Note 5. Variable Contracts Containing Guaranteed Benefits

The Company has issued variable annuity contracts in which the Company may have contractually guaranteed to the contract owner a guaranteed minimum death benefit (“GMDB”) and/or an optional guaranteed living benefit provision. The living benefit provisions offered by the Company included a GMIB and a GMWB. Information regarding the general characteristics of each guaranteed benefit type is provided below:

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In general, contracts containing GMDB provisions provide a death benefit equal to the greater of the GMDB or the contract value. Depending on the type of contract, the GMDB may equal: (1) contract deposits accumulated at a specified interest rate, (2) the contract value on specified contract anniversaries, (3) return of contract deposits, or (4) some combination of these benefits. Each benefit type is reduced for contract withdrawals.

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In general, contracts containing GMIB provisions provide the option to receive a guaranteed future income stream upon annuitization. There is a waiting period of ten years from contract issue that must elapse before the GMIB provision can be exercised.

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Contracts containing GMWB provisions provide the contract owner the ability to withdraw minimum annual payments regardless of the impact of market performance on the contract owner’s account value. In general, withdrawal percentages are based on the contract owner’s age at the time of the first withdrawal.

The Company records liabilities for contracts containing a GMDB, GMIB and GMWB as a component of future policy benefits on the Balance Sheets and changes in the liabilities are included as a component of policy benefits in the Statements of Income (Loss).

The changes in the variable annuity GMDB, GMIB and GMWB liabilities for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended
	March 31,
GMDB	2017			2016
Guaranteed benefits incurred	$	5,969		$	6,380
Guaranteed benefits paid		(4,634	)		(6,114	)
Unlocking		(13,657	)		7,471
Total	$	(12,322	)	$	7,737

	Three Months Ended
	March 31,
GMIB	2017			2016
Guaranteed benefits incurred	$	3,061		$	3,236
Guaranteed benefits paid		(1,294	)		(98	)
Unlocking		(13,105	)		7,091
Total	$	(11,338	)	$	10,229

	Three Months Ended
	March 31,
GMWB	2017			2016
Guaranteed benefits incurred	$	-		$	-
Guaranteed benefits paid		-			-
Change in fair value reserves		(6,748	)		13,446
Total	$	(6,748	)	$	13,446