Eversheds Sutherland (US) LLP
1114 Avenue of the Americas, 40th Floor
New York, NY 10036-7703
New York, NY 10036-7703
D: +1 212.389.5080
F: +1 212.389.5099
F: +1 212.389.5099
dodiekent@
eversheds-sutherland.com
April 20, 2021
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Attn: Yoon Choo, Esq.
Division of Investment Management –
Disclosure Review Office
| Re: | Post-Effective amendment filed under Rule 485(a) for “AdvanceDesigns Variable Annuity” an individual flexible purchase payment deferred variable annuity contract, issued by Security Benefit Life Insurance Company (“Security Benefit”) and SBL Variable Annuity Account XIV (the “Account”); File Nos. 333-41180, 811-10011 |
Dear Ms. Choo:
This letter, which we have filed as Correspondence, responds to the comments you conveyed to Alex Stith and myself on April 9, 2021 with regard to the above-noted filing. Along with this letter, we are filing a revised statutory prospectus, statement of additional information and Part C, which reflect conforming edits.
| I. | GENERAL |
| 1. | COMMENT: Please supplementally confirm that the revised disclosure for the “AdvanceDesigns” prospectus and the “SecureDesigns” prospectus contained here and in the Company’s 485A filing on February 8, 2021 reflect all staff comments provided on March 25th, April 6th, and April 9th to the extent applicable to both contracts. |
RESPONSE: We confirm.
| II. | PROSPECTUS |
Cover Page
| 1. | COMMENT: In regards to the name on the prospectus cover page, please change the EDGAR name (contract identifier name) on the prospectus to be consistent with the name in the prospectus. |
RESPONSE: We have altered the Contract ID contract name to match the contract name on the prospectus cover page.
| 2. | COMMENT: With regard to the cover page of the PDF, please confirm that this page will not serve as the cover page of the ISP or USP. |
RESPONSE: We confirm that this cover page will not serve as the cover or for the ISP or USP.
Eversheds Sutherland (US) LLP is part of a global legal practice, operating through various separate and distinct legal entities, under Eversheds Sutherland. For a full description of the structure and a list of offices, please visit www.eversheds-sutherland.com. |
| 3. | COMMENT: Add the word “individual” before the word “flexible” on the first line. |
RESPONSE: We have done so.
| 4. | COMMENT: The registrant’s name should appear as prominently on the cover page as the depositor. Please place the registrant’s name above the line alongside the depositor. |
RESPONSE: We have done so.
| 5. | COMMENT: Please consider whether the free look disclosure should be modified to reflect that the Credit Enhancements can be excluded from the free look amount. |
RESPONSE: We have included this disclosure.
| 6. | COMMENT: If you intend to rely on Rule 30(e)-3, please include the required Rule 30(e)‑3 disclosure. This applies even if the disclosure was included on the cover page of the prospectus for the last two years. |
RESPONSE: We have added this disclosure.
| 7. | COMMENT: Regarding the middle paragraph within the box, also disclose that Credit Enhancement provided by an optional benefit rider may be recaptured upon free look, withdrawal, surrender, annuitization, or death, as applicable. Also, please ensure this disclosure is included in the ISP, USP, and Overview sections. |
RESPONSE: We have included this disclosure as applicable.
| 8. | COMMENT: Replace the word “any” with the word “some” in the sentence “The amount of the Credit Enhancement may be more than offset by any additional fees and charges.” |
RESPONSE: We revised to state that the “…Credit Enhancement may be more than offset by additional fees and charges.”
Table of Contents (“TOC”)
| 1. | COMMENT: Please subdivide this section of the document into easily identifiable headings and subheadings so investors can readily locate the disclosure. In the body of the prospectus, prominently format these headings and subheadings so they are readily distinguishable by level and easily located. |
RESPONSE: We have done so.
Key Information Table (“KIT”)
| 1. | COMMENT: In general in the “Location in Prospectus” column, ensure the cross-references link directly in the statutory prospectus or provide a means of access by equivalent method. |
RESPONSE: We have done so.
| 2. | COMMENT: In the row entitled “Charges for Early Withdrawals,” change the term “CDSC” (Contingent Deferred Sales Charge) to “surrender charge.” |
RESPONSE: We have changed “CDSC” to “surrender charge.”
| 3. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” add “Interest on any contract loans are not reflected.” between the first and second sentences in the “Fees and Expenses” column. |
RESPONSE: We have done so.
| 4. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” in first sentence of the introductory paragraph, please confirm accuracy of this text, as pricing, at least for the base Contract, depends on money in the Contract and not when the investor purchased the Contract. |
RESPONSE: We have deleted “and the date your Contract was issued” from the first sentence.
| 5. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” for the minimum and maximum fees in the fees and expenses table, please confirm that the fees in the table are presented in accordance with item 2(c)(i)(F) of Form N-4. |
RESPONSE: We have revised the table to include the correct expenses.
| 6. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” related to footnote 1, why does this not refer to Contract Value, especially since there are fixed account investment options? The Fee Table says “average contract value” as well. |
RESPONSE: We have changed “each Subaccount’s average daily net assets” to “Contract Value allocated to the Separate Account” in footnote 1.
| 7. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” footnote 2 should state: “As a percentage of Underlying Fund average net assets.” |
RESPONSE: We have made this change.
| 8. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” please confirm footnote 3 compared to the Fee Table under “Annual Contract Expenses.” In the Fee Table, the Company states that optional benefit expenses are calculated either as a percentage of the benefit base or other, e.g., average Contract Value. |
RESPONSE: We have clarified the language used in footnote 3 and the Fee Table for consistency.
| 9. | COMMENT: In the row entitled “Ongoing Fees and Expenses,” in the text after footnote 3, please delete the comma after “charges” in the last line and add a period. After the period insert “This estimate assumes that you do not take withdrawals from the Contract,” before “which.” |
RESPONSE: We have done so.
| 10. | COMMENT: In the “Annual Cost” table, the figures for the low and high assumptions and the Examples in the Fee Table on pages 11 through 12 of the PDF do not appear to be based on the disclosures provided in the example in Item 4 of Form N-4. Please confirm. |
RESPONSE: We have revised these figures consistent with the disclosures in Item 4.
| 11. | COMMENT: In the “Annual Cost” table, add to the assumptions in each column that there are no loans. |
RESPONSE: We have done so.
| 12. | COMMENT: Per Form N-4, in the “Annual Cost” table, in both columns, after the line item on optional benefits, add “no sales charges”. |
RESPONSE: We have done so.
| 13. | COMMENT: In the “Annual Cost” table, please confirm that the lowest and highest annual costs do not reflect any Credit Enhancement amounts. |
RESPONSE: We confirm.
| 14. | COMMENT: In the row entitled “Not a Short-Term Investment”, please add a cross reference to the sections of the prospectus discussing surrender changes and tax deferral. |
RESPONSE: We have done so.
| 15. | COMMENT: In the row entitled “Not a Short-Term Investment,” in the third bullet point, please remove the word “generally.” |
RESPONSE: We have done so.
| 16. | COMMENT: In the row entitled “Risks Associated with Investment Options,” please add a cross reference to Appendix A. |
RESPONSE: We have done so.
| 17. | COMMENT: In the row entitled “Insurance Company Risks”, please add a cross reference to the section of the prospects discussing the Company. |
RESPONSE: We have done so.
| 18. | COMMENT: In the row entitled “Investments,” in the second bullet, for brevity, consider consolidating the second bullet with the fifth bullet. |
RESPONSE: We have done so.
| 19. | COMMENT: In the “Locations in Prospectus” column of the Investments row, please add “The Contract – Frequent Transfer Restrictions.” |
RESPONSE: We have done so.
| 20. | COMMENT: In the row entitled “Optional Benefits,” in the third bullet, also state whether the Company reserves the right to modify an optional benefit or terminate an optional benefit, as required by Form N-4, Item 2(4)(B). |
RESPONSE: We have included that we do not have the right to modify or terminate an optional benefit the investor has elected in our sole discretion.
| 21. | COMMENT: In the “Location in Prospectus” column of the “Optional Benefits” row, please include cross references to the discussion of all optional benefits currently offered. |
RESPONSE: We have done so.
Overview
| 1. | COMMENT: At the end of the third sentence under “Purpose of the Contract,” consider adding that these payment can provide or supplement your retirement income. |
RESPONSE: We have added this.
| 2. | COMMENT: In the second-to-last sentence of the first paragraph under “Purpose of the Contract,” change “will be” to “may be”. |
RESPONSE: We have done so.
| 3. | COMMENT: In the first sentence of the second paragraph under “Purpose of the Contract,” please insert the following after “horizon”: “Each purchase payment is subject to a withdrawal charge for seven years from the date of that purchase payment. This means that a purchase payment made in year 8 of the Contract will be subject to a withdrawal charge until year 15 of the Contract.” |
RESPONSE: We have done so.
| 4. | COMMENT: In the second-to-last sentence of the second paragraph under “Purpose of the Contract,” please delete the parenthetical. |
RESPONSE: We have done so.
| 5. | COMMENT: In the “Accumulation Phase” paragraph under “Phases of the Contract,” referring to the second-to-last sentence in first paragraph, this disclosure suggests that availability of the Fixed Account is dependent on factors other than whether it is available under a Contract. If so, please add disclosure later in the prospectus describing these circumstances and include a cross reference here. |
RESPONSE: We have clarified this disclosure.
| 6. | COMMENT: Bold the entire second paragraph under “Accumulation Phase” under “Phases of the Contract,” and change “Subaccounts” to “Underlying Funds.” |
RESPONSE: We have done so.
| 7. | COMMENT: In the last sentence of the “Annuity (Payout) Phase,” section, please note the exceptions to the general rule in the final sentence of this section. (i.e. disclose optional benefits that do not terminate upon annuitization). |
RESPONSE: We have done so.
| 8. | COMMENT: In the first sentence of the “Death Benefits” paragraph under “Contract Features,” revise the disclosure to provide the standard death benefit for those age 80 and under and those age 81 and older. |
RESPONSE: We have done so.
| 9. | COMMENT: In the parenthetical in the “Death Benefits” paragraph under “Contract Features,” please add “including any withdrawal charges,” after “prior withdrawals.” |
RESPONSE: We have added this.
| 10. | COMMENT: In the “Death Benefits” paragraph under “Contract Features,” “rider” should be “riders.” |
RESPONSE: We changed the sentence to state, “If you elect to purchase an optional rider that provides…”
Fee Table
| 1. | COMMENT: Please bold the introductory text to both the “Transaction Expenses” and the “Annual Contract Expenses” tables. Also, italicize “each year” in the introductory text to the “Annual Contract Expenses” table. |
RESPONSE: We have done so.
| 2. | COMMENT: In the “Transaction Expenses” table, the “Sales Load Imposed on Purchase Payments” line item can be deleted, if desired. |
RESPONSE: The Company has respectfully elected to retain this.
| 3. | COMMENT: In the “Transaction Expenses” table, change “Maximum Contingent Deferred Sales Charge” to either “deferred sales load charge” or “surrender charge.” |
RESPONSE: We have done so.
| 4. | COMMENT: In footnote 1 of the “Transaction Expenses” table, the Company may also include a tabular presentation of the range of the surrender charge over time. |
RESPONSE: The Company has respectfully declined to include such a tabular presentation.
| 5. | COMMENT: In footnote 2 of the “Annual Contract Expenses” table, disclose whether the annual administration charge is also deducted during the Annuity Period. |
RESPONSE: We have done this.
| 6. | COMMENT: In footnote 2 of the “Annual Contract Expenses” table, since the frequency of the deduction of the charge is disclosed, consider adding that the minimum mortality and expense risk charge and administration charge are deducted daily. |
RESPONSE: We have added this.
| 7. | COMMENT: In footnote 2 of the “Annual Contract Expenses,” table, add “as during the accumulation period” to the end of the sentence ending in “same manner.” |
RESPONSE: We have done so, modifying “accumulation period” to “accumulation phase.”
| 8. | COMMENT: The Optional Rider Expenses Table should not be a separate table from Annual Contract Expenses. It should be once charge under the heading “Annual Contract Expenses.” See Item 4 in Form N-4. |
RESPONSE: We have made this change.
| 9. | COMMENT: In the Optional Rider Expenses title, the parenthetical says “as a percentage of Contract Value.” Compare to the disclosure in the “Annual Contract Expenses” table which states that these fees are calculated “as a percentage of benefit base or other (e.g. average Contract Value.)” |
RESPONSE: We have conformed these disclosures, as applicable.
| 10. | COMMENT: For each rider in the “Optional Rider Expenses” table, and the table beginning on page 45 of the PDF, indicate the basis on which the fee is charged. |
RESPONSE: We have indicated that each rider fee is calculated as a percentage of Contract Value.
| 11. | COMMENT: In the “Optional Benefit Expenses” table, please specify which rider charges will terminate and which will continue after annuitization. |
RESPONSE: We have done so.
| 12. | COMMENT: Loan interest (or the loan interest spread) should be added as a line item under the “Optional Benefit Expenses” table. |
RESPONSE: We have added this.
| 13. | COMMENT: In the “Optional Rider Expenses” table, please revise the “Riders available for purchase with the Contract” heading, as the Contract is no longer being sold. |
RESPONSE: We have done so.
| 14. | COMMENT: In the “Optional Rider Expenses” table, there are numbers in the “Current” charge column under Annual Rider Charges. But the dashes in the “Maximum” column could indicate no maximum. Please include numbers for each column, or state “same as current.” |
RESPONSE: We have revised the table to show a Current and Maximum only where applicable.
| 15. | COMMENT: In the “Optional Rider Expenses” table, for riders with numbers in the “Maximum” column, as there are maximum charges for these rider that are not reflected in SecureDesigns, please confirm SecureDesigns. Also, add footnote 5 from AdvanceDesigns to the “Optional Rider Expenses” in SecureDesigns. |
RESPONSE: We have revised SecureDesigns’ Fee Table, accordingly. The Company respectfully notes that information was already in the SecureDesigns’ Fee Table footnotes.
| 16. | COMMENT: In the “Annual Underlying Fund Expenses” table, please bold text above that. |
RESPONSE: We have done so.
| 17. | COMMENT: In the “Annual Underlying Fund Expenses” table, for brevity, please consider deleting footnote 1. If footnote 1 will be retained, please delete the last sentence of the footnote. |
RESPONSE: We have deleted it.
| 18. | COMMENT: In the “Annual Underlying Fund Expenses” table, in the second footnote, update the date to reflect at lease a full year from the effective date of the registration statement. |
RESPONSE: We have amended the statement to reflect that waiver or reimbursement arrangements are in place at least through April 30, 2022.
| 19. | COMMENT: Under Examples, please bold the two paragraphs. |
RESPONSE: We have done so.
| 20. | COMMENT: Under Examples, in the second sentence of the first paragraph – please delete “owner,” and in the same line, please place “annual” in front of “Underlying Fund Fees.” |
RESPONSE: We have done so.
| 21. | COMMENT: Under Examples, in the second sentence of the first paragraph stating, “but do not include state premium taxes,” this disclosure does not appear in SecureDesigns. We note in numerous places that there is variation in disclosure between SecureDesigns and AdvanceDesigns where we would expect disclosure to be the same. |
RESPONSE: We have added this disclosure to SecureDesigns.
| 22. | COMMENT: In the table headings under Examples, for consistency, refer to “Annual Underlying Fund Expenses.” |
RESPONSE: We have made this change.
| 23. | COMMENT: In the second line items of the “Underlying Fund Expenses Most Expensive/Least Expensive” tables under Examples, separate “If you do not surrender” and “or if you annuitize your Contract” with a semicolon after the word “surrender.” |
RESPONSE: We have added the semicolons.
| 24. | COMMENT: In the “Annual Contract Expenses” table, move the “Optional Benefit Expenses” line item to the top of the next page. Also, remove the “1.60%” listed in the “Charge” column for this line item. |
RESPONSE: We have revised the Fee Table to reflect these concerns
Principal Risks
| 1. | COMMENT: Credit Enhancements should be discussed as a principal risk, including that the amount of the enhancement may be more than offset by the additional fees associated with the rider; describing the impact under the free look, withdrawals, annuitization value, and death benefit value; and the impact of Credit Enhancements on optional benefits. |
RESPONSE: We have added this disclosure.
| 2. | COMMENT: Add a discussion addressing the possibility of adverse tax consequences. |
RESPONSE: We have added this disclosure.
| 3. | COMMENT: Under “Short-Term Investment Risk/Withdrawal Risk,” change the reference from “may not be appropriate” to “is not appropriate.” Similarly, change “it may not be the right contract” to “it is not the right contract” in the following sentence. |
RESPONSE: We have changed it.
| 4. | COMMENT: In the third sentence under “Short-Term Investment Risk/Withdrawal Risk,” change “A tax” to “A withdrawal charge.” |
RESPONSE: We have changed it.
| 5. | COMMENT: Under “Short-Term Investment Risk/Withdrawal Risk,” after the sentence stating, “a tax may be assessed…and it could be substantial,” insert the following: “Each purchase payment is subject to a withdrawal charge for 7 years from the date of that purchase payment. This means that a purchase payment made in year 8 of the Contract will be subject to a withdrawal charge until year 15 of the Contract.” |
RESPONSE: We have inserted the language.
| 6. | COMMENT: Under “Financial Strength and Claims-Paying Ability Risk,” in the first sentence after “general account,” add “(including under any fixed account option).” |
RESPONSE: We have done so.
Information About the Company, the Separate Account, and the Underlying Funds
| 1. | COMMENT: In the fourth paragraph beginning with “We are obligated to pay,” consider adding this disclosure (the entire paragraph) to SecureDesigns. |
RESPONSE: We have done so.
| 2. | COMMENT: Please also add the statement that the cost of hedging strategies may negatively impact performance (mentioned in the “Information About the Company, the Separate Account, and the Underlying Funds” header in the “Underlying Funds” subheader) to the “Managed Volatility Fund Risk” section. |
RESPONSE: We have done so.
| 3. | COMMENT: Under “Underlying Funds” regarding the 6th paragraph beginning with, “A list of each Underlying Fund,” please replace this whole paragraph with the parallel disclosure in the SecureDesigns prospectus which complies with the requirements of Item 6(c). |
RESPONSE: We have replaced the paragraph with the parallel disclosure in SecureDesigns.
| 4. | COMMENT: Under the “Underlying Funds” section, beginning with “Due to the number of the Contract’s Underlying Funds,” consider deleting these last three paragraphs before the subheading “Certain Payments the Company and its Affiliates Receive with Regard to the Underlying Funds,” since this disclosure is covered in other parts of the prospectus. |
RESPONSE: The Company respectfully elects to retain this disclosure.
Optional Benefits Table
| 1. | COMMENT: Include “Systematic Withdrawals” as a line item in the Benefits Table. Note that income taxes may apply to withdrawals. |
RESPONSE: We have done so.
| 2. | COMMENT: For current benefits, consider stating where applicable that withdrawals could significantly reduce benefits. |
RESPONSE: The Company respectfully submits that this disclosure is already included, and it has not made any further change.
| 3. | COMMENT: In the “Dollar Cost Averaging” row, if the dollar cost averaging terminates for any reason, include the wait time for reinstatement of the benefit in various time categories. |
RESPONSE: We have included this disclosure.
| 4. | COMMENT: In the DCA Plus Account line item, in the “Purpose” column, remove the dash in “transferred” and insert the word “monthly” after “transferred.” Also, after “Purchase Payment” insert in parentheses “the DCA Plus Period”. |
RESPONSE: We have substantively revised this disclosure.
| 5. | COMMENT: Under the Purpose column for the Death Benefit, please strike “generally” since no qualification is disclosed in the prospectus. If there is a qualification, it should be disclosed in the prospectus. |
RESPONSE: We have done so.
| 6. | COMMENT: In the “Standard Death Benefit” row, revise the “Restrictions” column to disclose the standard death benefit to those aged 81 and above and to those aged 80 and under. |
RESPONSE: We have made this distinction.
| 7. | COMMENT: For the first bullet of the Death Benefit Restrictions/Limitations, consider whether this limitation should be included under “The Standard Death Benefit” section. |
RESPONSE: We believe this section is complete.
| 8. | COMMENT: Under the “Alternate Withdrawal Charge” 0-Year and 4-Year riders, in the Limitations/Restrictions column, for each rider disclose that depending on the annuity option chosen the fee may be imposed for the life of the Contract. |
RESPONSE: We have made this change.
| 9. | COMMENT: For the 4-Year Alternate Withdrawal Charge rider, please include in restrictions the following: “This rider may provide a benefit only if a withdrawal is taken during years 5 through 7 after the Purchase Payment date because for the first 4 years, the withdrawal charges under the rider are the same as the withdrawal charges under the Contract’s 7-year withdrawal charge schedule.” |
RESPONSE: We have added clarifying disclosure. However, please note that the surrender charge is tied to the Purchase Payment and not the Contract Date.
| 10. | COMMENT: In the “4% Extra Credit” row, add to the first bullet that if Purchase Payments are made in subsequent Contract Years, the applicable rider charge will increase in relation to Purchase Payments and no additional Credit Enhancements will be applied. |
RESPONSE: We have added this disclosure.
| 11. | COMMENT: In the “4% Extra Credit” row, add to the fourth bullet that credit enhancements are fully vested 7 years from the contract date and until then are subject to recapture under certain circumstances. |
RESPONSE: We have added this disclosure.
| 12. | COMMENT: Under the “Optional Benefits (No Longer Available for Election),” please confirm that if bonus credits are excluded from any contract benefit listed, that it is disclosed in the “Restriction” column. |
RESPONSE: We confirm.
| 13. | COMMENT: In the “Guaranteed Growth Death Benefits” row, in the Purpose column, add “benefit” after “enhanced death.” |
RESPONSE: We have done so.
Optional Benefits Discussion
| 1. | COMMENT: To the extent all aspects of any optional rider fee are not disclosed in the Optional Benefit table, please disclose them in full in the discussions on optional benefits below. |
RESPONSE: We have described the optional benefits, as required by Form N-4.
| 2. | COMMENT: Make the statement that the company makes each rider available only at issue and you cannot change or cancel the rider(s) you select after issue more prominent. |
RESPONSE: We have made it bold.
| 3. | COMMENT: Under “Annual Stepped Up Death Benefit,” add “outstanding credit debt” to the list of factors that reduce the death benefit in the second sentence. |
RESPONSE: We have added it but changed “credit” to “Contract.”
| 4. | COMMENT: Under the example of the Annual Stepped-Up Death Benefit, in the sentence stating, “Thus, 65,000 is the amount that would be paid,” change “amount that would be paid” to “Death Benefit.” |
RESPONSE: We have made the change.
| 5. | COMMENT: Move the explanation of the stepped up death benefit to appear before the example. |
RESPONSE: We have moved the explanation to appear before the example.
| 6. | COMMENT: In the “Example of a Reduction in the Stepped Up Death Benefit Amount as a Result of a Withdrawal,” if the Contract Value is $35,000 prior to withdrawal, only $3,500 would be eligible for free withdrawal, and the excess above that amount would be subject to a withdrawal charge. Please revise the disclosure and recalculate the example. |
RESPONSE: The Company declines to make this change. The free withdrawal amount is tied to the Contract Value on the most recent Contract Date Anniversary, not the Contract value prior to the withdrawal. Here, the Contract Value as of the prior Contract Date Anniversary was $49,000. Hence the free withdrawal amount is equal to $4,900 (10% of $49,000), not $3,500.
| 7. | COMMENT: In the “Example of a Reduction in the Stepped Up Death Benefit Amount as a Result of a Withdrawal,” it is not immediately obvious what “number 2” is in the statement that “the death benefit will be as set forth in number 2 above.” Please explain what the amount would be under these circumstances. |
RESPONSE: We have clarified the disclosure.
| 8. | COMMENT: Make the first sentence, on page 28, regarding the recapture of Credit Enhancements not yet vested, more prominent. In that same sentence – consider whether “and certain” should be “or certain.” |
RESPONSE: We have made this bold. We have also changed “and certain” to “or certain.”
| 9. | COMMENT: Under the Example of Credit Enhancement Vesting and Recapture, please explain each component of the formula under the table on page 29. |
RESPONSE: We have clarified the disclosure.
| 10. | COMMENT: In the paragraph immediately following the formula under the table on page 29, make the statements from the second sentence to the end of the paragraph more prominent. |
RESPONSE: We have made this bold.
| 11. | COMMENT: In the paragraph immediately preceding the table on page 30, replace “that are not eligible for the Credit Enhancement” with “after the first Contract Year” in the second sentence. |
RESPONSE: We have made this change.
| 12. | COMMENT: In the paragraph immediately preceding the “Example of the Waiver of Withdrawal Charge,” state in the second sentence that if the withdrawal amount exceeds the purchase payments made during the 12 months preceding the withdrawal, 100% of the credit enhancement vested during the 12 months preceding the withdrawal will be forfeited. |
RESPONSE: We have added this disclosure.
| 13. | COMMENT: In the “Example of the Waiver of Withdrawal Charge,” please include an example illustrating the forfeiture of Credit Enhancements. |
RESPONSE: We have done so.
| 14. | COMMENT: In the “Alternative Withdrawal Charge” section, please revise all introductory language to contemplate the two riders that are discussed below. |
RESPONSE: We have revised the language to contemplate the two riders.
| 15. | COMMENT: In the third sentence of the paragraph following the “Alternate Withdrawal Charge Schedule” table, explain clearly how forfeiture of the Credit Enhancement is calculated and whether it applies to the full amount of the unvested Credit Enhancement, the full amount of the vested and unvested Credit Enhancement, or only the Credit Enhancement amount credited or vested in the 12 months preceding the withdrawals. |
RESPONSE: We have provided additional information.
| 16. | COMMENT: In the last sentence of that same paragraph, change “if you do not plan to take withdrawals,” to “if you do plan to take withdrawals.” Also, in the same sentence, the reference to 7 years should be changed to “within 7 years from the date of the Purchase Payment.” Lastly, change “is not” not “may not.” |
RESPONSE: The Company respectfully declines to change “do not” to “do,” as that would render the disclosure inaccurate. We have changed Contract Date to date of Purchase Payment.
| 17. | COMMENT: In the “Example of the Alternate Withdrawal Charge,” please include an example for the 4 year schedule. |
RESPONSE: We have done so.
Purchases and Transfers
| 1. | COMMENT: Under “Existing Contracts,” please state how the dollar cost averaging option will be affected in the event of an allocation to a closed Subaccount in the second sentence. |
RESPONSE: The Company respectfully submits that disclosure is already included with regard to this event, as follows:
If you have automatic allocation instructions designating allocation to a Closed Subaccount pursuant to an Automatic Allocation Program as of the date that a Subaccount is closed, your automatic allocation instructions will be terminated as of the close of business on that date. If you wish to set up a new Dollar Cost Averaging Option or Asset Reallocation Option (without the Closed Subaccount), you will need to submit a new form to our Administration Office…
| 2. | COMMENT: Under “Frequent Transfer Restrictions,” revise the language to reflect that the performance of the underlying funds reflects deduction of the underlying funds’ fees and expenses. |
RESPONSE: We have done so.
| 3. | COMMENT: In the second-to-last table preceding the “Transfer Block Restriction” table under “Frequent Transfer Restrictions,” please describe with specificity the terms of the contract which may limit the Company’s ability to restrict or deter harmful traders, per Item 8(F)(4)(iii). |
RESPONSE: We have removed the sentence that states our rights may be limited, as, in fact, we have the right to suspend transfers in these circumstances. Any limitations on our ability to detect harmful transfer activity are operational or technological in nature, and these limitations are disclosed.
| 4. | COMMENT: Under “Systematic Withdrawals,” in the third full paragraph on page 41, please make the statement regarding automatic termination more prominent. |
RESPONSE: We have made it bold.
| 5. | COMMENT: Under “Death Benefit,” please provide an example of the calculation of the death benefit, as provided in the “Annual Stepped Up Death Benefit” section above. |
RESPONSE: We have done so.
| 6. | COMMENT: Under “Death Benefit,” change “upon receipt of due proof of death” to “as of the date the Company receives due proof of death.” |
RESPONSE: We have done so.
| 7. | COMMENT: Under “Death Benefit” at the top of page 42 in the first paragraph, change “any death benefit will be determined according to the terms of the Annuity Option” to “any applicable death benefit will terminate at the annuity start date without value.” Please retain the cross-reference that follows this sentence. |
RESPONSE: We have done so.
Charges and Deductions
| 1. | COMMENT: Under the second paragraph of “Contingent Deferred Sales Charge” in the 3rd line, please consider whether “and/or Bonus Credits” should be deleted. It states in the prior paragraph that Purchase Payments include any Bonus Credits for purposes of assessing the withdrawal charge. |
RESPONSE: The Company respectfully declines to make this change. The prior paragraph concerns the calculation of the withdrawal charge, and the second paragraph concerns what constitutes the free withdrawal amount.
| 2. | COMMENT: Under “Contingent Deferred Sales Charge,” please reconcile the second and third sentences of the third paragraph, regarding whether the withdrawal charge applies to withdrawals of earnings or not. |
RESPONSE: We have done so.
| 3. | COMMENT: With reference to the first sentence following the “Withdrawal Charge” table on page 44, please provide an example of a withdrawal request subject to the withdrawal charge processed net of fees and another example processed gross of fees. In other words, if an investor requests $1000 with the charge taken from the $1000 (so that the investor receives less than $1000), or if an investor requests $1000 with the charge taken from the contract value (so that the investor receives exactly $1000). |
RESPONSE: We have done so.
| 4. | COMMENT: Please confirm that a withdrawal charge is not computed on the amount of the withdrawal charge. |
RESPONSE: A withdrawal charge IS computed on the amount of the withdrawal charge when deducted from account value and not the withdrawal proceeds. We have clarified the disclosure to this effect.
| 5. | COMMENT: Under “Mortality and Expense Risk Charge” table, add a table showing the annual mortality and expense risk charge for the annuity options. |
RESPONSE: We have done so.
| 6. | COMMENT: Under “Administration Charge,” to the extent not disclosed previously, please disclose under which Annuity Options, if any, the administration charge will continue to be imposed during the Annuity Period, and how it is calculated and deducted. |
RESPONSE: The Company has added disclosure but notes this disclosure also appears in the Fee Table.
| 7. | COMMENT: Under “Optional Rider Charges,” make the second and third sentences of the second paragraph, regarding deduction of the monthly rider charge, more prominent. Also, please delete the qualification “generally” and instead disclose any specific qualifications. |
RESPONSE: We have done so.
| 8. | COMMENT: The heading of the “Optional Rider Expenses” table states “as a percentage of Contract Value.” Refer to the prior comment about the basis on which rider fees are calculated. Elsewhere it says a percentage of the Benefit Base |
RESPONSE: Respectfully, we have elected to retain the current wording.
Annuity Period
| 1. | COMMENT: In the fourth bullet on page 48 under “Annuity Period,” specify which options will be subject to the withdrawal charge after the annuity start date, for clarity. |
RESPONSE: We have done so.
| 2. | COMMENT: In the paragraph following the bullets on page 48, if accurate, please disclose the Company will always offer a variable annuity option. Alternatively, disclose the possibility that it will not always offer a variable annuity option. Also, please disclose what annuity rate Option 7 is based on. |
RESPONSE: We have done so.
| 3. | COMMENT: Please provide the information requested by the second sentence of instruction 1 to Form N-4, Item 9 in the following paragraph (where an annuitant is given a choice in assumed investment return, explain the effect of choosing a higher, as opposed to a lower, assumed investment return). |
RESPONSE: We do not give annuitants a choice with regard to the assumed investment return. Our disclosure, however, does already address the effect of the assumed rate.
| 4. | COMMENT: In the second-to-last paragraph preceding the “Annuity Options” section, state if the limitations on transfers are the same as during the accumulation phase. If not, briefly disclose the limitations. |
RESPONSE: We have done so.
| 5. | COMMENT: Under “Option 3,” provide an example for this option. |
RESPONSE: We have done so.
| 6. | COMMENT: Under “Selection of an Option,” the discussion of the annuity option and the calculation of the payment amount may be difficult for investors to follow. Please state in a prominent manner in this section that investors may request from the Company a personalized illustration of future payments under the annuitization option and provide a toll-free number and address for such requests. |
RESPONSE: The Company respectfully declines to include this disclosure. However, the Company has added disclosure that owners can call its toll-free number if they have questions about the calculation of the payment amount under a particular annuity option.
More About the Contract
| 1. | COMMENT: Under “Cyber Security and Certain Business Continuity Risks,” please consider consolidating this with the principal risks, or include a cross-reference that more information is available here. |
RESPONSE: We have provided a cross-reference.
| 2. | COMMENT: Under “Loans,” the final sentence in this section is a material contract variation. Please disclose the states in which a loan cannot be taken. |
RESPONSE: We have removed this state variation reference entirely, as our Loan Endorsement is available in all states.
| 3. | COMMENT: Under “Loans,” in the first full paragraph on page 56, please disclose how contract value is deducted from the subaccount and/or the fixed account. Also, please provide the information required by the second sentence of Form N-4, Item 13(C) regarding how interest is credited and allocated. |
RESPONSE: We have done so.
| 4. | COMMENT: Please describe when amounts borrowed are transferred and when amounts repaid are credited, per Form N-4, Item 13(F). |
RESPONSE: To the extent this disclosure was not already included, we have done so.
| 5. | COMMENT: In the following paragraph, please provide the information required by sentence 1 of Form N-4, Item 13(C), as follows: how interest accrues on the loan, when it is payable, and how interest is treated if not paid. Also, please state whether the loan interest rate may be changed during the life of a loan. If the rate may be changed, please state how frequently the Company may change the rate. |
RESPONSE: We have further clarified the existing disclosure, which is consistent with our loan endorsements and procedures.
| 6. | COMMENT: In the third sentence of the next paragraph, please disclose the minimum amount of each quarterly payment. |
RESPONSE: There is no minimum payment amount. We have added a disclosure to this effect.
| 7. | COMMENT: In the first paragraph of page 57, also state that the Contract Value at surrender and the death proceeds payable will be reduced by the amount of any outstanding contract loan plus accrued interest, per Form N-4, Item 13(B)(ii). |
RESPONSE: We have done so.
Other Information
| 1. | COMMENT: Under “Reports to Owners,” remove the second paragraph. |
RESPONSE: The Company respectfully declines to delete this paragraph, as it is appropriate disclosure related to the Company’s obligation to provide shareholder reports.
| 2. | COMMENT: Under “State Variations,” delete the second and third sentences. The Company must disclose all material variations to the contract and investors should not be referred to their registered representatives to get this information. |
RESPONSE: We have done so.
| 3. | COMMENT: Under “State Variations,” at the end of the first sentence, please insert “including material state variations.” |
RESPONSE: We have done so.
| 4. | COMMENT: Under “Sale of the Contract,” in the first two sentences, please delete, as the Contract is no longer sold. |
RESPONSE: We have done so.
| 5. | COMMENT: Under “Principal Underwriter,” confirm that all material intermediary specific variations to the offering have been disclosed, per Form N-4, Item 8(A). |
RESPONSE: We confirm.
Additional Information
| 1. | COMMENT: Under “Registration Statement,” please add a website reference landing page (e.g., “and available online at _____.”). Include specific landing page. Confirm website addresses will comply with Rule 498A(b)(2)(i)(b). |
RESPONSE: We have done so.
Appendices
| 1. | COMMENT: In the Appendix A second introductory paragraph, change “each Underlying Fund’s performance” to “each Underlying Fund’s past performance.” |
RESPONSE: We have done so.
| 2. | COMMENT: Regarding Average Annual Total Returns, if applicable, please include a statement explaining that updated performance information is available and provide a web address and/or toll-free telephone number where the updated information may be obtained. |
RESPONSE: We have done so.
| 3. | COMMENT: Please delete the lines with the trust names that separate each fund family in the table. |
RESPONSE: We have done so.
| 4. | COMMENT: In Appendix B, regarding the heading for Riders No Longer Available – Available for Purchase Prior to February 1, 2010, are the other riders in Appendix A still available for purchase given that this Contract is no longer being sold? If not, having this separate appendix does not appear to make sense. Please consider consolidating. |
RESPONSE: We have modified the heading for Appendix B but have maintained it as a stand-alone appendix. Appendix A is not related to Appendix B, and consolidating them would not be appropriate.
Back Cover Page
| 1. | COMMENT: Add “about the Contract” after “or submit inquiries.” |
RESPONSE: We have done so.
| 2. | COMMENT: In the first paragraph, the website address must be specific enough to lead investors directly to the document, rather than to the homepage or other section of the website on which the materials are posted (although the website could be a central site with prominent links to each document). |
RESPONSE: The website will meet these requirements.
| 3. | COMMENT: Please add the Contract identifier according to Form N-4, instruction 4, item 1(b). |
RESPONSE: We have done so.
| III. | STATEMENT OF ADDITIONAL INFORMATION |
| 1. | COMMENT: The statement of additional information and part C – except with respect to comments on exhibits L(1) and L(2), we reiterate all comments made on March 25, 2021 to the SAI and Part C (including the signature page) for SecureDesigns first registration statement here. Please make the same changes to AdvanceDesigns. |
RESPONSE: We have listed those comments here and responded accordingly.
| 2. | COMMENT: On the first page, remove the final sentence referring to April 30. |
RESPONSE: We have deleted it.
| 3. | COMMENT: Under “Limits on Purchase Payments Paid Under Tax-Qualified Retirement Plans,” please update the year dates of the contribution limits to 2021. |
RESPONSE: We have done so.
| 4. | COMMENT: Under “Mixed and Shared Funding Conflicts,” change “investment media” to “investment vehicles.” |
RESPONSE: We have done so.
| 5. | COMMENT: Under “Financial Statement,” please include the financial statements. |
RESPONSE: We will include the financial statements in our next post-effective amendment. |
| IV. | PART C |
| 1. | COMMENT: All exhibits must be hyperlinked, including exhibits that were filed herewith, per Instruction 4. |
RESPONSE: All exhibits will be hyperlinked in our next post-effective amendment.
| 2. | COMMENT: In Item 32, we note that the disclosure is not required if the disclosure is made in form N-CEN. |
RESPONSE: Noted.
| 3. | COMMENT: On the Signature page, please include two signature blocks: one for the registrant and one for the depositor. |
RESPONSE: We will do so.
| V. | ADDITIONAL SECUREDESIGNS COMMENTS |
| 1. | COMMENT: In the AdvanceDesigns Optional Benefit table, for the Guaranteed Growth Death Benefit, the maximum fee is 0.30% as a percentage of Contract Value. If accurate, please conform the figure in the SecureDesigns Optional Benefit Table to the figures provided for AdvanceDesigns. |
RESPONSE: The Benefit Tables for both contracts are now consistent on these points.
| 2. | COMMENT: In the AdvanceDesigns Optional Benefit table, if the maximum fee provided for the Guaranteed Minimum Income Benefit 3% or 5% rider is accurate, please conform the figures in SecureDesigns to those provided for AdvanceDesigns. |
RESPONSE: The Benefit Tables for both contracts are now consistent on these points.
Very truly yours,
Dodie C. Kent
Partner
Eversheds Sutherland (US) LLP
| cc: | Chris Swickard, Vice President, Assistant Secretary & Associate General Counsel, Security Benefit |
Alison Pollock, Assistant Vice President & Senior Counsel, Security Benefit
Prospectus
ADVANCEDESIGNS® VARIABLE ANNUITY |
May 1, 2021
Important Privacy Notice Included See Back Cover |
Variable annuity contracts issued by Security Benefit Life Insurance Company and offered by Security Distributors, LLC
| 6918 | 32-69181-00 2021/05/01 |
ADVANCEDESIGNSSM VARIABLE ANNUITY
Individual Flexible Purchase Payment
Deferred Variable Annuity Contract
SBL Variable Annuity Account XIV
Issued By: Security Benefit Life Insurance Company One Security Benefit Place Topeka, Kansas 66636‑0001 1‑800‑888‑2461 www.securitybenefit.com | Mailing Address: Security Benefit Life Insurance Company P.O. Box 750497 Topeka, Kansas 66675‑0497 |
This Prospectus describes an individual flexible purchase payment deferred variable annuity contract (the “Contract”) offered by Security Benefit Life Insurance Company (the “Company”). The Contract is available for individuals as a non-tax qualified contract. The Contract is also available for individuals in connection with a retirement plan qualified under Section 402A, 403(b), 408, or 408A of the Internal Revenue Code. The Contract may be available through third-party financial intermediaries who charge an advisory fee for their services. This fee is in addition to Contract fees and expenses. If you elect to pay the advisory fee from your Contract Value, then this deduction will reduce death benefits and other guaranteed benefits, and may be subject to federal and state income taxes and a 10% federal penalty tax. The Contract is designed to give you flexibility in planning for retirement and other financial goals. This Prospectus is used with both prospective purchasers and current Contract Owners.
You may allocate your Purchase Payments and Contract Value to one or more of the Subaccounts that comprise a separate account of the Company, called the SBL Variable Annuity Account XIV (the “Separate Account”) or to the Fixed Account (if it is available under your Contract). Each Subaccount invests in a corresponding mutual fund (each, an “Underlying Fund”).
This Prospectus sets forth information about the Contract and the Separate Account that you should know before purchasing the Contract. This Prospectus should be kept for future reference. Additional information about certain investment products, including variable annuities, has been prepared by the Securities and Exchange Commission’s staff and is available at Investor.gov.
If you are a new investor in the Contract, you may cancel your Contract within 10 days of receiving it without paying fees or penalties. In some states, this cancellation period may be longer. Upon cancellation, you will receive either a full refund of the amount you paid with your application or your total Contract Value. Neither the refund nor the Contract value will include any Credit Enhancements, if applicable. You should review this Prospectus, or consult with your investment professional, for additional information about the specific cancellation terms that apply.
The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Expenses for this Contract, if purchased with an Extra Credit Rider, may be higher than expenses for a contract without the Extra Credit Rider. The amount of Credit Enhancement may be more than offset by additional fees and charges. All or a portion of your Credit Enhancement may be recaptured upon free look, surrender, withdrawal, or death. The Contract is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your Contract can go up and down and you could lose money. Date: May 1, 2021 |
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the shareholder reports for Underlying Funds available under your Contract will no longer be sent by mail, unless you specifically request paper copies of the reports from the Company. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
You may elect to receive all future reports in paper free of charge. You can inform the Company that you wish to continue receiving paper copies of your shareholder reports by calling 1-800-888-2461. Your election to receive reports in paper will apply to all Underlying Funds available under your Contract.
The Contract is available only in New York. You should not consider this Prospectus to be an offering if the Contract may not be lawfully offered in your state. You should only rely upon information contained in this Prospectus or that we have referred you to. We have not authorized anyone to provide you with information that is different. |
2
Table of Contents
| Page | |
Definitions | 5 |
| Important Information You Should Consider About the Contract | 6 |
Overview of the Contract | 9 |
Purpose of the Contract | 9 |
Phases of the Contract | 9 |
Contract Features | 10 |
Additional Services | 11 |
Fee Table | 11 |
Transaction Expenses | 11 |
Annual Contract Expenses | 11 |
Annual Underlying Fund Expenses | 13 |
Expense Examples | 14 |
| Principal Risks of Investing in the Contract | 14 |
Risk of Investment Loss | 14 |
| Short-Term Investment Risk/Withdrawal Risk | 14 |
Subaccount Risk | 14 |
Managed Volatility Fund Risk | 15 |
Purchase Payment Risk | 15 |
| Financial Strength and Claims-Paying Ability Risk | 15 |
| Cybersecurity and Business Disruption Risk | 15 |
Enhancement Credit Risk | 15 |
Tax Consequences Risk | 15 |
Advisory Fee Deduction Risk | 15 |
| Information About the Company, the Separate Account, and the Underlying Funds | 15 |
| Security Benefit Life Insurance Company | 15 |
Published Ratings | 16 |
Separate Account | 16 |
Underlying Funds | 16 |
Services and Administration | 18 |
Charges and Deductions | 18 |
Transaction Expenses | 19 |
Contingent Deferred Sales Charge | 19 |
Premium Tax Charge | 20 |
Deduction of Advisory Fees | 20 |
Annual Contract Expenses | 21 |
Account Administration Charge | 21 |
Mortality and Expense Risk Charge | 21 |
Administration Charge | 22 |
Loan Interest Charge | 22 |
Other Charges | 22 |
Variations in Charges | 22 |
Optional Rider Charges | 22 |
Guarantee of Certain Charges | 24 |
Underlying Fund Expenses | 24 |
The Contract | 24 |
General | 24 |
| Important Information About Your Benefits Under the Contract | 24 |
Application for a Contract | 25 |
Purchase Payments | 25 |
Allocation of Purchase Payments | 26 |
Dollar Cost Averaging Option | 26 |
Asset Reallocation Option | 27 |
Transfers of Contract Value | 28 |
Contract Value | 31 |
Determination of Contract Value | 31 |
Cut-Off Times | 32 |
Full and Partial Withdrawals | 32 |
Withdrawals to Pay Advisory Fees | 34 |
| Systematic Withdrawals | 34 |
Free-Look Right | 35 |
Death Benefit | 35 |
Distribution Requirements | 36 |
Death of the Annuitant | 37 |
| Benefits Under the Contract | 37 |
Optional Riders | 47 |
Annual Stepped Up Death Benefit | 47 |
Extra Credit | 49 |
Waiver of Withdrawal Charge | 51 |
Alternate Withdrawal Charge | 52 |
| Riders Previously Available for Purchase | 53 |
Annuity Period | 53 |
General | 53 |
Annuity Options | 55 |
Selection of an Option | 57 |
3
| Page |
The Fixed Account | 57 |
Interest | 57 |
DCA Plus Account | 58 |
Death Benefit | 59 |
Contract Charges | 59 |
| Transfers and Withdrawals from the Fixed Account | 59 |
Payments from the Fixed Account | 59 |
More About the Contract | 60 |
Ownership | 60 |
| Designation and Change of Beneficiary | 60 |
Dividends | 60 |
| Payments from the Separate Account | 60 |
Proof of Age and Survival | 61 |
Misstatements | 61 |
| Cyber Security and Certain Business Continuity Risks | 61 |
Loans | 61 |
| Restrictions on Withdrawals from Qualified Plans | 63 |
| Restrictions Under the Texas Optional Retirement Program | 63 |
Federal Tax Matters | 64 |
Introduction | 64 |
| Tax Status of the Company and the Separate Account | 64 |
| Income Taxation of Annuities in General—Non‑Qualified Contracts | 65 |
Additional Considerations | 66 |
Qualified Plans | 67 |
Other Tax Considerations | 71 |
Other Information | 72 |
Voting of Underlying Fund Shares | 72 |
Changes to Investments | 72 |
| Changes to Comply with Law and Amendments | 73 |
Reports to Owners | 73 |
Electronic Privileges | 73 |
State Variations | 74 |
Legal Proceedings | 74 |
Legal Matters | 74 |
Sale of the Contract | 74 |
Additional Information | 76 |
Registration Statement | 76 |
Financial Statements | 76 |
Appendix A – Underlying Funds Available Under The Contract and Optional Rider Investment Restrictions | A-1 |
Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. | B-1 |
Appendix C – Automatic Bonus Credit Rider | C-1 |
4
Definitions
Various terms commonly used in this Prospectus are defined as follows:
Accumulation Unit — A unit of measure used to calculate Contract Value.
Administrative Office — Security Benefit Life Insurance Company, P.O. Box 750497, Topeka, Kansas 66675‑0497.
Annuitant — The person that you designate on whose life annuity payments may be determined. If you designate Joint Annuitants, “Annuitant” means both Annuitants unless otherwise stated.
Annuity (“annuity”) — A series of periodic income payments made by the Company to an Annuitant, Joint Annuitant, or Designated Beneficiary during the period specified in the Annuity Option.
Annuity Options — Options under the Contract that prescribe the provisions under which a series of annuity payments are made.
Annuity Period — The period beginning on the Annuity Start Date during which annuity payments are made.
Annuity Start Date — The date when annuity payments begin.
Annuity Unit — A unit of measure used to calculate variable annuity payments under Annuity Options 1 through 4, 7 and 8.
Automatic Investment Program — A program pursuant to which Purchase Payments are automatically paid from your bank account on a specified day of each month or a salary reduction agreement.
Bonus Credit — An amount added to Contract Value under the Automatic Bonus Credit Rider.
Company — Security Benefit Life Insurance Company. The Company is also identified herein as “we,” “our,” or “us.”
Contract — The flexible purchase payment deferred variable annuity contract described in this Prospectus.
Contract Date — The date the Contract begins as shown in your Contract. Contract anniversaries are measured from the Contract Date. The Contract Date is usually the date that your initial Purchase Payment is credited to the Contract.
Contract Debt — The unpaid loan balance including accrued loan interest.
Contract Value — The total value of your Contract which includes amounts allocated to the Subaccounts and the Fixed Account as well as any amount set aside in the Loan Account to secure loans as of any Valuation Date.
Contract Year — Each twelve-month period measured from the Contract Date.
Credit Enhancement — An amount added to Contract Value under the Extra Credit Rider.
Designated Beneficiary — The person having the right to the death benefit, if any, payable upon the death of the Owner or the Joint Owner prior to the Annuity Start Date.
Fixed Account — An account that is part of the Company’s General Account to which you may allocate all or a portion of your Contract Value to be held for accumulation at fixed rates of interest (which may not be less than the Guaranteed Rate) declared periodically by the Company. The Fixed Account is not available in all states and is not available if you have purchased the Extra Credit Rider at 3%, 4% or 5% or the 0‑Year or 4‑Year Alternate Withdrawal Charge Rider. See the “Fixed Account.”
General Account — All assets of the Company other than those allocated to the Separate Account or to any other separate account of the Company.
5
Guaranteed Rate — The minimum interest rate earned on Contract Value allocated to the Fixed Account, which accrues daily and ranges from an annual effective rate of 1% to 3% based upon the state in which the Contract is issued and the requirements of that state.
Internal Revenue Code or the Code — The Internal Revenue Code of 1986, as amended.
Owner — The person entitled to the ownership rights under the Contract and in whose name the Contract is issued.
Participant — A Participant under a Qualified Plan.
Purchase Payment — An amount initially paid to the Company as consideration for the Contract and any subsequent amounts paid to the Company under the Contract.
Separate Account — The SBL Variable Annuity Account XIV, a separate account of the Company that consists of accounts, referred to as Subaccounts, each of which invests in a corresponding Underlying Fund.
Subaccount — A division of the Separate Account which invests in a corresponding Underlying Fund.
Underlying Fund — A mutual fund or series thereof that serves as an investment vehicle for its corresponding Subaccount.
Valuation Date — Each date on which the Separate Account is valued, which currently includes each day that the New York Stock Exchange is open for trading. Each Valuation Date closes at the end of regular trading on the New York Stock Exchange (normally, 3:00 p.m. Central Time). The New York Stock Exchange is scheduled to be closed on weekends and on the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Valuation Period — A period used in measuring the investment experience of each Subaccount of the Separate Account. The Valuation Period begins at the close of one Valuation Date and ends at the close of the next Valuation Date.
Withdrawal Value — The amount you will receive upon full withdrawal of the Contract. It is equal to Contract Value less any Contract Debt, any applicable withdrawal charges, any pro rata account administration charge and any uncollected premium taxes. If the Extra Credit Rider is in effect, Contract Value will also be reduced by any Credit Enhancements that have not yet vested. The Withdrawal Value during the Annuity Period under Annuity Option 7 is the present value of future annuity payments commuted at the assumed interest rate, less any applicable withdrawal charges and any uncollected premium taxes.
Important Information You Should Consider About the Contract
| FEES AND EXPENSES | Location in Prospectus | |
| Charges for Early Withdrawals | If you withdraw money from your Contract within 7 years following your last Purchase Payment, you may be assessed a surrender charge of up to 7% (as a percentage of the portion of the withdrawal amount consisting of Purchase Payments, including any Bonus Credits paid), declining to 0% over 7 years. For example, if you were to withdraw $100,000 during a surrender charge period, you would be assessed a charge of up to $7,000. | Fee Table Fee Table – Expense Examples Charges and Deductions – Contingent Deferred Sales Charge |
| Transaction Charges | Other than surrender charges (if any), there are no charges for other contract transactions. | Not Applicable |
6
| FEES AND EXPENSES | Location in Prospectus | |||
| Ongoing Fees and Expenses (annual charges) | The tables below describe the current fees and expenses of the Contract that you may pay each year, depending on the options you choose. Interest on any Contract loans is not reflected. The fees and expenses do not reflect any advisory fees paid to financial intermediaries from your Contract Value or other assets. If such charges were reflect, the fees and expenses would be higher. Please refer to your Contract specifications page for information about the specific fees you will pay each year based on the options you have elected. | Fee Table Fee Table – Expense Examples Charges and Deductions Charges and Deductions – Mortality and Expense Risk Charge Charges and Deductions – Optional Rider Charges Charges and Deductions – Administration Charge Appendix A – Underlying Funds Available Under the Contract | ||
| Annual Fee | Minimum | Maximum | ||
Base Contract1 | 1.37% | 1.62% | ||
Investment options2 (Underlying Fund fees and expenses) | 0.69% | 3.98% | ||
Optional benefit available for an additional charge3 (for a single optional benefit, if elected) | 0.05% | 0.85% | ||
1 As a percentage of Contract Value allocated to the Separate Account. The charge shown also includes the account administration charge. 2 As a percentage of Underlying Fund average net assets. 3 As a percentage of Contract Value. | ||||
Because your Contract is customizable, the choices you make affect how much you will pay. To help you understand the cost of owning your Contract, the following table shows the lowest and highest cost you could pay each year, based on current charges. This estimate assumes you do not take withdrawals from the Contract, which could add surrender charges that substantially increase costs. | ||||
| Lowest Annual Cost: $1,821.24 | Highest Annual Cost: $4,659.42 | |||
Assumes: • Investment of $100,000 • 5% annual appreciation • Least expensive combination of Base Contract charge and Underlying Fund fees and expenses • No optional benefits • No sales charges or advisory fees • No additional Purchase Payments, transfers or withdrawals • No Contract loans • No Credit Enhancement amounts | Assumes: • Investment of $100,000 • 5% annual appreciation • Most expensive combination of Base Contract charge, optional benefit and Underlying Fund fees and expenses • No sales charges or advisory fees • No additional Purchase Payments, transfers or withdrawals • No Contract loans • No Credit Enhancement amounts | |||
| RISKS | Location in Prospectus | |||
| Risk of Loss | • You can lose money by investing in this Contract, including loss of principal. | |||
| Not a Short-Term Investment | • This Contract is not designed for short-term investing and is not appropriate for an investor who needs ready access to cash. • Surrender charges may apply to withdrawals. If you take a withdrawal, a surrender charge may reduce the value of your Contract or the amount of money that you actually receive. Withdrawals may also reduce or terminate Contract guarantees. • The benefits of tax deferral, long-term income and living benefit guarantees mean the Contract is more beneficial to investors with a long-time horizon. | Principal Risks of Investing in the Contract Charges and Deductions – Contingent Deferred Sales Charge The Contract – General | ||
7
| Risks Associated with Investment Options | • An investment in this Contract is subject to the risk of poor investment performance. Performance can vary depending on the performance of the investment options that are available under the Contract. • Each investment option (including the Fixed Account, if available) has its own unique risks. • You should review the investment options before making an investment decision. | Appendix A – Underlying Funds Available Under the Contract |
| RISKS | Location in Prospectus | |
| Insurance Company Risks | An investment in the Contract is subject to the risks related to us, Security Benefit Life Insurance Company. Any obligations, including under the Fixed Account option, guarantees or benefits of the Contract are subject to our claims-paying ability. If we experience financial distress, we may not be able to meet our obligations to you. More information about Security Benefit Life Insurance Company, including our financial strength ratings, is available upon request by calling 1-800-888-2461 or visiting www.securitybenefit.com. | Information About the Company, the Separate Account, and the Underlying Funds – Security Benefit Life Insurance Company |
| RESTRICTIONS | Location in Prospectus | |
| Investments | • Certain investment options may not be available under your Contract. • Certain Subaccounts prohibit you from transferring out and back in the same Subaccount within a period of calendar days. • There are certain restrictions on transfers between the Fixed Account and Subaccounts. • We reserve the right to limit your transfers to 14 in a Contract Year, to suspend transfers and limit the transfer amounts, and to limit transfers in circumstances of frequent or large transfers. • We reserve the right to add, remove or substitute the Underlying Funds available as investment options under the Contract. | The Contract – Allocation of Purchase Payments The Contract – Transfers of Contract Value – Frequent Transfer Restrictions |
| Optional Benefits | • Optional benefits are only available at Contract issue. You cannot change or cancel the benefits that you select after they are issued. • Certain optional benefits are not available in every state and are subject to age restrictions. The 6% and 7% Guaranteed Growth Death Benefit is not available to Texas residents. • We reserve the right to stop offering for purchase any currently available optional benefit at any time. • Optional benefits may further limit or restrict the investment options that you may select under the contract. We may change these restrictions in the future. • Withdrawals may reduce the value of an optional benefit by an amount greater than the value withdrawn or result in termination of the benefit. • We do not have the right to modify or terminate an optional benefit you have elected in our sole discretion. • If you elect to pay third-party advisory fees from your Contract Value, then the deduction will reduce the death benefits and other guaranteed benefits, and may be subject to federal and state income taxes and a 10% federal penalty tax. | The Contract – Withdrawals to Pay Advisory Fees Benefits Under the Contract |
8
| TAXES | Location in Prospectus | |
| Tax Implications | • Consult with a tax professional to determine the tax implications of an investment in and payments received under the Contract. • If you purchased the Contract through a tax-qualified plan or IRA, you do not get any additional tax benefit deferral under the Contract. • Earnings on your contract are taxed at ordinary income tax rates when you withdraw them, and you may have to pay a penalty if you take a withdrawal before age 59½. | Federal Tax Matters – Introduction Federal Tax Matters – Income Taxation of Annuities in General—Non Qualified Contracts |
| CONFLICTS OF INTEREST | Location in Prospectus | |
| Investment Professional Compensation | Your investment professional may receive compensation for selling this Contract to you, in the form of commissions, additional payments, and non-cash compensation. We may share the revenue we earn on this Contract with your investment professional’s firm. This conflict of interest may influence your investment professional to recommend this Contract over another investment for which the investment professional is not compensated or is compensated less. | Other Information – Sale of the Contract |
| CONFLICTS OF INTEREST | Location in Prospectus | |
| Exchanges | Some investment professionals may have a financial incentive to offer you a new contract in place of the one you already own. You should only exchange a contract you already own if you determine, after comparing the features, fees and risks of both contracts, that it is better for you to purchase the new contract rather than continue to own your existing contract. | Additional Compensation Paid to Selected Selling Broker-Dealers |
Overview of the Contract
Purpose of the Contract — The Contract is a variable annuity contract. It is designed for retirement planning purposes. You make investments in the Contract’s investment options during the accumulation phase. The value of your investments is used to calculate your benefits under the Contract. At the end of the accumulation phase, we use that accumulated value to calculate the payments that we make during the annuity phase. These payments can provide or supplement your retirement income. Generally speaking, the longer your accumulation phase, the greater your accumulated value may be for setting your benefits and annuity payouts. The Contract also includes a death benefit to help financially protect your Designated Beneficiary.
This Contract may be appropriate for you if you have a long investment time horizon. Each Purchase Payment is subject to a withdrawal charge for seven years from the date of that Purchase Payment. This means that a Purchase Payment made in year eight of the Contract will be subject to a withdrawal charge until year 15 of the Contract. Because of the withdrawal charge and the possibility of income tax and tax penalties on early withdrawals, the Contract should not be viewed as an investment vehicle offering low cost liquidity. Your financial goal in acquiring the Contract should focus on a long-term insurance product, offering the prospect of investment growth.
Phases of the Contract — The contract has two phases: (1) an accumulation phase (for savings) and (2) an annuity (payout) phase (for income).
Accumulation Phase. During the accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal. To accumulate value during the accumulation phase, you invest your Purchase Payments and earnings in the Subaccounts that are available under the Contract, which, in turn, invest in Underlying Funds with different investment strategies, objectives, and risk/reward profiles. You may allocate all or part of your Purchase Payments and Contract Value to the Subaccounts. Amounts that you allocate to a Subaccount will increase or decrease in dollar value depending in part on the investment performance of the Underlying Fund in which such Subaccount invests. The Fixed Account option which guarantees the principal and a minimum interest rate, may also be available for investment. If the Fixed Account is available under your Contract, you may allocate all or part of your Purchase Payments to the Fixed Account, which is part of the Company’s General Account.
A list of the Underlying Funds under the Contract is provided in Appendix A: Underlying Funds Available Under the Contract and Optional Rider Investment Restrictions to this Prospectus.
9
Annuity (Payout) Phase. The Annuity phase occurs after the Annuity Start Date and is when you or a designated payee begin receiving regular Annuity payments from your Contract. The Contract provides several Annuity Options. You should carefully review the Annuity Options with your financial or tax adviser. The payments may be fixed or variable or a combination of both. Variable payments will vary based on the performance of the Subaccounts you select. Unless you direct otherwise, proceeds derived from Contract Value allocated to the Subaccounts will be applied to purchase a variable annuity and proceeds derived from Contract Value allocated to the Fixed Account will be applied to purchase a fixed annuity.
Please note that if you annuitize, your investments will be converted to income payments and you generally will no longer be able to withdraw money at will from your Contract. However, under Annuity Options 5, 6 and 7 (and only if the Owner has elected variable annuity payments under Annuity Option 7), withdrawals (other than systematic withdrawals or withdrawals made to pay the fees of your investment adviser) are permitted after the Annuity Start Date. In general, optional benefits (e.g., the Annual Stepped Up Death Benefit) terminate upon annuitization if you elect one of Annuity Options 1 through 4, 7, or 8. If you elect Annuity Option 5 or 6, the optional benefit will continue after the Annuity Start Date if you purchase the Waiver of Withdrawal Charge Rider or the 0-Year or 4-Year Alternate Withdrawal Charge Rider, and the Company will continue to deduct optional benefit charges after the Annuity Start Date.
Contract Features —
Accessing Your Money. Before your Contract is annuitized, you can withdraw money from your Contract at any time. If you take a withdrawal, you may have to pay a surrender charge and/or income taxes, including a tax penalty if you are younger than age 59½.
Tax Treatment. You can transfer money between investment options without tax implications, and earnings (if any) on your investments are generally tax-deferred. You are taxed only upon: (1) making a withdrawal; (2) surrender of the Contract; (3) receiving a payment from us; or (4) payment of a death benefit.
Death Benefits. For Contract Owners aged 80 and younger on the Contract issue date, the Contract includes a standard death benefit that will pay the higher of Contract Value or total Purchase Payments (adjusted for any outstanding Contract Debt, any pro rata account administration charge, prior withdrawals, including any withdrawal charges, and any uncollected premium tax) upon your or the Annuitant’s death. For Contract Owners aged 81 and older on the Contract issue date, the standard death benefit will be equal to the Contract Value only. If you elect to purchase an optional rider that provides an enhanced death benefit for an additional charge, you have the opportunity to leave your beneficiary a death benefit greater than the standard death benefit.
Loans. If you own a Contract issued in connection with a retirement plan that is qualified under Section 403(b) of the Internal Revenue Code, you may be able to borrow money under your Contract using the Contract Value as the only security for the loan.
Waiver of Withdrawal Charge Rider. For an additional charge, under certain circumstances, we will waive your Withdrawal Charges.
Extra Credit Rider. For an additional cost during the first seven Contract years, the Company adds to your Contract Value an amount known as a Credit Enhancement, which is based on a percentage of any Purchase Payments made in the first Contract Year. In the past, we offered a version of this rider at no cost. All or a portion of your Credit Enhancement may be recaptured upon free look, surrender, withdrawal, or death.
0-Year or 4-Year Alternate Withdrawal Charge. For an additional cost, this rider makes available an alternative shorter withdrawal charge schedule. The withdrawal charge varies depending on the Purchase Payment age and will apply in lieu of the Contract’s seven year withdrawal charge.
Optional Living Benefits. Prior to February 1, 2010, we offered various optional living benefits that, for additional charges, offer protection against market risk (the risk that your investments may decline in value or underperform your expectations) and may guarantee a minimum lifetime income.
Advisory Fees. Deductions from your Contract Value to pay third-party advisory fees are treated as withdrawals under the Contract, but no surrender charge is assessed on such withdrawals and the deduction of advisory fees will not count toward the annual free withdrawal amount. If you elect to pay advisory fees from your Contract Value, then the deduction will reduce the death benefits and other guaranteed benefits, and may be subject to federal and state income taxes and a 10% federal penalty tax.
10
Additional Services — We offer several additional services:
Dollar Cost Averaging. You direct us to systematically transfer Contract Value among the Subaccounts and the Fixed Account on a monthly, quarterly, semiannual, or annual basis.
Asset Reallocation Option. You direct us to automatically reallocate your Contract Value to return to your original percentage investment allocations on a periodic basis.
Systematic Withdrawals. You receive regular automatic withdrawals from your Contract either monthly or quarterly, and after the first Contract Year, annually or semi-annually, provided that each payment must amount to at least $100 (unless we consent otherwise).
Fee Table
The following tables describe the fees and expenses that you will pay when buying, owning, surrendering or making withdrawals from the Contract. Please refer to your Contract specifications page for information about the specific fees you will pay each year based on the options you have elected.
The first table describes the fees and expenses that you will pay at the time that you buy the Contract, surrender or make withdrawals from the Contract, or transfer Contract value between investment options. State premium taxes may also be deducted. The fees and expenses do not reflect any advisory fees paid to financial intermediaries from your Contract Value or other assets. If such charges were reflected, the fees and expenses would be higher.
Transaction Expenses
| Charge | |
| Sales Load Imposed on Purchase Payments | None |
| Maximum Surrender Charge (as a percentage of amount withdrawn attributable to Purchase Payments) | 7%1 |
| Transfer Fee (per transfer) | None |
| 1 We also refer to this charge as a contingent deferred sales charge, withdrawal charge, and sales charge. The amount of the contingent deferred sales charge is determined by reference to how long your Purchase Payments or Bonus Credits have been held under the Contract. Free withdrawals are equal to (1) 10% of Purchase Payments, excluding any Credit Enhancements and/or Bonus Credits, in the first Contract Year, and (2) 10% of Contract Value as of the first Valuation Date of the Contract Year in each subsequent Contract Year. See “Full and Partial Withdrawals” and “Contingent Deferred Sales Charge” for more information. | |
The next table describes the fees and expenses that you will pay each year during the time that you own the Contract (not including Underlying Fund fees and expenses). If you choose to purchase an optional rider, you will pay additional charges, as shown below.
Annual Contract Expenses
| Charge | ||
| Minimum | Maximum | |
| Administrative Expenses | $301 | |
Base Contract Expenses (as a percentage of average Contract Value)2 | 1.35% | 1.60% |
Optional Benefit Expenses (as a percentage of Contract Value)3 | ||
11
| Charge | ||
| Current | Maximum | |
| Annual Stepped Up Death Benefit | 0.20% | |
4% Extra Credit4 | 0.55% | |
| Waiver of Withdrawal Charge* | 0.05% | |
| Alternate Withdrawal Charge (0-Year)* | 0.70% | |
Alternate Withdrawal Charge (4-Year)5* | 0.60%6 | |
| Net Loan Interest Charge | 2.16% | |
| 5% Guaranteed Minimum Income Benefit | 0.15% | |
| 3% Guaranteed Minimum Income Benefit | 0.30% | |
| 6% Dollar for Dollar Guaranteed Minimum Income Benefit | 0.60% | |
| 3% Guaranteed Growth Death Benefit | 0.10% | |
| 5% Guaranteed Growth Death Benefit | 0.20% | |
6% Guaranteed Growth Death Benefit7 | 0.25% | |
7% Guaranteed Growth Death Benefit7 | 0.30% | |
| Combined Annual Stepped Up Death Benefit and Guaranteed Growth Death Benefit | 0.25% | |
| Enhanced Death Benefit | 0.25% | |
| Combined Enhanced and Annual Stepped Up Death Benefit | 0.35% | |
| Combined Enhanced and Guaranteed Growth Death Benefit | 0.35% | |
| Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit | 0.40% | |
| 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit | 0.85% | |
Guaranteed Minimum Withdrawal Benefit8 | 0.45% | 1.10% |
Total Protection Rider9 | 0.85% | 1.45% |
12
| Charge | ||
| Current | Maximum | |
3% Extra Credit4 | 0.40% |
5% Extra Credit4 | 0.70% |
* Charges for these riders will continue after the Annuity Start Date if you select Annuity Options 5 or 6. 1 We call this the account administration charge in your Contract, as well as in other places in this Prospectus. An account administration charge of $30 is deducted at each Contract Anniversary and a pro rata account administration charge is deducted (1) upon full withdrawal of Contract Value; (2) upon the Annuity Start Date if one of Annuity Options 1 through 4, 7 or 8 is elected; and (3) upon payment of a death benefit. The account administration charge will be waived if your Contract Value is $50,000 or more upon the date it is to be deducted. This fee is presented as part of the Base Contract Expenses in the section entitled “Important Information You Should Consider About Your Contract” earlier in this Prospectus. 2 This charge is based on the percentage of Contract Value allocated to the Separate Account. Base Contract Expenses consist of the mortality and expense risk charge and the 0.15% annual administration charge. The administration charge is equal to an annual rate of 0.15% and is deducted daily. The mortality and expense risk charge is reduced for larger Contract Values as follows: Less than $25,000 – 1.45%; At least $25,000 but less than $100,000 – 1.30%; $100,000 or more – 1.20%. The minimum mortality and expense risk charge is deducted daily. Any mortality and expense risk charge above the minimum charge of 1.20% is deducted from your Contract Value on a monthly basis. During the Annuity Period, the mortality and expense risk charge under Annuity Options 5 and 6 is calculated and deducted in the same manner as during the accumulation phase. However, the annual mortality and expense risk charge is 1.25% under Annuity Options 1 through 4, 7 and 8, in lieu of the amounts described above and is deducted daily. The account administration charge also applies during the Annuity Period. See the discussion under “Mortality and Expense Risk Charge.” 3 If you purchase any optional riders, the charge will be calculated as a percentage of Contract Value and deducted from your Contract Value. (See the applicable rider charges in the table.) You may not select riders with total charges that exceed 1.60% of Contract Value for riders elected prior to February 1, 2010 (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider).This charge is based on the percentage of Contract Value allocated to the Separate Account. 4 The Company will deduct the charge for this rider during the seven-year period beginning on the Contract Date. 5 If the 4‑Year Alternate Withdrawal Charge Rider has not been approved in a state, a 3‑Year Alternate Withdrawal Charge Rider is available for a charge of 0.40%. See “Alternate Withdrawal Charge.” 6 The charge for the 4‑year Alternate Withdrawal Charge Rider is 0.60% if the Company issued your rider on or after January 1, 2005. However, if the Company issued your rider prior to that date, the charge is 0.55%. 7 Not available to Texas residents. 8 The Company may increase the rider charge for the Guaranteed Minimum Withdrawal Benefit Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.10% on an annual basis. Please see the discussion under “Guaranteed Minimum Withdrawal Benefit” In Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. The current charge for the rider is used in calculating the maximum rider charge of 1.60% of Contract Value (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider). 9 The Company may increase the rider charge for the Total Protection Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.45% on an annual basis. Please see the discussion under “Total Protection” in Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. The current charge for the rider is used in calculating the maximum rider charge of 1.60% of Contract Value (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider). | |
The next table below shows the minimum and maximum total operating expenses charged by the Underlying Funds you may pay periodically during the time that you own the Contract. A complete list of Underlying Funds available under the Contract, including their annual expenses, may be found in Appendix A at the back of this Prospectus.
Annual Underlying Fund Expenses
| Minimum | Maximum | |
Gross Annual Underlying Fund Operating Expenses (expenses deducted from Underlying Fund assets include management fees, distribution (12b-1) fees, service fees and other expenses) | 0.69% | 0.98% |
Net Annual Underlying Fund Operating Expenses (after contractual waivers/reimbursements)1 | 0.69% | 2.00% |
| 1 Certain of the Underlying Funds have entered into contractual expense waiver or reimbursement arrangements that reduce fund expenses during the period of the arrangement. These arrangements vary in length, and are in place at least through April 30, 2022. | ||
13
Expense Examples — These Examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include transaction expenses, the Annual Contract Expenses and annual Underlying Fund fees and expenses but do not include state premium taxes, which may be applicable to your Contract. The Examples do not reflect any advisory fees paid to financial intermediaries from your Contract Value or other assets. If such fees were reflected, the costs would be higher.
These Examples assume that you invest $100,000 in the Contract for the time periods indicated. The Examples also assume that your investment has a 5% return each year and you elect the optional benefit available for an additional charge. The first Example assumes the most expensive Annual Underlying Fund Expenses. The second Example assumes the least expensive Annual Underlying Fund Expenses. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
| Based on the Most Expensive Annual Underlying Fund Expenses | 1 Year | 3 Years | 5 Years | 10 Years |
If you surrender your Contract at the end of the applicable time period | $13,340.77 | $25,989.66 | $37,312.46 | $64,537.36 |
If you do not surrender; or if you annuitize your Contract at the end of the applicable time period | $ 7,117.66 | $20,887.34 | $34,058.71 | $64,537.36 |
| Based on the Least Expensive Annual Underlying Fund Expenses | 1 Year | 3 Years | 5 Years | 10 Years |
If you surrender your Contract at the end of the applicable time period | $10,266.32 | $17,465.72 | $23,857.33 | $41,270.54 |
If you do not surrender; or if you annuitize your Contract at the end of the applicable time period | $ 3,928.06 | $11,913.47 | $20,074.46 | $41,270.54 |
Principal Risks of Investing in the Contract
Risk of Investment Loss — The Contract involves risks, including possible loss of principal. You bear the risk of any decline in the Contract Value resulting from the performance of the Subaccounts you have chosen. Your losses could be significant. This risk could have a significant negative impact on certain benefits and guarantees under the Contract.
This Contract is not a deposit or obligation of, or guaranteed or endorsed by, any bank. This Contract is not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Short-Term Investment Risk/Withdrawal Risk — This Contract is not designed for short-term investing and is not appropriate for an investor who needs ready access to cash. If you plan to withdraw money or surrender the Contract for short-term needs, it is not be the right contract for you. A withdrawal charge may be assessed on withdrawals and surrenders, and it could be substantial. Each Purchase Payment is subject to a withdrawal charge for seven years from the date of that Purchase Payment. This means that a Purchase Payment made in year eight of the Contract will be subject to a withdrawal charge until year 15 of the Contract. If you make a withdrawal prior to age 59½, there may be adverse tax consequences, including a 10% IRS penalty tax. A withdrawal could reduce the value of certain optional benefits by an amount greater than the amount withdrawn and could result in termination of the benefit. A total withdrawal (surrender) will result in the termination of your Contract and any benefits.
The benefits of tax deferral, long-term income, and living benefit protections mean that this Contract is more beneficial to investors with a long time horizon.
Subaccount Risk — Amounts that you invest in the Subaccounts are subject to the risk of poor investment performance. You assume the investment risk. Generally, if the Subaccounts that you select make money, your Contract Value goes up, and if they lose money, your Contract Value goes down. Each Subaccount’s performance depends on the performance of its Underlying Fund. Each Underlying Fund has its own investment risks, and you
14
are exposed to the Underlying Fund’s investment risks when you invest in a Subaccount. You are responsible for selecting Subaccounts that are appropriate for you based on your own individual circumstances, investment goals, financial situation, and risk tolerance. The investment risks are described in the prospectuses for the Underlying Funds.
Managed Volatility Fund Risk — Certain Underlying Funds utilize managed volatility strategies. These risk management techniques help us manage our financial risks associated with the Contract’s guarantees, like living and death benefits, because they reduce the incidence of extreme outcomes including the probability of large gains or losses. However, these strategies can also limit your participation in rising equity markets, which may limit the potential growth of your Contract Value, and may therefore conflict with your personal investment objectives. In addition, the cost of these hedging strategies may negatively impact performance.
Purchase Payment Risk — Your ability to make subsequent Purchase Payments is subject to restrictions. We reserve the right to refuse any Purchase Payment, to further limit your ability to make subsequent Purchase Payments with advance notice, and require our prior approval before accepting Purchase Payments. There is no guarantee that you will always be permitted to make Purchase Payments.
Financial Strength and Claims-Paying Ability Risk — All guarantees under the Contract that are paid from our General Account (including under any Fixed Account option) are subject to our financial strength and claims-paying ability. If we experience financial distress, we may not be able to meet our obligations to you.
Cybersecurity and Business Disruption Risk — Our business is highly dependent upon the effective operation of our computer systems and those of our business partners, so our business is vulnerable to systems failures and cyber-attacks. Systems failures and cyber-attacks may adversely affect us, your Contract, and your Contract Value. In addition to cybersecurity risks, we are exposed to the risk that natural and man-made disasters, pandemics (like COVID-19) and catastrophes may significantly disrupt our business operations and our ability to administer the Contract. There can be no assurance that we or our service providers will be able to successfully avoid negative impacts associated with systems failures, cyber-attacks, or natural and man-made disasters, pandemics and catastrophes. For more information about these risks, see “More About the Contract – Cyber Security and Certain Business Continuity Risks.”
Enhancement Credit Risk — Expenses for a Contract with a Credit Enhancement may be higher than for a Contract without a Credit Enhancement. The amount of the Purchase Payment credit may be more than offset by the fees and charges associated with the credit. In addition, Credit Enhancements are excluded from the calculation of the optional living and death benefits.
Tax Consequences Risk — Withdrawals are generally taxable (to the extent of any earnings on the Contract), and prior to age 59½ a tax penalty may apply. In addition, even if the Contract is held for years before any withdrawal is made, the withdrawals are taxable as ordinary income rather than capital gains.
Advisory Fee Deduction Risk — If you elect to pay third-party advisory fees from your Contract Value, then the deduction will reduce the death benefits and other guaranteed benefits, and may be subject to federal and state income taxes and a 10% federal penalty tax.
Information About the Company, the Separate Account, and the Underlying Funds
Security Benefit Life Insurance Company — Security Benefit Life Insurance Company is a life insurance company organized under the laws of the State of Kansas. It was organized originally as a fraternal benefit society and commenced business on February 22, 1892. The Company’s indirect parent, Eldridge Industries, LLC, owns, operates and invests in businesses across a wide range of sectors and is ultimately controlled by Todd L. Boehly.
The Company offers life insurance policies and annuity contracts, as well as financial and retirement services. It is admitted to do business in the District of Columbia, and in all states except New York. As of the end of 2020, the Company had total assets under management of approximately $40.6 billion. The Company’s address is One Security Benefit Place, Topeka, Kansas 66636-0001.
15
The Principal Underwriter for the Contracts in Security Distributors, LLC (“SDL”), One Security Benefit Place, Topeka, Kansas 66636-0001. SDL, a wholly-owned subsidiary of the Company, is registered as a broker-dealer with the SEC and is a member of the Financial Industry Regulatory Authority (“FINRA”).
We are obligated to pay all amounts promised to you under your Contract. All guarantees under the Contract are subject to our financial strength and claims-paying capabilities. We provide information about our financial strength in reports filed with state insurance departments. You may obtain information about us by contacting us using the information stated on the cover page of this Prospectus, visiting our website at www.securitybenefit.com or visiting the SEC’s website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department.
Published Ratings — The Company may from time to time publish in advertisements, sales literature and reports to Owners, the ratings and other information assigned to it by one or more independent rating organizations such as A.M. Best Company and Standard & Poor’s. The purpose of the ratings is to reflect the financial strength and/or claims-paying ability of the Company and should not be considered as bearing on the investment performance of assets held in the Separate Account. Each year A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best’s Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, the claims-paying ability of the Company as measured by Standard & Poor’s Insurance Ratings Services may be referred to in advertisements or sales literature or in reports to Owners. These ratings, which are subject to change, are opinions as to an operating insurance company’s financial capacity to meet the obligations of its insurance and annuity policies in accordance with their terms. Such ratings do not reflect the investment performance of the Separate Account or the degree of risk associated with an investment in the Separate Account.
Separate Account — The Company established the Separate Account under Kansas law on June 26, 2000. The Contract provides that the income, gains, or losses of the Separate Account, whether or not realized, are credited to or charged against the assets of the Separate Account without regard to other income, gains, or losses of the Company. Kansas law provides that assets in the Separate Account attributable to the reserves and other liabilities under a contract may not be charged with liabilities arising from any other business that the insurance Company conducts if, and to the extent, the contract so provides. The Contract contains a provision stating that assets held in the Separate Account may not be charged with liabilities arising from other business that the Company conducts. The Company owns the assets in the Separate Account and is required to maintain sufficient assets in the Separate Account to meet all Separate Account obligations under the Contract. Such Separate Account assets are not subject to claims of the Company’s creditors.
The Contract provides that the income, gains and losses, whether or not realized, are credited to, or charged against, the assets of each Subaccount without regard to the income, gains or losses in the other Subaccounts. Each Subaccount invests exclusively in shares of a corresponding Underlying Fund. The Company may in the future establish additional Subaccounts of the Separate Account, which may invest in other Underlying Funds or in other securities or investment vehicles. See “Changes to Investments.”
The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”). Registration with the SEC does not involve supervision by the SEC of the administration or investment practices of the Separate Account or the Company.
Underlying Funds — Each Underlying Fund is an open-end management investment company or a series thereof and is registered with the SEC under the 1940 Act. Such registration does not involve supervision by the SEC of the investments or investment policies of the Underlying Funds. Each Underlying Fund has its own investment objectives and policies.
As described in more detail in the Underlying Fund prospectuses, certain Underlying Funds employ managed volatility strategies that are intended to reduce the Underlying Fund’s overall volatility and downside risk, and those Underlying Funds may help us manage the risks associated with providing guaranteed benefits under the Contract. Investing in Underlying Funds with managed volatility strategies may impact the value of certain guaranteed rider benefits. During rising markets, the strategies employed to manage volatility could result in your Contract Value rising less than would have been the case if you had been invested in an Underlying Fund without a managed volatility strategy. In addition, the cost of these strategies may negatively impact performance. On the other hand, investing in an Underlying Fund with a managed volatility strategy may be helpful in a declining market with higher market
16
volatility because the strategy will often reduce your equity exposure in such circumstances. In such cases, your Contract Value may decline less than would have been the case if you had not invested in an Underlying Fund with a managed volatility strategy.
Certain Underlying Funds invest substantially all of their assets in other funds (“funds of funds”). If you allocate Contract Value to a Subaccount that invests in a fund of funds, you will indirectly bear the fees and expenses of both the top-tier and bottom-tier funds, which will reduce your investment return. In addition, funds of funds may have higher expenses than funds that invest directly in debt or equity securities or other assets.
One of the Underlying Funds is a money market fund. There is no assurance that this Underlying Fund will be able to maintain a stable net asset value per share. In addition, during extended periods of low interest rates, and partly as a result of asset-based separate account charges, the yield on the corresponding Subaccount may become low and possibly negative.
Shares of the Underlying Funds currently are not publicly traded. They are available only as investment options in variable annuity or variable life insurance policies issued by life insurance companies or in some cases, through participation in certain qualified pension or retirement plans. Certain Underlying Funds have similar investment objectives and policies to other mutual funds managed by the same adviser. The investment results of the Underlying Funds, however, may be higher or lower than the results of such other funds. There can be no assurance, and no representation is made, that the investment results of any of the Underlying Funds will be comparable to the investment results of any other fund, even if both the Underlying Fund and the other fund are managed by the same adviser.
Information regarding each Underlying Fund, including its (i) name, (ii) type or investment objective, (iii) invest-ment adviser and any sub-investment adviser, (iv) current expenses, and (v) performance is available in an appendix to this Prospectus. See Appendix A: Underlying Funds Available Under the Contract and Optional Rider Investment Restrictions. We cannot assure that any Underlying Fund will achieve its objective. Each Underlying Fund has issued a prospectus that contains more detailed information about the Underlying Fund. Read these prospectuses carefully before investing. Paper or electronic copies of the Underlying Fund prospectuses may be obtained by calling us at 1-800-888-2461, e-mailing us at SBLProspectusRequests@securitybenefit.com or visiting www.dfinview.com/SecurityBenefit?site=SBL.
Due to the number of the Contract’s Underlying Funds, the number of charge-free transfer opportunities between and among the Underlying Funds and the fact that some Underlying Funds may have essentially the same investment strategy, it cannot be ruled out that the Owner of a Contract might be treated as the owner of a pro rata share of the Underlying Funds to which the Contract Value is allocated and taxed currently on income and gains attributable to the Underlying Funds.
Amounts that you allocate to the Subaccounts under a Contract will vary based on investment performance of the Subaccounts you select for investment. No minimum amount of Contract Value is guaranteed.
When you are ready to receive annuity payments, the Contract provides several options for annuity payments. See “Annuity Options.”
The Underlying Funds currently available under the Contract are listed and described in Appendix A to this Prospectus, entitled “Underlying Funds Available Under the Contract.”
Certain Payments the Company and its Affiliates Receive with Regard to the Underlying Funds. The Company (and its affiliates) receives payments from some of the Underlying Funds, their advisers, sub‑advisers, and distributors, or affiliates thereof. The Company negotiates these payments and thus they differ by Underlying Fund (sometimes substantially), and the amounts the Company (or its affiliates) receives can be significant. Where these payments are made, the advisers, sub‑advisers, or distributors (or affiliate thereof) of those Underlying Funds have increased access to the Company and its affiliates involved in the distribution of the Contract. Proceeds from these payments can be used by the Company for any corporate purpose, including payment of expenses that the Company and its affiliates incur in promoting, marketing, and administering the Contract and in the Company’s role as an intermediary for the Underlying Funds. The Company and its affiliates may profit from these payments.
12b‑1 Fees. The Company and/or its subsidiary, SDL, the principal underwriter for the Contract, receive 12b‑1 fees from certain of the Underlying Funds that are based on a percentage of the average daily net assets of the particular Underlying Fund attributable to the Contract and certain other variable insurance contracts issued or administered by the Company (or its affiliates). 12b‑1 fees are paid out of Underlying Fund assets as part of the Underlying Fund’s total annual operating expenses. Payments made out of Underlying Fund assets will reduce the amount of assets that would otherwise be available for investment, and will reduce the Underlying Funds’ investment
17
returns. Currently, the Company and SDL receive 12b‑1 fees ranging from 0% to 0.35% of the average net assets of the Contract (and certain other variable insurance contracts issued or administered by the Company (or its affiliates)) invested in Underlying Funds that pay 12b-1 fees.
Payments From Underlying Fund Service Providers. The Company (or its affiliates) also receives payments from the investment advisers, sub‑advisers, or distributors (or affiliates thereof) of certain of the Underlying Funds. These payments may be derived, in whole or in part, from the investment advisory fee deducted from Underlying Fund assets. Owners, through their indirect investment in the Underlying Funds, bear the costs of these investment advisory fees (see the Underlying Funds’ prospectuses for more information). These payments usually are based on a percentage of the average daily net assets of the particular Underlying Fund attributable to the Contract and to certain other variable insurance contracts issued or administered by the Company (or its affiliates). Currently, the Company and its affiliates receive payments that range from 0.10% to 0.60% of the average net assets of the Contract (and certain other variable insurance contracts issued or administered by the Company (or its affiliates)) invested in an Underlying Fund.
Other Payments. In the case of certain of the Underlying Funds, the Underlying Fund’s adviser, sub‑adviser, distributor, or affiliates provide the Company (or its affiliates) and/or broker-dealers that sell the Contract (“selling firms”) with wholesaling services to assist the Company in the distribution of the Contract, may pay the Company (or its affiliates) and/or selling firms amounts to participate in their national and regional sales conferences and meetings with the sales desks, and/or provide the Company (or its affiliates) and/or selling firms with occasional gifts, meals, tickets, or other compensation as an incentive to market the Underlying Funds when offering or distributing the Contract and to cooperate with their promotional efforts for their Underlying Funds.
For details about the compensation payments the Company makes in connection with the sale of the Contract, see “Sale of the Contract.”
Total Payments. Currently, the Company and its affiliates, including SDL, receive payments from the Underlying Funds, their advisers, sub‑advisers, and distributors, or affiliates thereof in the form of 12b‑1 fees, and/or other payments described above that range in total from a minimum of 0.25% to a maximum of 0.60% of the average net assets of the Contract (and certain other variable insurance contracts issued or administered by the Company (or its affiliates)) invested in an Underlying Fund.
Selection of Underlying Funds. The Company selects the Underlying Funds offered through the Contract based on several criteria, including asset class coverage, the strength of the investment adviser’s (or sub‑adviser’s) reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor the Company considers during the selection process is whether the Underlying Fund, its adviser, its sub‑adviser, or an affiliate will make payments to the Company or its affiliates, as described above. These payment arrangements may create an incentive for us to select funds that pay us higher amounts. The Company also considers whether the Underlying Fund’s adviser is one of its affiliates, and whether the Underlying Fund, its adviser, sub‑adviser, or distributor (or an affiliate) can provide marketing and distribution support for sale of the Contract. The Company reviews each Underlying Fund periodically after it is selected. Upon review, the Company may remove an Underlying Fund or restrict allocation of additional Purchase Payments and/or transfers of Contract Value to an Underlying Fund if it determines the Underlying Fund no longer meets one or more of the criteria and/or if the Underlying Fund has not attracted significant assets. The Company does not recommend or endorse any particular Underlying Fund, and does not provide investment advice.
Services and Administration — The Company has primary responsibility for all administration of the Contracts and the Separate Account. The Company has entered into an administrative services agreement with SE2, LLC (“SE2”), 5801 SW 6th Avenue, Topeka, Kansas 66636, whereby SE2 provides certain business process outsourcing services with respect to the Contracts. SE2 may engage other service providers to provide certain administrative functions. SE2 is an affiliate of the Company.
Charges and Deductions
Certain charges will be deducted in connection with the Contract, as described below.
18
Transaction Expenses
Contingent Deferred Sales Charge — We also refer to this charge as the surrender charge, sales charge, or withdrawal charge in this Prospectus. The Company does not deduct sales charges from Purchase Payments before crediting them to your Contract Value. However, except as set forth below, the Company may assess a contingent deferred sales charge (which may also be referred to as a “withdrawal charge”) on a full or partial with-drawal, including systematic withdrawals, depending on how long your Purchase Payments have been held under the Contract. Purchase Payments include any Bonus Credits for purposes of assessing the withdrawal charge. As such, any Bonus Credits are subject to withdrawal charges on the same basis as Purchase Payments in the event of a full or partial withdrawal of any such Bonus Credits. Purchase Payments do not include Credit Enhancements for the purpose of assessing the withdrawal charge.
The Company will waive the withdrawal charge on withdrawals to the extent that total withdrawals in a Contract Year, including systematic withdrawals, do not exceed the free withdrawal amount. The free withdrawal amount is equal in the first Contract Year, to 10% of Purchase Payments, excluding any Credit Enhancements and/or Bonus Credits, made during the year and for any subsequent Contract Year, to 10% of Contract Value as of the first Valuation Date of that Contract Year.
The withdrawal charge applies to the portion of any withdrawal, consisting of Purchase Payments and/or Bonus Credits that exceed the free withdrawal amount. The withdrawal charge does not apply to withdrawals of earnings. For purposes of determining the applicability of a withdrawal charge, withdrawals are considered to come first from Purchase Payments, then Bonus Credits in the order they were received and then from earnings. Free withdrawal amounts do not reduce Purchase Payments or Bonus Credits for the purpose of determining future withdrawal charges. Also, under the Guaranteed Minimum Withdrawal Benefit and Total Protection Riders, withdrawals of up to the Annual Withdrawal Amount are not subject to a withdrawal charge but reduce the Free Withdrawal amount otherwise available in that Contract Year.
The amount of the charge will depend on how long your Purchase Payments and/or Bonus Credits have been held under the Contract. Each Purchase Payment and Bonus Credit is considered to have a certain “age,” depending on the length of time since the Purchase Payment or Bonus Credit was effective. A Purchase Payment or Bonus Credit is “age one” in the year beginning on the date the Purchase Payment or Bonus Credit is applied by the Company and increases in age each year thereafter. The withdrawal charge is calculated according to the following schedule:
| Purchase Payment or Bonus Credit Age (in years) | Withdrawal Charge |
| 1 | 7% |
| 2 | 7% |
| 3 | 6% |
| 4 | 5% |
| 5 | 4% |
| 6 | 3% |
| 7 | 2% |
| 8 and over | 0% |
The Company will deduct the withdrawal charge from your withdrawal payment, unless you request that the charge be deducted from remaining Contract Value and provided there is sufficient Contract Value available. If we deduct the withdrawal charge from your remaining Contract Value, the withdrawal charge is also subject to a withdrawal charge.
Example of Withdrawal Charge Deducted from Withdrawal Payment and Deducted from Remaining Contract Value. Assume:
| (i) | A withdrawal of $20,000 is requested in Contract Year 2 |
| (ii) | The remaining free withdrawal amount in Contract Year 2 is $10,000 |
19
If the Owner requests that the withdrawal charge be deducted from the withdrawal payment, the withdrawal charge would be $700, calculated as follows:
(Withdrawal Amount – Remaining Free Withdrawal Amount) x Withdrawal Charge % =
($20,000 - $10,000) x 7% = $700
The $700 withdrawal charge is deducted from the withdrawal payment before the Company sends it to the Owner. The Contract Value decreases by $20,000 and the Owner receives a total payment of $19,300 ($20,000 - $700).
If the Owner requests that the withdrawal charge be deducted from the remaining Contract Value, the withdrawal charge would be $752.69, calculated as follows:
(Withdrawal Amount - Remaining Free Withdrawal Amount) x Withdrawal Charge % =
1 – Withdrawal Charge %
($20,000 - $10,000) x (7% / (1 - 7%)) =
$10,000 x (7% / 93%) =
$10,000 x 7.5269% = $752.69
The $752.69 withdrawal charge is deducted from the Contract Value. The Contract Value decreases by $20,752.69 ($20,000 + $752.69) and the Owner receives a total payment of $20,000.
In no event will the amount of any withdrawal charge, when added to such charge previously assessed against any amount withdrawn from the Contract, exceed 7% of Purchase Payments and Bonus Credits paid under the Contract. In addition, no withdrawal charge will be imposed upon: (1) payment of death benefit proceeds; or (2) Annuity Options that provide for payments for life, or a period of at least seven years. The Company will assess the withdrawal charge against the Subaccounts and the Fixed Account in the same proportion as the withdrawal proceeds are allocated.
The withdrawal charge is designed to reimburse the Company for costs and other expenses associated with the promotion and sales of the Contract, such as paying sales commissions to broker-dealers. It is expected that actual expenses will be greater than the amount of the withdrawal charge. To the extent that all sales expenses are not recovered from the charge, such expenses may be recovered from other charges, including amounts derived indirectly from the charge for mortality and expense risk.
Premium Tax Charge — Various states and municipalities impose a tax on premiums on annuity contracts received by insurance companies. Whether or not a premium tax is imposed will depend upon, among other things, the Owner’s state of residence, the Annuitant’s state of residence, and the insurance tax laws and the Company’s status in a particular state. The Company assesses a premium tax charge to reimburse itself for premium taxes that it incurs in connection with a Contract. The Company deducts this charge when due, typically upon the Annuity Start Date or payment of a Purchase Payment. The Company may deduct premium tax upon a full or partial withdrawal (including a systematic withdrawal or withdrawal made to pay the fees of your investment adviser) if a premium tax has been incurred and is not refundable. Currently, in Maine, South Dakota, and Wyoming the Company deducts the premium tax from Purchase Payments applied to a Non‑Qualified Contract. Those amounts are currently 2.00%, 1.25%, and 1.00%, respectively. Partial withdrawals, including systematic withdrawals, may be subject to a premium tax charge if a premium tax is incurred on the withdrawal by the Company and is not refundable. The Company reserves the right to deduct premium taxes when due or any time thereafter. Premium tax rates currently range from 0% to 3.5%, but are subject to change by a governmental entity.
Deduction of Advisory Fees — You may enter into a separate investment advisory agreement with an investment adviser that provides asset allocation services in connection with your Contract. We are not affiliated with those investment advisers, and we do not supervise or perform due diligence on investment advisers who may provide such asset allocation services. By entering into an agreement with the investment adviser for asset allocation services and executing the Company’s investment adviser authorization form, you authorize the investment adviser to allocate your Contract Value among certain Subaccounts and make changes in your allocations from time to time. You also authorize us to deduct amounts from your Contract Value to pay the investment adviser’s fee in the
20
amounts and at the times directed by the investment adviser in writing. You may terminate your investment adviser authorization at any time by sending written and signed notice of termination to our Administrative Office or submitting an electronic notice of termination.
We will treat each deduction as a partial withdrawal from your Contract. However, no surrender charges will apply to such deductions, and the deductions will not count toward the annual free withdrawal amount. The investment advisory fee is paid to the investment adviser and is not a Contract charge retained by us. For Non-Qualified Contracts, all or a portion of the charges deducted from your Contract Value to pay the investment adviser’s fees may be subject to federal and state income tax and a 10% federal penalty tax.
The investment advisory fee is described more fully in the disclosure statement provided by the investment adviser. You should consult with your representative for details regarding the investment advisory services, including fees and expenses. A tax-free partial exchange may become taxable if an advisory fee is paid from your Contract Value within 180 days of the partial exchange. Consult your tax adviser for advice concerning tax-free partial exchanges.
Withdrawals from your Contract Value to pay advisory fees will reduce the death benefits and other guaranteed benefits under the Contract. See “Death Benefit” for an example of how withdrawals to pay advisory fees impact the Contract Value and standard death benefit.
We have entered into an agreement with an investment adviser, Vantage Advisors, LLC, to provide asset allocation services in connection with the Contract. In providing such asset allocation services, Vantage Advisors currently uses the Ibbotson Asset Allocation Program, a proprietary asset allocation and rebalancing program developed by Ibbotson Associates Advisors, LLC. We pay Vantage Advisors a monthly fee, which is based on the aggregate Contract Value of those Contracts for which Owners have retained Vantage Advisors to provide such services. Vantage Advisors has agreed that it will not charge Owners for its asset allocation services provided in connection with the Contract for so long as its agreement with the Company is in effect. You should consult with your representative for details regarding Vantage Advisors’ services.
Annual Contract Expenses
Administrative Expenses
Account Administration Charge — The Company deducts an account administration charge of $30.00 from Contract Value at each Contract Anniversary. The Company will waive the charge if your Contract Value is $50,000 or more on the date the charge is to be deducted. The Company will deduct a pro rata account administration charge (1) upon a full withdrawal; (2) upon the Annuity Start Date if one of the Annuity Options 1 through 4, 7 or 8 is chosen; and (3) upon payment of a death benefit. This charge is not deducted during the Annuity Period if one of the Annuity Options 1 through 4, 7 or 8 is chosen. The purpose of the charge is to compensate the Company for the expenses associated with administration of the Contract.
Base Contract Expenses
Mortality and Expense Risk Charge — The Company deducts a charge for mortality and expense risks assumed by the Company under the Contract. The Company deducts a daily minimum charge equal to 1.20%, on an annual basis, of each Subaccount’s average daily net assets. If you are subject to mortality and expense risk charge above the minimum charge, the Company deducts the excess amount from your Contract Value on a monthly basis. The mortality and expense risk charge amount is determined each month by reference to the amount of your Contract Value at the time the charge is deducted, as set forth in the table below.
| Contract Value | Annual Mortality and Expense Risk Charge |
| Less than $25,000 | 1.45% |
| At least $25,000 but less than $100,000 | 1.30% |
| $100,000 or more | 1.20% |
During the Annuity Period, the mortality and expense risk charge is as follows:
| Annuity Option | Annual Mortality and Expense Risk Charge |
| Annuity Options 5 & 6 | See table immediately above. |
| Annuity Options 1-4, 7 & 8 | 1.25% |
The expense risk is the risk that the Company’s actual expenses in issuing and administering the Contract and operating the Subaccounts will be more than the charges assessed for such expenses. The mortality risk borne by the Company is the risk that Annuitants, as a group, will live longer than the Company’s actuarial tables predict. In this event, the Company guarantees that annuity payments will not be affected by a change in mortality experience that results in the payment of greater annuity income than assumed under the Annuity Options in the Contract. The
21
Company also assumes a mortality risk in connection with the death benefit under the Contract (i.e., for deaths occurring sooner than the Company’s actuarial tables predict).
The Company may ultimately realize a profit from this charge to the extent it is not needed to cover mortality and administrative expenses, but the Company may realize a loss to the extent the charge is not sufficient. The Company may use any profit derived from this charge for any lawful purpose, including distribution expenses. See “Determination of Contract Value” for more information about how the Company deducts the mortality and expense risk charge.
Administration Charge — The Company deducts a daily administration charge equal to an annual rate of 0.15% of each Subaccount’s average daily net assets. The purpose of this charge is to compensate the Company for the expenses associated with administration of the Contract and operation of the Subaccounts.
The Company assesses the administration charge in order to facilitate making certain Underlying Funds available as investment options under the Contract. The Company applies the fee on all Subaccounts, but may impose a higher fee on Subaccounts that we add in the future that invest in Underlying Funds that do not provide the Company or its affiliates with the amount of revenue it requires in order for it to meet its revenue targets. See “Certain Payments the Company and its Affiliates Receive With Regard to the Underlying Funds” for more information on payments the Company and its affiliates may receive from the Underlying Funds and their affiliates. These payments may be used for any corporate purpose, including payment of expenses that the Company and its affiliates incur in promoting, marketing, and administering the Contract and, in its role as intermediary, the Underlying Funds. The Company may profit from the administration charge, and may use any profit derived from this fee for any lawful purpose, including distribution expenses. This charge continues during the Annuity Period.
Loan Interest Charge — The Company charges an effective annual interest rate on a loan that will never be greater than an amount equal to 5.16% plus the total charges for riders you have selected. The Company also will credit the amount in the Loan Account with an effective annual interest rate equal to the 3.0%. The net cost of a loan is the interest rate charged by the Company less the interest rated credited.
Other Charges — The Company may charge the Separate Account or the Subaccounts for the federal, state, or local taxes incurred by the Company that are attributable to the Separate Account or the Subaccounts, or to the operations of the Company with respect to the Contract, or that are attributable to payment of premiums or acquisition costs under the Contract. No such charge is currently assessed. See “Tax Status of the Company and the Separate Account” and “Charge for the Company’s Taxes.”
Variations in Charges — The Company may reduce or waive the amount of the contingent deferred sales charge and certain other charges for a Contract where the expenses associated with the sale of the Contract or the administrative and maintenance costs associated with the Contract are reduced for reasons such as the amount of the initial Purchase Payment or projected Purchase Payments or the Contract is sold in connection with a group or sponsored arrangement.
Optional Rider Charges — In addition to the charges and deductions discussed above, you may purchase certain optional riders under the Contract. The Company makes each rider available only at issue.
The Company deducts a monthly charge from Contract Value for any riders elected by the Owner. The Company will deduct the monthly rider charge from Contract Value beginning on the Contract Date and ending on the Annuity Start Date if you elect one of Annuity Options 1 through 4, 7 or 8. If you elect Annuity Option 5 or 6, the Company will deduct the monthly rider charge for the life of the Contract if you purchase the Waiver of Withdrawal Charge Rider or the 0-Year or 4-Year Alternate Withdrawal Charge Rider. Thus, the Company may deduct certain rider charges during periods where no benefits are provided or payable. The charge for the Extra Credit Rider, however, is deducted only during the seven-year period beginning on the Contract Date. The amount of each rider charge is equal to a percentage, on an annual basis, of your Contract Value. Each rider and its charge are listed below. (You may not select riders with total charges in excess of 1.60% of Contract Value, for riders elected prior to February 1, 2010.)
Riders are no longer available for purchase. For more information on riders that were available for purchase only prior to February 1, 2010, please see Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010 and Appendix C – Automatic Bonus Credit Rider.
22
Optional Rider Expenses (as a percentage of Contract Value) | ||
| Annual Rider Charge | ||
| Current | Maximum | |
4% Extra Credit1 | 0.55% | |
Annual Stepped Up Death Benefit | 0.20% | |
Waiver of Withdrawal Charge* | 0.05% | |
Alternate Withdrawal Charge (0-Year)* | 0.70% | |
Alternate Withdrawal Charge (4-Year)2* | 0.60%3 | |
3% Guaranteed Minimum Income Benefit | 0.15% | |
5% Guaranteed Minimum Income Benefit | 0.30% | |
6% Dollar for Dollar Guaranteed Minimum Income Benefit | 0.60% | |
3% Guaranteed Growth Death Benefit | 0.10% | |
5% Guaranteed Growth Death Benefit | 0.20% | |
6% Guaranteed Growth Death Benefit4 | 0.25% | |
7% Guaranteed Growth Death Benefit4 | 0.30% | |
Combined Annual Stepped Up and Guaranteed Growth Death Benefit | 0.25% | |
Enhanced Death Benefit | 0.25% | |
Combined Enhanced and Annual Stepped Up Death Benefit | 0.35% | |
Combined Enhanced and Guaranteed Growth Death Benefit | 0.35% | |
Combined Enhanced, Annual Stepped Up and Guaranteed Growth Death Benefit | 0.40% | |
6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit | 0.85% | |
Guaranteed Minimum Withdrawal Benefit5 | 0.45% | 1.10% |
Total Protection6 | 0.85% | 1.45% |
3% Extra Credit1 | 0.40% | |
5% Extra Credit1 | 0.70% | |
* Charges for these riders will continue after the Annuity Start Date if you select Annuity Option 5 or 6. 1 The Company will deduct the charge for this rider during the seven-year period beginning on the Contract Date. 2 If the 4‑Year Alternate Withdrawal Charge Rider has not been approved in a state, a 3‑Year Alternate Withdrawal Charge Rider is available for a charge of 0.40%. See “Alternate Withdrawal Charge.” 3 The charge for the 4‑year Alternate Withdrawal Charge Rider is 0.60% if the Company issues your Rider on or after January 1, 2005. However, if the Company issued your Rider prior to that date, the charge is 0.55%. 4 Not available to Texas residents. 5 The Company may increase the rider charge for the Guaranteed Minimum Withdrawal Benefit Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.10% on an annual basis. Please see the discussion under “Guaranteed Minimum Withdrawal Benefit” In Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. The current charge for the rider is used in calculating the maximum rider charge of 1.60% of Contract Value (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider). 6 The Company may increase the rider charge for the Total Protection Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.45% on an annual basis. Please see the discussion under “Total Protection” in Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. The current charge for the rider is used in calculating the maximum rider charge of 1.60% of Contract Value (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider). | ||
23
Guarantee of Certain Charges — The Company guarantees that: (1) the charge for mortality and expense risks will not exceed an annual rate of 1.45% (1.25% during the Annuity Period) of each Subaccount’s average daily net assets; (2) the administration charge will not exceed an annual rate of 0.15% of each Subaccount’s average daily net assets; and (3) the account administration charge will not exceed $30 per year.
Underlying Fund Expenses — Each Subaccount of the Separate Account purchases shares at the net asset value of the corresponding Underlying Fund. Each Underlying Fund’s net asset value reflects the investment advisory fee and other expenses that are deducted from the assets of the Underlying Fund. These fees and expenses are not deducted from the Subaccounts, but are paid from the assets of the corresponding Underlying Fund. As a result, the Owner indirectly bears a pro rata portion of such fees and expenses. The advisory fees and other expenses, if any, which are more fully described in each Underlying Fund’s prospectus, are not specified or fixed under the terms of the Contract, and may vary from year to year.
The Contract
General — The Company issues the Contract offered by this Prospectus. It is a flexible purchase payment deferred variable annuity. To the extent that you allocate all or a portion of your Purchase Payments to the Subaccounts, the Contract is significantly different from a fixed annuity contract in that it is the Owner under a Contract who assumes the risk of investment gain or loss rather than the Company. When you are ready to begin receiving annuity payments, the Contract provides several Annuity Options under which the Company will pay periodic annuity payments on a variable basis, a fixed basis or both, beginning on the Annuity Start Date. The amount that will be available for annuity payments will depend on the investment performance of the Subaccounts to which you have allocated Purchase Payments and the amount of interest credited on Contract Value that you have allocated to the Fixed Account.
The Contract is available for purchase by an individual as a non-tax qualified contract (“Non‑Qualified Contract”). The Contract is also eligible for purchase in connection with certain tax qualified retirement plans that meet the requirements of Section 402A, 403(b), 408, or 408A of the Internal Revenue Code (“Qualified Plan”). Certain federal tax advantages are currently available to retirement plans that qualify as (1) annuity purchase plans of public school systems and certain tax-exempt organizations under Section 403(b), or (2) traditional and Roth individual retirement accounts or annuities, including traditional IRAs established by an employer under a simplified employee pension plan or a SIMPLE IRA plan, under Section 408. Joint Owners are permitted only on a Contract issued pursuant to a Non‑Qualified Contract. If you are purchasing the Contract as an investment vehicle for a Section 402A, 403(b), 408, or 408A Qualified Plan, you should consider that the Contract does not provide any additional tax advantages beyond those already available through the Qualified Plan. However, the Contract does offer features and benefits in addition to providing tax deferral that other investments may not offer, including death benefit protection for your beneficiaries and annuity options which guarantee income for life. You should consult with your financial professional as to whether the overall benefits and costs of the Contract are appropriate considering your circumstances.
Note that for Contracts issued to Massachusetts residents on or after January 1, 2009, a unisex Massachusetts-approved Contract will be issued without regard to where the application was signed.
Important Information About Your Benefits Under the Contract — The benefits under the Contract are paid by us from our General Account assets and/or your Contract Value held in the Separate Account. It is important that you understand that payment of benefits from the Separate Account is not guaranteed and depends upon certain factors discussed below.
Assets in the Separate Account. Your Contract permits you to allocate Purchase Payments and Contract Value to various Subaccounts. You bear all of the investment risk for allocations to the Subaccounts. Your Contract Value in the Subaccounts is part of the assets of the Separate Account. These assets are segregated and cannot be charged with liabilities arising from any other business that we may conduct.
Assets in the General Account. Your Contract may permit you to allocate Purchase Payments and Contract Value to the Fixed Account. Amounts allocated to the Fixed Account, plus any guarantees under the Contract that exceed your Contract Value (such as those associated with the guaranteed death benefit and any enhanced death benefits provided by rider, or a guaranteed minimum income benefit rider), are paid from our General Account. We issue other types of insurance policies and financial products as well, and we pay our obligations under these products from our assets in the General Account.
24
Any amounts that we are obligated to pay under the Contract from the General Account are subject to our financial strength and claims-paying ability. An insurance company’s financial strength and claims-paying ability may be affected by, among other factors, adverse market developments. Adverse market developments may result in, among other things, realized losses on General Account investments, unrealized losses on such investments (which may or may not result in accounting impairments), increased reserve requirements, and a reduction of capital both absolutely and relative to minimum, regulatory required capital (some of which are cash items and some of which are non-cash items). Adverse market developments are an inherent risk to our, and any insurer’s, General Account.
Application for a Contract — If you wish to purchase a Contract, you may submit an application and an initial Purchase Payment to the Company, as well as any other form or information that the Company may require. The Company reserves the right to reject an application or Purchase Payment for any reason, subject to the Company’s underwriting standards and guidelines and any applicable state or federal law relating to nondiscrimination.
The maximum age of an Owner or Annuitant for which a Contract will be issued is age 90. If there are Joint Owners or Annuitants, the maximum issue age will be determined by reference to the older Owner or Annuitant.
Purchase Payments — The minimum initial Purchase Payment for the purchase of a Contract is $10,000. Thereafter, you may choose the amount and frequency of Purchase Payments, except that the minimum subsequent Purchase Payment is $500. The minimum subsequent Purchase Payment if you elect an Automatic Investment Program is $50. The Company may reduce the minimum Purchase Payment requirement under certain circum-stances. The Company will not accept without prior Company approval aggregate Purchase Payments in an amount that exceeds $1,000,000 under any variable annuity contract(s) issued by the Company for which you are an Owner and/or Joint Owner. The Company has the right to refuse any Purchase Payment.
The Company will apply the initial Purchase Payment not later than the end of the second Valuation Date after the Valuation Date it is received by the Company, in good order. In this regard “good order” means that the Purchase Payment is preceded or accompanied by an application that contains sufficient information to establish an account and properly credit such Purchase Payment. The application form will be provided by the Company. If you submit your application and/or initial Purchase Payment to your registered representative, the Company will not begin processing the application and the initial Purchase Payment until the Company receives them from your represen-tative’s broker-dealer.
Sometimes the Purchase Payment is not preceded by or accompanied by a complete application. The application includes your affirmative consent permitting the Company to hold your initial Purchase Payment beyond five Valuation Dates in its effort to complete your application. If your application is incomplete, and the Company is unable to resolve the problem within five Valuation Dates, the Company will notify you of the reasons for the delay. If you affirmatively revoke the consent given with your application to hold your initial Purchase Payment pending resolution of the problem, we will return your Purchase Payment. Otherwise, the Purchase Payment will be applied not later than the second Valuation Date after the Valuation Date the problem is resolved.
The Company will credit subsequent Purchase Payments as of the end of the Valuation Period in which they are received by the Company; however, subsequent Purchase Payments received at or after close of a Valuation Date (normally 3:00 p.m. Central time) will be effected at the Accumulation Unit value determined on the following Valuation Date. See “Cut-Off Times.” In addition, any such Purchase Payment will not be processed until it is in good order. In this regard, “good order” means that the Purchase Payment is preceded or accompanied by sufficient information to properly credit such Purchase Payment. Purchase Payments after the initial Purchase Payment may be made at any time prior to the Annuity Start Date, so long as the Owner is living. Subsequent Purchase Payments under a Qualified Plan may be limited by the terms of the plan and provisions of the Internal Revenue Code. Subsequent Purchase Payments may be paid under an Automatic Investment Program. The initial Purchase Payment required must be paid before the Company will accept the Automatic Investment Program. If you submit a subsequent Purchase Payment to your registered representative, the Company will not begin processing the Purchase Payment until the Company receives it from your representative’s broker-dealer.
If mandated under applicable law, the Company may be required to reject a Purchase Payment. The Company also may be required to provide additional information about an Owner’s account to government regulators. In addition, the Company may be required to block an Owner’s account and thereby refuse to pay any request for transfers, full or partial withdrawals (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser), or death benefits until instructions are received from the appropriate regulator.
25
Allocation of Purchase Payments — In an application for a Contract, you select the Subaccounts or the Fixed Account to which Purchase Payments will be allocated. Purchase Payments will be allocated according to your instructions contained in the application or more recent instructions received, if any, except that no Purchase Payment allocation is permitted that would result in less than $25.00 per payment being allocated to any one Subaccount or the Fixed Account. The allocations must be a whole dollar amount or a whole percentage. Available allocation alternatives include the Subaccounts and the Fixed Account; provided that the Fixed Account is available under your Contract.
You may change the Purchase Payment allocation instructions by submitting a proper written request to the Company’s Administrative Office. A proper change in allocation instructions will be effective upon receipt by the Company at its Administrative Office and will continue in effect until you submit a change in instructions to the Company. You may make changes in your Purchase Payment allocation and changes to an existing Dollar Cost Averaging or Asset Reallocation Option (each, an “Automatic Allocation Program”) by telephone provided the proper form is properly completed, signed, and received by the Company. Changes in the allocation of future Purchase Payments have no effect on existing Contract Value. You may, however, transfer Contract Value among the Subaccounts and the Fixed Account in the manner described in “Transfers of Contract Value.”
Fund Liquidations. If your allocation instructions include a Subaccount that has become no longer available due to a fund liquidation, upon advance notice to you and unless you otherwise instruct us, we will allocate the applicable portion of any subsequent Purchase Payments to the Invesco V.I. Government Money Market Subaccount, and any automatic allocation instructions for scheduled transfers that include a Subaccount that is no longer available due to a fund liquidation will be terminated. If you wish to set up a new Dollar Cost Averaging Option or Asset Reallocation Option (without the Subaccount that is no longer available due to fund liquidation), you will need to submit a new form to us. If you request a transfer of Contract Value to a Subaccount that is no longer available due to a fund liquidation, we will consider your request to not be in good order, and we will not process it. In such cases, we will contact you for further instructions.
Closed Subaccounts. We reserve the right to close Subaccounts. If we close a Subaccount (a “Closed Subaccount”), you may be prevented from allocating Purchase Payments or Contract Value to that Subaccount.
In the event that we receive a request on or after the effective date to allocate to any of the Closed Subaccounts, we will handle those transactions as follows:
New Applications. If we receive an application for a Contract with an allocation to any of the Closed Subaccounts, we will consider the application to be incomplete and we will attempt to contact the applicant to get revised instructions. The Company will hold the Purchase Payment in its General Account and may take up to five Valuation Dates to resolve the problem. If the Company is unable to resolve the problem within the five Valuation Dates, the Company will notify the applicant of the reasons for the delay. If the applicant affirmatively revokes the consent given with their application to hold the initial Purchase Payment pending resolution of the problem, we will return the applicant’s Purchase Payment. Otherwise, the Purchase Payment will be applied not later than the second Valuation Date after the Valuation Date the problem is resolved.
Existing Contracts. Except as otherwise provided, if we receive a Purchase Payment for an existing Contract with an allocation to a Closed Subaccount, we will allocate the applicable portion of the payment to the Invesco V.I. Government Money Market Subaccount. If you have automatic allocation instructions designating allocation to a Closed Subaccount pursuant to an Automatic Allocation Program as of the date that a Subaccount is closed, your automatic allocation instructions will be terminated as of the close of business on that date. If you wish to set up a new Dollar Cost Averaging Option or Asset Reallocation Option (without the Closed Subaccount), you will need to submit a new form to our Administrative Office. If you request a transfer of Contract Value to a Closed Subaccount, we will consider your request to not be in good order, and we will not process it. In such cases, we will contact you for further instructions.
Dollar Cost Averaging Option — For no additional charge, prior to the Annuity Start Date, you may dollar cost average your Contract Value by authorizing the Company to make periodic transfers of Contract Value from any one Subaccount to one or more of the other Subaccounts. Dollar cost averaging is a systematic method of investing in which securities are purchased at regular intervals in fixed dollar amounts so that the cost of the securities gets averaged over time and possibly over various market cycles. The option will result in the transfer of Contract Value from one Subaccount to one or more of the other Subaccounts. Amounts transferred under this option will be credited at the price of the Subaccount as of the end of the Valuation Dates on which the transfers are effected.
26
Since the price of a Subaccount’s Accumulation Units will vary, the amounts transferred to a Subaccount will result in the crediting of a greater number of units when the price is low and a lesser number of units when the price is high. Similarly, the amounts transferred from a Subaccount will result in a debiting of a greater number of units when the price is low and a lesser number of units when the price is high. Dollar cost averaging does not guarantee profits, nor does it assure that you will not have losses.
A Dollar Cost Averaging form is available upon request. On the form, you must designate whether Contract Value is to be transferred on the basis of a specific dollar amount, a fixed period or earnings only, the Subaccount or Subaccounts to and from which the transfers will be made, the desired frequency of the transfers, which may be on a monthly, quarterly, semiannual or annual basis, and the length of time during which the transfers shall continue or the total amount to be transferred over time. The minimum amount that may be transferred to any one Subaccount is $25.00. The Company does not require that transfers be continued over any minimum period of time, although typically dollar cost averaging would extend over a period of at least one year.
After the Company has received a Dollar Cost Averaging request in proper form at its Administrative Office, the Company will transfer Contract Value in the amounts you designate from the Subaccount from which transfers are to be made to the Subaccount or Subaccounts you have chosen. The Company will effect each transfer on the date you specify or if no date is specified, on the monthly, quarterly, semiannual or annual anniversary, whichever corresponds to the period selected, of the date of receipt at the Administrative Office of a Dollar Cost Averaging request in proper form. Transfers will be made until the total amount elected has been transferred, or until Contract Value in the Subaccount from which transfers are made has been depleted. Amounts periodically transferred under this option are not included in the 14 transfers per Contract Year that generally are allowed as discussed under “Transfers of Contract Value.”
You may make changes to the option by writing to the Company’s Administrative Office or by telephone provided the proper form is completed, signed, and received by the Company. You may instruct the Company at any time to terminate the option by written request to the Company’s Administrative Office. In that event, the Contract Value in the Subaccount from which transfers were being made that has not been transferred will remain in that Subaccount unless you instruct us otherwise. If you wish to continue transferring on a dollar cost averaging basis after the expiration of the applicable period, the total amount elected has been transferred, or the Subaccount has been depleted, or after the Dollar Cost Averaging Option has been canceled, a new Dollar Cost Averaging form must be completed and sent to the Administrative Office. The Company requires that you wait at least a month if transfers were made on a monthly basis or one quarter if transfers were made on a quarterly basis before reinstating Dollar Cost Averaging after it has been terminated for any reason. The Company may discontinue, modify, or suspend the Dollar Cost Averaging Option at any time. The Company does not currently charge a fee for this option.
If you elect the Dollar Cost Averaging Option, you also may elect the Asset Reallocation Option. If the Fixed Account is available under your Contract, you may also dollar cost average Contract Value to or from the Fixed Account, subject to certain restrictions described under “Transfers and Withdrawals from the Fixed Account.”
Asset Reallocation Option — Prior to the Annuity Start Date, you may authorize the Company to automa-tically transfer Contract Value on a monthly, quarterly, semiannual or annual basis to maintain a particular percentage allocation among the Subaccounts. The Contract Value allocated to each Subaccount will grow or decline in value at different rates during the selected period, and Asset Reallocation automatically reallocates the Contract Value in the Subaccounts to the allocation you selected on a monthly, quarterly, semiannual or annual basis, as you select. Asset Reallocation is intended to transfer Contract Value from those Subaccounts that have increased in value to those Subaccounts that have declined in value. Over time, this method of investing may help you buy low and sell high. This investment method does not guarantee profits, nor does it assure that you will not have losses.
To elect this option an Asset Reallocation request in proper form must be received by the Company at its Administrative Office. An Asset Reallocation form is available upon request. On the form, you must indicate the applicable Subaccounts, the applicable time period and the percentage of Contract Value to be allocated to each Subaccount.
Upon receipt of the Asset Reallocation/Dollar Cost Averaging form, the Company will effect a transfer or, in the case of a new Contract, will allocate the initial Purchase Payment among the Subaccounts based upon the percentages that you selected. Thereafter, the Company will transfer Contract Value to maintain that allocation on each monthly, quarterly, semiannual or annual anniversary, as applicable, of the date of the Company’s receipt of the Asset Reallocation request in proper form. The amounts transferred will be credited at the price of the Subaccount
27
as of the end of the Valuation Date on which the transfer is effected. Amounts periodically transferred under this option are not included in the 14 transfers per Contract Year that generally are allowed as discussed under “Transfers of Contract Value.”
You may make changes to the option by writing to the Company’s Administrative Office or by telephone provided the proper form is completed, signed, and received at the Company’s Administrative Office. You may instruct the Company at any time to terminate this option by written request to the Company’s Administrative Office. In that event, the Contract Value in the Subaccounts that has not been transferred will remain in those Subaccounts regardless of the percentage allocation unless you instruct us otherwise. If you wish to continue Asset Reallocation after it has been canceled, a new Asset Reallocation form must be completed and sent to the Company’s Administrative Office. The Company may discontinue, modify, or suspend, and reserves the right to charge a fee for the Asset Reallocation Option at any time. The Company does not currently charge a fee for this option. If you elect the Asset Reallocation Option, you also may elect the Dollar Cost Averaging Option.
Contract Value allocated to the Fixed Account may be included in the Asset Reallocation Option, subject to certain restrictions described in “Transfers and Withdrawals from the Fixed Account.”
Transfers of Contract Value — You may transfer Contract Value among the Subaccounts upon proper written request to the Company’s Administrative Office both before and after the Annuity Start Date. You may make transfers (other than transfers pursuant to the Dollar Cost Averaging and Asset Reallocation Options) by telephone if the Electronic Transfer Privilege section of the application or the proper form has been completed, signed and received at the Company’s Administrative Office. The minimum transfer amount is $500, or the amount remaining in a given Subaccount. The minimum transfer amount does not apply to transfers under the Dollar Cost Averaging or Asset Reallocation Options.
The Company generally effects transfers between or from the Subaccounts at their respective Accumulation Unit values as of the close of the Valuation Period during which the transfer request is received; however, transfer requests received at or after close of a Valuation Date (normally 3:00 p.m. Central time) will be effected at the Accumulation Unit value determined on the following Valuation Date. See “Cut-Off Times.” In addition, a transfer request will not be processed until it is in good order. In this regard, “good order” means that the transfer request is preceded or accompanied by sufficient information to properly execute the transfer.
You may also transfer Contract Value to the Fixed Account, provided that the Fixed Account is available under your Contract. Transfers from the Fixed Account to the Subaccounts are restricted as described in “The Fixed Account.” The Company reserves the right to limit the number of transfers to 14 in a Contract Year, although the Company does not limit the frequency of transfers with regard to the Invesco V.I. Government Money Market Subaccount. In addition, transfers are subject to the frequent trading restrictions described below. The Company will limit your transfers if we determine that you are engaging in a pattern of transfers that is disruptive to the Underlying Funds or potentially disadvantageous to other Owners and Participants with Contract Value allocated to the applicable Subaccount(s) and we believe that suspension of your electronic transfer privileges, as discussed below, does not adequately address your transfer activity. The Company does not assess a transfer fee on transfers.
Frequent Transfer Restrictions. The Contract is not designed for organizations or individuals engaging in a market timing strategy, or making programmed transfers, frequent transfers or transfers that are large in relation to the total assets of an Underlying Fund. These kinds of strategies and transfer activities may disrupt portfolio management of the Underlying Funds in which the Subaccounts invest (such as requiring an Underlying Fund to maintain a high level of cash or causing an Underlying Fund to liquidate investments prematurely to pay withdrawals), hurt Underlying Fund performance, and drive Underlying Fund expenses (such as brokerage and administrative expenses) higher, which are reflected in Underlying Fund performance. In addition, because other insurance companies and/or retirement plans may invest in the Underlying Funds, the risk exists that the Underlying Funds may suffer harm from programmed, frequent, or large transfers among subaccounts of variable contracts issued by other insurance companies or among investment options available to retirement plan participants. These risks and costs are borne by all shareholders of an affected Underlying Fund, Owners and Participants with Contract Value allocated to the corresponding Subaccount (as well as their Designated Beneficiaries and Annuitants) and long-term investors who do not generate these costs.
The Company has in place policies and procedures designed to restrict transfers if we determine that you are engaging in a pattern of transfers that is disruptive to the Underlying Funds or potentially disadvantageous to other Owners and Participants with Contract Value allocated to the applicable Subaccount (regardless of the number of
28
previous transfers the Owner or Participant has made during the Contract Year). In making this determination, we monitor transfers among the Subaccounts and consider, among other things, the following factors:
| • | the total dollar amount being transferred; |
| • | the number of transfers you made within a period of time; |
| • | transfers to and from (or from and to) the same Subaccount; |
| • | whether your transfers appear to follow a pattern designed to take advantage of short-term market fluctuations; and |
| • | whether your transfers appear to be part of a group of transfers made by a third party on behalf of the individual Owners in the group. |
There is a risk that some Owners may engage in transfer activity in a manner that is disruptive to the Underlying Funds or potentially disadvantageous to other Owners and Participants, which may have a negative impact on such other Owners and Participants. If the Company determines that your transfer patterns among the Subaccounts are disruptive to the Underlying Funds or potentially disadvantageous to Owners and Participants, the Company may send you a letter notifying you that it is prohibiting you from making telephone transfers or other electronic transfers and instead requiring that you submit transfer requests in writing via regular U.S. mail for a disclosed period that begins on the date of the letter.
In addition, if you make a transfer from any of the Subaccounts listed below, then you may not make a transfer to that same Subaccount for a period of calendar days equal to the amount listed in the table below in the column titled “Transfer Block Restriction.” The calendar day after the date of the transfer out of the particular Subaccount is considered day 1 for the purpose of computing the period before a transfer to the same Subaccount may be made. For example, if you transferred money out of the Guggenheim SMid Cap Value subaccount on April 16, the 30 day restriction begins on April 17 and ended on May 16, which means you could transfer back into the Guggenheim SMid Cap Value subaccount on May 17. This restriction does not apply to transfers made pursuant to the Dollar Cost Averaging and Asset Reallocation Options.
| Subaccount | Transfer Block Restriction (# of Calendar Days) |
American Century VP Mid Cap Value, American Century VP Ultra®, American Century VP Value | 30 days |
BNY Mellon IP Technology Growth | 60 days |
ClearBridge Variable Aggressive Growth, ClearBridge Variable Small Cap Growth | 30 days |
Franklin Income VIP Fund, Franklin Mutual Global Discovery VIP Fund, Franklin Small Cap Value VIP Fund | 30 days |
Guggenheim VIF All Cap Value, Guggenheim VIF Alpha Opportunity, Guggenheim VIF High Yield, Guggenheim VIF Large Cap Value, Guggenheim VIF Long Short Equity, Guggenheim VIF Managed Asset Allocation, Guggenheim VIF Multi-Hedge Strategies, Guggenheim VIF Small Cap, Guggenheim VIF SMid Cap Value, Guggenheim VIF StylePlus Large Core, Guggenheim VIF StylePlus Large Growth, Guggenheim VIF StylePlus Mid Growth, Guggenheim VIF StylePlus Small Growth, Guggenheim VIF Total Return Bond, Guggenheim VIF World Equity Income | 30 days |
Invesco V.I. American Value, Invesco V.I. Comstock, Invesco V.I. Core Bond Fund, Invesco V.I. Discovery Mid Cap Growth Fund, Invesco V.I. Equity and Income, Invesco V.I. Global Real Estate, Invesco V.I. Government Securities, Invesco V.I. Health Care, Invesco V.I. International Growth, Invesco V.I. Main Street Mid Cap Fund, Invesco V.I. Main Street Small Cap Fund | 30 days |
Invesco V.I. Government Money Market | Unlimited |
Janus Henderson VIT Enterprise, Janus Henderson VIT Research | 30 days |
MFS® VIT II Research International, MFS® VIT Total Return, MFS® VIT Utilities | 30 days |
Morgan Stanley VIF Emerging Markets Equity | 30 days |
29
| Subaccount | Transfer Block Restriction (# of Calendar Days) |
Neuberger Berman AMT Sustainable Equity | 30 days |
PIMCO VIT All Asset, PIMCO VIT CommodityRealReturn Strategy, PIMCO VIT Emerging Markets Bond, PIMCO VIT International Bond Portfolio (U.S. Dollar-Hedged), PIMCO VIT Low Duration, PIMCO VIT Real Return | 30 days |
Royce Micro-Cap | 30 days |
Western Asset Variable Global High Yield Bond | 30 days |
In addition to the Company’s own frequent transfer procedures, the Underlying Funds may have adopted their own policies and procedures with respect to frequent transfer of their respective shares, and the Company reserves the right to enforce these policies and procedures. The prospectuses for the Underlying Funds describe any such policies and procedures, which may be more or less restrictive than the policies and procedures the Company has adopted. In particular, some of the Underlying Funds have reserved the right to temporarily or permanently refuse payments or transfer requests from the Company if, in the judgment of the Underlying Fund’s manager, the Underlying Fund would be unable to invest effectively in accordance with its investment objective or policies, or would otherwise potentially be adversely affected.
You should be aware that the Company currently may not have the contractual obligation or the operational capacity to apply the Underlying Funds’ frequent transfer policies and procedures. However, under SEC rules, the Company is required to: (1) enter into a written agreement with each Underlying Fund or its principal underwriter that obligates the Company to provide to the Underlying Fund promptly upon request certain information about the trading activity of individual Owners, and (2) execute instructions from the Underlying Fund to restrict or prohibit further purchases or transfers by specific Owners who violate the frequent transfer policies established by the Underlying Fund.
Managers of the Underlying Funds may contact the Company if they believe or suspect that there is market timing or other potentially harmful trading, and, if so, the Company will take appropriate action to protect others. In particular, the Company may, and the Company reserves the right to, reverse a potentially harmful transfer. If the Company reverses a potentially harmful transfer, it will effect such reversal not later than the close of business on the second Valuation Date following the Valuation Date in which the original transfer was effected, and the Company will inform the Owner in writing at his or her address of record.
To the extent permitted by applicable law, the Company also reserves the right to reject a transfer request at any time that the Company is unable to purchase or redeem shares of any of the Underlying Funds because of any refusal or restriction on purchases or redemptions of their shares as a result of the Underlying Fund’s policies and procedures on market timing activities or other potentially abusive transfers. The Company also reserves the right to implement, administer, and collect redemption fees imposed by one or more of the Underlying Funds in the future. You should read the prospectuses of the Underlying Funds for more details on their ability to refuse or restrict purchases or redemptions of their shares.
In its sole discretion, the Company may revise its market timing procedures at any time without prior notice as the Company deems necessary or appropriate to better detect and deter programmed, frequent, or large transfers that may adversely affect other Owners, Participants, or Underlying Fund shareholders, to comply with state or federal regulatory requirements, or to impose additional or alternate restrictions on market timers (such as dollar or percentage limits on transfers). The Company may change its parameters to monitor for factors other than transfer block restrictions. For purposes of applying the parameters used to detect potential market timing and other potentially harmful activity, the Company may aggregate transfers made in two or more Contracts that it believes are connected (for example, two Contracts with the same Owner, or owned by spouses, or owned by different partnerships or corporations that are under common control, etc.).
The Company does not include transfers made pursuant to Dollar Cost Averaging and Asset Reallocation Options in these limitations. The Company may vary its market timing procedures from Subaccount to Subaccount, and may be more restrictive with regard to certain Subaccounts than others. The Company may not always apply these detection methods to Subaccounts investing in Underlying Funds that, in its judgment, would not be particularly attractive to market timers or otherwise susceptible to harm by frequent transfers.
30
Contract Owners seeking to engage in programmed, frequent, or large transfer activity may deploy a variety of strategies to avoid detection. The Company’s ability to detect and deter such transfer activity is limited by operational systems and technological limitations. Furthermore, the identification of Owners determined to be engaged in transfer activity that may adversely affect other Owners, Participants, or Underlying Fund shareholders involves judgments that are inherently subjective. Accordingly, despite its best efforts, the Company cannot guarantee that its market timing procedures will detect every potential market timer, but the Company applies its market timing procedures consistently to all Owners without special arrangement, waiver, or exception. Because other insurance companies and/or retirement plans may invest in the Underlying Funds, the Company cannot guarantee that the Underlying Funds will not suffer harm from programmed, frequent, or large transfers among subaccounts of variable contracts issued by other insurance companies or among investment options available to retirement plan participants.
The Company does not limit or restrict transfers to or from the Invesco V.I. Government Money Market Subaccount. As stated above, market timing and frequent transfer activities may disrupt portfolio management of the Underlying Funds, hurt Underlying Fund performance, and drive Underlying Fund expenses higher, which are reflected in Underlying Fund performance.
Because the Company cannot guarantee that it can restrict or deter all harmful transfer activity, Owners bear the risks associated with such activity, including potential disruption of portfolio management of the Underlying Funds and potentially lower Underlying Fund performance and higher Underlying Fund expenses. In addition, there is a risk that the Company will not detect harmful transfer activity on the part of some Owners and, as a result, the Company will inadvertently treat those Owners differently than Owners it does not permit to engage in harmful transfer activity. Moreover, due to the Company’s operational and technological limitations, as well as possible variations in the market timing policies of other insurance companies and/or retirement plans that may also invest in the Underlying Funds, some Owners may be treated differently than others. Consequently, there is a risk that some Owners may be able to engage in market timing while others suffer the adverse effects of such trading activities.
Contract Value — The Contract Value is the sum of the amounts under the Contract held in each Subaccount and the Fixed Account as well as any amount set aside in the Loan Account to secure loans as of any Valuation Date.
On each Valuation Date, the amount of Contract Value allocated to any particular Subaccount will be adjusted to reflect the investment experience of that Subaccount. See “Determination of Contract Value.” Contract Value allocated to the Subaccounts is not guaranteed by the Company. You bear the entire investment risk relating to the investment performance of Contract Value allocated to the Subaccounts.
Determination of Contract Value — Your Contract Value will vary depending upon several factors, including
| • | Investment performance of the Subaccounts to which you have allocated Contract Value, |
| • | Interest credited to the Fixed Account, |
| • | Payment of Purchase Payments, |
| • | The amount of any outstanding Contract Debt, |
| • | Full and partial withdrawals (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser), and |
| • | Charges assessed in connection with the Contract, including charges for any optional Riders selected. |
The amounts allocated to a Subaccount will be invested in shares of the corresponding Underlying Funds. The investment performance of each Subaccount will reflect increases or decreases in the net asset value per share of the corresponding Underlying Fund and any dividends or distributions declared by the Underlying Fund. Any dividends or distributions from any Underlying Fund will be automatically reinvested in shares of the same Underlying Fund, unless the Company, on behalf of the Separate Account, elects otherwise.
Assets in the Subaccounts are divided into Accumulation Units, which are accounting units of measure used to calculate the value of an Owner’s interest in a Subaccount. When you allocate Purchase Payments to a Subaccount, your Contract is credited with Accumulation Units. The number of Accumulation Units to be credited is determined by dividing the dollar amount, including any Credit Enhancements and Bonus Credits, allocated to the particular Subaccount by the price for the Subaccount’s Accumulation Units as of the end of the Valuation Period in which the Purchase Payment is credited.
31
In addition to Purchase Payments, other transactions such as loans, full or partial withdrawals (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser), transfers, and assessment of certain charges against the Contract affect the number of Accumulation Units attributable to a Contract. The number of units credited or debited in connection with any such transaction is determined by dividing the dollar amount of such transaction by the price of the Accumulation Unit of the affected Subaccount next determined after receipt of the transaction (subject to any applicable requirements that the transactions be in good order, as described herein). The price of each Subaccount is determined on each Valuation Date as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 3:00 p.m. Central time. Transactions received at or after that time on any Valuation Date will be effected at the Accumulation Unit value determined on the following Valuation Date. See “Cut-Off Times.” The price of each Subaccount may be determined earlier if trading on the NYSE is restricted or as permitted by the SEC.
The number of Accumulation Units credited to a Contract shall not be changed by any subsequent change in the value of an Accumulation Unit, but the dollar value of an Accumulation Unit may vary from Valuation Date to Valuation Date depending upon the investment experience of the Subaccount and charges against the Subaccount.
The price of each Subaccount’s units initially was $10. The price of a Subaccount on any Valuation Date takes into account the following: (1) the investment performance of the Subaccount, which is based upon the investment performance of the corresponding Underlying Fund, (2) any dividends or distributions paid by the Underlying Fund, (3) the charges, if any, that may be assessed by the Company for taxes attributable to the operation of the Subaccount, (4) the minimum mortality and expense risk charge under the Contract of 1.20%, and (5) the admini-stration charge under the Contract of 0.15%, and (6) the deduction of the Underlying Fund’s fees and expenses.
The minimum mortality and expense risk charge of 1.20% and the administration charge of 0.15% are factored into the Accumulation Unit value or “price” of each Subaccount on each Valuation Date. The Company deducts any mortality and expense risk charge above the minimum charge and the charge for any optional Riders (the “Excess Charge”) on a monthly basis. Each Subaccount declares a monthly subaccount adjustment and the Company deducts the Excess Charge from this monthly subaccount adjustment upon its reinvestment in the Subaccount. The Excess Charge is a percentage of your Contract Value allocated to the Subaccount as of the reinvestment date. The monthly subaccount adjustment is paid only for the purpose of collecting the Excess Charge. Assuming that you owe a charge above the minimum mortality and expense risk charge and the administration charge, your Contract Value will be reduced in the amount of your Excess Charge upon reinvestment of the Subaccount’s monthly subaccount adjust-ment. The Company deducts the Excess Charge only upon reinvestment of the monthly subaccount adjustment and does not assess an Excess Charge upon a full or partial withdrawal from the Contract. The Company reserves the right to compute and deduct the Excess Charge from each Subaccount on each Valuation Date. See the Statement of Additional Information for a more detailed discussion of how the Excess Charge is deducted.
Cut-Off Times — Any financial transactions involving your Contract, including those submitted by telephone, must be received by us before any announced closing of regular trading on the NYSE (the “cut-off time”) to be processed on the current Valuation Date. The NYSE normally closes at 3:00 p.m. Central time, so financial transactions normally must be received prior to that time. Financial transactions received at or after the applicable cut-off time will be processed on the following Valuation Date. Financial transactions include loans, transfers, full and partial withdrawals (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser), death benefit payments, and Purchase Payments.
Full and Partial Withdrawals — An Owner may make a partial withdrawal of Contract Value, or surrender the Contract for its Withdrawal Value. A full or partial withdrawal, including a systematic withdrawal or a withdrawal made to pay the fees of your investment adviser, may be taken from Contract Value at any time while the Owner is living and before the Annuity Start Date, subject to limitations under the applicable plan for Qualified Plans and applicable law. Withdrawals (other than systematic withdrawals or withdrawals made to pay the fees of your invest-ment adviser) after the Annuity Start Date are permitted only under Annuity Options 5, 6 and 7 (unless the Owner has elected fixed annuity payments under Option 7). See “Annuity Period” for a discussion of withdrawals after the Annuity Start Date. A full or partial withdrawal request generally will be effective as of the end of the Valuation Period that it is received by the Company; at its Administrative Office; however, if the request is received on a Valuation Date at or after the cut-off time, the withdrawal will be effected at the Accumulation Unit value determined on the following Valuation Date. See “Cut-Off Times.” In addition, a withdrawal will not be processed until it is in good order.
32
In this regard, “good order” means that the withdrawal request is accompanied by a properly completed Withdrawal Request form (including the Owner’s signature and the written consent of any effective assignee or irrevocable beneficiary, if applicable).
The proceeds received upon a full withdrawal will be the Contract’s Withdrawal Value. The Withdrawal Value is equal to the Contract Value as of the end of the Valuation Period during which the withdrawal is processed, less any outstanding Contract Debt, any applicable withdrawal charges (if the withdrawal is made from Purchase Payments and/or Bonus Credits that have been held in the Contract for less than seven years), any pro rata account adminis-tration charge and any uncollected premium taxes to reimburse the Company for any tax on premiums on a Contract that may be imposed by various states and municipalities. See “Contingent Deferred Sales Charge,” “Account Administration Charge,” and “Premium Tax Charge.” If the Extra Credit Rider is in effect, Contract Value will also be reduced by any Credit Enhancements that have not yet vested. See the discussion of vesting of Credit Enhancements under “Extra Credit.” The Withdrawal Value during the Annuity Period under Option 7 is the present value of future annuity payments commuted at the assumed interest rate, less any applicable withdrawal charges and any uncollected premium taxes.
The Company requires the signature of all Owners on any request for withdrawal. The Company also requires a guarantee of all such signatures to effect the transfer or exchange of all of the Contract, or any part of the Contract in excess of $25,000, for another investment. The signature guarantee must be provided by an eligible guarantor, such as a bank, broker, credit union, and national securities exchange or savings association. Notarization is not an acceptable form of signature guarantee. The Company further requires that any request to transfer or exchange all or part of the Contract for another investment be made upon a transfer form provided by the Company which is available upon request.
A partial withdrawal may be requested for a specified percentage or dollar amount of Contract Value. Each partial withdrawal must be at least $500 except systematic withdrawals discussed below. A request for a partial withdrawal (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser) will result in a payment by the Company of the amount specified in the partial withdrawal request less any applicable withdrawal charge, any premium tax charge and a percentage of any Credit Enhancements that have not yet vested. Any withdrawal charge on partial withdrawals (including systematic withdrawals and withdrawals made to pay the fees of your investment adviser) from Purchase Payments and/or Bonus Credits that have been held in the Contract for less than seven years will be deducted from the requested payment amount as will any premium tax charge and a percentage of any Credit Enhancements that have not yet vested. Alternatively, you may request that any withdrawal charge, any premium tax charge and a percentage of any unvested Credit Enhancements, be deducted from your remaining Contract Value, provided there is sufficient Contract Value available. Upon payment, your Contract Value will be reduced by an amount equal to the payment, or if you requested that any withdrawal charges be deducted from your remaining Contract Value, your Contract Value also will be reduced by the amount of any such withdrawal charge, or premium tax charge and a percentage of any Credit Enhancements that have not yet vested. See “Premium Tax Charge” and “Extra Credit.” No partial withdrawal will be processed which would result in the with-drawal of Contract Value from the Loan Account.
If a partial withdrawal (other than a systematic withdrawal or a withdrawal made to pay the fees of your investment adviser) is requested after the first Contract Year that would leave the Withdrawal Value in the Contract less than $2,000, the Company reserves the right to terminate the Contract and pay the Contract Value in one sum to the Owner. However, the Company will first notify the Owner that the Contract is subject to termination, and will only terminate the Contract if, after 90 days following the date of the notice, the Owner has not made any Purchase Payments to increase the Withdrawal Value to $2,000. No partial withdrawal will be processed which would result in the withdrawal of Contract Value from the Loan Account.
The Company will deduct the amount of a partial withdrawal from the Contract Value in the Subaccounts and the Fixed Account, according to the Owner’s instructions to the Company. If you do not specify the allocation, the Company will deduct the withdrawal in the same proportion that Contract Value is allocated among the Subaccounts and the Fixed Account.
A full or partial withdrawal, including a systematic withdrawal or a withdrawal made to pay the fees of your investment adviser, may result in receipt of taxable income to the Owner and, if made prior to the Owner attaining age 59½, may be subject to a 10% penalty tax. In the case of Contracts issued in connection with retirement plans that meet the requirements of Section 403(b) of the Internal Revenue Code, reference should be made to the terms of the particular Qualified Plan for any limitations or restrictions on withdrawals. If your Contract was issued pursuant
33
to a 403(b) plan, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders or transfers you request comply with applicable tax requirements and to decline requests that are not in compliance. For more information, see “Restrictions on Withdrawals from Qualified Plans” and “Restrictions under the Texas Optional Retirement Program.” The tax consequences of a withdrawal under the Contract should be carefully considered. See “Federal Tax Matters.”
Withdrawals to Pay Advisory Fees — The deduction of advisory fees from your Contract Value is treated as a withdrawal under the Contract. No surrender charges will be assessed on a withdrawal to pay advisory fees and the deduction of advisory fees will not count toward the annual free withdrawal amount. Deductions from your Contract Value to pay advisory fees will reduce death benefits and any guaranteed benefit values, perhaps significantly. Such deductions will not reduce the Guaranteed Lifetime Withdrawal Benefit Rider values. See Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. However, such deductions will still result in a reduction in your Contract Value, which could reduce death benefits and reduce the potential for increases in any guaranteed benefits under the Guaranteed Lifetime Withdrawal Benefit Rider. See “The Contract – Optional Riders.”
Withdrawals to pay advisory fees may still be treated as withdrawals for tax purposes by the Company and/or the IRS. For Non-Qualified Contracts, all or a portion of the charges deducted from your Contract Value to pay advisory fees to a financial intermediary may be subject to federal and state income taxes and a 10% federal penalty tax. A tax-free partial exchange may become taxable if an advisory fee is paid from your Contract Value within 180 days of the partial exchange. Consult your tax adviser for advice concerning tax-free partial exchanges and the impact of deducting advisory fees from your Contract Value.
Systematic Withdrawals — For no additional charge, the Company currently offers a feature under which you may select systematic withdrawals. Under this feature, an Owner may elect to receive systematic withdrawals while the Owner is living and before the Annuity Start Date by sending a properly completed Scheduled Systematic Withdrawal form to the Company at its Administrative Office. This option may be elected at any time. An Owner may designate the systematic withdrawal amount as a percentage of Contract Value allocated to the Subaccounts and/or Fixed Account, as a fixed period, as level payments, as a specified dollar amount, as all earnings in the Contract, or based upon the life expectancy of the Owner or the Owner and a beneficiary. An Owner also may designate the desired frequency of the systematic withdrawals, which may be monthly, quarterly, semiannual or annual. The Owner may stop or modify systematic withdrawals upon proper written request received by the Company at its Administrative Office at least 30 days in advance of the requested date of termination or modification. A proper request must include the written consent of any effective assignee or irrevocable beneficiary, if applicable.
Each systematic withdrawal must be at least $100. Upon payment, your Contract Value will be reduced by an amount equal to the payment proceeds plus any applicable withdrawal charge and premium tax. Contract Value will also be reduced by a percentage of any Credit Enhancements that have not yet vested. See “Extra Credit.”
If an Owner is enrolled in the Dollar Cost Averaging or Asset Reallocation Options, the Owner may not elect to receive systematic withdrawals from any Subaccount that is part of the Dollar Cost Averaging or Asset Reallocation Options.
In no event will payment of a systematic withdrawal exceed the Contract Value less any applicable withdrawal charges, any uncollected premium taxes, any pro rata account administration charge, and any reduction for Credit Enhancements that have not yet vested (the “Withdrawal Value”). The Contract will automatically terminate if a systematic withdrawal causes the Contract’s Withdrawal Value to equal zero.
The Company will effect each systematic withdrawal as of the end of the Valuation Period during which the withdrawal is scheduled. The deduction caused by the systematic withdrawal, including any applicable withdrawal charge, will be allocated to your Contract Value in the Subaccounts and the Fixed Account, as you have directed. If you do not specify the allocation, the Company will deduct the systematic withdrawal in the same proportion that Contract Value is allocated among the Subaccounts and the Fixed Account.
The Company may, at any time, discontinue, modify, suspend or charge a fee for systematic withdrawals. You should consider carefully the tax consequences of a systematic withdrawal, including the 10% penalty tax which may be imposed on withdrawals made prior to the Owner attaining age 59½. See “Restrictions on Withdrawals from Qualified Plans,” “Restrictions under the Texas Optional Retirement Program,” and “Federal Tax Matters.”
34
Free-Look Right — You may return a Contract within the Free-Look Period, which is generally a ten-day period beginning when you receive the Contract. Purchase Payments received during the Free-Look period will be allocated according to your instructions contained in the application or more recent instructions, if any. If you return your Contract during the Free-Look Period, the Company will then deem void the returned Contract and will refund to you as of the Valuation Date on which the Company receives your Contract Purchase Payments allocated to the Fixed Account (not including any Credit Enhancements if the Extra Credit Rider was in effect). The Company will also refund any Contract Value allocated to the Subaccounts based upon the value of Accumulation Units next determined after we receive your Contract, plus any charges deducted from such Contract Value, less any such Contract Value attributable to Credit Enhancements. Because the Company will deduct the current value of any Credit Enhancements from the amount of Contract Value refunded to you, the Company will bear the investment risk associated with Credit Enhancements during the Free-Look Period.
Some states’ laws require us to refund your Purchase Payments. If your Contract is delivered in one of those states and you return your Contract during the Free-Look Period, the Company will refund the greater of: (1) Purchase Payments (not including any Credit Enhancement or Bonus Credits); or (2) Contract Value, plus any charges deducted from such Contract Value, less the Contract Value attributable to any Credit Enhancements and/or Bonus Credits.
Death Benefit — You should consider the following provisions carefully when choosing the Designated Beneficiary, Annuitant, any Joint Annuitant, and any Joint Owner, as well as before changing any of these parties. Naming different persons as Owner(s), Annuitant(s) and Designated Beneficiary(ies) can have important impacts on whether the death benefit is paid, and on who would receive it.
If an Owner dies prior to the Annuity Start Date while this Contract is in force, the Company will calculate the death benefit proceeds payable to the Designated Beneficiary as of the Valuation Date the Company receives due proof of the Owner’s death and instructions regarding payment to the Designated Beneficiary. If there are Joint Owners, the death benefit proceeds will be calculated upon receipt of due proof of death of either Owner and instructions regarding payment.
If the surviving spouse of the deceased Owner is the sole Designated Beneficiary, such spouse may elect to continue the Contract in force, subject to certain limitations. See “Distribution Requirements” below. If any Owner is not a natural person, the death benefit proceeds will be calculated as of the date the Company receives due proof of death of the Annuitant prior to the Annuity Start Date and instructions regarding payment. If the death of any Owner occurs on or after the Annuity Start Date, any applicable death benefit will terminate at the Annuity Start Date without value. See “Annuity Options.”
The death benefit proceeds will be the death benefit reduced by any outstanding Contract Debt, any pro rata account administration charge and any uncollected premium tax. If the age of each Owner (or Annuitant dies, if any Owner is not a natural person) was 80 or younger on the Contract Date and an Owner dies prior to the Annuity Start Date while this Contract is in force, the amount of the death benefit will be the greater of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits if the Extra Credit Rider and/or Automatic Bonus Credit Rider were in effect), less any reductions caused by previous withdrawals, including withdrawal charges, or |
| 2. | The Contract Value on the Valuation Date due proof of death and instructions regarding payment are received by the Company (less any Credit Enhancements applied during the 12 months prior to the date of the Owner’s death). |
If any Owner (or Annuitant, if the Owner is not a natural person) was age 81 or older on the Contract Date, the death benefit will be as set forth in number 2 above.
Example of the Standard Death Benefit. Assume:
| (i) | The initial Purchase Payment is $100,000 |
| (ii) | The Owner takes one withdrawal of $10,000 over the life of the Contract |
| (iii) | At the time of the Owner’s death, the Contract Value is $89,000 |
| (iv) | There is no outstanding Contract Debt and no unvested Credit Enhancements at the time of the Owner’s death |
35
If the Owner was 80 years old or younger on the Contract Date, the standard death benefit is the greater of the Contract Value or total Purchase Payments less any withdrawals (including withdrawal charges). The Contract Value is $89,000, and the amount of total Purchase Payments less withdrawals and withdrawal charges is $90,000. Thus, the death benefit is $90,000.
If the Owner was 81 years or older on the Contract Date, the standard death benefit is the Contract Value, which is $89,000.
If you purchased one of the optional riders that provides an enhanced death benefit, your death benefit will be determined in accordance with the terms of the rider. See the discussion of Annual Stepped Up Death Benefit Rider above, as well as the discussion of the Guaranteed Growth Death Benefit Rider, Combined Annual Stepped Up and Guaranteed Growth Death Benefit Rider, Enhanced Death Benefit Rider, Combined Enhanced and Annual Stepped Up Death Benefit Rider, Combined Enhanced and Guaranteed Growth Death Benefit Rider, Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit Rider, 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Rider, and Total Protection Rider in Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. Your death benefit proceeds under the rider will be the death benefit reduced by any outstanding Contract Debt, any pro rata account administration charge and any uncollected premium tax and, if the proceeds are based upon Contract Value, any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. No Credit Enhancements will be recaptured from the Death Benefit that are attributable to amounts allocated to the Fixed Account.
The death benefit proceeds will be paid to the Designated Beneficiary in a single sum or under one of the Annuity Options, as elected by the Designated Beneficiary. However, if the Owner has completed a restricted beneficiary designation form, the death benefit proceeds will be paid to the Designated Beneficiary in the manner specified on the form. If the Company does not receive at its Administrative Office within six months of the date of the Owner’s death instructions regarding the death benefit payment, the death benefit will be as set forth in item 2 above. If the Designated Beneficiary is to receive annuity payments under an Annuity Option, there may be limits under applicable law on the amount and duration of payments that the Beneficiary may receive, and require-ments respecting timing of payments. Under a Qualified Contract, most non-spouse Designated Beneficiary’s will be required to receive all proceeds within ten years. A tax adviser should be consulted in considering Annuity Options. See “Federal Tax Matters” and “Distribution Requirements” for a discussion of the tax consequences in the event of death.
Every state has unclaimed property laws which generally declare annuity contracts to be abandoned after a period of inactivity of 3 to 5 years from the Contract’s Annuity Start Date or date the death benefit is due and payable. For example, if the payment of a death benefit has been triggered, but the Designated Beneficiary does not come forward to claim the death benefit in a timely manner, the death benefit will be paid to the abandoned property division or unclaimed property office of the state in which the Designated Beneficiary or the Owner last resided, as shown on our books and records, or to our state of domicile. This “escheatment” is revocable, however, and the state is obligated to pay the death benefit (without interest) if your Designated Beneficiary steps forward to claim the death benefit with the proper documentation. To prevent such escheatment, it is important that you update your Designated Beneficiary designations, including addresses, if and as they change. Such updates should be communicated in writing or other approved means at our Administrative Office.
Distribution Requirements — For Contracts issued in connection with a Non-Qualified Contract, if the surviving spouse of the deceased Owner is the sole Designated Beneficiary, such spouse may elect to continue this Contract in force until the earliest of the spouse’s death or the Annuity Start Date or receive the death benefit proceeds. If the surviving spouse elects to continue the Contract, no death benefit will be paid and Contract Value will not be adjusted to reflect the amount of any death benefit; provided, however, that the Designated Beneficiary will be entitled to receive the death benefit proceeds in accordance with the terms of the Contract upon the death of the surviving spouse.
The Contract provides that upon your death, a surviving spouse may have certain continuation rights that he or she may elect to exercise for the Contract’s death benefit and any joint-life coverage under an optional living benefit. All Contract provisions relating to spousal continuation are available only to a person who meets the definition of “spouse” under federal law. The U.S. Supreme Court has held that same-sex marriages must be permitted under state law and that marriages recognized under state law will be recognized for federal law purposes. Domestic
36
partnerships and civil unions that are not recognized as legal marriages under state law, however, will not be treated as marriages under federal law. Consult a tax adviser for more information on this subject.
For any Designated Beneficiary of a Non-Qualified Contract other than a surviving spouse, only those options may be chosen that provide for complete distribution of such Owner’s interest in the Contract within five years of the death of the Owner. If the Designated Beneficiary is a natural person, that person alternatively can elect to begin receiving annuity payments within one year of the Owner’s death over a period not extending beyond his or her life or life expectancy. If the Owner of the Contract is not a natural person, these distribution rules are applicable upon the death of or a change in the primary Annuitant.
For Contracts issued in connection with a Qualified Plan, the terms of the particular Qualified Plan and the Internal Revenue Code should be reviewed with respect to distributions following the death of the Owner or Annuitant. Because the rules applicable to Qualified Plans are extremely complex, a competent tax adviser should be consulted.
Please note that any death benefit we may pay that is in excess of Contract Value is subject to our financial strength and claims-paying ability.
Death of the Annuitant — If the Annuitant dies prior to the Annuity Start Date, and the Owner is a natural person and is not the Annuitant, no death benefit proceeds will be payable under the Contract. The Owner may name a new Annuitant within 30 days of the Annuitant’s death. If a new Annuitant is not named, the Company will designate the Owner as Annuitant. On the death of the Annuitant after the Annuity Start Date, any guaranteed payments remaining unpaid will continue to be paid to the Designated Beneficiary pursuant to the Annuity Option in force at the date of death.
Benefits Under The Contract
The following table summarizes information about the optional and standard benefits under the Contract that were previously available. Please note that this table does not fully describe the terms and conditions of each benefit. You should refer to the applicable sections of this Prospectus for additional information.
| Standard Benefits | |||
| Name of Benefit | Purpose | Maximum Fee | Brief Description of Restrictions/Limitations |
Dollar Cost Averaging | Allows the systematic transfer of a specified dollar amount or percentage of Contract Value among Subaccounts and the Fixed Account, if available. | There is no charge for this option | • The minimum amount that may be transferred to any one Subaccount is $25.00. • The Company may discontinue, modify, or suspend Dollar Cost Averaging at any time. • Transfers can be made for a fixed period of time, or until the total amount elected has been transferred or the Contract Value in the Subaccount from which transfers are made has been depleted. • After termination of the Dollar Cost Averaging for any reason, before reinstating Dollar Cost Averaging, you must wait at least one month if transfers were monthly, at least one quarter if transfers were quarterly, at least six months if transfers were semiannual, and at least one year if transfers were annual. |
Asset Reallocation Option | Allows you to automatically transfer Contract Value on a monthly, quarterly, semiannual or annual basis to maintain a particular percentage allocation among the Subaccounts. | There is no charge for this option | • The Company may discontinue, modify, or suspend the availability of the Asset Reallocation Option at any time. |
37
| Standard Benefits | |||
| Name of Benefit | Purpose | Maximum Fee | Brief Description of Restrictions/Limitations |
DCA Plus Account | Interest is credited to Purchase Payments allocated to the DCA Plus Account, which is part of the Company’s Fixed Account, and amounts are systematically transferred monthly to the Subaccounts over the DCA Plus Period, per your election. | There is no charge for this option | • The rate of Current Interest credited to the DCA Plus Account will be fixed for the applicable DCA Plus Period (a six-month or 12-month period that begins as of the Valuation Date your Purchase Payment is applied to the DCA Plus Account). • The rate of interest for the Fixed Account allocations could be higher. • You may only allocate Purchase Payments to the DCA Plus Account. Transfers of Contract Value are not permitted. • Not available if you have purchased the Extra Credit Rider at 3%, 4% or 5%, the 0-Year or 4‑Year Alternate Withdrawal Charge Rider or the Guaranteed Lifetime Withdrawal Benefit Rider, or if the DCA Plus Period has expired. • Not available in all states. |
Standard Death Benefit – Contract Issue Age 80 and Younger | Provides a death benefit equal to the greater of all Purchase Payments, less any withdrawals, including withdrawal charges, or the Contract Value. | There is no charge for this option | • The death benefit will be reduced by any outstanding Contract Debt, any pro rata account administration charge, and any uncollected premium tax. • Purchase Payments do not include any Credit Enhance-ments and/or Bonus Credits. • The Contract Value will be reduced by any Credit Enhancements applied during the 12 months prior to the date of the Owner’s death. |
Standard Death Benefit – Contract Issue Age 81 and Older | Provides a death benefit equal to the Contract Value. | There is no charge for this option | • The death benefit will be reduced by any outstanding Contract Debt, any pro rata account administration charge and any uncollected premium tax. • The Contract Value will be reduced by any Credit Enhance-ments applied during the 12 months prior to the date of the Owner’s death. |
Systematic Withdrawals | Allow you to set up an automatic payment of up to 10% of your total Purchase Payments each year. | There is no charge for this option | • Each payment must be at least $100 (unless we consent otherwise). • In the first Contract Year, only monthly or quarterly payments are allowed. • Withdrawals may be subject to income tax and penalties. |
38
| Optional Benefits | |||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations |
Annual Stepped Up Death Benefit | Provides an enhanced death benefit equal to the greatest of (1) Purchase Payments (excluding Credit Enhancements and Bonus Credits and less any withdrawals and withdrawal charges, (2) the Contract Value, or (3) the Stepped Up Death Benefit. | 0.20% | • We will recapture any Credit Enhancements, if applicable, during the 12 months preceding the Owner’s date of death. • The death benefit is no longer eligible to “step up” on any Contract Anniversary following your 81st birthday. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value as of the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner is age 79 or younger on the Contract Date. • Available at Contract issue only. • The benefit will terminate at the Annuity Start Date. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. • The death benefit will be reduced by any outstanding Contract Debt, pro rata account administration charge, and outstanding premium tax. |
Waiver of Withdrawal Charge | Provides a waiver of withdrawal charge in the event of your (1) total and permanent disability prior to age 65, (2) confinement to a nursing home, or (3) terminal illness. | 0.05% | • Subject to a written physician’s statement acceptable to the Company or a certified Social Security finding of disability. • We will recapture any Credit Enhancements, if applicable, credited during the 12 months preceding any withdrawal. • You will receive no benefit from the disability portion of this rider (and the rider charge will remain the same) if you purchase the Contract with this rider after age 65. • The benefit differs and is not available in certain states. • Available at Contract issue only. • Depending on the Annuity Option chosen, a rider fee may be imposed for the life of the Contract. |
Alternate Withdrawal Charge (0 Year) | Makes available a shorter withdrawal charge schedule in lieu of the Contract’s 7-year withdrawal charge schedule. | 0.70% | • Not available with the Fixed Account. • We may recapture any Credit Enhancement in the event of a full or partial withdrawal. • Available at Contract issue only. • Depending on the Annuity Option chosen, a rider fee may be imposed for the life of the Contract. |
39
| Optional Benefits | |||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations |
Alternate Withdrawal Charge (4 Year) | Makes available a shorter withdrawal charge schedule in lieu of the Contract’s 7-year withdrawal charge schedule. | 0.60%1 | • Not available with the Fixed Account. • We may recapture any Credit Enhancement in the event of a full or partial withdrawal. • Available at Contract issue only. • If the 4 Year Alternate Withdrawal Charge Rider has not been approved in a particular state, the 3 Year Withdrawal Charge Rider is available for a fee or 0.40%. • This rider may provide a benefit only if a withdrawal is taken in the five to seven Contract years after the applicable Purchase Payment date because for the first four years after the Purchase Payment date, the withdrawal charges are the same as they would be under the 7-year schedule. • Depending on the Annuity Option chosen, a rider fee may be imposed for the life of the Contract. |
4% Extra Credit | Provides a Credit Enhancement equal to 4% of Purchase Payments, which will be added to the Contract Value for each Purchase Payment made in the first Contract Year. | 0.55% | • Credit Enhancements are only applied to Purchase Payments received in the first Contract Year. If Purchase Payments are made in subsequent Contract Years, the charge for this benefit will increase proportionately in relation to those Purchase Payments and no additional Credit Enhancement will be applied. • Not available with the Fixed Account. • You may not select an Annuity Start Date prior to seven years from the effective date of the rider. • Credit Enhancements are not fully vested until the seventh Contract Anniversary. Until that date, all or a portion of the Credit Enhancement(s) will be forfeited under certain circumstances. • Available if the Owner is age 80 or younger on the Contract Date. • Available at Contract issue only. |
Contract Loans | Provides the ability to borrow money under your Contract using the Contract Value as the only security for the loan. | 5.16% plus total charges for riders selected (3.00% interest credited on loan amounts) | • Only permitted in connection with 403(b) Contracts and pursuant to the Employer plan or program. • A loan must be taken and repaid prior to the Annuity Start Date. • Subject to minimum and maximum loan amounts. • The Fixed Account must be available under your Contract. • Loans must be repaid within 5 years. • You forego the investment experience of the Subaccounts and the Current Rate of interest on the Fixed Account on any loaned amounts. |
40
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Automatic Bonus Credit (Available May 1, 2005 through December 31, 2007) | Provided a Bonus Credit, which was automatically added to Contract Value, equal to 2% of each Purchase Payment made in the first Contract Year | There was no charge for this benefit | • Bonus Credits are only applied to Purchase Payments received in the first Contract Year. • Bonus Credit is subject to any applicable withdrawal charge. • Available for Contracts purchased in connection with the transfer or exchange of a variable annuity contract issued by another insurance company, provided the initial Purchase Payment was received no later than February 28, 2008 • Not available with the 0-Year Alternate Withdrawal Charge Rider. • If you also elected a 4-Year Alternate Withdrawal Charge Rider, your Bonus Credit was equal to 1%, not 2%, of each Purchase Payment received in the first Contract Year. • Available at Contract issue if the Owner was age 80 or younger. | |
Guaranteed Growth Death Benefit | Provides an enhanced death benefit equal to the Purchase Payments and any Credit Enhancements and/or Bonus Credits, less premium tax and any withdrawals, increased at an annual effective rate of interest (which you elect when you purchase the benefit) adjusted for withdrawals. | 3%: 0.10% | • The death benefit is no longer subject to increase following the Contract Anniversary after your 80th birthday. • 6% and 7% not available to Texas residents. • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • If you elect the Guaranteed Growth Death Benefit at 5%, 6% or 7%, the Company will credit a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, and the Loan Account. • The death benefit is capped at an amount equal to 200% of Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less premium tax and any withdrawals, including withdrawal charges. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instruc-tions are received by the Company. • Certain withdrawals could significantly reduce or even terminate the benefits • Available if the Owner was age 79 or younger on the Contract Date. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
| 5%: 0.20% | ||||
| 6%: 0.25% | ||||
| 7%: 0.30% |
41
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Enhanced Death Benefit | Provides an enhanced death benefit equal to your Contract Value, increased by an enhanced amount based on a percentage of Contract gains. | 0.25% | • The enhanced death benefit amount is calculated using a lower percentage for Contract issue age 70 or older. • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner was age 79 or younger on the Contract Date. • Certain withdrawals could significantly reduce or even terminate the benefit. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
Guaranteed Minimum Withdrawal Benefit | Permits you to withdraw up to a specified amount each Contract Year, regardless of the performance of your Contract Value, until the Remaining Benefit Amount is reduced to $0. You may periodically increase the Benefit Amount through resets. | Current: 0.45% | • You are only eligible to reset the remaining Benefit Amount every five years. • The rider charge may be increased in the event that you elect a reset. • While rider is in effect, we reserve right to restrict subsequent Purchase Payments. • Available only if the Owner and Annuitant were age 85 or younger on the rider purchase date. • Certain withdrawals could significantly reduce or even terminate the benefits. • If a withdrawal (including a withdrawal to pay advisory fees) exceeds the Annual Withdrawal Amount, the withdrawal will reduce the benefit proportionately, but if the withdrawal does not exceed the Annual Withdrawal Amount, the withdrawal will reduce the benefit by the dollar amount of the withdrawal. A proportionate withdrawal could significantly reduce the benefit by substantially more than the actual amount of the withdrawal. | |
Maximum: 1.10%2 |
42
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Guaranteed Minimum Income Benefit (3% or 5%) | Provides a minimum amount (“Minimum Income Benefit”), based on a 3% or 5% crediting rate, for the purchase of a Fixed Annuity only. | 3%: 0.15% | • You may only apply the Minimum Income Benefit to purchase certain fixed Annuity options. • You may not exercise this benefit or convert it to an income stream until your 10th Contract Anniversary. • If you elected the benefit at 5%, the Company credits a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market, the Fixed Account and the Loan Account. • Available only if the Owner was age 79 or younger on the Contract Date. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
| 5%: 0.30% | ||||
6% Dollar for Dollar Guaranteed Minimum Income Benefit (formerly Dollar for Dollar Living Benefit) | Provides a minimum amount “Minimum Income Benefit”), based on a 6% crediting rate, for purchase of a fixed Annuity, and allows withdrawal of a specified amount each Contract Year (“Annual Limit”) without a proportional reduction to the Minimum Income Benefit. | 0.60% | • The Company will credit a maximum rate of 3%, not 6%, for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, the PIMCO Low Duration Subaccount, and the Loan Account; however, you will still pay the full rider charge • If the Owner annuitizes the Contract before the tenth anniversary of the rider purchase date or at any time thereafter other than within the 30 day period following a Contract Anniversary, the Minimum Income Benefit is not available. • Available if the age of the Annuitant was 79 or younger on the Contract Date. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
Combined Annual Stepped Up and Guaranteed Growth Death Benefit | Provides an enhanced death benefit equal to the greater of the Stepped Up Death Benefit and the Guaranteed Growth Death Benefit. | 0.25% | • Any death benefit will be reduced by any Credit Enhance-ments applied during the 12 months preceding the Owner’s date of death. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner was age 79 or younger on the Contract Date. • See Annual Stepped Up Death Benefit and Guaranteed Growth Death Benefit above. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. |
43
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Combined Enhanced and Annual Stepped Up Death Benefit | Provides an enhanced death benefit equal to the greatest of the (1) Purchase Payments (less any withdrawals, including withdrawal charges), (2) the Contract Value plus the Enhanced Death Benefit, or (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit. | 0.35% | • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner was age 79 or younger on the rider issue date. • See Enhanced Death Benefit and Annual Stepped Up Death Benefit above. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
Combined Enhanced and Guaranteed Growth Death Benefit | Provides an enhanced death benefit equal to the greatest of (1) Purchase Payments (less any withdrawals, including withdrawal charges), (2) the Contract Value plus the Enhanced Death Benefit, or (3) and the Guaranteed Growth Death Benefit at 5% plus the Enhanced Death Benefit. | 0.35% | • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner was age 79 or younger on the rider issue date. • See Enhanced Death Benefit and Guaranteed Growth Death Benefit above. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. |
44
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Combined Enhanced, Annual Stepped Up and Guaranteed Growth Death Benefit | Provides an enhanced death benefit equal to the greatest of (1) Purchase Payments (less any withdrawals, including withdrawal charges), (2) the Contract Value plus the Enhanced Death Benefit, (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit, or (4) and the Guaranteed Growth Death Benefit at 5% plus the Enhanced Death Benefit. | 0.40% | • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • If proof of death and instructions regarding payment are not received by the Company within six months of the Owner’s date of death, the death benefit will equal the Contract Value on the Valuation Date such proof of death and instructions are received by the Company. • Available if the Owner was age 79 or younger on the rider issue date. • See Enhanced Death Benefit, Annual Stepped Up Death Benefit, and Guaranteed Growth Death Benefit above. • Withdrawals (including withdrawals to pay advisory fees) will reduce the benefit proportionately. This means withdrawals could significantly reduce the benefit by substantially more than the actual amount of the withdrawal, or even terminate the benefit. | |
6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit (formerly the Dollar for Dollar Combination Benefit) | Provides a minimum amount (“Minimum Income Benefit”), based on a 6% crediting rate, for purchase of a fixed Annuity, as well as an enhanced death benefit equal to the greatest of (1) Purchase Payments less withdrawals, (2) Contract Value, or (3) Purchase Payments, less withdrawals, increased at an annual effective rate of 6%, and allows withdrawal of a specified amount each Contract Year (“Annual Limit”) without a proportional reduction to the Minimum Death Benefit. | 0.85% | • Any death benefit will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. • Available if each Annuitant and Owner was age 79 or younger on the Contract Date. • Certain withdrawals could significantly reduce or even terminate the benefits. • See 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit above. • If a withdrawal (including a withdrawal to pay advisory fees) exceeds the Annual Limit, the withdrawal will reduce the benefit proportionately, but if the withdrawal does not exceed the Annual Limit, the withdrawal will reduce the benefit by the dollar amount of the withdrawal. A proportionate withdrawal could significantly reduce the benefit by substantially more than the actual amount of the withdrawal. |
45
| Optional Benefits (Available for Purchase Only Prior to February 1, 2010) | ||||
| Name of Benefit | Purpose | Maximum Fee (as a percentage of Contract Value) | Brief Description of Restrictions/Limitations | |
Total Protection | Provides (1) a Guaranteed Growth Death Benefit at 5%, (2) a Guaranteed Minimum Withdrawal Benefit with an Annual Withdrawal Amount of 5%, and a Benefit Amount of 100%, and (3) a Guaranteed Minimum Accumulation Benefit, which provides a guaranteed minimum Contract Value at the end of ten years. | Current: 0.85% | • The Guaranteed Minimum Accumulation Benefit will terminate 10 years after the rider purchase date if no reset is elected. • The Guaranteed Growth Death Benefit is reduced by any Annual Withdrawal Amount and is reduced propor-tionately by any withdrawal that exceeds the Annual Withdrawal Amount for a Contract Year. • Five years after the rider purchase date, under certain circumstances, you may elect to reset the Remaining Benefit Amount, the Guaranteed Growth Death Benefit, and the Guaranteed Minimum Accumulation Benefit. • While this rider is in effect, we reserve the right to restrict subsequent Purchase Payments. • Available if each Annuitant and Owner was age 79 or younger on the rider issue date. • See Guaranteed Growth Death Benefit, Guaranteed Minimum Withdrawal Benefit, and 6% Dollar for Dollar Guaranteed Minimum Income Benefit above. • If a withdrawal (including a withdrawal to pay advisory fees) exceeds the Annual Limit, the withdrawal will reduce the benefit proportionately, but if the withdrawal does not exceed the Annual Limit, the withdrawal will reduce the benefit by the dollar amount of the withdrawal. A proportionate withdrawal could significantly reduce the benefit by substantially more than the actual amount of the withdrawal. | |
Max: 1.45%3 | ||||
3% and 5% Extra Credit | Provides a Credit Enhancement equal to 3% or 5% of Purchase Payments, which will be added to the Contract Value for each Purchase Payment made in the first Contract Year. | 3%: 0.40% | • Credit Enhancements are only applied to Purchase Payments received in the first Contract Year. • Not available with the Fixed Account. • You may not select an Annuity Start Date prior to seven years from the effective date of the rider. • Credit Enhancements are subject to recapture under certain circumstances. • Available only if the Owner was age 80 or younger on the Contract Date. | |
| 5%: 0.70% | ||||
1 The charge for the 4-Year Alternate Withdrawal Rider is 0.60% if the Company issues your rider on or after January 1, 2005. However, if the Company issued your rider prior to that date, the charge is 0.55%. 2 The Company may increase the rider charge for the Guaranteed Minimum Withdrawal Benefit Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.10% on an annual basis. The current charge for such rider is used in calculating the maximum rider charge of 1.60% (1.00% for Contracts issued prior to June 19, 2006 with a 0 Year Alternate Withdrawal Charge Rider). 3 The Company may increase the rider charge for the Total Protection Rider only if you elect a reset; the Company guarantees the rider charge upon reset will not exceed 1.45% on an annual basis. Please see the discussion under “Total Protection” in Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010. The current charge for the rider is used in calculating the maximum rider charge of 1.60% of Contract Value (1.00% for Contracts issued prior to June 19, 2006 with a 0‑Year Alternate Withdrawal Charge Rider). | ||||
46
Optional Riders — Upon your application for the Contract, you may select one or more of the following riders at an additional charge. Contract Owners who purchased their Contracts prior to February 1, 2010 were not permitted to select riders with total rider charges in excess of 1.60%:
| • | Annual Stepped Up Death Benefit; |
| • | Extra Credit at 4%1; |
| • | Waiver of Withdrawal Charge; or |
| • | 0‑Year or 4‑Year Alternate Withdrawal Charge1. |
| 1 | The Fixed Account is not available under your Contract if you select the Extra Credit Rider at 4% or the 0‑Year or 4‑Year Alternate Withdrawal Charge Rider. |
The Company makes each rider available only at issue. You cannot change or cancel the rider(s) that you select after they are issued. The Annual Stepped Up Death Benefit Rider, Extra Credit at 4% Rider, and the Alternate Withdrawal Charge Riders are available in every state. The Waiver of Withdrawal Charge rider is not available in every state. See the detailed description of each rider below.
The deduction of advisory fees from your Contract Value to pay a financial intermediary is treated as a withdrawal under the Contract. Such deductions will reduce death benefits and any guaranteed benefit values, perhaps significantly. Consult your financial intermediary as to the impact of deducting advisory fees from your Contract Value prior to making an election.
For information on riders that are no longer available for purchase, please see Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010 and Appendix C – Automatic Bonus Credit Rider.
Please note that any amount that we may pay or make available under any optional rider that is in excess of Contract Value is subject to our financial strength and claims-paying ability.
Annual Stepped Up Death Benefit — For an additional charge, as reflected in the Fee Table and the table of benefits above, this rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by outstanding Contract Debt, any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit (except the death benefit calculated under number 1 below) also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements or Bonus Credits), less any withdrawals (including systematic withdrawals) and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company; or |
| 3. | The Stepped Up Death Benefit. |
The Stepped Up Death Benefit is the largest result determined for the following calculation as of the date of receipt of instructions regarding payment of the death benefit:
| • | The Contract Value on each Contract Anniversary that occurs prior to the oldest Owner attaining age 81; plus |
| • | Any Purchase Payments received by the Company since the applicable Contract Anniversary; less |
| • | An adjustment for any withdrawals (including systematic withdrawals and withdrawals to pay advisory fees) and withdrawal charges made since the applicable anniversary. In the event of a withdrawal (including a systematic withdrawal or a withdrawal to pay advisory fees), the Stepped Up Death Benefit is reduced as of the date of the withdrawal by a percentage found by dividing the withdrawal amount, including any applicable withdrawal charges, or premium taxes and any forfeited Credit Enhancements, by Contract Value immediately prior to the withdrawal. |
47
If an Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will be as set forth in number 2 above.
This rider is available only if the age of the Owner at the time the Contract is issued is age 79 or younger. See the discussion under “Death Benefit.”
Example of the Annual Stepped Up Death Benefit. Assume:
| (i) | The initial Purchase Payment is $50,000, and no additional Purchase Payments are added to the Contract. |
| (ii) | The Owner is 60 years old when the Contract is issued. |
| (iii) | The Owner takes no withdrawals between the date the Contract was issued and the date of the Owner’s death. |
At the time the Contract is issued, the Stepped Up Death Benefit amount is the initial Purchase Payment or $50,000. Due to positive market performance, the Contract Value on the first Contract Anniversary is $65,000. The Owner’s Stepped Up Death Benefit amount increases from $50,000 to $65,000. Due to negative market performance, the Contract Value has decreased to $49,000 on the second Contract Anniversary. The Stepped Up Death Benefit amount remains at $65,000.
The Owner dies during the third Contract Year. At the time of the Owner’s death, the Contract Value is $55,000. The amount payable at death would be the greatest of (1) the sum of all Purchase Payments (not including any Credit Enhancements or Bonus Credits), less any withdrawals and withdrawal charges (in this case, $50,000); (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company (in this case, $55,000); or (3) the Stepped Up Death Benefit (in this case, $65,000). Thus, $65,000 is the amount of the death benefit.
Example of a Reduction in the Stepped Up Death Benefit Amount as a Result of a Withdrawal. Assume:
| (i) | The initial Purchase Payment is $50,000, and no additional Purchase Payments are added to the Contract. |
| (ii) | The Owner is 60 years old when the Contract is issued. |
| (iii) | The Owner takes no withdrawals between the date the Contract was issued and the date of the Owner’s death. |
At the time the Contract is issued, the Stepped Up Death Benefit amount is the initial Purchase Payment or $50,000. Due to positive market performance, the Contract Value on the first Contract Anniversary is $65,000. The Owner’s Stepped Up Death Benefit amount increases from $50,000 to $65,000. Due to negative market performance, the Contract Value has decreased to $49,000 on the second Contract Anniversary. The Stepped Up Death Benefit amount remains at $65,000.
The Owner takes a free withdrawal of $4,900 in the third Contract Year. The Contract Value prior to the withdrawal is $35,000. As a result of the withdrawal, the Stepped Up Death Benefit is reduced as follows:
Withdrawal amount / Contract Value prior to withdrawal
$4,900 / $35,000 = 0.14 or 14%
Stepped Up Death Benefit x 14%
$65,000 x 14% = $9,100
$65,000 - $9,100 = $55,900
The Stepped Up Death Benefit following the withdrawal is $55,900.
Example of a Reduction in the Stepped Up Death Benefit Amount as a Result of a Withdrawal to Pay Advisory Fees. Assume:
| (i) | The initial Purchase Payment is $100,000, and no additional Purchase Payments are added to the Contract. |
| (ii) | The Stepped Up Death Benefit prior to the advisory fee withdrawal is $125,000. |
48
The Owner makes a $1,000 withdrawal to pay advisory fees. The Stepped Up Death Benefit is reduced as follows:
Stepped Up Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$125,000 x [1 - ($1,000 / $100,000)] =
$125,000 x 1 - .01 = $123,750
The $1,000 withdrawal causes the Stepped Up Death Benefit to decrease by $1,250.
Extra Credit — For an additional charge, as reflected in the Fee Table and the table of benefits above, this rider makes available a Credit Enhancement, which is an amount added to your Contract Value by the Company. You may purchase this rider only at issue. If you elect this rider, the Fixed Account is not available as an investment option under the Contract. A Credit Enhancement of 4% of Purchase Payments, as elected in the application, will be added to Contract Value for each Purchase Payment made in the first Contract Year. Prior to February 1, 2010, a Credit Enhancement of 3% or 5% was also available for election. Any Credit Enhancement will be allocated among the Subaccounts in the same proportion as your Purchase Payment. You may have in effect on your Contract both the Extra Credit Rider and an Automatic Bonus Credit Rider; however, each rider calculates the Credit Enhancement amount and Bonus Credit amount, respectively, on the basis of Purchase Payments, which do not include any Credit Enhancement or Bonus Credit. See Appendix C – Automatic Bonus Credit Rider.
This rider is available only if the age of the Owner on the Contract Date is age 80 or younger at issue. If you elect this rider, you may not select an Annuity Start Date that is prior to seven years from the effective date of the rider.
Example of the Credit Enhancement Applied to Initial and Subsequent Purchase Payments. Assume:
| (i) | The Owner purchased the Contract with the 4.0% Extra Credit Rider. |
| (ii) | The initial Purchase Payment is $100,000. |
The amount of the Credit Enhancement added to the Contract Value would be $4,000 ($100,000 x 4.0%). Thus, the Contract Value at issue would be $104,000.
Six months later the Owner makes a Purchase Payment of $50,000. The additional Purchase Payment will increase the Contract Value by $52,000, the amount of the $50,000 Purchase Payment plus $2,000 ($50,000 x 4.0%).
In the event of a full or certain partial withdrawal, the Company will recapture all or part of any Credit Enhancement that has not yet vested. An amount equal to 1/7 of the Credit Enhancement will vest as of each Contract Date anniversary and the Credit Enhancement will be fully vested at the end of seven years from that date. The amount to be forfeited in the event of a withdrawal is equal to a percentage of the Credit Enhancement that has not yet vested. The percentage is determined for each withdrawal as of the date of the withdrawal by dividing:
| 1. | The amount of the withdrawal, including any applicable withdrawal charges, or premium taxes and any forfeited Credit Enhancements, less the free withdrawal amount, by |
| 2. | Contract Value immediately prior to the withdrawal. |
The Company will recapture Credit Enhancements on withdrawals only to the extent that total withdrawals in a Contract Year, including systematic withdrawals, exceed the free withdrawal amount. The free withdrawal amount is equal in the first Contract Year, to 10% of Purchase Payments, excluding any Credit Enhancements and/or Bonus Credits, made during the year and, for any subsequent Contract Year, to 10% of Contract Value as of the first Valuation Date of that Contract Year. In addition, the Company does not recapture Credit Enhancements on withdrawals made to pay the fees of your registered investment adviser, provided that your adviser has entered into a variable annuity adviser agreement with the Company.
The Company may recapture Credit Enhancements in the event of a full or partial withdrawal as described above. In addition, the Company will recapture the Credit Enhancement: if you exercise your right to return the Contract
49
during the Free-Look period, in which case your Contract Value will be reduced by the value of any Credit Enhance-ments applied. See “Free-Look Right.” In the event of a withdrawal under the terms of the Waiver of Withdrawal Charge Rider, you will forfeit all or part of any Credit Enhancements applied during the 12 months preceding such a withdrawal. See “Waiver of Withdrawal Charge.” Death benefit proceeds may exclude all or part of any Credit Enhancements. See “Death Benefit” and the discussions of the death benefit riders.
Example of Credit Enhancement Vesting and Recapture upon Withdrawal in Excess of the Free Withdrawal Amount. Assume:
| (i) | The Owner purchased the Contract with the 4.0% Extra Credit Rider. |
| (ii) | The initial Purchase Payment is $175,000. |
The amount of the Credit Enhancement added to the Contract Value would be $7,000 ($175,000 x 4.0%). Thus, the Contract Value at issue would be $182,000.
An amount equal to 1/7 of the Credit Enhancement vests each Contract Anniversary, and the Credit Enhance-ment is fully vested seven years from the date the Contract was issued. Assuming no withdrawals in excess of the free withdrawal amount are taken during the first seven Contract Years, the table below shows how the $7,000 Credit Enhancement vests each year:
| Beginning of Contract Year | Vested Credit Enhancement | Unvested Credit Enhancement |
| 1 | $0.00 | $7,000 |
| 2 | $1,000 | $6,000 |
| 3 | $2,000 | $5,000 |
| 4 | $3,000 | $4,000 |
| 5 | $4,000 | $3,000 |
| 6 | $5,000 | $2,000 |
| 7 | $6,000 | $1,000 |
| 8 | $7,000 | $0.00 |
Due to negative market performance, in Contract Year 3, the Contract Value is $100,000, and the free withdrawal amount is $10,000. The Owner requests a withdrawal of $20,000, $10,000 more than the free withdrawal amount. The Credit Enhancement recapture is calculated as follows:
(Withdrawal Amount - Free Withdrawal Amount) x Unvested Credit =
(Contract Value Prior to Withdrawal - Unvested Credit Enhancement) Enhancement
($20,000 - $10,000) x $5,000 = $526.32
($100,000 - $5,000)
The Company expects to make a profit from the charge for this rider and funds payment of the Credit Enhance-ments through the rider charge and the vesting schedule. The Extra Credit Rider may make sense for you only if you expect your average annual return (net of expenses of the Contract and the Underlying Funds) to exceed the applicable amount set forth in the table below, and you do not expect to make Purchase Payments to the Contract after the first Contract Year. The returns below represent the amount that must be earned each year during the seven-year period beginning on the Contract Date to break even on the rider. The rate of return assumes that all Purchase Payments are made during the first Contract Year when the Credit Enhancement is applied to Purchase Payments. If Purchase Payments are made in subsequent Contract Years, the applicable rider charge will increase in correlation to Purchase Payments and no offsetting Credit Enhancement will be available. As a result, the rate of return required to break even would be higher.
50
If your actual returns are greater than the amounts set forth below and you make no Purchase Payments after the first Contract Year, you will profit from the purchase of the rider. If your actual returns are less, or if you make additional Purchase Payments after the first Contract Year, you will be worse off than if you had not purchased the rider. Please note that the returns below are net of Contract and Underlying Fund expenses so that you would need to earn the amount in the table plus the amount of applicable expenses to break even on the rider.
| Interest Rate | Rate of Return (net of expenses) |
| 3%* | -5.00% |
| 4% | -1.50% |
| 5%* | 0.80% |
| *Effective February 1, 2010, the 3% and 5% Credit Enhancements are no longer available for election with the Extra Credit rider. | |
The Internal Revenue Code generally requires that interests in a Qualified Contract be nonforfeitable, and it is unclear whether the Credit Enhancement feature is consistent with those requirements. Consult a tax advisor before purchasing this rider as part of a Qualified Contract.
Prior to May 1, 2010, on a non-discriminatory basis, the Company paid the additional Credit Enhancement in connection with a Contract purchased by customers of certain broker-dealers who exchanged their current contract for this Contract and paid a withdrawal charge on the exchange. When such a customer purchased a Credit Enhance-ment of 5%, the Company added an additional Credit Enhancement to the customer’s initial Purchase Payment. The Company determined the amount of any additional Credit Enhancement by subtracting the 5% Credit Enhancement from the withdrawal charge amount assessed on the customer’s exchanged annuity contract. The Company required that it be notified when a purchase was made that qualified under this provision. There was no charge for this additional Credit Enhancement above the charge for the Extra Credit Rider at 5%. Any additional Credit Enhance-ment amount was subject to recapture in the event that the Owner exercised his or her right to return the Contract during the Free-Look period and was subject to a withdrawal charge.
Waiver of Withdrawal Charge — For an additional charge, as reflected in the Fee Table and the table of benefits above, this rider makes available a waiver of withdrawal charge in the event of your (1) total and permanent disability prior to age 65, (2) confinement to a nursing home, or (3) terminal illness.
The rider defines confinement to a hospital or nursing facility, as follows: (1) you have been confined to a “hospital” or “qualified skilled nursing facility” for at least 90 consecutive days prior to the date of the withdrawal; and (2) you are so confined when the Company receives the waiver request and first became so confined after the Contract Date.
The Company defines terminal illness as follows: (1) the Owner has been diagnosed by a licensed physician with a “terminal illness”; and (2) such illness was first diagnosed after the Contract was issued.
The Company defines disability as follows: (1) the Owner is unable, because of physical or mental impairment, to perform the material and substantial duties of any occupation for which the Owner is suited by means of education, training or experience; (2) the impairment has been in existence for more than 180 days and began before the Owner attained age 65 and after the Contract Date; and (3) the impairment is expected to result in death or be long-standing and indefinite.
Prior to making a withdrawal pursuant to this rider, you must submit to the Company a properly completed claim form and a written physician’s statement acceptable to the Company. The Company will also accept as proof of disability a certified Social Security finding of disability.
The Company reserves the right to have a physician of its choice examine the Owner to determine if the Owner is eligible for a waiver. The confinement to a nursing home provision of the Waiver of Withdrawal Charge rider is not available in California and Massachusetts. The terminal illness provision of the Waiver of Withdrawal Charge rider is not available in California and New Jersey.
If you have also purchased the Extra Credit Rider, you will forfeit all or part of any Credit Enhancements applied during the 12 months preceding any withdrawal pursuant to this rider. The amount of Credit Enhancements to be forfeited is a percentage determined by dividing the amount of the withdrawal by the total Purchase Payments made in the 12 months preceding the withdrawal. This means that if the withdrawal amount exceeds the Purchase Payment(s) made during the 12 months preceding the withdrawal, 100% of any Credit Enhancements paid will be
51
forfeited. The maximum percentage that may be forfeited is 100% of Credit Enhancements earned during the 12 months preceding the withdrawal. Note that if you purchase the Contract with this rider after age 65, you will receive no benefit from the disability portion of this rider and the annual rider charge will remain the same.
Example of the Waiver of Withdrawal Charge. Assume:
| (i) | The Owner is diagnosed with a terminal illness after the Contract is issued. |
| (ii) | The Owner requests a withdrawal of $25,000 in Contract Year 3. |
| (iii) | The free withdrawal amount for Contract Year 3 is $10,000. |
Without the Waiver of Withdrawal Charge Rider, the charge applicable to the $25,000 withdrawal would be $900 (($25,000 - $10,000) x 6.0%), and the Owner would receive $24,100 ($25,000 - $900). With the Waiver of Withdrawal Charge Rider, the $900 charge is waived, and the Owner receives the full $25,000.
Example of Credit Enhancement Recapture if the Extra Credit Rider is Purchased with the Waiver of Withdrawal Charge Rider. Assume:
(i) (ii) (iii) | The Owner purchased the 4.0% Extra Credit Rider and Waiver of Withdrawal Charge Rider at Contract issue. The initial Purchase Payment was $100,000 The Owner was younger than age 65 when the Contract was purchased. |
At the time the Contract is issued, $4,000 is applied as a Credit Enhancement. Assume that six months after Contract issue, the Owner requests a withdrawal of $5,000. The Credit Enhancement is recaptured from this withdrawal as follows:
Withdrawal Amount x Credit Enhancements Applied in Last 12 Months =
Total Purchase Payments
Made in Last 12 Months
$5,000 x $4,000 = $200
$100,000
Alternate Withdrawal Charge — For an additional charge, as reflected in the Fee Table and the table of benefits above, these riders make available an alternative withdrawal charge schedule. If you elect one of these riders, the Fixed Account is not available as an investment option under the Contract. You may select one of the following schedules at the time of purchase of the rider, which is available only at issue.
| 0‑Year Schedule | 4‑Year Schedule | ||
| Purchase Payment Age (in years) | Withdrawal Charge | Purchase Payment Age (in years) | Withdrawal Charge |
| 0 and over | 0% | 1 | 7% |
| 2 | 7% | ||
| 3 | 6% | ||
| 4 | 5% | ||
| 5 and over | 0% | ||
If you purchase one of these riders, the withdrawal charge schedule above will apply in lieu of the 7‑year withdrawal charge schedule described under “Contingent Deferred Sales Charge.” If the 4‑Year Alternate Withdrawal Charge Rider has not yet been approved in your state, you may purchase a 3‑Year Alternate Withdrawal Charge Rider, which provides a withdrawal charge of 7%, 6%, 5% and 0%, respectively, based upon Purchase Payment age (in years) of 1, 2, 3 and over. If you have also purchased the Extra Credit Rider, you may forfeit all or part of any Credit Enhancement in the event of a full or partial withdrawal. The amount of the Credit Enhancement forfeiture is calculated in accordance with the Extra Credit Rider. See “Extra Credit.” You should consider whether purchasing an Extra Credit Rider (which recaptures all or a portion of the related Credit Enhancements upon any withdrawal within seven years) with an Alternate Withdrawal Charge Rider (which provides a 0 or 4 year withdrawal charge
52
schedule) is appropriate based on your circumstances. If you do not plan to take withdrawals in excess of the free withdrawal amount within seven years of the date of a Purchase Payment, this rider is not appropriate for you. See “Extra Credit.
Fees for these riders will continue to apply even after the withdrawal charges under the seven-year withdrawal charge schedule are no longer applicable. Fees for these riders are imposed until the Annuity Start Date if Annuity Options 1 through 4, 7, or 8 are chosen and for the life of the Contract if Annuity Options 5 or 6 are chosen. The 4‑Year Alternate Withdrawal Charge Rider provides a potential benefit only if a withdrawal is taken in the five to seven years after the applicable Purchase Payment date because for the first four years after the Purchase Payment date, the withdrawal charges are the same as they would be under the seven-year schedule. The Company expects to make a profit from the charge for these riders.
Example of the 0-Year Alternate Withdrawal Charge. Assume:
| (i) | The Owner purchased the Contract with the 0-Year Alternate Withdrawal Charge Rider. |
| (ii) | The Owner requests a withdrawal of $25,000 in Contract Year 2. |
| (iii) | The free withdrawal amount for Contract Year 2 is $10,000. |
Without the 0-Year Alternate Withdrawal Charge Rider, the charge applicable to the $25,000 withdrawal would be $1,050, calculated as follows: ($25,000 - $10,000) x 7% Withdrawal Charge, and the Owner would receive $23,950 ($25,000 - $1,050). With the 0-Year Alternate Withdrawal Charge Rider, there is no Withdrawal Charge, and the Owner receives the full $25,000.
Example of the 4-Year Alternate Withdrawal Charge. Assume:
| (i) | The Owner purchased the Contract with the 4-Year Alternate Withdrawal Charge Rider. |
| (ii) | The Owner requests a withdrawal of $25,000 in Contract Year 5. |
| (iii) | The free withdrawal amount for Contract Year 5 is $10,000. |
Without the 4-Year Alternate Withdrawal Charge Rider, the charge applicable to the $25,000 withdrawal would be $600, calculated as follows: ($25,000 - $10,000) x 4% Withdrawal Charge, and the Owner would receive $24,400 ($25,000 - $600). With the 4-Year Alternate Withdrawal Charge Rider, there is no Withdrawal Charge, and the Owner receives the full $25,000.
Riders Previously Available for Purchase — A number of other riders previously offered with the Contract are no longer available for purchase. Please refer to Appendix B – Riders No Longer Available – Available For Purchase Only Prior To February 1, 2010 and Appendix C – Automatic Bonus Credit Rider for descriptions of these riders.
Annuity Period
General — You select the Annuity Start Date at the time of application. The Annuity Start Date may not be prior to the third Contract anniversary and may not be deferred beyond the Annuitant’s 95th birthday, although the terms of a Qualified Plan and the laws of certain states may require that you start annuity payments at an earlier age. If you do not select an Annuity Start Date, the Annuity Start Date will be the later of the Annuitant’s 70th birthday or the tenth Contract anniversary. For Contracts issued in Arizona on or after September 20, 2007, if no Annuity Start Date is selected, the Annuity Start Date will be the Annuitant’s 95th birthday. If you do not select an Annuity Option, annuity payments will not begin until you make a selection, which may be after the Annuity Start Date. Any applicable death benefit will terminate at the Annuity Start Date without value. See “Selection of an Option.” If there are Joint Annuitants, the birth date of the older Annuitant will be used to determine the latest Annuity Start Date.
On the Annuity Start Date, the proceeds under the Contract will be applied to provide an annuity under one of the options described below. Each option is available in two forms—either as a variable annuity for use with the Subaccounts or as a fixed annuity for use with the Fixed Account. A combination variable and fixed annuity is also available. Variable annuity payments will fluctuate with the investment performance of the applicable Subaccounts while fixed annuity payments will not. Unless you direct otherwise, proceeds derived from Contract Value allocated to the Subaccounts will be applied to purchase a variable annuity and proceeds derived from Contract Value
53
allocated to the Fixed Account will be applied to purchase a fixed annuity. The proceeds under the Contract will be equal to your Contract Value in the Subaccounts and the Fixed Account as of the Annuity Start Date, reduced by
| • | any applicable premium taxes; |
| • | any outstanding Contract Debt; |
| • | for Annuity Options 1 through 4, 7 and 8, a pro rata account administration charge, if applicable; and |
| • | A withdrawal charge for Annuity Options 5, 6 and 7. |
The Contract currently provides for eight Annuity Options. The Company may make other Annuity Options available upon request. The Company may discontinue the availability of one or more of these options at any time but will always offer a variable annuity option. Annuity payments under Annuity Options 1 through 4, 7 and 8 are based upon annuity rates that vary with the Annuity Option selected. In the case of Annuity Options 1 through 4 and 8, the annuity rates will vary based on the age and sex of the Annuitant, except that unisex rates are available where required by law. The annuity rates reflect the Annuitant’s life expectancy based upon the Annuitant’s age as of the Annuity Start Date and the Annuitant’s gender, unless unisex rates apply. The annuity rates are based upon the 1983(a) mortality table with mortality improvement under Projection Scale G and are adjusted to reflect an assumed interest rate of 3.5%, compounded annually, for the variable annuity. In the case of Annuity Option 7, the annuity rate is determined without reference to the age or sex of the Annuitant and is based upon the assumed interest rate. In the case of Annuity Options 5 and 6 as described below, annuity payments are based upon Contract Value without regard to annuity rates.
Annuity Options 1 through 4 and 8 provide for payments to be made during the lifetime of the Annuitant. Annuity payments under such options cease in the event of the Annuitant’s death, unless the option provides for a guaranteed minimum number of payments, for example a life income with guaranteed payments of 5, 10, 15 or 20 years. The level of annuity payments will be greater for shorter guaranteed periods and less for longer guaranteed periods. Similarly, payments will be greater for life annuities than for joint and survivor annuities, because payments for life annuities are expected to be made for a shorter period.
You may elect to receive annuity payments on a monthly, quarterly, semiannual, or annual basis, although no payments will be made for less than $100. If the frequency of payments selected would result in payments of less than $100, the Company reserves the right to change the frequency. For example, if you select monthly payments and your payment amount would be $75 per month, the Company could elect to change your payment frequency to quarterly as less frequent payments will result in a larger payment amount (assuming the same amount is applied to purchase the annuity).
You may designate or change an Annuity Start Date, Annuity Option, or Annuitant, provided proper written notice is received by the Company at its Administrative Office at least 30 days prior to the Annuity Start Date set forth in the Contract. The date selected as the new Annuity Start Date must be at least 30 days after the date written notice requesting a change of Annuity Start Date is received at the Company’s Administrative Office.
Once annuity payments have commenced under Annuity Options 1 through 4 and 8, an Annuitant or Owner cannot change the Annuity Option and cannot make partial withdrawals or surrender his or her annuity for the Withdrawal Value. An Owner also cannot change the Annuity Option or make partial withdrawals or surrender his or her annuity for the Withdrawal Value if he or she has elected fixed annuity payments under Annuity Option 7. Under Annuity Options 5 and 6, an Owner may make full or partial withdrawals of Contract Value (other than systematic withdrawals), subject to any applicable withdrawal charge, premium tax charge, and pro rata account administration charge.
If an Owner has elected variable annuity payments or a combination of variable and fixed annuity payments under Annuity Option 7, an Owner may elect to withdraw the present value of future annuity payments, commuted at the assumed interest rate, subject to a reduction for any applicable withdrawal charge and any uncollected premium tax. However, the Owner cannot take systematic withdrawals or make withdrawals to pay the fees of an investment adviser. If the Owner elects a partial withdrawal under Annuity Option 7, future variable annuity payments will be reduced as a result of such withdrawal. The Company will make payment in the amount of the partial withdrawal requested and will reduce the amount of future annuity payments by a percentage that is equal to the ratio of (i) the partial withdrawal, plus any applicable withdrawal charge and any uncollected premium tax, over (ii) the present value of future annuity payments, commuted at the assumed interest rate. The number of Annuity Units used in calculating future variable annuity payments is reduced by the applicable percentage. The tax treatment of partial withdrawals
54
taken after the Annuity Start Date is uncertain. Consult a tax advisor before requesting a withdrawal after the Annuity Start Date. The Owner may not make systematic withdrawals under Annuity Option 7. See “Value of Variable Annuity Payments: Assumed Interest Rate” for more information with regard to how the Company calculates variable annuity payments.
An Owner may transfer Contract Value among the Subaccounts during the Annuity Period, as was available during the accumulation phase, if variable annuity payments have been selected.
The Contract specifies annuity tables for Annuity Options 1 through 4, 7 and 8, described below. The tables contain the guaranteed minimum dollar amount (per $1,000 applied) of the first annuity payment for a variable annuity and each annuity payment for a fixed annuity.
Annuity Options —
Option 1 — Life Income. Periodic annuity payments will be made during the lifetime of the Annuitant. It is possible under this Option for any Annuitant to receive only one annuity payment if the Annuitant’s death occurred prior to the due date of the second annuity payment, two if death occurred prior to the due date of the third annuity payment, etc. There is no minimum number of payments guaranteed under this option. Payments will cease upon the death of the Annuitant regardless of the number of payments received.
Option 2 — Life Income with Guaranteed Payments of 5, 10, 15 or 20 Years. Periodic annuity payments will be made during the lifetime of the Annuitant with the promise that if, at the death of the Annuitant, payments have been made for less than a stated period, which may be five, ten, fifteen or twenty years, as elected by the Owner, annuity payments will be continued during the remainder of such period to the Designated Beneficiary. Upon the Annuitant’s death after the period certain, no further annuity payments will be made. If you have elected the Guaranteed Minimum Income Benefit Rider, the 6% Dollar for Dollar Guaranteed Minimum Income Benefit Rider, or the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Rider, you may apply the Minimum Income Benefit to purchase a Life Income Annuity with a 10‑year period certain. The annuity rates under the rider are based upon the 1983(a) mortality table with mortality improvement under Projection Scale G and an interest rate of 2½% (2% for the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Riders) in lieu of the rate described above.
Option 3 — Life with Installment or Unit Refund Option. Periodic annuity payments will be made during the lifetime of the Annuitant with the promise that, if at the death of the Annuitant, the number of payments that has been made is less than the number determined by dividing the amount applied under this Annuity Option by the amount of the first payment, annuity payments will be continued to the Designated Beneficiary until that number of payments has been made. For example, if the Annuity start amount was $100,000 and the calculated monthly annuity payment was $550, 182 payments ($100,000 / $550) would be guaranteed for the life of the Annuitant. This means if the Annuitant dies before 182 payments have been made, the remaining annuity payments will be continued to the Designated Beneficiary.
Option 4 —
A. Joint and Last Survivor. Annuity payments will be made as long as either Annuitant is living. Upon the death of one Annuitant, annuity payments continue to the surviving Annuitant at the same or a reduced level of 75%, 66 2/3% or 50% of annuity payments as elected by the Owner at the time the Annuity Option is selected. With respect to fixed annuity payments, the amount of the annuity payment, and with respect to variable annuity payments, the number of Annuity Units used to determine the annuity payment, is reduced as of the first annuity payment following the Annuitant’s death. It is possible under this Option for only one annuity payment to be made if both Annuitants died prior to the second annuity payment due date, two if both died prior to the third annuity payment due date, etc. As in the case of Option 1, there is no minimum number of payments guaranteed under this Option 4A. Payments cease upon the death of the last surviving Annuitant, regardless of the number of payments received.
B. Joint and Last Survivor with Guaranteed Payments of 5, 10, 15 or 20 Years. You may also select Option 4 with guaranteed payments. Annuity payments will be made as long as either Annuitant is living. Upon the death of one Annuitant, annuity payments continue to the surviving Annuitant at the same level with the promise that if, at the death of the both Annuitants, payments have been made for less than a stated period, which may be five, ten, fifteen or twenty years, as elected by the Owner, annuity payments will be continued during the remainder
55
of such period to the Designated Beneficiary. Upon the last death of the Annuitants after the period certain, no further annuity payments will be made. If you have elected the Guaranteed Minimum Income Benefit Rider, the 6% Dollar for Dollar Guaranteed Minimum Income Benefit Rider, or the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Rider, you may apply the Minimum Income Benefit to purchase a fixed Joint and Last Survivor Annuity with a 10‑year period certain. The annuity rates under the rider are based upon the 1983(a) mortality table with mortality improvement under Projection Scale G and an interest rate of 2½% (2% for the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Riders) in lieu of the rate described above.
Option 5 — Payments For a Specified Period. Periodic annuity payments will be made for a fixed period, which may be from 5 to 20 years, as elected by the Owner. The amount of each annuity payment is determined by dividing Contract Value by the number of annuity payments remaining in the period. If, at the death of all Annuitants, payments have been made for less than the selected fixed period, the remaining unpaid payments will be paid to the Designated Beneficiary. The Company will continue to deduct any applicable monthly rider charge and pro rata account administration charge from Contract Value if you elect this option.
Option 6 — Payments of a Specified Amount. Periodic annuity payments of the amount elected by the Owner will be made until Contract Value is exhausted, with the guarantee that, if, at the death of all Annuitants, all guaran-teed payments have not yet been made, the remaining unpaid payments will be paid to the Designated Beneficiary. The Company will continue to deduct any applicable monthly rider charge and pro rata account administration charge from Contract Value if you elect this option.
Option 7 — Period Certain. Periodic annuity payments will be made for a stated period, which may be 5, 10, 15 or 20 years, as elected by the Owner. This option differs from Option 5 in that annuity payments are calculated on the basis of Annuity Units rather than as a percentage of Contract Value. If the Annuitant dies prior to the end of the period, the remaining payments will be made to the Designated Beneficiary.
Option 8 — Joint and Contingent Survivor Option. Periodic annuity payments will be made during the life of the primary Annuitant. Upon the death of the primary Annuitant, payments will be made to the contingent Annuitant during his or her life. If the contingent Annuitant is not living upon the death of the primary Annuitant, no payments will be made to the contingent Annuitant. It is possible under this Option for only one annuity payment to be made if both Annuitants died prior to the second annuity payment due date, two if both died prior to the third annuity payment due date, etc. As in the case of Options 1 and 4A, there is no minimum number of payments guaranteed under this Option. Payments cease upon the death of the last surviving Annuitant, regardless of the number of payments received.
Value of Variable Annuity Payments: Assumed Interest Rate. The annuity tables in the Contract which are used to calculate variable annuity payments for Annuity Options 1 through 4, 7 and 8 are based on an “assumed interest rate” of 3.5%, compounded annually. Variable annuity payments generally increase or decrease from one annuity payment date to the next based upon the performance of the applicable Subaccounts during the interim period adjusted for the assumed interest rate. If the performance of the Subaccount selected is equal to the assumed interest rate, the annuity payments will remain constant. If the performance of the Subaccounts is greater than the assumed interest rate, the annuity payments will increase and if it is less than the assumed interest rate, the annuity payments will decline. A higher assumed interest rate would mean a higher initial annuity payment but the amount of the annuity payment would increase more slowly in a rising market (or the amount of the annuity payment would decline more rapidly in a declining market). A lower assumption would have the opposite effect.
The Company calculates variable annuity payments under Options 1 through 4, 7 and 8 using Annuity Units. The value of an Annuity Unit for each Subaccount is determined as of each Valuation Date and was initially $1.00. The Annuity Unit value of a Subaccount as of any subsequent Valuation Date is determined by adjusting the Annuity Unit value on the previous Valuation Date for (1) the interim performance of the corresponding Underlying Fund; (2) any dividends or distributions paid by the corresponding Underlying Fund; (3) the mortality and expense risk and administration charges; (4) the charges, if any, that may be assessed by the Company for taxes attributable to the operation of the Subaccount; and (5) the assumed interest rate.
The Company determines the number of Annuity Units used to calculate each variable annuity payment as of the Annuity Start Date. As discussed above, the Contract specifies annuity rates for Options 1 through 4, 7 and 8 for each $1,000 applied to an Annuity Option. The proceeds under the Contract as of the Annuity Start Date, are divided by $1,000 and the result is multiplied by the rate per $1,000 specified in the annuity tables to determine the initial annuity payment for a variable annuity and the guaranteed monthly annuity payment for a fixed annuity.
56
On the Annuity Start Date, the Company divides the initial variable annuity payment by the value as of that date of the Annuity Unit for the applicable Subaccount to determine the number of Annuity Units to be used in calculating subsequent annuity payments. If variable annuity payments are allocated to more than one Subaccount, the number of Annuity Units will be determined by dividing the portion of the initial variable annuity payment allocated to a Subaccount by the value of that Subaccount’s Annuity Unit as of the Annuity Start Date. The initial variable annuity payment is allocated to the Subaccounts in the same proportion as the Contract Value is allocated as of the Annuity Start Date. The number of Annuity Units will remain constant for subsequent annuity payments, unless the Owner transfers Annuity Units among Subaccounts or makes a withdrawal under Option 7.
Subsequent variable annuity payments are calculated by multiplying the number of Annuity Units allocated to a Subaccount by the value of the Annuity Unit as of the date of the annuity payment. If the annuity payment is allocated to more than one Subaccount, the annuity payment is equal to the sum of the payment amount determined for each Subaccount.
Selection of an Option — You should carefully review the Annuity Options with your financial or tax adviser. If you have questions about the calculation of the payment amount under a particular Annuity Option, you can contact the Company at 1-800-888-2461. For Contracts used in connection with a Qualified Plan, reference should be made to the terms of the particular plan and the requirements of the Internal Revenue Code for pertinent limitations respecting annuity payments and other matters. For instance, Qualified Plans generally require that distributions begin no later than April 1 of the calendar year following the year in which the Annuitant reaches age 72. In addition, under Qualified Plans, not all Annuity Options will satisfy required minimum distribution rules, particularly as those rules apply to your beneficiary after your death. Beginning with Owner deaths occurring on or after January 1, 2020, subject to certain exceptions, most non-spouse beneficiaries must complete distributions within ten years of the Owner’s death in order to satisfy required minimum distribution rules. Consult a tax adviser before electing an Annuity Option.
The Company does not allow the Annuity Start Date to be deferred beyond the Annuitant’s 95th birthday.
The Fixed Account
The Fixed Account is not available in all states. Even if it is available in your state, the Fixed Account is not available if you select the Extra Credit Rider at 4% or the 0‑Year or 4‑Year Alternate Withdrawal Charge Rider. If the Fixed Account option and Loan Account are important to you, you should not select the foregoing optional riders. (The Fixed Account also is not available if you purchased the Extra Credit Rider at 3% or 5%. See Appendix B – Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010.)
If the Fixed Account is available under your Contract, you may allocate all or a portion of your Purchase Payments and transfer Contract Value to the Fixed Account. Amounts allocated to the Fixed Account become part of the Company’s General Account, which supports the Company’s insurance and annuity obligations. The General Account is subject to regulation and supervision by the Kansas Insurance Department and is also subject to the insurance laws and regulations of other jurisdictions in which the Contract is distributed. In reliance on certain exemptive and exclusionary provisions, interests in the Fixed Account have not been registered as securities under the Securities Act of 1933 (the “1933 Act”) and the Fixed Account has not been registered as an investment company under the Investment Company Act of 1940 (the “1940 Act”). Accordingly, neither the Fixed Account nor any interests therein are generally subject to the provisions of the 1933 Act or the 1940 Act. This disclosure, however, is subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in this Prospectus. This Prospectus is generally intended to serve as a disclosure document only for aspects of a Contract involving the Separate Account and contains only selected information regarding the Fixed Account. For more information regarding the Fixed Account, see “The Contract.”
Amounts allocated to the Fixed Account become part of the General Account of the Company, which consists of all assets owned by the Company other than those in the Separate Account and other separate accounts of the Company. Subject to applicable law, the Company has sole discretion over investment of the assets of its General Account. Please note that any amounts we guarantee in connection with the Fixed Account are subject to our financial strength and claims-paying ability.
Interest — Contract Value allocated to the Fixed Account earns interest at a fixed rate or rates that are paid by the Company. The Contract Value in the Fixed Account earns interest at an interest rate that is guaranteed to be at
57
least a specified minimum (“Guaranteed Rate”). The Guaranteed Rate accrues daily and ranges from an annual effective rate of 1% to 3% based upon the state in which the Contract is issued and the requirements of that state. Such interest will be paid regardless of the actual investment experience of the Fixed Account. The principal, after charges and deductions, also is guaranteed. In addition, the Company may in its discretion pay interest at a rate (“Current Rate”) that exceeds the Guaranteed Rate. The Company will determine the Current Rate, if any, from time to time. Because the Company may declare a Current Rate in its sole discretion, you assume the risk that interest credited to Contract Value in the Fixed Account may not exceed the Guaranteed Rate.
Contract Value allocated or transferred to the Fixed Account will earn interest at the Guaranteed Rate (or Current Rate, if any, in effect on the date such portion of Contract Value is allocated or transferred to the Fixed Account). The Current Rate paid on any such portion of Contract Value allocated or transferred to the Fixed Account will be guaranteed for rolling periods of one or more years (each a “Guarantee Period”). The Company currently offers only Guarantee Periods of one year. Upon expiration of any Guarantee Period, a new Guarantee Period of the same duration begins with respect to that portion of Contract Value which will earn interest at the Current Rate, if any, declared on the first day of the new Guarantee Period.
Because the Company may, in its sole discretion, anticipate changing the Current Rate from time to time, Contract Value allocated or transferred to the Fixed Account at one point in time may be credited with a different Current Rate than amounts allocated or transferred to the Fixed Account at another point in time. For example, amounts allocated to the Fixed Account in June may be credited with a different current rate than amounts allocated to the Fixed Account in July. In addition, if Guarantee Periods of different durations are offered, Contract Value allocated or transferred to the Fixed Account for a Guarantee Period of one duration may be credited with a different Current Rate than amounts allocated or transferred to the Fixed Account for a Guarantee Period of a different duration. Therefore, at any time, various portions of your Contract Value in the Fixed Account may be earning interest at different Current Rates depending upon the point in time such portions were allocated or transferred to the Fixed Account and the duration of the Guarantee Period. The Company bears the investment risk for the Contract Value allocated to the Fixed Account and for paying interest at the Guaranteed Rate on amounts allocated to the Fixed Account.
For purposes of determining the interest rates to be credited on Contract Value in the Fixed Account, transfers from the Fixed Account pursuant to the Dollar Cost Averaging or Asset Reallocation Options will be deemed to be taken in the following order: (1) from any portion of Contract Value allocated to the Fixed Account for which the Guarantee Period expires during the calendar month in which the withdrawal, loan, or transfer is effected; (2) then in the order beginning with that portion of such Contract Value which has the longest amount of time remaining before the end of its Guarantee Period and (3) ending with that portion which has the least amount of time remaining before the end of its Guarantee Period. For more information about transfers and withdrawals from the Fixed Account, see “Transfers and Withdrawals From the Fixed Account.”
If permitted by your Contract, the Company may discontinue accepting Purchase Payments or transfers into the Fixed Account at any time.
DCA Plus Account — The DCA Plus Account is not available in all states. If it is available in your state, you may allocate all or part of your initial Purchase Payment to the DCA Plus Account, which is part of the Company’s Fixed Account. The rate of Current Interest declared by the Company for the DCA Plus Account will be fixed for the applicable DCA Plus Period, which is a six-month or 12‑month period that begins as of the Valuation Date your Purchase Payment is applied to the DCA Plus Account. If you would like to allocate your initial Purchase Payment to the DCA Plus Account, you must complete a DCA Plus form, which is available upon request. Upon the form, you must select the applicable DCA Plus Period, the Subaccounts to which monthly transfers from the DCA Plus Account will be made, and the percentage to be allocated to each such Subaccount. Transfers from the DCA Plus Account to the Fixed Account are not permitted.
The Company will transfer your Contract Value allocated to the DCA Plus Account to the Subaccounts that you select on a monthly basis over the DCA Plus Period. The Company will effect each transfer on the monthly anniver-sary of the date that your Purchase Payment is allocated to the DCA Plus Account, and the first such transfer will be made on the first monthly anniversary of that date. The amount of each monthly transfer is found by dividing Contract Value allocated to the DCA Plus Account by the number of months remaining in the DCA Plus Period. The Company may declare a rate of Current Interest for the DCA Plus Account that differs from the rate declared for the Fixed Account.
58
You may allocate only Purchase Payments to the DCA Plus Account, and transfers of Contract Value to this account are not permitted under the Contract. Any Purchase Payments allocated to the DCA Plus Account must be made during the DCA Plus Period and will be transferred to the Subaccounts over the months remaining in the DCA Plus Period. The DCA Plus Account is not available if you have purchased the Extra Credit Rider at 3%, 4% or 5% or the 0‑Year or 4‑Year Alternate Withdrawal Charge Rider, or if the DCA Plus Period has expired. You may terminate your allocation to the DCA Plus Account by sending a written request to transfer all Contract Value allocated to the DCA Plus Account to one or more of the Subaccounts.
Death Benefit — The death benefit under the Contract will be determined in the same fashion for a Contract that has Contract Value allocated to the Fixed Account as for a Contract that has Contract Value allocated to the Subaccounts. See “Death Benefit.”
Contract Charges — Premium taxes and the account administration, optional rider and withdrawal charges will be the same for Owners who allocate Purchase Payments or transfer Contract Value to the Fixed Account as for those who allocate Purchase Payments or transfer Contract Value to the Subaccounts. For Contract Value that is allocated to the Fixed Account, any optional rider charges are deducted from current interest. The charges for mortality and expense risks and the administration charge will not be assessed against the Fixed Account, and any amounts that the Company pays for income taxes allocable to the Subaccounts will not be charged against the Fixed Account. In addition, you will not pay directly or indirectly the investment advisory fees and other operating expenses of the Underlying Funds to the extent Contract Value is allocated to the Fixed Account; however, you also will not participate in the investment experience of the Subaccounts.
Transfers and Withdrawals from the Fixed Account — You may transfer amounts from the Subaccounts to the Fixed Account and from the Fixed Account to the Subaccounts, subject to the following limitations. Transfers from the Fixed Account are allowed only (1) during the calendar month in which the applicable Guarantee Period expires, (2) pursuant to the Dollar Cost Averaging Option, provided that such transfers are scheduled to be made over a period of not less than six months, and (3) pursuant to the Asset Reallocation Option, provided that, upon receipt of the Asset Reallocation request, Contract Value is allocated among the Fixed Account and the Subaccounts in the percentages selected by the Owner without violating the restrictions on transfers from the Fixed Account set forth in (1) above. Accordingly, if you desire to implement the Asset Reallocation Option, you should do so at a time when Contract Value may be transferred from the Fixed Account to the Subaccounts without violating the restrictions on transfers from the Fixed Account. Once you implement an Asset Reallocation Option, the restrictions on transfers will not apply to transfers made pursuant to the Option.
The minimum amount that you may transfer from the Fixed Account to the Subaccounts is the lesser of (i) $500 or (ii) the amount of Contract Value for which the Guarantee Period expires in the calendar month that the transfer is effected. Transfers of Contract Value pursuant to the Dollar Cost Averaging and Asset Reallocation Options are not currently subject to any minimums. The Company reserves the right to limit the number of transfers permitted each Contract Year to 14 transfers, to suspend transfers and to limit the amount that may be subject to transfers. See “Transfers of Contract Value.”
If Purchase Payments are allocated (except Purchase Payments made pursuant to an Automatic Investment Program), or Contract Value is transferred, to the Fixed Account, any transfers from the Fixed Account in connection with the Dollar Cost Averaging or Asset Reallocation Options will automatically terminate as of the date of such Purchase Payment or transfer. You may reestablish Dollar Cost Averaging or Asset Reallocation by submitting a written request to the Company. However, if for any reason a Dollar Cost Averaging Option is canceled, you may only reestablish the option after the expiration of the next monthly or quarterly anniversary that corresponds to the period selected in establishing the option.
You may also make full or partial withdrawals to the same extent as if you had allocated Contract Value to the Subaccounts. However, no partial withdrawal request will be processed which would result in the withdrawal of Contract Value from the Loan Account. See “Full and Partial Withdrawals” and “Systematic Withdrawals.” In addition, to the same extent as Owners with Contract Value in the Subaccounts, the Owner of a Contract used in connection with a Qualified Plan may obtain a loan if so permitted under the terms of the Qualified Plan. See “Loans.”
Payments from the Fixed Account — Full and partial withdrawals, loans, and transfers from the Fixed Account may be delayed for up to six months after a request in good order is received by the Company at its
59
Administrative Office. During the period of deferral, interest at the applicable interest rate or rates will continue to be credited to the amounts allocated to the Fixed Account.
More About the Contract
Ownership — The Owner is the person named as such in the application or in any later change shown in the Company’s records. While living, the Owner alone has the right to receive all benefits and exercise all rights that the Contract grants or the Company allows. The Owner may be an entity that is not a living person such as a trust or corporation referred to herein as “Non‑natural Persons.” See “Federal Tax Matters.”
Joint Owners. The Joint Owners will be joint tenants with rights of survivorship and upon the death of an Owner, the surviving Owner shall be the sole Owner. Any Contract transaction requires the signature of all persons named jointly.
Designation and Change of Beneficiary — The Designated Beneficiary is the person having the right to the death benefit, if any, payable upon the death of the Owner or Joint Owner prior to the Annuity Start Date. The Designated Beneficiary is the first person on the following list who, if a natural person, is alive on the date of death of the Owner or the Joint Owner: the Owner; the Joint Owner; the Primary Beneficiary; the Secondary Beneficiary; the Annuitant; or if none of the above are alive, the Owner’s estate. The Primary Beneficiary is the individual named as such in the application or any later change shown in the Company’s records. The Primary Beneficiary will receive the death benefit of the Contract only if he or she is alive on the date of death of both the Owner and any Joint Owner prior to the Annuity Start Date. Because the death benefit of the Contract goes to the first person on the above list who is alive on the date of death of any Owner, careful consideration should be given to the manner in which the Contract is registered, as well as the designation of the Primary Beneficiary. The Owner may change the Primary Beneficiary at any time while the Contract is in force by written request on forms provided by the Company and received by the Company at its Administrative Office. The change will not be binding on the Company until it is received and recorded at its Administrative Office. The change will be effective as of the date this form is signed subject to any payments made or other actions taken by the Company before the change is received and recorded. A Secondary Beneficiary may be designated. The Owner may designate a permanent Beneficiary whose rights under the Contract cannot be changed without his or her consent.
Reference should be made to the terms of a particular Qualified Plan and any applicable law for any restrictions or limitations on the designation of a Beneficiary. Some qualified plans do not allow the designation of any primary beneficiary other than a spouse unless the spouse consents to such designation and the consent is witnessed by a plan representative or a notary public. Not all Annuity Options will satisfy required minimum distribution rules for every Beneficiary.
Dividends — The Contract does not share in the surplus earnings of the Company, and no dividends will be paid.
Payments from the Separate Account — The Company generally will pay any full or partial withdrawal (including a systematic withdrawal or a withdrawal made to pay the fees of an investment adviser) or death benefit proceeds from the Subaccounts within seven days after a proper request is received at the Company’s Administrative Office. However, the Company can postpone such a payment from the Subaccounts to the extent permitted under applicable law, which is currently permissible only for any period:
| • | During which the NYSE is closed other than customary weekend and holiday closings, |
| • | During which trading on the NYSE is restricted as determined by the SEC, |
| • | During which an emergency, as determined by the SEC, exists as a result of which (i) disposal of securities held by the Separate Account is not reasonably practicable, or (ii) it is not reasonably practicable to determine the value of the assets of the Separate Account, or |
| • | For such other periods as the SEC may by order permit for the protection of investors. |
The Company reserves the right to delay payments of any full or partial withdrawal until all of your Purchase Payment checks have been honored by your bank.
60
If, pursuant to SEC rules, the Invesco V.I. Government Money Market Fund chooses to suspend payments of redemption proceeds by imposing a temporary “redemption gate,” we will delay payment of any transfer, full or partial withdrawal, or death benefit from the Invesco V.I. Government Money Market Subaccount until the Fund redemption gate has been lifted.
Proof of Age and Survival — The Company may require proof of age or survival of any person on whose life annuity payments depend.
Misstatements — If you misstate the age or sex of an Annuitant or age of an Owner, the correct amount paid or payable by the Company under the Contract shall be such as the Contract Value would have provided for the correct age or sex (unless unisex rates apply).
Cyber Security and Certain Business Continuity Risks — Our variable product business is highly dependent upon the effective operation of our computer systems and those of our business partners, so that our business is potentially susceptible to operational and informa-tion security risks resulting from a cyber-attack. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, denial of service attacks on websites and other operational disruption and unauthorized release of confidential customer information. Cyber security risks may also impact the issuers of securities in which the Underlying Funds invest, which may cause the funds underlying your Contract to lose value. There can be no assurance that we or the Underlying Funds or our service providers will avoid losses affecting your Contract due to cyber-attacks or information security breaches in the future.
Cyber-attacks and other disruptive events including, but not limited to, natural disasters and public health crises (like COVID‑19) that affect us, the Underlying Funds, intermediaries and other affiliated or third-party service providers may adversely impact our ability to conduct business, including if our employees or the employees of our service providers are unable or unwilling to perform their responsibilities as a result of any such event, and these disruptions may also impact your Contract Value. For instance, such disruptions may interfere with our processing of Contract transactions, including the processing of orders from our website or with the Underlying Funds, impact our ability to calculate Accumulation Unit values, cause the release and possible destruction of confidential customer or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. In the event of such a disruption, although our employees and the employees of our third-party service providers are able to work remotely, those remote work arrangements may result in our business operations being less efficient than under normal circumstances and could lead to delays in processing Contract transactions, including the processing of orders from Owners. For more information on the risks associated with owning the Contract, see “Principal Risks of Investing in the Contract.”
Loans — If you own a Contract issued in connection with a retirement plan that is qualified under Section 403(b) of the Internal Revenue Code, you may be able to borrow money under your Contract using the Contract Value as the only security for the loan. You may obtain a loan by submitting a proper written request to the Company. A loan must be taken and repaid prior to the Annuity Start Date. Whether you can borrow money will depend on the terms of your Employer’s 403(b) plan or program. If you are permitted, you may obtain a loan by submitting a proper written request to the Company. The minimum loan that may be taken is $1,000. The maximum amount of all loans on all contracts combined is generally equal to the lesser of: (1) $50,000 reduced by the excess of: (a) the highest outstanding loan balance within the preceding 12‑month period ending on the day before the date the loan is made; over (b) the outstanding loan balance on the date the loan is made; or (2) 50% of the Contract Values or $10,000, whichever is greater ($10,000 limit is not available for contracts issued under a 403(b) Plan subject to the Employee Retirement Income Security Act of 1974). For loans issued under plans that are subject to ERISA, the maximum amount of all loans is the lesser of: (1) $50,000 reduced by the excess of: (a) the highest outstanding loan balance within the preceding 12‑month period ending on the day before the date the loan is made; over (b) the outstanding loan balance on the date the loan is made; or (2) 50% of your Contract Value. In any case, the maximum loan balance outstanding at any time may not exceed 80% of Contract Value, and the Company reserves the right to limit to one the number of loans outstanding at any time. The Internal Revenue Code requires aggregation of all loans made to an individual employee under a single employer plan. However, since the Company may have no information concerning outstanding loans with other providers, we may only be able to use information available under annuity contracts issued by us, and you will be responsible for determining your loan limits considering loans
61
from other providers. If your Contract was issued pursuant to a 403(b) plan, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that loans you request comply with applicable tax requirements and to decline requests that are not in compliance. Reference should be made to the terms of your particular Employer’s Plan or program for any additional loan restrictions.
Upon receipt by the Company of a written loan application and agreement by the Company and subject to the Company’s approval (which approval or disapproval may be postponed for up to six months after receipt of the loan application), Contract Value in an amount equal to the loan amount is withdrawn from the Subaccounts and/or the Fixed Account proportionately as they are currently invested in the Subaccounts and/or the Fixed Account and transferred into an account called the “Loan Account,” which is an account within the Fixed Account. Amounts allocated to the Loan Account earn 3.0% on an annual basis. The Owner’s Contract must provide a Fixed Account option for the Owner to be eligible to take a loan. See “The Fixed Account” to determine its availability.
Interest will be charged for the loan and will accrue on the loan balance from the effective date of any loan. The loan interest rate will be as declared from time to time by the Company but once a loan has been issued, the Company will not change the loan interest rate. The loan interest amount will never be greater than an amount equal to 5.16% plus the total charges for riders you have selected. For example, if you selected the Annual Stepped Up Death Benefit Rider with an annual charge of 0.20%, the loan interest rate is guaranteed not to exceed 5.36% (5.16% + 0.20%). The net cost of a loan is the interest rate charged by the Company less the interest rated credited. We are not responsible for determining whether this interest rate is “reasonable” as required by ERISA for loans under ERISA-covered 403(b) plans.
Loans must be repaid within five years, unless the loan is used to acquire your principal residence, in which case the loan must be repaid within 30 years. In either event, your loan must be repaid prior to the Annuity Start Date. You must make loan repayments on at least a quarterly basis, and you may prepay your loan at any time. There is no required minimum payment. You must label each loan payment as such. If not labeled as a loan payment, amounts received by the Company will be treated as Purchase Payments. Upon receipt of a loan payment, the Company will transfer Contract Value from the Loan Account to the Fixed Account and/or the Subaccounts according to your current instructions with respect to Purchase Payments in an amount equal to the amount by which the payment reduces the amount of the loan outstanding.
If you do not make any required loan payment by the end of the calendar quarter following the calendar quarter in which the missed payment was due, the TOTAL OUTSTANDING LOAN BALANCE will be deemed to be in default for tax reporting purposes. The total outstanding loan balance, which includes accrued interest, will be reported as income to the Internal Revenue Service (“IRS”) on form 1099‑R for the year in which the default occurred. The Company may agree to extend these deadlines for late payments within any limits imposed by IRS regulations. This deemed distribution may be subject to a 10% penalty tax, which is imposed upon distributions prior to the Owner attaining age 59½. Once a loan has defaulted, regularly scheduled loan payments will not be accepted by the Company. No new loans will be allowed while a loan is in default. Interest will continue to accrue on a loan in default. Contract Value equal to the amount of the accrued interest may be transferred to the Loan Account. If a loan continues to be in default, the total outstanding balance may be deducted from Contract Value on or after the Contract Owner attains age 59½. The Contract will terminate automatically if the outstanding loan balance of a loan in default equals or exceeds the Withdrawal Value. Contract Value will be used to repay the loan and any applicable withdrawal charges. Because of the adverse tax consequences associated with defaulting on a loan, you should carefully consider your ability to repay the loan and should consult with a tax adviser before requesting a loan.
While the amount to secure the loan is held in the Loan Account, you forego the investment experience of the Subaccounts and the Current Rate of interest on the Fixed Account. The Contract Value at surrender and the death proceeds payable will be reduced by the amount of any outstanding Contract Debt plus accrued interest. Loans, therefore, can affect the Contract Value, and benefits linked to the Contract Value, whether or not the loan is repaid. Outstanding Contract Debt will reduce the amount of proceeds paid upon full withdrawal, upon payment of the death benefit, and upon annuitization. In addition, no partial withdrawal will be processed which would result in the withdrawal of Contract Value from the Loan Account. If a Guaranteed Growth Death Benefit Rider or Guaranteed Minimum Income Benefit Rider is in effect, amounts allocated to the Loan Account will earn the minimum rate of interest guaranteed under the Fixed Account for the purpose of calculating the benefit under any such Rider. Until the loan is repaid, the Company reserves the right to restrict any transfer of the Contract which would otherwise qualify as a transfer permitted in the Internal Revenue Code.
62
In the event that you elect to exchange your Contract for a contract of another company, you will need to either pay off your loan prior to the exchange or incur tax consequences in that you will be deemed to have received a taxable distribution in the amount of the outstanding loan balance.
You should consult with your tax adviser on the effect of a loan.
Restrictions on Withdrawals from Qualified Plans — Generally, a Qualified Plan under Code sections 401(a), 403(b) or 457 may not permit for the distribution or withdrawal of amounts accumulated under the Plan until after a fixed number of years, the attainment of a stated age or upon the occurrence of a specific event such as hardship, disability, retirement, death or termination of employment. Therefore, if you own a Contract purchased in connection with one of these Qualified Plans, you may not be entitled to make a full or partial withdrawal (including systematic withdrawals), as described in this Prospectus, unless one of the above-described conditions has been satisfied. For this reason, you should refer to the terms of your particular Qualified Plan, the Internal Revenue Code and other applicable law for any limitation or restriction on distributions and withdrawals, including the 10% penalty tax that may be imposed in the event of a distribution from a Qualified Plan before the participant reaches age 59½. See the discussion under “Tax Penalties.”
Section 403(b) imposes restrictions on certain distributions from tax-sheltered annuity contracts meeting the requirements of Section 403(b). Section 403(b) requires that distributions from Section 403(b) tax-sheltered annuities that are attributable to employee contributions made after December 31, 1988 under a salary reduction agreement begin only after the employee (i) reaches age 59½, (ii) has a severance from employment, (iii) dies, (iv) becomes disabled, or (v) incurs a hardship. Furthermore, distributions of gains attributable to such contributions accrued after December 31, 1988 may not be made on account of hardship. Hardship, for this purpose, is generally defined as an immediate and heavy financial need, such as paying for medical expenses, the purchase of a residence, paying certain tuition expenses, paying for funeral expenses, paying for casualty losses on your principal residence, or paying amounts needed to avoid eviction or foreclosure that may only be met by the distribution.
If you own a Contract purchased as a tax-sheltered Section 403(b) annuity contract, you will not, therefore, be entitled to make a full or partial withdrawal, as described in this Prospectus, in order to receive proceeds from the Contract attributable to contributions under a salary reduction agreement or any gains credited to such Contract after December 31, 1988 unless one of the above-described conditions has been satisfied. In the case of transfers of amounts accumulated in a different Section 403(b) contract to this Contract under a Section 403(b) program, the withdrawal constraints described above would not apply to the amount transferred to the Contract designated as attributable to the Owner’s December 31, 1988 account balance under the old contract, provided the amounts transferred between contracts qualified as a rollover exchange under the Internal Revenue Code. An Owner of a Contract may be able to transfer the Contract’s Withdrawal Value to certain other investment alternatives meeting the requirements of Section 403(b) that are available under an employer’s Section 403(b) arrangement.
Your particular Qualified Plan or 403(b) plan or program may have additional restrictions on distributions that may also be followed for your Contract. The distribution or withdrawal of amounts under a Contract purchased in connection with a Qualified Plan may result in the receipt of taxable income to the Owner or Annuitant and in some instances may also result in a penalty tax. Therefore, you should carefully consider the tax consequences of a distribution or withdrawal under a Contract and you should consult a competent tax adviser. See “Federal Tax Matters.” If your Contract was issued pursuant to a 403(b) plan, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders or transfers you request comply with applicable tax requirements and to decline requests that are not in compliance. We will defer such payments you request until all information required under the tax law has been received. By requesting a surrender or transfer, you consent to the sharing of confidential information about you, the contract, and transactions under the contract and any other 403(b) contracts or accounts you have under the 403(b) plan among us, your employer or plan sponsor, any plan administrator or recordkeeper, and other product providers.
Restrictions under the Texas Optional Retirement Program — If you are a Participant in the Texas Optional Retirement Program, your Contract is subject to restrictions required under the Texas Government Code. In accordance with those restrictions, you will not be permitted to make withdrawals prior to your retirement, death or termination of employment in a Texas public institution of higher education and may not receive a loan from your Contract.
63
Federal Tax Matters
Introduction — The Contract described in this Prospectus is designed for use by individuals in retirement plans which may or may not be Qualified Plans under the provisions of the Internal Revenue Code (“Code”). The ultimate effect of federal income taxes on the amounts held under a Contract, on annuity payments, and on the economic benefits to the Owner, the Annuitant, and the Beneficiary or other payee will depend upon the type of retirement plan, if any, for which the Contract is purchased, the tax and employment status of the individuals involved and a number of other factors. The discussion contained herein and in the Statement of Additional Information is general in nature and is not intended to be an exhaustive discussion of all questions that might arise in connection with a Contract. It is based upon the Company’s understanding of the present federal income tax laws as currently interpreted by the Internal Revenue Service (“IRS”) as of the date of this Prospectus, and is not intended as tax advice. No representation is made regarding the likelihood of continuation of the present federal income tax laws or of the current interpretations by the IRS or the courts. Future legislation may affect annuity contracts adversely. Moreover, no attempt has been made to consider any applicable state or other laws. Because of the inherent complexity of the tax laws and the fact that tax results will vary according to the particular circumstances of the individual involved and, if applicable, the Qualified Plan, a person should consult with a qualified tax adviser regarding the purchase of a Contract, the selection of an Annuity Option under a Contract, the receipt of annuity payments under a Contract or any other transaction involving a Contract. The Company does not make any guarantee regarding the tax status of, or tax consequences arising from, any Contract or any transaction involving the Contract.
Tax Status of the Company and the Separate Account —
General. The Company intends to be taxed as a life insurance company under Part I, Subchapter L of the Code. Because the operations of the Separate Account form a part of the Company, the Company will be responsible for any federal income taxes that become payable with respect to the income of the Separate Account and its Subaccounts.
Charge for the Company’s Taxes. A charge may be made for any federal taxes incurred by the Company that are attributable to the Separate Account, the Subaccounts or to the operations of the Company with respect to the Contract or attributable to payments, premiums, or acquisition costs under the Contract. The Company will review the question of a charge to the Separate Account, the Subaccounts or the Contract for the Company’s federal taxes periodically. Charges may become necessary if, among other reasons, the tax treatment of the Company or of income and expenses under the Contract is ultimately determined to be other than what the Company currently believes it to be, if there are changes made in the federal income tax treatment of variable annuities at the insurance company level, or if there is a change in the Company’s tax status.
Under current laws, the Company may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If there is a material change in applicable state or local tax laws, the Company reserves the right to charge the Separate Account or the Subaccounts for such taxes, if any, attributable to the Separate Account or Subaccounts.
Diversification Standards. Each Underlying Fund will be required to adhere to regulations adopted by the Treasury Department pursuant to Section 817(h) of the Code prescribing asset diversification requirements for investment companies whose shares are sold to insurance company separate accounts funding variable contracts. Pursuant to these regulations, on the last day of each calendar quarter (or on any day within 30 days thereafter), no more than 55% of the total assets of an Underlying Fund may be represented by any one investment, no more than 70% may be represented by any two investments, no more than 80% may be represented by any three investments, and no more than 90% may be represented by any four investments. For purposes of Section 817(h), securities of a single issuer generally are treated as one investment but obligations of the U.S. Treasury and each U.S. Governmental agency or instrumentality generally are treated as securities of separate issuers. The Separate Account, through the Underlying Funds, intends to comply with the diversification requirements of Section 817(h).
Owner Control. In certain circumstances, owners of Non-Qualified variable annuity contracts may be considered the owners, for federal income tax purposes, of the assets of the separate account used to support their contracts. In those circumstances, income and gains from the separate account assets would be includable currently in the variable Contract Owner’s gross income. The ownership rights under the Contract are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that policy owners were not
64
owners of separate account assets. For example, the Owner has additional flexibility in allocating Purchase Payments and Contract Values. While the Company does not think that such will be the case, these differences could result in an Owner being treated as the owner of a pro rata portion of the assets of the Separate Account. The Company nonetheless reserves the right to modify the Contract, as it deems appropriate, to attempt to prevent an Owner from being considered the owner of a pro rata share of the assets of the Separate Account. Moreover, in the event that regulations are adopted or rulings are issued, there can be no assurance that the Underlying Funds will be able to operate as currently described in the Prospectus, or that the Underlying Funds will not have to change their invest-ment objective or investment policies.
Income Taxation of Annuities in General—Non‑Qualified Contracts — Section 72 of the Code governs the taxation of annuities. In general, a contract owner is not taxed on increases in value under an annuity contract until some form of distribution is made under the contract. However, the increase in value may be subject to tax currently under certain circumstances. See “Contracts Owned by Non-Natural Persons,” “Diversification Standards,” and “Owner Control.” Withholding of federal income taxes on all distributions may be required unless a recipient who is eligible elects not to have any amounts withheld and properly notifies the Company of that election.
Withdrawals Prior to the Annuity Start Date. Code Section 72 provides generally that amounts received upon a total or partial withdrawal (including systematic withdrawals or withdrawals made to pay the fees of an investment adviser) from a Non-Qualified Contract prior to the Annuity Start Date generally will be treated as gross income to the extent that the cash value of the Contract immediately before the withdrawal (determined without regard to any withdrawal charge in the case of a partial withdrawal) exceeds the “investment in the contract.” The “investment in the contract” is that portion, if any, of Purchase Payments paid under a Contract less any distributions received previously under the Contract that are excluded from the recipient’s gross income. The taxable portion is taxed as ordinary income. For purposes of this rule, a pledge or assignment of a contract is treated as a payment received on account of a partial withdrawal of a Contract.
Amounts distributed from a Contract because of your death or the death of the Annuitant are generally treated as income to the recipient. If distributed in a lump sum, such payments are taxed in the same manner as if the Contract had been surrendered, and if distributed under an Annuity Option, they are taxed in the same manner as annuity payments. For Non-Qualified Contracts, all or a portion of the charges deducted from your Contract Value to pay advisory fees to a financial intermediary may be subject to federal and state income taxes and a 10% federal penalty tax. A tax-free partial exchange may become taxable if an advisory fee is paid from your Contract Value within 180 days of the partial exchange. Consult your tax adviser for advice concerning tax-free partial exchanges. Amounts distributed as loans are generally not taxable, as loans are only permitted for Contracts issued in connection with a retirement plan that is qualified under Section 403(b) of the Internal Revenue Code. Such loan amounts become taxable in the event of default. See “Loans.”
Surrenders. Upon a complete surrender, the receipt is taxable to the extent that the cash value of the Contract exceeds the investment in the Contract. The taxable portion of such payments will be taxed as ordinary income.
Annuity Payments. For fixed annuity payments, the taxable portion of each payment generally is determined by using a formula known as the “exclusion ratio,” which establishes the ratio that the investment in the Contract bears to the total expected amount of annuity payments for the term of the Contract. That ratio is then applied to each payment to determine the non‑taxable portion of the payment. The remaining portion of each payment is taxed at ordinary income rates. For variable annuity payments, the taxable portion of each payment is determined by using a formula known as the “excludable amount,” which establishes the non-taxable portion of each payment. The non-taxable portion is a fixed dollar amount for each payment, determined by dividing the investment in the Contract by the number of payments to be made. The remainder of each variable annuity payment is taxable. Once the excludable portion of annuity payments to date equals the investment in the Contract, the balance of the annuity payments will be fully taxable.
Penalty Tax on Certain Surrenders and Withdrawals. With respect to amounts withdrawn or distributed before the taxpayer reaches age 59½, a penalty tax is imposed equal to 10% of the portion of such amount which is includable in gross income. However, the penalty tax is not applicable to withdrawals: (i) made on or after the death of the owner (or where the owner is not an individual, the death of the “primary annuitant,” who is defined as the individual the events in whose life are of primary importance in affecting the timing and amount of the payout under the Contract); (ii) attributable to the taxpayer’s becoming totally disabled within the meaning of Code Section 72(m)(7); (iii) which are part of a series of substantially equal periodic payments (not less frequently than annually) made for
65
the life (or life expectancy) of the taxpayer, or the joint lives (or joint life expectancies) of the taxpayer and his or her beneficiary; (iv) from certain qualified plans; (v) under a so-called qualified funding asset (as defined in Code Section 130(d)); (vi) under an immediate annuity contract; or (vii) which are purchased by an employer on termination of certain types of qualified plans and which are held by the employer until the employee separates from service.
If the penalty tax does not apply to a surrender or withdrawal as a result of the application of item (iii) above, and the series of payments are subsequently modified (other than by reason of death or disability), the tax for the first year in which the modification occurs will be increased by an amount (determined by the regulations) equal to the tax that would have been imposed but for item (iii) above, plus interest for the deferral period, if the modification takes place (a) before the close of the period which is five years from the date of the first payment and after the taxpayer attains age 59½, or (b) before the taxpayer reaches age 59½.
Partial Annuitization. If part of an annuity contract’s value is applied to an annuity option that provides payments for one or more lives and for a period of at least ten years, those payments may be taxed as annuity payments instead of withdrawals. None of the payment options under the Contract is intended to qualify for this “partial annuitization” treatment and, if you apply only part of the value of the Contract to a payment option, we will treat those payments as withdrawals for tax purposes.
Additional Considerations —
Distribution-at-Death Rules. In order to be treated as an annuity contract, a Non-Qualified contract must provide the following two distribution rules: (a) if any owner dies on or after the Annuity Start Date, and before the entire interest in the Contract has been distributed, the remainder of the owner’s interest will be distributed at least as quickly as the method in effect on the owner’s death; and (b) if any owner dies before the Annuity Start Date, the entire interest in the Contract must generally be distributed within five years after the date of death, or, if payable to a designated beneficiary, must be annuitized over the life of that designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary, commencing within one year after the date of death of the owner. If the sole designated beneficiary is the spouse of the deceased owner, the Contract (together with the deferral of tax on the accrued and future income thereunder) may be continued in the name of the spouse as owner.
The Contract provides that upon your death, a surviving spouse may have certain continuation rights that he or she may elect to exercise for the Contract’s death benefit and any joint-life coverage under an optional living benefit. All Contract provisions relating to spousal continuation are available only to a person who meets the definition of “spouse” under federal law. The U.S. Supreme Court has held that same-sex marriages must be permitted under state law and that marriages recognized under state law will be recognized for federal law purposes. Domestic partnerships and civil unions that are not recognized as legal marriages under state law, however, will not be treated as marriages under federal law. Consult a tax adviser for more information on this subject.
Generally, for purposes of determining when distributions must begin under the foregoing rules, where an owner is not an individual, the primary annuitant is considered the owner. In that case, a change in the primary annuitant will be treated as the death of the owner. Finally, in the case of joint owners, the distribution-at-death rules will be applied by treating the death of the first owner as the one to be taken into account in determining generally when distributions must commence, unless the sole Designated Beneficiary is the deceased owner’s spouse.
Gift of Annuity Contracts. Generally, gifts of non‑tax qualified Contracts prior to the Annuity Start Date will trigger tax on the gain on the Contract, with the donee getting a stepped-up basis for the amount included in the donor’s income. The 10% penalty tax and gift tax also may be applicable. This provision does not apply to transfers between spouses or incident to a divorce.
Contracts Owned by Non-Natural Persons. If the Contract is held by a non-natural person (for example, a corporation) the income on that Contract (generally the increase in net surrender value less the Purchase Payments) is includable in taxable income each year. The rule does not apply where the Contract is acquired by the estate of a decedent, where the Contract is held by certain types of retirement plans, where the Contract is a qualified funding asset for structured settlements, where the Contract is purchased on behalf of an employee upon termination of a qualified plan, and in the case of an immediate annuity. An annuity contract held by a trust or other entity as agent for a natural person is considered held by a natural person.
Multiple Contract Rule. For purposes of determining the amount of any distribution under Code Section 72(e) (amounts not received as annuities) that is includable in gross income, all Non‑Qualified deferred annuity contracts issued by the same insurer to the same contract owner during any calendar year are to be aggregated and treated
66
as one contract. Thus, any amount received under any such contract prior to the contract’s Annuity Start Date, such as a partial surrender, dividend, or loan, will be taxable (and possibly subject to the 10% penalty tax) to the extent of the combined income in all such contracts.
In addition, the Treasury Department has broad regulatory authority in applying this provision to prevent avoid-ance of the purposes of this rule. It is possible that, under this authority, the Treasury Department may apply this rule to amounts that are paid as annuities (on and after the Annuity Start Date) under annuity contracts issued by the same company to the same owner during any calendar year. In this case, annuity payments could be fully taxable (and possibly subject to the 10% penalty tax) to the extent of the combined income in all such contracts and regard-less of whether any amount would otherwise have been excluded from income because of the “exclusion ratio” under the contract.
Transfers, Assignments or Exchanges of a Contract. A transfer of ownership of a Contract, the designation of an Annuitant, Payee or other Beneficiary who is not also the Owner, the selection of certain Annuity Start Dates or the exchange of a Contract may result in certain tax consequences to the Owner that are not discussed herein. An Owner contemplating any such transfer, assignment, selection or exchange should contact a competent tax adviser with respect to the potential effects of such a transaction.
Optional Benefit Riders. It is possible that the Internal Revenue Service may take the position that fees deducted for certain optional benefit riders are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat fees deducted for the optional benefits as taxable withdrawals, which might also be subject to a tax penalty if withdrawn prior to age 59½. Although we do not believe that the fees associated or any optional benefit provided under the Contract should be treated as taxable withdrawals, you should consult your tax advisor prior to selecting any optional benefit under the Contract.
Withholding. Annuity distributions are generally subject to withholding for the recipient’s federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions.
Qualified Plans — The Contract may be used with Qualified Plans that meet the requirements of Section 402A, 403(b), 408 or 408A of the Code. If you are purchasing the Contract as an investment vehicle for one of these Qualified Plans, you should consider that the Contract does not provide any additional tax advantage to that already available through the Qualified Plan. However, the Contract does offer features and benefits in addition to providing tax deferral that other investments may not offer, including death benefit protection for your beneficiaries and annuity options which guarantee income for life. You should consult with your financial professional as to whether the overall benefits and costs of the Contract are appropriate considering your circumstances.
The amounts that may be contributed to Qualified Plans are subject to limitations that vary depending on the type of Plan. In addition, early distributions from most Qualified Plans may be subject to penalty taxes, or, for certain plans, could cause the Plan to be disqualified. Furthermore, distributions from most Qualified Plans are subject to certain minimum distribution rules. Failure to comply with these rules could subject the Owner or Annuitant to penalty taxes. As a result, the minimum distribution rules may limit the availability of certain Annuity Options to certain Annuitants and their beneficiaries. These requirements may not be incorporated into the Company’s Contract administration procedures. Owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law.
The following are brief descriptions of the various types of Qualified Plans and the use of the Contract therewith:
Section 403(b). Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations specified in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to certain limitations, to exclude the amount of Purchase Payments from gross income for tax purposes. The Contract may be purchased in connection with a Section 403(b) annuity plan.
Section 403(b) annuities must generally be provided under a plan which meets certain minimum participation, coverage, and nondiscrimination requirements. Each employee’s interest in a retirement plan qualified under Code Section 403(b) must generally be distributed or begin to be distributed not later than April 1 of the calendar year following the later of the calendar year in which the employee reaches age 72 (70½ if the employee reached age 70½ before January 1, 2020) or retires (“required beginning date”). Periodic distributions must not extend beyond the life of the employee or the lives of the employee and a designated beneficiary (or over a period extending beyond the life expectancy of the employee or the joint life expectancy of the employee and a designated beneficiary). Not all Annuity Options will satisfy minimum distribution rules for every designated beneficiary.
67
If an employee dies before reaching his or her required beginning date, the employee’s entire interest in the plan must generally be distributed beginning before the close of the calendar year following the year of the employee’s death to a designated beneficiary over the life of the beneficiary (or over a period not extending beyond the life expectancy of the beneficiary). If the designated beneficiary is the employee’s surviving spouse, distributions may be delayed until the employee would have reached age 72 (70½ if the employee reached age 70½ before January 1, 2020). Please note that for employees who die on or after January 1, 2020, most non-spouse Beneficiaries will no longer be able to satisfy these rules by “stretching” payouts over their lifetimes. Instead, the Beneficiaries will have to take their post death distributions within ten years. Certain exceptions apply to “eligible designated beneficiaries,” which include disabled and chronically ill individuals, individuals who are note more than ten years younger than the deceased individual, and children who have not reached the age of majority. Employees and Beneficiaries should consult a tax advisor if they may be affected by these changes.
If an employee dies after reaching his or her required beginning date, the employee’s interest in the plan must generally be distributed at least as rapidly as under the method of distribution in effect at the time of the employee’s death.
A Section 403(b) annuity contract may be purchased with employer contributions, employee contributions or a combination of both. An employee’s rights under a Section 403(b) contract attributable to employee contributions must be nonforfeitable. The contribution limit is similar to the limits on contributions to qualified retirement plans and depends upon, among other things, whether the annuity contract is purchased with employer or employee contributions.
Amounts used to purchase Section 403(b) annuities generally are excludable from the taxable income of the employee. As a result, all distributions from such annuities are normally taxable in full as ordinary income to the employee. However, employee salary reduction contributions can be made to certain 403(b) annuities on an after-tax basis. See Roth 403(b) below.
A Section 403(b) annuity contract must prohibit the distribution of employee contributions (including earnings thereon) until the employee: (i) attains age 59½, (ii) has a severance from employment; (iii) dies; (iv) becomes disabled; or (v) incurs a financial hardship (earnings may not be distributed in the event of hardship). Additional restrictions may be imposed by a particular 403(b) Plan or program.
Distributions from a Section 403(b) annuity contract may be eligible for a tax-free rollover to another eligible retirement plan, including an individual retirement account or annuity (IRA). See “Rollovers.”
If your Contract was issued pursuant to a 403(b) plan, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders or transfers you request comply with applicable tax requirements and to decline requests that are not in compliance. By requesting a surrender or transfer, you consent to the sharing of confidential information about you, the Contract, and transactions under the Contract and any other 403(b) contracts or accounts you have under the 403(b) plan among us, your employer or plan sponsor, any plan administrator or recordkeeper, and other product providers.
Roth 403(b). Employees eligible to make elective salary reduction contributions to a 403(b) annuity contract may designate their elective contributions as “Roth contributions” under Code Section 402A, if the employer agrees to treat the contributions as Roth contributions under the employer’s 403(b) plan. Roth contributions may be made to the Contract.
Unlike regular or “traditional” 403(b) contributions, which are made on a pre‑tax basis, Roth contributions are made after-tax and must be reported by the employer as currently taxable income of the employee. The employee must specifically designate the contributions as Roth contributions at the time they are made. Roth contributions are always full vested.
Although Roth contributions are made on an after-tax basis, if they are held in the Contract until certain conditions are met, a contract distribution may be a “qualifying distribution” and the income that is earned on the contributions will never be subject to federal income taxes. If a distribution is not qualifying, the income earned on the Roth contributions is subject to federal income taxes when distributed.
Roth contributions may be made up to the same elective contribution limits that apply to a traditional 403(b) contract. If the employee makes elective contribution to both types of contracts, the one contribution limit will apply to the total of all contributions, both Roth and traditional. Other types of employer contributions, such as matching contributions or non-elective contributions, cannot be made to a Roth contract or account, although they may be made to other accounts in the plan or program.
68
Roth contributions are held in a separate Roth account in the Contract and separate records are kept for earnings in the Roth account. Although amounts in a Roth account are subject to the same distribution restrictions, loan limits, and required minimum distribution rules as traditional 403(b) contributions (including lifetime required minimum distributions), the Company may impose special rules on distributions from Roth accounts and may restrict or forbid loans from Roth accounts.
If your Contract was issued pursuant to a 403(b) plan, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders or transfers you request comply with applicable tax requirements and to decline requests that are not in compliance. See “Section 403(b).”
Distributions from a Roth 403(b) qualified account may be eligible for a tax-free rollover to another eligible retirement plan, including a Roth IRA. See “Rollovers.”
Section 408. Traditional Individual Retirement Annuities. Section 408 of the Code permits eligible individuals to establish individual retirement programs through the purchase of Individual Retirement Annuities (“traditional IRAs”). The Contract may be purchased as an IRA. The IRAs described in this section are called “traditional IRAs” to distinguish them from “Roth IRAs,” which are described below.
IRAs are subject to limitations on the amount that may be contributed, the persons who may be eligible and on the time when distributions must commence. Depending upon the circumstances of the individual, contributions to a traditional IRA may be made on a deductible or non‑deductible basis. IRAs may not be transferred, sold, assigned, discounted or pledged as collateral for a loan or other obligation. The annual premium for an IRA may not be fixed and may not exceed (except in the case of a rollover contribution) the lesser of 100% of the individual’s taxable compensation or $6,000 (for 2021).
Any refund of premium must be applied to the payment of future premiums or the purchase of additional benefits. If an individual is age 50 or over, the individual may make an additional catch-up contribution to a traditional IRA of $1,000 for each tax year. However, if the individual is covered by an employer-sponsored retirement plan, the amount of IRA contributions the individual may deduct in a year may be reduced or eliminated based on the individual’s adjusted gross income for the year ($105,000 to $125,000 for a married couple filing a joint return and $66,000 to $76,000 for a single taxpayer in 2021). If the individual’s spouse is covered by an employer-sponsored retirement plan but the individual is not, the individual may be able to deduct those contributions to a traditional IRA; however, the deduction will be reduced or eliminated if the adjusted gross income on a joint return is between $198,000 and $208,000 (for 2021). Nondeductible contributions to traditional IRAs must be reported to the IRS in the year made on Form 8606.
Sale of the Contract for use with IRAs may be subject to special requirements imposed by the Internal Revenue Service. Purchasers of the Contract for such purposes will be provided with such supplementary information as may be required by the Internal Revenue Service or other appropriate agency, and will have the right to revoke the Contract under certain circumstances. See the IRA Disclosure Statement that accompanies this Prospectus.
In general, traditional IRAs are subject to minimum distribution requirements similar to those applicable to retirement plans qualified under Section 403(b) of the Code; however, the required beginning date for traditional IRAs is generally April 1 following the calendar year that the contract owner reaches age 72 (70½ for contract owners who reached age 70½ before January 1, 2020)—the contract owner’s retirement date, if any, will not affect his or her required beginning date. See “Section 403(b).” Distributions from IRAs are generally taxed under Code Section 72. Under these rules, a portion of each distribution may be excludable from income. The amount excludable from the individual’s income is the amount of the distribution that bears the same ratio as the individual’s nondeductible contributions bears to the expected return under the IRA.
Distributions from a traditional IRA may be eligible for a tax-free rollover to any kind of eligible retirement plan, including another traditional IRA. A distribution of non‑deductible contributions or other after-tax amounts from a traditional IRA may be eligible to be rolled over to another traditional IRA. See “Rollovers.”
The IRS has not reviewed the Contract for qualification of an IRA, and has not addressed in a ruling of general applicability whether a death benefit provision such as the provision in the Contract comports with IRA qualification requirements.
Section 408A. Roth IRAs. Section 408A of the Code permits eligible individuals to establish a Roth IRA. The Contract may be purchased as a Roth IRA. Regular contributions may be made to a Roth IRA up to the same contribution limits that apply to traditional IRA contributions. The regular contribution limits are phased out for taxpayers with $125,000 to $140,000 in adjusted gross income for 2021 ($198,000 to $208,000 for married filing
69
joint returns). Also the taxable balance in a traditional IRA may be rolled over or converted into a Roth IRA. Distributions from Roth 403(b) plans can be rolled over to a Roth IRA regardless of income.
Regular contributions to a Roth IRA are not deductible, and rollovers and conversions from other retirement plans are taxable when completed, but withdrawals that meet certain requirements are not subject to federal income tax on either the original contributions or any earnings. However, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1) before 59½ (subject to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA. A 10% penalty tax may apply to amounts attributable to a conversion from an IRA if they are distributed during the five taxable years beginning with the year in which the conversion was made. Rollovers of Roth contributions were already taxed when made and are not generally subject to tax when rolled over to a Roth IRA. Sale of the Contract for use with Roth IRAs may be subject to special requirements imposed by the Internal Revenue Service. Purchasers of the Contract for such purposes will be provided with such supplementary information as may be required by the Internal Revenue Service or other appropriate agency, and will have the right to revoke the Contract under certain requirements. Unlike a traditional IRA, Roth IRAs are not subject to minimum required distribution rules during the contract owner’s lifetime. Generally, however, the amount remaining in a Roth IRA after the contract owner’s death must begin to be distributed by the end of the first calendar year after death, and made in amounts that satisfy IRS required minimum distribution regulations. Beginning with deaths occurring on or after January 1, 2020, subject to certain exceptions, most non-spouse beneficiaries must now complete distributions within ten years of the contract owner’s death.
Rollovers. A “rollover” is the tax-free transfer of a distribution from one “eligible retirement plan” to another. Distributions which are rolled over are not included in the employee’s gross income until some future time.
If any portion of the balance to the credit of an employee in a Section 403(b) or other eligible retirement plan (other than Roth sources) is paid in an “eligible rollover distribution” and the payee transfers any portion of the amount received to an “eligible retirement plan,” then the amount so transferred is not includable in income. Also, pre-tax distributions from an IRA may be rolled over to another kind of eligible retirement plan. An “eligible rollover distribution” generally means any distribution that is not one of a series of periodic payments made for the life of the distributee or for a specified period of at least ten years. In addition, a required minimum distribution, death distributions (except to a surviving spouse), and certain corrective distributions, will not qualify as an eligible rollover distribution. A rollover must be made directly between plans or indirectly within 60 days after receipt of the distribution.
For an employee (or employee’s spouse or former spouse as beneficiary or alternate payee), an “eligible retirement plan” will be another Section 403(b) plan, a qualified retirement plan, or a traditional individual retirement account or annuity described in Code Section 408. For a non-spouse beneficiary, an “eligible retirement plan” is an IRA established by the direct rollover. For a Roth 403(b) account, a rollover, including a direct rollover, can only be made to a Roth IRA or to the same kind of account in another plan (such as a Roth 403(b) to a Roth 403(b), but not a Roth 403(b) to a Roth 401(k)). Anyone attempting to rollover Roth 403(b) contributions should seek competent tax advice. Additionally, a rollover for a Roth IRA can only be made to another Roth IRA.
A Section 403(b) plan must provide a participant receiving an eligible rollover distribution, the option to have the distribution transferred directly to another eligible retirement plan.
Only one indirect rollover may be made from an IRA, including traditional IRAs, Roth IRAs, SIMPLE-IRAs and SEP-IRAs, to another IRA in a 12 month period. The 12 month period begins on the date the IRA distribution is received. If a second indirect rollover is made during the 12 month period, the transaction may have adverse tax consequences. This rollover limitation does not apply to direct rollovers or a rollover between a retirement plan and an IRA.
Tax Penalties. Premature Distribution Tax. Distributions from a 403(b) plan or IRA before the participant reaches age 59½ are generally subject to an additional tax equal to 10% of the taxable portion of the distribution. The 10% penalty tax does not apply to distributions: (i) made on or after the death of the employee; (ii) attributable to the employee’s disability; (iii) which are part of a series of substantially equal periodic payments made (at least annually) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary and (except for IRAs) which begin after the employee terminates employment; (iv) made to an employee after termination of employment after reaching age 55; (v) made to pay for certain medical expenses; (vi) that are exempt withdrawals of an excess contribution; (vii) that are rolled over or transferred in accordance with Code requirements; (viii) made as a qualified reservist distribution; (ix) that are transferred pursuant to a decree of
70
divorce or separate maintenance or written instrument incident to such a decree; or (x) made in connection with the birth or adoption of a child, in limited circumstances.
The exception to the 10% penalty tax described in item (iv) above is not applicable to IRAs. However, distributions from an IRA to unemployed individuals can be made without application of the 10% penalty tax to pay health insurance premiums in certain cases. There are two additional exceptions to the 10% penalty tax on withdrawals from IRAs before age 59½: withdrawals made to pay “qualified” higher education expenses and withdrawals made to pay certain “eligible first-time home buyer expenses.” There may be additional exceptions to the 10% penalty tax (e.g., certain disaster relief distributions.)
Minimum Distribution Tax. If the amount distributed from a Qualified Contract is less than the minimum required distribution for the year, the participant is subject to a 50% tax on the amount that was not properly distributed. The value of any enhanced death benefits or other optional contract provisions such as the Guaranteed Minimum Income Benefit may need to be taken into account when calculating the minimum required distribution. Consult a tax advisor.
Withholding. Periodic distributions (e.g., annuities and installment payments) from a Qualified Contract that will last for a period of ten or more years are generally subject to voluntary income tax withholding. The amount withheld on such periodic distributions is determined at the rate applicable to wages. The recipient of a periodic distribution may generally elect not to have withholding apply.
Eligible rollover distributions from a Qualified Plan (other than IRAs) are generally subject to mandatory 20% income tax withholding. However, no withholding is imposed if the distribution is transferred directly to another eligible retirement plan. Nonperiodic distributions from an IRA are subject to income tax withholding at a flat 10% rate. The recipient of such a distribution may elect not to have withholding apply.
The above description of the federal income tax consequences of the different types of Qualified Plans which may be funded by the Contract offered by this Prospectus is only a brief summary and is not intended as tax advice. The rules governing the provisions of Qualified Plans are extremely complex and often difficult to comprehend. Anything less than full compliance with the applicable rules, all of which are subject to change, may have adverse tax consequences. A prospective Owner considering adoption of a Qualified Plan and purchase of a Contract in connection therewith should first consult a qualified and competent tax adviser, with regard to the suitability of the Contract as an investment vehicle for the Qualified Plan.
Other Tax Considerations —
Federal Estate, Gift, and Generation-Skipping Transfer Taxes. While no attempt is being made to discuss the Federal estate tax implications of the Contract, a purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning advisor for more information.
Under certain circumstances, the Code may impose a “generation skipping transfer tax” (“GST”) when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Code may require the Company to deduct the tax from your Contract, or from any applicable payment, and pay it directly to the IRS.
The potential application of these taxes underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios.
Annuity Purchases by Nonresident Aliens and Foreign Corporations. The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser’s country of citizenship or residence. Additional withholding may occur with respect to entity purchasers (including foreign corporations, partnerships, and trusts) that are not U.S. residents. Prospective purchasers are advised to consult with a qualified tax adviser regarding U.S. state, and foreign taxation with respect to an annuity contract purchase.
Foreign Tax Credits. We may benefit from any foreign tax credits attributable to taxes paid by certain Funds to foreign jurisdictions to the extent permitted under Federal tax law.
71
Medicare Tax. Distributions from non-qualified annuity contracts are considered “investment income” for purposes of the Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g. earnings) to individuals whose income exceeds certain threshold amounts. Please consult a tax advisor for more information.
Annuity Purchases by Residents of Puerto Rico. The Internal Revenue Service has announced that income received by residents of Puerto Rico under life insurance or annuity contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.
Other Information
Voting of Underlying Fund Shares — The Company is the legal owner of the shares of the Underlying Funds held by the Subaccounts. The Company will exercise voting rights attributable to the shares of each Underlying Fund held in the Subaccounts at any regular and special meetings of the shareholders of the Underlying Funds on matters requiring shareholder voting. In accordance with its view of presently applicable law, the Company will exercise its voting rights based on instructions received from persons having beneficial interest in corresponding Subaccounts. However, if the 1940 Act or any regulations thereunder should be amended, or if the present interpre-tation thereof should change, and as a result the Company determines that it is permitted to vote the shares of the Underlying Funds in its own right, it may elect to do so.
The person having the voting interest under a Contract is the Owner. Unless otherwise required by applicable law, the number of shares of a particular Underlying Fund as to which voting instructions may be given to the Company is determined by dividing your Contract Value in the corresponding Subaccount on a particular date by the net asset value per share of the Underlying Fund as of the same date. Fractional votes will be counted. The number of votes as to which voting instructions may be given will be determined as of the same date established by the Underlying Fund for determining shareholders eligible to vote at the meeting of the Underlying Fund. If required by the SEC, the Company reserves the right to determine in a different fashion the voting rights attributable to the shares of the Underlying Funds. Voting instructions may be cast in person or by proxy.
It is important that each Owner provide voting instructions to the Company because we vote all Underlying Fund shares proportionately in accordance with instructions received from Owners. This means that the Company will vote shares for which no timely voting instructions are received in the same proportion as those shares for which we do receive voting instructions. As a result, a small number of Owners may control the outcome of a vote. The Company will also exercise the voting rights from assets in each Subaccount that are not otherwise attributable to Owners, if any, in the same proportion as the voting instructions that are received in a timely manner for all Contracts participating in that Subaccount.
Changes to Investments — The Company reserves the right, subject to compliance with the law as then in effect, to make additions to, deletions from, or combinations of the securities that are held by the Separate Account or any Subaccount or that the Separate Account or any Subaccount may purchase. In addition, the Company reserves the right to substitute shares of any or all of the Underlying Funds in accordance with applicable law. In all cases, the Company will send you notice. For instance, the Company may seek to substitute shares of Underlying Funds should they no longer be available for investment, or if the Company’s management believes further invest-ment in shares of any Underlying Fund should become inappropriate in view of the purposes of the Contract. The Company may substitute shares of an Underlying Fund with the shares of another Underlying Fund or the shares of a fund not currently offered under the Contract. Substituted fund shares may have higher fees and expenses. The Company may also purchase, through the Subaccount, other securities for other classes of contracts, or permit a
72
conversion between classes of contracts on the basis of requests made by Owners. The Company further reserves the right to close any Subaccount to future allocations.
The Company also reserves the right to establish additional Subaccounts of the Separate Account that would invest in a new Underlying Fund or in shares of another investment company, a series thereof, or other suitable investment vehicle. The Company may establish new Subaccounts in its sole discretion, and will determine whether to make any new Subaccount available to existing Owners. The Company may also eliminate or combine one or more Subaccounts to all or only certain classes of Owners if, in its sole discretion, marketing, tax, or investment conditions so warrant.
The Company also reserves the right, subject to any required regulatory approvals, to transfer assets of the Separate Account or any Subaccount to another separate account or Subaccount.
In the event of any such substitution or change, the Company may, by appropriate endorsement, make such changes in these and other contracts as may be necessary or appropriate to reflect such substitution or change. If the Company believes it to be in the best interests of persons having voting rights under the Contract, the Separate Account may be operated as a management investment company under the 1940 Act or any other form permitted by law. The Separate Account may be deregistered under the 1940 Act in the event such registration is no longer required, or it may be combined with other separate accounts of the Company or an affiliate thereof. Subject to compliance with applicable law, the Company also may establish a committee, board, or other group to manage one or more aspects of the operation of the Separate Account.
Changes to Comply with Law and Amendments — The Company reserves the right, without the consent of Owners, to suspend sales of the Contract as presently offered and to make any change to the provisions of the Contract to comply with, or give Owners the benefit of, any federal or state statute, rule, or regulation, including but not limited to requirements for annuity contracts and retirement plans under the Internal Revenue Code and regulations thereunder or any state statute or regulation.
Reports to Owners — The Company will send you annually a statement setting forth a summary of the transactions that occurred during the year, and indicating the Contract Value as of the end of each year. In addition, the statement will indicate the allocation of Contract Value among the Fixed Account and the Subaccounts and any other information required by law. The Company will also send confirmations upon Purchase Payments, transfers, loans, loan repayments, and full and partial withdrawals. The Company may confirm certain transactions on a quarterly basis rather than at the time they occur. These transactions include purchases under an Automatic Investment Program, transfers under the Dollar Cost Averaging and Asset Reallocation Options, systematic withdrawals and annuity payments.
The shareholder reports for Underlying Funds available under your Contract will no longer be sent by mail, effective January 1, 2021, unless you specifically request paper copies of the reports from the Company. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and available online at http://dfinview.com/SecurityBenefit?site=SBL.
You may elect to receive all future reports in paper free of charge. You can inform the Company that you wish to continue receiving paper copies of your shareholder reports by calling 1-800-888-2461. Your election to receive reports in paper will apply to all Underlying Funds available under your Contract.
Electronic Privileges — If the Electronic Privileges section of the application or the proper form has been completed, signed, and received at the Company’s Administrative Office, you may (1) request a transfer of Contract Value and make changes in your Purchase Payment allocation and to an existing Dollar Cost Averaging or Asset Reallocation Option by telephone; (2) request a transfer of Contract Value electronically via facsimile; and (3) request transfer of Contract Value through the Company’s Internet web site. If you elect Electronic Privileges, you automati-cally authorize your financial representative to make transfers of Contract Value and changes in your Purchase Payment allocation or Dollar Cost Averaging or Asset Reallocation Option, on your behalf.
Any telephone or electronic device, whether it is the Company’s, yours, your service provider’s, or your registered representative’s, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent the Company’s processing of your transfer request. Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your transfer request by writing to our Administrative Office.
73
The Company has established procedures to confirm that instructions communicated by telephone are genuine and will not be liable for any losses due to fraudulent or unauthorized instructions provided it complies with its procedures. The Company’s procedures require that any person requesting a transfer by telephone provide the account number and the Owner’s tax identification number and such instructions must be received on a recorded line. The Company reserves the right to deny any telephone transfer request. If all telephone lines are busy (which might occur, for example, during periods of substantial market fluctuations) or are otherwise unavailable, you may not be able to request transfers by telephone and would have to submit written requests.
By authorizing telephone transfers, you authorize the Company to accept and act upon telephonic instructions for transfers involving your Contract. There are risks associated with telephone transactions that do not occur if a written request is submitted. Anyone authorizing or making telephone requests bears those risks. You agree that neither the Company, any of its affiliates, nor any Underlying Fund, will be liable for any loss, damages, cost, or expense (including attorneys’ fees) arising out of any telephone requests; provided that the Company effects such request in accordance with its procedures. As a result of this policy on telephone requests, you bear the risk of loss arising from the telephone transfer privilege. The Company may discontinue, modify, or suspend the telephone transfer privilege at any time.
State Variations — This Prospectus and the Statement of Additional Information describe all materials terms and features of the Contract including material state variations. If you would like to review a copy of your Contract and its endorsements and riders, if any, contact the Company’s Administrative Office.
Legal Proceedings — The Company and its subsidiaries, like other life insurance companies, may be involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, the Company believes that at the present time there are no legal proceedings pending or threatened to which the Company, the Separate Account, or SDL is a party that are reasonably likely to materially affect the Separate Account or the Company’s ability to meet its obligations under the Contract, or SDL’s ability to perform its contract with the Separate Account.
Legal Matters — Chris Swickard, Esq., Associate General Counsel of the Company, has passed upon legal matters in connection with the issue and sale of the Contract described in this Prospectus, the Company’s authority to issue the Contract under Kansas law, and the validity of the forms of the Contract under Kansas law.
Sale of the Contract —
Principal Underwriter. The Company has entered into a principal underwriting agreement with its subsidiary, SDL, for the distribution and sale of the Contract. SDL’s home office is located at One Security Benefit Place, Topeka, Kansas 66636‑0001. SDL, a wholly-owned subsidiary of the Company, is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 and is a member of FINRA.
SDL does not sell the Contract directly to purchasers. The Contract is offered to the public through registered representatives of broker-dealers that have entered into selling agreements with the Company and SDL for the sale of the Contract (collectively, “Selling Broker-Dealers”). Registered representatives must be licensed as insurance agents by applicable state insurance authorities and appointed as agents of the Company in order to sell the Contract. The Company pays commissions to Selling Broker-Dealers through SDL. During fiscal years 2020, 2019, and 2018, the commission amounts paid to SDL in connection with all Contracts sold through the Separate Account were $1,348,138, $2,274,574, and $2,435,279, respectively. The Company, on behalf of SDL, pays commissions to Selling Broker-Dealers for their sales, and SDL does not retain any portion of commissions it receives as principal underwriter for the Contract. However, the Company (or an affiliate) pays some or all of SDL’s operating and other expenses, including the following sales expenses: compensation and bonuses for SDL’s management team, compen-sation and benefits for SDL’s registered representatives, advertising expenses, and other expenses of distributing the Contract. The Company does not pay commissions to financial intermediaries who receive advisory fees from Contract owners because such intermediaries receive compensation in connection with the Contract in the form of those advisory fees.
Selling Broker-Dealers. The Company pays commissions to all Selling Broker-Dealers in connection with the promotion and sale of the Contract according to one or more schedules. A portion of any payments made to Selling Broker-Dealers may be passed on to their registered representatives in accordance with their internal compensation
74
programs. Commissions and other incentives or payments described below are not charged directly to Owners or the Separate Account. The Company uses its corporate assets to pay commissions and other costs of distributing the Contract. Commissions and other incentives or payments described below are not charged directly to Owners or the Separate Account. The Company intends to recoup commissions and other sales expenses through fees and charges deducted under the Contract (including any profit from the mortality and expense risk charge or other fees and charges imposed under the Contract) or from its General Account.
Compensation Paid to All Selling Broker-Dealers. The Company pays commissions as a percentage of initial and subsequent Purchase Payments at the time it receives them, as a percentage of Contract Value on an ongoing basis, or a combination of both. While the amount and timing of commissions may vary depending on the selling agreement, the Company does not expect commissions to exceed 6.5% of aggregate Purchase Payments (if compensation is paid as a percentage of Purchase Payments) and/or 1.0% annually of average Contract Value (if compensation is paid as a percentage of Contract Value). The Company also pays non-cash compensation in connection with the sale of the Contract, including conferences, seminars and trips (including travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items.
The registered representative who sells you the Contract typically receives a portion of the compensation the Company pays to his or her Selling Broker-Dealer, depending on the agreement between the Selling Broker-Dealer and your registered representative and the Selling Broker-Dealer’s internal compensation program. These programs may include other types of cash and non-cash compensation and other benefits. Ask your registered represen-tative for further information about what he or she and the Selling Broker-Dealer for whom he or she works may receive in connection with your purchase of a Contract.
Additional Compensation Paid to Selected Selling Broker-Dealers. In addition to the commissions and non-cash compensation described above, the Company pays additional compensation to selected Selling Broker-Dealers. These payments include: (1) trail commissions or persistency payments, which are periodic payments based on contract values of the Company’s variable insurance contracts (including Contract Values of the Contract) or other persistency standards; (2) preferred status fees (which may be in the form of a higher percentage of ordinary commission) paid to obtain preferred treatment of the Contract in Selling Broker-Dealers’ marketing programs, including enhanced marketing services and increased access to their registered representatives; (3) one-time bonus payments for their participation in sales promotions with regard to the Contract; (4) periodic bonus payments calculated as a percentage of the average contract value of the Company’s variable insurance contracts (including the Contract) sold by the Selling Broker-Dealer during the calendar year of payment; (5) sponsorship of or reimburse-ment of industry conference fees paid to help defray the costs of sales conferences and educational seminars put on by the Selling Broker-Dealers; and (6) reimbursement of Selling Broker-Dealers for expenses incurred by the Selling Broker-Dealer or its registered representatives in connection with client seminars or similar prospecting activities conducted to promote sales of the Contract.
The following list sets forth the names of the top ten Selling Broker-Dealers that received additional compensation from the Company in 2020 in connection with the sale of its variable annuity contracts, variable life insurance policies, and other insurance products (including the Contract): OFG Financial Services, Inc., GWN Securities, Inc., Securities America Inc., Lincoln Investment PLNG, LLC, Cetera Advisor Networks, LLC, LPL Financial Corporation, PlanMember Securities Corporation, Royal Alliance Associates, Inc., Sagepoint Financial Inc., and ACA/Prudent Investors Plan Corp.
These additional compensation arrangements are not offered to all Selling Broker-Dealers and the terms of such arrangements and the payments made thereunder can differ substantially among Selling Broker-Dealers. The payments may be significant and may be calculated in different ways by different Selling Broker-Dealers. These arrangements are designed to specially encourage the sale of the Company’s products (and/or its affiliates’ products) by such Selling Broker-Dealers. The prospect of receiving, or the receipt of, additional compensation may provide Selling Broker-Dealers and/or their registered representatives with an incentive to favor sales of the Contract over other variable annuity contracts (or other investments) with respect to which a Selling Broker-Dealer does not receive additional compensation, or receives lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the Contract. Ask your registered representative for further information about what he or she and the Selling Broker-Dealer for whom he or she works may receive in connection with your purchase of a Contract.
75
Additional Information
Registration Statement — A Registration Statement of which this Prospectus is a part has been filed with the SEC relating to the offering described in this Prospectus. This Prospectus does not include all the information included in the Registration Statement, certain portions of which, including the Statement of Additional Information, have been omitted pursuant to the rules and regulations of the SEC. The omitted information may be obtained at the SEC’s principal office in Washington, DC, upon payment of any of the SEC’s prescribed fees and may also be obtained for free from the SEC’s web site (http://www.sec.gov). You may also obtain the Statement of Additional Information by writing the Company at One Security Benefit Place, Topeka, Kansas 66636 or by calling 1‑800‑888‑2461. The Statement of Additional Information is also available online at https://dfinview.com/SecurityBenefit?site=SBL.
Financial Statements — You can find financial statements for Security Benefit Life Insurance Company and Subsidiaries and the Separate Account in the Statement of Additional Information, which is available online at https://dfinview.com/SecurityBenefit?site=SBL. To receive a copy of the Statement of Additional Information free of charge, call your investment professional or contact us at 1-800-888-2461.
76
APPENDIX A
Underlying Funds Available Under the Contract
The following is a list of Underlying Funds available under the Contracts. More information about the Underlying Funds is available in the prospectuses for the Underlying Funds, which may be amended from time to time and can be found online at http://dfinview.com/SecurityBenefit?site=SBL. You can also request this information at no cost by calling us at 1-800-888-2461 or by sending an email request SBLProspectusRequests@securitybenefit.com.
The current expenses and performance information below reflect fee and expenses of the Underlying Funds, but do not reflect the other fees and expenses that your Contract may charge. Expenses would be higher and performance would be lower if these other charges were included. Each Underlying Fund’s past performance is not necessarily an indication of future performance. Updated performance information is available online at https://securitybenefit.se2.com/#53&RID=11&prodID=19&prodCat=VA.
| Investment Type | Fund Adviser/Sub-Adviser | Current Expense1 | Average Annual Total Returns (as of 12/31/2020) | ||
| 1 Year | 5 Year | 10 Year | |||
Mid Cap Value | American Century VP Mid Cap Value – Class II Adviser: American Century Investment Management, Inc. | 1.16% | 1.11% | 9.19% | 10.27% |
Large Cap Growth | American Century VP Ultra® – Class II Adviser: American Century Investment Management, Inc. | 1.16% | 49.55% | 22.72% | 17.68% |
Large Cap Value | American Century VP Value – Class II Adviser: American Century Investment Management, Inc. | 1.13% | 0.83% | 8.67% | 9.57% |
Specialty-Sector | BNY Mellon IP Technology Growth – Service Class Adviser: BNY Mellon Investment Adviser, Inc. | 1.03% | 69.57% | 25.58% | 17.35% |
Large Cap Growth | ClearBridge Variable Aggressive Growth – Class II Adviser: Legg Mason Partners Fund Advisor, LLC Sub-Adviser: ClearBridge Investments, LLC | 1.05% | 17.73% | 9.47% | 12.69% |
Small Cap Growth | ClearBridge Variable Small Cap Growth – Class I Adviser: Legg Mason Partners Fund Advisor, LLC Sub-Adviser: ClearBridge Investments, LLC | 0.81% | 43.26% | 19.84% | 15.92% |
Balanced/Asset Allocation | Franklin Income VIP Fund – Class 2 Adviser: Franklin Advisers, Inc. | 0.73% | 0.69% | 6.94% | 5.98% |
Global Equity | Franklin Mutual Global Discovery VIP Fund – Class 2 Adviser: Franklin Mutual Advisers, LLC | 1.22% | (4.46)% | 5.14% | 6.27% |
Small Cap Value | Franklin Small Cap Value VIP Fund – Class 2 Adviser: Franklin Mutual Advisers, LLC | 0.93% | 5.19% | 10.77% | 9.20% |
Multi Cap Value | Guggenheim VIF All Cap Value Adviser: Security Investors, LLC | 1.21% | 1.88% | 9.67% | 9.13% |
Specialty | Guggenheim VIF Alpha Opportunity Adviser: Security Investors, LLC | 3.98% | 0.27% | 0.90% | 4.87% |
High Yield Bond | Guggenheim VIF High Yield Adviser: Security Investors, LLC | 1.38% | 4.64% | 6.95% | 5.44% |
Large Cap Value | Guggenheim VIF Large Cap Value Adviser: Security Investors, LLC | 1.09% | 2.21% | 9.63% | 9.21% |
Specialty | Guggenheim VIF Long Short Equity Adviser: Security Investors, LLC | 1.73% | 4.93% | 2.19% | 2.89% |
Balanced/Asset Allocation | Guggenheim VIF Managed Asset Allocation Adviser: Security Investors, LLC | 1.11% | 12.59% | 9.51% | 8.17% |
A-1
| Investment Type | Fund Adviser/Sub-Adviser | Current Expense1 | Average Annual Total Returns (as of 12/31/2020) | ||
| 1 Year | 5 Year | 10 Year | |||
Specialty | Guggenheim VIF Multi-Hedge Strategies Adviser: Security Investors, LLC | 1.91% | 7.39% | 2.01% | 2.38% |
Small Cap Value | Guggenheim VIF Small Cap Value Adviser: Security Investors, LLC | 1.29% | (0.97)% | 6.84% | 7.17% |
Mid Cap Value | Guggenheim VIF SMid Cap Value Adviser: Security Investors, LLC | 1.22% | 4.30% | 10.64% | 8.46% |
Large Cap Blend | Guggenheim VIF StylePlus Large Core Adviser: Security Investors, LLC | 1.38% | 18.78% | 14.85% | 12.60% |
Large Cap Growth | Guggenheim VIF StylePlus Large Growth Adviser: Security Investors, LLC | 1.45% | 37.87% | 20.27% | 15.31% |
Mid Cap Growth | Guggenheim VIF StylePlus Mid Growth Adviser: Security Investors, LLC | 1.39% | 32.10% | 17.14% | 13.68% |
Small Cap Growth | Guggenheim VIF StylePlus Small Growth Adviser: Security Investors, LLC | 1.67% | 31.82% | 15.59% | 13.10% |
Intermediate Term Bond | Guggenheim VIF Total Return Bond Adviser: Security Investors, LLC | 0.92% | 14.21% | 6.59% | 5.47% |
Global Equity | Guggenheim VIF World Equity Income Adviser: Security Investors, LLC | 1.20% | 6.65% | 8.59% | 6.31% |
Mid Cap Value | Invesco V.I. American Value – Series II Adviser: Invesco Advisers, Inc. | 1.40% | 5.33% | 8.85% | 8.20% |
Large Cap Value | Invesco V.I. Comstock – Series II Adviser: Invesco Advisers, Inc. | 1.01% | (1.09)% | 8.30% | 9.18% |
Intermediate Term Bond | Invesco V.I. Core Bond – Series II Adviser: Invesco Advisers, Inc. | 1.19% | 9.43% | 4.88% | 4.93% |
Mid Cap Growth | Invesco V.I. Discovery Mid Cap Growth – Series II Adviser: Invesco Advisers, Inc. | 1.11% | 40.24% | 19.09% | 15.62% |
Balanced/Asset Allocation | Invesco V.I. Equity and Income – Series II Adviser: Invesco Advisers, Inc. | 0.83% | 9.65% | 8.61% | 8.29% |
Specialty-Sector | Invesco V.I. Global Real Estate – Series I Adviser: Invesco Advisers, Inc. Sub-Adviser: Invesco Asset Management Limited | 1.04% | (12.32)% | 3.15% | 4.96% |
Money Market | Invesco V.I. Government Money Market – Series II Adviser: Invesco Advisers, Inc. | 0.73% | 0.21% | 0.70% | 0.36% |
Government Bond | Invesco V.I. Government Securities – Series II Adviser: Invesco Advisers, Inc. | 0.92% | 5.97% | 2.92% | 2.52% |
Specialty-Sector | Invesco V.I. Health Care – Series I Adviser: Invesco Advisers, Inc. | 0.98% | 14.46% | 9.43% | 13.09% |
International Equity | Invesco V.I. International Growth – Series II Adviser: Invesco Advisers, Inc. | 1.17% | 13.74% | 8.55% | 6.46% |
Mid Cap Blend | Invesco Main Street Mid Cap Fund – Series II Adviser: Invesco Advisers, Inc. | 1.19% | 8.94% | 9.33% | 7.55% |
A-2
| Investment Type | Fund Adviser/Sub-Adviser | Current Expense1 | Average Annual Total Returns (as of 12/31/2020) | ||
| 1 Year | 5 Year | 10 Year | |||
Small Cap Blend | Invesco V.I. Main Street Small Cap Fund – Series II Adviser: Invesco Advisers, Inc. | 1.16% | 19.63% | 12.59% | 11.85% |
Mid Cap Growth | Janus Henderson VIT Enterprise – Service Class Adviser: Janus Capital Management, LLC | 0.97% | 19.18% | 17.92% | 14.97% |
Large Cap Growth | Janus Henderson VIT Research – Service Class Adviser: Janus Capital Management, LLC | 0.85% | 32.58% | 17.38% | 14.38% |
International Equity | MFS® VIT II Research International – Service Class Adviser: Massachusetts Financial Services Company | 1.23% | 12.71% | 9.34% | 5.71% |
Balanced/Asset Allocation | MFS® VIT Total Return – Service Class Adviser: Massachusetts Financial Services Company | 0.96% | 9.52% | 8.58% | 8.07% |
Specialty-Sector | MFS® VIT Utilities – Service Class Adviser: Massachusetts Financial Services Company | 1.04% | 5.62% | 11.10% | 8.93% |
Emerging Markets | Morgan Stanley VIF Emerging Markets Equity – Class II Adviser: Morgan Stanley Investment Management, Inc. Sub-Adviser: Morgan Stanley Investment Management Company | 1.55% | 14.36% | 10.18% | 2.98% |
Large Cap Blend | Neuberger Berman AMT Sustainable Equity – Class S Adviser: Neuberger Berman Investment Advisers LLC | 1.18% | 19.28% | 12.78% | 11.40% |
Specialty | PIMCO VIT All Asset – Administrative Class Adviser: Pacific Investment Management Company LLC Sub-Adviser: Research Affiliates | 1.375% | 8.01% | 7.95% | 4.65% |
Specialty-Sector | PIMCO VIT CommodityRealReturn Strategy – Administrative Class Adviser: Pacific Investment Management Company LLC | 1.38% | 1.35% | 2.67% | (5.39)% |
Emerging Markets Bond | PIMCO VIT Emerging Markets Bond – Advisor Class Adviser: Pacific Investment Management Company LLC | 1.20% | 6.60% | 7.64% | 5.22% |
International Bond | PIMCO VIT International Bond Portfolio (U.S. Dollar-Hedged) – Administrative Class Adviser: Pacific Investment Management Company LLC | 0.94% | 5.56% | 4.77% | 5.28% |
Short Term Bond | PIMCO VIT Low Duration – Administrative Class Adviser: Pacific Investment Management Company LLC | 0.69% | 2.99% | 2.01% | 1.79% |
Inflation-Protected Bond | PIMCO VIT Real Return – Administrative Class Adviser: Pacific Investment Management Company LLC | 0.84% | 10.59% | 4.20% | 2.59% |
Small Cap Blend | Royce Micro-Cap – Investment Class Adviser: Royce & Associates, LP | 1.29% | 24.50% | 11.64% | 5.20% |
High Yield Bond | Western Asset Variable Global High Yield Bond – Class II Adviser: Legg Mason Partners Fund Advisor, LLC Sub-Adviser: Western Asset Management Company, LLC; Western Asset Management Company Limited (London); and Western Asset Management Company Pte. Ltd. (Singapore) | 1.10% | 7.12% | 7.92% | 5.56% |
| 1 Certain Investment Portfolios and their investment advisers have entered into temporary expense reimbursement and/or fee waivers. Please see the Investment Portfolios’ prospectuses for additional information regarding these arrangements | |||||
A-3
Optional Rider Investment Restrictions
| Rider | Investment Restrictions | Investment Allocation Impact on Crediting Rate |
Extra Credit at 4% | Fixed Account not available as an investment option. | N/A |
0-Year or 4-Year Alternate Withdrawal Charge | Fixed Account not available as an investment option. | N/A |
Guaranteed Minimum Income Benefit at 5% | N/A | The Company will credit a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account and the Loan Account. All other investments will be credited at 5%. |
6% Dollar for Dollar Guaranteed Minimum Income Benefit (formerly Dollar for Dollar Living Benefit) | N/A | The Company will credit a maximum rate of 3% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the PIMCO Low Duration Subaccount, the Fixed Account and the Loan Account. All other investments will be credited at 6%. |
Guaranteed Growth Death Benefit | N/A | If you elected this benefit at 5%, 6% or 7%, the Company will credit a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account and Loan Account. All other investments will be credited at the rate you selected. |
6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit (formerly the Dollar for Dollar Combination Benefit) | N/A | The Company will credit a maximum rate of 3% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the PIMCO Low Duration Subaccount, the Fixed Account and the Loan Account. All other investments will be credited at 6%. |
Extra Credit at 3% or 5% | Fixed Account not available as an investment option. | N/A |
A-4
APPENDIX B
Riders No Longer Available – Available for Purchase Only Prior to February 1, 2010
Guaranteed Minimum Income Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available a minimum amount for the purchase of a fixed Annuity (“Minimum Income Benefit”). The Minimum Income Benefit is equal to Purchase Payments and any Credit Enhancements and Bonus Credits, net of any premium tax, less an adjustment for withdrawals, increased at an annual effective rate of interest of 3% or 5%, as elected in the application. (If you elected the Guaranteed Minimum Income Benefit at 5%, please note that the Company will credit a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account and the Loan Account; however, you will still pay the Rider charge applicable to the 5% rate.) Any amounts allocated to the Loan Account, however, will only earn the Guaranteed Rate.
In crediting interest, the Company takes into account the timing of when each Purchase Payment and withdrawal occurred and accrues such interest until the earlier of: (1) the Annuity Start Date, or (2) the Contract Anniversary following the oldest Annuitant’s 80th birthday. In the event of a withdrawal, the Minimum Income Benefit is reduced as of the date of the withdrawal by a percentage found by dividing the withdrawal amount, including any withdrawal charges, by Contract Value immediately prior to the withdrawal.
You may apply the Minimum Income Benefit, less any applicable premium tax and pro rata account administration charge, to purchase a fixed Annuity within 30 days of any Contract Anniversary following the 10th Contract Anniversary. You may apply the Minimum Income Benefit to purchase only a fixed Annuity under Option 2, life income with a 10‑year period certain, or Option 4B, joint and last survivor with a 10‑year period certain. See the discussion of Options 2 and 4 under “Annuity Options.” The Annuity rates for this rider are based upon the 1983(a) mortality table with mortality improvement under Projection Scale G and an interest rate of 2½%. This rider was available only if the age of the Owner at the time the Contract is issued was age 79 or younger.
Example 1. How the Guaranteed Minimum Income Benefit Increases with Purchase Payments and Interest.
Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Income Benefit at 5%. |
| (ii) | The initial Purchase Payment is $100,000. |
| (iii) | No Contract Value is allocated to the Invesco V.I. Government Money Market or Fixed Account. |
| (iv) | There are no outstanding loans on the Contract. |
At the time the Contract is issued, the Minimum Income Benefit is $100,000. 191 days after Contract issue, the Owner adds a Purchase Payment of $50,000 to the Contract. As a result of interest accrued over the 191 days since the initial Purchase Payment, immediately prior to the $50,000 Purchase Payment, the Minimum Income Benefit has increased to $102,586, calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Initial Purchase Payment
$100,000 x ((1 + .05)(191/365))
$100,000 x (1.05(191/365)) = $102,586
After the $50,000 Purchase Payment, the Minimum Income Benefit is $152,586 ($102,586 + $50,000).
Example 2. How the Guaranteed Minimum Income Benefit Decreases as a Result of Withdrawals.
Continuing from Example 1, the Owner takes a withdrawal of $15,000 a little over a year (377 days) after the $50,000 Purchase Payment. The Contract Value prior to the withdrawal is $150,000 and the Minimum Income Benefit prior to the withdrawal is $160,472.50 ($152,586 x 1.05(377/365)). After the withdrawal, the Minimum Income Benefit decreases as follows:
B-1
Minimum Income Benefit prior to withdrawal x (1 - (Withdrawal amount / Contract Value prior to Withdrawal))
$160,472.50 x (1 - ($15,000 / $150,000)
$160,472.50 x (1 - .10)
$160,472.50 x .90 = $144,425.25
After the $15,000 withdrawal, the Contract Value is $135,000 ($150,000 - $15,000), and the Minimum Income Benefit is $144,425.25.
Example 3. How the Minimum Income Benefit is used at Annuitization.
Continuing from Example 2, the Owner decides to annuitize the Contract 20 days after the 10th Contract Anniversary. Approximately 3,104 days have elapsed since the last withdrawal of $15,000. The Owner has taken no other withdrawals and added no additional Purchase Payments to the Contract. The Owner chooses Annuity Option 2 and monthly annuity payments. At the time of annuitization, the year is 2020, and the Owner, a male, is age 72. The guaranteed rate per thousand for the 5% Guaranteed Minimum Income Benefit assuming life with 10 year period certain for a male aged 72 in 2020 is $5.65. As a result of accrued interest, the Minimum Income Benefit at the time of annuitization is $218,695.20 ($144,425.25 x (1.05(3104/365))). The guaranteed monthly annuity payment is calculated as follows:
(Minimum Income Benefit at Annuitization / $1,000) x Applicable guaranteed rate per thousand
($218,695.20 / $1,000) x $5.65
$218.70 x $5.65 = $1,235.63
Example 4. How Advisory Fee Withdrawals Reduce the Guaranteed Minimum Income Benefit.
Continuing from Example 3, 191 days after the Contract Date, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $100,000. Assume no Credit Enhancements or Bonus Credits are applicable. At the time the Contract is issued, the initial Guaranteed Minimum Income Benefit is $100,000. Immediately prior to the withdrawal of the advisory fee, the Guaranteed Minimum Income Benefit would have grown to $102,586 ($100,000 x 1.05^(191/365)). After the advisory fee is withdrawn, the reduction to the Guaranteed Minimum Income Benefit is calculated as follows:
Guaranteed Minimum Income Benefit Prior to Withdrawal x (1 - (Advisory Fee Withdrawal Amount / Contract Value)) =
$102,586 x (1 - ($1,000 / $100,000)) =
$102,586 x (1 - .01) = $101,560.14
After the advisory fee withdrawal, the Contract Value is $99,000 ($100,000 - $1000) and the Guaranteed Minimum Income Benefit is $101,560.14.
6% Dollar for Dollar Guaranteed Minimum Income Benefit (formerly Dollar for Dollar Living Benefit) (This rider was available for purchase ONLY prior to February 1, 2010) — This rider, like the Guaranteed Minimum Income Benefit Rider, makes available a minimum amount for the purchase of a fixed Annuity (“Minimum Income Benefit”); provided, however, that there are differences in the terms of the riders, including the annual effective rate of interest and the manner in which withdrawals affect the Minimum Income Benefit under each rider. You may never need to rely upon the Minimum Income Benefit, which should be viewed as a payment “floor.”
The Minimum Income Benefit under this rider is equal to Purchase Payments received during the three-year period that starts on the Contract Date, plus any Credit Enhancements and/or Bonus Credits applied in connection with those Purchase Payments, less any premium tax, and less an adjustment for withdrawals, increased at an annual effective rate of interest of 6%. Please note that the Company will credit a maximum rate of 3% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, the PIMCO Low Duration Subaccount and the Loan Account; however, you will still pay the full rider charge. To the extent that you allocate Purchase Payments or transfer Contract Value to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, the PIMCO Low Duration Subaccount or the Loan Account, you will not receive the benefit of an annual effective
B-2
interest rate of 6% in determining the Minimum Income Benefit. The Company may add new Subaccounts in the future that will earn only the 3% rate in calculating the Minimum Income Benefit. Any such Subaccounts will be disclosed in this Prospectus.
Under this rider, you may withdraw up to a specified amount each Contract Year (the “Annual Limit”), without a proportional reduction in the Minimum Income Benefit. If you purchased this rider when you purchased the Contract, the Annual Limit initially was equal to 6% of the initial Purchase Payment, not including any Credit Enhancement and/or any Bonus Credits. If you purchased this rider on a Contract Anniversary, the Annual Limit initially was equal to 6% of Contract Value. The Annual Limit will remain the same each Contract Year, unless you make additional Purchase Payments after the purchase date of the rider or make a withdrawal that, on its own or together with other withdrawals in that Contract Year, exceeds the Annual Limit immediately prior to the withdrawal.
The Company increases the Annual Limit in an amount equal to 6% of any Purchase Payment that is added subsequent to the purchase date of the rider. The Company reduces the Annual Limit if you make a withdrawal in a Contract Year that, on its own or together with other withdrawals in that Contract Year, exceeds the Annual Limit. In that event, the Company will reduce the Annual Limit by a percentage that is found by dividing (a) over (b) where (a) is the amount of the withdrawal that exceeds the Annual Limit, and (b) is the amount of Contract Value immediately prior to the withdrawal, reduced by that portion of the withdrawal, if any, that was not in excess of the Annual Limit. The Annual Limit as last adjusted in a Contract Year is the new Annual Limit for subsequent Contract Years, subject to adjustment for Purchase Payments made subsequent to adjusting the Annual Limit or aggregate withdrawals in a Contract Year that exceed the new Annual Limit. Any portion of the Annual Limit that is not withdrawn during a Contract Year may not be carried over for withdrawal in a subsequent Contract Year.
In crediting interest to determine the Minimum Income Benefit, the Company takes into account the timing of when each Purchase Payment and withdrawal occurs and accrues the applicable annual effective rate of interest until the earlier of: (1) the Annuity Start Date, or (2) the Contract Anniversary following the oldest Annuitant’s 80th birthday.
In the event of a withdrawal that does not exceed the Annual Limit, the Minimum Income Benefit is reduced as of the date of the withdrawal by the exact dollar amount of the withdrawal, which for purposes of the rider includes any applicable withdrawal charges, any Credit Enhancement forfeitures and any premium tax charges. In the event of a withdrawal that exceeds the Annual Limit, the Minimum Income Benefit is first reduced by any portion of the withdrawal that does not exceed the Annual Limit and is then further reduced by a percentage found by dividing the amount of the withdrawal that exceeds the Annual Limit, by the amount of Contract Value immediately prior to the withdrawal, reduced by that portion of the Withdrawal, if any, that was not in excess of the Annual Limit.
Beginning on the tenth anniversary of the purchase date of the rider, you may apply the Minimum Income Benefit, less any applicable premium tax and pro rata account administration charge, to purchase a fixed Annuity under: (1) Annuity Option 2, (2) Annuity Option 4B, or (3) the Alternate Benefit, as discussed below. You may purchase a fixed Annuity under Option 2 or Option 4B within the 30‑day period following any Contract Anniversary that occurs on or after the 10th anniversary of the purchase date of the rider. A fixed Annuity under Option 2 provides annuity payments that will be made during the lifetime of the Annuitant with a 10‑year period certain, and under Option 4B provides annuity payments that will be made as long as either Annuitant is living with a 10‑year period certain. See the discussion of Option 2 and Option 4B under “Annuity Options.” The Annuity rates under the rider for those Options are based upon the 1983(a) mortality table with mortality improvement under Projection Scale G and an interest rate of 2%.
The Owner may elect an Alternate Benefit, which provides for fixed Annuity payments on a monthly, quarterly, semiannual or annual basis for a period of 15 years. The Alternate Benefit is available only on the tenth anniversary of the rider purchase date and shall not be available thereafter. Any election of the Alternate Benefit is made by providing written notice of such election to the Company within the 30‑day period following the tenth anniversary of the purchase date of the rider. Annuity payments under the Alternate Benefit are equal to the amount determined by dividing the Minimum Income Benefit on the Annuity Start Date, less any applicable premium tax and any pro rata account administration charge, by the total number of payments, as set forth in the table below (the total number of payments is based upon whether the Owner elects monthly, quarterly, semiannual or annual payments):
B-3
| Payment Frequency | Total Number of Payments |
| Monthly | 180 |
| Quarterly | 60 |
| Semiannual | 30 |
| Annual | 15 |
The Company guarantees that the Alternate Benefit shall be at least equal to an amount determined by applying the Minimum Income Benefit on the Annuity Start Date, less any applicable premium tax and any pro rata account administration charge, to Annuity Option 7 with a 15‑year period certain, calculated without reference to the terms of the rider (see the discussion of Option 7 under “Annuity Options”).
The Alternate Benefit is calculated without reference to Annuity rates and represents the return of your Minimum Income Benefit on the Annuity Start Date, less any applicable premium tax and any pro rata account administration charge, over a period of 15 years without crediting interest on that amount.
If the Owner annuitizes the Contract before the tenth anniversary of the purchase date of the rider or at any time thereafter other than within the 30‑day period following a Contract Anniversary, the Minimum Income Benefit is not available. The Owner is not required to use this Rider to receive Annuity Payments. However, the Company will not refund charges paid for this rider if the Owner annuitizes outside of its terms and conditions.
This rider was available only if the age of the Annuitant at the time the rider was issued was 79 or younger.
Please note that this rider may not be appropriate for you if you plan on taking withdrawals in excess of the Annual Limit because such excess withdrawals may significantly reduce or eliminate the value of the Guaranteed Minimum Income Benefit. If you have a qualified contract, you may be required to take minimum distributions from the Contract during your lifetime. If your required minimum distribution amount exceeds your Annual Limit, you will have to withdraw more than the Annual Limit to avoid the imposition of a 50% excise tax, causing a proportional reduction in the Guaranteed Minimum Income Benefit.
Example 1. How the 6% Dollar for Dollar Guaranteed Minimum Income Benefit Increases with Purchase Payments and Interest.
Assume:
| (i) | The Owner purchases the Contract with the 6% Dollar for Dollar Guaranteed Minimum Income Benefit. |
| (ii) | The initial Purchase Payment is $100,000. |
| (iii) | No Contract Value is allocated to the Invesco V.I. Government Money Market, the PIMCO Low Duration Subaccount, or the Fixed Account. |
| (iv) | The Owner does not purchase a credit enhancement rider. |
| (v) | No Bonus Credits are applicable. |
| (vi) | There are no outstanding loans on the Contract. |
At the time the Contract is issued, the Minimum Income Benefit is $100,000, and the Annual Limit is $6,000 ($100,000 x 6%). 99 days after Contract issue, the Owner adds a Purchase Payment of $50,000 to the Contract. As a result of interest accrued over the 99 days since the initial Purchase Payment, immediately prior to the $50,000 Purchase Payment, the Minimum Income Benefit has increased to $101,593, calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Initial Purchase Payment
$100,000 x ((1 + .06)(99/365)) =
$100,000 x (1.06(99/365)) = $101,593
The increase in the Annual Limit is calculated as follows:
Annual Limit prior to Purchase Payment + (Purchase Payment x 6%)
$6,000 + ($50,000 x 6%) =
$6,000 + $3,000 = $9,000
B-4
After the $50,000 Purchase Payment, the Minimum Income Benefit is $151,593 ($101,593 + $50,000), and the Annual Limit is $9,000.
Example 2. How the 6% Dollar for Dollar Guaranteed Minimum Income Benefit Decreases as a Result of a Withdrawal.
Continuing from Example 1, the Owner takes a withdrawal of $19,000 a little over a year (376 days) after the $50,000 Purchase Payment. The Contract Value prior to the withdrawal is $159,000 and the Minimum Income Benefit prior to the withdrawal is $160,971 ($151,593 x 1.06(376/365)). After the withdrawal, the Minimum Income Benefit decreases as follows:
(Minimum Income Benefit prior to withdrawal – Remaining Annual Limit) x (1 - (Amount of withdrawal in excess of the Annual Limit / Contract Value prior to withdrawal - Remaining Annual Limit)))
($160,971 - $9,000) x (1 - ($19,000 - $9,000) / ($159,000 - $9,000)) =
$151,971 x (1 - ($10,000 / $150,000)) = $141,839.60
The decrease in the Annual Limit is calculated as follows:
Annual Limit prior to withdrawal x (1 - (Amount of withdrawal in excess of Annual Limit / (Contract Value prior to withdrawal - Remaining Annual Limit)))
$9,000 x (1 - ($19,000 - $9,000) / ($159,000 - $9,000))
$9,000 x (1 - ($10,000 / $150,000)) = $8,400
After the $19,000 withdrawal, the Contract Value is $140,000 ($159,000 - $19,000), the Minimum Income Benefit is $141,839.60, and the Annual Limit is $8,400.
Example 3. How the 6% Dollar for Dollar Guaranteed Minimum Income Benefit is used at Annuitization.
Continuing from Example 2, the Owner decides to annuitize the Contract 20 days after the 10th Contract Anniversary. Approximately 3,197 days have elapsed since the last withdrawal of $19,000. The Owner has taken no other withdrawals and added no additional Purchase Payments to the Contract. The Owner chooses Annuity Option 2 and monthly annuity payments. At the time of annuitization, the year is 2020, and the Owner, a male, is age 72. The guaranteed rate per thousand for the 6% Guaranteed Minimum Income Benefit assuming life with 10 year period certain for a male aged 72 in 2020 is $5.39. As a result of accrued interest, the Minimum Income Benefit at the time of annuitization is $236,292.07 ($141,839.60 x (1.06(3197/365))). The guaranteed monthly annuity payment is calculated as follows:
(Minimum Income Benefit at Annuitization / $1,000) x Applicable guaranteed rate per thousand
($236,292.07 / $1,000) x $5.39 =
$236.29 x $5.39 = $1,273.61
Example 4. How Advisory Fee Withdrawals Reduce the 6% Dollar for Dollar Guaranteed Minimum Income Benefit.
Continuing from Example 3, 99 days after the Contract Date, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $100,000. At the time the Contract is issued, the initial Guaranteed Minimum Income Benefit is $100,000. Immediately prior to the withdrawal of the advisory fee, the Guaranteed Minimum Income Benefit would have grown to $101,593 ($100,000 x 1.06^(99/365)). Assume there have been no other fees or withdrawals taken during the Contract Year. Thus, the $1,000 advisory fee is less than the remaining Annual Limit of $6,000. As a result of the advisory fee withdrawal, the Guaranteed Minimum Income Benefit is reduced dollar for dollar as follows:
Guaranteed Minimum Income Benefit Prior to Withdrawal - Advisory Fee Withdrawal Amount =
$101,593 - $1,000 = $100,593
B-5
The remaining Annual Limit is also reduced dollar for dollar by the amount of the advisory fee withdrawal. Thus, after the advisory fee withdrawal, the remaining Annual Limit is $5,000 ($6,000 - $1,000) and the Guaranteed Minimum Income Benefit is $100,593.
Guaranteed Growth Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company; or |
| 3. | The Guaranteed Growth Death Benefit. |
The Guaranteed Growth Death Benefit is an amount equal to Purchase Payments and any Credit Enhancements and/or Bonus Credits, net of any Premium tax, less an adjustment for withdrawals, increased at an annual effective rate of interest of 3%, 5%, 6% or 7% (6% and 7% are not available to Texas residents), as elected in the application. (If you elect the Guaranteed Growth Death Benefit at 5%, 6% or 7%, please note that the Company will credit a maximum rate of 4% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account and Loan Account; however, you will still pay the Rider charge applicable to the rate you have selected.) In crediting interest, the Company takes into account the timing of when each Purchase Payment and withdrawal occurred. The Company accrues such interest until the earliest of: (1) the Annuity Start Date; (2) the Contract Anniversary following the oldest Owner’s 80th birthday; (3) the date due proof of the Owner’s death and instructions regarding payment are received; or (4) the six-month anniversary of the Owner’s date of death. In the event of a withdrawal, the Guaranteed Growth Death Benefit is reduced as of the date of the withdrawal by a percentage found by dividing the withdrawal amount, including any withdrawal charges, by Contract Value immediately prior to the withdrawal.
The amount of the Guaranteed Growth Death Benefit shall not exceed an amount equal to 200% of Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), net of premium tax and any withdrawals, including withdrawal charges.
If an Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will be Contract Value, as set forth in item 2 above.
This rider was available only if the age of the Owner at the time the Contract was issued was age 79 or younger. See the discussion under “Death Benefit.”
Example 1. How the Guaranteed Growth Death Benefit Increases with Purchase Payments and Interest. Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Income Benefit at 5%. |
| (ii) | The initial Purchase Payment is $100,000. |
| (iii) | No Contract Value is allocated to the Invesco V.I. Government Money Market or the Fixed Account. |
| (iv) | The Owner does not purchase a credit enhancement rider. |
| (v) | There are no applicable Bonus Credits. |
| (vi) | There are no outstanding loans on the Contract. |
At the time the Contract is issued, the Guaranteed Growth Death Benefit is $100,000, and the Guaranteed Growth Death Benefit cap is 200% of Purchase Payments or $200,000. 191 days after Contract issue, the Owner adds a Purchase Payment of $50,000 to the Contract. As a result of interest accrued over the 191 days since the
B-6
initial Purchase Payment, immediately prior to the $50,000 Purchase Payment, the Guaranteed Growth Death Benefit has increased to $102,586, calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Initial Purchase Payment
$100,000 x (1 + .05(191/365)) =
$100,000 x (1.05(191/365)) = $102,586
The Guaranteed Growth Death Benefit increases as a result of the Purchase Payment:
Guaranteed Growth Death Benefit prior to Purchase Payment + Purchase Payment
$102,586 + $50,000 = $152,586
The Guaranteed Growth Death Benefit cap also increases as a result of the Purchase Payment:
Guaranteed Growth Death Benefit cap prior to Purchase Payment + (Purchase Payment x 200%)
$200,000 + ($50,000 x 200%)
$200,000 + $100,000 = $300,000
Following the $50,000 Purchase Payment, the Guaranteed Growth Death Benefit is $152,586, and the Guaranteed Growth Death Benefit cap is $300.000.
Example 2. How the Guaranteed Growth Death Benefit Decreases as a Result of a Withdrawal.
Continuing from Example 1, the Owner takes a withdrawal of $15,000 a little over a year (377 days) after the $50,000 Purchase Payment. The Contract Value prior to the withdrawal is $150,000 and the Guaranteed Growth Death Benefit prior to the withdrawal is $160,472.50 ($152,586 x 1.05(377/365)). After the withdrawal, the Guaranteed Growth Death Benefit decreases as follows:
Guaranteed Growth Death Benefit prior to withdrawal x (1 - (Withdrawal amount / Contract Value prior to Withdrawal))
$160,472.50 x (1 - ($15,000 / $150,000) =
$160,472.50 x (1 - .10) =
$160,472.50 x .90 = $144,425.25
The Guaranteed Growth Death Benefit cap also decreases as a result of the withdrawal:
(Cumulative Purchase Payments - Cumulative withdrawals) x 200%
($150,000 - $15,000) x 200%
$135,000 x 200% = $270,000
After the $15,000 withdrawal, the Contract Value is $135,000 ($150,000 - $15,000), the Guaranteed Growth Death Benefit is $144,425.25, and the Guaranteed Growth Death Benefit cap is $270,000.
Example 3. How the Guaranteed Growth Death Benefit applies at Death.
Continuing from Example 2, 439 days after the $15,000 withdrawal, the Company receives due proof of death. At the time of death, the Contract Value is $150,000. The amount payable at death would be the greatest of (1) the sum of all Purchase Payments, less any withdrawals and withdrawal charges (in this case, $135,000); (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company (in this case, $150,000); or (3) the Guaranteed Growth Death Benefit (in this case, $153,154 ($144,425.25 x 1.05(439/365)). Thus, $153,154 is the amount that would be paid.
B-7
Example 4. How Advisory Fee Withdrawals Reduce the Guaranteed Growth Death Benefit.
Continuing from Example 3, 191 days after the Contract Date, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $100,000. At the time the Contract is issued, the initial Guaranteed Growth Death Benefit is $100,000. Immediately prior to the withdrawal of the advisory fee, the Guaranteed Growth Death Benefit would have grown to $102,586 ($100,000 x 1.05^(191/365)). After the advisory fee is withdrawn, the reduction to the Guaranteed Growth Death Benefit is calculated as follows:
Guaranteed Growth Death Benefit Prior to Advisory Fee Withdrawal x (1 - (Advisory Fee Withdrawal Amount / Contract Value)) =
$102,586 x (1 - ($1,000 / $100,000)) =
$102,586 x (1 - .01) = $101,560.14
At the time of Contract issue, the Guaranteed Growth Death Benefit cap is equal to 200% of Purchase Payments or $200,000. After the advisory fee withdrawal, the cap decreases to $198,000 ($200,000 - ($1,000 x 200%)).
Combined Annual Stepped Up and Guaranteed Growth Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company; |
| 3. | The Annual Stepped Up Death Benefit (as described above); or |
| 4. | The Guaranteed Growth Death Benefit at 5% (as described above). |
If an Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will be as set forth in item 2 above.
This rider was available only if the age of the Owner at the time the Contract was issued was age 79 or younger. See the discussion under “Death Benefit.”
Example 1. How the Combined Annual Stepped Up and Guaranteed Growth Death Benefit Works.
Assume:
| (i) | The Owner purchases the Contract with the Combined Annual Stepped Up and Guaranteed Growth Death Benefit. |
| (ii) | The Owner is age 60 when the Contract is purchased. |
| (iii) | The initial Purchase Payment is $100,000. |
| (iv) | The Owner takes no withdrawals between Contract issue and death. |
At the time of Contract issue, the Annual Stepped Up Death Benefit is $100,000 (the Purchase Payment), the Guaranteed Growth Death Benefit at 5% is $100,000 (the Purchase Payment), and the Guaranteed Growth Death Benefit cap is 200% or $200,000.
B-8
Due to positive market performance, the Contract Value on the first Contract Anniversary is $125,000. The Annual Stepped Up Death Benefit increases to $125,000, the Guaranteed Growth Death Benefit increases to $105,000 ($100,000 x (1.05(365/365))), and the Guaranteed Growth Death Benefit cap remains unchanged at $200,000.
Due to negative market performance, the Contract Value on the second Contract Anniversary is $98,000. The Annual Stepped Up Death Benefit remains unchanged at $125,000, the Guaranteed Growth Death Benefit increases to $110,250 ($105,000 x (1.05(365/365))), and the Guaranteed Growth Death Benefit cap remains unchanged at $200,000.
212 days into the third Contract Year, the Owner dies. At the time of death, the Contract Value is $102,000, and the Annual Stepped Up Death Benefit is $113,418 ($110,250 x (1.05(212/365))). The death benefit is the greatest of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $100,000), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company (in this example, $102,000), (3) the Annual Stepped Up Death Benefit (in this example, $125,000), or (4) the Guaranteed Growth Death Benefit at 5% (in this example, $113,418).
Thus, the death benefit payable is $125,000.
Example 2. How Advisory Fee Withdrawals Reduce the Combined Annual Stepped Up and Guaranteed Growth Death Benefit.
Continuing from Example 1, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $100,000, the Guaranteed Growth Death Benefit is $113,419, the Guaranteed Growth Death Benefit cap is $200,000, and the Annual Stepped Up Death Benefit is $125,000.
After the withdrawal, the Guaranteed Growth Death Benefit is calculated as follows:
Guaranteed Growth Death Benefit Prior to Advisory Fee Withdrawal x [1 – (Advisory Fee Withdrawal Amount / Account Value Prior to Advisory Fee Withdrawal)] =
$113,419 x [1 - (1 - ($1,000 / $100,000)] =
$113,419 x (1 - .01) = $112,284.81
The Guaranteed Growth Death Benefit cap is calculated as follows:
Guaranteed Growth Death Benefit Cap Prior to Advisory Fee Withdrawal - (200% x Advisory Fee Withdrawal Amount) =
$200,000 - (200% x $1,000) = $198,000
The Annual Stepped Up Death Benefit is calculated as follows:
Annual Stepped Up Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$125,000 x [1 - ($1,000 / $100,000)] =
$125,000 x (1 - .01) = $123,750
Enhanced Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greater of:
B-9
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; or |
| 2. | The Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company, plus the Enhanced Death Benefit. |
The Enhanced Death Benefit for a Contract issued prior to the Owner attaining age 70 is the lesser of: (1) 50% of Contract gain; or (2) 50% of adjusted Purchase Payments. For a Contract issued after the Owner has attained age 70 or older, the Enhanced Death Benefit is the lesser of: (1) 25% of Contract gain; or (2) 25% of adjusted Purchase Payments.
| • | “Contract gain” is equal to Contract Value as of the date due proof of death and instructions with regard to payment are received less adjusted Purchase Payments. |
| • | “Adjusted Purchase Payments” are equal to all Purchase Payments made to the Contract adjusted for withdrawals and any applicable premium tax. In the event of a withdrawal, Purchase Payments are reduced as of the date of the withdrawal by a percentage found by dividing the withdrawal amount, including any withdrawal charges, by Contract Value immediately prior to the withdrawal. |
If the Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will be the Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company.
This rider was available only if the age of the Owner at the time the Contract was issued was age 79 or younger. See the discussion under “Death Benefit.”
Example 1. How the Enhanced Death Benefit Works.
Assume:
| (i) | The Owner purchases the Contract with the Enhanced Death Benefit. |
| (ii) | The Owner is age 60 when the Contract is purchased. |
| (iii) | The initial Purchase Payment is $100,000. |
During the fifth Contract Year, the Owner takes a withdrawal of $10,000. The Contract Value at the time of the withdrawal is $160,000. The adjusted Purchase Payments after the withdrawal are calculated as follows:
Previous Adjusted Purchase Payments x (1 - Withdrawal / Contract Value prior to withdrawal)
$100,000 x (1 - $10,000 / $160,000)
$100,000 x (1 - .0625)
$100,000 x .9375 = $93,750
During the sixth Contract Year, the Owner dies. At the time of death, the Contract Value is $175,000.
The Enhanced Death Benefit is the lesser of (1) 50% of the Contract gain, or (2) 50% of adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Due Proof of Death - Adjusted Purchase Payments) =
50% x ($175,000 - $93,750) =
50% x $81,250 = $40,625
50% of adjusted Purchase Payments = 50% x 93,750 = $46,875
Thus, the Enhanced Death Benefit is $40,625.
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $90,000 ($100,000 -
B-10
$10,000)), or (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $215,625 ($175,000 + $40,625).
Thus, the death benefit payable is $215,625.
Example 2. How Advisory Fee Withdrawals Reduce the Enhanced Death Benefit.
Continuing from Example 1, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $125,000. After the withdrawal, the Adjusted Purchase Payments are calculated as follows:
Adjusted Purchase Payments Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$100,000 x [1 - ($1,000 / $125,000)] =
$100,000 x (1 - .008) = $99,200
Assume time elapses since the advisory fee withdrawal is take, and the Owner dies. At the time of the Owner’s death, the Contract Value is $130,000.
The Enhanced Death Benefit at the time of death is the lesser of (1) 50% of Contract gain or (2) 50% of Adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Valuation Date of due proof of death - Adjusted Purchase Payments)
= 50% x ($130,000 - $99,200)
= $15,400
50% of Adjusted Purchase Payments = 50% x $99,200
= $49,600
Therefore, the Enhanced Death Benefit is $15,400.
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $99,200), or (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $145,400 ($130,000 + $15,400)). Thus, the death benefit payable is $145,400.
Combined Enhanced and Annual Stepped Up Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company, plus the Enhanced Death Benefit (as described above); or |
| 3. | The Annual Stepped Up Death Benefit (as described above in the Prospectus under “Optional Riders”), plus the Enhanced Death Benefit (as described above). |
B-11
If the Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will be the Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company.
This rider was available only if the age of the Owner at the time the rider was issued was age 79 or younger. See the discussion under “Death Benefit.”
Example 1. How the Combined Enhanced and Annual Stepped Up Death Benefit Works.
Assume:
| (i) | The Owner purchases the Contract with the Combined Enhanced and Annual Stepped Up Death Benefit. |
| (ii) | The Owner is age 60 when the Contract is purchased. |
| (iii) | The initial Purchase Payment is $100,000. |
| (iv) | The Owner takes no withdrawals and makes no additional Purchase Payments. |
| (v) | On the first Contract Anniversary, the Contract Value is $105,000. |
| (vi) | On the second Contract Anniversary, the Contract Value is $99,000. |
| (vii) | On the third Contract Anniversary, the Contract Value is $106,000. |
The Annual Stepped Up Death Benefit is $100,000 at Contract issue, increases to $105,000 at the first Contract Anniversary, remains unchanged at $105,000 at the second Contract Anniversary, and increases to $106,000 at the third Contract Anniversary.
During the fourth Contract Year, the Owner dies. At the time of death, the Contract Value is $107,000, and the Annual Stepped Up Death Benefit is $106,000.
The Enhanced Death Benefit is the lesser of (1) 50% of the Contract gain, or (2) 50% of adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Due Proof of Death - Adjusted Purchase Payments) =
50% x ($107,000 - $100,000) =
50% x $7,000 = $3,500
50% of adjusted Purchase Payments = 50% x $100,000 = $50,000
Thus, the Enhanced Death Benefit is $3,500.
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $100,000), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Bene-ficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $110,500 ($107,000 + $3,500), or (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit (in this example, $109,500 ($106,000 + $3,500).
Thus, the death benefit payable is $110,500.
Example 2. How Advisory Fee Withdrawals Reduce the Enhanced and Annual Stepped Up Death Benefit.
Continuing from Example 1, a $1,000 advisory fee is withdrawn from the Contract in the fourth Contract Year. Prior to the withdrawal, the Contract Value is $125,000. After the withdrawal, the Adjusted Purchase Payments are calculated as follows:
Adjusted Purchase Payments Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$100,000 x [1 - ($1,000 / $125,000)] =
$100,000 x (1 - .008) = $99,200
B-12
After the withdrawal, the Annual Stepped Up Death Benefit is calculated as follows:
Annual Stepped Up Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$106,000 x [1 - ($1,000 / $125,000)] =
$106,000 x (1 - .008) = $105,152
Later in the fourth Contract Year, the Owner dies. At the time of the Owner’s death, the Contract Value is $130,000.
The Enhanced Death Benefit at the time of death is the lesser of (1) 50% of Contract gain or (2) 50% of Adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Valuation Date of due proof of death - Adjusted Purchase Payments)
= 50% x ($130,000 - $99,200)
= $15,400
50% of Adjusted Purchase Payments = 50% x $99,200
= $49,600
Therefore, the Enhanced Death Benefit is $15,400.
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $99,200), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $145,400 ($130,000 + $15,400)), or (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit (in this example, $120,552 ($105,152 + 15,400)). Thus, the death benefit payable is $145,400.
Combined Enhanced and Guaranteed Growth Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company, plus the Enhanced Death Benefit (as described above); or |
| 3. | The Guaranteed Growth Death Benefit at 5% (as described above in the Prospectus under “Optional Riders”), plus the Enhanced Death Benefit (as described above). |
If the Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will the Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company.
This rider was available only if the age of the Owner at the time the rider was issued was age 79 or younger. See the discussion under “Death Benefit.”
B-13
Example 1. How the Combined Enhanced and Guaranteed Growth Death Benefit Works. Assume:
| (i) | The Owner purchases the Contract with the Combined Enhanced and Guaranteed Growth Death Benefit at 5%. |
| (ii) | The Owner is age 60 when the Contract is purchased. |
| (iii) | The initial Purchase Payment is $100,000. |
| (iv) | The Owner takes no withdrawals and makes no additional Purchase Payments. |
During the fourth Contract Year, 1,546 days from Contract issue, the Owner dies. At the time of death, the Contract Value is $107,000.
The Enhanced Death Benefit is the lesser of (1) 50% of the Contract gain, or (2) 50% of adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Due Proof of Death - Adjusted Purchase Payments) =
50% x ($107,000 - $100,000) =
50% x $7,000 = $3,500
50% of adjusted Purchase Payments = 50% x $100,000 = $50,000
Thus, the Enhanced Death Benefit is $3,500.
The Guaranteed Growth Death Benefit at the time of death is calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Purchase Payment
$100,000 x ((1 + .05(1546/365)))
$100,000 x (1.05(1546/365)) = $122,956
(less than the $200,000 Guaranteed Growth Death Benefit cap of $200,000)
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $100,000), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $110,500 ($107,000 + $3,500), or (3) the Guaranteed Growth Death Benefit plus the Enhanced Death Benefit (in this example, $126,456 ($122,956 + $3,500).
Thus, the death benefit payable is $126,456.
Example 2. How Advisory Fee Withdrawals Reduce the Enhanced and Guaranteed Growth Death Benefit.
Continuing from Example 1, a $1,000 advisory fee is withdrawn from the Contract in the fourth Contract Year. Prior to the withdrawal, the Contract Value is $125,000 and the Guaranteed Growth Death Benefit is $122,956. After the withdrawal, the Adjusted Purchase Payments are calculated as follows:
Adjusted Purchase Payments Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$100,000 x [1 - ($1,000 / $125,000)] =
$100,000 x (1 - .008) = $99,200
After the withdrawal, the Guaranteed Growth Death Benefit is calculated as follows:
Guaranteed Growth Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$122,956 x [1 - ($1,000 / $125,000)] =
$122,956 x (1 - .008) = $121,972.35
B-14
Thirty days after the advisory fee is taken, the Owner dies. At the time of the Owner’s death, the Contract Value is $126,000.
The Enhanced Death Benefit at the time of death is the lesser of (1) 50% of Contract gain or (2) 50% of Adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Valuation Date of due proof of death - Adjusted Purchase Payments)
= 50% x ($126,000 - $99,200)
= $13,400
50% of Adjusted Purchase Payments = 50% x $99,200
= $49,600
Therefore, the Enhanced Death Benefit is $13,400.
The Guaranteed Growth Death Benefit at the time of death is calculated as follows:
Guaranteed Growth Death Benefit x 1.05^(30/365) =
$121,972.35 x 1.05^(30/365) = $122,462.46
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $99,200), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $139,400 ($126,000 + $13,400)), or (3) the Guaranteed Growth Death Benefit plus the Enhanced Death Benefit (in this example, $135,862.46 ($122,462.46 + 13,400)). Thus, the death benefit payable is $135,862.46.
Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company, plus the Enhanced Death Benefit (as described above); or |
| 3. | The Annual Stepped Up Death Benefit (as described above), plus the Enhanced Death Benefit (as described above); or |
| 4. | The Guaranteed Growth Death Benefit at 5% (as described above), plus the Enhanced Death Benefit (as described above). |
If the Owner dies prior to the Annuity Start Date, but due proof of death and instructions regarding payment are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit will the Contract Value on the Valuation Date due proof of the Owner’s death and instructions regarding payment are received by the Company.
This rider was available only if the age of the Owner at the time the rider was issued was age 79 or younger. See the discussion under “Death Benefit.”
B-15
Example 1. How the Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit Works.
Assume:
| (i) | The Owner purchases the Contract with the Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit at 5%. |
| (ii) | The Owner is age 60 when the Contract is purchased. |
| (iii) | The initial Purchase Payment is $100,000. |
| (iv) | The Owner takes no withdrawals and makes no additional Purchase Payments. |
| (v) | On the first Contract Anniversary, the Contract Value is $105,000. |
| (vi) | On the second Contract Anniversary, the Contract Value is $99,000. |
| (vii) | On the third Contract Anniversary, the Contract Value is $106,000. |
The Annual Stepped Up Death Benefit is $100,000 at Contract issue, increases to $105,000 at the first Contract Anniversary, remains unchanged at $105,000 at the second Contract Anniversary, and increases to $106,000 at the third Contract Anniversary.
During the fourth Contract Year, 1,546 days from Contract issue, the Owner dies. At the time of death, the Contract Value is $107,000, and the Annual Stepped Up Death Benefit is $106,000.
The Enhanced Death Benefit is the lesser of (1) 50% of the Contract gain, or (2) 50% of adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Due Proof of Death - Adjusted Purchase Payments) =
50% x ($107,000 - $100,000) =
50% x $7,000 = $3,500
50% of adjusted Purchase Payments = 50% x $100,000 = $50,000
Thus, the Enhanced Death Benefit is $3,500.
The Guaranteed Growth Death Benefit at the time of death is calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Purchase Payment
$100,000 x ((1 + .05(1546/365)))
$100,000 x (1.05(1546/365)) = $122,956
(less than the $200,000 Guaranteed Growth Death Benefit cap of $200,000)
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $100,000), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $110,500 ($107,000 + $3,500), (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit (in this example, $109,500 ($106,000 + $3,500)), (4) the Guaranteed Growth Death Benefit plus the Enhanced Death Benefit (in this example, $126,456 ($122,956 + $3,500).
Thus, the death benefit payable is $126,456.
Example 2. How Advisory Fee Withdrawals Reduce the Combined Enhanced, Annual Stepped Up, and Guaranteed Growth Death Benefit.
Continuing from Example 1, a $1,000 advisory fee is withdrawn from the Contract in the fourth Contract Year. Prior to the withdrawal, the Contract Value is $125,000 and the Guaranteed Growth Death Benefit is $122,956. After the withdrawal, the Adjusted Purchase Payments are calculated as follows:
B-16
Adjusted Purchase Payments Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$100,000 x [1 - ($1,000 / $125,000)] =
$100,000 x (1 - .008) = $99,200
After the withdrawal, the Guaranteed Growth Death Benefit is calculated as follows:
Guaranteed Growth Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$122,956 x [1 - ($1,000 / $125,000)] =
$122,956 x (1 - .008) = $121,972.35
After the withdrawal, the Annual Stepped Up Death Benefit is calculated as follows:
Annual Stepped Up Death Benefit Prior to Advisory Fee Withdrawal x [1 - (Advisory Fee Withdrawal Amount / Contract Value Prior to Advisory Fee Withdrawal)] =
$106,000 x [1 - ($1,000 / $125,000)] =
$106,000 x (1 - .008) = $105,152
Thirty days after the advisory fee is taken, the Owner dies. At the time of the Owner’s death, the Contract Value is $120,000.
The Enhanced Death Benefit at the time of death is the lesser of (1) 50% of Contract gain or (2) 50% of Adjusted Purchase Payments.
50% of Contract gain = 50% x (Contract Value as of Valuation Date of due proof of death - Adjusted Purchase Payments)
= 50% x ($120,000 - $99,200)
= $10,400
50% of Adjusted Purchase Payments = 50% x $99,200
= $49,600
Therefore, the Enhanced Death Benefit is $10,400.
The Guaranteed Growth Death Benefit at the time of death is calculated as follows:
Guaranteed Growth Death Benefit x 1.05^(30/365) =
$121,972.35 x 1.05^(30/365) = $122,462.46
The death benefit is the greater of: (1) the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges (in this example, $99,200), (2) the Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company, plus the Enhanced Death Benefit (in this example, $130,400 ($120,000 + $10,400)), (3) the Annual Stepped Up Death Benefit plus the Enhanced Death Benefit (in this example, $115,552 ($105,152 + 13,400)), or the Guaranteed Growth Death Benefit plus the Enhanced Death Benefit (in this example, $132,862.46 ($122,462.46 + $10,400)). Thus, the death benefit payable is $132,862.46.
6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit (formerly Dollar for Dollar Combination Benefit) (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available a minimum amount for the purchase of a fixed Annuity (“Minimum Income Benefit”) as described under “6% Dollar for Dollar Guaranteed Minimum Income Benefit.” For a discussion of the Minimum Income Benefit, see “6% Dollar for Dollar Guaranteed Minimum Income Benefit.”
B-17
In addition to the Minimum Income Benefit, this rider makes available an enhanced death benefit upon the death of the Owner or any Joint Owner prior to the Annuity Start Date. The death benefit proceeds will be the death benefit reduced by any pro rata account administration charge and any uncollected premium tax. If the Extra Credit Rider was in effect, the death benefit also will be reduced by any Credit Enhancements applied during the 12 months preceding the Owner’s date of death; provided that the death benefit defined in 1 below will not be so reduced. If an Owner dies prior to the Annuity Start Date, the amount of the death benefit under this rider will be the greatest of:
| 1. | The sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any withdrawals and withdrawal charges; |
| 2. | The Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company; or |
| 3. | The Minimum Death Benefit, as described below. |
The Company will not pay the Minimum Death Benefit if either 1 or 2 above is higher than the Minimum Death Benefit as of the Valuation Date that the Company receives due proof of death and instructions regarding payment. The Company will not, however, refund charges paid for the rider if the Minimum Death Benefit is not paid. Because you may never need to rely upon the Minimum Death Benefit, it should be viewed as a death benefit “floor.”
The Minimum Income Benefit and Minimum Death Benefit are calculated separately and there are differences in the methods of their calculation. As a result, the Minimum Income Benefit and Minimum Death Benefit amounts will differ.
The Minimum Death Benefit is an amount equal to Purchase Payments, plus any Credit Enhancements and/or Bonus Credits, less any Premium tax, and less an adjustment for withdrawals, increased at an annual effective rate of interest of 6%. Please note that the Company will credit a maximum rate of 3% for amounts allocated to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, the PIMCO Low Duration Subaccount and the Loan Account; however, you will still pay the full rider charge. To the extent that you allocate Purchase Payments or transfer Contract Value to the Invesco V.I. Government Money Market Subaccount, the Fixed Account, the PIMCO Low Duration Subaccount or the Loan Account, you will not receive the benefit of an annual effective interest rate of 6% in determining the Minimum Death Benefit. The Company may add new Subaccounts in the future that will earn only the 3% rate in calculating the Minimum Death Benefit. Any such Subaccounts will be disclosed in this Prospectus.
Under this rider, you may withdraw up to a specified amount each Contract Year (the “Annual Limit”), without a proportional reduction in the Minimum Death Benefit. The Annual Limit initially is equal to 6% of the initial Purchase Payment, not including any Credit Enhancement and Bonus Credit. The Annual Limit will remain the same each Contract Year, unless you make additional Purchase Payments after the Contract Date or make a withdrawal that, on its own or together with other withdrawals in that Contract Year, exceeds the Annual Limit immediately prior to the withdrawal.
The Company increases the Annual Limit in an amount equal to 6% of any Purchase Payment that is added to Contract Value subsequent to the Contract Date. The Company reduces the Annual Limit if you make a withdrawal of Contract Value in a Contract Year that, on its own or together with other withdrawals in that Contract Year, exceeds the Annual Limit. In that event, the Company will reduce the Annual Limit by a percentage that is found by dividing (a) over (b) where (a) is the amount of the withdrawal that exceeds the Annual Limit, and (b) is the amount of Contract Value immediately prior to the withdrawal, reduced by that portion of the withdrawal, if any, that was not in excess of the Annual Limit. The Annual Limit as last adjusted in a Contract Year is the new Annual Limit for subsequent Contract Years, subject to adjustment for Purchase Payments made subsequent to adjusting the Annual Limit or aggregate withdrawals in a Contract Year that exceed the new Annual Limit. Any portion of the Annual Limit that is not withdrawn during a Contract Year may not be carried over for withdrawal in a subsequent Contract Year.
In crediting interest to determine the Minimum Death Benefit, the Company takes into account the timing of when each Purchase Payment and withdrawal occurs and accrues the applicable annual effective rate of interest until the earlier of: (1) the Annuity Start Date, (2) the Contract Anniversary following the oldest Owner’s 80th birthday, or (3) the first Valuation Date as of which the Minimum Death Benefit exceeds the Minimum Death Benefit Cap. The Minimum Death Benefit Cap is an amount equal to 200% of (a) minus (b) where (a) is the sum of all Purchase Payments (not including any Credit Enhancements and/or Bonus Credits), less any premium tax, and (b) is the sum of all withdrawals
B-18
from Contract Value, including any applicable withdrawal charges, any forfeited Credit Enhancements, and any charges for premium taxes.
In the event of a withdrawal that does not exceed the Annual Limit, the Minimum Death Benefit is reduced as of the date of the withdrawal by the exact dollar amount of the withdrawal. (Withdrawals, for purposes of the rider, include any applicable withdrawal charges, any Credit Enhancement forfeitures and any premium tax charges.) In the event of a withdrawal that exceeds the Annual Limit, the Minimum Death Benefit is first reduced by any portion of the withdrawal that does not exceed the Annual Limit and is then further reduced by a percentage found by dividing the amount of the withdrawal that exceeds the Annual Limit, by the amount of Contract Value immediately prior to the withdrawal, reduced by that portion of the Withdrawal, if any, that was not in excess of the Annual Limit.
The amount of the Minimum Death Benefit shall in no event exceed an amount equal to the Minimum Death Benefit Cap. Also, if due proof of death and instructions regarding payment of the death benefit are not received by the Company at its Administrative Office within six months of the date of the Owner’s death, the death benefit under the rider will be Contract Value on the Valuation Date due proof of death and instructions regarding payment for each Designated Beneficiary are received by the Company.
This rider was available only if the age of each Owner on the Contract Date was 79 or younger and the age of each Annuitant on the Contract Date was 79 or younger. See the discussion under “Death Benefit.”
Example 1. How the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Increase with Purchase Payments and Interest.
Assume:
| (i) | The Owner purchases the Contract with the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit. |
| (ii) | The initial Purchase Payment is $100,000. |
| (iii) | No Contract Value is allocated to the Invesco V.I. Government Money Market, the PIMCO Low Duration Subaccount, or the Fixed Account. |
| (iv) | The Owner does not purchase a credit enhancement rider. |
| (v) | No Bonus Credits are applicable. |
| (vi) | There are no outstanding loans on the Contract. |
At the time the Contract is issued, the Minimum Income Benefit is $100,000, the Annual Limit is $6,000 ($100,000 x 6%), the Minimum Death Benefit is $100,000, and the Minimum Death Benefit Cap is $200,000 ($100,000 x 200%). 99 days after Contract issue, the Owner adds a Purchase Payment of $50,000 to the Contract. As a result of interest accrued over the 99 days since the initial Purchase Payment, immediately prior to the $50,000 Purchase Payment, the Minimum Income Benefit and Minimum Death Benefit have both increased to $101,593, calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Initial Purchase Payment
$100,000 x ((1 + .06)(99/365)) =
$100,000 x (1.06(99/365)) = $101,593
The increase in the Annual Limit is calculated as follows:
Annual Limit prior to Purchase Payment + (Purchase Payment x 6%)
$6,000 + ($50,000 x 6%)
$6,000 + $3,000 = $9,000
After the $50,000 Purchase Payment, the Minimum Income Benefit and the Minimum Death Benefit are both $151,593 ($101,593 + $50,000), the Annual Limit is $9,000, and the Minimum Death Benefit Cap increases to $300,000 ($200,000 + ($50,000 x 200%)).
B-19
Example 2. How the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Decrease as a Result of a Withdrawal.
Continuing from Example 1, the Owner takes a withdrawal of $19,000 a little over a year (376 days) after the $50,000 Purchase Payment. The Contract Value prior to the withdrawal is $159,000. The Minimum Income Benefit and the Minimum Death Benefit prior to the withdrawal are both $160,971 ($151,593 x 1.06(376/365)). After the withdrawal, the Minimum Income Benefit and Minimum Death Benefit decrease as follows:
(Minimum Income Benefit prior to withdrawal - Annual Limit) x (1 - (Amount of withdrawal in excess of the Annual Limit / Contract Value prior to withdrawal - Amount of withdrawal not in excess of the Annual Limit))
($160,971 - $9,000) x (1 - ($19,000 - $9,000) / ($159,000 - $9,000))
$151,971 x (1 - ($10,000 / $150,000)) = $141,839.60
(Minimum Death Benefit prior to withdrawal - Annual Limit) x (1 - (Amount of withdrawal in excess of the Annual Limit / Contract Value prior to withdrawal - Amount of withdrawal not in excess of the Annual Limit))
($160,971 - $9,000) x (1 - ($19,000 - $9,000) / ($159,000 - $9,000))
$151,971 x (1 - ($10,000 / $150,000)) = $141,839.60
The decrease in the Annual Limit is calculated as follows:
Annual Limit prior to withdrawal x (1 - (Amount of withdrawal in excess of Annual Limit / Contract Value prior to withdrawal - Amount of withdrawal not in excess of the Annual Limit))
$9,000 x (1 - ($19,000 - $9,000) / ($159,000 - $9,000))
$9,000 x (1 - ($10,000 / $150,000)) = $8,400
After the $19,000 withdrawal, the Contract Value is $140,000 ($159,000 - $19,000), the Minimum Income Benefit and the Minimum Death Benefit are both $141,839.60, the Annual Limit is $8,400, and the Minimum Death Benefit Cap is $281,000 ($300,000 - $19,000).
Example 3. Death Benefit and Annuitization under the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit.
Continuing from Example 2, approximately 12 years (4,380 days) have elapsed since the $19,000 withdrawal. No additional withdrawals have been taken, and no additional Purchase Payments have been added to the Contract. The Minimum Income Benefit and Minimum Death Benefit are both $285,409.14 ($141,839.60 x (1.06(4380/365))), and the Minimum Death Benefit Cap is $281,000.
If the Owner chooses to annuitize under the Guaranteed Minimum Income Benefit, $285,409.14 would be used to determine the guaranteed annuity payment.
If the Owner dies, the death benefit payable would be $281,000 (the Minimum Death Benefit Cap).
Example 4. How Advisory Fee Withdrawals Reduce the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit Decrease as a Result of a Withdrawal. Assume:
| (i) | The Owner purchases the Contract with the 6% Dollar for Dollar Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit. |
| (ii) | The initial Purchase Payment is $100,000. |
| (iii) | No Contract Value is allocated to the Invesco V.I. Government Money Market, the PIMCO Low Duration Subaccount, or the Fixed Account. |
| (iv) | The Owner does not purchase a Credit Enhancement rider. |
| (v) | No Bonus Credits are applicable. |
| (vi) | There are no outstanding loans on the Contract. |
B-20
At the time the Contract is issued, the Minimum Income Benefit is $100,000, the Annual Limit is $6,000 ($100,000 x 6%), the Minimum Death Benefit is $100,000, and the Minimum Death Benefit Cap is $200,000 ($100,000 x 200%). Ninety-nine days after Contract issue, a $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Minimum Income Benefit is $101,593 ($100,000 x 1.06^(99/365)), the Minimum Death Benefit is $101,593 ($100,000 x 1.06^(99/365)), the Minimum Death Benefit Cap is $200,000, and the Annual Limit is $6,000.
Because the advisory fee of $1,000 is less than the Annual Limit of $6,000, the withdrawal reduces the Minimum Income Benefit dollar for dollar as follows:
Minimum Income Benefit Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal =
$101,593 - $1,000 = $100,593
Because the advisory fee of $1,000 is less than the Annual Limit of $6,000, the withdrawal reduces the Minimum Death Benefit dollar for dollar as follows:
Minimum Death Benefit Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal =
$101,593 - $1,000 = $100,593
The Guaranteed Minimum Death Benefit Cap is reduced as follows:
Minimum Death Benefit Cap Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$200,000 - $1,000 = $199,000
The Annual Limit is reduced as follows:
Annual Limit Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$6,000 - $1,000 = $5,000
Guaranteed Minimum Withdrawal Benefit (This rider was available for purchase ONLY prior to February 1, 2010) — If you elected this rider when you purchased the Contract, your “Benefit Amount” was equal to a percentage of the initial Purchase Payment including any Credit Enhancement and/or Bonus Credit. If you purchased the rider on a Contract Anniversary, your Benefit Amount was equal to a percentage of your Contract Value on the Valuation Date we added this rider to your Contract. The Benefit Amount, which is the amount available for withdrawal under this rider, is reduced as you take Annual Withdrawal Amounts, and the Benefit Amount as so reduced is referred to as the “Remaining Benefit Amount.”
Under this rider, you may withdraw up to a specified amount each Contract Year (the “Annual Withdrawal Amount”), regardless of the performance of your Contract Value, until the Remaining Benefit Amount is reduced to $0. The Annual Withdrawal Amount initially is a percentage of the initial Purchase Payment including any Credit Enhancement and/or Bonus Credit (or Contract Value on the purchase date of the rider if the rider was purchased on a Contract Anniversary). You may select one of the following combinations of Annual Withdrawal Amount and Benefit Amount:
| Annual Withdrawal Amount* | Benefit Amount* |
| 5% | 130% |
| 6% | 110% |
| 7% | 100% |
| *A percentage of the initial Purchase Payment including any Credit Enhancement and/or Bonus Credit (or Contract Value on the purchase date of the rider if the rider was purchased on a Contract Anniversary) | |
If you do not take the Annual Withdrawal Amount during a Contract Year, you may not take more than the Annual Withdrawal Amount in the next Contract Year, without triggering a proportional reduction in the Annual Withdrawal Amount and Remaining Benefit Amount. The Annual Withdrawal Amount can be taken in one
B-21
withdrawal or multiple withdrawals during the Contract Year. You can continue to take up to the Annual Withdrawal Amount each Contract Year until the Remaining Benefit Amount is depleted.
Example 1. Annual Withdrawal Amount Continues when the Contract Value Reaches Zero.
Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Withdrawal Benefit. |
| (ii) | The initial Purchase Payment is $100,000, and no additional Purchase Payments are added to the Contract. |
| (iii) | The Owner elects 5% as the Annual Withdrawal Amount, with 130% as the corresponding Benefit Amount. |
| (iv) | The assumed rate of return is -1.00%. |
At the beginning of Contract Year 1, the Contract Value is $100,000, the Remaining Benefit Amount is $130,000, and the Annual Withdrawal Amount is $5,000. If the Owner takes no other withdrawals in Contract Year 1 besides the Annual Withdrawal Amount, at the beginning of Contract Year 2, the Contract Value is $94,050 and the Remaining Benefit Amount is $125,000. If the Owner continues taking only the Annual Withdrawal Amount each Contract Year, at the end of Contract Year 19, the Contract Value is $0, but the Remaining Benefit Amount is $35,000. The Owner can continue taking the Annual Withdrawal Amount for seven additional Contract Years until the Remaining Benefit Amount is $0.
If you take more than the Annual Withdrawal Amount in a Contract Year, we will recalculate the Remaining Benefit Amount, and your Annual Withdrawal Amount may be lower in the future. Withdrawals under this rider reduce Contract Value by the amount of the withdrawal, including any applicable withdrawal charges or premium taxes and any forfeited Credit Enhancements; provided, however, that a withdrawal of the Annual Withdrawal Amount is not subject to a withdrawal charge. Any withdrawal up to the Annual Withdrawal Amount in a Contract Year reduces the Free Withdrawal amount otherwise available in that Contract Year, and withdrawals, including withdrawals of the Annual Withdrawal Amount, may result in forfeiture of Credit Enhancements if you have the Extra Credit Rider in effect. Please see the discussion under “Contingent Deferred Sales Charge,” and “Extra Credit.” Withdrawals, including withdrawals of the Annual Withdrawal Amount, may result in receipt of taxable income to the Owner and, if made prior to the Owner attaining age 59½, may be subject to a 10% penalty tax. Please see “Federal Tax Matters.”
The Annual Withdrawal Amount will remain the same each Contract Year unless you make additional Purchase Payments after the purchase date of the rider, withdraw more than the Annual Withdrawal Amount in a Contract Year, or elect to reset the Remaining Benefit Amount as discussed below. If additional Purchase Payments are made, the Annual Withdrawal Amount will increase by an amount equal to 5%, 6% or 7% of the Purchase Payment including any Credit Enhancements and/or Bonus Credits, and the Remaining Benefit Amount will increase by an amount equal to 130%, 110% or 100% of the Purchase Payment including any Credit Enhancements and/or Bonus Credits, depending on which combination of Annual Withdrawal Amount and Benefit Amount you have selected.
The Annual Withdrawal Amount and Remaining Benefit Amount are recalculated in the event of a withdrawal in a Contract Year that exceeds the Annual Withdrawal Amount as follows. The Annual Withdrawal Amount and Remaining Benefit Amount respectively are reduced by an amount equal to a percentage of the Annual Withdrawal Amount and Remaining Benefit Amount. The percentage is determined by dividing the excess withdrawal amount by Contract Value after deduction of any Annual Withdrawal Amount included in the withdrawal.
Example 2. Effect of an Excess Withdrawal and Recalculation of the Remaining Benefit Amount and the Annual Withdrawal Amount.
Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Withdrawal Benefit. |
| (ii) | The initial Purchase Payment is $100,000, and no additional Purchase Payments are added to the Contract. |
| (iii) | The Owner elects 5% as the Annual Withdrawal Amount, with 130% as the corresponding Benefit Amount. |
At the beginning of Contract Year 1, the Contract Value is $100,000, the Remaining Benefit Amount is $130,000, and the Annual Withdrawal Amount is $5,000. Due to negative market performance, in Contract Year 1 the Contract Value is reduced to $85,000 and the Owner decides to withdraw $15,000. This reduces the Contract
B-22
Value to $70,000 ($85,000 - $15,000). Because the $15,000 withdrawal exceeds the Annual Withdrawal Amount, the Remaining Benefit Amount and future Annual Withdrawal Amount will be reduced. The excess withdrawal is equal to $10,000 ($15,000 - $5,000), the amount of the withdrawal in excess of the Annual Withdrawal Amount.
The percentage reduction in the Remaining Benefit Amount and the future Annual Withdrawal Amount is calculated as follows:
Excess Withdrawal Amount / (Contract Value Prior to Withdrawal – Remaining - Annual Withdrawal Amount):
$10,000 / ($85,000 - $5,000) =
$10,000 / $80,000 = 12.50%
The adjusted Remaining Benefit Amount is calculated as follows:
(Remaining Benefit Amount – Remaining Annual Withdrawal Amount) x Calculated Reduction
($130,000 - $5,000) x (1 – 12.50%) =
$125,000 x 87.50% = $109,375
The future Annual Withdrawal Amount is calculated as follows:
Annual Withdrawal Amount x Calculated Reduction
$5,000 x (1 - 12.50%) = $4,375
After the reduction, the Remaining Benefit Amount is $109,375 and the future Annual Withdrawal Amount is $4,375.
After the fifth anniversary of the purchase of this rider, you may elect to reset the Remaining Benefit Amount to an amount equal to Contract Value on the reset date and the Annual Withdrawal Amount to 5%, 6% or 7%, as applicable, of Contract Value on that date; provided, however, that the Annual Withdrawal Amount will remain the same if the current Annual Withdrawal Amount is greater than the reset amount. Once a reset election has been made, you may not elect another reset until after the fifth anniversary of the prior reset date. The Company reserves the right to require that resets be effected on a Contract Anniversary and the rider charge may be increased in the event that you elect a reset; provided, however, that such charge will not exceed 1.10%.
Example 3. Remaining Benefit Amount Reset.
Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Withdrawal Benefit. |
| (ii) | The initial Purchase Payment is $100,000, and no additional Purchase Payments are added to the Contract. |
| (iii) | The Owner elects 5% as the Annual Withdrawal Amount, with 130% as the corresponding Benefit Amount. |
At the beginning of Contract Year 1, the Contract Value is $100,000, the Remaining Benefit Amount is $130,000, and the Annual Withdrawal Amount is $5,000. On the sixth Contract Anniversary, the Owner elects to reset the Remaining Benefit Amount. The Owner has taken no other withdrawals besides the Annual Withdrawal Amount for the last six Contract Years. On the sixth Contract Anniversary, due to positive market performance, the Contract Value is $120,000, and the Remaining Benefit Amount is $100,000 ($130,000 – ($5,000 x 6)). Upon the reset, the Remaining Benefit Amount will increase to $120,000, and the Annual Withdrawal Amount will increase from $5,000 to $6,000 ($120,000 x 5%). After the reset, the Contract will not be eligible for another reset until after the 11th Contract Anniversary.
B-23
Example 4. How Advisory Fee Withdrawals Reduce the Guaranteed Minimum Withdrawal Benefit. Assume:
| (i) | The Owner purchases the Contract with the Guaranteed Minimum Withdrawal Benefit. |
| (ii) | The initial Purchase Payment is $100,000, and no additional Purchase Payments are added to the Contract. |
| (iii) | The Owner elects 5% as the Annual Withdrawal Amount, with 130% as the corresponding Benefit Amount. |
A $1,000 advisory fee is withdrawn from the Contract. Prior to the withdrawal, the Contract Value is $100,000. Because the advisory fee of $1,000 is less than the Annual Withdrawal Amount of $5,000, the withdrawal reduces the Guaranteed Minimum Withdrawal Benefit dollar for dollar as follows:
Guaranteed Minimum Withdrawal Benefit Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$130,000 - $1,000 = $129,000
After the withdrawal, the remaining Annual Withdrawal Amount is reduced as follows:
Annual Withdrawal Amount Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$5,000 - $1,000 = $4,000
While this rider is in effect, we reserve the right to restrict subsequent Purchase Payments. This rider will terminate upon the earliest of: (1) termination of the Contract, (2) the Annuity Start Date, (3) any Valuation Date on which Contract Value and the Remaining Benefit Amount are equal to $0, (4) a full withdrawal of Contract Value pursuant to a withdrawal that exceeds the Annual Withdrawal Amount for that Contract Year, or (5) upon the first death of any Owner, or if the Owner is a non-natural person, the death of an Annuitant or a Joint Owner that is a natural person. This rider may not be reinstated by Purchase Payments or reset after such termination. This rider was available only if the age of each Owner and Annuitant at the time the rider was purchased was age 85 or younger.
If you have a qualified contract, you may be required to take minimum distributions from the Contract during your lifetime. If your required minimum distribution amount exceeds your Annual Withdrawal Amount, you will have to withdraw more than the Annual Withdrawal Amount to avoid the imposition of a 50% excise tax, causing a proportional reduction in the Remaining Benefit Amount.
Total Protection (This rider was available for purchase ONLY prior to February 1, 2010) — This rider makes available a (1) Guaranteed Growth Death Benefit at 5%; (2) Guaranteed Minimum Withdrawal Benefit with an Annual Withdrawal Amount of 5% and a Benefit Amount of 100%; and (3) Guaranteed Minimum Accumulation Benefit as described below.
Upon the death of the Owner or any Joint Owner prior to the Annuity Start Date, a Guaranteed Growth Death Benefit at 5% will be available as described under “Guaranteed Minimum Death Benefit,” with the following differences. Under this rider, the Guaranteed Growth Death Benefit will be reduced by any Annual Withdrawal Amount taken under the Guaranteed Minimum Withdrawal Benefit and will be reduced proportionately by any with-drawal that exceeds in whole or in part the Annual Withdrawal Amount for the Contract Year. The Guaranteed Growth Death Benefit is reduced as of the date of any such withdrawal by a percentage that is determined by dividing the excess withdrawal amount by Contract Value after deduction of any Annual Withdrawal Amount included in the withdrawal. Also, under this rider, the amount of the Guaranteed Growth Death Benefit shall not exceed an amount equal to 200% of Purchase Payments (not including any Credit Enhancements, Bonus Credits or Purchase Payments made during the 12 months preceding the Owner’s date of death), net of premium tax and any withdrawals, including withdrawal charges. Finally, under this rider, the annual effective rate of interest used in calculating the benefit will be 5% for Contract Value allocated to any of the Subaccounts. If the Guaranteed Growth Death Benefit on any Valuation Date is equal to $0, the benefit will terminate and may not be reinstated or reset (as described below) after such termination.
This rider also makes available a Guaranteed Minimum Withdrawal Benefit (as described under “Guaranteed Minimum Withdrawal Benefit” above); provided, however, that the Annual Withdrawal Amount is equal to 5%, and the Remaining Benefit Amount is equal to 100%, of the initial Purchase Payment including any Credit Enhancement
B-24
and/or Bonus Credits (or Contract Value on the purchase date of this rider if the rider was purchased on a Contract Anniversary).
The Guaranteed Minimum Accumulation Benefit provides that at the end of the “Term,” which is the ten-year period beginning on the date of your purchase of the rider, the Company will apply an additional amount to your Contract if the Contract Value on that date is less than the Guaranteed Minimum Accumulation Benefit amount. The additional amount will be equal to the difference between the Contract Value on that date and the Guaranteed Minimum Accumulation Benefit amount on that date. Any additional amount added to your Contract will be allocated among the Subaccounts in the same proportion as Contract Value is allocated on that date. No additional amount will be applied if the Contract Value is greater than the Guaranteed Minimum Accumulation Benefit amount on the last day of the Term.
The Guaranteed Minimum Accumulation Benefit amount is equal to 105% of your initial Purchase Payment including any Credit Enhancement and/or Bonus Credit (or Contract Value on the purchase date of this rider if the rider was purchased on a Contract Anniversary); plus 105% of any Purchase Payments (including any Credit Enhancements and/or Bonus Credits) made during the first three years of the Term; less any withdrawals of the Annual Withdrawal Amount under the Guaranteed Minimum Withdrawal Benefit; and less an adjustment for any withdrawals that exceed in whole or in part the Annual Withdrawal Amount for the Contract Year. The adjustment reduces the Guaranteed Minimum Accumulation Benefit amount by a percentage that is determined by dividing the excess withdrawal amount by Contract Value after deduction of any Annual Withdrawal Amount included in the withdrawal.
The Guaranteed Minimum Accumulation Benefit will terminate upon payment of any additional amount as described above or upon expiration of the Term without payment of an additional amount. This benefit may not be reinstated by Purchase Payments or reset after such termination.
After the fifth anniversary of the purchase of this rider, you may elect to reset the Remaining Benefit Amount, the Guaranteed Growth Death Benefit and the Guaranteed Minimum Accumulation Benefit to an amount equal to Contract Value on the reset date; provided that Contract Value on that date is greater than the Remaining Benefit Amount. The Annual Withdrawal Amount will reset to 5% of Contract Value on the reset date, unless the current Annual Withdrawal Amount is greater, in which case the Annual Withdrawal Amount will remain the same. The reset election must be made as to all or none of the Remaining Benefit Amount, the Guaranteed Growth Death Benefit and the Guaranteed Minimum Accumulation Benefit. If you elect a reset, a new Term will begin for the Guaranteed Minimum Accumulation Benefit effective on the reset date. Once a reset election has been made, you may not elect another reset until after the fifth anniversary of the prior reset date. The Company reserves the right to require that resets be effected on a Contract Anniversary and the rider charge may be increased in the event that you elect a reset; provided, however, that such charge will not exceed 1.45%.
This rider will terminate upon the earliest of: (1) termination of the Contract, (2) the Annuity Start Date, (3) any Valuation Date on which Contract Value and the Remaining Benefit Amount are equal to $0, (4) a full withdrawal of Contract Value pursuant to a withdrawal that exceeds the Annual Withdrawal Amount for that Contract Year, or (5) upon the first death of any Owner, or if the Owner is a non-natural person, the death of an Annuitant or a Joint Owner that is a natural person.
While this rider is in effect, we reserve the right to restrict subsequent Purchase Payments. This rider was available only if the age of each Owner and Annuitant at the time the rider was purchased was age 79 or younger.
Because of the ten-year Term, if you are within ten years of your required beginning date for taking required minimum distributions under a Qualified Contract, you may not be able to receive the full value of the Guaranteed Minimum Accumulation Benefit. You should consult a tax adviser before resetting the Guaranteed Minimum Accumu-lation Benefit with a Qualified Contract. Because of the ten-year Term, if you are within ten years of your required beginning date for taking required minimum distributions under a Qualified Contract, you may not be able to receive the full value of the Guaranteed Minimum Accumulation Benefit. You should consult a tax adviser before purchasing the Total Protection rider or resetting the Guaranteed Minimum Accumulation Benefit with a Qualified Contract.
Example 1. How an Additional Purchase Payment Affects the Total Protection Rider.
Assume:
| (i) | The Owner purchases the Contract with the Total Protection Rider. |
| (ii) | The initial Purchase Payment is $100,000. |
B-25
At Contract issue, the Guaranteed Growth Death Benefit is $100,000, the Guaranteed Growth Death Benefit cap is $200,000 ($100,000 x 200%), the Remaining Benefit Amount is $100,000 ($100,000 x 100%), the Annual Withdrawal Amount is $5,000 ($100,000 x 5%), and the Guaranteed Minimum Accumulation Benefit is $105,000 ($100,000 x 105%).
The Owner adds a Purchase Payment of $10,000 to the Contract in the first Contract Year (42 days after Contract issue). As a result of interest accrued over the 42 days since the initial Purchase Payment, immediately prior to the $10,000 Purchase Payment, the Guaranteed Growth Death Benefit has increased to $100,563, calculated as follows:
Initial Purchase Payment x (1 + Effective Annual Interest Rate)^Time Elapsed Since Initial Purchase Payment
$100,000 x (1 + .05(42/365)) =
$100,000 x (1.05(42/365)) = $100,563
The Guaranteed Growth Death Benefit increases as a result of the Purchase Payment:
Guaranteed Growth Death Benefit prior to Purchase Payment + Purchase Payment
$100,563 + $10,000 = $110,563
The Guaranteed Growth Death Benefit cap also increases as a result of the Purchase Payment:
Guaranteed Growth Death Benefit cap prior to Purchase Payment + (Purchase Payment x 200%)
$200,000 + ($10,000 x 200%) =
$200,000 + $20,000 = $220,000
The Remaining Benefit Amount increases as a result of the Purchase Payment:
Initial Purchase Payment + (Additional Purchase Payment x 100%)
$100,000 + ($10,000 x 100%)=
$100,000 + $10,000 = $110,000
The Annual Withdrawal Amount increases as a result of the Purchase Payment:
Prior Annual Withdrawal Amount + (Purchase Payment x 5%)
$5,000 + ($10,000 x 5%)=
$5,000 + $500 = $5,500
The Guaranteed Minimum Accumulation Benefit increases as a result of the Purchase Payment:
Guaranteed Minimum Accumulation Benefit + (Purchase Payment x 105%)
$105,000 + ($10,000 x 105%) =
$105,000 + $10,500 = $115,500
Example 2. How a Withdrawal Affects the Total Protection Rider.
Continuing from Example 1, the Owner withdraws $10,500 from the Contract in the fourth Contract Year (1,450 days after the additional Purchase Payment). The Contract Value prior to withdrawal is $130,500.
As a result of interest accrued over the 1,450 days since the additional Purchase Payment, immediately prior to the $10,500 withdrawal, the Guaranteed Growth Death Benefit has increased to $134,210.50, calculated as follows:
Guaranteed Growth Death Benefit x (1 + Effective Annual Interest Rate)^Time Elapsed Since Additional Purchase Payment
B-26
$110,563 x (1 + .05(1450/365)) =
$110,563 x (1.05(1450/365)) = $134,210.50
The Guaranteed Growth Death Benefit decreases as a result of the withdrawal:
(Guaranteed Growth Death Benefit prior to withdrawal – Remaining Annual Withdrawal Amount) x (1 - (Amount of withdrawal in excess of the Annual Withdrawal Amount / (Contract Value – Remaining Annual Withdrawal Amount)))
($134,210.50 - $5,500) x (1 - ($10,500 - $5,500) / ($130,500 - $5,500)) =
$128,710.50 x (1 - ($5,000 / $125,000)) =
$128,710.50 x (1 - .04) =
$128,710.50 x .96 = $123,562.08
The Guaranteed Growth Death Benefit cap also decreases as a result of the withdrawal:
(Cumulative Purchase Payments - Cumulative withdrawals) x 200%
($100,000 + $10,000 - $10,500) x 200% =
$99,500 x 200% = $199,000
The Remaining Benefit Amount decreases as a result of the withdrawal:
(Remaining Benefit Amount prior to withdrawal – Remaining Annual Withdrawal Amount) x (1 - (Amount of withdrawal in excess of the Annual Withdrawal Amount / (Contract Value – Remaining Annual Withdrawal Amount)))
($110,000 - $5,500) x (1 - ($10,500 - $5,500) / ($130,500 - $5,500)) =
$104,500 x (1 - ($5,000 / $125,000)) =
$104,500 x (1 - .04) =
$104,500 x .96 = $100,320
The Annual Withdrawal Amount decreases as a result of the withdrawal:
Prior Annual Withdrawal Amount x (1 - (Amount of withdrawal in excess of the Annual Withdrawal Amount / (Contract Value – Remaining Annual Withdrawal Amount)))
$5,500 x (1 - ($10,500 - $5,500) / ($130,500 - $5,500)) =
$5,500 x (1 - ($5,000 / $125,000)) =
$5,500 x (1 - .04) =
$5,500 x .96 = $5,280
The Guaranteed Minimum Accumulation Benefit decreases as a result of the withdrawal:
(Guaranteed Minimum Accumulation Benefit prior to withdrawal – Remaining Annual Withdrawal Limit) x (1 - (Amount of withdrawal in excess of the Annual Withdrawal Amount / (Contract Value – Remaining Annual Withdrawal Amount)))
($115,500 - $5,500) x (1 - ($10,500 - $5,500) / ($130,500 - $5,500)) =
$110,000 x (1 - ($5,000 / $125,000)) =
$110,000 x (1 - .04) =
$110,000 x 0.96 = $105,600
After the withdrawal, the Guaranteed Growth Death Benefit is $123,562.08, the Guaranteed Growth Death Benefit cap is $199,000, the Remaining Benefit Amount is $100,320, the Annual Withdrawal Amount is $5,280, and the Guaranteed Minimum Accumulation Benefit is $105,600.
B-27
Example 3. Total Protection Rider at the end of 10 Years.
Continuing from Example 2, assume the Owner does not reset the Guaranteed Minimum Accumulation Benefit term for the first 10 Contract Years. At the end of 10 Contract Years, the Owner’s Contract Value is $104,000, and the Guaranteed Minimum Accumulation Benefit is $105,600. Because the Guaranteed Minimum Accumulation Benefit exceeds the Contract Value, the difference of $1,600 will be added to the Owner’s Contract Value. Once this additional amount has been added to the Owner’s Contract Value, the Guaranteed Minimum Accumulation Benefit terminates.
Example 4. How Advisory Fee Withdrawals Reduce the Total Protection Rider. Assume:
| (i) | The Owner purchases the Contract with the Total Protection Rider. |
| (ii) | The initial Purchase Payment is $100,000. |
At Contract issue, the Guaranteed Growth Death Benefit is $100,000, the Guaranteed Growth Death Benefit cap is $200,000 ($100,000 x 200%), the Remaining Benefit Amount is $100,000 ($100,000 x 100%), the Annual Withdrawal Amount is $5,000 ($100,000 x 5%), and the Guaranteed Minimum Accumulation Benefit is $105,000 ($100,000 x 105%).
A $1,000 advisory fee is withdrawn from the Contract. Immediately prior to the withdrawal, the Guaranteed Growth Death Benefit has increased to $110,563, the Guaranteed Growth Death Benefit cap is $200,000, the Remaining Benefit Amount is $100,000, the Annual Withdrawal Amount is $5,000, and the Guaranteed Minimum Accumulation Benefit is $105,000.
Because the advisory fee of $1,000 is less than the Annual Withdrawal Amount of $5,000, the withdrawal reduces the Guaranteed Minimum Withdrawal Benefit dollar for dollar as follows:
Guaranteed Growth Death Benefit - Advisory Fee Withdrawal Amount =
$110,563 - $1,000 = $109,563
The Guaranteed Growth Death Benefit cap is reduced as follows:
Guaranteed Growth Death Benefit Cap Prior to Advisory Fee Withdrawal - (Advisory Fee Withdrawal Amount x 200%) =
$200,000 - ($1,000 x 200%) =
$200,000 - $2,000 = $198,000
The remaining Annual Withdrawal Amount is reduced as follows:
Annual Withdrawal Amount Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$5,000 - $1,000 = $4,000
Because the advisory fee is less than the Annual Withdrawal Amount of $5,000, the withdrawal reduces the Remaining Benefit Amount dollar for dollar as follows:
Remaining Benefit Amount Prior to Advisory Fee Withdrawal – Advisory Fee Withdrawal Amount =
$100,000 - $1,000 = $99,000
Because the advisory fee is less than the Annual Withdrawal Amount of $5,000, the withdrawal reduces the Guaranteed Minimum Accumulation Benefit dollar for dollar as follows:
Guaranteed Minimum Accumulation Benefit Prior to Advisory Fee Withdrawal - Advisory Fee Withdrawal Amount =
$105,000 - $1,000 = $104,000
B-28
APPENDIX C
Automatic Bonus Credit Rider
During the period of May 1, 2005 through December 31, 2007, the Company automatically issued a rider, which made available a Bonus Credit; provided, however, that the rider was available only if (1) the Company issued the Contract during the period of May 1, 2005 through December 31, 2007; (2) the Contract was issued without a 0‑Year Alternate Withdrawal Charge Rider; and (3) the age of any Owner on the Contract Date was 80 or younger.
The Bonus Credit, which was added to Contract Value, generally was equal to 2% of each Purchase Payment made in the first Contract Year. If the Contract was issued with a 4-Year Alternate Withdrawal Charge Rider, the Bonus Credit was equal to 1% of each Purchase Payment made in the first Contract Year, and if the Contract was issued with a 0-Year Alternate Withdrawal Charge Rider, the Bonus Credit was not available. The Company applied the Bonus Credit to Contract Value at the time the Purchase Payment was effective, and any Bonus Credit was allocated among the Subaccounts in the same proportion as the applicable Purchase Payment. This rider is no longer available, but if your Contract was issued with this rider, you received the applicable Bonus Credit amount with respect to all Purchase Payments made during the first Contract Year. If you purchased the Contract in connection with the transfer or exchange of a variable annuity contract issued by another insurance company, the Company made the automatic Bonus Credit available only if your application was submitted during the period of May 1, 2005 through December 31, 2007 and your initial Purchase Payment was received by the Company no later than February 28, 2008.
The Bonus Credit is subject to any applicable withdrawal charge. There was no charge for this rider.
C-1
The Statement of Additional Information (SAI) contains additional information about the Contract, us, and the Separate Account, including financial statements. The SAI is dated the same date as this Prospectus and the SAI is incorporated by reference into this Prospectus. You may request a free copy of the SAI or submit inquiries about the Contract by writing the Company at its Administrative Office, P.O. Box 750497, Topeka, KS 66675-0497, by calling 1‑800-888-2461 or by visiting us online at https://dfinview.com/SecurityBenefit?site=SBL.
You may also obtain reports and other information about the Separate Account on the SEC’s website at www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
EDGAR contract identifier C000227296
ADVANCEDESIGNSSM VARIABLE ANNUITY
May 1, 2021
SBL Variable Annuity Account XIV
Individual Flexible Purchase Payment
Deferred Variable Annuity Contract
Statement of Additional Information
Issued By: Security Benefit Life Insurance Company One Security Benefit Place Topeka, Kansas 66636-0001 1-800-888-2461 www.securitybenefit.com | Mailing Address: Security Benefit Life Insurance Company P.O. Box 750497 Topeka, Kansas 66675-0497 |
This Statement of Additional Information is not a prospectus; it should be read in conjunction with the current Prospectus for the AdvanceDesigns Variable Annuity dated May 1, 2021, as it may be supplemented from time to time. A copy of the Prospectus may be obtained free of charge from the Company by calling 1‑800‑888‑2461 or by writing us at P.O. Box 750497, Topeka, Kansas 66675‑0497.
6918A | 32-69186-01 2021/05/01 |
Table of Contents
| Page | |
General Information and History | 3 |
The Company | 3 |
The Separate Account | 3 |
Principal Underwriter | 3 |
General Information | 3 |
Safekeeping of Assets | 3 |
Non-Principal Risks of Investing in the Contract | 3 |
Custodian | 3 |
Method of Deducting the Excess Charge | 3 |
Limits on Purchase Payments Paid Under Tax-Qualified Retirement Plans | 5 |
Section 403(b) | 5 |
Roth 403(b) | 5 |
Sections 408 and 408A | 5 |
Performance Information | 6 |
Mixed and Shared Funding Conflicts | 7 |
Independent Registered Public Accounting Firm | 7 |
Financial Statements | 7 |
2
General Information and History
The Company — The Company is a life insurance company that offers life insurance policies and annuity contracts, as well as financial and retirement services. The Company is organized under the laws of the State of Kansas, and is admitted to do business in the District of Columbia and all states except for New York. It was originally organized as a fraternal benefit society and commenced business February 22, 1892. It became a mutual life insurance company under its present name on January 2, 1950, and converted to a stock life insurance company on July 31, 1998. The Company’s indirect parent, Eldridge Industries, LLC, owns, operates and invests in businesses across a wide range of sectors and is ultimately controlled by Todd L. Boehly.
The Separate Account — The Company established the SBL Variable Annuity Account XIV as a separate account under Kansas law on June 26, 2000. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”).
Principal Underwriter — The Company currently offers the Contract on a continuous basis. The Company anticipates continuing to offer the Contract but reserves the right to discontinue the offering. The Principal Underwriter for the Contracts is Security Distributors, LLC (“SDL”), located at One Security Benefit Place, Topeka, Kansas 66636‑0001. SDL, a wholly-owned subsidiary of the Company, is registered as a broker-dealer with the SEC and is a member of the Financial Industry Regulatory Authority (“FINRA”).
The Company pays commissions to Selling Broker-Dealers through SDL. During fiscal years 2020, 2019, and 2018, the amounts paid to SDL in connection with all Contracts sold through the Separate Account were $1,348,138, $2,274,574, and $2,435,279, respectively. SDL passes through commissions it receives to Selling Broker-Dealers for their sales and does not retain any portion of commissions it receives as principal underwriter for the Contract. However, the Company (or an affiliate) pays some or all of SDL’s operating and other expenses, including the following sales expenses: compensation and bonuses for SDL’s management team, compensation and benefits for SDL’s registered representatives, advertising expenses, and other expenses of distributing the Contract.
General Information — For a description of the Flexible Purchase Payment Deferred Variable Annuity Contract (the “Contract”), Security Benefit Life Insurance Company (the “Company”), and the SBL Variable Annuity Account XIV (the “Separate Account”), see the Prospectus. This Statement of Additional Information contains information that supplements the information in the Prospectus. Defined terms used in this Statement of Additional Information have the same meaning as terms defined in the section entitled “Definitions” in the Prospectus.
Safekeeping of Assets — The Company is responsible for the safekeeping of the assets of the Subaccounts. These assets, which consist of shares of the Underlying Funds in non‑certificated form, are held separate and apart from the assets of the Company’s General Account and its other separate accounts.
Non-Principal Risks of Investing in the Contract
All non-principal risks of purchasing a contract are disclosed in the Prospectus in their related subject matter sections.
Custodian
The Company acts as custodian of the Separate Account. We have custody of all assets and cash of the Separate Account and handle the collection of proceeds of shares of the Underlying Funds bought and sold by the Separate Account.
Method of Deducting the Excess Charge
The minimum mortality and expense risk charge of 1.20%, and the administration charge of 0.15%, on an annual basis, of each Subaccount’s average daily net assets, are factored into the accumulation unit value or “price” of each Subaccount on each Valuation Date. The Company deducts any mortality and expense risk charge above the minimum charge and the charge for any optional riders (the “Excess Charge”) on a monthly basis.
3
Each Subaccount declares a monthly subaccount adjustment and the Company deducts the Excess Charge from this monthly subaccount adjustment upon its reinvestment in the Subaccount. The Excess Charge is a percentage of your Contract Value allocated to the Subaccount as of the reinvestment date. The monthly subaccount adjustment is paid only for the purpose of collecting the Excess Charge. Assuming that you owe a charge above the minimum mortality and expense risk charge and the administration charge, your Contract Value will be reduced in the amount of your Excess Charge upon reinvestment of the Subaccount’s monthly subaccount adjustment. The Company reserves the right to compute and deduct the Excess Charge from each Subaccount on each Valuation Date.
The Company will declare a monthly subaccount adjustment for each Subaccount on one Valuation Date of each calendar month (“Record Date”). The Company will pay the monthly subaccount adjustment on a subsequent Valuation Date (“Reinvestment Date”) within five Valuation Dates of the Record Date. Such subaccount adjustment will be declared as a dollar amount per Accumulation Unit.
For each Subaccount, any Owner as of the Record Date will receive on the Reinvestment Date a net dividend equal to:
| 1. | the amount of subaccount adjustment per Accumulation Unit; times |
| 2. | the number of Accumulation Units allocated to the Subaccount as of the Record Date; less |
| 3. | the amount of the Excess Charge for that Subaccount; provided that the Company will not deduct any Excess Charge from the first subaccount adjustment following the Contract Date. |
The net monthly subaccount adjustment will be reinvested on the Reinvestment Date at the Accumulation Unit Value determined as of the close of that date in Accumulation Units of the Subaccount.
An example of this process is as follows. Assuming Contract Value of $50,000 allocated to the Guggenheim VIF StylePlus Large Core Subaccount and no Riders, the Excess Charge would be computed as follows:
Mortality and Expense Risk Charge | 1.30% | |
Plus: Optional Rider Charge | + | N/A |
Less: Minimum Charge | - | 1.20% |
Excess Charge on an Annual Basis | 0.10% |
Further assuming 5,000 Accumulation Units with an Accumulation Unit Value of $10 per unit on December 30 and a gross subaccount adjustment of $0.025 per unit declared on December 31 (Record Date), the net subaccount adjustment amount would be as follows:
| Accumulation Unit Value as of Valuation Date before Record Date | $10.00 | |
Accumulation Unit Value as of Reinvestment Date | $ 9.975 | |
Gross Subaccount Adjustment Per Unit | $ 0.025 | |
Less: Excess Charge Per Unit | - | $ 0.00085 |
Net Subaccount Adjustment Per Unit | $ 0.02415 | |
Times: Number of Accumulation Units | x | 5,000 |
Net Dividend Amount | $ 120.75 |
The net monthly subaccount adjustment amount would be reinvested on the Reinvestment Date in Accumulation Units of the Guggenheim VIF StylePlus Large Core Subaccount, as follows: $0.02415 (net monthly subaccount adjustment per unit) divided by $9.975 (Accumulation Unit value as of the Reinvestment Date) times 5,000 Units equals 12.105 Accumulation Units. On the Reinvestment Date, 12.105 Accumulation Units are added to Contract Value for a total of 5,012.105 Accumulation Units after the monthly subaccount adjustment reinvestment. Contract Value on the Reinvestment Date is equal to 5,012.105 Accumulation Units times $9.975 (Accumulation Unit Value as of the Reinvestment Date) for a Contract Value of $49,995.75 after the monthly subaccount adjustment reinvestment.
After the Annuity Start Date, the Company will deduct an annual mortality and expense risk charge of 1.25% under Annuity Options 1 through 4, 7 and 8. This charge is factored into the annuity unit values on each Valuation Date. Monthly subaccount adjustments are payable after the Annuity Start Date only with respect to Annuity Options 5 and 6.
4
Limits on Purchase Payments Paid Under Tax‑Qualified Retirement Plans
Section 403(b) — Contributions to 403(b) annuities are excludable from an employee’s gross income if they do not exceed the limits under Sections 402(g) and 415 of the Code. The applicable limit will depend upon whether the annuities are purchased with employer or employee contributions. Rollover contributions are not subject to these annual limits.
Section 402(g) generally limits an employee’s annual elective salary reduction contributions to a 403(b) annuity and any 401(k) arrangement to $19,500 for tax year 2020. The $19,500 limit may be adjusted for inflation in $500 increments for future tax years. If an individual is age 50 or over, catch up contributions equal to $6,500 can be made to a 403(b) annuity during the 2020 tax year. The $6,500 limit may be adjusted for inflation in $500 increments for future tax years.
The contribution limits will be reduced by salary reduction contributions to other 403(b) or 401(k) arrangements. An employee under a 403(b) annuity with at least 15 years of service for a “qualified employer” (i.e., an educational organization, hospital, home health service agency, health and welfare service agency, church or convention or association of churches) generally may exceed the annual limit by the lesser of (a) $3,000; (b) the excess of $15,000 reduced by the sum of the additional pre-tax elective contributions and designated Roth contributions made in prior years because of this rule; or (c) $5,000 times the number of years of service for the organization, minus the total elective deferrals made for earlier years.
Section 415(c) also provides an overall limit on the amount of employer and employee elective salary reduction contributions to a Section 403(b) annuity that will be excludable from an employee’s gross income in a given year. Generally the Section 415(c) limit for 2021 is the lesser of (i) $58,000, or (ii) 100% of the employee’s annual compensation.
Roth 403(b) — Elective contributions to a Roth 403(b) arrangement are not excludible from the taxable income of the employee. However, income earned on these contributions is free from federal income tax if distributed in a “qualifying distribution.” Roth 403(b) contributions are subject to the same contribution limits that apply to traditional 403(b) elective contributions--$19,500 in 2021 with a $6,500 limit on catch up contributions on or after age 50, and a special additional limit of up to $3,000 (limits will be updated) for employees who have at least 15 years of service with a “qualified employer.” Furthermore, contributions made to a Roth 403(b) and a traditional 403(b) are aggregated for the purpose of these limits. For example, if an individual who is only eligible for the $19,500 elective contribution limit makes $9,500 in contributions to a Roth annuity contract, the individual can only make $10,000 in contributions to a traditional 403(b) contract in the same year.
Sections 408 and 408A — Premiums (other than rollover contributions) paid under a Contract used in connection with a traditional or Roth individual retirement annuity (IRA) that is described in Section 408 or Section 408A of the Internal Revenue Code are subject to the limits on contributions to IRAs under Section 219(b) of the Internal Revenue Code. Under Section 219(b) of the Code, contributions (other than rollover contributions) to an IRA are limited to the lesser of 100% of the individual’s taxable compensation or $5,500.
If an individual is age 50 or over, the individual may make an additional catch up contribution to a traditional or Roth IRA of $1,000 for each tax year.
Spousal IRAs allow an Owner and his or her spouse to each contribute up to the applicable dollar amount to their respective IRAs so long as a joint tax return is filed and joint income is $6,000 or more. The maximum amount the higher compensated spouse may contribute for the year is the lesser of (i) $6,000 (for 2021) or (ii) 100% of that spouse’s compensation. The maximum the lower compensated spouse may contribute is the lesser of (i) $6,000 for 2021) or (ii) 100% of that spouse’s compensation plus the amount by which the higher compensated spouse’s compensation exceeds the amount the higher compensated spouse contributes to his or her IRA. The extent to which an Owner may deduct contributions to a traditional IRA depends on the gross income of the Owner and his or her spouse for the year and whether either is an “active participant” in an employer-sponsored retirement plan.
Premiums under a Contract used in connection with a simplified employee pension plan described in Section 408 of the Internal Revenue Code are subject to limits under Section 402(h) of the Internal Revenue Code. Section 402(h) currently limits employer contributions and salary reduction contributions (if permitted) under a simplified
5
employee pension plan to the lesser of (a) 25% of the compensation of the participant in the Plan, or (b) $58,000. Salary reduction contributions, if any, are subject to additional annual limits.
Performance Information
Performance information for the Subaccounts of the Separate Account, including the yield and effective yield of the Invesco V.I. Government Money Market Subaccount, and the average annual total return and total return of all Subaccounts, may appear in advertisements, reports, and promotional literature provided to current or prospective Owners.
Quotations of yield for the Invesco V.I. Government Money Market Subaccount will be based on the change in the value, exclusive of capital changes and income other than investment income, of a hypothetical investment in a Contract over a particular seven day period, less a hypothetical charge reflecting deductions from the Contract during the period (the “base period”) and stated as a percentage of the investment at the start of the base period (the “base period return”). The base period return is then annualized based on the formula provided below with the resulting yield figure carried to at least the nearest one hundredth of one percent. Any quotations of effective yield for the Invesco V.I. Government Money Market Subaccount assume that all monthly subaccount adjustments received during an annual period have been reinvested. Calculation of “effective yield” begins with the same “base period return” used in the yield calculation, which is then annualized to reflect weekly compounding pursuant to the following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1
Quotations of average annual total return for any Subaccount will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in a Contract over a period of one, five and ten years (or, if less, up to the life of the Subaccount), calculated pursuant to the following formula: P(1 + T)n = ERV (where P = a hypothetical initial payment of $1,000, T = the average annual total return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period).
Average annual total return figures (referred to as “Standardized Total Return”) are calculated from the inception date of the Subaccounts under the Contract, and reflect the deduction of the following charges: (1) maximum mortality and expense risk and optional Rider charges of 3.05%; (2) the administration charge of 0.15%; (3) the account administration charge of $30; and (4) the contingent deferred sales charge.
Other total return figures (referred to as “Non‑Standardized Total Return”) may be quoted that do not assume a surrender and that do not reflect deduction of the contingent deferred sales charge and account administration charge of $30; provided that such figures do not reflect the addition of any Credit Enhancement. The contingent deferred sales charge and account administration charge if reflected would lower the Non‑Standardized Total Return. Total return figures that do not reflect deduction of all charges will be accompanied by Standardized Total Return figures that reflect such charges and which date from the Separate Account inception date.
Total return figures may also be shown for periods beginning prior to the availability of the Contract. Such total return figures are based upon the performance of the Underlying Funds, adjusted to reflect the maximum charges imposed under the Contract. Any quotation of performance that pre-dates the date of inception of the Separate Account (or a Subaccount thereof as applicable) will be accompanied by Standardized Total Return figures that reflect the deduction of the applicable contingent deferred sales charge and other fees and charges since the date of inception of the Separate Account or Subaccount.
Total return figures also may be quoted that assume the Owner has purchased an Extra Credit Rider and, as such, will reflect any applicable Credit Enhancements; however, such total return figures will also reflect the deduction of all applicable charges, including any contingent deferred sales charge and any account administration charge.
Quotations of total return for any Subaccount will be based on a hypothetical investment in a Subaccount over a certain period and will be computed by subtracting the initial value of the investment from the ending value and dividing the remainder by the initial value of the investment. Such quotations of total return will reflect the deduction of all applicable charges to the Contract and the Separate Account (on an annual basis) except the applicable contingent deferred sales charge.
Performance information for any Subaccount reflects only the performance of a hypothetical Contract under which Contract Value is allocated to a Subaccount during a particular time period on which the calculations are based. Performance information should be considered in light of the investment objectives and policies, characteristics and
6
quality of the Underlying Fund in which the Subaccount invests, and the market conditions during the given time period, and should not be considered as a representation of what may be achieved in the future. Yields and total returns do not reflect any advisory fees paid to financial intermediaries from your Contract Value or other assets. If such charges were reflected, performance would be lower.
Mixed and Shared Funding Conflicts
Because the Underlying Funds may serve as investment vehicles for both variable life insurance policies and variable annuity contracts (“mixed funding”) and shares of the Underlying Funds also may be sold to separate accounts of other insurance companies (“shared funding”), material conflicts could occur. The Company currently does not foresee any disadvantages to Owners arising from either mixed or shared funding; however, due to differences in tax treatment or other considerations, it is possible that the interests of Owners of various contracts for which the Underlying Funds serve as investment vehicles might at some time be in conflict. However, the Company, each Underlying Fund’s Board of Directors, and any other insurance companies that participate in the Underlying Funds are required to monitor events in order to identify any material conflicts that arise from mixed and/or shared funding. If such a conflict were to occur, the Company would take steps necessary to protect Owners including withdrawal of the Separate Account from participation in the Underlying Fund(s) involved in the conflict. This might force the Underlying Fund to sell securities at disadvantageous prices.
Independent Registered Public Accounting Firm
The consolidated financial statements of Security Benefit Life Insurance Company and Subsidiaries at December 31, 2020 and 2019, and for each of the three years in the period ended December 31, 2020, and the financial statements of SBL Variable Annuity Account XIV at December 31, 2020, and for each of the specified periods ended December 31, 2020 and 2019, or for such portions of such periods as disclosed in the financial statements appearing in this Statement of Additional Information have been audited by [ ], independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
Financial Statements
The consolidated financial statements of Security Benefit Life Insurance Company and Subsidiaries at December 31, 2020 and 2019, and for each of the three years in the period ended December 31, 2020, and the financial statements of SBL Variable Annuity Account XIV at December 31, 2020, and for each of the specified periods ended December 31, 2020 and 2019, or for such portions of such periods as disclosed in the financial statements, are set forth herein, following this section.
The consolidated financial statements of Security Benefit Life Insurance Company and Subsidiaries, which are included in this Statement of Additional Information, should be considered only as bearing on the ability of the Company to meet its obligations under the Contracts. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.
7
| File No. 333-41180 | |
| Filed on: April [ ], 2021 | File No. 811-10011 |
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | ☐ | ||
| Pre-Effective Amendment No. | ☐ | ||
| Post-Effective Amendment No. | 32 | ☒ | |
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | ☐ | ||
| Amendment No. | 76 | ☒ | |
(Check appropriate box or boxes)
SBL VARIABLE ANNUITY ACCOUNT XIV (SecureDesigns) |
(Exact Name of Registrant) |
| Security Benefit Life Insurance Company |
(Name of Depositor) |
| One Security Benefit Place, Topeka, Kansas 66636-0001 |
(Address of Depositor’s Principal Executive Offices) |
| (785) 438-3000 |
(Depositor’s Telephone Number, Including Area Code) |
Chris Swickard, Associate General Counsel Security Benefit Life Insurance Company One Security Benefit Place, Topeka, KS 66636-0001 |
| (Name and Address of Agent for Service |
Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
☐ immediately upon filing pursuant to paragraph (b)
☒ on May 1, 2021, pursuant to paragraph (b)
☐ 60 days after filing pursuant to paragraph (a)(1)
☐ on May 1, 2021, pursuant to paragraph (a)(1) of rule 485 under the Securities Act.
If appropriate, check the following box:
☐ this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
PART C
OTHER INFORMATION
Item 27. Exhibits
| Exhibit Number | Description | Location |
| (a) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (b) | Form of Custody Agreements | Not Applicable |
| (c)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 30, 2019) | |
| (c)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 29, 2008) | |
| (c)(3) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed March 1, 2002). | |
| (c)(4) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (c)(5) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (c)(6) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (c)(7) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2003) | |
| (c)(8) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015). | |
| (c)(9) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (c)(10) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2003) | |
| (c)(11) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (c)(12) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-120399 (filed November 12, 2004) | |
| (c)(13) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 28, 2017) | |
| (d)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed February 20, 2001) | |
| (d)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed February 20, 2001) | |
| (d)(3) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (d)(4) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (d)(5) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 002‑89328 (filed April 30, 1997) |
2
| Exhibit Number | Description | Location |
| (d)(6) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (d)(7) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 002‑89328 (filed April 8, 2002) | |
| (d)(8) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (d)(9) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (d)(10) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 002-89328 (filed April 30, 1999) | |
| (d)(11) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(12) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(13) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(14) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(15) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(16) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed July 11, 2000) | |
| (d)(17) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed February 20, 2001) | |
| (d)(18) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(19) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(20) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(21) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(22) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(23) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed March 1, 2002) | |
| (d)(24) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed March 1, 2002) | |
| (d)(25) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed March 1, 2002) | |
| (d)(26) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed March 1, 2002) | |
| (d)(27) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) | |
| (d)(28) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed March 1, 2002) |
3
| Exhibit Number | Description | Location |
| (d)(29) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑52114 (filed February 18, 2004) | |
| (d)(30) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑111589 (filed December 29, 2003) | |
| (d)(31) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed March 9, 2007) | |
| (d)(32) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (d)(33) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 28, 2006) | |
| (d)(34) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed July 6, 2007) | |
| (e)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 28, 2006) | |
| (e)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2010) | |
| (e)(3) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 28, 2006) | |
| (e)(4) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2010) | |
| (e)(5) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (e)(6) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (e)(7) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2010) | |
| (e)(8) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2010) | |
| (e)(9) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 29, 2005) | |
| (e)(10) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed February 20, 2001) | |
| (f)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-52114 (filed February 23, 2005) | |
| (f)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2016) | |
| (g) | Reinsurance Contracts | Not Applicable |
| (h)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 28, 2017) | |
| (h)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(3) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed December 28, 2012) | |
| (h)(4) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 30, 2018) | |
| (h)(5) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2018) |
4
| Exhibit Number | Description | Location |
| (h)(6) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 002-89328 (filed April 30, 2012) | |
| (h)(7) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 30, 2014) | |
| (h)(8) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(9) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(10) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2012) | |
| (h)(11) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (h)(12) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2009) | |
| (h)(13) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-120399 (filed April 28, 2006) | |
| (h)(14) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 29, 2008) | |
| (h)(15) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(16) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2012) | |
| (h)(17) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 28, 2017) | |
| (h)(18) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2020) | |
| (h)(19) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 30, 2015) | |
| (h)(20) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (h)(21) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(22) | Incorporated herein by reference to the Exhibits filed with Registration Statement No 333‑41180 (filed April 30, 2015) | |
| (h)(23) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2012) | |
| (h)(24) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 30, 2019) | |
| (h)(25) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed December 28, 2012) | |
| (h)(26) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(27) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 28, 2017) | |
| (h)(28) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 29, 2020) |
5
| Exhibit Number | Description | Location |
| (h)(29) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 28, 2017) | |
| (h)(30) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 15, 2011) | |
| (h)(31) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed December 28, 2012) | |
| (h)(32) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2016) | |
| (h)(33) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 30, 2018) | |
| (h)(34) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2018) | |
| (h)(35) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 28, 2006) | |
| (h)(36) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 29, 2020) | |
| (h)(37) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2020) | |
| (h)(38) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(39) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 29, 2020) | |
| (h)(40) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed December 28, 2012) | |
| (h)(41) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(42) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 002-89328 (filed April 28, 2006) | |
| (h)(43) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(44) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 28, 2017) | |
| (h)(45) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 29, 2020) | |
| (h)(46) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-52114 (filed April 28, 2006) | |
| (h)(47) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed March 9, 2007) | |
| (h)(48) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 30, 2014) | |
| (h)(49) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30,2014) | |
| (h)(50) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 29, 2011) | |
| (h)(51) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) |
6
| Exhibit Number | Description | Location |
| (h)(52) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-84159 (filed April 30, 2013) | |
| (h)(53) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑41180 (filed April 30, 2018) | |
| (h)(54) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(55) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(56) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(57) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(58) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(59) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed April 30, 2014) | |
| (h)(60) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(61) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(62) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(63) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(64) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(65) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(66) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(67) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2013) | |
| (h)(68) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(69) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(70) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 30, 2009) | |
| (h)(71) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(72) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(73) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(74) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) |
7
| Exhibit Number | Description | Location |
| (h)(75) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(76) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-138540 (filed February 21, 2013) | |
| (h)(77) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(78) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 033-85592 (filed April 27, 2007) | |
| (h)(79) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(80) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed April 27, 2007) | |
| (h)(81) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-89236 (filed April 27, 2007) | |
| (i) | Administrative Contracts | [To be filed by amendment as applicable] |
| (j) | Other Material Contracts | [To be filed by amendment as applicable] |
| (k) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2016) | |
| (l)(1) | Consent of Independent Registered Public Accounting Firm | [To be filed by amendment as applicable] |
| (l)(2) | Consent of Counsel | [To be filed by amendment as applicable] |
| (m) | Omitted Financial Statements | Not Applicable |
| (n) | Initial Capital Agreements | Not Applicable |
| (o) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333-41180 (filed February 8, 2021) | |
| (p)(1) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 29, 2016). | |
| (p)(2) | Incorporated herein by reference to the Exhibits filed with Registration Statement No. 333‑138540 (filed April 28, 2017). |
Item 28. Directors and Officers of the Depositor
The directors and principal officers of Security Benefit Life Insurance Company are set forth below.
| Name and Principal Business Address* | Positions and Offices with Depositor |
| Michael P. Kiley | Chairman, Chief Executive Officer, and Director |
| Douglass G. Wolff | President and Director |
| Barry G. Ward | Senior Vice President, Chief Financial Officer, Chief Risk Officer, Treasurer, and Director |
| John F. Guyot | Senior Vice President, General Counsel, Secretary, and Director |
| Roger S. Offermann | Senior Vice President, Chief Actuary and Director |
| Joseph W. Wittrock | Senior Vice President, Chief Investment Officer, and Director |
| David G. Byrnes | Vice President |
| Robert M. Cicchi | Vice President, Chief Underwriter |
| Amy L. Comer | Vice President and Assistant General Counsel |
8
| Name and Principal Business Address* | Positions and Offices with Depositor |
| Albert J. DalPorto | Vice President, Product Development and Market Research |
| Jessica Daniels | Vice President, Administration and Employee Relations |
| Joseph, Elmy | Vice President, Tax Director |
| Jackie R. Fox | Vice President, Client Service |
| Dustin Stejskal | Vice President, Chief Digital Officer |
| John R. Keddy | Vice President and Chief Technology Officer and Chief Information Security Officer |
| Felix Kuhlmann | Vice President, Head of Direct to Consumer C |
| Rui Guo | Vice President and Product Actuary |
| Susan J. Lacey | Vice President and Controller |
| Jeanne R. Slusher | Vice President and Director of Audit |
| John P. Wohletz | Vice President and Chief Accounting Officer |
| Christopher D. Swickard | Vice President, Associate General Counsel, and Assistant Secretary |
| Kevin M. Watt | Vice President |
| Craig P. Weishaar | Vice President, Direct Relationships |
| Carmen R. Hill | Vice President, Chief Compliance Officer and Chief Privacy Officer |
| Cherie L. Huffman | Vice President, Investments |
| Christopher C. Ogburn | Vice President, Life Insurance |
| Dustin A Stejskal | Vice President, Chief Digital Officer |
| Richard J. Wells | Vice President, Operations |
*Located at One Security Benefit Place, Topeka, Kansas 66636‑0001. | |
Item 29. Persons Controlled by or Under Common Control with the Depositor or Registrant
The Depositor, Security Benefit Life Insurance Company (“SBL” or “the Company”), is a wholly-owned subsidiary of SBL Holdings, LLC. The Registrant is a segregated asset account of SBL. The list of companies controlled by or under common control with SBL Holdings, LLC is set forth below.
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Todd L. Boehly, Individual | |||
| 100 N. Crescent Holdings LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| 100 N. Crescent LLC | DE | 100% | by 100 N. Cresent Holdings LLC |
| 123 West 57th Street Holdings LLC | DE | 90% | by CI W57th Street Holdings LLC |
| 123 West 57th Street Property Owner LLC | DE | 100% | by 123 West 57th Street Holdings LLC |
| 125 West 57th Street Holdings LLC | DE | 90% | by CI W57th Street Holdings LLC |
| 125 West 57th Street Mezz, LLC | DE | 100% | by 125 West 57th Street Holdings LLC |
| 125 West 57th Street Property Owner LLC | DE | 100% | by 125 West 57th Street Holdings LLC |
| 13 FEG Asset Production, LLC | DE | 100% | by 13FEG Ops, LLC |
| 13 FEG Haunted Holdings, LLC | DE | 100% | by 13FEG Ops, LLC |
| 13 FEG LA Holdings, LLC | DE | 100% | by 13 FEG Haunted Holdings, LLC |
| 13 FEG Touring Events, LLC | DE | 100% | by 13FEG Ops, LLC |
| 13FEG Alamo Production, LLC | DE | 100% | by 13 FEG Asset Production, LLC |
| 13FEG Columbus Holdings, LLC | DE | 100% | by 13 FEG Haunted Holdings, LLC |
| 13FEG IP, LLC | DE | 100% | by Thirteenth Floor Entertainment Group, LLC |
| 13FEG Jacksonville Holdings, LLC | DE | 100% | by 13 FEG Haunted Holdings, LLC |
9
| Name | Jurisdiction | Percent of Voting Securities Owned |
| 13FEG New Orleans, LLC | DE | 100% | by 13 FEG Haunted Holdings, LLC |
| 13FEG Ops, LLC | DE | 100% | by Thirteenth Floor Entertainment Group, LLC |
| 13th Floor Denver Holdings, LLC | CO | 100% | by 13 FEG Haunted Holdings, LLC |
| 234 Productions, LLC | DE | 100% | by Fulwell 73 Productions US, Inc. |
| 2525 Atlantic LLC | DE | 100% | by Eldridge Charlston LLC |
| 3030 Chain Bridge Road, LLC | DE | 90% | by SBT Investors, LLC |
| 333 Fish Tacos NY 1, LLC | NY | 100% | by Fish Tacos NY 1, LLC |
| 37-41 Mortimer GP LTD | GBR | 100% | by 37-41 Mortimer Street LLP |
| 37-41 Mortimer LP | GBR | 99.99% | by 37-41 Mortimer Unit Trust |
| 37-41 Mortimer Nominee 1 Ltd | GBR | 100% | by 37-41 Mortimer GP LTD |
| 37-41 Mortimer Nominee 2 Ltd | GBR | 100% | by 37-41 Mortimer GP LTD |
| 37-41 Mortimer Opco Ltc | GBR | 100% | by 37-41 Mortimer Street LLP |
| 37-41 Mortimer Street LLP | GBR | 0% | Board rights held by CH Capital A Holdings LLc |
| 37-41 Mortimer Unit Trust | JEY | 99.99% | by 37-41 Mortimer Street LLP |
| 688 Bronx Commissary, LLC | NY | 100% | by MPQ 688 Bronx HoldCo, LLC |
| 700 Edgewater Development Mezz, LLC | DE | 100% | by CHE Edgewater LLC |
| 700 Edgewater Development Parent, LLC | DE | 40% | by CHE Edgewater LLC |
| 700 Edgewater Development, LLC | DE | 100% | by CHE Edgewater LLC |
| 720 NE Street Holdco LLC | DE | 100% | by CHE NE Street LLC |
| 720 NE Street LLC | DE | 50% | by CHE NE Street LLC |
| 720 NE Street PropCo LLC | DE | 100% | by CHE NE Street LLC |
| 9350 Civic Center Drive, LLC | DE | 100% | by 9350 Civic Center JV, LLC |
| 9350 Civic Center JV, LLC | DE | 50% | by SBC Civic Center LLC |
| A Bus Could Run Limited | GBR | 100% | by Fulwell 73 Limited |
| A24 Analytics LLC | DE | 100% | by A24 Films LLC |
| A24 Distribution, LLC | DE | 100% | by A24 Films LLC |
| A24 Films, LLC | DE | 35% | by Valence A24, LLC |
| A24 International LLC | DE | 100% | by A24 Films LLC |
| A24 Investments LLC | DE | 100% | by A24 Films LLC |
| A24 Merch LLC | DE | 100% | by A24 Films LLC |
| A24 Music LLC | DE | 100% | by A24 Films LLC |
| A24 Productions 1 LLC | DE | 100% | by A24 Films LLC |
| A24 Productions 2 LLC | DE | 100% | by A24 Films LLC |
| A24 Services, LLC | DE | 100% | by A24 Films LLC |
| A24 Studios LLC | DE | 100% | by A24 Films LLC |
| A24 Sunset LLC | DE | 100% | by A24 Films LLC |
| A24 TV Inc. | DE | 100% | by After The Fact LLC |
| A24 TV LLC | DE | 100% | by A24 Films LLC |
| A24 Ventures LLC | DE | 100% | by A24 Films LLC |
| AB 148 Madison, LLC | NY | 100% | by Aurify Brands, LLC |
| AB Wellco, LLC | DE | 100% | by Aurify Brands, LLC |
| Aequitas Estates (Poyle) Ltd | GBR | 100% | by GDL (Aylesbury) Ltd |
| Aero Solutions Srl | Italy | 100% | by Sirio S.p.A. |
| After The Fact LLC | DE | 100% | by A24 Films LLC |
| AIC The Film Limited | GBR | 100% | by Fulwell 73 Limited |
10
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Air Eldridge LLC | DE | 100% | by Eldridge Corporate Services, LLC |
| Aircraft Hangar Services LLC | DE | 100% | by Air Eldridge LLC |
| Alpha Data, LLC | DE | 100% | by P-MRC Data, LLC |
| Apocalypse Events LLC | CO | 100% | by 13 FEG Touring Events, LLC |
| APQ 10 Fifth Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 1131 Madison Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 1399 Madison NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 1592 First Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 17th Street DC, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 33 Bakery Annex NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 33 Street Bakery NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 708 Third Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 85 Broad NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 8th and Walnut PA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ 933 Broadway NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Americana CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Bethesda MD, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Beverly Hills CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Blaine Mansion DC, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Bleecker NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Bryant Park Kiosk NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Bryant Park NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Calabasas CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Capitol Hill DC, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Carnegie Hill NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Carroll Square DC, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Central Park NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Chevy Chase MD, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Claremont CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Clarendon VA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Coconut Grove FL, LLC | DE | 100% | by LPQ USA, LLC |
| APQ E53 NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ E65 NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Encino Bakery CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Fashion Island CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ First Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Florence Bakery Annex CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Garden City NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Grand Central West NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Greenwich CT, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Larchmont CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Lincoln Square NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Manhattan Beach CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Merrifield VA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Mineral Springs NY, LLC | DE | 100% | by LPQ USA, LLC |
11
| Name | Jurisdiction | Percent of Voting Securities Owned |
| APQ New Canaan CT, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Rye NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Sailboat Pond NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ South End Avenue NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ South Gayley CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Spring Valley DC, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Studio City CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Tribeca NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Tuxedo Bakery MD, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Union Square NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Verdi Park NY, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Villa Marina CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Westlake CA, LLC | DE | 100% | by LPQ USA, LLC |
| APQ Wildwood MD, LLC | DE | 100% | by LPQ USA, LLC |
| Arch Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
| Arotr LLC | DE | 49% | by StarVista Live LLC |
| Arstar Productions, LLC | CA | 100% | by Keshet/dcp LLC |
| Asian Perspective Media, LLC | DE | 100% | by Valence APM, LLC |
| Asylum Holdings, LLC | CO | 100% | by 13 FEG Haunted Holdings, LLC |
| Atrium Sports, Inc. | DE | 46.39% | by Palmer Portfolio Trust, LLC |
| Atrium Sports, Ltd. | UK | 100% | by Atrium Sports, Inc. |
| Atrium Sports, Pty. Ltd. | AU | 100% | by Atrium Sports, Inc. |
| Aurify Brands Holdings, LLC | NY | 100% | by Aurify Brands, LLC |
| Aurify Brands, LLC | NY | 30.1% | by Palmer Portfolio Trust, LLC |
| Aurify Brands, LLC | NY | 29.7% | by Putnam Asset Holdings, LLC |
| Aurify Brands, LLC | NY | 23.2% | by Arch Portfolio Trust, LLC |
| Aurify Fish Tacos Holdings LLC | NY | 100% | by Aurify Brands Holdings, LLC |
| Baia Waterviews LLC | DE | 100% | by CHE Edgewater LLC |
| Baleta sp.zo.o | Poland | 100% | by PZO JV B.V. |
| Ballinshire Asset Holdings, LLC | DE | 100% | by Ballinshire Capital Funding Trust |
| Ballinshire Asset Holdings, LLC | DE | 100% | by EPH Holdings, LLC |
| Ballinshire Capital Funding Trust | DE | 100% | by EPH Holdings, LLC |
| Ballinshire FA Holdings, LLC | NJ | 100% | by Ballinshire Capital Funding Trust |
| Bambino Films LLC | DE | 100% | by MRC II Holdings, LP |
| Bambino Films UK Limited | GBR | 100% | by MRC II Holdings, LP |
| Banner Creek Bridge, LLC | KS | 100% | by Security Benefit Corporation |
| Bastille Euro CLO 2020-3 DAC | Ireland | 0% | Mgmt. by CBAM CLO Management LLC |
| Bath Road Properties Ltd. | GBR | 75% | by Galliard Developments Ltd |
| BBMA Holdings I, LLC | DE | 100% | by dcp LLC |
| BBMA Holdings, LLC | DE | 100% | by DCP Rights, LLC |
| BBMA Parent, LLC | DE | 100% | by CP Investment Holdings, LLC |
| BCM 625 Broadway Holdco LLC | DE | 93% | by CI San Diego Holdings LLC |
| BCM 625 Broadway LLC | DE | 100% | by BCM 625 Broadway Holdco LLC |
| Be Funny When You Can LLC | LA | 100% | by A24 Films LLC |
| Beach Hotel Associates LLC | DE | 100% | by EC 17th Street MezzCo LLC |
12
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Beaumont Hills LLC | DE | 100% | by Cain Hoy UK Holdings Limited |
| BEEU The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Benedict White, LLC | CA | 100% | by MRC II Holdings, LP |
| BHDM LendCo, LLC | DE | 100% | by Cain International LP |
| Big Week CDN Productions Inc. | CAN | 100% | by MRC II Holdings, LP |
| Big Week Productions, LLC | CA | 100% | by MRC II Holdings, LP |
| Bilbao Asset Holdings, LLC | DE | 100% | by Bilbao Capital, LLC |
| Bilbao Capital, LLC | DE | 100% | by SBT Investors, LLC |
| Bilbao-KCI, LLC | DE | 90% | by Bilbao Capital, LLC |
| Billboard IP Holdings LLC | DE | 50% | by Billboard Media, LLC |
| Billboard IP Holdings, LLC | DE | 50% | by BBMA Holdings, LLC |
| Billboard Media, LLC | DE | 100% | by P-MRC Music, LLC |
| Bird of Paradise LLC | DE | 100% | by A24 Films LLC |
| Blackbrook Capital (Europe) Carry LP | UK | 0% | Mgmt. by Blackbrook Capital (Europe) GP, LLC |
| Blackbrook Capital (Europe) GP, LLC | DE | 100% | by Eldridge BB Holdings, LLC |
| Blackbrook Capital (Europe) Limited | UK | 100% | by Blackbrook Capital (Europe) LP |
| Blackbrook Capital (Europe) LP | UK | 0% | Mgmt. by Blackbrook Capital (Europe) GP, LLC |
| Blackbrook Capital (Europe) SARL | LUX | 100% | by Blackbrook Capital (Europe) LP |
| Blackbrook Property Holdings SARL | LUX | 100% | by Blackbrook Capital (Europe) SARL |
| Bleeker Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| Blue Cat Productions, LLC | DE | 100% | by MRC II Holdings, LP |
| Bombshow Productions, LLC | CA | 100% | by Keshet/dcp LLC |
| Brewskee Limited | GBR | 100% | by Competitive Socialising Limited |
| Bridge Road Southall 2 Ltd | GBR | 100% | by Bridge Road Southall Ltd |
| Bridge Road Southall Ltd | GBR | 64.3% | by Galliard Developments Ltd |
| Bridge Road Southall Newco Limited | GBR | 61.9% | by Galliard Developments Ltd |
| Bros The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Buda Hills JV B.V. | Netherlands | 90% | by CIEF1 UK Holdings Limited |
| C092 The Film Limited | GBR | 50% | by Fulwell 73 Limited |
| C4G Holdings, LLC | DE | 100% | by Lifestyle Products Group LLC |
| Cain Hoy Enterprises (U.K.) Limited | GBR | 100% | by Cain Hoy UK Holdings Limited |
| Cain Hoy Finance Limited | GBR | 100% | by CH Capital A Holdings LLc |
| Cain Hoy UK Holdings Limited | MLT | 100% | by CHE UK Holdings LP |
| Cain Hoy US LLC | DE | 100% | by Cain International LP |
| Cain International Advisers Ltd | GBR | 100% | by Cain International AM LP |
| Cain International Agent Ltd | GBR | 100% | by Cain International AM LP |
| Cain International AM LP | GBR | 0% | Mgmt. by CI AM GP Ltd |
| Cain International Equity Fund 2 GP LLC | DE | 100% | by Cain International AM LP |
| Cain International Equity Fund 2 LP | DE | 80% | by Cain International Equity Fund 2 GP LLC |
| Cain International Equity Fund 2 LP | DE | 20% | by CI Founder Partner LP |
| Cain International European Real Estate Opportunity Fund I GP Limited | GBR | 100% | by Cain International AM LP |
| Cain International European Real Estate Opportunity Fund I GP Limited | JEY | 100% | by Cain International AM LP |
| Cain International European Real Estate Opportunity Fund I LP | GBR | 0% | Mgmt. by Cain International European Real Estate Opportunity Fund I GP Limited |
13
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Cain International European Real Estate Opportunity Fund I LP | JEY | 0% | Mgmt. by Cain International European Real Estate Opportunity Fund I GP Limited |
| Cain International II LP | DE | 0% | Mgmt. by Eldridge CH GP LLC |
| Cain International LP | DE | 0% | Mgmt. by Eldridge CH GP LLC |
| Cain International Management Ltd | GBR | 100% | by Cain International AM LP |
| Cain International UK Services Ltd | GBR | 100% | by Cain International AM LP |
| Cain International US Services LP | DE | 0% | Mgmt. by CI US Services GP LLC |
| CAIS Access Fund - Asia Fund IV GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Access Fund - Asia Fund IV LP | DE | 0% | Mgmt. by CAIS Access Fund - Asia Fund IV GP LLC |
| CAIS Access Fund - BCRE I GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Access Fund - BCRE I LP | DE | 0% | Mgmt. by CAIS Access Fund - BCRE I GP LLC |
| CAIS Access Fund - BCRE II GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Access Fund - BCRE II LP | DE | 0% | Mgmt. by CAIS Access Fund - BCRE II GP LLC |
| CAIS Access Fund - MMC 2018 (Offshore) LP | CYM | 0% | Mgmt. by CAIS Access Fund - MMC 2018 GP LLC |
| CAIS Access Fund - MMC 2018 GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Access Fund - MMC 2018 LP | DE | 0% | Mgmt. by CAIS Access Fund - MMC 2018 GP LLC |
| CAIS Apollo HV Access Fund GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Apollo Hybrid Value Access Fund LP | DE | 0% | Mgmt. by CAIS Apollo HV Access Fund GP LLC |
| CAIS BC Fund XIII, GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS BC Fund XIII, LP | DE | 0% | Mgmt. by CAIS BC Fund XIII, GP LLC |
| CAIS Blackstone Growth GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Blackstone Growth LP | DE | 0% | Mgmt. by CAIS Blackstone Growth GP LLC |
| CAIS Blackstone TAS V GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Blackstone TAS V LP | DE | 0% | Mgmt. by CAIS Blackstone TAS V GP LLC |
| CAIS Blackstone TAS VI GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Blackstone TAS VI LP | DE | 0% | Mgmt. by CAIS Blackstone TAS VI GP LLC |
| CAIS Capital LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Carlyle Direct Access GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Carlyle Direct Access LP | DE | 0% | Mgmt. by CAIS Carlyle Direct Access GP LLC |
| CAIS Carlyle Renewable and Sustainable Energy Fund GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Carlyle Renewable and Sustainable Energy Fund LP | DE | 0% | Mgmt. by CAIS Carlyle Renewable and Sustainable Energy Fund GP LLC |
| CAIS Crawford Lake Fund Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS DES Composite Fund LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS DES Oculus LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS DES Oculus Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS Financial Credit Investment IV Access Fund GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Financial Credit Investment IV Access Fund LP | DE | 0% | Mgmt. by CAIS Financial Credit Investment IV Access Fund GP LLC |
| CAIS ICG Strategic Equity III GP LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS ICG Strategic Equity III LP | DE | 0% | Mgmt. by CAIS ICG Strategic Equity III GP LLC |
| CAIS ICG Strategic Equity IV GP LLC | DE | 100% | by Capital Integration Systems LLC |
14
| Name | Jurisdiction | Percent of Voting Securities Owned |
| CAIS ICG Strategic Equity IV LP | DE | 0% | Mgmt. by CAIS ICG Strategic Equity IV GP LLC |
| CAIS Insurance Solutions LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Mercer Private Equity Vintage Fund (TE) I LP | DE | 0% | Mgmt. by CM PEVF I GP LLC |
| CAIS Mercer Private Equity Vintage Fund I LP | DE | 0% | Mgmt. by CM PEVF I GP LLC |
| CAIS Millennium Intl. Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS Millennium USA LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS OZMF LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS OZMF Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS Paloma International Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS Paloma Partners LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS Third Point Offshore Fund Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| CAIS Third Point Partners LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS WorldQuant Millennium WMQS GEAE LLC | DE | 100% | by Capital Integration Systems LLC |
| CAIS WorldQuant Millennium WMQS GEAE Ltd. | CYM | 0% | Mgmt. by Capital Integration Systems LLC |
| Canon Portfolio Trust, LLC | KS | 100% | by EPH, LLC |
| Capital Integration Systems LLC | DE | 36.17% | by Eldridge CG Holdings LLC |
| CardCash Holdings, LLC | DE | 86% | by Wanamaker Portfolio Trust, LLC |
| Carlostron, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Cavalcade Productions, LLC | DE | 100% | by MRC II Holdings, LP |
| CBAM 2018-5 Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2018-6 Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2018-7, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2019-10, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2019-11, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2019-9, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2020-12, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM 2020-13, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM Charleston, LLC | DE | 100% | by CBAM Holdings, LLC |
| CBAM CLO 2017-1, LTD | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM CLO 2017-2, LTD | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM CLO 2017-3, LTD | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM CLO 2017-4, LTD | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| CBAM CLO Management Europe, LLC | DE | 100% | by CBAM Partners, LLC |
| CBAM CLO Management LLC | DE | 100% | by CBAM Partners, LLC |
| CBAM Credit Opportunities Fund GP, LLC | DE | 100% | by CBAM Partners, LLC |
| CBAM Credit Opportunities Fund, LP | DE | 100% | by CBAM Partners, LLC |
| CBAM Credit Opportunities Master Fund, LP | CYM | 100% | by CBAM Partners, LLC |
| CBAM Credit Opportunities Offshore Fund, LP | CYM | 100% | by CBAM Partners, LLC |
| CBAM Equity Fund GP, LLC | DE | 100% | by CBAM Partners, LLC |
| CBAM Equity Fund, LP | DE | 100% | by CBAM Equity Fund GP, LLC |
| CBAM Feeco, LLC | DE | 100% | by CBAM Partners, LLC |
15
| Name | Jurisdiction | Percent of Voting Securities Owned |
| CBAM Holdings, LLC | DE | 56.5% | by Eldridge AM Holdings, LLC |
| CBAM MAG Finance, LLC | KS | 100% | by Chain Bridge Opportunistic Funding Holdings, LLC |
| CBAM Partners, LLC | DE | 100% | by CBAM Holdings, LLC |
| CBAM Secured Loan Fund GP, LLC | DE | 100% | by CBAM Holdings, LLC |
| CBAM Secured Loan Fund, LP | DE | 100% | by CBAM Secured Loan Fund GP, LLC |
| Celiana sp. zo. O | Poland | 100% | by PZO JV B.V. |
| CF-G Funding II, LLC | DE | 100% | by Gennessee Insurance Agency, LLC |
| CF-G Funding III, LLC | DE | 100% | by Gennessee Insurance Agency, LLC |
| CF-G Funding, LLC | DE | 100% | by Gennessee Insurance Agency, LLC |
| CH Capital A Holdings LLC | DE | 100% | by Cain Hoy UK Holdings Limited |
| CH Galliard (Courchevef PW) LLP | GBR | 0% | Board rights held by CH Capital A Holdings LLc |
| CH Kansas, LLC | KS | 100% | by Security Benefit Corporation |
| CH McCourt (The Stage) LLC | DE | 0% | Board rights held by CH Capital A Holdings LLc |
| Chain Bridge Opportunistic Funding Holdings, LLC | KS | 100% | by Security Benefit Corporation |
| Chain Bridge Opportunistic Funding, LLC | KS | 100% | by Chain Bridge Opportunistic Funding Holdings, LLC |
| CHE 830 Brickell LLC | DE | 100% | by CHE Miami Holdings LLC |
| CHE Edgewater LLC | DE | 100% | by CHE Miami Holdings LLC |
| CHE Miami Holdings LLC | DE | 100% | by CHE US Holdings LLC |
| CHE NE Street LLC | DE | 100% | by CHE Miami Holdings LLC |
| CHE SBE Holdings, LLC | DE | 100% | by CHE US Holdings LLC |
| CHE SJG Holdings LLC | DE | 100% | by CHE US Holdings LLC |
| CHE SJG LLC | DE | 100% | by CHE SJG Holdings LLC |
| CHE South Brickell LLC | DE | 100% | by CHE Miami Holdings LLC |
| CHE UK GP Limited | JEY | 100% | by Cain International LP |
| CHE UK Holdings LP | JEY | 0% | Mgmt. by CHE UK GP Limited |
| CHE US Holdings LLC | DE | 100% | by Cain International LP |
| Chemex I Corp. | OK | 100% | by El Dorado Chemical Company |
| Cherokee Nitrogen L.L.C. | OK | 100% | by LSB Chemical L.L.C. |
| Chesney Park, LLC | DE | 100% | by Dayton Funding, LLC |
| Chubby Panda LLC | DE | 100% | by A24 Films LLC |
| CI AM GP Ltd | GBR | 100% | by Cain International II LP |
| CI AM UK Holdings Limited | GBR | 100% | by Cain International AM LP |
| CI BH Holdings II LLC | DE | 71.49% | by Cain International LP |
| CI BH Holdings II LLC | DE | 28.51% | by Mason Portfolio Trust, LLC |
| CI BH Holdings LLC | DE | 71.5% | by Cain International LP |
| CI BH Holdings LLC | DE | 28.5% | by Wanamaker Portfolio Trust, LLC |
| CI Boston Holdings LLC | DE | 49% | by Cain International LP |
| CI Boston Holdings LLC | DE | 51% | by Cain International Equity Fund 2 LP |
| CI CB3 Subfund | Ireland | 100% | by Cain International European Real Estate Opportunity Fund I LP |
| CI Diplomat Holdings LLC | DE | 100% | by Cain International LP |
| CI DMO Holding 2 LLC | DE | 100% | by BCM 625 Broadway Holdco LLC |
| CI DMO Holdings LLC | DE | 100% | by Cain International LP |
16
| Name | Jurisdiction | Percent of Voting Securities Owned |
| CI EREO I CIP GP Limited | GBR | 100% | by Cain International AM LP |
| CI EREO I CIP GP Limited | JEY | 100% | by Cain International AM LP |
| CI EREO I CIP LP | GBR | 0% | Mgmt. by CI EREO I CIP GP Limited |
| CI EREO I CIP LP | JEY | 0% | Mgmt. by CI EREO I CIP GP Limited |
| CI ExchangeCo Limited | GBR | 99% | by Cain Hoy UK Holdings Limited |
| CI ExchangeCo Limited | GBR | 1% | by Cain Hoy Enterprises (U.K.) Limited |
| CI FCL Funding 1 Limited | GBR | 100% | by CI FCL Investor LP |
| CI FCL Investor GP Limited | GBR | 100% | by Cain International LP |
| CI FCL Investor LP | GBR | 100% | by CI FCL Investor GP Limited |
| CI Founder Partner GP LLC | DE | 100% | by Cain International LP |
| CI Founder Partner LP | DE | 0% | Mgmt. by CI Founder Partner GP LLC |
| CI GGL Limited | GBR | 100% | by CH Capital A Holdings LLC |
| CI Koryfeum Sarl | LUX | 100% | by CIEF1 UK Holdings Limited |
| CI Milan Limited | GBR | 100% | by Jampurchaseco Limited |
| CI Roman Holdings Sarl | LUX | 100% | by CIEF1 UK Holdings Limited |
| CI San Diego Holdings LLC | DE | 14% | by Cain International LP |
| CI Sponsor LLC | DE | 100% | by Cain International LP |
| CI US Services GP LLC | DE | 100% | by Cain International AM LP |
| CI W57th Street Holdings LLC | DE | 49% | by Cain International LP |
| CI W57th Street Holdings LLC | DE | 51% | by Cain International Equity Fund 2 LP |
| CIEF1 UK Holdings Limited | GBR | 100% | by Cain International European Real Estate Opportunity Fund I LP |
| Click Records, Inc. | DE | 100% | by dcp Holdco I, LLC |
| CM PEVF I GP LLC | DE | 100% | by Capital Integration Systems LLC |
| Collins Park, LLC | KS | 100% | by Dayton Funding, LLC |
| Competitive Socialising Limited | GBR | 68.81% | by Jampurchaseco Limited |
| Competitive Socializing U.S., LLC | DE | 100% | by Competitive Socialising Limited |
| Convergent Holdings LLC | DE | 100% | by SE2 Technologies LLC |
| Corporate Funding VIII, LLC | DE | 100% | by EPH Holdings, LLC |
| Country Music Cruise 18 LLC | DE | 100% | by StarVista Live LLC |
| Country Music Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Country Music Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Country Music Cruise 21 LLC | DE | 100% | by StarVista Live LLC |
| CP Investment Holdings, LLC | DE | 100% | by dcp Holdco II, LLC |
| CPI Productions, Inc. | DE | 100% | by dcp Holdco I, LLC |
| Craneshaw House Limited | GBR | 66% | by Galliard Developments Ltd |
| Creativity Media Ltd | GBR | 100% | by Fulwell 73 Limited |
| CSL (Jam) Limited | GBR | 100% | by Competitive Socialising Limited |
| Davisville Holdings S.a r.l | LUX | 90% | by CIEF1 UK Holdings Limited |
| Dawn Acres II, LLC | DE | 100% | by Security Benefit Corporation |
| Dawn Acres III, LLC | DE | 100% | by Security Benefit Corporation |
| Dawn Acres IV, LLC | DE | 100% | by Security Benefit Corporation |
| DC Company Music, LLC | CA | 100% | by dick clark productions, LLC |
| dcp Corp. | DE | 100% | by dcp Holdco I, LLC |
| DCP Funding LLC | DE | 81.5% | by Valence Media Partners, LLC |
17
| Name | Jurisdiction | Percent of Voting Securities Owned |
| DCP Guaranty Services, LLC | DE | 100% | by dick clark productions, LLC |
| dcp Holdco I, LLC | DE | 100% | by DCP Funding LLC |
| dcp Holdco II, LLC | DE | 100% | by Mirror Media IP Holdings, LLC |
| dcp LLC | DE | 100% | by CP Investment Holdings, LLC |
| DCP Rights, LLC | DE | 100% | by DCP Guaranty Services, LLC |
| dcp TL Funding LLC | DE | 50% | by CP Investment Holdings, LLC |
| Dcpg investco, LLC | DE | 100% | by dcp LLC |
| Dcpl investco, LLC | DE | 100% | by dcp LLC |
| Death On A Tuesday LLC | DE | 100% | by A24 Films LLC |
| Denver Zombie Crawl, LLC | CO | 100% | by 13 FEG Touring Events, LLC |
| Desert Screams LLC | AZ | 100% | by 13 FEG Haunted Holdings, LLC |
| DHAI Video LLC | DE | 100% | by Direct Holdings Global LLC |
| Dick Clark Communications, Inc. | DE | 100% | by dcp Holdco I, LLC |
| Dick Clark Features, Inc. | CA | 100% | by dcp Holdco I, LLC |
| Dick Clark Film Group, Inc. | CA | 100% | by dcp Holdco I, LLC |
| Dick Clark Kids, Inc. | DE | 100% | by dcp Holdco I, LLC |
| Dick Clark Media Archives, LLC | CA | 100% | by dick clark productions, LLC |
| dick clark productions, LLC | DE | 100% | by dcp LLC |
| Dick Clark Restaurants, Inc. | DE | 100% | by dcp Holdco I, LLC |
| Digital Media Asset Holdings, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Direct Holdings Americas LLC | DE | 100% | by Direct Holdings U.S. LLC |
| Direct Holdings Customer Service Inc. | DE | 100% | by Direct Holdings Americas LLC |
| Direct Holdings Global LLC | DE | 100% | by Mosaic Media Investment Partners, LLC |
| Direct Holdings IP LLC | DE | 100% | by Direct Holdings U.S. LLC |
| Direct Holdings Libraries Inc. | DE | 100% | by dcp Holdco I, LLC |
| Direct Holdings U.S. LLC | DE | 100% | by Direct Holdings Global LLC |
| DLICT, LLC | DE | 75% | by Eldridge Industries, LLC |
| DNBR Funding II, LLC | DE | 100% | by Dunbarre Insurance Agency, LLC |
| DNBR Funding, LLC | KS | 100% | by Dunbarre Insurance Agency, LLC |
| Do It Live LLC | DE | 100% | by A24 Films LLC |
| Donkey Elephant Productions, LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| DS Malecon Holdings LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| DS MB Holdings LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| DTC The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Dunbarre Insurance Agency, LLC | DE | 100% | by SBL Holdings, Inc. |
| Dynamo 1C S.a.r.l. | DE | 100% | by Dynamo Holdings SCSP |
| Dynamo GP S.a.r.l. | LUX | 50% | by CH Galliard (Courchevef PW) LLP |
| Dynamo Holdings SCSP | LUX | 0% | Mgmt. by Dynamo GP S.a.r.l. |
| Dynamo PW S.a.r.l. | LUX | 100% | by Dynamo Holdings SCSP |
| E&D PH RE Holdings LLC | DE | 100% | by E&D RE Holdings LLC |
| E&D RE Holdings LLC | DE | 49.99% | by Eldridge E&D RE Holdings LLC |
| E&D W RE 1546 NC HWY 56 LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 1808 MIAMI BLVD LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 2214 ERIC LANE LLC | DE | 100% | by E&D W RE Holdings LLC |
18
| Name | Jurisdiction | Percent of Voting Securities Owned |
| E&D W RE 226 GRAHAM-HOPDALE RD LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 2423 S CHURCH ST LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 375 S CHURTON ST LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 735 MADISON BLVD LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE 808 E ATLANTIC ST LLC | DE | 100% | by E&D W RE Holdings LLC |
| E&D W RE Holdings LLC | DE | 100% | by E&D RE Holdings LLC |
| E&D W RE 1301 MEBANE OAKS RD LLC | DE | 100% | by E&D W RE Holdings LLC |
| E10 Holdings Kft | Hungary | 100% | by Buda Hills JV B.V. |
| E10 Project Kft | Hungary | 100% | by E10 Holdings Kft |
| EACS II, LLC | DE | 100% | by Eldridge Industries, LLC |
| EACS LLC | DE | 100% | by Eldridge Industries, LLC |
| Earhart Capital, LLC | KS | 100% | by Security Benefit Corporation |
| Easy Mark, LLC | CA | 100% | by MRC II Holdings, LP |
| EBBH, LLC | DE | 100% | by Eldridge Industries, LLC |
| EC 17th Street Holdings LLC | DE | 100% | by Eldridge 17th Street Holdings LLC |
| EC 17th Street MezzCo LLC | DE | 100% | by EC 17th Street Holdings LLC |
| EC 58th Street Holdings II LLC | DE | 100% | by EC 58th Street Holdings LLC |
| EC 58th Street Holdings LLC | DE | 100% | by Eldridge 58th Street Holdings LLC |
| EC 58th Street LLC | DE | 100% | by EC 58th Street MezzCo LLC |
| EC 58th Street MezzCo LLC | DE | 100% | by EC 58th Street Holdings II LLC |
| Echidna Capital LLC | DE | 70% | by Anthony D. Minella, Individual |
| EDC Ag Products Company L.L.C. | OK | 100% | by El Dorado Chemical Company |
| Eden T Entertainment Inc. | DE | 100% | by Fulwell 73 Productions US, Inc. |
| Eden T Productions LLC | CA | 100% | by Eden T Entertainment Inc. |
| E-HS Investor II, LLC | DE | 100% | by EHSI Holdings II, LLC |
| E-HS Investor, LLC | DE | 100% | by EHSI Holdings, LLC |
| EHSI Holdings II, LLC | DE | 100% | by Dayton Funding, LLC |
| EHSI Holdings, LLC | DE | 100% | by Dayton Funding, LLC |
| EKW Holdings II LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| EKW Holdings III LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| EKW Holdings IV LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| EKW Holdings LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| EKW Holdings V LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| El Dorado Ammonia L.L.C. | OK | 100% | by El Dorado Chemical Company |
| El Dorado Chemical Company | OK | 100% | by LSB Chemical L.L.C. |
| El Dorado Nitrogen L.L.C. | OK | 100% | by LSB Chemical L.L.C. |
| Eldridge 17th Street Holdings LLC | DE | 100% | by Arch Portfolio Trust, LLC |
| Eldridge 58th Street Holdings LLC | DE | 100% | by Arch Portfolio Trust, LLC |
| Eldridge 625 Broadway, LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge Aircraft Services LLC | DE | 100% | by EPH II, LLC |
| Eldridge AM Holdings, LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge BB Holdings, LLC | DE | 100% | by EBBH, LLC |
| Eldridge BBLP, LLC | DE | 100% | by Eldridge BB Holdings, LLC |
| Eldridge Bitkraft Funding LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
19
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Eldridge Business Services LLC | DE | 99% | by Eldridge Corporate Services, LLC |
| Eldridge Butterfly Network Holdings, LLC | DE | 100% | by Palmer Portfolio Trust, LLC |
| Eldridge CEC Funding, LLC | DE | 100% | by Collins Park, LLC |
| Eldridge CG Holdings LLC | DE | 100% | by Eldridge FS Holdings, LLC |
| Eldridge CH GP LLC | DE | 100% | by Eldridge CH Holdings, LLC |
| Eldridge CH Holdings, LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge CH LP LLC | DE | 100% | by Eldridge CH Holdings, LLC |
| Eldridge Charlston LLC | DE | 100% | by Eldridge CHG Holdings LLC |
| Eldridge CHG Holdings LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge CI GP LLC | DE | 100% | by Eldridge CI Holdings II LLC |
| Eldridge CI Holdings II LLC | DE | 100% | by Eldridge AM Holdings, LLC |
| Eldridge CI LP LLC | DE | 100% | by Eldridge CI Holdings II LLC |
| Eldridge Corporate Funding LLC | DE | 100% | by EPH II, LLC |
| Eldridge Corporate Services, LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge Diplomat Holdings, LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge DK Holdings, LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Eldridge DK II, LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| Eldridge DK, LLC | DE | 100% | by Eldridge DK Holdings, LLC |
| Eldridge DMO, LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge DTS Funding, LLC | DE | 100% | by Putnam Asset Holdings, LLC |
| Eldridge E&D RE Holdings LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge ELO Funding LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Eldridge Equipment Finance LLC | DE | 100% | by EPH, LLC |
| Eldridge Esports Funding II LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge Esports One Funding LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Eldridge Executive Services LLC | DE | 99% | by Eldridge Corporate Services, LLC |
| Eldridge Expensify Holdings LLC | DE | 100% | by Mason Portfolio Trust, LLC |
| Eldridge FEG Holdings | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Eldridge FS Holdings, LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge Gaming 247 Funding LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge G-Form Holdings LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| Eldridge Gizer Funding LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge Happy Money Funding LLC | DE | 100% | by Palmer Portfolio Trust, LLC |
| Eldridge HIP Ventures, LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| Eldridge Homodeus Funding LLC | DE | 100% | by Mason Portfolio Trust, LLC |
| Eldridge HZACS LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge HZONS LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge Industries, LLC | DE | 0% | Echidna Capital LLC |
| Eldridge Industries, LLC | DE | 85.36% | by SBT Investors, LLC |
| Eldridge Industries, LLC | DE | 2.1% | by Bilbao-KCI, LLC |
| Eldridge IP Holdings LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge KRNL Funding LLC | DE | 100% | by Putnam Asset Holdings, LLC |
| Eldridge Maranon Holdings, LLC | DE | 100% | by Eldridge AM Holdings, LLC |
| Eldridge NPC Holdings LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge PayActiv Holdings LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
20
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Eldridge Pixion Funding LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge ROS Holdings LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| Eldridge RV Funding LLC | DE | 100% | by Canon Portfolio Trust, LLC |
| Eldridge SBC Holdings LLC | DE | 100% | by Eldridge Industries, LLC |
| Eldridge Scopely Holdings LLC | DE | 100% | by Palmer Portfolio Trust, LLC |
| Eldridge Services Incorporated | DE | 100% | by Eldridge Corporate Services, LLC |
| Eldridge SFLY Funding, LLC | DE | 100% | by Potwin Place, LLC |
| Eldridge SLG Holdings, LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Eldridge Tax Services Inc. | DE | 100% | by Eldridge Business Services LLC |
| Eldridge Truebill Funding, LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| Eldridge Unqork Holdings LLC | DE | 70% | by Palmer Portfolio Trust, LLC |
| Eldridge VS, LLC | DE | 100% | by Mayfair Portfolio Trust, LLC |
| Eldridge Wellthy Funding LLC | DE | 100% | by Canon Portfolio Trust, LLC |
| Eli Entertainment Inc. | DE | 100% | by Fulwell 73 Productions US, Inc. |
| Eli Entertainment LLC | CA | 100% | by Eli Entertainment Inc. |
| Elia Management LLC | DE | 100% | by A24 Films LLC |
| Ellicott Limited | JEY | 100% | by Beaumont Hills LLC |
| Elliott Bay Capital Trust, LLC | DE | 99% | by Elliott Bay Parent LLC |
| Elliott Bay Healthcare Realty Holdings II LLC | DE | 100% | by Elliott Bay Holdings LLC |
| Elliott Bay Healthcare Realty Holdings III LLC | DE | 100% | by Elliott Bay Holdings LLC |
| Elliott Bay Healthcare Realty Holdings LLC | DE | 100% | by Elliott Bay Holdings LLC |
| Elliott Bay Healthcare Realty II LLC | DE | 100% | by Elliott Bay Healthcare Realty Holdings II LLC |
| Elliott Bay Healthcare Realty III LLC | DE | 100% | by Elliott Bay Healthcare Realty Holdings III LLC |
| Elliott Bay Healthcare Realty LLC | DE | 100% | by Elliott Bay Healthcare Realty Holdings LLC |
| Elliott Bay Holdings LLC | DE | 91.89% | by Elliott Bay Parent LLC |
| Elliott Bay LLC | DE | 100% | by Elliott Bay Holdings LLC |
| Elliott Bay Parent LLC | DE | 100% | by Mason Portfolio Trust, LLC |
| Ellis Funding LLC | DE | 97.5% | by SCF Aviation Capital LLC |
| Elm Portfolio Trust LLC | DE | 100% | by EPH II, LLC |
| Elo Entertainment Inc. | DE | 28% | by Eldridge ELO Funding LLC |
| E-OZ 2019-1, LLC | DE | 98.76% | by EPH, LLC |
| EPH Holdings II, LLC | DE | 100% | by Eldridge Industries, LLC |
| EPH Holdings, LLC | DE | 100% | by EPH Holdings II, LLC |
| EPH II, LLC | DE | 100% | by EPH Holdings, LLC |
| EPH, LLC | DE | 100% | by EPH II, LLC |
| Epic Aero, Inc. | DE | 17.2% | by Epic Preferred Holdings LLC |
| Epic Preferred Holdings LLC | DE | 11.29% | by EPH, LLC |
| Epic Preferred Holdings LLC | DE | 25.34% | by Palmer Portfolio Trust, LLC |
| Epic Preferred Holdings LLC | DE | 6.22% | by Canon Portfolio Trust, LLC |
| Epic Preferred Holdings LLC | DE | 36.41% | by Putnam Asset Holdings, LLC |
| Epic Preferred Holdings LLC | DE | 6.22% | by Mayfair Portfolio Trust, LLC |
| Epic Preferred Holdings LLC | DE | 14.52% | by Arch Portfolio Trust, LLC |
| Everest Fuel Management, LLC | DE | 100% | by Tuvoli, LLC |
| Everly, LLC | KS | 100% | by Security Benefit Corporation |
21
| Name | Jurisdiction | Percent of Voting Securities Owned |
| F&B Advisory Company LLC | DE | 50% | by Eldridge NPC Holdings LLC |
| F73 Productions Limited | GBR | 100% | by Fulwell 73 Limited |
| Fairchild Place Ltd | GBR | 100% | by The Stage Shoreditch (Master) Unit Trust |
| Fairlawn Funding, LLC | DE | 100% | by Dayton Funding, LLC |
| False Positive LLC | DE | 100% | by A24 Films LLC |
| Family Secret Productions, Inc. | DE | 100% | by dcp Holdco I, LLC |
| Fang Shui, LLC | DE | 100% | by MRC II Holdings, LP |
| Farah Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Farmhold Financial Holdings LLC | DE | 50% | by Canon Portfolio Trust, LLC |
| Farmhold Financial LLC | DE | 100% | by Farmhold Financial Holdings LLC |
| Farmhold Financial Management Holdings LLC | DE | 100% | by Farmhold Financial Holdings LLC |
| Farmhold Financial Management Intermediate Holdings LLC | DE | 100% | by Farmhold Financial Management Holdings LLC |
| Farmhold Financial Management LLC | DE | 1% | by Farmhold Financial Management Intermediate Holdings LLC |
| Farmhold Financial Management LLC | DE | 99% | by Farmhold Financial Management Holdings LLC |
| Farmhold Lending LLC | DE | 100% | by Farmhold Financial Holdings LLC |
| FC Virginia Soccer Club LLC | VA | 100% | by Cain International LP |
| Fear Farm Holdings, LLC | AZ | 100% | by 13 FEG Haunted Holdings, LLC |
| FEG Haunted Holdings, LLC | DE | 100% | by 13FEG Ops, LLC |
| Felix Keane Enterprises LLC | DE | 100% | by A24 Films LLC |
| Fever Lake LLC | LA | 100% | by A24 Films LLC |
| Fever Lake Rights LLC | DE | 100% | by A24 Films LLC |
| Fevo Czech s.r.o. | Czech Republic | 100% | by Fevo, Inc. |
| Fevo d.o.o. Beograd | Serbia | 100% | by Fevo, Inc. |
| Fevo, Inc. | DE | 20.19% | by Wanamaker Portfolio Trust, LLC |
| FGC 101 Maiden, LLC | NY | 100% | by Fields GC, LLC |
| FGC 148 Madison, LLC | NY | 100% | by Fields GC, LLC |
| FGC 24 E12, LLC | DE | 100% | by Fields GC, LLC |
| FGC 275 Madison, LLC | NY | 100% | by Fields GC, LLC |
| FGC 304 PAS, LLC | NY | 100% | by Fields GC, LLC |
| FGC 599 Lexington, LLC | NY | 100% | by Fields GC, LLC |
| Fields GC, LLC | NY | 56% | by Aurify Brands, LLC |
| Fifteen Sled Dogs LLC | DE | 100% | by A24 Films LLC |
| Film Expo Group Holdings LLC | DE | 85.7% | by Eldridge FEG Holdings LLC |
| Film Expo Group Intermediate Holdings, LLC | DE | 100% | by Film Expo Group Holdings LLC |
| Film Expo Group LLC | DE | 99% | by Film Expo Group Holdings LLC |
| FilmNation Partners, LLC | DE | 20.2% | by MRC II Holdings, LP |
| First Security Benefit Life Insurance and Annuity Company of New York | NY | 100% | by SBL Holdings, Inc. |
| Fish Tacos NY 1, LLC | NY | 61.6% | by Aurify Fish Tacos Holdings, LLC |
| Flairjet Ltd. | DE | 100% | by Volare Acquisitions, Limited |
| Flexjet Limited | GBR | 100% | by One Sky Flight, LLC |
| Flexjet, LLC | GBR | 100% | by One Sky Flight, LLC |
22
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Flight Options, LLC | DE | 100% | by One Sky Flight, LLC |
| Flower Power Cruise 18 LLC | DE | 100% | by StarVista Live LLC |
| Flower Power Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Flower Power Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Flower Power Cruise Fall 21 LLC | DE | 100% | by StarVista Live LLC |
| Flower Power Cruise Spring 21 LLC | DE | 100% | by StarVista Live LLC |
| FlyEasy Corp. | CAN | 100% | by Tuvoli, LLC |
| Fortwell Capital Limited | GBR | 80% | by Cain International II LP |
| Fox River Investments, LLC | DE | 100% | by Spoon River Investments, LLC |
| FP Rights LLC | DE | 100% | by A24 Films LLC |
| Free State Funding, LLC | KS | 100% | by Security Benefit Corporation |
| Frimpse Film Productions Ltd | CAN | 100% | by Frimpse LLC |
| Frimpse LLC | CA | 100% | by MRC II Holdings, LP |
| Froome Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Fulwell 73 Holdco Limited | GBR | 32% | by Valence FW73, LLC |
| Fulwell 73 Limited | GBR | 100% | by Fulwell 73 Holdco Limited |
| Fulwell 73 Productions US, Inc. | DE | 100% | by Fulwell 73 UK Limited |
| Fulwell 73 Project Q, LLC | Qatar | 100% | by Fulwell 73 UK Limited |
| Fulwell 73 UK Limited | GBR | 100% | by Fulwell 73 Holdco Limited |
| Fulwell Music Limited | GBR | 100% | by Fulwell 73 Limited |
| Future Autumn LLC | DE | 100% | by A24 Films LLC |
| FX Leasing, LLC | DE | 100% | by SCF Aviation Capital LLC |
| G6000-9796 LLC | DE | 95% | by SCF Aviation Capital LLC |
| Galliard Developments Ltd | GBR | 100% | by GDL Holdco Limited |
| Gaming 247, Inc. | DE | 13.9% | by Eldridge Gaming 247 Funding LLC |
| GDL (Aylesbury) Ltd | GBR | 51% | by Galliard Developments Ltd |
| GDL (Birmingham Middleway) Ltd | GBR | 66% | by Galliard Developments Ltd |
| GDL (Cheltenham) Holdings Ltd | GBR | 100% | by Galliard Developments Ltd |
| GDL (Cheltenham) Ltd | GBR | 100% | by GDL (Cheltenham) Holdings Ltd |
| GDL (Chiswick) LLP | GBR | 66% | by Galliard Developments Ltd |
| GDL (Creekside) Ltd | GBR | 52% | by Galliard Developments Ltd |
| GDL (Kilmorie) Ltd | GBR | 100% | by Galliard Developments Ltd |
| GDL (Luton) Developments Ltd | GBR | 90% | by Galliard Developments Ltd |
| GDL (Millharbour) Ltd | GBR | 100% | by Galliard Developments Ltd |
| GDL (Romford) Limited | GBR | 100% | by Galliard Developments Ltd |
| GDL (Slough) Developments Ltd | GBR | 100% | by Galliard Developments Ltd |
| GDL (Sub 2) Limited | GBR | 100% | by Galliard Developments Ltd |
| GDL (Sub 3) Limited | GBR | 100% | by Galliard Developments Ltd |
| GDL (TCRW) Limited | GBR | 100% | by Galliard Developments Ltd |
| GDL (Tower Bridge Road) Limited | GBR | 70% | by Galliard Developments Ltd |
| GDL Holdco Limited | GBR | 0% | Board rights held by CH Capital A Holdings LLc |
| Generate Entertainment, LLC | DE | 100% | by dcp LLC |
| Gennessee Insurance Agency, LLC | DE | 100% | by SBL Holdings, Inc. |
| G-Form, LLC | RI | 23.5% | by Wanamaker Portfolio Trust, LLC |
| GIV-X 4098, LLC | DE | 100% | by Air Eldridge LLC |
23
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Gizer Inc. | DE | 26.23% | by Eldridge Gizer Funding LLC |
| Glow Holdings, LLC | DE | 100% | by Pumpkin Fest Holdings, LLC |
| Golden Dragons, LLC | CA | 100% | by MRC II Holdings, LP |
| GRE Austin, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Chicago, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Cincinnati, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Cleveland, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Dallas, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Denver, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE San Antonio, LLC | DE | 100% | by Great Room Escape, LLC |
| GRE Tempe, LLC | DE | 100% | by Great Room Escape, LLC |
| Great Room Escape, LLC | CO | 100% | by 13FEG Ops, LLC |
| Greedy Hippo LLC | DE | 100% | by After The Fact LLC |
| GS BTS Limited | GBR | 100% | by Fulwell 73 UK Limited |
| GS TV Productions Ltd | GBR | 50% | by Fulwell 73 UK Limited |
| Guacamole Airlines LLC | DE | 100% | by A24 Films LLC |
| GV 667, LLC | DE | 100% | by Air Eldridge LLC |
| GVI 6274, LLC | DE | 100% | by Air Eldridge LLC |
| H of A Production Limited | GBR | 100% | by Fulwell 73 Limited |
| Halfnelson Films UK Limited | GBR | 100% | by MRC II Holdings, LP |
| Halfnelson Films, LLC | CA | 100% | by MRC II Holdings, LP |
| Harsh Times, LLC | DE | 30% | by MRC Investments, LLC |
| Highland Peak Asset Holdings, LLC | DE | 100% | by Highland Peak Trust |
| Highland Peak FA Holdings, LLC | NJ | 100% | by Highland Peak Trust |
| Holliday Park, LLC | KS | 100% | by Dayton Funding, LLC |
| Horizon II Sponsor, LLC | DE | 11% | by MRC Horizon II, LLC |
| Horizon II Sponsor, LLC | DE | 14% | by Eldridge HZACS LLC |
| Horizon III Sponsor, LLC | DE | 100% | by Eldridge Industries, LLC |
| Horizon Sponsor, LLC | DE | 15% | by Eldridge HZACS LLC |
| Hot Costs LLC | DE | 100% | by A24 Films LLC |
| Hotdog Hands LLC | DE | 100% | by A24 Films LLC |
| House of Torment LLC | TX | 100% | by 13 FEG Haunted Holdings, LLC |
| Hungry City, LLC | DE | 100% | by MRC II Holdings, LP |
| Hyphen Hyphen LLC | DE | 100% | by After The Fact LLC |
| HZACS CI, LLC | DE | 0% | Mgmt. by Eldridge HZACS LLC |
| HZONS CI, LLC | DE | 0% | Mgmt. by Eldridge HZONS LLC |
| Ibiza 87 Limited | GBR | 100% | by Fulwell 73 Limited |
| IDF V, LLC | DE | 100% | by Security Benefit Life Insurance Company |
| IDF VI, LLC | DE | 100% | by Security Benefit Life Insurance Company |
| Jampurchaseco Limited | GBR | 100% | by Cain International LP |
| Jazz Hands Motion Picture Group LLC | DE | 100% | by A24 Films LLC |
| Jefferson Square 1892, LLC | KS | 100% | by Dayton Funding, LLC |
| Jessica House Developments Ltd | GBR | 95% | by Galliard Developments Ltd |
| JJ Concepts Limited | GBR | 50% | by Jampurchaseco Limited |
| JJ ISQ Limited | GBR | 100% | by JJ Concepts Limited |
24
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Jonty LLC | DE | 100% | by A24 Films LLC |
| JP Initiative, LLC | DE | 100% | by Eldridge Business Services LLC |
| Jubilee Scripted Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Juno Albatros, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno CB 1, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno Corn, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno EURO, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno Holdings Lux 2 S.a.r.l | LUX | 100% | by Juno Holdings Lux I S.a.r.l |
| Juno Holdings Lux I S.a.r.l | LUX | 95% | by CIEF1 UK Holdings Limited |
| Juno Holdings Spain 1, S.L.U. | Spain | 100% | by Juno Holdings Lux 2 S.a.r.l |
| Juno Mini, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno Munt, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Juno Plan, S.L.U. | Spain | 100% | by Juno Holdings Spain 1, S.L.U. |
| Keemotion Group, Inc. | DE | 100% | by Atrium Sports, Inc. |
| Keemotion LLC | DE | 100% | by Synergy Sports, SRL |
| Keemotion SPRL | Belgium | 100% | by Atrium Sports, Inc. |
| Keshet/dcp LLC | DE | 50% | by dcp LLC |
| Kitewood (Creekside) Limited | GBR | 75% | by GDL (Creekside) Limited |
| KMA Gems LLC | DE | 100% | by After The Fact LLC |
| Knight Takes King Productions, LLC | DE | 100% | by MRC II Holdings, LP |
| Knoema Corporation | DE | 100% | by Knoema Holdings, LLC |
| Knoema Holdings, LLC | DE | 86.2% | by PD Holdings LLC |
| Krakow Office Park B.V. | Netherlands | 90% | by CIEF1 UK Holdings Limited |
| KWCI GP | Ireland | 50% | by Cain International European Real Estate Opportunity Fund I GP Limited |
| KWCI LP | NJ | 50% | by CI CB3 Subfund |
| KWSB Real Estate Venture I, LLC | DE | 80% | by EKW Holdings LLC |
| KWSB Real Estate Venture II, LLC | DE | 80% | by EKW Holdings II LLC |
| KWSB Real Estate Venture III, LLC | DE | 80% | by EKW Holdings III LLC |
| KWSB Real Estate Venture IV, LLC | DE | 80% | by EKW Holdings IV LLC |
| Lakewood Portfolio Trust, LLC | DE | 100% | by Dayton Funding, LLC |
| Last Rider Productions UK Limited | GBR | 100% | by MRC Documentary, L.P. |
| Last Rider Productions, LLC | CA | 100% | by MRC Documentary, L.P. |
| LB 1140 Broadway, LLC | NY | 100% | by Little Beet, LLC |
| LB 125 Park, LLC | NY | 100% | by Little Beet, LLC |
| LB 1291 First Avenue, LLC | DE | 100% | by Little Beet, LLC |
| LB 148 Madison, LLC | NY | 100% | by Little Beet, LLC |
| LB 320 Park, LLC | NY | 100% | by Little Beet, LLC |
| LB 470 PAS, LLC | DE | 100% | by Little Beet, LLC |
| LB Aventura, LLC | NY | 100% | by Little Beet, LLC |
| LB Bryant Park, LLC | NY | 100% | by Little Beet, LLC |
| LB City Vista, LLC | DE | 100% | by Little Beet, LLC |
| LB Coconut Grove, LLC | DE | 100% | by Little Beet, LLC |
| LB DC 1212, LLC | NY | 100% | by Little Beet, LLC |
| LB Hanover Square, LLC | NY | 100% | by Little Beet, LLC |
25
| Name | Jurisdiction | Percent of Voting Securities Owned |
| LB Newport Center, LLC | NY | 100% | by Little Beet, LLC |
| LB Penn, LLC | NY | 100% | by Little Beet, LLC |
| LB Roosevelt Field, LLC | NY | 100% | by Little Beet, LLC |
| LB Rosslyn, LLC | NY | 100% | by Little Beet, LLC |
| LB Sub W50, LLC | NY | 100% | by LB W50, LLC |
| LB W50, LLC | NY | 100% | by Little Beet, LLC |
| LB Westchester, LLC | NY | 100% | by Little Beet, LLC |
| LB Westport, LLC | DE | 100% | by Little Beet, LLC |
| LBMISF LLC | DE | 100% | by A24 Films LLC |
| LBT Chevy Chase, LLC | NY | 100% | by LBT Chicago, LLC |
| LBT Chicago, LLC | NY | 100% | by Little Beet Table, LLC |
| LBT Greenwich, LLC | NY | 100% | by LBT Chicago, LLC |
| Leadoff Investments, LLC | DE | 100% | by SBT Investors, LLC |
| Lebanon 3998, LLC | KS | 100% | by Security Benefit Corporation |
| Life.io Holdco, LLC | DE | 100% | by Life.io Holdings, LLC |
| Life.io Holdings, LLC | DE | 100% | by SE2 Holdings, LLC |
| Life.io, LLC | DE | 1% | by Life.io Holdings, LLC |
| Life.io, LLC | DE | 100% | by Lifo.io Holdco, LLC |
| Lifestyle Products Group LLC | DE | 100% | by Direct Holdings Global LLC |
| Little Beet Table, LLC | NY | 100% | by Aurify Brands Holdings, LLC |
| Little Beet, LLC | NY | 98% | by Aurify Brands Holdings, LLC |
| LME1 Limited | GBR | 100% | by Competitive Socialising Limited |
| Lost in the Andes, LLC | CA | 100% | by MRC Documentary, L.P. |
| Love Retro LLC | DE | 100% | by Lifestyle Products Group LLC |
| LPQ Sailboat Pond, Inc. | DE | 100% | by APQ Sailboat Pond NY, LLC |
| LPQ USA, LLC | DE | 100% | by Aurify Brands, LLC |
| LSB Chemical L.L.C. | OK | 100% | by LSB Industries, Inc. |
| LSB Funding LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| LSB Industries, Inc. | DE | 10% | by LSB Funding LLC |
| LU The Film Limited | GBR | 50% | by Fulwell 73 Limited |
| Make Hay LLC | DE | 100% | by A24 Films LLC |
| Malecon Entertainment LLC | DE | 50% | by DS Malecon Holdings LLC |
| Malt Shop Cruise 18 LLC | DE | 100% | by StarVista Live LLC |
| Malt Shop Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Malt Shop Cruise 21 LLC | DE | 100% | by StarVista Live LLC |
| MAOdcp LLC | DE | 50% | by dick clark productions, LLC |
| Maple Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
| Maranon Capital Ultimate General Partner LLC | DE | 50% | by Eldridge Maranon Holdings, LLC |
| Maranon Capital, L.P. | DE | 60.51% | by Eldridge Maranon Holdings, LLC |
| Maranon Centre Street Executive Fund LP | DE | 99% | by Maranon Capital, L.P. |
| Maranon Centre Street General Partner, LP | DE | 100% | by Maranon Capital Ultimate General Partner LLC |
| Maranon Centre Street Partnership LP | DE | 0% | Mgmt. by Maranon Centre Street General Partner, LP |
| Maranon Centre Street SPV LLC | DE | 100% | by Maranon Centre Street Partnership LP |
26
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Maranon Loan Funding 2018-1, Ltd | CYM | 0% | Mgmt. by Maranon Management LLC |
| Maranon Loan Funding 2019-1, Ltd | CYM | 0% | Mgmt. by Maranon Capital, L.P. |
| Maranon Loan Funding 2020-1, Ltd | CYM | 0% | Mgmt. by Maranon Capital, L.P. |
| Maranon Management LLC | DE | 100% | by Maranon Capital, L.P. |
| Maranon Mezzanine Executive Funding, LP | DE | 0% | Mgmt. by Maranon Mezzanine GP, LP |
| Maranon Mezzanine Fund II, LP | DE | 0% | Mgmt. by Maranon Mezzanine GP II, LP |
| Maranon Mezzanine Fund III-A, LP | DE | 0% | Mgmt. by Maranon Mezzanine GP III-A, LP |
| Maranon Mezzanine Fund, LP | DE | 0% | Mgmt. by Maranon Mezzanine GP, LP |
| Maranon Mezzanine GP II, LP | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Mezzanine GP III-A, LP | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Mezzanine GP, LP | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Mezzanine Offshore Fund II, LP | CYM | 0% | Mgmt. by Maranon Mezzanine GP II, LP |
| Maranon Senior Credit Fund II-A, LP | DE | 0% | Mgmt. by Maranon Senior Credit GP II, L.P. |
| Maranon Senior Credit Fund II-B, LP | DE | 0% | Mgmt. by Maranon Senior Credit GP II, L.P. |
| Maranon Senior Credit Fund IX DB, L.P. | DE | 100% | by Maranon Capital Ultimate General Partner LLC |
| Maranon Senior Credit Fund IX GP, L.P. | DE | 100% | by Maranon Capital Ultimate General Partner LLC |
| Maranon Senior Credit Fund IX, LLC | DE | 0% | Mgmt. by Maranon Senior Credit Fund IX GP, L.P. |
| Maranon Senior Credit Fund IX, LLC | DE | 100% | by Maranon Senior Credit Fund IX DB, L.P. |
| Maranon Senior Credit Fund V-Onshore SPV LLC | DE | 100% | by Maranon Senior Credit Strategies Fund V-Levered, LP |
| Maranon Senior Credit GP II, L.P. | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Senior Credit IV, LLC | KS | 100% | by Security Benefit Corporation |
| Maranon Senior Credit Opportunities Fund SPV GP, LP | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Senior Credit Opportunities Fund SPV, LLC | DE | 100% | by Maranon Senior Credit Opportunities Fund SPV, LP |
| Maranon Senior Credit Opportunities Fund SPV, LP | DE | 0% | Mgmt. by Maranon Senior Credit Opportunities Fund SPV GP, LP |
| Maranon Senior Credit Strategies Fund V‑Levered, LP | DE | 0% | Mgmt. by Maranon Senior Credit Strategies GP V, LP |
| Maranon Senior Credit Strategies Fund V‑Unlevered, LP | DE | 0% | Mgmt. by Maranon Senior Credit Strategies GP V, LP |
| Maranon Senior Credit Strategies GP V, LP | DE | 0% | Mgmt. by Maranon Capital Ultimate General Partner LLC |
| Maranon Senior Rated Fund I LLC | DE | 0% | Mgmt. by Maranon Capital, L.P. |
| Maranon Services Corp. | DE | 100% | by Maranon Capital, L.P. |
| Maranon Services, LLC | DE | 99.9% | by Maranon Capital, L.P. |
| Maslow’s Group LLP | GBR | 0% | Board rights held by CH Capital A Holdings LLC |
| Maslow’s UK Services Ltd | GBR | 100% | by 37-41 Mortimer Street LLP |
| Mason Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
| Massive Noise Holdings, LLC | DE | 100% | by 13FEG Ops, LLC |
| Massive Noise LLC | CO | 100% | by Massive Noise Holdings, LLC |
| Mayfair Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
27
| Name | Jurisdiction | Percent of Voting Securities Owned |
| MB Group Holdings LLC | DE | 100% | by DS MB Holdings LLC |
| MB The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| McGlue LLC | DE | 100% | by A24 Films LLC |
| Media Capital Holdings, LLC | DE | 100% | by Valence Media Group, LLC |
| Media Rights Capital II, LLC | DE | 100% | by Original Narrative Library, LLC |
| Mediabistro Holdings LLC | DE | 100% | by MB Group Holdings LLC |
| Mellotron, LLC | DE | 40% | by Carlostron, LLC |
| Melt Shop Enterprises International, LLC | NY | 100% | by Melt Shop, LLC |
| Melt Shop Enterprises, LLC | NY | 100% | by Melt Shop, LLC |
| Melt Shop, LLC | NY | 96.5% | by Aurify Brands Holdings, LLC |
| MF Master Seed Co., LLC | DE | 100% | by Wanamaker Portfolio Trust, LLC |
| MF Seed Co, LLC | DE | 100% | by MF Master Seed Co, LLC |
| MG Warwick Street HoldCo Limited | GBR | 100% | by Maslow’s Group LLP |
| MG Warwick Street OpCo Limited | GBR | 100% | by MG Warwick Street HoldCo Limited |
| MG Warwick Street PropCo Limited | GBR | 100% | by MG Warwick Street HoldCo Limited |
| Miami Waterfront Ventures Mezz, LLC | DE | 100% | by CHE South Brickell LLC |
| Miami Waterfront Ventures Parent, LLC | DE | 60% | by CHE South Brickell LLC |
| Miami Waterfront Ventures, LLC | DE | 100% | by CHE South Brickell LLC |
| Microphone Holdings, LLC | DE | 80% | by Putnam Asset Holdings, LLC |
| Microphone Services Holdings, LLC | DE | 100% | by Microphone Holdings, LLC |
| Microphone Services, LLC | DE | 1% | by Microphone Services Holdings, LLC |
| Microphone Services, LLC | DE | 99% | by Microphone Holdings, LLC |
| Microphone, LLC | DE | 100% | by Microphone Holdings, LLC |
| Mill Link Developments Limited | GBR | 100% | by Galliard Developments Ltd |
| Minari LLC | DE | 100% | by A24 Films LLC |
| Minari Rights LLC | DE | 100% | by A24 Films LLC |
| Ministry of Arts and Interrogation LLC | DE | 100% | by A24 Films LLC |
| Ministry of Creative Reasoning LLC | DE | 100% | by After The Fact LLC |
| Mirror Media IP Holdings, LLC | DE | 100% | by Valence Media, LLC |
| Mirrors and Windows Films Inc. | CAN | 100% | by A24 Films LLC |
| MK Debt, LLC | DE | 100% | by LPQ USA, LLC |
| MK USA, LLC | DE | 100% | by LPQ USA, LLC |
| Monterra Asset Holdings, LLC | DE | 100% | by Monterra Trust |
| Monterra FA Holdings, LLC | NJ | 100% | by Monterra Trust |
| Monterra Trust | DE | 100% | by EPH Holdings, LLC |
| Moon Base LLC | DE | 100% | by A24 Films LLC |
| Morse Code UK Films Limited | UK | 100% | by MRC II Holdings, LP |
| Morse Code, LLC | CA | 100% | by MRC II Holdings, LP |
| Mosaic Media Investment Partners, LLC | DE | 100% | by dcp LLC |
| Motown The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| MPQ 1377 Sixth Avenue, LLC | NY | 100% | by MK USA, LLC |
| MPQ 1400 Broadway, LLC | NY | 100% | by MK USA, LLC |
| MPQ 1535 Third Avenue LLC | NY | 100% | by MK USA, LLC |
| MPQ 1800 Broadway, LLC | NY | 100% | by MK USA, LLC |
| MPQ 210 Joralemon, LLC | NY | 100% | by MK USA, LLC |
28
| Name | Jurisdiction | Percent of Voting Securities Owned |
| MPQ 2161 Broadway, LLC | NY | 100% | by MK USA, LLC |
| MPQ 339 Seventh Avenue, LLC | NY | 100% | by MK USA, LLC |
| MPQ 370 Lexington, LLC | NY | 100% | by MK USA, LLC |
| MPQ 400 Fifth Avenue, LLC | NY | 100% | by MK USA, LLC |
| MPQ 685 Third Avenue, LLC | NY | 100% | by MK USA, LLC |
| MPQ 688 Bronx HoldCo, LLC | DE | 100% | by MK USA, LLC |
| MPQ 787 Seventh Avenue LLC | NY | 100% | by MK USA, LLC |
| MPQ 921 Broadway, LLC | NY | 100% | by MK USA, LLC |
| MPQ Bronx Commissary, LLC | NY | 100% | by MK USA, LLC |
| MRC Data Canada, ULC | CAN | 100% | by MRC Data, LLC |
| MRC Data Holdings, LLC | DE | 100% | by Mirror Media IP Holdings, LLC |
| MRC Data UK Limited | UK | 100% | by MRC Data, LLC |
| MRC Data, LLC | DE | 100% | by P-MRC Data, LLC |
| MRC Documentary, L.P. | DE | 99.9% | by Media Rights Capital II, LLC |
| MRC Horizon II, LLC | DE | 100% | by Media Capital Holdings, LLC |
| MRC I Hedge Co, LLC | DE | 100% | by MRC II Holdings, LP |
| MRC I Project Co, LLC | DE | 100% | by MRC II Holdings, LP |
| MRC II Distribution Company, L.P. | DE | 99.9% | by Media Rights Capital II, LLC |
| MRC II Holdings, LP | DE | 99.9% | by MRC II Distribution Company, L.P. |
| MRC II Sub GP, LLC | DE | 100% | by Media Rights Capital II, LLC |
| MRC International Distribution Company, Inc. | DE | 100% | by MRC II Distribution Company, L.P. |
| MRC Investments, LLC | DE | 100% | by Media Rights Capital II, LLC |
| MRC Media Holdings LLC | DE | 100% | by Mirror Media IP Holdings, LLC |
| MRC360, LLC | CA | 100% | by MRC II Holdings, LP |
| MS 111 Fulton, LLC | NY | 100% | by Melt Shop, LLC |
| MS 135 Fourth Avenue, LLC | NY | 100% | by Melt Shop, LLC |
| MS Marketing Fund, LLC | NY | 100% | by Melt Shop, LLC |
| MS Menlo Park, LLC | NY | 100% | by Melt Shop, LLC |
| MS MOA, LLC | NY | 100% | by Melt Shop, LLC |
| MS Newport Center, LLC | NY | 100% | by Melt Shop, LLC |
| MS Rockaway, LLC | NY | 100% | by Melt Shop, LLC |
| MS Roosevelt Field, LLC | NY | 100% | by Melt Shop, LLC |
| MS Sawgrass I, LLC | NY | 100% | by Melt Shop, LLC |
| MS Smith Haven, LLC | NY | 100% | by Melt Shop, LLC |
| MS Special Events, LLC | NY | 100% | by Melt Shop, LLC |
| MS Staten Island, LLC | NY | 100% | by Melt Shop, LLC |
| MS Sub W50, LLC | NY | 100% | by MS W50, LLC |
| MS W26, LLC | NY | 100% | by Melt Shop, LLC |
| MS W50, LLC | NY | 100% | by Melt Shop, LLC |
| MS W52, LLC | NY | 100% | by Melt Shop, LLC |
| MS Westchester, LLC | NY | 100% | by Melt Shop, LLC |
| Music Business Worldwide Limited (UK) | UK | 50% | by MRC Media Holdings LLC |
| N318MM, LLC | KS | 50% | by Security Benefit Corporation |
| Nashville Nightmare, LLC | TN | 100% | by Nightmare Holdings, LLC |
| Nashville The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
29
| Name | Jurisdiction | Percent of Voting Securities Owned |
| NBT Holdings, LLC | DE | 97% | by Venture Brand Management LLC |
| Net-Net Worldwide LLC | DE | 100% | by A24 Films LLC |
| Nightmare Holdings, LLC | DE | 100% | by 13 FEG Haunted Holdings, LLC |
| No Commas LLC | DE | 100% | by A24 Films LLC |
| Nolensville Invest S.L. | Spain | 100% | by Pleasant Invest S.L. |
| North City Screams LLC | IL | 100% | by 13 FEG Haunted Holdings, LLC |
| North Woolwich Road Developments Limited | GBR | 30% | by Galliard Developments Ltd |
| Note Funding 1892-2, LLC | KS | 100% | by EPH, LLC |
| NPC Holdings, Inc. | DE | 99.44% | by NPC Restaurant Holdings II LLC |
| NPC International Holdings, LLC | DE | 100% | by NPC Holdings, Inc. |
| NPC International, Inc. | DE | 100% | by NPC Restaurant Holdings, LLC |
| NPC Operating Company B, Inc. | KS | 100% | by NPC International, Inc. |
| NPC QB LLC | DE | 100% | by NPC International, Inc. |
| NPC Quality Burgers, Inc. | KS | 100% | by NPC International, Inc. |
| NPC RE Holdings LLC | DE | 100% | by NPC Restaurant Holdings I LLC |
| NPC Restaurant Holdings I LLC | DE | 49.99% | by Eldridge NPC Holdings LLC |
| NPC Restaurant Holdings II LLC | DE | 100% | by NPC Restaurant Holdings I LLC |
| NPC Restaurant Holdings, LLC | DE | 100% | by NPC International Holdings, LLC |
| NZC Capital LLC | DE | 80.5% | by Todd L. Boehly, Individual |
| Oaktree Entertainment, LLC | DE | 100% | by MRC II Holdings, LP |
| On The Rocks LLC | DE | 100% | by After The Fact LLC |
| One Sky Flight Holdings, LLC | DE | 100% | by Epic Aero, Inc. |
| One Sky Flight, LLC | DE | 100% | by One Sky Flight Holdings, LLC |
| Oneida Portfolio Trust, LLC | DE | 100% | by Steamboat Portfolio Trust, LLC |
| Operation Mongoose LLC | DE | 50% | by A24 Films LLC |
| Orchard Wharf Developments Ltd | GBR | 50% | by Galliard Developments Ltd |
| Original Narrative Library, LLC | DE | 100% | by Valence Media, LLC |
| Over The Hill Pictures LLC | DE | 100% | by A24 Films LLC |
| Ozawkie LLC | KS | 100% | by Dayton Funding, LLC |
| Paderna sp.zo.o | Poland | 100% | by PZO JV B.V. |
| Palio Funding 2, Ltd. | CYM | 0% | Mgmt. by CBAM CLO Management LLC |
| Pallazzo Funding LLC | DE | 97.5% | by SCF Aviation Capital LLC |
| Palmer Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
| Palouse Productions Limited | DE | 100% | by A24 Films LLC |
| Panagram Holdings, LLC | DE | 100% | by Eldridge AM Holdings, LLC |
| Panagram Senior Loan Fund I GP, LLC | DE | 100% | by Panagram Holdings, LLC |
| Panagram Senior Loan Fund I, LP | DE | 0% | Mgmt. by Panagram Senior Loan Fund I GP, LLC |
| Panagram Services Holdings, LLC | DE | 100% | by Panagram Holdings, LLC |
| Panagram Services, LLC | DE | 1% | by Panagram Services Holdings, LLC |
| Panagram Services, LLC | DE | 99% | by Panagram Holdings, LLC |
| Panagram Structured Asset Management, LLC | DE | 100% | by Panagram Holdings, LLC |
| PayActiv, Inc. | DE | 13.12% | by Eldridge PayActiv Holdings LLC |
| PD Holdings LLC | DE | 100% | by Dayton Funding, LLC |
| PGM-MB Holdings LLC | DE | 100% | by Mediabistro Holdings LLC |
| Pickleback NOLA, LLC | LA | 100% | by MRC II Holdings, LP |
30
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Pickleback, LLC | CA | 100% | by MRC II Holdings, LP |
| Pink Freud LLC | DE | 100% | by A24 Films LLC |
| Pixion Games Limited | UK | 11.62% | by Eldridge Pixion Funding LLC |
| Pleasant Invest S.L. | Spain | 100% | by Davisville Holdings S.a r.l |
| P-MRC Data, LLC | DE | 50% | by MRC Data Holdings, LLC |
| P-MRC Holdings, LLC | DE | 30% | by MRC Media Holdings LLC |
| P-MRC Music, LLC | DE | 100% | by MRC Media Holdings LLC |
| Post Portfolio Trust, LLC | DE | 100% | by Dayton Funding, LLC |
| Potwin Place, LLC | KS | 100% | by Dayton Funding, LLC |
| Powder Keg Farms Limited | New Zealand | 100% | by Over The Hill Pictures LLC |
| Priest Lake Haunted Woods, LLC | TN | 100% | by Nightmare Holdings, LLC |
| Primary Issue Anchor Separate Account LLC | DE | 100% | by Security Benefit Corporation |
| PrivateFly Limited | GBR | 100% | by Skyjet Europe Limited |
| PrivateFly, LLC | DE | 100% | by PrivateFly Limited |
| Pryor Chemical Company | OK | 100% | by LSB Chemical L.L.C. |
| Public House Productions LLC | DE | 100% | by A24 Films LLC |
| Pumpkin Fest Holdings, LLC | DE | 100% | by 13FEG Ops, LLC |
| Putnam Asset Holdings, LLC | DE | 100% | by EPH, LLC |
| PZO JV B.V. | Netherlands | 90% | by CIEF1 UK Holdings Limited |
| Queens LLC | DE | 100% | by After The Fact LLC |
| Quick As A Wink Limited | New Zealand | 100% | by Reserving Rights LLC |
| Quinton Heights, LLC | KS | 100% | by Dayton Funding, LLC |
| Raging Bear, LLC | DE | 100% | by MRC II Holdings, LP |
| Ramy Rights LLC | DE | 100% | by A24 Films LLC |
| Ravenwood Portfolio Trust, LLC | DE | 100% | by Dayton Funding, LLC |
| Renegade Brands USA, INC. | DE | 20% | by Canon Portfolio Trust, LLC |
| Reserving Rights LLC | DE | 100% | by A24 Films LLC |
| Rhapsody Acquisition Corporation | CYM | 100% | by CI Sponsor LLC |
| Ride or Die Productions, LLC | CA | 100% | by MRC II Holdings, LP |
| Ridge Media Holdings, LLC | DE | 78.52% | by Eldridge Industries, LLC |
| Ridge Media Holdings, LLC | DE | 21.48% | by Arch Portfolio Trust, LLC |
| Ripple Effects Productions, LLC | CA | 100% | by MRC II Holdings, LP |
| Rivabella sp.zo.o | Poland | 100% | by Krakow Office Park B.V. |
| Rock and Romance Cruise 18 LLC | DE | 100% | by StarVista Live LLC |
| Rock and Romance Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Rock and Romance Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Rock and Romance Cruise 22 LLC | DE | 100% | by StarVista Live LLC |
| Rolling Stone Licensing, LLC | DE | 100% | by Rolling Stone Media, LLC |
| Rolling Stone Media, LLC | DE | 100% | by P-MRC Music, LLC |
| Rolling Stone, LLC | DE | 100% | by Rolling Stone Media, LLC |
| Roman 1 Sarl | LUX | 100% | by Roman JV Sarl |
| Roman 2 Sarl | LUX | 100% | by Roman JV Sarl |
| Roman JV Sarl | LUX | 100% | by CI Roman Holdings Sarl |
31
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Roman SNC | France | 50% | by Roman 1 Sarl |
| Roman SNC | France | 50% | by Roman 2 Sarl |
| RR The Film Limited | GBR | 100% | by Fulwell 73 UK Limited |
| Ruby Entertainment Inc. | DE | 100% | by Fulwell 73 Productions US, Inc. |
| Ruby Productions LLC | CA | 100% | by Ruby Entertainment Inc. |
| Rules Beauty LLC | DE | 100% | by A24 Ventures LLC |
| S(LSV) LLC | NV | 100% | by Competitive Socializing U.S., Inc. |
| S(WDC) LLC | DC | 100% | by Competitive Socializing U.S., Inc. |
| S(WMB) LLC | NY | 100% | by Competitive Socializing U.S., Inc. |
| Sager House (Almedia) Limited | GBR | 92.5% | by CH Capital A Holdings LLC |
| Saguaro Road Records Inc. | DE | 100% | by Direct Holdings U.S. LLC |
| SAILES 2, LLC | DE | 100% | by Security Benefit Life Insurance Company |
| Sandy Beaches Cruise 21 LLC | DE | 100% | by StarVista Live LLC |
| Sarena Holdings Ltd | GBR | 100% | by Galliard Developments Ltd |
| Sarena House LLP | GBR | 50% | by Sarena Holdings Ltd |
| Saving The World LLC | DE | 100% | by A24 Films LLC |
| Saving The World Rights LLC | DE | 100% | by A24 Films LLC |
| SB Corporate Funding LLC | DE | 100% | by Security Benefit Corporation |
| SB ISH LLC | DE | 100% | by Security Benefit Life Insurance Company |
| SBC Civic Center LLC | DE | 100% | by Mason Portfolio Trust, LLC |
| SBL Holdings, Inc. | KS | 100% | by Security Benefit Corporation |
| SBT Investors, LLC | DE | 100% | by NZC Capital LLC |
| SBT Media Holdings, LLC | DE | 100% | by SBT Investors, LLC |
| SCF Aviation Capital LLC | DE | 100% | by SCF Funding LLC |
| SCF Canada 2018 GP Ltd. | CAN | 100% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Canada 2019 GP Ltd. | CAN | 100% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Canada 2019-2 GP Ltd. | CAN | 100% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Canada 2020 GP Ltd. | CAN | 100% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Canada Revolver GP Ltd. | CAN | 100% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Equipment Leasing 2017-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing 2017-2 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing 2018-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing 2019-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing 2019-2 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing 2020-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Equipment Leasing Canada 2018 Limited Partnership | CAN | 99.9% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Equipment Leasing Canada 2019 Limited Partnership | CAN | 99.9% | by Stonebriar Commercial Finance Canada Inc. |
| SCF Equipment Leasing Canada 2019-2 Limited Partnership | CAN | 99.9% | by SCF Canada 2019-2 GP Ltd. |
| SCF Equipment Leasing Canada 2020-1 Limited Partnership | CAN | 99.9% | by SCF Canada 2020 GP Ltd. |
| SCF Equipment Trust 2016-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Funding LLC | DE | 100% | by Stonebriar Finance Holdings LLC |
| SCF Goose LLC | DE | 100% | by SCF Aviation Capital LLC |
32
| Name | Jurisdiction | Percent of Voting Securities Owned |
| SCF Maverick LLC | DE | 100% | by SCF Aviation Capital LLC |
| SCF Merlin LLC | DE | 100% | by SCF Aviation Capital LLC |
| SCF NBL LLC | DE | 100% | by SCF Funding LLC |
| SCF Rail Leasing LLC | DE | 100% | by SCF Funding LLC |
| SCF Revolver 2018-1 LLC | DE | 100% | by Stonebriar Commercial Finance LLC |
| SCF Revolver Canada Limited Partnership | CAN | 99.9% | by SCF Canada Revolver GP Ltd. |
| SCF Servicing Company LLC | DE | 99% | by SCF Funding LLC |
| SE2 Digital Service LLP | India | 99.9999% | by SE2 Holdings, LLC |
| SE2 Digital Service LLP | India | 0.0001% | by se2, LLC |
| se2 Holdco, LLC | KS | 100% | by Security Benefit Corporation |
| SE2 Holdings, LLC | KS | 93.2% | by se2 Holdco, LLC |
| SE2 Information Services Ireland Limited | Ireland | 100% | by SE2 Holdings, LLC |
| SE2 Technologies LLC | DE | 100% | by SE2 Holdings, LLC |
| se2, LLC | KS | 100% | by SE2 Holdings, LLC |
| SecBen GBM Investco, LLC | DE | 100% | by Security Benefit Life Insurance Company |
| Security Benefit Academy, Inc. | KS | 100% | by Security Benefit Corporation |
| Security Benefit Business Services, LLC | KS | 100% | by Security Benefit Corporation |
| Security Benefit Corporation | KS | 99.841% | by Eldridge SBC Holdings LLC |
| Security Benefit Life Insurance Company | KS | 100% | by SBL Holdings, Inc. |
| Security Distributors, LLC | KS | 100% | by Security Benefit Life Insurance Company |
| Security Financial Resources, Inc. | KS | 100% | by SBL Holdings, Inc. |
| Sensory Impact Group, LLC | DE | 73% | by Arch Portfolio Trust, LLC |
| Sentient Holdings, LLC | DE | 100% | by One Sky Flight, LLC |
| Sentient Jet Charter, LLC | DE | 100% | by Sentient Jet, LLC |
| Sentient Jet, LLC | DE | 100% | by Sentient Holdings, LLC |
| Sesame Marketplace, LLC | DE | 100% | by Aurify Brands, LLC |
| SGT VF GP, LLC | DE | 100% | by EPH Holdings, LLC |
| SGTV Fund, LP | DE | 0% | Mgmt. by SGT VF GP, LLC |
| Shamrock Valley, LLC | KS | 100% | by Security Benefit Corporation |
| Shelter At Home LLC | DE | 100% | by A24 Films LLC |
| Short of the Week, LLC | DE | 10.3% | by Sugar23, Inc. |
| SIMCOM Holdings, Inc. | DE | 50% | by Volo Sicuro, LLC |
| SIMCOM International, Inc. | FL | 100% | by SIMCOM, Inc. |
| SIMCOM, Inc. | DE | 100% | by SIMCOM Holdings, Inc. |
| Sirio Acquisition S.r.l. | Italy | 100% | by Volare Acquisitions, Limited |
| Sirio S.p.A. | Italy | 80% | by Sirio Acquisition S.r.l. |
| Sixth Avenue Reinsurance Company | VT | 100% | by Security Benefit Life Insurance Company |
| SJS&W Washington Property LLC | DE | 100% | by St. James Sports and Wellness Washington LLC |
| Skyjet Europe Limited | GBR | 100% | by One Sky Flight, LLC |
| Slushie LLC | DE | 100% | by After The Fact LLC |
| Soft Money LLC | DE | 100% | by A24 Films LLC |
| Soggy Jam UK Limited | UK | 100% | by MRC II Holdings, LP |
| Soggy Jam, LLC | CA | 100% | by MRC II Holdings, LP |
| Sojourn Aviation Company, LLC | DE | 100% | by Epic Aero, Inc. |
33
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Somebody Told Me, LLC | DE | 100% | by Eldridge IP Holdings LLC |
| Soul Train Cruise 18 LLC | DE | 100% | by StarVista Live LLC |
| Soul Train Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Soul Train Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Soul Train Cruise 22 LLC | DE | 100% | by StarVista Live LLC |
| South Audley Street LLP | GBR | 0% | Board rights held by CH Capital A Holdings LLC |
| Southern Rock Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Southern Rock Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Spinmedia LLC | DE | 100% | by MRC Media Holdings LLC |
| Spoon River Investments, LLC | DE | 100% | by SBT Investors, LLC |
| Sports Media Technology Corporation | DE | 14.1% | by Steamboat Portfolio Trust, LLC |
| St. James Sports and Wellness Washington LLC | DE | 100% | by The St. James Sports and Wellness Complex LLC |
| Starbones Ltd | GBR | 80% | by GDL (Chiswick) LLP |
| StarVista Entertainment LLC | DE | 100% | by Direct Holdings Global LLC |
| StarVista Live LLC | DE | 100% | by StarVista Entertainment LLC |
| StarVista Management LLC | DE | 100% | by StarVista Entertainment LLC |
| Steamboat Portfolio Trust, LLC | DE | 100% | by EPH, LLC |
| Stereogum Media LLC | DE | 20% | by Media Capital Holdings, LLC |
| Stewart Street Productions, LLC | DE | 100% | by dcp LLC |
| Stonebriar Commercial Finance Canada Inc. | CAN | 100% | by SCF Funding LLC |
| Stonebriar Commercial Finance LLC | DE | 100% | by SCF Funding LLC |
| Stonebriar Finance Holdings LLC | DE | 80.7% | by Three L Finance Holdings, LLC |
| Stonebriar Holdings LLC | DE | 100% | by Three L Finance Holdings, LLC |
| Stonebriar IFH LLC | DE | 100% | by SCF Funding LLC |
| Strivers LLC | DE | 100% | by The St. James Sports and Wellness Complex LLC |
| Studio Momo LLC | DE | 100% | by A24 Films LLC |
| Sugar 23 Technology Holdings LLC | DE | 100% | by Sugar23, Inc. |
| Sugar23 Podcast Group LLC | DE | 100% | by Sugar23, Inc. |
| Sugar23, Inc. | DE | 20.05% | by Valence Circle Up, LLC |
| Sunday Best, LLC | CA | 100% | by MRC Documentary, L.P. |
| Sunset Screams LLC | TX | 100% | by 13 FEG Haunted Holdings, LLC |
| Super, Awesome & Amazing LLC | DE | 100% | by The St. James Sports and Wellness Complex LLC |
| Sweepstakes Hero, LLC | CA | 100% | by MRC Documentary, L.P. |
| Swingers 1 Limited | GBR | 100% | by Competitive Socialising Limited |
| Swingers 2 Limited | GBR | 100% | by Competitive Socialising Limited |
| Swingers NY LLC | NY | 100% | by Competitive Socializing U.S., Inc. |
| Synergy Sports Technology, LLC | AZ | 100% | by Atrium Sports, Inc. |
| Synergy Sports, SRL | Belgium | 100% | by Keemotion Group, Inc. |
| Talk Later LLC | DE | 100% | by A24 Films LLC |
| Terror on the Fox Holdings, LLC | CO | 100% | by 13 FEG Haunted Holdings, LLC |
| TG Acquisitions Limited | GBR | 100% | by South Audley Street LLP |
| The Allbright Group LA, LLC | CA | 100% | by The Allbright Group US, LLC |
| The Allbright Group Limited | GBR | 0% | Board rights held by CH Capital A Holdings LLC |
34
| Name | Jurisdiction | Percent of Voting Securities Owned |
| The Allbright Group US, LLC | DE | 100% | by The Allbright Group Limited |
| The Hollywood Reporter, LLC | DE | 100% | by MRC Media Holdings LLC |
| The Humans Rights LLC | DE | 100% | by A24 Films LLC |
| The Most Down to Earth, LLC | CA | 100% | by MRC Documentary, L.P. |
| The St. James FCVA LLC | VA | 100% | by SJS&W Washington Property LLC |
| The St. James Lacrosse LLC | VA | 100% | by SJS&W Washington Property LLC |
| The St. James Sports & Wellness Lincolnshire LLC | DE | 100% | by Cain International LP |
| The St. James Sports and Wellness Complex LLC | DE | 0% | Board rights held by CHE SJG LLC |
| The Stage Shoreditch (Commercial Tower) GP Ltd | GBR | 100% | by The Stage Shoreditch (Commercial Tower) Unit Trust |
| The Stage Shoreditch (Commercial Tower) LP | GBR | 99.9% | by The Stage Shoreditch (Commercial Tower) Unit Trust |
| The Stage Shoreditch (Commercial Tower) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Commercial Tower) GP Ltd |
| The Stage Shoreditch (Commercial Tower) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch (Containers) GP Ltd | GBR | 100% | by The Stage Shoreditch (Containers) Unit Trust |
| The Stage Shoreditch (Containers) LP | GBR | 99.9% | by The Stage Shoreditch (Containers) Unit Trust |
| The Stage Shoreditch (Containers) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Containers) GP Ltd |
| The Stage Shoreditch (Containers) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch (Curtain Theatre) GP Ltd | GBR | 100% | by The Stage Shoreditch (Curtain Theatre) Unit Trust |
| The Stage Shoreditch (Curtain Theatre) LP | GBR | 64.9% | by The Stage Shoreditch (Curtain Theatre) Unit Trust |
| The Stage Shoreditch (Curtain Theatre) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Curtain Theatre) GP Ltd |
| The Stage Shoreditch (Curtain Theatre) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch (Master) Unit Trust | JEY | 99% | by The Stage Shoreditch LLP |
| The Stage Shoreditch (Office North) GP Ltd | GBR | 100% | by The Stage Shoreditch (Office North) Unit Trust |
| The Stage Shoreditch (Office North) LP | GBR | 99.9% | by The Stage Shoreditch (Office North) Unit Trust |
| The Stage Shoreditch (Office North) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Office North) GP Ltd |
| The Stage Shoreditch (Office North) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch (Office South) GP Ltd | GBR | 100% | by The Stage Shoreditch (Office South) Unit Trust |
| The Stage Shoreditch (Office South) LP | GBR | 99.9% | by The Stage Shoreditch (Office South) Unit Trust |
| The Stage Shoreditch (Office South) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Office South) GP Ltd |
| The Stage Shoreditch (Office South) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch (Pavilion) GP Ltd | GBR | 65% | by The Stage Shoreditch (Pavilion) Unit Trust |
| The Stage Shoreditch (Pavilion) LP | GBR | 99.9% | by The Stage Shoreditch (Pavilion) Unit Trust |
| The Stage Shoreditch (Pavilion) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (Pavilion) GP Ltd |
| The Stage Shoreditch (Pavilion) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
35
| Name | Jurisdiction | Percent of Voting Securities Owned |
| The Stage Shoreditch (The Tower) GP Ltd | GBR | 100% | by The Stage Shoreditch (The Tower) Unit Trust |
| The Stage Shoreditch (The Tower) LP | GBR | 99.9% | by The Stage Shoreditch (The Tower) Unit Trust |
| The Stage Shoreditch (The Tower) Nominee Ltd | GBR | 100% | by The Stage Shoreditch (The Tower) GP Ltd |
| The Stage Shoreditch (The Tower) Unit Trust | JEY | 99.2% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch Deveopment LLP | GBR | 100% | by The Stage Shoreditch LLP |
| The Stage Shoreditch LLP | GBR | 0% | Board rights held by CH McCourt (The Stage) LLC |
| The Stage Shoreditch Management Ltd | GBR | 100% | by The Stage Shoreditch (Master) Unit Trust |
| The Stage Shoreditch Residential Ltd | GBR | 100% | by The Stage Shoreditch (Master) Unit Trust |
| Thirteenth Floor Entertainment Group, LLC | DE | 50% | by Sensory Impact Group, LLC |
| Three L Finance Holdings, LLC | DE | 100% | by Eldridge Equipment Finance LLC |
| TLB-GBM, LLC | DE | 100% | by Todd L. Boehly, Individual |
| Toil and Trouble Productions LLC | DE | 100% | by A24 Films LLC |
| Toil and Trouble Rights LLC | DE | 100% | by A24 Films LLC |
| Topeka Grand Hotels, LLC | DE | 37% | by Security Benefit Life Insurance Company |
| Trigger Investco, LLC | DE | 100% | by Putnam Asset Holdings, LLC |
| Trigger Media Group, LLC | DE | 100% | by Trigger Investco, LLC |
| Trinity Stuart Development LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| Trinity Stuart Holding, LLC | DE | 85% | by CI Boston Holdings LLC |
| Triple8, LLC | KS | 100% | by Security Benefit Corporation |
| Trison Construction, Inc. | OK | 100% | by LSB Chemical L.L.C. |
| Truebill, Inc. | DE | 18.22% | by Eldridge Truebill Funding, LLC |
| Truth Mobile LLC | DE | 100% | by A24 Films LLC |
| TS Hotel Holding, LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| TS Pied-a-Terre Holding, LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| TS Residences Holding, LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| TS Retail Holding, LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| TSJ Lincolnshire Property LLC | DE | 100% | by The St. James Sports and Wellness Complex LLC |
| TSJ Tysons Galleria Property LLC | VA | 0% | Mgmt. by The St. James Sports and Wellness Complex LLC |
| Tumbleweed Funding LLC | KS | 100% | by Dayton Funding, LLC |
| Tuvoli, LLC | DE | 100% | by Epic Aero, Inc. |
| Twenty Years LLC | DE | 100% | by A24 Films LLC |
| UB The Film Limited | GBR | 100% | by Fulwell 73 Limited |
| Ultimate Disco Cruise 19 LLC | DE | 100% | by StarVista Live LLC |
| Ultimate Disco Cruise 20 LLC | DE | 100% | by StarVista Live LLC |
| Ultimate Disco Cruise 22 LLC | DE | 100% | by StarVista Live LLC |
| University Club Holding, LLC | DE | 100% | by Trinity Stuart Holding, LLC |
| Upstate Riot, LLC | CA | 100% | by MRC Documentary, L.P. |
| Valence A24, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Valence APM, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Valence Circle Up, LLC | DE | 100% | by Valence Media Group, LLC |
| Valence FW73, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Valence Media Group, LLC | DE | 99% | by Valence Media Partners, LLC |
| Valence Media Holdings, LLC | DE | 100% | by Valence Media Group, LLC |
36
| Name | Jurisdiction | Percent of Voting Securities Owned |
| Valence Media Partners, LLC | DE | 38.31% | by Ridge Media Holdings, LLC |
| Valence Media Partners, LLC | DE | 4.64% | by Mason Portfolio Trust, LLC |
| Valence Media Partners, LLC | DE | 22.5% | by SBT Media Holdings, LLC |
| Valence Media, LLC | DE | 100% | by Valence Media Holdings, LLC |
| Valence Zig Holdings, LLC | DE | 100% | by Media Capital Holdings, LLC |
| Variety Business Intelligence, LLC | DE | 100% | by P-MRC Data, LLC |
| Variety Media, LLC | DE | 100% | by MRC Media Holdings LLC |
| Vectura Services LLC | DE | 100% | by Eldridge Business Services LLC |
| Venn Music Publishing, LLC | CA | 100% | by Gaming 247, Inc. |
| Venn Records LLC | CA | 100% | by Gaming 247, Inc. |
| Venn Studios LLC | CA | 100% | by Gaming 247, Inc. |
| Venture Brand Management LLC | DE | 100% | by Sugar23, Inc. |
| Vibe Media Publishing, LLC | DE | 100% | by P-MRC Music, LLC |
| Vim & Victor LLC | DE | 100% | by The St. James Sports and Wellness Complex LLC |
| Volare Acquisitions, Limited | Ireland | 49% | by Flexjet Limited |
| Volo Sicuro, LLC | DE | 5.93% | by Epic Aero, Inc. |
| Volo Sicuro, LLC | DE | 19.77% | by Eldridge VS, LLC |
| Wanamaker Portfolio Trust, LLC | KS | 100% | by EPH, LLC |
| Watson Brickell Development Mezz, LLC | DE | 100% | by CHE 830 Brickell LLC |
| Watson Brickell Development Parent, LLC | DE | 50% | by CHE 830 Brickell LLC |
| Watson Brickell Development Pledgor, LLC | DE | 100% | by CHE 830 Brickell LLC |
| Watson Brickell Development, LLC | DE | 100% | by CHE 830 Brickell LLC |
| WBC, LLC | DE | 100% | by MRC II Holdings, LP |
| Western Remedy LLC | DE | 100% | by A24 Films LLC |
| Westgate House Developments Limited | GBR | 50% | by Galliard Developments Ltd |
| Windy Screams LLC | IL | 100% | by 13 FEG Haunted Holdings, LLC |
| Yang Rights LLC | DE | 100% | by A24 Films LLC |
| Yekaterina UK Limited | GBR | 100% | by MRC II Holdings, LP |
| Yekaterina, LLC | CA | 100% | by MRC II Holdings, LP |
| Young Brothers LLC | DE | 100% | by A24 Films LLC |
SBL is also the depositor of the following separate accounts: SBL Variable Annuity Accounts I, III, IV, SBL Variable Universal Life Insurance Account Varilife, Security Varilife Separate Account, Variable Annuity Account XI, Variflex Separate Account, SBL Variable Annuity Account VIII, SBL Variable Annuity Account XIV, SBL Variable Annuity Account XVII, T. Rowe Price Variable Annuity Account and Parkstone Variable Annuity Separate Account. As depositor of the separate accounts, SBL might be deemed to control them.
Item 30. Indemnification
The bylaws of Security Benefit Life Insurance Company provide that the Company shall, to the extent authorized by the laws of the State of Kansas, indemnify officers and directors for certain liabilities threatened or incurred in connection with such person’s capacity as director or officer.
The Articles of Incorporation include the following provision:
(a) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, provided that nothing contained in this Article shall eliminate or limit the liability of a director (a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under the provisions
37
of K.S.A. 17-6424 and amendments thereto, or (d) for any transaction from which the director derived an improper personal benefit. If the General Corporation Code of the State of Kansas is amended after the filing of these Articles of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Code of the State of Kansas, as so amended.
(b) Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
Insofar as indemnification for a liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person of the Depositor in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Securities being registered, the Depositor will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 31. Principal Underwriter
| (a)(1) | Security Distributors, LLC (“SDL”), a subsidiary of SBL, acts as principal underwriter for: |
SBL Variable Annuity Account I
SBL Variable Annuity Account III
SBL Variable Annuity Account IV
Security Varilife Separate Account (Security Elite Benefit)
Security Varilife Separate Account (Security Varilife)
SBL Variable Universal Life Insurance Account (Varilife)
Parkstone Advantage Variable Annuity
Variflex Separate Account (Variflex)
Variflex Separate Account (Variflex ES)
SBL Variable Annuity Account VIII (Variflex Extra Credit)
SBL Variable Annuity Account VIII (Variflex LS)
SBL Variable Annuity Account VIII (Variflex Signature)
Variable Annuity Account XI (Scarborough Advantage Variable Annuity)
SBL Variable Annuity Account XIV (AdvisorDesigns Variable Annuity)
SBL Variable Annuity Account XIV (AEA Variable Annuity)
SBL Variable Annuity Account XIV (AdvanceDesigns Variable Annuity)
SBL Variable Annuity Account XIV (EliteDesigns Variable Annuity)
SBL Variable Annuity Account XIV (EliteDesigns II Variable Annuity)
SBL Variable Annuity Account XIV (NEA Valuebuilder)
SBL Variable Annuity Account XIV (NEA Valuebuilder Retirement Income Director Variable Annuity)
SBL Variable Annuity Account XIV (SecureDesigns Variable Annuity)
SBL Variable Annuity Account XIV (Security Benefit Advisor Variable Annuity)
SBL Variable Annuity Account XVII (ClassicStrategies Variable Annuity)
SBL Variable Annuity Account XVII (ThirdFed Variable Annuity)
T. Rowe Price Variable Annuity Account
| (a)(2) | SDL acts as principal underwriter for the following variable annuity contracts issued by First Security Benefit Life Insurance and Annuity Company of New York (“FSBL”): |
Variable Annuity Account A (AdvisorDesigns Variable Annuity)
Variable Annuity Account A (EliteDesigns Variable Annuity)
Variable Annuity Account A (EliteDesigns II Variable Annuity)
Variable Annuity Account B (SecureDesigns Variable Annuity)
Variable Annuity Account B (AdvanceDesigns Variable Annuity)
T. Rowe Price Variable Annuity Account of First Security Benefit Life Insurance and Annuity Company of New York
| (a)(3) | SDL acts as principal underwriter for the following Nationwide Life Insurance Company Separate Accounts: |
38
Nationwide Multi-Flex Variable Account
Nationwide Variable Account 9
(b) | Name and Principal Business Address* | Position and Offices with Underwriter |
David G. Byrnes | President and Head of Distribution | |
Timothy P. Gillen | Chief Financial Officer, Treasurer and Finance and Operations Principal | |
Justin A. Jacquinot | Senior Vice President, Direct Relationships | |
Kevin M Watt | Senior Vice President | |
Michael K Reidy | Senior Vice President | |
James J. Kiley | Senior Vice President, Education Markets | |
Mark W. Turner | Senior Vice President, Education Markets | |
Michael T Maghini | Senior Vice President | |
Kurt E. Auleta | Senior Vice President, Sales Operations | |
Christopher D. Swickard | Vice President, and Secretary | |
Donald A. Wiley | Vice President | |
Carmen R. Hill | Vice President and Assistant Secretary | |
Yolande C Nichols | Chief Compliance Officer | |
*For all persons listed, the principal business address is One Security Benefit Place, Topeka, Kansas 66636-0001. | ||
(c) | (1) | (2) | (3) | (4) | (5) |
| Name of Principal Underwriter | Net Underwriting Discounts and Commissions | Compensation on Redemption | Brokerage Commissions | Other Compensation | |
| Security Distributors, LLC | $3,235,5701 | $72,2942 | $0 | N/A | |
1 SBL pays commissions to selling broker-dealers through SDL. This is the amount paid to SDL in connection with all contracts sold through the separate account. SDL passes through to selling broker-dealers all such amounts. 2 A contingent deferred sales charge may be assessed on full or partial withdrawals from the contract. This is the amount of contingent deferred sales charge assessed in connection with all withdrawals from all contracts in the separate account, all of which is retained by SBL. | |||||
Item 32. Location of Accounts and Records
Omitted
Item 33. Management Services
All management contracts are discussed in Part A or Part B.
Item 34. Fee Representation and Other Representations
Fee Representation
Security Benefit Life Insurance Company represents that the fees and charges deducted under the Contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Depositor.
Other Representations
| (a) | SBL, sponsor of the unit investment trust, SBL Variable Annuity Account XIV, hereby represents that it is relying upon American Council of Life Insurance, SEC No-Action Letter, [1988-1989 Transfer Binder] Fed. Sec. L. Rep. (CCH) paragraph 78,904 (Nov. 28, 1988), and that it has complied with the provisions of paragraphs (1)-(4) of such no-action letter which are incorporated herein by reference. |
| (b) | Security Benefit Life Insurance Company represents that it is relying upon Rule 6c‑7 under the Investment Company Act of 1940 with respect to Contracts issued to participants under the Texas Optional Retirement Program and that it has complied with the provisions of paragraphs (a) – (d) of that Rule. |
39
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf, in the City of Topeka, and State of Kansas on this [ ]th day of April, 2021.
Security Benefit Life Insurance Company (the Depositor) | |
By: | * |
Michael P. Kiley, Chief Executive Officer and Director |
SBL Variable Annuity Account XIV (The Registrant) | |
By: | * |
Michael P. Kiley, Chief Executive Officer and Director |
As required by the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed by the following persons in the capacities indicated on April [ ], 2021.
SIGNATURES AND TITLES
By: | * |
Michael P. Kiley, Chief Executive Officer and Director | |
By: | * |
John P. Wohletz, Vice President and Chief Accounting Officer | |
By: | * |
Barry G. Ward, Senior Vice President, Chief Financial Officer Chief Risk Officer, Treasurer, and Director | |
By: | * |
John F. Guyot, Senior Vice President, General Counsel, Secretary and Director | |
By: | * |
Roger S. Offermann, Senior Vice President, Chief Actuary and Director | |
By: | * |
Joseph Wittrock, Senior Vice President, Chief Investment Officer and Director | |
By: | * |
Douglas G. Wolff, President and Director | |
*By: | CHRIS SWICKARD |
Chris Swickard, as Attorney-in-Fact |
40
EXHIBIT INDEX
41