus Payments, but it may change your rider charge. We change your charge to equal the current charge for single Lifetime Plus Payments that is in effect on the anniversary that we process your request to remove a joint Covered Person if this amount differs from your current charge. However, any new rider charge cannot be greater than the maximum listed in the Fee Tables or section 7, Expenses - Rider Charge.
 
*
Or on the next Business Day if the Contract Anniversary or Benefit Anniversary is not a Business Day.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
12

 

Covered Persons must continue to qualify as spouses under federal law while your benefit is in effect. If at any time before this you are no longer spouses, you must immediately send us notice. We either divide the Contract in accordance with any applicable court order or law regarding division of assets upon divorce, or remove a Covered Person from the Contract. At this time, we change the rider charge to equal the current charge for single lifetime payments that is in effect if this amount differs from your current charge. However, any new rider charge cannot be greater than the maximum listed in the Fee Tables or section 7, Expenses - Rider Charge. When we receive notification of an Owner’s death, if we discover that the joint Covered Persons were not federally recognized spouses at the time of death, spousal continuation of the Contract is not available. Therefore, your benefit, any lifetime payments and the Contract all end.
 
NOTE:
 
·
A person no longer qualifies as a Covered Person and is removed from the Contract if that person is no longer an Owner, Joint Owner, Annuitant, sole primary Beneficiary, or sole contingent Beneficiary as required here.
 
·
For non-spouse Joint Owners selecting single Lifetime Plus Payments or single Lifetime Income Payments: Upon the death of any Owner, we pay any applicable death benefit, and Income Protector or Investment Plus and any lifetime payments end if the Contract Value is positive. This means that upon an Owner’s death, Lifetime Plus Payments or Lifetime Income Payments are no longer available even if the sole Covered Person is still alive.
 
·
For Contracts issued to civil union partners in New Jersey: We allow civil union partners to be Joint Owners and/or joint Covered Persons. However, civil union partners are treated differently from persons who are recognized as spouses under the federal tax law and this affects how long Lifetime Plus Payments or Lifetime Income Payments continue. Upon the death of one federally recognized spouse, the survivor can continue the Contract and lifetime payments also continue if the survivor is a Covered Person. This type of continuation is generally not allowed for a surviving civil union partner under the federal tax law with the following exception. If the Contract Value reduces to zero before the one year anniversary of the first civil union partner’s death, lifetime payments can continue if the survivor is a Covered Person and the survivor chooses not to take the death benefit. If instead the Contract Value is positive at this time, or if the survivor chooses to take the death benefit, lifetime payments end.
 
PAYEE
 
The Payee is the person you designate (subject to our approval) to receive Annuity Payments during the Annuity Phase. The Owner receives tax reporting on those payments. For Non-Qualified Contracts, an Owner or Annuitant can be the Payee, but it is not required. For Qualified Contracts owned by a qualified plan, the qualified plan must be the Payee. For all other Qualified Contracts, the Owner is not required to be the Payee, but the Owner cannot transfer or assign his or her rights under the Contract to someone else. If you do not designate a Payee by the Income Date, we make Annuity Payments to the Owner. The Owner can change the Payee at any time, subject to our approval, provided the Payee designation is consistent with federal and state laws and regulations.
 
ASSIGNMENT, CHANGES OF OWNERSHIP AND OTHER TRANSFERS OF A CONTRACT
 
An authorized request specifying the terms of an assignment (including any assignment, change of ownership or other transfer) of a Contract must be sent to our Service Center and approved by us. To the extent permitted by state law, we reserve the right to refuse to consent to any assignment at any time on a nondiscriminatory basis. We withhold our consent if the assignment would violate or result in noncompliance with any applicable state or federal law or regulation. We are not liable for any payment made or action taken before we consent and record the assignment. An assignment may be a taxable event. We are not responsible for the validity or tax consequences of any assignment. After the death benefit has become payable, an assignment can only be made with our consent. If the Contract is assigned, your rights may only be exercised with the consent of the assignee of record. Qualified Contracts generally cannot be assigned.
 
NOTE: For Contracts with Income Protector or Investment Plus, if you assign the Contract, you cannot change the Covered Person(s). Any existing Contract assignment must be removed before you begin receiving Lifetime Plus Payments or Lifetime Income Payments. We may make exceptions to the removal of a Contract assignment in order to comply with applicable law.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
13

 

 
3.
PURCHASING THE CONTRACT
 
PURCHASE REQUIREMENTS
 
To purchase this Contract, all Owners and the Annuitant must be age 80 or younger on the Issue Date. The Purchase Payment requirements for this Contract are as follows.
 
·
The minimum initial Purchase Payment due on the Issue Date is $10,000, or $25,000 with the No Withdrawal Charge Option.
 
·
If you select Income Protector, Investment Protector or Investment Plus, we restrict additional Purchase Payments. Each rider year that we allow additional payments you cannot invest more than your initial amount without our prior approval. Your initial amount is all Purchase Payments received before the first Quarterly Anniversary of the first Contract Year. A Contract Year is a period of twelve months beginning on the Issue Date or any subsequent Contract Anniversary. If your benefit is effective on the Issue Date, we allow you to invest the same amount prior to the first Contract Anniversary. We do not accept any additional Purchase Payments on or after:
 
 
the date Lifetime Plus Payments begin (Benefit Date) under Income Protector;
 
 
the third rider anniversary under Investment Protector; and
 
 
the earlier of the third rider anniversary or the date you request Lifetime Income Payments (Benefit Election Date) under Investment Plus.
 
 
If you remove Income Protector, Investment Protector or Investment Plus, these restrictions no longer apply.
 
·
If you do not select Income Protector, Investment Protector or Investment Plus, you can make additional Purchase Payments of $50 or more during the Accumulation Phase.
 
·
We do not accept additional Purchase Payments on or after the Income Date that you take a Full Annuitization.
 
·
The maximum total Purchase Payments we accept without our prior approval is $1 million including amounts already invested in other Allianz Life variable annuities.
 
We may, at our sole discretion, waive the minimum Purchase Payment requirements. We reserve the right to decline any Purchase Payment, and if mandated under applicable law, we may be required to reject a Purchase Payment.
 
Once we receive your initial Purchase Payment and all necessary information, we issue the Contract within two Business Days and allocate your payment to your selected Investment Options. If you do not give us all of the information we need, we contact you or your Financial Professional. If for some reason we are unable to complete this process within five Business Days, we either send back your money or get your permission to keep it until we get all of the necessary information. If you make additional Purchase Payments, we add this money to your Contract on the Business Day we receive it in Good Order. Our Business Day closes when regular trading on the New York Stock Exchange closes.
 
If you submit a Purchase Payment and/or application to your Financial Professional, we do not begin processing the Purchase Payment until we receive it. A Purchase Payment is “received” when it arrives at our Service Center regardless of how or when you made the payment. We forward applications and Purchase Payments received at our home office address to the address listed on your application, which may delay processing.
 
 
NOTE:
 
·
For Contracts issued in Mississippi: We do not accept additional Purchase Payments on or after the first Contract Anniversary.
 
·
For Contracts issued in Massachusetts: If you select Investment Protector or Investment Plus, we do not accept additional Purchase Payments on or after the third Contract Anniversary. This restriction continues to apply even if you later remove one of these benefits from your Contract.
 

·
If you select Income Protector, Investment Protector or Investment Plus, total Purchase Payments of $1 million or more are subject to our prior review and approval.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
14

 

 
FAXED APPLICATIONS
 
We accept faxed applications, but we currently do not accept applications delivered via email or our website. It is important to verify receipt of any faxed application. We are not liable for faxed applications that we do not receive. A manually signed faxed application is considered the same as an application delivered by mail. Our fax system may not always be available; any fax system can experience outages or slowdowns and may delay fax application processing. Although we have taken precautions to help our system handle heavy use, we cannot promise complete reliability. If you experience problems, please submit your written application by mail to our Service Center. We reserve the right to discontinue or modify our faxed application policy at any time and for any reason.
 
ALLOCATION OF PURCHASE PAYMENTS
 
You must allocate your money to the Investment Options in whole percentages. If you have a Bonus Option Contract, we allocate the bonus in the same way as the corresponding Purchase Payment. Currently we allow you to invest in up to 15 Investment Options at any one time. We may change this maximum in the future, but you can always invest in at least five Investment Options.
 
You can instruct us how to allocate additional Purchase Payments. If you do not instruct us, we allocate them according to your future Purchase Payment allocation instructions. Contract Value transfers between Investment Options do not change your future allocation instructions, or how we rebalance your Contract Value quarterly if you select Income Protector, Investment Protector or Investment Plus. For more information, see section 5, Investment Options – Electronic Investment Option Transfer and Allocation Instructions.
 
You can change your future allocation instructions at any time without fee or penalty by writing to us, or electronically by telephone, fax, or website at http://www.allianzlife.com. We do not currently accept future Purchase Payment allocation instructions from you through any other form of electronic communication. Future allocation instruction changes are effective on the Business Day we receive them in Good Order at our Service Center. If you change your future allocation instructions by writing, telephone or fax, and you are participating in the automatic investment plan, dollar cost averaging program or the flexible rebalancing program, your instructions must include directions for the plan/program. If you change your future allocation instructions on our website and are participating in the automatic investment plan, dollar cost averaging program or flexible rebalancing program, you must contact us separately to change directions for your plan or program. We accept changes to future allocation instructions from any Owner unless you instruct otherwise. We may allow you to authorize someone else to change allocation instructions on your behalf.
 
AUTOMATIC INVESTMENT PLAN (AIP)
 
The AIP makes additional Purchase Payments during the Accumulation Phase on a monthly or quarterly basis by electronic money transfer from your savings, checking or brokerage account. You can participate in AIP by completing our AIP form. Our Service Center must receive your form in Good Order by the first of the month in order for AIP to begin that same month. We process AIP Purchase Payments on the 20th of the month, or the next Business Day if the 20th is not a Business Day. We allocate AIP Purchase Payments according to your future allocation instructions which must comply with the allocation requirements and restrictions stated in this section, and in section 11.a, Income Protector, section 11.b, Investment Protector, or section 11.c, Investment Plus. AIP has a maximum of $1,000 per month. We must receive your request to stop or change AIP at our Service Center by 4 p.m. Eastern Time on the Business Day immediately before the Business Day we process AIP to make the change that month, with the following exception. If you begin Annuity Payments, AIP ends on the Business Day before the Income Date. If you select Income Protector, AIP ends on the Benefit Date. If you select Investment Protector, AIP ends on the third rider anniversary. If you select Investment Plus, AIP ends on the earlier of the third rider anniversary or the Benefit Election Date.
 
NOTE: For Owners of Qualified Contracts, AIP is not available if your Contract is funding a plan that is tax qualified under Section 401of the Internal Revenue Code.
 
DOLLAR COST AVERAGING (DCA) PROGRAM
 
The DCA program transfers Contract Value or Bonus Value (Contract Value plus any unvested bonus amounts if you select Bonus Option) monthly from the AZL Money Market Fund to your selected Investment Options. By allocating on a regularly scheduled basis, as opposed to making a one-time allocation, your Contract Value may be less susceptible to market fluctuations. However, dollar cost averaging does not directly result in a Contract Value gain or protect against a market loss.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
15

 

You can participate in either the six- or twelve-month DCA program by completing our DCA form. You can participate in this program, during the Accumulation Phase, one or more times. There are no fees for DCA transfers and currently, we do not count them as a free transfer. We reserve the right to discontinue or modify the DCA program at any time and for any reason.
 
If you choose to participate immediately in this program, we apply 100% of the initial Purchase Payment (including any applicable bonus) to the AZL Money Market Fund. If you choose to participate later, you must allocate at least $1,500 to the AZL Money Market Fund. Each month while the program is in effect, we transfer Contract Value (or Bonus Value, if applicable) applied to the DCA program from the AZL Money Market Fund according to your future Purchase Payment allocation instructions.
 
Information on the AZL Money Market Fund can be found in section 5, Investment Options; Appendix A – Annual Operating Expenses for Each Investment Option; and in the AZL Money Market Fund prospectus that you can obtain from your Financial Professional or us by calling the toll-free telephone number at the back of this prospectus.
 
We make DCA transfers on the tenth of the month, or the next Business Day if the tenth is not a Business Day. We must receive your DCA form in Good Order at our Service Center by 4 p.m. Eastern Time on the Business Day before we process these transfers or your participation does not begin until next month.
 
Your participation ends on the earliest of the following:
 
·
the Benefit Date when Lifetime Plus Payments begin, if you select Income Protector;
 
·
the Benefit Election Date when Lifetime Income Payments begin, if you select Investment Plus;
 
·
you request to end the program (your request must be received at our Service Center by 4 p.m. Eastern Time on the Business Day immediately before the tenth to end that month);
 
·
the DCA program period ends (which is either six or twelve months); or
 
·
your Contract ends.
 
If the DCA program ends at your request or because you request lifetime payments, on the Business Day your program ends we transfer any remaining DCA program Contract Value in the AZL Money Market Fund according to your future allocation instructions.
 
NOTE: For Contracts with Income Protector, Investment Protector or Investment Plus, quarterly rebalancing transfers under these benefits do not move Contract Value allocated to the DCA program into or out of the AZL Money Market Fund.
 
FREE LOOK/RIGHT-TO-EXAMINE PERIOD
 
If you change your mind about owning the Contract, you can cancel it within ten days after receiving it (or the period required in your state). If you cancel within the allowed period, in most states we return your Contract Value as of the day we receive your cancellation request. This may be more or less than your initial Purchase Payment. If you cancel a Bonus Option Contract, you forfeit the entire bonus amount (see section 11.e, Bonus Option). In certain states where we are required to return Purchase Payments less withdrawals, or if you have an IRA Qualified Contract, we refund your Purchase Payments less withdrawals, or Contract Value, if greater. In states that require return of Purchase Payments, we reserve the right to allocate your initial Purchase Payment (and any bonus) to the AZL Money Market Fund until the free look period ends, and then re-allocate your money according to your future Purchase Payment allocation instructions. If we do this, we return the greater of Purchase Payments less withdrawals, or Contract Value. For Owners in California age 60 or older, we are required to allocate your money to the AZL Money Market Fund during the free look period unless you specify otherwise on the appropriate form. For Owners in California age 60 or older, we return the greater of Purchase Payments less withdrawals, or Contract Value less fees and charges. In the Contract, the free look provision is also called the right-to-examine.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
16

 

 
4.
VALUING YOUR CONTRACT
 

Your Contract Value (and Bonus Value, if applicable) increases and decreases based on Purchase Payments (and any bonus), transfers, withdrawals, deduction of fees and charges, and your selected Investment Options’ performance.
 
We place Purchase Payments you allocate to the Investment Options into subaccounts under our Separate Account (Allianz Life Variable Account B). Each subaccount invests exclusively in one Investment Option. We use accumulation units to account for all amounts allocated to or withdrawn from each subaccount. If you request variable Annuity Payments during the Annuity Phase, we call this measurement an annuity unit.
 
 
ACCUMULATION UNITS
 
When we receive a Purchase Payment at our Service Center, we credit your Contract with accumulation units based on the Purchase Payment (and any bonus) amount and daily price (the net asset value) for your selected Investment Option. An Investment Option’s net asset value is typically determined at the end of each Business Day, and any Purchase Payment received at or after the end of the current Business Day receives the next Business Day’s price.
 
We arbitrarily set the initial accumulation unit value for each subaccount. On the Issue Date, the number of accumulation units in each subaccount is equal to the initial Purchase Payment (and any bonus) amount allocated to a subaccount, divided by that subaccount’s accumulation unit value.
 
Example
 
·
On Wednesday, we receive at our Service Center an additional Purchase Payment of $3,000 from you before the end of the Business Day.
 
·
When the New York Stock Exchange closes on that Wednesday, we determine that the accumulation unit value is $13.25 based on your selected Investment Option.
 
We then divide $3,000 by $13.25 and credit your Contract on Wednesday night with 226.415094 subaccount accumulation units for your selected Investment Option.
 
At the end of each Business Day, we adjust the number of accumulation units in each subaccount as follows. Additional Purchase Payments (and any bonus), and transfers into a subaccount increase the number of accumulation units. Withdrawals, transfers out of a subaccount, and the deduction of any Contract charge other than the M&E charge decrease the number of accumulation units. The M&E reduces the accumulation unit value, not the number of accumulation units.
 
Each Business Day, we calculate changes to each subaccount's accumulation unit value to reflect:
 
·
changes in the value of underlying Investment Option shares,
 
·
dividends (including income and capital gains) declared by the Investment Option with an ex-dividend date of that Business Day, and
 
·
the deduction of the M&E charge.
 
For more detailed information about how we determine each subaccount’s accumulation unit value, see the Statement of Additional Information – Accumulation Unit Values.
 
COMPUTING CONTRACT VALUE AND BONUS VALUE
 
We calculate your Contract Value or Bonus Value (Contract Value plus any unvested bonus amounts) each Business Day by multiplying each subaccount’s accumulation unit value by its number of accumulation units, and then adding those results together for all subaccounts. If you have a Bonus Contract, we compute your Contract Value by deducting the unvested bonus amount from the Bonus Value. Your Contract Value and Bonus Value (if applicable) on any given Business Day are determined at the end of the prior Business Day. For example, your Contract Value on a Contract Anniversary reflects the number and value of the accumulation units at the end of the prior Business Day.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
17

 

 
5.
INVESTMENT OPTIONS
 

The following table lists this Contract’s Investment Options and their associated investment advisers and subadvisers, investment objectives, and primary investments. In the future, we may add, eliminate or substitute Investment Options. Depending on market conditions, you can gain or lose value by investing in the Investment Options.
 
You should read the Investment Options’ prospectuses carefully. The Investment Options invest in different types of securities and follow varying investment strategies. There are potential risks associated with each of these types of securities and investment strategies. The operation of the Investment Options and their various risks and expenses are described in the Investment Options’ prospectuses. We send you the current copy of the Investment Options’ prospectus when we issue the Contract. (You can also obtain the current Investment Options’ prospectus by contacting your Financial Professional or calling us at the toll-free telephone number listed at the back of this prospectus.)
 
Currently, the Investment Options are not publicly traded mutual funds. They are available only as investment options in variable annuity contracts or variable life insurance policies issued by life insurance companies or in some cases, through participation in certain qualified pension or retirement plans. A material conflict of interest may arise between insurance companies, owners of different types of contracts, and retirement plans or their participants. Each Investment Option’s Board of Directors monitors for material conflicts, and determines what action, if any, should be taken.
 
The names, investment objectives and policies of certain Investment Options may be similar to the names, investment objectives and policies of other portfolios managed by the same investment advisers. Although the names, objectives and policies may be similar, the Investment Options investment results may be higher or lower than these other portfolios’ results. The investment advisers cannot guarantee, and make no representation, that these similar funds’ investment results will be comparable even though the Investment Options have the same names, investment advisers, objectives, and policies.
 
Each Investment Option offered by the Allianz Variable Insurance Products Fund of Funds Trust (Allianz VIP Fund of Funds Trust) is a “fund of funds” and diversifies its assets by investing primarily in shares of several other affiliated mutual funds.
 
The Investment Options may pay 12b-1 fees to the Contracts’ distributor, our affiliate, Allianz Life Financial Services, LLC, for distribution and/or administrative services. In addition, we may enter into certain arrangements under which we, or Allianz Life Financial Services, LLC, are compensated by the Investment Options’ advisers, distributors and/or affiliates for administrative services and benefits we provide to the Investment Options. The compensation amount usually is based on the Investment Options’ aggregate assets purchased through contracts we issue or administer. Some advisers may pay us more or less than others. The maximum service fee we currently receive is 0.50% annually of the average aggregate amount invested by us in the Investment Options.
 
The Allianz VIP Fund of Funds Trust underlying funds do not pay 12b-1 fees or service fees to the Trust, and the Trust does not charge 12b-1 fees or service fees. The Allianz VIP Fund of Funds Trust underlying funds or their advisers may pay service fees to us and our affiliates for providing customer service and other administrative services to you. Service fees may vary depending on the underlying fund.
 
We offer other variable annuity contracts that may invest in these Investment Options. These contracts may have different charges and may offer different benefits more appropriate to your needs. For more information about these contracts, please contact our Service Center.
 
The following advisers and subadvisers are affiliated with us through common ownership: Allianz Investment Management LLC, Allianz Global Investors Capital, and Pacific Investment Management Company LLC.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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INVESTMENT OPTIONS
 
Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
ALLIANZ FUND OF FUNDS
Managed by Allianz Investment Management LLC
AZL Balanced Index Strategy Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation with preservation of capital as an important consideration
Invests primarily in a combination of five underlying bond and equity index funds, to achieve a range generally from 40% to 60% of assets in the underlying equity index funds and 40% to 60% in the underlying bond index fund.
 
AZL Fusion Balanced Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation with preservation of capital as an important consideration
Allocation among the underlying investments, to achieve a range generally from 40% to 60% of assets in equity funds and approximately 40% to 60% invested in fixed income funds.
 
AZL Fusion Conservative Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation with preservation of capital as an important consideration
Allocation among the underlying investments, to achieve a range generally from 25% to 45% of assets in equity funds and approximately 55% to 75% invested in fixed income funds.
 
AZL Fusion Growth Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation
Allocation among the underlying investments, to achieve a range generally from 70% to 90% of assets in equity funds and approximately 10% to 30% invested in fixed income funds.
 
AZL Fusion Moderate Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation
Allocation among the underlying investments, to achieve a range generally from 55% to 75% of assets in equity funds and approximately 25% to 45% invested in fixed income funds.
 
AZL Growth Index Strategy Fund
A “Fund of Funds” Model Portfolio
Long-term capital appreciation
Invests primarily in a combination of five underlying bond and equity index funds, to achieve a range generally from 65% to 85% of assets in the underlying equity index funds and 15% to 35% in the underlying bond index fund.
ALLIANZ GLOBAL INVESTORS CAPITAL
Managed by Allianz Global Investors Capital
AZL Allianz AGIC Opportunity Fund
Small Cap
Capital appreciation
At least 65% of its assets in common stocks of “growth” companies (believed by the subadviser to have above-average growth prospects), with market capitalizations of less than $2 billion at the time of investment.
BLACKROCK
Managed by Allianz Investment Management LLC/BlackRock Capital Management, Inc.
AZL BlackRock Capital Appreciation Fund
Large Growth
Long-term growth of capital
Invests at least 80% of total assets in common and preferred stock and securities convertible into common and preferred stock of mid-size and large-size companies.
Managed by Allianz Investment Management LLC/BlackRock Investment Management, LLC
AZL International Index Fund
International
Match the performance of the MSCI EAFE® Index as closely as possible
Invests at least 80% of its assets in a statistically selected sampling of equity securities of companies included in the Morgan Stanley Capital International Europe, Australasia and Far East Index (MSCI EAFE) and in derivative instruments linked to the MSCI EAFE Index.
 
AZL Mid Cap Index Fund
Mid Cap
Match the performance of the Standard & Poor’s MidCap 400® Index (“S&P 400 Index”) as closely as possible
Invests at least 80% of the value of its net assets in a statistically selected sampling of equity securities of companies included in the S&P 400 Index and in derivative instruments linked to the S&P 400 Index, primarily futures contracts.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
19

 


Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
Managed by Allianz Investment Management LLC/BlackRock Institutional Management Corporation
AZL Money Market Fund
Cash Equivalent
Current income consistent with stability of principal
Invests in a broad range of short-term, high quality U.S. dollar-denominated money market instruments, including government, U.S. and foreign bank, commercial and other obligations. During extended periods of low interest rates, and due in part to contract fees and expenses, the yield of the AZL Money Market Fund may also become extremely low and possibly negative.
Managed by Allianz Investment Management LLC/BlackRock Investment Management, LLC
AZL S&P 500 Index Fund
Large Blend
Match total return of the S&P 500®
Normally invests in all 500 stocks in the S&P 500® in proportion to their weighting in the index.
 
AZL Small Cap Stock Index Fund
Small Cap
Match performance of the S&P SmallCap 600 Index®
Invests in a representative sample of stocks included in the S&P SmallCap 600 Index®, and in futures whose performance is related to the index, rather than attempting to replicate the index.
Managed by BlackRock Advisors, LLC/BlackRock Investment Management, LLC and BlackRock International Limited
BlackRock Global Allocation V.I. Fund
Specialty
High total investment return
Invests in both equity and debt securities, including money market securities, of issuers located around the world. Seeks diversification across markets, industries, and issuers. May invest in securities of companies of any market capitalization and in REITs.
COLUMBIA
Managed by Allianz Investment Management LLC/Columbia Management Investment Advisers, LLC
AZL Columbia Mid Cap Value Fund
Mid Cap
Long-term growth of capital
Invests at least 80% of net assets in equity securities of companies that have market capitalizations in the range of the companies in the Russell Midcap® Value Index at the time of purchase that the fund’s subadviser believes are undervalued and have the potential for long-term growth.
 
AZL Columbia Small Cap Value Fund
Small Cap
Long-term capital appreciation
Invests at least 80% of net assets in equity securities of companies with market capitalizations in the range of the companies in the Russell 2000 Value Index® at the time of purchase that the subadviser believes are undervalued.
DAVIS
Managed by Allianz Investment Management LLC/Davis Selected Advisers, L.P.
AZL Davis NY Venture Fund
Large Value
Long-term growth of capital
Invests the majority of assets in equity securities issued by large companies with market capitalizations of at least $10 billion.
Managed by Davis Selected Advisers, L.P.
Davis VA Financial Portfolio
Specialty
Long-term growth of capital
At least 80% of net assets in securities issued by companies principally engaged in the financial services sector.
DREYFUS
Managed by Allianz Investment Management LLC/The Dreyfus Corporation
AZL Dreyfus Equity Growth Fund
Large Growth
Long-term growth of capital and income
Primarily invests in common stocks of large, well-established and mature companies. Normally invests at least 80% of its net assets in stocks that are included in a widely recognized index of stock market performance. May invest in non-dividend paying companies and up to 30% of its total assets in foreign securities.
EATON VANCE
Managed by Allianz Investment Management LLC/Eaton Vance Management
AZL Eaton Vance Large Cap Value Fund
Large Value
Total Return
Invests at least 80% of net assets in equity securities, primarily in dividend-paying stocks, of large-cap companies with market capitalizations equal to or greater than the median capitalization of companies included in the Russell 1000 Value Index. May invest up to 25% of total assets in foreign securities, including emerging market securities.


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
20

 


Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
FIDELITY
Managed by Strategic Advisers, Inc.
Fidelity VIP FundsManager 50% Portfolio
Model Portfolio
(Fund of Funds)
High total return
Invests in a combination of underlying Fidelity retail and variable insurance products funds using a target allocation of approximately 35% domestic equity funds, 15% international equity funds, 40% fixed income funds and 10% money market funds, to achieve portfolio characteristics similar to the VIP FundsManager 50% Composite Index.
 
Fidelity VIP FundsManager 60% Portfolio
Model Portfolio
(Fund of Funds)
High total return
Invests in a combination of underlying Fidelity retail and variable insurance products funds using a target allocation of approximately 42% domestic equity funds, 18% international equity funds, 35% fixed income funds and 5% money market funds, to achieve portfolio characteristics similar to the VIP FundsManager 60% Composite Index.
FRANKLIN TEMPLETON
Managed by Allianz Investment Management LLC/Franklin Advisory Services, LLC
AZL Franklin Small Cap Value Fund
Small Cap
Long-term total return
Under normal market conditions, invests at least 80% of its net assets in investments of small capitalization companies with market capitalizations under $3.5 billion at the time of investment.
Managed by Allianz Investment Management LLC/Franklin Mutual Advisers, LLC, Templeton Global Advisors Limited, and Franklin Advisers, Inc.
AZL Franklin Templeton Founding Strategy Plus Fund
Specialty
Long-term capital appreciation, with income as a secondary goal
Invests in a combination of subportfolios or strategies, each of which is managed by an asset manager that is part of Franklin Templeton. The strategies invest primarily in U.S. and foreign equity and fixed income securities.
Managed by Franklin Advisers, Inc.
Franklin High Income Securities Fund
High-Yield Bonds
High current income with capital appreciation as a secondary goal
Invests primarily to predominantly in high yield, lower-rated debt securities (“junk bonds”) and preferred stocks.
 
Franklin Income Securities Fund
Specialty
Maximize income while maintaining prospects for capital appreciation
Normally invests in debt and equity securities.
Administered by Franklin Templeton Services, LLC
Franklin Templeton VIP Founding Funds Allocation Fund
Model Portfolio
(Fund of Funds)
Capital appreciation with income as a secondary goal.
Invests equal portions in Class 1 shares of the Franklin Income Securities Fund, Mutual Shares Securities Fund, and Templeton Growth Securities Fund.
Managed by Franklin Advisers, Inc.
Franklin U.S. Government Fund
Intermediate-Term Bonds
Income
At least 80% of its net assets in U.S. government securities.
Managed by Franklin Mutual Advisers, LLC
Mutual Global Discovery Securities Fund
International Equity
Capital appreciation
Invests primarily in U.S. and foreign equity securities that the manager believes are undervalued.
 
Mutual Shares Securities Fund
Large Value
Capital appreciation, with income as a secondary goal
Invests primarily in U.S. and foreign equity securities that the manager believes are undervalued.
Managed by Franklin Advisers, Inc.
Templeton Global Bond Securities Fund
Intermediate-Term Bonds
High current income, consisent with preservation of capital, with capital appreciation as a secondary consideration
Normally invests at least 80% of its net assets in bonds, which include debt securities of any maturity, such as bonds, notes, bills and debentures.
Managed by Templeton Global Advisors Limited
Templeton Growth Securities Fund
International Equity
Long-term capital growth
Normally invests primarily in equity securities of companies located anywhere in the world, including those in the U.S. and in emerging markets.


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
21

 


Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
GATEWAY
Managed by Allianz Investment Management LLC/Gateway Investment Advisors, LLC
AZL Gateway Fund
Specialty
Capture equity market investment returns, while exposing investors to less risk than other equity investments
Normally invests in a broadly diversified portfolio of common stocks, while also selling index call options and purchasing index put options. May invest in companies with small, medium or large market capitalizations and in foreign securities traded in U.S. markets.
INVESCO
Managed by Allianz Investment Management LLC/Invesco Advisers, Inc.
AZL Invesco Equity and Income Fund
Specialty
Highest possible income consistent with safety of principal. Secondary objective of long-term growth of capital
Invests at least 65% of its total assets in income-producing equity securities and also invests in investment grade quality debt securities. May invest up to 25% ot total assets in foreign securities, including emerging market securities.
 
AZL Invesco Growth and Income Fund
Large Value
Income and long-term growth of capital
Invests primarily in income-producing equity securities, including common stocks and convertible securities; also in non-convertible preferred stocks and debt securities rated “investment grade.” May invest  up to 25% of total assets in foreign securities, including emerging markets.
 
AZL Invesco International Equity Fund
International
Long-term growth of capital
At least 80% of its assets in a diversified portfolio of equity securities of foreign issuers that are considered by the fund’s subadviser to have strong earnings growth.
J .P. MORGAN
Managed by Allianz Investment Management LLC/J.P. Morgan Investment Management, Inc.
AZL JPMorgan International Opportunities Fund
International
Long term capital appreciation
Invests at least 80% of assets in a diversified portfolio of equity securities of issuers primarily from developed countries other than the U.S.
 
AZL JPMorgan U.S. Equity Fund
Large Blend
High total return
Invests at least 80% of its net assets, plus any borrowings for investment purposes, primarily in equity securities of large- and medium-capitalization U.S. companies.
MFS
Managed by Allianz Investment Management LLC/Massachusetts Financial Services Company
AZL MFS Investors Trust Fund
Large Blend
Capital appreciation
Invests primarily in equity securities of companies with large capitalizations that the subadviser believes has above average earnings growth potential, are undervalued, or in a combination of growth and value companies.
MORGAN STANLEY
Managed by Allianz Investment Management LLC/Morgan Stanley Investment Management, Inc.
AZL Morgan Stanley Global Real Estate Fund
Specialty
Income and capital appreciation
Invests at least 80% of assets in equity securities of companies in the real estate industry located throughout the world, including real estate investment trusts and real estate operating companies established outside the U.S.
 
AZL Morgan Stanley Mid Cap Growth Fund
Mid Cap
Capital growth
At least 80% of net assets in common stocks and other equity securities of mid capitalization growth companies, with market capitalizations within the range of the Russell Midcap Growth Index.


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
22

 


Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
PIMCO
Managed by Pacific Investment Management Company LLC
PIMCO EqS Pathfinder Portfolio
International Equity
Capital appreciation
Normally invests in equity securities, including common and preferred stock, of issuers that PIMCO believes are undervalued by the market in comparison to PIMCO’s own determination of the company’s value. May invest in securities and instruments that are economically tied to foreign countries.
 
PIMCO VIT All Asset Portfolio
Specialty
(Fund of Funds)
Maximum real return consistent with preservation of real capital and prudent investment management
Invests substantially all of its assets in institutional class shares of the underlying PIMCO Funds.
 
PIMCO VIT CommodityReal
Return® Strategy Portfolio
Specialty
Maximum real return consistent with prudent investment management
Invests in commodity linked derivative instruments backed by a portfolio of inflation-indexed securities and other fixed income securities.
 
PIMCO VIT Emerging Markets Bond Portfolio
Intermediate-Term Bonds
Maximum total return, consistent with preservation of capital and prudent investment management
At least 80% of its assets in fixed income instruments of issuers that economically are tied to emerging markets countries.
 
PIMCO VIT Global Advantage Strategy Bond Portfolio
Intermediate-Term Bonds
Total return, which exceeds that of its benchmarks, consistent with prudent investment management
At least 80% of its assets in fixed income instruments that are economically tied to at least three countries (one of which may be the United States), which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.
 
PIMCO VIT Global Bond Portfolio (Unhedged)
Intermediate-Term Bonds
Maximum total return, consistent with preservation of capital and prudent investment management
At least 80% of its assets in fixed income instruments of issuers in at least three countries (one of which may be the U.S.), which may be represented by forwards or derivatives. May invest, without limitation, in securities economically tied to emerging market countries.
 
PIMCO VIT Global Multi-Asset Portfolio
Specialty
Total return which exceeds a blend of 60% MSCI World Index/40% Barclays Capital U.S. Aggregate Index
Invests in a combination of affiliated and unaffiliated funds, fixed income instruments, equity securities, forwards and derivatives. Typically invests 20% to 80% of total assets in equity-related investments.
 
PIMCO VIT High Yield Portfolio
High-Yield Bonds
Maximum total return, consistent with preservation of capital and prudent investment management
At least 80% of assets in a diversified portfolio of high-yield securities (“junk bonds”) rated below investment grade, but at least Caa by Moody’s or equivalently rated by S&P or Fitch. May invest up to 20% of total asets in securities denominated in foreign currencies.
 
PIMCO VIT Real Return Portfolio
 
Intermediate-Term Bonds
Maximum real return, consistent with preservation of real capital and prudent investment management
At least 80% of its net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities and corporations.
 
PIMCO VIT Total Return Portfolio
Intermediate-Term Bonds
Maximum total return, consistent with preservation of capital and prudent investment management
At least 65% of total assets in a diversified portfolio of fixed income instruments of varying maturities, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
23

 


Investment Management Company
and
Adviser/Subadviser
Name of Investment Option
Asset Category
Objective(s)
Primary Investments
(Normal market conditions)
 
PIMCO VIT Unconstrained Bond Portfolio
Specialty
Maximum long-term return, consistent with preservation of capital and prudent investment management
At least 80% of its assets in a diversified portfolio of fixed income instruments of varying maturities, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.
SCHRODER
Managed by Allianz Investment Management LLC/Schroder Investment Management North America Inc.
AZL Schroder Emerging Markets Equity Fund
Specialty
Capital appreciation
Invests at least 80% of its net assets in equity securities of companies that the subadviser believes to be “emerging market” issuers. May invest remainder of assets in securities of issuers located anywhere in the world.
TURNER
Managed by Allianz Investment Management LLC/Turner Investment Partners, Inc.
AZL Turner Quantitative Small Cap Growth Fund
Small Cap
Long-term growth of capital
At least 80% of its net assets in common stocks and other equity securities of U.S. companies with small market capitalizations (in the range of companies included in the Russell 2000® Growth Index), that the subadviser believes have strong earnings growth potential.
 
SUBSTITUTION AND LIMITATION ON FURTHER INVESTMENTS
 
We may substitute another Investment Option for one of your selected Investment Options, for any reason in our sole discretion. To the extent required by the Investment Company Act of 1940 or other applicable law, we do not substitute any shares without SEC approval and providing you notice. We may make substitutions with respect to your existing allocations, future Purchase Payment allocations, or both. New or substitute Investment Options may have different fees and expenses, and their availability may be limited to certain purchaser classes. We may limit further Investment Option allocations if marketing, tax or investment considerations warrant, or for any reason in our sole discretion. We may also close Investment Options to additional allocations. The fund companies that sell Investment Option shares to us, pursuant to participation agreements, may end those agreements and discontinue offering us their shares.
 
TRANSFERS BETWEEN INVESTMENT OPTIONS
 
You can make transfers between Investment Options, subject to the following restrictions. Currently, there is no maximum number of transfers allowed, but we may change this in the future. Transfers may be subject to a transfer fee, see section 7, Expenses.
 
The following applies to any transfer.
 
·
The minimum transfer is $1,000, or the entire Investment Option amount if less. We waive this requirement under the dollar cost averaging and flexible rebalancing programs, and under the allocation and transfer restrictions for Income Protector, Investment Protector or Investment Plus.
 
·
We may choose not to allow you to make transfers during the free look/right-to-examine period.
 
·
Your request for a transfer must clearly state the Investment Options involved and how much to transfer.
 
·
If you select Income Protector, Investment Protector or Investment Plus, your transfer instructions must comply with the “Investment Option Allocation Restrictions and Quarterly Rebalancing” in section 11.a, Income Protector; section 11.b, Investment Protector; or section 11.c, Investment Plus.
 
·
Your right to make transfers is subject to the Excessive Trading and Market Timing policy discussed later in this section.
 
·
Contract Value transfers between Investment Options do not change your future Purchase Payment allocation instructions or how we rebalance your Contract Value quarterly if you select Income Protector, Investment Protector or Investment Plus. To change this quarterly rebalancing when you make a transfer, you must also change your future allocation instructions.
 
We process transfer requests based on prices we determine after we receive your request in Good Order at our Service Center. If we do not receive your transfer request before the end of the current Business Day, even if due to our delay in answering your call or a delay caused by our electronic systems, you receive the next Business Day’s prices.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
24

 

You can request transfers in writing, or electronically by telephone, fax, or website at http:// www.allianzlife.com. We do not currently accept transfer instructions from you through any other form of electronic communication. Unless you instruct us not to, we accept transfer instructions from any Owner. We may also allow you to authorize someone else to request transfers on your behalf.
 
NOTE: For Partial Annuitizations, transfer instructions apply equally to the accumulation and all annuitization portions of the Contract. You cannot make transfers selectively within different portions of the Contract.
 
ELECTRONIC INVESTMENT OPTION TRANSFER AND ALLOCATION INSTRUCTIONS
 
We use reasonable procedures to confirm that electronic transfer and allocation instructions given to us are genuine. If we do not use such procedures, we may be liable for any losses due to unauthorized or fraudulent instructions. We record all telephone instructions and log all website instructions. We reserve the right to deny any transfer request or allocation instruction change, and to discontinue or modify our electronic instruction privileges at any time for any reason.
 
Please note that telephone, fax and/or the website may not always be available. Any electronic system, whether it is ours, yours, your service provider’s, or your Financial Professional’s, can experience outages or slowdowns for a variety of reasons, which may delay or prevent our processing of your transfer request or allocation instruction change. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability. If you are experiencing problems, you should submit your instructions in writing to our Service Center.
 
By authorizing electronic instructions, you authorize us to accept and act upon these instructions for your Contract. There are risks associated with electronic communications that do not occur with a written request. Anyone authorizing or making such requests bears those risks. You should protect your website password, because the website is available to anyone with your password; we cannot verify that the person providing instructions on the website is you, or is authorized by you.
 
EXCESSIVE TRADING AND MARKET TIMING
 
We may restrict or modify your right to make transfers to prevent any use that we consider to be part of a market timing program.
 
Frequent transfers, programmed transfers, transfers into and then out of an Investment Option in a short period of time, and transfers of large amounts at one time (collectively referred to as “potentially disruptive trading”) may have harmful effects for other Owners, Annuitants and Beneficiaries. These risks and harmful effects include the following.
 
·
Dilution of the interests of long-term investors in an Investment Option, if market timers or others transfer into an Investment Option at prices that are below their true value, or transfer out at prices above their true value.
 
·
An adverse effect on portfolio management, such as causing an Investment Option to maintain a higher level of cash or causing an Investment Option to liquidate investments prematurely.
 
·
Increased brokerage and administrative expenses.
 
We attempt to protect our Owners and the Investment Options from potentially disruptive trading through our excessive trading and market timing policies and procedures. Under these policies and procedures, we could modify your transfer privileges for some or all of the Investment Options. Unless prohibited by your Contract or applicable state law, we may:
 
·
Limit transfer frequency (for example, prohibit more than one transfer a week, or more than two a month, etc.).
 
·
Restrict the transfer method (for example, requiring all transfers be sent by first class U.S. mail and rescinding electronic transfer privileges).
 
·
Require a minimum time period between each transfer into or out of the same Investment Option. Our current policy, which is subject to change without notice, prohibits “round trips” within 14 calendar days. We do not include transfers into and/or out of the following Investment Options when available in your Contract: any fixed option, the AZL Money Market Fund, and Investment Options offered through the Allianz Variable Insurance Products Fund of Funds Trust. Round trips are transfers into and back out of the same Investment Option, or transfers out of and back into the same Investment Option.
 
·
Refuse transfer requests made on your behalf by an asset allocation and/or market timing service.
 
·
Limit the dollar amount of any single Purchase Payment or transfer request to an Investment Option.
 
·
Impose redemption fees on short-term trading (or implement and administer an Investment Option’s redemption fees).
 
·
Prohibit transfers into specific Investment Options.
 
·
Impose other limitations or restrictions.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
25

 

We also reserve the right to reject any specific Purchase Payment allocation or transfer request from any person if in the investment adviser’s, subadviser’s or our judgment, an Investment Option may be unable to invest effectively in accordance with its investment objectives and policies.
 
Currently, we attempt to deter disruptive trading as follows. If a transfer(s) is/are identified as potentially disruptive trading, we may (but are not required to) send a warning letter. If the conduct continues and we determine it constitutes disruptive trading, we also impose transfer restrictions. Transfer restrictions may include refusing electronic transfers and requiring all transfers be sent by first-class U.S. mail. We do not enter into agreements permitting market timing and would not permit activities determined to be disruptive trading to continue. We also reserve the right to impose transfer restrictions if we determine, in our sole discretion, that transfers disadvantage other Owners. We notify you in writing if we impose transfer restrictions on you.
 
We do not include automatic transfers made under any of our programs or Contract features when applying our market timing policy.
 
We adopted these policies and procedures as a preventative measure to protect all Owners from the potential effects of disruptive trading, while also abiding by your legitimate interest in diversifying your investment and making periodic asset re-allocations based on your personal situation or overall market conditions. We attempt to protect your interests in making legitimate transfers by providing reasonable and convenient transfer methods that do not harm other Owners.
 
We may make exceptions when imposing transfer restrictions if we determine a transfer is appropriate, although it may technically violate our policies and procedures discussed here. In determining if a transfer is appropriate, we may, but are not required to, take into consideration its relative size, whether it was purely a defensive transfer into the AZL Money Market Fund, and whether it involved an error or similar event. We may also reinstate electronic transfer privileges after we revoke them, but we do not reinstate these privileges if we believe they might be used for future disruptive trading.
 
We cannot guarantee the following.
 
·
Our monitoring will be 100% successful in detecting all potentially disruptive trading activity.
 
·
Revoking electronic transfer privileges will successfully deter all potentially disruptive trading.
 
In addition, some of the Investment Options are available to other insurance companies and we do not know if they adopted policies and procedures to detect and deter potentially disruptive trading, or what their policies and procedures might be. Because we may not be completely successful at detecting and preventing market timing activities, and other insurance companies that offer the Investment Options may not have adopted adequate market timing procedures, there is some risk that market timing activity may occur and negatively affect other Owners.
 
We may, without prior notice to any party, take whatever action we deem appropriate to comply with any state or federal regulatory requirement. In addition, purchase orders for an Investment Option’s shares are subject to acceptance by that Investment Option’s manager. We reserve the right to reject, without prior notice, any Investment Option transfer request or Purchase Payment if the purchase order is rejected by the investment manager. We have entered into agreements required under SEC Rule 22c-2 (Rule 22c-2 agreements) whereby, upon request by an underlying fund or its designee, we must provide information about you and your trading activities to the underlying fund or its designee. Under the terms of the Rule 22c-2 agreements, we are required to: (1) provide details concerning every purchase, redemption, transfer, or exchange of Investment Options during a specified period; and (2) restrict your trading activity if the party receiving the information so requests. Under certain Rule 22c-2 agreements, if we fail to comply with a request to restrict trading activity, the underlying fund or its designee may refuse to accept buy orders from us until we comply.
 
Investment Options may add or change policies designed to restrict market timing activities. For example, Investment Options may impose restrictions on transfers between Investment Options in an affiliated group if the investment adviser to one or more of the Investment Options determines that the person requesting the transfer has engaged, or is engaging in, market timing or other abusive trading activities. In addition, an Investment Option may impose a short-term trading fee on purchases and sales within a specified period. You should review the Investment Options’ prospectuses regarding any applicable transfer restrictions and the imposition of any fee to discourage short-term trading. The imposition of these restrictions would occur as a result of Investment Option restrictions and actions taken by the Investment Options’ managers.
 
NOTE: This Contract is not designed for professional market timing organizations, other entities or persons using programmed, large, or frequent transfers, and we may restrict excessive or inappropriate transfer activity.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
26

 

We retain some discretion in determining what actions constitute potentially disruptive trading and in determining when and how to impose trading restrictions. Therefore, persons engaging in potentially disruptive trading may be subjected to some uncertainty as to when and how we apply trading restrictions, and persons not engaging in potentially disruptive trading may not know precisely what actions will be taken against a person engaging in potentially disruptive trading. For example, if we determine a person is engaging in potentially disruptive trading, we may revoke that person’s electronic transfer privileges and require all future requests to be sent by first class U.S. mail. In the alternative, if the disruptive trading affects only a single Investment Option, we may prohibit transfers into or Purchase Payment allocations to that Investment Option. We notify the person or entity making the potentially disruptive trade when we revoke any transfer privileges.
 
The retention of some level of discretion by us may result in disparate treatment among persons engaging in potentially disruptive trading, and it is possible that some persons could experience adverse consequences if others are able to engage in potentially disruptive trading practices that have negative effects.
 
 
FLEXIBLE REBALANCING PROGRAM
 
Your selected Investment Options’ performance may cause the percentage of Contract Value in each Investment Option to change. Flexible rebalancing can help you maintain your selected allocation percentages. You can direct us to automatically adjust your Contract Value (and Bonus Value, if applicable) in the Investment Options on a quarterly, semi-annual or annual basis according to your instructions. We make flexible rebalancing transfers on the 20th of the month, or the prior Business Day if the 20th is not a Business Day. We must receive your flexible rebalancing program form in Good Order at our Service Center by 4 p.m. Eastern Time on the Business Day before we rebalance, or your program does not begin until next month. If you participate in this program, there are no fees for the flexible rebalancing transfers and we do not currently count them as a free transfer. We reserve the right to discontinue or modify the flexible rebalancing program at any time and for any reason. To end this program, we must receive your request at our Service Center by 4 p.m. Eastern Time on the Business Day immediately before the 20th to end that month.
 
NOTE: This program is not available if you select Income Protector, Investment Protector, or Investment Plus.
 
FINANCIAL ADVISERS – ASSET ALLOCATION PROGRAMS
 
If you have an investment adviser and want to pay their fees from this Contract, you can submit a written request to our Service Center on a form satisfactory to us. If we approve your request, we withdraw the fee and pay it to your adviser. We treat this fee payment as a withdrawal. For tax purposes, withdrawals from Non-Qualified Contracts are considered to come from earnings first, not Purchase Payments. If any Owner is under age 59½ it may be subject to a 10% federal penalty tax. You should consult a tax adviser regarding the tax treatment of adviser fee payments.
 
Your investment adviser acts on your behalf, not ours. We are not party to your advisory agreement or responsible for your adviser’s actions. We do not set your adviser’s fee or receive any part of it. Any adviser fee you pay is in addition to this Contract’s fees and expenses. You should ask your adviser about compensation they receive for this Contract.
 
You can submit a written request to our Service Center on a form satisfactory to us to allow your adviser to make Investment Option transfers on your behalf. However, we reserve the right to review an adviser’s trading history before allowing him or her to make transfers. If, in our sole discretion, we believe the adviser's trading history indicates excessive trading, we can deny your request. If we approve it, your adviser is subject to the same trading restrictions that apply to Owners. We can deny or revoke trading authority in our sole discretion.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
27

 

 
VOTING PRIVILEGES
 
We legally own the Investment Option shares. However, when an Investment Option holds a shareholder vote that affects your investment, we ask you to give us voting instructions. We then vote all of our shares, including any we own on our behalf, in proportion to those instructions. Because most Owners do not give us instructions and we vote shares proportionally, a small number of Owners may determine a vote’s outcome. If we determine we no longer need to get your voting instructions, we decide how to vote the shares. Only Owners have voting privileges. Annuitants, Beneficiaries, Payees and other persons have no voting privileges unless they are also Owners.
 
We determine your voting interest in an Investment Option as follows.
 
·
You can cast votes based on the dollar value of Investment Option’s shares in your Contract’s subaccount. We calculate this value based on the number and value of accumulation/annuity units for your Contract on the record date. We count fractional votes.
 
·
We determine the number of shares you can vote.
 
·
You receive proxy materials, a voting instruction form, and periodic reports on your selected Investment Options.
 
 
6.
OUR GENERAL ACCOUNT
 
Our general account holds all our assets other than our separate account assets. We own our general account assets and use them to support our insurance and annuity obligations, other than those funded by our separate accounts. These assets are subject to our general business operation liabilities, and may lose value. Subject to applicable law, we have sole investment discretion over our general account assets.
 
We have not registered our general account as an investment company under the Investment Company Act of 1940, nor have we registered our general account interests under the Securities Act of 1933. As a result, the SEC has not reviewed our general account prospectus disclosures.
 
We do not currently offer any general account investment choices during the Accumulation Phase. Any Contract Value you apply to fixed Annuity Payments during the Annuity Phase become part of our general account. Any guaranteed values greater than the Contract Value are subject to our claims paying ability.
 
 
7.
EXPENSES
 

Contract fees and expenses reduce your investment return and are described here in detail.
 
MORTALITY AND EXPENSE RISK (M&E) CHARGE
 
We calculate and accrue the M&E charge on a daily basis, at an annualized rate of the Investment Options’ net asset value. Each Business Day during the Accumulation Phase, we deduct this charge from your Investment Options’ assets. We also deduct this charge during the Annuity Phase on amounts you apply to variable Annuity Payments. Your M&E charge is as follows.
 
 
M&E Charge
 
Accumulation Phase
Annuity Phase
BASE CONTRACT
1.40%
1.40%
Additional Charges for Optional Benefits
   
Quarterly Value Death Benefit
0.30%
 
Bonus Option
0.30%
0.30%
Short Withdrawal Charge Option
0.25%
 
No Withdrawal Charge Option
0.35%
 
 
The M&E charge compensates us for all your Contract’s benefits, including our contractual obligation to make Annuity Payments, certain Contract expenses, and assuming the expense risk that the current charges are less than future Contract administration costs. If the M&E charge covers these costs and risks, any excess is profit to us. We anticipate making such a profit.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
28

 

 
RIDER CHARGE
 
If you select Income Protector, Investment Protector or Investment Plus, we deduct a rider charge from your Contract Value (and Bonus Value, if applicable) during the Accumulation Phase while your benefit is in effect and your Contract Value is positive. The rider charge is an annualized rate that is accrued on a daily basis as a percentage of the Benefit Base under Income Protector, as a percentage of the Target Value under Investment Protector, or as a percentage of the Lifetime Income Value under Investment Plus. The Benefit Base and Lifetime Income Value are the amounts we use to calculate the initial annual maximum lifetime payments under your selected benefit.
 
We begin calculating the daily rider charge amount on the day after the rider effective date. We deduct the rider charge for each quarter at the end of the last Business Day before each Quarterly Anniversary with the following exceptions.
 
·
If you withdraw the total Contract Value, we first deduct the accumulated rider charge for the current Contract quarter and then process the withdrawal.
 
·
If your Contract ends due to death, we deduct the final rider charge before calculating the death benefit.
 
 
Rider Charge during the Accumulation Phase
 
Maximum
Minimum
Current
Income Protector
Single Lifetime Plus Payments
Joint Lifetime Plus Payments
2.50%
2.75%
0.50%
0.50%
1.05%
1.20%
Investment Protector
2.50%
0.35%
0.90%
Investment Plus
Single Lifetime Income Payments
Joint Lifetime Income Payments
2.50%
2.50%
0.50%
0.50%
1.50%
1.50%
 
We reserve the right to increase or decrease the rider charge on each Quarterly Anniversary, subject to the maximum and minimum. However, in any twelve-month period we cannot increase or decrease the rider charge for Income Protector or Investment Plus more than 0.50%, and for Investment Protector more than 0.35%. If we increase your rider charge, we notify you in writing at least 30 days in advance to allow you the option of removing the benefit before the charge increases.
 
We deduct this charge on a dollar for dollar basis from the Contract Value (and Bonus Value, if applicable), and we deduct it proportionately from your selected Investment Options. We deduct the rider charge before we use the Contract Value to compute any of your Contract’s guaranteed values, but this charge does not directly decrease these guaranteed values. If on a Quarterly Anniversary the Contract Value at the end of the prior Business Day is less than the rider charge, we deduct your total remaining Contract Value to cover the final rider charge and reduce your Contract Value to zero. If the deduction of the final rider charge eliminates your Contract Value, it does not end your Contract, selected benefit, or any Lifetime Plus Payments or Lifetime Income Payments, although we no longer assess or deduct the rider charge.
 
Changes to the Benefit Base, Target Value, or Lifetime Income Value change the rider charge amount. For example, if you receive an annual Lifetime Plus Payment increase because the Contract Value increased, both your Benefit Base and daily rider charge amount also increase. Similarly, an Excess Withdrawal decreases both your Benefit Base and daily rider charge amount.
 
This fee compensates us for the benefits provided by Income Protector, Investment Protector, or Investment Plus, including your benefit’s guarantees. If the rider charge covers these costs and risks, any excess is profit to us. We anticipate making such a profit.
 
CONTRACT MAINTENANCE CHARGE
 
Your annual contract maintenance charge is $50. This charge is for Contract administration and maintenance expenses.
 
During the Accumulation Phase, we waive this charge for all your Vision Contracts registered with the same social security or tax identification number if their total Contract Value (or Bonus Value, if applicable) is at least $100,000 at the time we are to deduct the charge. We also waive this charge during the Annuity Phase if the Contract Value on the Income Date is at least $100,000. If you select fixed Annuity Payments and do not qualify for the waiver, we only deduct this charge once on the Income Date. If you take a full withdrawal from your Contract (other than on a Contract Anniversary), we deduct the full contract maintenance charge.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
29

 

During the Accumulation Phase, we deduct this charge on a dollar for dollar basis from the Contract Value (and Bonus Value, if applicable), determined at the end of the last Business Day before the Contract Anniversary. We deduct this charge proportionately from your selected Investment Options before we use the Contract Value to compute any of your Contract’s guaranteed values, but this charge does not directly decrease these guaranteed values. During the Annuity Phase, we collect a portion of the charge out of each variable Annuity Payment.
 
WITHDRAWAL CHARGE
 
You can take withdrawals from any portion of the Contract that is in the Accumulation Phase. A withdrawal charge applies if any part of a withdrawal comes from a Purchase Payment that is still within the withdrawal charge period. We assess the withdrawal charge against the Withdrawal Charge Basis, which is equal to total Purchase Payments, less any Purchase Payment withdrawn (excluding any penalty-free withdrawals), and less any applicable withdrawal charge. We do not reduce the Withdrawal Charge Basis for any amounts we deduct to pay other Contract charges.
 
You are not subject to a withdrawal charge if you select the No Withdrawal Charge Option. We also do not assess a withdrawal charge on penalty-free withdrawals or amounts we deduct to pay Contract charges, other than the withdrawal charge. However, any amounts used to pay a withdrawal charge are subject to a withdrawal charge. Amounts withdrawn to pay investment adviser fees are subject to a withdrawal charge if they exceed the free withdrawal privilege. Penalty-free withdrawals include: withdrawals under the free withdrawal privilege and waiver of withdrawal charge benefit; payments under our minimum distribution program; Annuity Payments; Lifetime Plus Payments; and Lifetime Income Payments.
 
For purposes of calculating any withdrawal charge, we withdraw Purchase Payments on a “first-in-first-out” (FIFO) basis and we process withdrawal requests as follows.
 
1.
First, we withdraw from Purchase Payments that are beyond your Contract’s withdrawal charge period (for example, on a Base Contract, Purchase Payments we have had for seven or more complete years). This withdrawal is not subject to a withdrawal charge and it reduces the Withdrawal Charge Basis.
 
2.
If this is a partial withdrawal, we withdraw from the free withdrawal privilege (see section 8, Access to Your Money – Free Withdrawal Privilege). This withdrawal is not subject to a withdrawal charge and does not reduce the Withdrawal Charge Basis.
 
3.
Next, on a FIFO basis, we withdraw from Purchase Payments within your Contract’s withdrawal charge period and assess a withdrawal charge. Withdrawing payments on a FIFO basis may help reduce the total withdrawal charge because the charge declines over time. We determine your total withdrawal charge by multiplying each payment by its applicable withdrawal charge percentage and then totaling the charges. This withdrawal reduces the Withdrawal Charge Basis.
 
4.
Finally, we withdraw any Contract earnings. Bonuses (if applicable) and earnings on them are considered Contract earnings for withdrawal charge purposes. This withdrawal is not subject to a withdrawal charge and does not reduce the Withdrawal Charge Basis.
 
The withdrawal charge as a percentage of each Purchase Payment withdrawn is as follows.
 
Number of Complete Years Since Purchase Payment
Withdrawal Charge Amount
Base Contract(1)
Bonus Option(2)
Short Withdrawal Charge Option
No Withdrawal
Charge Option
0
8.5%
8.5%
8.5%
0%
1
8.5%
8.5%
7.5%
0%
2
7.5%
8.5%
5.5%
0%
3
6.5%
8%
3%
0%
4
5%
7%
0%
0%
5
4%
6%
0%
0%
6
3%
5%
0%
0%
7
0%
4%
0%
0%
8
0%
3%
0%
0%
9 years or more
0%
0%
0%
0%
 
(1)
In Mississippi, the withdrawal charge is 8.5%, 7.5%, 6.5%, 5.5%, 5%, 4%, 3%, and 0% for the time periods referenced.
 
(2)
Not available in Connecticut or Oregon. In Mississippi, the withdrawal charge is 8%, 8%, 8%, 8%, 7%, 6%, 5%, 3.5%, 1.5% and 0% for the time periods referenced.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
30

 

Upon a full withdrawal, we first deduct any applicable contract maintenance charge and rider charge before we calculate the withdrawal charge. For a full withdrawal, we deduct any applicable withdrawal charge as a percentage of the Withdrawal Charge Basis from the total Contract Value and send you the remaining amount. For a partial withdrawal we deduct the amount you request, plus any applicable withdrawal charge from the total Contract Value (and Bonus Value, if applicable). We apply the withdrawal charge to this total amount and we pay you the amount you requested. For partial withdrawals, we deduct the charge proportionately from your selected Investment Options. If a partial withdrawal occurs on a day that we also assess the rider charge and/or contract maintenance charge, we assess these charges in this order after we deduct the withdrawal and any applicable withdrawal charge from the Contract Value.
 
The withdrawal charge compensates us for expenses associated with selling the Contract.
 
Example: You make an initial Purchase Payment of $30,000 on a Base Contract and make another Purchase Payment in the first month of the second Contract Year of $70,000. In the third month of the third Contract Year, your Contract Value is $110,000 and you request a $52,000 withdrawal. We withdraw money and compute the withdrawal charge as follows.
 
1)
Purchase Payments beyond the withdrawal charge period. All payments are still within the withdrawal charge period, so this does not apply.
 
2)
Amounts available under the free withdrawal privilege. You did not take any other withdrawals this year, so you can withdraw up to 12% of your total payments (or $12,000) without incurring a withdrawal charge.
 
3)
Purchase Payments on a FIFO basis. The total amount we withdraw from the first Purchase Payment is $30,000, which is subject to a 7.5% withdrawal charge, and you receive $27,750. We determine this amount as follows:
 
 
(amount withdrawn) x (1 – withdrawal charge) = the amount you receive, or:
 
 
$30,000 x 0.925 = $27,750.
 
 
 
Next we withdraw from the second Purchase Payment. So far, you received $39,750 ($12,000 under the partial withdrawal privilege and $27,750 from the first Purchase Payment), so we withdraw $12,250 from the second Purchase Payment to equal the $52,000 you requested. The second Purchase Payment is subject to an 8.5% withdrawal charge. We calculate the total amount withdrawn and its withdrawal charge as follows:
 
 
(the amount you receive) ÷ (1 – withdrawal charge) = amount withdrawn, or:
 
 
$12,250 ÷ 0.915 = $13,388
 
 
4)
Contract earnings. We already withdrew your requested amount, so this does not apply.
 
In total we withdrew $55,388 from your Contract, of which you received $52,000 and paid a withdrawal charge of $3,388.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
31

 

 
Reduction or Elimination of the Withdrawal Charge
 
We may reduce or eliminate the withdrawal charge when the Contract is sold under circumstances that reduce its sales expenses. For example, if a large group of individuals purchases Contracts or if a prospective purchaser already has a relationship with us. We may choose not to deduct a withdrawal charge under a Contract issued to an officer, director, or employee of Allianz Life or any of its affiliates. Also, we may reduce or eliminate the withdrawal charge when a Contract is sold by a Financial Professional appointed with Allianz Life to any members of his or her immediate family and the Financial Professional waives their commission. We must pre-approve any withdrawal charge reduction or elimination.
 
NOTE:
 
·
Because we do not reduce the Withdrawal Charge Basis for penalty-free withdrawals or the deduction of other Contract charges, we may assess a withdrawal charge on more than the amount you are withdrawing upon a full withdrawal of the total Contract Value. Also, upon full withdrawal, if the Contract Value has declined due to poor performance, the withdrawal charge may be greater than the total Contract Value and you will not receive any money.
 
·
Withdrawals may have tax consequences and, if taken before age 59½, may be subject to a 10% federal penalty tax. For tax purposes, withdrawals from Non-Qualified Contracts are considered to come from earnings first, not Purchase Payments.
 
·
Partial Annuitizations reduce each Purchase Payment and the Withdrawal Charge Basis proportionately by the percentage of Contract Value you annuitize.
 
·
For Contracts issued in Washington: Penalty-free withdrawals reduce the Withdrawal Charge Basis. It is equal to total Purchase Payments less any withdrawals (including any withdrawal charges).
 
·
For Contracts issued in Florida: The withdrawal charge can not exceed 10% of the Contract Value.
 
TRANSFER FEE
 
The first twelve transfers every Contract Year are free. After that, we deduct a $25 transfer fee for each additional transfer. We count all transfers made in the same Business Day as one transfer. The following do not count against the free transfers we allow and are not subject to a transfer fee: dollar cost averaging transfers, flexible rebalancing transfers, or quarterly rebalancing transfers under Income Protector, Investment Protector, or Investment Plus.
 
Currently, we deduct this fee only during the Accumulation Phase, but we reserve the right to deduct it during the Annuity Phase. We deduct this fee on a dollar for dollar basis from the Contract Value (and Bonus Value, if applicable) determined at the end of the Business Day that we process the transfer request. If you are transferring from multiple Investment Options, we deduct this fee proportionately from the Investment Options from which the transfer is made. If you transfer the total amount in an Investment Option, we deduct a transfer fee from the amount transferred. We deduct this fee before we use the Contract Value to compute any of your Contract’s guaranteed values, but this fee does not directly decrease these guaranteed values.
 
PREMIUM TAX
 
Some states and other governmental entities (for example, municipalities) assess a tax (premium tax) on us based on Purchase Payments or amounts applied to Annuity Payments. We are responsible for paying this tax. Your Contract may indicate that we deduct this tax from your Contract Value. Currently, we do not deduct this tax, although we reserve the right to do so in the future. Premium tax normally ranges from 0% to 3.5% of the Purchase Payment, depending on the state or governmental entity.
 
INCOME TAX
 
Currently, we do not deduct any Contract related income tax we incur, although we reserve the right to do so in the future.
 
INVESTMENT OPTION EXPENSES
 
The Investment Options’ assets are subject to operating expenses (including management fees). These expenses are described in the Fee Tables, Appendix A, and in the Investment Options’ prospectuses. These expenses reduce the Investment Options’ performance and, therefore, negatively affect your Contract Value and any guaranteed values or payments based on Contract Value. The Investment Options’ investment advisers provided us with the expense information in this prospectus and we did not independently verify it.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
32

 

 
8.
ACCESS TO YOUR MONEY
 
The money in your Contract is available under the following circumstances:
 
·
by withdrawing your Contract Value;
 
·
by withdrawing the Target Value on the last Business Day before each Target Value Date (if you select Investment Protector);
 
·
by withdrawing the Protected Investment Value on the last Business Day before each Protected Investment Date (if you select Investment Plus);
 
·
by taking Lifetime Plus Payments (if you select Income Protector);
 
·
by taking Lifetime Income Payments (if you select Investment Plus);
 
·
by taking required minimum distributions (Qualified Contracts only);
 
·
by taking Annuity Payments; or
 
·
when we pay a death benefit.
 
You can take withdrawals from any part of the Contract that is in the Accumulation Phase. We process withdrawal requests based on values determined after receipt of the request in Good Order at our Service Center. Values are normally determined at the end of each Business Day. Any withdrawal request received at or after the end of the current Business Day receives the next Business Day’s values.
 
Any partial withdrawal must be for at least $500.* The Contract Value after a partial withdrawal must be at least $2,000.** We reserve the right to treat a partial withdrawal that reduces the Contract Value below this minimum as a full withdrawal.
 
 
*
Does not apply to Lifetime Plus Payments, Lifetime Income Payments, systematic withdrawals, or required minimum distributions.
 
**
Does not apply to Lifetime Plus Payments or Lifetime Income Payments.
 
We deduct any partial withdrawal (including any withdrawal charge) proportionately from each Investment Option unless you provide us with alternate instructions. If you select Income Protector, Investment Protector, or Investment Plus and take a partial withdrawal from specific Investment Options, the benefit’s quarterly rebalancing feature moves money back into those Investment Options at the end of the quarter unless you also change your future Purchase Payment allocation instructions.
 
If you select a Bonus Option Contract and you have multiple bonuses, we reduce the oldest unvested bonus first (see section 11.e, Bonus Option). Partial withdrawals in excess of the free withdrawal privilege reduce unvested bonus amounts by the percentage of the Contract Value withdrawn, as shown in the following example.
 
When you take a full withdrawal of the total Contract Value, we process your request on the Business Day we receive it in Good Order at our Service Center:
 
·
based on the values determined at the end of the day,
 
·
less any rider charge,
 
·
less any withdrawal charge, and
 
·
less any contract maintenance charge.
 
See the Fee Tables and section 7, Expenses for a discussion of these charges.
 
We pay withdrawals within seven days of receipt of your request in Good Order at our Service Center, unless the suspension of payments or transfers provision is in effect (see the discussion later in this section).
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
33

 

 
 
NOTE:
 
·
Ordinary income taxes and tax penalties may apply to any withdrawal you take.
 
·
We may be required to provide information about you or your Contract to government regulators. We may also be required to stop Contract disbursements and thereby refuse any transfer requests, and refuse to pay any withdrawals, surrenders, or death benefits until we receive instructions from the appropriate regulator. If, pursuant to SEC rules, the AZL Money Market Fund suspends payment of redemption proceeds in connection with a fund liquidation, we will delay payment of any transfer, partial withdrawal, surrender, or death benefit from the AZL Money Market Fund subaccount until the fund is liquidated.
 
·
For Contracts with Investment Protector or Investment Plus: The Target Value or Protected Investment Value is only guaranteed to be available on the last Business Day before each Target Value Date or Protected Investment Date. Beginning on the next Business Day, your Contract Value fluctuates based on your selected Investment Options’ performance, and this is the value available to you upon withdrawal.
 
Example
 
·
You purchase a Bonus Option Contract, make an initial Purchase Payment of $100,000 and receive a $6,000 bonus.
 
·
You request a $50,000 partial withdrawal (not including the withdrawal charge) during the first Contract Year when the withdrawal charge is 8.5%. On the day of (but before) the partial withdrawal, your Contract Value is $110,600, the Bonus Value is $116,600, and your free withdrawal privilege is $12,000. Your bonus is not vested.
 
Calculating the total withdrawal charge:
 
Amount requested that is subject to a withdrawal charge (amount requested minus the free withdrawal privilege)
 
= $50,000 – $12,000 =
$38,000.00
Divided by (1 minus the withdrawal charge percentage) = 1 – 0.085 =
¸ 0.915
Total amount subject to a withdrawal charge
$41,530.05
Total withdrawal charge (amount withdrawn minus the amount requested) = $41,530.05 – $38,000.00 =
$ 3,530.05
   
Reducing the Contract Value:
 
Contract Value on the day of (but before) the partial withdrawal
$110,600.00
Minus the total amount withdrawn (amount requested plus the total withdrawal charge)
 
= $50,000.00 + $3,530.05 =
– 53,530.05
Contract Value after the partial withdrawal
$ 57,069.95
   
Reducing the unvested bonus:
 
Amount of the unvested bonus
$ 6,000.00
Multiplied by the result of the total amount withdrawn, minus the free withdrawal privilege,
 
divided by the Contract Value on the day of (but before the partial withdrawal)
 
= ($53,530.05 – $12,000) / $110,600 =
x 0.380
Reduction in the unvested bonus due to the partial withdrawal (0.38 x $6,000)
$ 2,280
Unvested bonus after the partial withdrawal = $6,000 – $2,280 =
$ 3,720
 
FREE WITHDRAWAL PRIVILEGE
 
Each Contract Year, you can withdraw up to 12% of your total Purchase Payments without incurring a withdrawal charge (the free withdrawal privilege). Any unused free withdrawal privilege in one Contract Year is not added to the amount available next year. Withdrawals of Purchase Payments that are beyond the withdrawal charge period are not subject to a withdrawal charge and do not reduce your free withdrawal privilege. Required minimum distribution payments are not subject to a withdrawal charge, but do reduce your free withdrawal privilege.
 
NOTE: The free withdrawal privilege is not available upon a full withdrawal (except for Contracts issued in Washington), or while you are receiving Lifetime Plus Payments or Lifetime Income Payments.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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SYSTEMATIC WITHDRAWAL PROGRAM
 
If your Contract Value is at least $25,000, the systematic withdrawal program can provide automatic withdrawal payments to you. You can request to receive these withdrawal payments monthly, quarterly, semi-annually or annually. The minimum amount you can withdraw under this program is $500, and there is no maximum. During the withdrawal charge period (if applicable), systematic withdrawals in excess of the free withdrawal privilege are subject to a withdrawal charge. We make systematic withdrawals on the ninth of the month, or the prior Business Day if the ninth is not a Business Day. We must receive your systematic withdrawal program form instructions in Good Order at our Service Center by 4 p.m. Eastern Time on the Business Day before we process these withdrawals, or your program does not begin until the next month. This program ends at your request or when you withdraw your total Contract Value. However, we reserve the right to discontinue the systematic withdrawal program at any time and for any reason.
 
 
NOTE:
 
·
Ordinary income taxes and tax penalties may apply to systematic withdrawals.
 
·
The systematic withdrawal program is not available while you are receiving required minimum distribution payments, Lifetime Plus Payments or Lifetime Income Payments.
 
MINIMUM DISTRIBUTION PROGRAM AND REQUIRED MINIMUM DISTRIBUTION (RMD) PAYMENTS
 
If you own a Qualified Contract, you can participate in the minimum distribution program during the Accumulation Phase. Under this program, we make payments to you designed to meet the applicable minimum distribution requirements imposed by the Internal Revenue Code for this Qualified Contract. RMD payments are not subject to a withdrawal charge, but they reduce the free withdrawal privilege amount during the Contract Year. We can make payments to you on a monthly, quarterly, semi-annual or annual basis. However, if your Contract Value is less than $25,000, we only make annual payments. You cannot aggregate RMD payments between this Contract and other qualified contracts that you own. We make RMD payments on the ninth of the month, or the prior Business Day if the ninth is not a Business Day. We must receive your program form instructions in Good Order at our Service Center by 4 p.m. Eastern Time on the Business Day before we process these payments, or your program does not begin until the next month.
 
Lifetime Plus Payments or Lifetime Income Payments can also be used to satisfy your RMD needs. If you begin Lifetime Plus Payments or Lifetime Income Payments while participating in the minimum distribution program, RMD payments end on the Business Day immediately before the Benefit Date or Benefit Election Date (as applicable). You remain in the program (unless you choose to end it), and if your selected benefit’s payments and Excess Withdrawals taken during a calendar year do not fully satisfy your RMD, we send you an additional RMD payment to satisfy your remaining RMD needs. For more information, see the note in section 11.a, Income Protector – Calculating Your Lifetime Plus Payments, or section 11.c, Investment Plus – Calculating Your Lifetime Income Payments.
 
 
NOTE:
 
·
You should consult a tax adviser before purchasing a Qualified Contract that is subject to RMD payments.
 

·
The minimum distribution program is not available while you are receiving systematic withdrawals.
 
WAIVER OF WITHDRAWAL CHARGE BENEFIT
 
After the first Contract Year, if any Owner becomes confined to a nursing home for a period of at least 90 consecutive days and a physician certifies that continued confinement is necessary, you can take a withdrawal and we waive the withdrawal charge. This waiver is not available if any Owner was confined to a nursing home on the Issue Date. We base this benefit on the Annuitant for non-individually owned Contracts. We must receive proof of confinement in Good Order before we waive the withdrawal charge.
 
 
NOTE FOR CONTRACTS ISSUED IN:
 
·
Massachusetts – The waiver of withdrawal charge benefit is not available.
 
·
New Hampshire – The definition of nursing home is an institution operated in accordance with state law.
 
·
Pennsylvania – The waiver is not available if the terminal illness was already diagnosed as of the Issue Date. Also, the nursing home confinement requirement is a total of 90 days within a six month period. These 90 days do not need to be consecutive.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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SUSPENSION OF PAYMENTS OR TRANSFERS
 
We may be required to suspend or postpone transfers or payments for withdrawals* for any period when:
 
·
the New York Stock Exchange is closed (other than customary weekend and holiday closings);
 
·
trading on the New York Stock Exchange is restricted;
 
·
an emergency (as determined by the SEC) exists as a result of which disposal of the Investment Option shares is not reasonably practicable or we cannot reasonably value the Investment Option shares; or
 
·
during any other period when the SEC, by order, so permits for the protection of Owners.
 
*
Including Lifetime Plus Payments, Lifetime Income Payments and Excess Withdrawals.
 
 
9.
THE ANNUITY PHASE
 

Prior to annuitization, you can surrender your Contract and receive your total Contract Value. Annuity Payments offer a guaranteed income stream with certain tax advantages and are designed for Owners who are not concerned with continued access to Contract Value.
 
You can apply your Contract Value to regular periodic annuity payments (Annuity Payments). The Payee receives the Annuity Payments. You receive tax reporting on the payments, whether or not you are the Payee. We may require proof of the Annuitant(s)’ age before we make any life contingent Annuity Payment. If you misstate the Annuitant(s)’ age or gender, we pay the amount that would have been paid at the true age or gender.
 
 
CALCULATING YOUR ANNUITY PAYMENTS
 
We base Annuity Payments upon the following:
 
·  
The Contract Value on the Income Date.
 
·
Whether you request fixed payments, variable payments, or a combination of both fixed and variable Annuity Payments.
 
·
The age of the Annuitant and any joint Annuitant on the Income Date.
 
·
The gender of the Annuitant and any joint Annuitant where permitted.
 
·
The Annuity Option you select.
 
·
Your Contract’s mortality table.
 
We guarantee the dollar amount of fixed Annuity Payments and this amount does not change. Variable payments are not predetermined and the dollar amount changes with your selected Investment Options’ investment experience.
 
VARIABLE OR FIXED ANNUITY PAYMENTS
 
You can request Annuity Payments under Annuity Options 1-5 as:
 
·
a variable payout,
 
·
a fixed payout, or
 
·
a combination of both.
 
After the Income Date, you cannot make a transfer from a fixed Annuity Payment stream to variable, but you can transfer from a variable Annuity Payment stream and establish a new fixed Annuity Payment stream.
 
We base fixed Annuity Payments on your Contract’s interest rate and mortality table or current rates, if higher.
 
The dollar amount of variable Annuity Payments depends on the assumed investment rate (AIR) you select and your selected Investment Options’ performance. You can choose a 3%, 5% or 7% AIR.* Using a higher AIR results in a higher initial variable Annuity Payment, but future payments increase more slowly and decrease more rapidly. If your Investment Options’ actual performance exceeds your selected AIR, variable Annuity Payments increase. Similarly, if the actual performance is less than your selected AIR, variable Annuity Payments decrease.
 
*
The maximum available AIR in Florida is 4%, and in Oregon it is 5%.
 
If you choose a variable payout, you can invest in up to 15 Investment Options. We may change this in the future, but we will always allow you to invest in at least five Investment Options. If you do not instruct us, we base variable Annuity Payments on your future Purchase Payment allocation instructions. Currently, we require your initial Annuity Payment to be more than $50.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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ANNUITY PAYMENT OPTIONS
 
You can choose one of the Annuity Options described below or any other payment option to which we agree. Before the Income Date, you can select and/or change the Annuity Option with at least 30 days written notice to us. After Annuity Payments begin, you cannot change the Annuity Option.
 
Option 1. Life Annuity. We make Annuity Payments during the life of the Annuitant, and the last payment is the one that is due before the Annuitant’s death. If the Annuitant dies shortly after the Income Date, the Payee may receive less than your investment in the Contract.
 
Option 2. Life Annuity with Payments Over 5, 10, 15 or 20 Years Guaranteed. We make Annuity Payments during the life of the Annuitant, with payments for a guaranteed minimum period that you select.
 
Option 3. Joint and Last Survivor Annuity. We make Annuity Payments during the lifetimes of the Annuitant and the joint Annuitant. Upon the death of one Annuitant, Annuity Payments to the Payee continue during the lifetime of the surviving joint Annuitant, at a level of 100%, 75% or 50% of the previous amount that you selected. If both Annuitants die shortly after the Income Date, the Payee may receive less than your investment in the Contract.
 
Option 4. Joint and Last Survivor Annuity with Payments Over 5, 10, 15 or 20 Years Guaranteed. We make Annuity Payments during the lifetimes of the Annuitant and the joint Annuitant, with payments for a minimum guaranteed period that you select.
 
Option 5. Refund Life Annuity. We make Annuity Payments during the lifetime of the Annuitant, and the last payment is the one that is due before the Annuitant’s death. After the Annuitant’s death, the Payee may receive a lump sum refund. For a fixed payout, the amount of the refund equals the amount applied to this Annuity Option minus the total paid under this option. For variable Annuity Payments, the amount of the refund depends on the current Investment Option allocation and is the sum of refund amounts attributable to each Investment Option.
 
Annuity Payments are usually lower if you select an Annuity Option that requires us to make more frequent Annuity Payments or to make payments over a longer period of time. If you choose life contingent Annuity Payments, payout rates for a younger Annuitant are lower than the payout rates for an older Annuitant and payout rates for life with a guaranteed period are typically lower than life only payments. Monthly payout rates are lower than annual payout rates, payout rates for a 20-year guaranteed period are less than payout rates for a 10-year guaranteed period, and payout rates for a 50-year-old Annuitant are less than payout rates for a 70-year-old Annuitant.
 
NOTE: If you do not choose an Annuity Option before the Income Date, we make variable Annuity Payments to the Payee under Annuity Option 2 with five years of guaranteed monthly payments.
 
WHEN ANNUITY PAYMENTS BEGIN
 
Annuity Payments begin on the Income Date. Your scheduled Income Date is the maximum permitted date allowed for your Contract, which is the first day of the calendar month following the later of: a) the Annuitant’s 90th birthday, or b) the tenth Contract Anniversary. Your scheduled Income Date may be different if the Contract is issued to a charitable remainder trust. An earlier Income Date or a withdrawal may be required to satisfy minimum required distribution rules under certain Qualified Contracts. You can make an authorized request for a different, earlier or later Income Date after the Issue Date, but any such request is subject to applicable law and our approval. An earlier or later Income Date may not be available to you depending on the Financial Professional you purchase your Contract through and your state of residence. Your Income Date must be the first day of a calendar month at least two years after the Issue Date.* The Income Date cannot be later than what is permitted under applicable law.
 
*
In Florida, the earliest acceptable Income Date is one year after the Issue Date.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
37

 


 
 
NOTE:
 
·
If on the maximum permitted Income Date your Contract Value is greater than zero, you must take a Full Annuitization. We notify you of your available options in writing 60 days in advance. If you have not selected an Annuity Option, we make payments under the default option described in “Annuity Payments.” Upon Full Annuitization you no longer have Contract Value, a death benefit, or any other periodic withdrawals or payments other than Annuity Payments.
 
·
For Contracts with Income Protector or Investment Plus: If on the maximum permitted Income Date we require you to take a Full Annuitization and you are receiving Lifetime Plus Payments or Lifetime Income Payments, and your Contract Value is greater than zero, we make the following guarantee if you take fixed Annuity Payments under Annuity Option 1 or 3.
 
 
For single Lifetime Plus Payments or Lifetime Income Payments, if you choose Annuity Option 1 (Life Annuity) where the sole Annuitant is the sole Covered Person, then your fixed Annuity Payments equals the greater of:
 
·
annual fixed Annuity Payments under Annuity Option 1 based on the Contract Value; or
 
·
the current annual maximum Lifetime Plus Payment or Lifetime Income Payment available to you.
 
 
For joint Lifetime Plus Payments or Lifetime Income Payments, if you choose Annuity Option 3 (Joint and Last Survivor Annuity) with Annuity Payments to continue at a level of 100% to the surviving joint Annuitant, and both joint Annuitants are the joint Covered Persons, then your fixed Annuity Payments equals the greater of:
 
·
annual fixed Annuity Payments under Annuity Option 3 based on the Contract Value; or
 
·
the current annual maximum Lifetime Plus Payment or Lifetime Income Payment available to you.
 
 
However, if you select any other Annuity Option, or if you choose to take variable Annuity Payments, these guarantees do not apply.
 
PARTIAL ANNUITIZATION
 
Only a sole Owner can take Partial Annuitizations under Annuity Options 1, 2, or 5. The Owner must be the Annuitant and we do not allow joint Annuitants. You cannot take a new Partial Annuitization while receiving Lifetime Plus Payments or Lifetime Income Payments. We allow you to annuitize less than your total Contract Value in a Partial Annuitization. If you take a Partial Annuitization, your Contract is in both the Accumulation and Annuity Phases at the same time. We allow one Partial Annuitization every twelve months, up to a maximum of five. If you have four Partial Annuitizations and want a fifth, you must take a Full Annuitization of the total remaining Contract Value. You cannot add Contract Value to the part of a Contract that has been partially annuitized, or transfer values that have been partially annuitized to any other part of the Contract. Partial Annuitizations are not subject to a withdrawal charge (if applicable), but they decrease the Contract Value, Withdrawal Charge Basis, death benefit, and any of your Contract’s guaranteed values.
 
NOTE: A recent tax law change allows a Partial Anuitization under a life Annuity Option on a Non-Qualified Contract to receive the same income tax treatment as a Full Annuitization. However, this income tax treatment does not apply to a Partial Annuitization on a Qualified Contract. You should consult a tax adviser before requesting a Partial Annuitization.
 


The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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10.
DEATH BENEFIT
 

“You” in this section refers to the Owner, or the Annuitant if the Contract is owned by a non-individual.
 
The Base Contract provides the Traditional Death Benefit. If available, you can instead select the Quarterly Value Death Benefit at Contract issue (see section 11.d, Quarterly Value Death Benefit). Death benefits are only available during the Accumulation Phase.
 
If you die during the Accumulation Phase, we process the death benefit using prices determined after we receive both due proof of death and the death benefit payment election in Good Order at our Service Center. If we receive this information at or after the end of the current Business Day, we use the next Business Day’s prices. We consider due proof of death to be any of the following: a copy of a certified copy of the death certificate, a decree of court of competent jurisdiction as to the finding of death, or any other proof satisfactory to us.
 
If there are multiple Beneficiaries, each Beneficiary receives the portion of the death benefit they are entitled to when we receive their required information in Good Order at our Service Center. Also, any part of the death benefit that is in the Investment Options remains there until distribution begins. From the time we determine the death benefit until we make a complete distribution, any amount in the Investment Options continues to be subject to investment risk that is borne by the recipient(s). Once we receive notification of death, we no longer accept additional Purchase Payments or process transfer requests.
 
TRADITIONAL DEATH BENEFIT
 
We determine the Traditional Death Benefit as of the end of the Business Day during which we receive in Good Order at our Service Center, both due proof of death and the death benefit payment election. It is the greater of the Contract Value (after deduction of the final rider charge, if applicable), or the Traditional Death Benefit value.
 
The Traditional Death Benefit value is the total of all Purchase Payments received, reduced by the percentage of Contract Value withdrawn, determined at the end of each Business Day. Withdrawals include Lifetime Plus Payments, Excess Withdrawals, Partial Annuitizations, and any withdrawal charges; but do not include amounts we withdraw for other Contract charges.
 
The Traditional Death Benefit ends upon the earliest of the following.
 
·
The Business Day before the Income Date that you take a Full Annuitization.
 
·
The Business Day that the Traditional Death Benefit value and Contract Value are both zero.
 
·
When the Contract ends.
 
 
NOTE:
 
·
For Bonus Option Contracts: Bonus amounts are included in the portion of the death benefit based on Contract Value, but only as the bonus vests. We do not include the bonus in the portion of the death benefit based on Purchase Payments.
 

·
For Contracts with Income Protector, Investment Protector or Investment Plus: We restrict additional Purchase Payments, which limits the Traditional Death Benefit value.
 
DEATH OF THE OWNER AND/OR ANNUITANT
 
The appendix to the Statement of Additional Information includes tables that are intended to help you better understand what happens upon the death of any Owner and/or Annuitant under the different portions of the Contract.
 
DEATH BENEFIT PAYMENT OPTIONS DURING THE ACCUMULATION PHASE
 
If you do not designate a death benefit payment option, a Beneficiary must select one of the options listed below. If Option A (lump sum payment) is selected, we pay the amount within seven days of our receipt of due proof of death and a death benefit payment election, including any required governmental forms, unless the suspension of payments or transfers provision is in effect. Payment of the death benefit may be delayed, pending receipt of any applicable tax consents and/or state forms.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
39

 

Spousal Continuation: If the Beneficiary is the deceased Owner’s spouse, he or she can choose to continue the Contract with their portion of the death benefit in his or her own name. Spouses must qualify as such under federal law to continue the Contract. An election by the spouse to continue their portion of the Contract must be made on the death claim form before we pay the death benefit. If the surviving spouse continues the Contract, at the end of the Business Day we receive in Good Order at our Service Center both due proof of death and death benefit payment election, we increase their portion of the Contract Value to equal their portion of the death benefit if that amount is greater. For Contracts with Income Protector, Investment Protector, or Investment Plus, a Contract Value increase may not increase the Benefit Base, Target Value, or Lifetime Income Value. If the surviving spouse continues their portion of the Contract, he or she may exercise all of the Owner’s rights, including naming a new Beneficiary or Beneficiaries. However, if the surviving spouse is not a Covered Person and the Contract included Income Protector or Investment Plus, both the benefit and any Lifetime Plus Payments or Lifetime Income Payments end. If the spouse continues the Contract, the spouse will be subject to any remaining withdrawal charge.
 
Option A: Lump sum payment of the death benefit. We do not deduct the contract maintenance charge.
 
Option B: Payment of the entire death benefit within five years of the date of any Owner’s death.
 
Option C: If the Beneficiary is an individual, payment of the death benefit as an Annuity Payment over the Beneficiary’s lifetime, or over a period not extending beyond the Beneficiary’s life expectancy. This means only Annuity Options 1, 2 and 5 are available. Distribution must begin within one year of the date of the Owner’s death. We waive the contract maintenance charge on any portion of the death benefit applied to fixed Annuity Payments, or if the Contract Value on the Income Date is at least $100,000. We continue to assess the full contract maintenance charge on each Beneficiary’s death benefit portion applied to variable Annuity Payments if they do not qualify for the waiver.
 
Any portion of the death benefit not applied to Annuity Payments within one year of the date of the Owner’s death must be distributed within five years of the date of death.
 
If the Contract is owned by a non-individual, then we treat the death of any Annuitant as the death of an Owner for purposes of the Internal Revenue Code’s distribution at death rules, which are set forth in Section 72(s) of the Code.
 
In all events, notwithstanding any provision to the contrary in the Contract or this prospectus, the Contract is interpreted and administered in accordance with Section 72(s) of the Internal Revenue Code.
 
Other rules may apply to Qualified Contracts.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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11.
SELECTION OF OPTIONAL BENEFITS
 
Check with your Financial Professional regarding availability of optional benefits. Each optional benefit carries an additional M&E charge or a rider charge. For more information, please see the Fee Tables and section 7, Expenses.
 
·
Income Protector. This benefit provides guaranteed lifetime income payments (called Lifetime Plus Payments) with continued access to both Contract Value and a death benefit for a period of time as described in section 11.a, Income Protector.
 
·
Investment Protector. This benefit provides a level of protection for your principal and any annual investment gains on a specific date in the future, assuming you hold the Contract for the required period, as described in section 11.b, Investment Protector.
 
·
Investment Plus. This benefit provides guaranteed lifetime income payments (Lifetime Income Payments, similar to Income Protector’s Lifetime Plus Payments) with continued access to both Contract Value and a death benefit for a period of time, and/or before lifetime income payments begin, a level of protection for your principal and any quarterly investment gains on a specific date in the future, assuming you hold the Contract for the required period (similar to Investment Protector) as described in section 11.c, Investment Plus.
 
·
Quarterly Value Death Benefit. This benefit locks in any quarterly investment gains to provide an increased death benefit as described in section 11.d, Quarterly Value Death Benefit.
 
·
Bonus Option. This benefit provides a 6% bonus on Purchase Payments received before age 81 (subject to a three-year vesting schedule) and has a higher and longer withdrawal charge schedule as described in section 11.e, Bonus Option. Bonus annuity contracts generally have higher charges than contracts without a bonus and therefore, the charges may be greater than the bonus.
 
·
Short Withdrawal Charge Option. This benefit shortens the Base Contract’s withdrawal charge period from seven to four years as described in section 11.f, Short Withdrawal Charge Option.
 
·
No Withdrawal Charge Option. This benefit eliminates the Base Contract’s withdrawal charge as described in section 11.g, No Withdrawal Charge Option.
 
At issue you first select one of the following: Base Contract, Bonus Option, Short Withdrawal Charge Option or No Withdrawal Charge Option. You then choose whether to add the Quarterly Value Death Benefit to your Contract. After we issue the Contract, you cannot remove any of these optional benefits from your Contract.
 
If you select the No Withdrawal Charge Option or Quarterly Value Death Benefit you must also select Income Protector, Investment Protector or Investment Plus at issue. Otherwise, you can select Income Protector, Investment Protector or Investment Plus at issue, or on a Quarterly Anniversary (if available). Income Protector and Investment Plus are available before the older Covered Person’s 81st birthday. Investment Protector is available before the older Owner’s 81st birthday (or the Annuitant’s 81st birthday if the Owner is a non-individual). Once selected, you can remove your benefit subject to certain restrictions. If you select the No Withdrawal Charge Option, you can only remove the additional required benefit if we increase the rider charge, or if you simultaneously replace your selected additional required benefit (e.g., Income Protector) with another additional required benefit (e.g., Investment Protector). If you remove Income Protector, Investment Protector or Investment Plus from your Contract, it is not available for future selection.
 
REPLACING OPTIONAL BENEFITS
 
You can replace a benefit one time as follows if you meet the age selection requirement and the new benefit is available.
 
·
Replace Investment Protector with Income Protector.
 
·
Replace Income Protector with Investment Protector.
 
These are the only replacements we allow. Replacements include both the simultaneous removal and addition of benefits on a Quarterly Anniversary, as well as removing one benefit on a Quarterly Anniversary and adding another benefit on a future Quarterly Anniversary. If you select the No Withdrawal Charge Option, any replacement of Investment Protector or Income Protector must happen simultaneously. The guarantees of the new benefit may be more or less than the benefit you are replacing.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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Primary Differences Between Income Protector, Investment Protector and Investment Plus
 
Income Protector
Investment Protector
Investment Plus
What are the benefit features?
Lifetime income payments (Lifetime Plus Payments) with continued access to both Contract Value and a death benefit.
A future Contract Value guarantee (the Target Value)
A future Contract Value guarantee (the Protected Investment Value) before you request optional lifetime income payments (Lifetime Income Payments) with continued access to both Contract Value and a death benefit.
On whom do we base the benefit?
The Covered Person(s), who must either be Owners, Annuitant or Beneficiaries.
The Owner (or Annuitant if Owner is a non-individual).
The Covered Person(s), who must either be Owners, Annuitant or Beneficiaries.
What are the charges?
The current rider charge for single Lifetime Plus Payments is 1.05% of the Benefit Base, or 1.20% for joint Lifetime Plus Payments.
The current rider charge is 0.90% of the Target Value.
The current rider charge for single Lifetime Income Payments is [ ]% of the Lifetime Income Value, or [ ]% for joint Lifetime Income Payments.
Can the rider charge increase?
Yes, on each Quarterly Anniversary up to 2.50% for single or 2.75% for joint, or we can decrease it to 0.50%. However, we cannot increase or decrease it more than 0.50% in any twelve-month period.
Yes, on each Quarterly Anniversary up to 2.50% or we can decrease it to 0.35%. However, we cannot increase or decrease it more than 0.35% in any twelve-month period.
Yes, on each Quarterly Anniversary up to 2.50%, or we can decrease it to 0.50%. However, we cannot increase or decrease it more than 0.50% in any twelve-month period.
Do we restrict additional Purchase Payments?
We only accept additional Purchase Payments before the Benefit Date. We also annually limit additional payments to all payments received in the first quarter, without our prior approval.
We only accept additional Purchase Payments before the third rider anniversary. We also annually limit additional payments to all payments received in the first quarter, without our prior approval.
We only accept additional Purchase Payments before the earlier of the third rider anniversary or the Benefit Election Date. We also annually limit additional payments to all payments received in the first quarter, without our prior approval.
Do we restrict allocations and transfers?
Yes, and the restrictions are set when you select the benefit and do not change over time.
Yes, and the restrictions change over time.
Yes, and the restrictions are set when you select the benefit and do not change over time.
Is there a waiting period to access the benefit?
No, if the Covered Person(s) meet the minimum exercise age requirement when you select the benefit.
The earliest available initial Target Value Date is ten years after you select the benefit (the tenth rider anniversary).
The earliest available initial Protected Investment Date is the tenth rider anniversary. Lifetime income can begin immediately if the Covered Person(s) meet the minimum exercise age requirement.
Is there a mandatory beginning date?
No, but if you do not begin taking Lifetime Plus Payments during the eligibility period, the benefit ends.
Yes. The initial Target Value Date is when the Contract Value guarantee first takes effect. Subsequent dates occur every five years.
Yes, if you select an initial Protected Investment Date and do not begin Lifetime Income Payments before this date. Subsequent dates occur every ten years before you begin payments. Payments are only available during the eligibility period.
What are the guaranteed values?
The Benefit Base determines the initial Lifetime Plus Payment. It is based on the greater of the highest quarterly Contract Value, or quarterly simple interest applied to Purchase Payments adjusted for withdrawals for a guaranteed number of years. Each quarter we reset the simple interest to equal the Contract Value, if greater.
The Target Value is the greater of a percentage of the highest Contract Anniversary value, or total Purchase Payments adjusted for withdrawals. It is guaranteed to be available on the last Business Day before each Target Value Date.
The Protected Investment Value determines the future Contract Value guarantee. It is based on the greater of a percentage of the highest quarterly Contract Anniversary value, or total Purchase Payments adjusted for withdrawals. It is guaranteed to be available on the last Business Day before each Protected Invesment Date.The Lifetime Income Value determines the initial Lifetime Income Payment. It is based on the highest quarterly Contract Value.

 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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11.a INCOME PROTECTOR
 
We designed Lifetime Plus Payments to last for the lifetime of the Covered Person(s). If all Covered Persons die or are removed from the Contract before Lifetime Plus Payments begin, this benefit ends and payments are not available to you. In the case of non-spouse Joint Owners, if a Joint Owner dies before payments begin, this benefit ends and payments are not available to you even if the Covered Person is still alive. You can begin payments immediately if the Covered Person(s) meet the minimum exercise age requirement (see “Requesting Lifetime Plus Payments”). You choose your payment frequency and amount subject to an annual maximum. Once established, the annual maximum Lifetime Plus Payment can increase, but it cannot decrease unless you take an Excess Withdrawal.
 
There are several important points to consider before selecting Income Protector.
 
·
If you do not begin Lifetime Plus Payments during the eligibility period, the benefit ends and you will have paid for the benefit without receiving any of its advantages.
 
·
Joint Lifetime Plus Payments are not available if there is more than a 30-year age difference between Covered Persons.
 
·
This benefit is subject to a rider charge, as described in the Fee Tables and section 7, Expenses – Rider Charge.
 
·
This benefit does not create Contract Value or guarantee Investment Option performance.
 
·
If you select the No Withdrawal Charge Option, you can only remove Income Protector as discussed under “Removing Income Protector” below.
 
·
If you select this benefit, we restrict additional Purchase Payments and Contract Value allocations and transfers, and rebalance your Contract Value quarterly. These restrictions support the benefit’s guarantees, and to the extent they limit your investment flexibility, they may limit the upside potential to your Contract Value and Benefit Base.
 
·
If you take less than the annual maximum Lifetime Plus Payment, you may not receive an annual payment increase.
 
Please discuss Income Protector’s appropriateness with your Financial Professional and tax adviser.
 
SELECTING INCOME PROTECTOR
 
You can select Income Protector at issue or on any subsequent Quarterly Anniversary once before the older Covered Person’s 81st birthday. Covered Person(s) are discussed in section 2, Ownership.
 
You can select Income Protector after the Issue Date by completing the appropriate form. We add this benefit to your Contract on the Quarterly Anniversary (or on the next Business Day if the anniversary is not a Business Day) after we receive your request in Good Order at our Service Center, and the rider effective date is that Quarterly Anniversary. For the request to be in Good Order, we must receive this form no earlier than 30 days before a Quarterly Anniversary, and no later than 4 p.m. Eastern Time on the last Business Day before the Quarterly Anniversary. If we receive your request outside this time period, we ask you to resubmit it for the next Quarterly Anniversary. Your Contract Value on the rider effective date must be at least $10,000 (or $25,000 if you selected the No Withdrawal Charge Option). You must reallocate your Contract Value and change your future allocation instructions to comply with the Investment Option allocation and transfer restrictions discussed later in this section before we add this benefit to your Contract.
 
REMOVING INCOME PROTECTOR
 
You can remove Income Protector from your Contract once while the Contract Value is positive. If you remove this benefit, it is not available for future selection. If you select the No Withdrawal Charge Option, you can only remove this benefit if we increase the rider charge, or if you simultaneously replace it with Investment Protector.
 
You can remove Income Protector by completing the appropriate form. If we increase this benefit’s rider charge and you want to remove this benefit before the increase, we must receive this form within 30 days of the date of our letter notifying you of the rider charge increase. We remove this benefit from your Contract on the Quarterly Anniversary (or on the next Business Day if the anniversary is not a Business Day) that occurs immediately after we receive your request in Good Order at our Service Center, and the rider termination date is that Quarterly Anniversary. For the request to be in Good Order, we must receive this form no earlier than 30 days before a Quarterly Anniversary, and no later than 4 p.m. Eastern Time on the last Business Day before the Quarterly Anniversary. If we receive your request outside this time period, we ask you to resubmit it for the next Quarterly Anniversary.
 
On the rider termination date Lifetime Plus Payments (if applicable) stop, we deduct the final rider charge, and the restrictions on additional Purchase Payments and Contract Value allocations and transfers no longer apply.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
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LIFETIME PLUS PAYMENT OVERVIEW
 
We base your initial Lifetime Plus Payment on the Benefit Base and payment percentage. When payments begin (Benefit Date), the Benefit Base is the greatest of:
 
·
Contract Value as of the end of the last Business Day before the Benefit Date,
 
·
highest Contract Value from any prior Quarterly Anniversary adjusted for subsequent withdrawals (Quarterly Anniversary Value), or
 
·
quarterly simple interest applied to Purchase Payments adjusted for withdrawals for a guaranteed number of years. Each quarter we reset the simple interest to equal the Contract Value, if greater (Annual Increase).
 
We determine your payment percentage by using the Annual Maximum Lifetime Plus Payment Table. We establish your Contract’s Annual Maximum Lifetime Plus Payment Table on the rider effective date and we cannot change it. The current Annual Maximum Lifetime Plus Payment Table is as follows:
 
Annual Maximum Lifetime Plus Payment Table
Age band of the Covered Person
(or younger Covered Person for joint Lifetime Plus Payments)
Annual maximum Lifetime Plus Payment percentage
60 – 64
4.0%
65 – 79
4.5%
80+
5.5%
 
In the future, we may change the Annual Maximum Lifetime Plus Payment Table for newly issued Contracts. The minimum payment percentage that we may offer in the future is 3% and the maximum is 8%. We may also add payment percentages for age bands that begin as low as age 50, or as high as age 85.
 
The annual maximum Lifetime Plus Payment is the amount you are entitled to receive each year, but you can choose to take less. Your annual maximum Lifetime Plus Payment may increase based on the Covered Person’s age and/or if the Contract Value increases. However, your annual maximum payment does not increase just as a result of the Covered Person moving into a new age band; the result of the current Contract Value multiplied by the increased payment percentage must be greater than your current annual maximum payment for your payment to increase. For more information, see “Automatic Annual Lifetime Plus Payment Increases.”
 
NOTE: For Contracts issued in Delaware and Minnesota, the maximum payment percentage we may offer in the future is 6%.
 
BENEFIT BASE
 
The Benefit Base determines both your rider charge and your initial annual maximum Lifetime Plus Payment. The greater the Benefit Base, the greater the initial annual maximum Lifetime Plus Payment.
 
On the rider effective date, and on each Business Day before the Benefit Date, the Benefit Base is equal to the greater of the Quarterly Anniversary Value or the Annual Increase. On the Benefit Date, we compare your Benefit Base to the Contract Value using the values determined at the end of the prior Business Day and increase your Benefit Base to equal this Contract Value if it is greater.
 
On and after the Benefit Date, your Benefit Base only changes if you take an Excess Withdrawal, or we increase your annual maximum Lifetime Plus Payment. Changes in the Benefit Base also change your daily rider charge amount. Excess Withdrawals reduce your Benefit Base by the percentage of Contract Value withdrawn, determined at the end of the Business Day we process the withdrawal. An annual payment increase may increase or decrease your Benefit Base at the end of the last Business Day before a Benefit Anniversary as follows.
 
·
If we increase your annual maximum Lifetime Plus Payment because the Contract Value increased, we increase your Benefit Base by the same percentage that we increased the payment.
 
·
If we increase your annual maximum Lifetime Plus Payment because the current payment percentage multiplied by the current Contract Value results in a higher payment, we change your Benefit Base to equal this Contract Value. This change may increase or decrease your Benefit Base.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
44

 

QUARTERLY ANNIVERSARY VALUE
While the benefit is in effect, we only calculate the Quarterly Anniversary Value before the Benefit Date.
 
If the rider effective date is the Issue Date, the Quarterly Anniversary Value is initially equal to the Purchase Payment received on the Issue Date. If the rider effective date occurs after the Issue Date, the Quarterly Anniversary Value is initially equal to the Contract Value at the end of the prior Business Day.
 
At the end of each Business Day, we adjust the Quarterly Anniversary Value as follows.
 
·
We increase it by the amount of any additional Purchase Payments.
 
·
We reduce it by the percentage of any Contract Value withdrawn. Withdrawals include Partial Annuitizations and any withdrawal charges, but do not include amounts we withdraw for other Contract charges.
 
On each Quarterly Anniversary, we compare the Quarterly Anniversary Value to the Contract Value using the values determined at the end of the prior Business Day and increase the Quarterly Anniversary Value to equal this Contract Value if it is greater.
 
ANNUAL INCREASE
While the benefit is in effect, we only calculate the Annual Increase before the Benefit Date.
 
On each Quarterly Anniversary during the guarantee years, we apply a simple interest increase of one-fourth of the annual increase percentage to the Purchase Payments adjusted for withdrawals (or the Contract Value on the rider effective date, if applicable). Next, we compare this value to the Contract Value and increase it to equal the Contract Value if the Contract Value is greater (reset). We then apply any future simple interest increases to the reset value. Contract Value resets occur during the entire period we calculate the Annual Increase, not just during the guarantee years.
 
We establish your Contract’s number of guarantee years and annual increase percentage on the rider effective date and we cannot change them. The guarantee years are the maximum number of years that you can receive simple interest increases under the Annual Increase. The current number of guarantee years is 30, the current annual increase percentage is 8%, and the current quarterly simple interest increase is 2%. In the future, we may change the number of guarantee years and annual increase percentage for newly issued Contracts. The minimum number of guarantee years that we may offer in the future is five and the maximum is 30. The minimum annual increase percentage that we may offer in the future is 4% and the maximum is 10%, which means the minimum quarterly simple interest increase we may offer in the future is 1% and the maximum is 2.5%.
 
If the rider effective date is the Issue Date, both the Annual Increase and increase base are initially equal to the Purchase Payment received on the Issue Date. If the rider effective date occurs after the Issue Date, both the Annual Increase and increase base are initially equal to the Contract Value at the end of the prior Business Day.
 
At the end of each Business Day, we adjust both the Annual Increase and increase base as follows.
 
·
We increase them by the amount of any additional Purchase Payments.
·
We reduce them by the percentage of any Contract Value withdrawn. Withdrawals include Partial Annuitizations and any withdrawal charges, but do not include amounts we withdraw for other Contract charges.
 
On each Quarterly Anniversary on or before the maximum rider anniversary, the Annual Increase is equal to:
 
a + (b x (c – d))
 
Where:
a =
The Annual Increase at the end of the prior Business Day;
b =
The annual increase percentage we set on the rider effective date divided by four;
c =
The increase base at the end of the prior Business Day; and
d =
Purchase Payments* received on or after the prior Quarterly Anniversary. If you select this benefit at issue, we exclude from “d” any Purchase Payments received before the first Quarterly Anniversary.
 
*
We reduce each Purchase Payment by the percentage of any Contract Value withdrawn, determined at the end of each Business Day.
 
The maximum rider anniversary is the Quarterly Anniversary that occurs on the number of guarantee years after the rider effective date. For example, if the Issue Date is June 1, 2009, the rider effective date is September 1, 2009, and the number of guarantee years is 30 years, then the maximum rider anniversary is September 1, 2039.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
45

 

We then compare this Annual Increase to the Contract Value at the end of the prior Business Day and increase both the Annual Increase and the increase base to equal this Contract Value if it is greater. As previously stated, these resets can occur during the entire period we calculate the Annual Increase.
 
NOTE: For Bonus Option Contracts, unvested bonus amounts are not included in the Quarterly Anniversary Value or Annual Increase, or the Contract Value.
 
REQUESTING LIFETIME PLUS PAYMENTS
 
You request Lifetime Plus Payments by completing a payment election form. Lifetime Plus Payments begin on the Benefit Date, which must be either the 1st or 15th of a calendar month. Your Benefit Date is the next available date that occurs at least 15 calendar days after we receive your request in Good Order at our Service Center. At least one Covered Person must be alive on the Benefit Date in order for Lifetime Plus Payments to begin. You cannot submit this form until the younger Covered Person reaches the minimum exercise age, or once the older Covered Person reaches age 91. We establish your Contract’s minimum exercise age on the Issue Date and we cannot change it. The current minimum exercise age is age 60. In the future, we may change the minimum exercise age for newly issued Contracts to be as low as age 50 or as high as age 85.
 
You can receive Lifetime Plus Payments semi-monthly, monthly, quarterly, semi-annually, or annually. If the scheduled payment date does not fall on a Business Day, we make the payment on the next Business Day.
 
You can change your payment frequency once each Benefit Year while your Contract Value is positive. A Benefit Year is a period of twelve months beginning on the Benefit Date or any subsequent Benefit Anniversary. Once your Contract Value reduces to zero, you receive your maximum Lifetime Plus Payment at the previous selected payment frequency. You must provide notice of any requested payment frequency change to our Service Center at least 30 days before the Benefit Anniversary. If the change is available, we implement it on the Benefit Anniversary and it remains in effect until the benefit ends or you request another change.
 
If your Contract Value reduces to zero for any reason other than a withdrawal while this benefit is in effect and before the Benefit Date, we calculate your annual maximum Lifetime Plus Payment and begin making annual payments to you on the next available Benefit Date. If the Benefit Date has not occurred six months before the older Covered Person reaches age 91, we send you written notice that the benefit is about to end. If the benefit ends before Lifetime Plus Payments begin, you will have paid for the benefit without receiving any of its advantages.
 
Once Lifetime Plus Payments begin:
 
·
You cannot take new Partial Annuitizations.
 
·
You cannot make additional Purchase Payments so the Traditional Death Benefit value (if applicable) no longer increases.
 
·
Any active automatic investment plan and/or systematic withdrawal or dollar cost averaging programs end.
 
·
The free withdrawal privilege is not available.
 
·
You can only remove Income Protector while the Contract Value is positive. If you remove this benefit, the restrictions listed above do not apply on or after the rider termination date.
 
·
You can only change the Owner if you selected joint Lifetime Plus Payments and:
 
 
an Owner dies and the spouse continues the Contract, or
 
 
you remove a joint Covered Person who is also a Joint Owner from the Contract. In this case, the remaining Covered Person must become the new sole Owner.
 
·
The rider charge continues until the benefit ends, or the Business Day the Contract Value reduces to zero.
 
·
If you select the Quarterly Value Death Benefit, its additional M&E charge continues until that benefit ends.
 
·
If you take a Full Annuitization, Lifetime Plus Payments stop and Income Protector ends.
 
·
The Contract Value continues to fluctuate as a result of Investment Option performance. It decreases on a dollar for dollar basis with each Lifetime Plus Payment, Excess Withdrawal, and deduction of Contract charges other than the M&E charge.
 
·
Lifetime Plus Payments do not reduce your Benefit Base, but Excess Withdrawals reduce your Benefit Base and annual maximum Lifetime Plus Payment by the percentage of Contract Value withdrawn (including any withdrawal charge). If you take an Excess Withdrawal of your total Contract Value, Lifetime Plus Payments stop and Income Protector ends.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
46

 

·
Each Lifetime Plus Payment and any Excess Withdrawal reduces the Traditional Death Benefit value (or the Quarterly Anniversary Value under the Quarterly Value Death Benefit, if applicable) by the percentage of Contract Value withdrawn (including any withdrawal charge).
 
·
Any part of your annual maximum Lifetime Plus Payment that you do not withdraw in a given Benefit Year remains in your Contract for the remainder of that year, but is not added to the annual maximum payment available next year.
 
·
We may increase your annual maximum Lifetime Plus Payment on every Benefit Anniversary before the older Covered Person reaches age 91. If you receive a payment increase, we may also change your Benefit Base.
 
NOTE: If the older Covered Person is age 80 on the rider effective date, we extend the latest available Benefit Date by 30 calendar days in order to allow you to receive the maximum benefit from the Annual Increase.
 
CALCULATING YOUR LIFETIME PLUS PAYMENTS
 
The annual maximum Lifetime Plus Payment is the amount you are entitled to receive each Benefit Year. On the Benefit Date, the initial annual maximum Lifetime Plus Payment is equal to the Benefit Base multiplied by the current payment percentage, determined by using the Annual Maximum Lifetime Plus Payment Table (see “Lifetime Plus Payment Overview”). On the Benefit Date, if your initial annual maximum Lifetime Plus Payment is less than $100, this benefit ends.
 
The annual maximum Lifetime Plus Payment is the amount you are entitled to, but you can choose to take less. The annual actual Lifetime Plus Payment is the total amount you choose to receive each year. Any part of your annual maximum payment that you do not withdraw in a given Benefit Year is not added to the annual maximum payment available next year. Each Lifetime Plus Payment you receive is equal to the annual actual Lifetime Plus Payment divided by the number of payments you chose to receive during the Benefit Year. The initial actual Lifetime Plus Payment must either be zero, or at least $100.
 
We deduct each Lifetime Plus Payment, Excess Withdrawal, and any additional payment resulting from a required minimum distribution, proportionately from the Investment Options. We continue to rebalance the Contract Value quarterly among the Investment Options according to your future Purchase Payment allocation instructions while this benefit is in effect. You can also continue to make transfers between the Investment Options while your benefit is in effect, subject to the restrictions set out in section 5, Investment Options – Transfers Between Investment Options, and the “Investment Option Allocation and Transfer Restrictions” discussion later in this section.
 
If your Contract Value reduces to zero for any reason other than an Excess Withdrawal or Full Annuitization, then Lifetime Plus Payments continue until the deaths of all Covered Persons.
 
Excess Withdrawals
 
Your annual maximum Lifetime Plus Payment only decreases if you take an Excess Withdrawal. An Excess Withdrawal is a withdrawal you take while you are receiving Lifetime Plus Payments, that when added to any other withdrawals taken during the Benefit Year and your annual actual payment, is greater than your current annual maximum payment. If your actual Lifetime Plus Payment is less than your annual maximum payment, you can withdraw the difference and we consider that withdrawal to be an additional actual Lifetime Plus Payment, and not an Excess Withdrawal. Excess Withdrawals include any applicable withdrawal charge, but do not include amounts we withdraw for other Contract charges.
 
For example, assume your annual maximum Lifetime Plus Payment is $2,000 and you take an additional withdrawal of $1,000 in the same year. Within a Benefit Year, you can take an additional withdrawal of up to $1,000 and we consider that to be an additional actual Lifetime Plus Payment. If you withdraw $1,200, we consider the first $1,000 to be an additional actual Lifetime Plus Payment and the next $200 to be an Excess Withdrawal.
 
Any partial Excess Withdrawal must comply with the restrictions in section 8, Access to Your Money and the following provisions. If your Contract Value is less than $2,000, you can only withdraw the total remaining Contract Value (less any rider charge). Also, if at the end of the Business Day that we process your Excess Withdrawal your Contract Value is less than $2,000, you must withdraw the total remaining Contract Value (less any rider charge). If you take an Excess Withdrawal of the total remaining Contract Value your entire Contract ends.
 
Excess Withdrawals reduce your annual maximum Lifetime Plus Payment on the next Benefit Anniversary after the withdrawal. For each Excess Withdrawal, we reduce your annual maximum payment by the same percentage that we reduced the Benefit Base. If partial Excess Withdrawals reduce your annual maximum Lifetime Plus Payment to less than $100, we send you the total remaining Contract Value (less any rider charge) and your Contract ends.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
47

 


 
NOTE:
 
·
For Qualified Contracts, if we calculate a required minimum distribution (RMD) based on this Contract, after making all Lifetime Plus Payments for the calendar year, we determine whether this calendar year’s total RMD has been satisfied by these payments and any Excess Withdrawals. If the RMD amount has not been satisfied, we send you this remaining amount as one RMD payment by the end of the calendar year. We consider this payment to be a withdrawal, but it is not an Excess Withdrawal and it is not subject to a withdrawal charge.
 
·
For required annuitization, if on the maximum permitted Income Date you are receiving Lifetime Plus Payments, we guarantee to pay you the greater of your maximum Lifetime Plus Payment or fixed Annuity Payments based on the Contract Value under Annuity Option 1 or Annuity Option 3. If you select any other Annuity Option, or if you choose variable Annuity Payments, this guarantee does not apply. For more information, see section 9, The Annuity Phase.
 

 
AUTOMATIC ANNUAL LIFETIME PLUS PAYMENT INCREASES
 
We may change your annual maximum Lifetime Plus Payment on each Benefit Anniversary before the older Covered Person reaches age 91 as follows.
 
·
If you took your annual maximum Lifetime Plus Payment during the last Benefit Year, we increase next year’s annual maximum payment if the Contract Value at the end of the prior Business Day is greater than the Contract Value from one year ago (which is the end of the last Business Day before the prior Benefit Anniversary, or the Benefit Date if this is the first Benefit Anniversary). This increase is equal to the percentage of growth between these two Contract Values. For example, if the Contract Value increased by 5%, we also increase your annual maximum Lifetime Plus Payment by 5%.
 
·
If the current payment percentage multiplied by the Contract Value at the end of the prior Business Day results in a higher annual maximum Lifetime Plus Payment.
 
If your actual Lifetime Plus Payment is an exact dollar amount, an automatic annual payment increase does not increase your actual payment. However, if your actual Lifetime Plus Payment is a percentage of your annual maximum Income Advantage Payment, an automatic annual payment increase does increase your actual payment.
 
NOTE: Automatic annual Lifetime Plus Payment increases are not available once the older Covered Person reaches age 91, or on or after the Business Day your Contract Value reduces to zero.
 

 
TAXATION OF LIFETIME PLUS PAYMENTS
 
We treat Lifetime Plus Payments as withdrawals for tax purposes. This means that, for Non-Qualified Contracts, gains from the entire Contract are considered to be distributed first and are subject to ordinary income tax. Purchase Payments are distributed after gains have been paid out and are generally considered to be a return of your investment and are not subject to income tax. For Qualified Contracts, the total Lifetime Plus Payment is most likely subject to ordinary income tax. For both Qualified and Non-Qualified Contracts, if we reduce the minimum exercise age in the future to below age 59½, and any Owner is younger than age 59½ while receiving Lifetime Plus Payments, the payments may be subject to a 10% federal penalty tax. If you are taking withdrawals from the Contract under Section 72(t) or 72(q) of the Internal Revenue Code and you begin Lifetime Plus Payments before the required series of withdrawals is complete, you may incur additional penalties, including a 10% federal penalty tax.
 
 
INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING
 
Under Income Protector, we restrict your Investment Option selection. By selecting this benefit, you agree to allow us to rebalance your Contract Value quarterly, as described here. We put these restrictions in place to support Income Protector’s guarantees and not to meet your investment objectives. To the extent these restrictions limit your investment flexibility, they may limit the upside potential to your Investment Option returns, which may limit your Contract Value and Benefit Base.
 
We establish your Contract’s Investment Option allocation and transfer restrictions on the rider effective date and we cannot change them. We currently require you to allocate 100% of your total Contract Value to Investment Option Group C. In the future, we could offer additional Investment Option groups with as few as five total Investment Options in all groups. If we offer multiple Investment Option groups in the future, we may also move Investment Options from a more restrictive group to a less restrictive group, but we cannot move Investment Options the other way.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
48

 


 
Income Protector Investment Option Group C
AZL Balanced Index Strategy Fund
AZL Franklin Templeton Founding Strategy Plus Fund
AZL Fusion Balanced Fund
AZL Fusion Conservative Fund
AZL Fusion Moderate Fund
AZL Gateway Fund
AZL Growth Index Strategy Fund
AZL Invesco Equity and Income Fund
AZL Money Market Fund
BlackRock Global Allocation V.I. Fund
Fidelity VIP FundsManager 50% Portfolio
Fidelity VIP FundsManager 60% Portfolio
Franklin High Income Securities Fund
Franklin Income Securities Fund
Franklin U.S. Government Fund
PIMCO VIT All Asset Portfolio
PIMCO VIT Emerging Markets Bond Portfolio
PIMCO VIT Global Advantage Strategy Bond Portfolio
PIMCO VIT Global Bond Portfolio (Unhedged)
PIMCO VIT Global Multi-Asset Portfolio
PIMCO VIT High Yield Portfolio
PIMCO VIT Real Return Portfolio
PIMCO VIT Total Return Portfolio
PIMCO VIT Unconstrained Bond Portfolio
Templeton Global Bond Securities Fund
 
We may add, remove or substitute Investment Options from this group. We secure all necessary SEC and other governmental approvals before removing or substituting an Investment Option. We send you written notice regarding additions, removals or substitutions. When an Investment Option within a group is removed or substituted, we send your written notice 30 days before the removal or substitution date.
 
While your benefit is in effect and your Contract Value is positive, we rebalance your Contract Value quarterly according to your future Purchase Payment allocation instructions. The rebalancing occurs at the end of the last Business Day before each Quarterly Anniversary. Your Investment Options’ performance may cause your chosen allocations to shift. Quarterly rebalancing helps you maintain your selected allocation mix. There are no fees for the quarterly rebalancing transfers we make, and we do not count them against the free transfers we allow. To change this quarterly rebalancing, you must change your future Purchase Payment allocation instructions. Any requested change to these instructions must comply with the restrictions stated here or we reject your change.
 
WHEN INCOME PROTECTOR ENDS
 
Before the Benefit Date, Income Protector ends on the earliest of the following.
 
·
The Business Day we process your request to remove this benefit from your Contract (the rider termination date).
 
·
For single Lifetime Plus Payments where the Contract is jointly owned by non-spouses, the date of death of any Joint Owner. This means Income Protector may end even if the sole Covered Person is still alive.
 
·
The date of death of all Covered Persons. If joint Covered Persons were not federally recognized spouses as of the date of the first Covered Person’s death, spousal continuation of the Contract is not available and Income Protector ends as of this date of death.
 
·
The older Covered Person’s 91st birthday.
 
·
The Business Day before the Income Date you take a Full Annuitization.
 
·
The Business Day we process your request for a full withdrawal.
 
·
When the Contract ends.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
49

 

On and after the Benefit Date, Income Protector ends on the earliest of the following.
 
·
The rider termination date we process your request to remove this benefit from your Contract (only available while your Contract Value is positive).
 
·
The Business Day you take an Excess Withdrawal of the total Contract Value.
 
·
The Business Day before the Income Date that you take a Full Annuitization (only available while your Contract Value is positive).
 
·
On the Benefit Date if the initial annual maximum Lifetime Plus Payment is less than $100.
 
·
The Benefit Anniversary that your annual maximum Lifetime Plus Payment is less than $100 due to an Excess Withdrawal.
 
·
For single Lifetime Plus Payments when the Contract is solely owned or owned by a non-individual, the date of death of the Covered Person.
 
·
For single Lifetime Plus Payments where the Contract is jointly owned, if the Contract Value has been reduced to zero, the date of death of the Covered Person.
 
·
For single Lifetime Plus Payments where the Contract is jointly owned by non-spouses, if the Contract Value has not been reduced to zero, the date of death of any Joint Owner. This means Income Protector may end even if the sole Covered Person is still alive.
 
·
For single Lifetime Plus Payments where the Contract is jointly owned by spouses, if the Contract Value has not been reduced to zero, the date of death of any Joint Owner unless the surviving spouse is the Covered Person and continues the Contract. If the surviving spouse who is also the Covered Person continues the Contract, this benefit ends on the date of death of the Covered Person.
 
·
For joint Lifetime Plus Payments, the date of death of the last surviving Covered Person. However, if a Covered Person dies and the surviving spouse who is also a Covered Person elects to receive the death benefit instead of continuing the Contract, then Lifetime Plus Payments stop and this benefit ends as of the end of the Business Day during which we receive in Good Order at the Service Center, both due proof of death and an election of the death benefit payment option. If joint Covered Persons were not federally recognized spouses as of the date of the first Covered Person’s death, spousal continuation of the Contract is not available and Income Protector ends as of this date of death.
 
·
When the Contract ends.
 

 
 
11.b INVESTMENT PROTECTOR
 

Investment Protector provides, during the Accumulation Phase, a level of protection for your principal and any annual investment gains through the Target Value which is available at a future point you select, called the Target Value Date. The earliest initial Target Value Date you can select is the tenth rider anniversary and subsequent Target Value Dates occur on every subsequent fifth rider anniversary. The Target Value is only guaranteed to be available to you on the last Business Day before each Target Value Date. Beginning on the next Business Day, your Contract Value fluctuates based on your selected Investment Options’ performance, and this is the value available to you upon withdrawal.
 
There are several important points to consider before selecting Investment Protector.
 
·
This benefit is subject to a rider charge, as described in the Fee Tables and section 7, Expenses – Rider Charge.
 
·
This benefit does not guarantee Investment Option performance.
 
·
If you select the No Withdrawal Charge Option, you can only remove Investment Protector as discussed under “Removing Investment Protector” below.
 
·
If you select this benefit, we restrict additional Purchase Payment and Contract Value allocations and transfers and rebalance your Contract Value quarterly. These restrictions support the benefit’s guarantees, and to the extent they limit your investment flexibility, they may limit the upside potential to your Contract Value and Target Value.
 
·
The Target Value does not lock in any Contract Value gains that occur between rider anniversaries.
 
·
The Target Value does not provide any guarantee to your Contract Value before the initial Target Value Date, or during the period between Target Value Dates.
 
Please discuss Investment Protector’s appropriateness with your Financial Professional.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
50

 

 
SELECTING INVESTMENT PROTECTOR
 
You can select Investment Protector at issue or on any subsequent Quarterly Anniversary once before the older Owner’s 81st birthday (or the Annuitant’s 81st birthday if the Owner is a non-individual).
 
You can select Investment Protector after the Issue Date by completing the appropriate form. We add this benefit to your Contract on the Quarterly Anniversary (or on the next Business Day if the anniversary is not a Business Day) after we receive your request in Good Order at our Service Center, and the rider effective date is that Quarterly Anniversary. For the request to be in Good Order, we must receive this form no earlier than 30 days before a Quarterly Anniversary, and no later than 4 p.m. Eastern Time on the last Business Day before the Quarterly Anniversary. If we receive your request outside this time period, we ask you to resubmit it for the next Quarterly Anniversary. Your Contract Value on the rider effective date must be at least $10,000 (or $25,000 if you selected the No Withdrawal Charge Option). You must reallocate your Contract Value and change your future allocation instructions to comply with the Investment Option allocation and transfer restrictions discussed later in this section before we add this benefit to your Contract.
 
NOTE: For Contracts issued in Massachusetts, Investment Protector is only available at issue.
 
REMOVING INVESTMENT PROTECTOR
 
You can remove Investment Protector from your Contract once while the Contract Value is positive. If you remove this benefit, it is not available for future selection. If you select the No Withdrawal Charge Option, you can only remove this benefit if we increase the rider charge, or if you simultaneously replace it with Income Protector.
 
You can remove Investment Protector by completing the appropriate form. If we increase this benefit’s rider charge and you want to remove this benefit before the increase, we must receive this form within 30 days of the date of our letter notifying you of the rider charge increase. We remove this benefit from your Contract on the Quarterly Anniversary (or on the next Business Day if the anniversary is not a Business Day) that occurs immediately after we receive your request in Good Order at our Service Center, and the rider termination date is that Quarterly Anniversary. For the request to be in Good Order, we must receive this form no earlier than 30 days before a Quarterly Anniversary, and no later than 4 p.m. Eastern Time on the last Business Day before the Quarterly Anniversary. If we receive your request outside this time period, we ask you to resubmit it for the next Quarterly Anniversary.
 
On the rider termination date we deduct the final rider charge, and the restrictions on additional Purchase Payments and Contract Value allocations and transfers no longer apply.
 
TARGET VALUE DATES
 
Investment Protector guarantees that on each Target Value Date until the benefit ends, your Contract Value cannot be less than the Target Value (described next in this section). You select the initial Target Value Date when you select this benefit. The earliest available initial Target Value Date is the tenth rider anniversary, and the latest date is the rider anniversary prior to the older Owner’s 91st birthday (or the Annuitant’s 91st birthday if the Owner is a non-individual). Subsequent Target Value Dates occur on every fifth rider anniversary after the initial Target Value Date while this benefit is in effect.
 
For example, you purchase a Contract as the sole Owner on September 1, 2009 and you are age 70. You select Investment Protector on the first Quarterly Anniversary, December 1, 2009 and you are still age 70. The earliest available initial Target Value Date is December 1, 2019 and the latest date is December 1, 2029. If you select the earliest available initial date (December 1, 2019), subsequent Target Value Dates would occur on December 1st in 2024, 2029, 2034, etc.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
51

 

If your Contract Value is less than the Target Value at the end of the last Business Day before each Target Value Date (or on the next Business Day if this date is not a Business Day), we credit your Contract Value with the difference. This credit is available for immediate withdrawal, subject to any applicable withdrawal charge and penalty tax. This is the only day the Target Value is guaranteed to be available to you. Beginning on the next Business Day, your Contract Value fluctuates based on your selected Investment Options’ performance, and this is the value available to you upon withdrawal. We allocate this credit to your selected Investment Options based on the percentage of Contract Value in each Investment Option on the date of the credit. We apply the credit to your Contract after we do any quarterly Contract Value rebalancing. For tax purposes, we treat the credit as earnings under the Contract. However, if the Contract Value at the time of a credit is less than net Purchase Payments (total Purchase Payments less any payments withdrawn) then we may treat some or all of the credit as a Purchase Payment when applying the withdrawal charge if you withdraw the total Contract Value. This is similar to when the Contract Value is less than net Purchase Payments, but the Contract Value then experiences a gain immediately before you take a complete withdrawal (see section 7, Expenses – Withdrawal Charge).
 
Initial Target Value Date Resets
 
After the rider effective date, you can reset the initial Target Value Date before the older Owner’s 81st birthday (or the Annuitant’s 81st birthday if the Owner is a non-individual). Resets are only available if your Contract Value is at least equal to the Target Value using the values determined at the end of the last Business Day before the rider anniversary that we process your reset request. The earliest new initial Target Value Date is ten rider anniversaries after we process your request, and the latest available date is the rider anniversary prior to the older Owner’s 91st birthday (or the Annuitant’s 91st birthday if the Owner is a non-individual). You request a reset by completing the appropriate form. We process your request as of the immediately preceding rider anniversary (or on the next Business Day if the anniversary is not a Business Day) once we receive your request in Good Order at our Service Center. For the request to be in Good Order, we must receive this form within 30 days after a rider anniversary. If we receive your request outside this time period, we reject your request. The reset date is the rider anniversary that we process your request.
 
Initial Target Value Date resets may change the maximum amount you can allocate to your selected Investment Options, but a reset does not automatically change your allocations. To change your allocations on a reset, you must also change your future Purchase Payments allocation instructions and they must comply with the current maximum allowable allocations.
 
TARGET VALUE
 
The Target Value determines both your rider charge and if you receive a Contract Value credit on each Target Value Date. We only calculate the Target Value while the benefit is in effect.
 
On each Business Day the Target Value is equal to the greater of the result of the Rider Anniversary Value multiplied by the current guarantee percentage, or one of the following:
 
·
if you select the benefit at issue, total Purchase Payments reduced by the percentage of Contract Value withdrawn, determined at the end of the Business Day we process each withdrawal.
 
·
if you select the benefit after issue, the Contract Value at the end of the last Business Day before the rider effective date, plus all Purchase Payments received on or after the rider effective date, and reduced by the percentage of Contract Value withdrawn determined at the end of the Business Day we process each withdrawal taken on or after the rider effective date.
 
·
if you reset the initial Target Value Date, the Contract Value at the end of the last Business Day before the reset date, plus all Purchase Payments received on or after the reset date, and reduced by the percentage of Contract Value withdrawn determined at the end of the Business Day we process each withdrawal taken on or after the reset date.
 
Withdrawals include Partial Annuitizations and any withdrawal charges, but do not include amounts we withdraw for other Contract charges. We establish your Contract’s guarantee percentage on the rider effective date and we cannot change it. The current guarantee percentage is 100%. In the future, we may change the guarantee percentage for newly issued Contracts to as low as 80%, but it cannot be greater than 100%.
 
If the rider effective date is the Issue Date, the Rider Anniversary Value is initially equal to the Purchase Payment received on the Issue Date. If the rider effective date occurs after the Issue Date, the Rider Anniversary Value is initially equal to the Contract Value at the end of the prior Business Day.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
52

 

At the end of each Business Day, we adjust the Rider Anniversary Value as follows.
 
·
We increase it by the amount of any additional Purchase Payments.
 
·
We reduce it by the percentage of any Contract Value withdrawn. Withdrawals include Partial Annuitizations and any withdrawal charges, but do not include amounts we withdraw for other Contract charges.
 
On each rider anniversary, we compare the Rider Anniversary Value to the Contract Value using the values determined at the end of the prior Business Day and increase the Rider Anniversary Value to equal this Contract Value if it is greater.
 
NOTE: For Bonus Option Contracts, unvested bonus amounts are not included in the Target Value or the Contract Value.
 
INVESTMENT OPTION ALLOCATION AND TRANSFER RESTRICTIONS AND QUARTERLY REBALANCING
 
Under Investment Protector, we restrict your Investment Option selection as discussed in this section. By selecting this benefit, you agree to allow us to rebalance your Contract Value quarterly, as described here. We put these restrictions in place to support Investment Protector’s guarantees, and not to meet your investment objectives. To the extent these restrictions limit your investment flexibility, they may limit the upside potential to your Investment Option returns, which may limit your Contract Value and Target Value.
 
We establish your Contract’s Investment Option allocation and transfer restrictions on the rider effective date and we cannot change them. We may add, remove or substitute Investment Options from these groups. We secure all necessary SEC and other governmental approvals before removing or substituting an Investment Option. We may also move Investment Options from a more restrictive group to a less restrictive group, but we cannot move Investment Options the other way. We send you written notice regarding additions, removals or substitutions. When an Investment Option in one of these groups is removed or substituted, we send your written notice 30 days before the removal or substitution date.
 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
53

 

These are the current Investment Option groups. In the future, we may change the Investment Options that make up these groups. The minimum number of Investment Option Groups we may offer in the future is one, and the minimum total number of Investment Options we may offer in all groups is five.
 
TABLE 1: Investment Protector Investment Option Groups
Group A
AZL Allianz AGIC Opportunity Fund
AZL Columbia Small Cap Value Fund
AZL Franklin Small Cap Value Fund
AZL Fusion Growth Fund
AZL Morgan Stanley Global Real Estate Fund
AZL Schroder Emerging Markets Equity Fund
AZL Small Cap Stock Index Fund
AZL Turner Quantitative Small Cap Growth Fund
Davis VA Financial Portfolio
Franklin Templeton VIP Founding Funds Allocation Fund
PIMCO VIT CommodityRealReturn Strategy Portfolio
Group B/X
AZL Balanced Index Strategy Fund
AZL BlackRock Capital Appreciation Fund
AZL Columbia Mid Cap Value Fund
AZL Davis NY Venture Fund
AZL Dreyfus Equity Growth Fund
AZL Eaton Vance Large Cap Value Fund
AZL Franklin Templeton Founding Strategy Plus Fund
AZL Fusion Balanced Fund
AZL Fusion Conservative Fund
AZL Fusion Moderate Fund
AZL Gateway Fund
AZL Growth Index Strategy Fund
AZL International Index Fund
AZL Invesco Equity and Income Fund
AZL Invesco Growth and Income Fund
AZL Invesco International Equity Fund
AZL JPMorgan International Opportunities Fund
AZL JPMorgan U.S. Equity Fund
AZL MFS Investors Trust Fund
AZL Mid Cap Index Fund
AZL Morgan Stanley Mid Cap Growth Fund
AZL S&P 500 Index Fund
BlackRock Global Allocation V.I. Fund
Fidelity VIP FundsManager 50% Portfolio
Fidelity VIP FundsManager 60% Portfolio
Franklin Income Securities Fund
Mutual Global Discovery Securities Fund
Mutual Shares Securities Fund
PIMCO EqS Pathfinder Portfolio
PIMCO VIT All Asset Portfolio
PIMCO VIT Global Multi-Asset Portfolio
Templeton Growth Securities Fund
Group Y
AZL Money Market Fund
Franklin High Income Securities Fund
Franklin U.S. Government Fund
PIMCO VIT Emerging Markets Bond Portfolio
PIMCO VIT Global Advantage Strategy Bond Portfolio
PIMCO VIT Global Bond Portfolio (Unhedged)
PIMCO VIT High Yield Portfolio
PIMCO VIT Real Return Portfolio
PIMCO VIT Total Return Portfolio
PIMCO VIT Uncontstrained Bond Portfolio
Templeton Global Bond Securities Fund

 

The Allianz VisionSM Variable Annuity Contract Prospectus – May 1, 2011
 
 
 
54

 

The maximum allowed Contract Value allocation for Investment Option Groups A and B/X is as follows. The minimum required Contract Value for Investment Option Group Y appears in Table 3 on the next page.
 
TABLE 2
: Investment Protector
 
Maximum Percentage of Contract Value Allowed in Investment Option Groups A and B/X
Based on the Number of Rider Years* to the Initial Target Value Date
and the Comparison of Contract Value (CV) to the Target Value (TV)
Number of Rider Years* to the Initial Target Value Date
CV = 94%+ of TV
CV = 88% to < 94% of TV
CV = 82% to < 88% of TV
CV = 76% to < 82% of TV
CV = 70% to < 76% of TV
CV = 64% to < 70% of TV
CV = 58% to < 64% of TV
CV = 52% to < 58% of TV
CV = 46% to < 52% of TV
CV = 40% to < 46% of TV
CV = 34% to < 40% of TV
CV = 28% to < 34% of TV
CV = 22% to < 28% of TV
CV = 16% to < 22% of TV
CV = 10% to < 16% of TV
CV = 4% to < 10% of TV
CV < 4% of TV
33+
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
32
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
31
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
30
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
29
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
28
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
27
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
26
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
25
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
55%
24
95%
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
23
95%
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
45%
22
95%
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
45%
40%
21
95%
95%
95%
95%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
45%
40%
35%
20
95%
95%
95%
95%
90%