497 1 a10-3313_3497.htm 497

 

Supplement dated February 15, 2010 to Prospectus dated May 1, 2009 for

Pinnacle V

Flexible Premium Variable Annuity

Issued by Integrity Life Insurance Company

Through its Separate Account II

 

This is a supplement to the prospectus identified above.  This supplement describes an important change to the Guaranteed Lifetime Income Advantage Rider offered with the variable annuity issued by Integrity Life Insurance Company.  Please retain this supplement to the prospectus for future reference.

 

Effective March 1, 2010, the Withdrawal Percentage and Bonus Percentage used to calculate the benefits under the Guaranteed Lifetime Income Advantage Rider will be reduced.  The following specific changes to the prospectus will take effect:

 

In Part 6 - Optional Benefits, in the section titled “Guaranteed Lifetime Income Advantage Rider,” the following subsections have been changed:

 

In “Lifetime Payout Amount (LPA)” the table is deleted and replaced with the following:

 

Age of (younger) Annuitant

 

Withdrawal Percentage

 

60-64

 

4.00

%

65-69

 

4.50

%

70-74

 

5.00

%

75-79

 

5.50

%

80 and above

 

6.50

%

 

In “Bonus” the table is deleted and replaced with the following:

 

Age of (younger) Annuitant

 

Bonus Percentage

 

64 or below

 

4.00

%

65-69

 

4.50

%

70-74

 

5.00

%

75-79

 

5.50

%

80 and above

 

6.50

%

 

In Part 1 - Fees and Expense Tables and Summary, in the section titled “Examples,” the first example, which includes all maximum costs of the variable annuity with the GLIA Spousal Rider, where the younger Annuitant is age 65 on the Contract Date, has been changed to reflect lower total expenses:

 

If you surrender your contract at the end of the applicable period:

 

1 year

 

3 years

 

5 years

 

10 years

 

$

1,413

 

$

2,445

 

$

3,484

 

$

6,212

 

 

If you keep your contract in force or select an Annuity Benefit with a life contingency at the end of the applicable period:

 

1 year

 

3 years

 

5 years

 

10 years

 

$

613

 

$

1,845

 

$

3,084

 

$

6,212

 

 

1


 

Appendix D is replaced with the following:

 

Appendix D

Illustration of Guaranteed Lifetime Income Advantage

 

The following examples demonstrate how the Rider works, based on the stated assumptions.  These examples are for illustration only, and do not predict future investment results.

 

Example #1

 

This example illustrates the Spousal Rider where withdrawals equal to the Lifetime Payout Amount (LPA), as well as Nonguaranteed Withdrawals have been taken, additional contributions have been made and Bonuses and Step Ups have been applied.  It also illustrates payments for the life of the Primary and Spousal Annuitant even though the Account Value has been reduced to zero.

 

Assumptions:

 

·                  Primary Annuitant’s age on date GLIA Rider is purchased = 55; Spousal Annuitant’s age on date GLIA Rider is purchased = 52

·                  Initial contribution = $100,000; additional contribution = $10,000 in Contract Year 10

·                  Nonguaranteed Withdrawal equal to $5,000 in Contract Years 8; Nonguaranteed Withdrawal of $776 in Contract Year 14

·                  Withdrawals equal to LPA in Contract Years 9-13, and Contract Years 15+

·                  No withdrawals were taken that would result in withdrawal charges under the contract.

·                  The contract is not a tax qualified contract.

·                  The Rider remains in effect during the period covered in this example.

 

Contract
Year

 

Primary
Annuitant’s
Age on the
APD*

 

Spousal
Annuitant’s
Age on the
APD

 

Contributions

 

LPA

 

Annual
Withdrawal

 

Adjusted
Nonguaranteed
Withdrawal

 

Hypothetical
Account Value on
APD (A)

 

Bonus

 

Bonus Base

 

Step-Up Base

 

Payment Base
at the end of the
APD (B)

 

1

 

55

 

52

 

$

100,000

 

N/A

 

$

0

 

$

0

 

$

104,500

 

$

4,000

(C)

$

104,000

(C)

$

104,500

(D)

$

104,500

 

2

 

56

 

53

 

 

 

N/A

 

$

0

 

$

0

 

$

107,635

 

$

4,000

(C)

$

108,000

(C)

$

107,635

(D)

$

108,000

 

3

 

57

 

54

 

 

 

N/A

 

$

0

 

$

0

 

$

111,940

 

$

4,000

(C)

$

112,000

(C)

$

111,940

(D)

$

112,000

 

4

 

58

 

55

 

 

 

N/A

 

$

0

 

$

0

 

$

115,310

 

$

4,000

(C)

$

116,000

(C)

$

115,310

(D)

$

116,000

 

5

 

59

 

56

 

 

 

N/A

 

$

0

 

$

0

 

$

113,004

 

$

4,000

(C)

$

120,000

(C)

$

115,310

 

$

120,000

 

6

 

60

 

57

 

 

 

N/A

 

$

0

 

$

0

 

$

113,004

 

$

4,000

(C)

$

124,000

(C)

$

115,310

 

$

124,000

 

7

 

61

 

58

 

 

 

N/A

 

$

0

 

$

0

 

$

108,483

 

$

4,000

(C)

$

128,000

(C)

$

115,310

 

$

128,000

 

 

2


 

Contract
Year

 

Primary
Annuitant’s
Age on the
APD*

 

Spousal
Annuitant’s
Age on the
APD

 

Contributions

 

LPA

 

Annual
Withdrawal

 

Adjusted
Nonguaranteed
Withdrawal

 

Hypothetical
Account Value on
APD (A)

 

Bonus

 

Bonus Base

 

Step-Up Base

 

Payment Base
at the end of the
APD (B)

 

8

 

62

 

59

 

 

 

N/A

 

$

5,000

(E)

$

5,784

(E)

$

105,683

 

$

0

 

$

122,216

(E)

$

109,526

(E)

$

122,216

 

9

 

63

 

60

 

 

 

$

4,889

(F)

$

4,889

 

$

0

 

$

100,764

 

$

0

 

$

122,216

 

$

109,526

 

$

122,216

 

10

 

64

 

61

 

$

10,000

(G)

$

5,289

(G)

$

5,289

 

$

0

 

$

103,261

 

$

0

 

$

132,216

(G)

$

119,526

(G)

$

132,216

 

11

 

65

 

62

 

 

 

$

5,289

 

$

5,289

 

$

0

 

$

99,005

 

$

0

 

$

132,216

 

$

119,526

 

$

132,216

 

12

 

66

 

63

 

 

 

$

5,289

 

$

5,289

 

$

0

 

$

89,756

 

$

0

 

$

132,216

 

$

119,526

 

$

132,216

 

13

 

67

 

64

 

 

 

$

5,289

 

$

5,289

 

$

0

 

$

86,262

 

$

0

 

$

132,216

 

$

119,526

 

$

132,216

 

14

 

68

 

65

 

 

 

$

5,289

 

$

6,065

(H)

$

1,254

(H)

$

81,060

 

$

0

 

$

130,962

(H)

$

118,272

(H)

$

130,962

 

15

 

69

 

66

 

 

 

$

5,238

(H)

$

5,238

 

$

0

 

$

76,632

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

16

 

70

 

67

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

74,459

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

17

 

71

 

68

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

69,965

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

18

 

72

 

69

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

63,327

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

19

 

73

 

70

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

54,922

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

20

 

74

 

71

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

51,881

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

21

 

75

 

72

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

46,124

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

22

 

76

 

73

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

42,269

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

23

 

77

 

74

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

38,298

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

24

 

78

 

75

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

31,528

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

25

 

79

 

76

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

24,713

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

26

 

80

 

77

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

18,733

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

27

 

81

 

78

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

14,431

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

28

 

82

 

79

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

9,626

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

29

 

83

 

80

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

4,195

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

30

 

84

 

81

 

 

 

$

5,238

(I)

$

5,238

 

$

0

 

$

0

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

31+

 

85

 

82

 

 

 

$

5,238

 

$

5,238

 

$

0

 

$

0

 

$

0

 

$

130,962

 

$

118,272

 

$

130,962

 

 

* APD = Annual Processing Date

 

(A)  The hypothetical Account Value includes deduction of all fees.  Rounding of amounts less than $1.00 is used in this example.

 

(B)  The Payment Base is always the greater of the Bonus Base and Step-Up Base.

 

3


 

(C)  A Bonus was added to the Bonus Base in Contract Years 1 -7 because no withdrawals were taken during those Contract Years.  The Bonus amount is the Bonus Percentage, which is 4.00% in each of these years, times the total contributions minus total withdrawals, which is $100,000 for each year.

 

For example, the Bonus in Contract Year 1 is calculated as follows:

 

·                  4.00% (Bonus Percentage) X ($100,000 (total contributions) - $0 (total withdrawals)) = $4,000 Bonus amount.  This calculation is the same in each of the 7 years.

 

The Bonus Base after the Bonus in Contract Year 1 is $100,000+ $4,000 = $104,000; the Bonus Base after the Bonus in Contract Year 2 is $104,000+ $4,000 = $108,000; the Bonus Base after the Bonus in Contract Year 3 is $108,000+ $4,000 = $112,000; the Bonus Base after the Bonus in Contract Year 4 is $112,000+ $4,000 = $116,000; the Bonus Base after the Bonus in Contract Year 5 is $116,000+ $4,000 = $120,000; the Bonus Base after the Bonus in Contract Year 6 is $120,000+ $4,000 = $124,000; the Bonus Base after the Bonus in Contract Year 7 is $124,000+ $4,000 = $128,000.

 

(D)  In Contract Year 1, the Step-Up Base increases to $104,500 because the hypothetical Account Value ($104,500) is larger than the Step-Up Base in Contract Year 1($100,000).  After the step-up, the Step-Up Base ($104,500) is larger than the Bonus Base ($104,000) and therefore the Payment Base is equal to the Step-Up Base of $104,500.  In Contract Years 2-4, the Step-Up Base increases to the Account Value, because the Account Value is larger than the previous years’ Step-Up Base, however the Payment Base is not affected because the Bonus Base is higher than the Step-Up Base in each Contract Year.  In Contract Years 5+, the Step-Up Base is always larger than the Account Value, and thus is not stepped up.

 

(E)  In Contract Year 8, the younger spouse has not yet reached age 60.  Therefore, the withdrawal in the amount of $5000 is a Nonguaranteed Withdrawal.  The Adjusted Nonguaranteed Withdrawal amount is the Nonguaranteed Withdrawal amount multiplied by the greater of 1 or the ratio of the Payment Base to Account Value, where both values are calculated immediately before the Nonguaranteed Withdrawal.  It is calculated as follows:

 

·                  $5,000 (Nonguaranteed Withdrawal amount) x 1.1568 ($128,000 Payment Base divided by $110,653 Account Value [$105,653+ $5,000]) = $5,784 (Adjusted Nonguaranteed Withdrawal amount)

 

The Bonus Base and the Step-Up Base (and therefore the payment Base) are reduced by the amount of the Adjusted Nonguaranteed Withdrawal:

 

·                  $128,000 Bonus Base – $5,784 Adjusted Nonguaranteed Withdrawal amount = $122,216 Bonus Base after the Nonguaranteed Withdrawal

 

·                  $115,310 Step-Up Base - $5,784 Adjusted Nonguaranteed Withdrawal amount = $109,526 Step-Up Base after the Nonguaranteed Withdrawal

 

(F)  In Contract Year 9, the LPA is determined, since this is the first withdrawal on or after the Age 60 Contract Anniversary.  The LPA is the Withdrawal Percentage times the Payment Base:

 

·                  4.0% (Withdrawal Percentage) X $122,216 (Payment Base) =$4,889 (LPA)

 

(G)  The $10,000 additional contribution made at the beginning of Contract Year 10 increases the Bonus Base and Step-Up Base (and therefore the Payment Base) dollar-for-dollar.

 

·                  $122,216 Bonus Base + $10,000 additional contribution amount = $132,216 Bonus Base after the additional contribution.

 

4


 

·                  $109,526 Step-Up Base + $10,000 additional contribution amount = $119,526 Step-Up Base after the additional contribution.

 

The LPA is recalculated using the Withdrawal Percentage times the Payment Base after the additional contribution:

 

·                  4.0% (Withdrawal Percentage) X $132,216 (Payment Base) =$5,289 (LPA)

 

(H)  In Contract Year 14, a Nonguaranteed Withdrawal in the amount of $776 ($6,065 amount withdrawn - $5,289 LPA) is taken.  The Adjusted Nonguaranteed Withdrawal amount is the Nonguaranteed Withdrawal amount multiplied by the greater of 1 or the ratio of the Payment Base to Account Value, where both values are calculated immediately before the Nonguaranteed Withdrawal.  It is calculated as follows:

 

·                  $776 (Nonguaranteed Withdrawal amount) x  1.6156 ($132,216 Payment Base divided by $81,836 Account Value [$81,060+ $776]) = $1,254 (Adjusted Nonguaranteed Withdrawal amount)

 

The Bonus Base and Step-Up Base (and therefore the Payment Base) are reduced by the Adjusted Nonguaranteed Withdrawal amount:

 

·                  $132,216 Bonus Base - $1,254 Adjusted Nonguaranteed Withdrawal amount = $130,962 Bonus Base after the Nonguaranteed Withdrawal.

 

·                  $119,526 Step-Up Base - $1,254 Adjusted Nonguaranteed Withdrawal amount = $118,272 Step-Up Base after the Nonguaranteed Withdrawal

 

The LPA is recalculated after the withdrawal as 4.0% of the Payment Base after the withdrawal: $130,962 x 4.0% = $5,238.

 

(I)  In Contract Year 30, the Account Value is reduced to zero, however the Payment Base is greater than zero; therefore, the Rider enters Guaranteed Payment Phase and payments of the LPA continue.

 

5


 

Example #2

 

This example illustrates the Individual Rider where withdrawals equal to the LPA, as well as Nonguaranteed Withdrawals have been taken, and Bonuses have been applied.  It also illustrates the termination of the rider if the Account Value is reduced to zero by a Nonguaranteed Withdrawal.

 

Assumptions:

 

·                  Annuitant’s age on date GLIA Rider is purchased = 55

·                  Initial contribution = $100,000; no additional contributions

·                  Withdrawals equal to LPA in Contract Years 6-7, 9-13

·                  Nonguaranteed Withdrawals in Contract Year 8 in the amount of $25,000

·                  Full Account Value withdrawn in Contract Year 14

·                  No withdrawals were taken that would result in withdrawal charges under the contract.

·                  The contract is not a tax qualified contract.

·                  The Rider remains in effect during the period covered in this example.

 

Contract
Year

 

Annuitant’s Age
on APD*

 

Contributions

 

LPA

 

Annual
Withdrawal

 

Adjusted
Nonguaranteed
Withdrawal

 

Hypothetical Account
Value on APD (A)

 

Bonus

 

Bonus Base

 

Step-Up Base

 

Payment Base at
the end of the APD
(B)

 

1

 

55

 

$

100,000

 

N/A

 

$

0

 

$

0

 

$

99,000

 

$

4,000

(C)

$

104,000

(C)

$

100,000

(D)

$

104,000

 

2

 

56

 

 

 

N/A

 

$

0

 

$

0

 

$

98,010

 

$

4,000

(C)

$

108,000

(C)

$

100,000

 

$

108,000

 

3

 

57

 

 

 

N/A

 

$

0

 

$

0

 

$

95,070

 

$

4,000

(C)

$

112,000

(C)

$

100,000

 

$

112,000

 

4

 

58

 

 

 

N/A

 

$

0

 

$

0

 

$

92,218

 

$

4,000

(C)

$

116,000

(C)

$

100,000

 

$

116,000

 

5

 

59

 

 

 

N/A

 

$

0

 

$

0

 

$

91,295

 

$

4,000

(C)

$

120,000

(C)

$

100,000

 

$

120,000

 

6

 

60

 

 

 

$

4,800

(E)

$

4,800

(E)

$

0

 

$

87,408

 

$

0

 

$

120,000

 

$

100,000

 

$

120,000

 

7

 

61

 

 

 

$

4,800

 

$

4,800

 

$

0

 

$

83,482

 

$

0

 

$

120,000

 

$

100,000

 

$

120,000

 

8

 

62

 

 

 

$

4,800

 

$

25,000

(F)

$

30,484

(F)

$

59,317

 

$

0

 

$

89,516

(F)

$

69,516

(F)

$

89,516

 

9

 

63

 

 

 

$

3,581

(F)

$

3,581

 

$

0

 

$

55,143

 

$

0

 

$

89,516

 

$

69,516

 

$

89,516

 

10

 

64

 

 

 

$

3,581

 

$

3,581

 

$

0

 

$

51,011

 

$

0

 

$

89,516

 

$

69,516

 

$

89,516

 

11

 

65

 

 

 

$

3,581

 

$

3,581

 

$

0

 

$

44,880

 

$

0

 

$

89,516

 

$

69,516

 

$

89,516

 

12

 

66

 

 

 

$

3,581

 

$

3,581

 

$

0

 

$

41,748

 

$

0

 

$

89,516

 

$

69,516

 

$

89,516

 

13

 

67

 

 

 

$

3,581

 

$

3,581

 

$

0

 

$

38,168

 

$

0

 

$

89,516

 

$

69,516

 

$

89,516

 

14

 

68

 

 

 

$

3,581

 

$

38,168

(G)

N/A

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

15

 

69

 

 

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

 

* APD = Annual Processing Date

(A)  The hypothetical Account Value includes deduction of all fees.  Rounding of amounts less than $1.00 is used in this example.

 

6


 

(B)  The Payment Base is always the greater of the Bonus Base and Step-Up Base.

 

(C)  A Bonus was added to the Bonus Base in Contract Years 1 -5 because no withdrawals were taken during those Contract Years.  The Bonus amount is the Bonus Percentage, which is 4.00% in each of these years, times the total contributions minus total withdrawals, which is $100,000 for each year.

 

For example, the Bonus in Contract Year 1 is calculated as follows:

 

·                  4.00% (Bonus Percentage) X ($100,000 (total contributions) - $0 (total withdrawals)) = $4,000 Bonus amount. This calculation is the same in each of the 5 years.

 

The Bonus Base after the Bonus in Contract Year 1 is $100,000+ $4,000 = $104,000; the Bonus Base after the Bonus in Contract Year 2 is $104,000+ $4,000 = $108,000; the Bonus Base after the Bonus in Contract Year 3 is $108,000+ $4,000 = $112,000; the Bonus Base after the Bonus in Contract Year 4 is $112,000+ $4,000 = $116,000; the Bonus Base after the Bonus in Contract Year 5 is $116,000+ $4,000 = $120,000.

 

(D)  In Contract Years 1-8, the hypothetical Account Value is less than the Step-Up Base and thus, the Step-Up Base is not stepped up.

 

(E)  In Contract Year 6, the LPA is determined, since this is the first withdrawal on or after the Age 60 Contract Anniversary.  The LPA is the Withdrawal Percentage times the Payment Base:

 

·                  4.0% (Withdrawal Percentage) X $120,000 (Payment Base) =$4,800 (LPA)

 

(F)  A Nonguaranteed Withdrawal in the amount of $20,200 ($25,000 amount withdrawn - $4,800 LPA) is taken in Contract Year 8.  The Adjusted Nonguaranteed Withdrawal amount is the Nonguaranteed Withdrawal amount multiplied by the greater of 1 or the ratio of the Payment Base to Account Value, where both values are calculated immediately before the Nonguaranteed Withdrawal.  It is calculated as follows:

 

·                  $20,200 (Nonguaranteed Withdrawal amount) x 1.5091 ($120,000 Payment Base divided by $79,517 Account Value [$59,317+ $20,200]) = $30,484 (Adjusted Nonguaranteed Withdrawal amount)

 

The Bonus Base and Step-Up Base (and therefore the Payment Base) are reduced by the Adjusted Nonguaranteed Withdrawal amount.

 

·                  $120,000 Bonus Base - $30,484 Adjusted Nonguaranteed Withdrawal amount = $89,516 Bonus Base after the Nonguaranteed Withdrawal

·                  $100,000 Step-Up Base - $30,484 Adjusted Nonguaranteed Withdrawal amount = $69,516 Step-Up Base after the Nonguaranteed Withdrawal

 

The LPA is recalculated after the withdrawal as 4.0% of the Payment Base after the withdrawal: $89,516 x 4.0% = $3,851.

 

(G)  A Nonguaranteed withdrawal reduces the Account Value to zero in Contract Year 14 and the Rider and Annuity Contract terminate.

 

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