Country Investors Variable Annuity Account
Filed: 25 Sep 08, 12:00am
| · | On the Contract Date, the Income Base is equal to the initial premium payment. |
| · | Each Contract Year, the Income Base is increased by 3%. |
| · | At the end of the tenth Contract Year, the GMIB Option can be exercised and minimum fixed monthly payments may begin. In the Monthly Income Benefit column we show that $896 is the monthly payment that would be received assuming a male age 70 applied the Income Base of $134,392 to a lifetime option with fixed payments. |
Example 3: Impact of a Partial Withdrawal
The values shown are based on the following assumptions:
Owner age at issue = 60
Annuitant = Same as Owner
Initial premium payment = $100,000
No additional premium payments are made
Fixed Annuity Settlement Option 3 (Lifetime Payment Option) chosen
Each Contract Year, Accumulated Value is increased by 3.5%, except Contract Year 8 where Accumulated Value is decreased by 30%.
Contract Year (end of year) | Age | Premium Payment | Withdrawal | Accumulated Value | Income Base | Monthly Income Benefit Based on Accumulated Value | Monthly Income Benefit Based on Income Base | |||||||||||||
| 1 | 61 | $ | 100,000 | $ | 0 | $ | 103,500 | $ | 103,000 | $ | 0 | $ | 0 | |||||||
| 2 | 62 | $ | 0 | $ | 107,123 | $ | 106,090 | $ | 0 | $ | 0 | |||||||||
| 3 | 63 | $ | 0 | $ | 110,872 | $ | 109,273 | $ | 0 | $ | 0 | |||||||||
| 4 | 64 | $ | 0 | $ | 114,752 | $ | 112,551 | $ | 0 | $ | 0 | |||||||||
| 5 | 65 | $ | 10,000 | $ | 108,769 | $ | 106,167 | $ | 0 | $ | 0 | |||||||||
| 6 | 66 | $ | 0 | $ | 112,576 | $ | 109,352 | $ | 0 | $ | 0 | |||||||||
| 7 | 67 | $ | 0 | $ | 116,516 | $ | 112,632 | $ | 0 | $ | 0 | |||||||||
| 8 | 68 | $ | 0 | $ | 81,561 | $ | 116,011 | $ | 0 | $ | 0 | |||||||||
| 9 | 69 | $ | 0 | $ | 84,416 | $ | 119,491 | $ | 0 | $ | 0 | |||||||||
| 10 | 70 | $ | 0 | $ | 87,370 | $ | 123,076 | $ | 583 | $ | 821 | |||||||||
| · | On the Contract Date, the Income Base is equal to the initial premium payment. |
| · | Each Contract Year, the Income Base is increased by 3%. |
| · | A partial withdrawal of $10,000 is taken in the fifth Contract Year. The Income Base is reduced in direct proportion to the reduction in Accumulated Value for the partial withdrawal. To determine the amount by which the Income Base is reduced, we multiply the Income Base prior to the withdrawal by a percentage amount equal to the amount of the partial withdrawal divided by the Accumulated Value prior to the withdrawal (“partial withdrawal percentage”). The Income Base prior to the partial withdrawal is $115,927 (Income Base in Contract Year four ($112,551) multiplied by 1.03 (representing an assumed annual increase in the Income Base of 3%)). The partial withdrawal percentage equals 8.42% (the amount of the partial withdrawal ($10,000) divided by the Accumulated Value prior to the partial withdrawal ($118,769)). The partial withdrawal reduces the Income Base by $9,760 (partial withdrawal percentage (8.42%) multiplied by $115,927). The Income Base following the partial withdrawal is $106,167 (Income Base prior to the partial withdrawal ($115,927) minus the partial withdrawal reduction ($9,760)). |
A-2
| · | The Accumulated Value is reduced by the amount of the partial withdrawal. |
| · | At the end of the tenth Contract Year, the GMIB Option can be exercised and minimum fixed monthly payments may begin. The Monthly Income Benefit of $821 is the monthly payment that would be received by applying the Income Base of $123,076 to a lifetime settlement option with fixed payments for a male age 70. |
Examples for Guaranteed Minimum Accumulation Benefit (“GMAB”) Option
The following examples demonstrate, on a purely hypothetical basis, the operation of the GMAB Option.
Example 1: Setting of Initial Values
The values shown are based on the following assumptions:
Annuitant = Same as Owner
Initial premium payment = $100,000
No additional premium payments are made
No withdrawals are taken
Contract Year (beginning of year) | Premium Payment | Withdrawal | Accumulated Value | Guaranteed Accumulation | ||||||||
| 1 | $ | 100,000 | $ | 0 | $ | 100,000 | $ | 100,000 | ||||
On the Contract Date, the Guaranteed Accumulation Amount is equal to the initial premium payment. The Guaranteed Accumulation Amount will be increased by any additional premium payments received in the first 120 days beginning on the Contract Date.
Example 2: Decline in Accumulated Value
The values shown are based on the following assumptions:
Annuitant = Same as Owner
Initial premium payment = $100,000
No additional premium payments are made
No withdrawals are taken
Each Contract Year, Accumulated Value is increased by 3.5%, except Contract Year 8 where Accumulated Value is decreased by 30%.
Contract Year (end of year) | Premium Payment | Withdrawal | Accumulated Value | Guaranteed Accumulation | Guaranteed Accumulation | ||||||||||
| 1 | $ | 100,000 | $ | 0 | $ | 103,500 | $ | 100,000 | $ | 0 | |||||
| 2 | $ | 107,123 | $ | 100,000 | $ | 0 | |||||||||
| 3 | $ | 110,872 | $ | 100,000 | $ | 0 | |||||||||
| 4 | $ | 114,752 | $ | 100,000 | $ | 0 | |||||||||
| 5 | $ | 118,769 | $ | 100,000 | $ | 0 | |||||||||
| 6 | $ | 122,926 | $ | 100,000 | $ | 0 | |||||||||
| 7 | $ | 127,228 | $ | 100,000 | $ | 0 | |||||||||
| 8 | $ | 89,060 | $ | 100,000 | $ | 0 | |||||||||
| 9 | $ | 92,177 | $ | 100,000 | $ | 0 | |||||||||
| 10 | $ | 95,403 | $ | 100,000 | $ | 4,597 | |||||||||
| · | On the Contract Date, the Guaranteed Accumulation Amount is equal to the initial premium payment of $100,000. |
A-3
| · | At the end of the tenth Contract Year, the Accumulated Value is less than the Guaranteed Accumulation Amount. The Accumulated Value is increased by $4,597, the amount of the Guaranteed Accumulation Payment. |
Example 3: Impact of a Partial Withdrawal
The values shown are based on the following assumptions:
Annuitant = Same as Owner
Initial premium payment = $100,000
No additional premium payments are made
Each Contract Year, Accumulated Value is increased by 3.5%.
Contract Year (end of year) | Premium Payment | Withdrawal | Accumulated Value | Guaranteed Accumulation | Guaranteed Accumulation | ||||||||||
| 1 | $ | 100,000 | $ | 0 | $ | 103,500 | $ | 100,000 | $ | 0 | |||||
| 2 | $ | 0 | $ | 107,123 | $ | 100,000 | $ | 0 | |||||||
| 3 | $ | 0 | $ | 110,872 | $ | 100,000 | $ | 0 | |||||||
| 4 | $ | 0 | $ | 114,752 | $ | 100,000 | $ | 0 | |||||||
| 5 | $ | 10,000 | $ | 108,769 | $ | 91,580 | $ | 0 | |||||||
| 6 | $ | 0 | $ | 112,576 | $ | 91,580 | $ | 0 | |||||||
| 7 | $ | 0 | $ | 116,516 | $ | 91,580 | $ | 0 | |||||||
| 8 | $ | 0 | $ | 120,594 | $ | 91,580 | $ | 0 | |||||||
| 9 | $ | 0 | $ | 124,815 | $ | 91,580 | $ | 0 | |||||||
| 10 | $ | 0 | $ | 129,183 | $ | 91,580 | $ | 0 | |||||||
| · | On the Contract Date, the Guaranteed Accumulation Amount is equal to the initial premium payment of $100,000. |
| · | A partial withdrawal of $10,000 is taken in year five. |
| · | As a result of the partial withdrawal, the Guaranteed Accumulation Amount is reduced in direct proportion to the reduction in Accumulated Value for the partial withdrawal. To determine the amount by which the Guaranteed Accumulation Amount is reduced, we multiply the Guaranteed Accumulation Amount prior to the withdrawal by a percentage amount equal to the amount of the partial withdrawal divided by the Accumulated Value prior to the withdrawal (“partial withdrawal percentage”). The Guaranteed Accumulation Amount prior to the partial withdrawal is $100,000. The partial withdrawal percentage equals 8.42% (the amount of the partial withdrawal ($10,000) divided by the Accumulated Value prior to the partial withdrawal ($118,769)). The partial withdrawal reduces the Guaranteed Accumulation Amount by $8,420 (partial withdrawal percentage (8.42%) multiplied by $100,000). The Guaranteed Accumulation Amount following the partial withdrawal is $91,580 (Guaranteed Accumulation Amount prior to the partial withdrawal ($100,000) minus the partial withdrawal reduction ($8,420)). |
| · | At the end of the tenth Contract Year, the Accumulated Value is greater than the Guaranteed Accumulation Amount. There is no Guaranteed Accumulation Payment and the Accumulated Value remains unchanged. |
A-4
APPENDIX B
Calculating Variable Annuity Payments
The following charts have been prepared to show how investment performance could affect variable annuity payments over time. Each chart illustrates the variable annuity payments under a supplemental agreement issued in consideration of proceeds from a Non-Qualified Contract. Each chart illustrates certain variable annuity payments under five hypothetical rate of return scenarios. The first chart reflects the deduction of theguaranteed maximum mortality and expense risk charge while the second chart reflects the deduction of thecurrent mortality and expense risk charge. Of course, the illustrations merely represent what such payments might be under ahypotheticalsupplemental agreement issued for proceeds from ahypotheticalContract.
What the Charts Illustrate. Each chart illustrates the first monthly payment in each of 25 years under a hypothetical variable payment supplemental agreement issued in consideration of proceeds from a hypothetical Non-Qualified Contract assuming a different hypothetical rate of return for a single Subaccount supporting the agreement. Each chart assumes that the first monthly payment in the initial year shown is $1,000.
Hypothetical Rates of Return. In each chart, the variable annuity payments reflect five different assumptions for a constant investment return before fees and expenses: 0.00%, 3.04%, 6.08%, 9.04%, and 12.00%. Under the first chart, net of all expenses, these constant returns are: (2.28)%, 0.76%, 3.80%, 6.76%, and 9.72%. Under the second chart, net of all expenses, these constant returns are: (2.08)%, 0.96%, 4.00%, 6.96%, and 9.92%. The first variable annuity payment for each year reflects the 4% Assumed Interest Rate net of all expenses for the Subaccount (and the underlying Funds) pro-rated for the month shown. Fund management fees and operating expenses are assumed to be at an annual rate of 0.88% of their average daily net assets. This is the average of Fund expenses shown in the Annual Investment Option Expenses table beginning on page 5. The first chart assumes the deduction of the guaranteed maximum mortality and expense risk charge at an annual rate of 1.40% while the second chart assumes the deduction of the current mortality and expense risk charge at an annual rate of 1.20%.
The first monthly variable annuity payments depicted in each chart are based on a hypothetical settlement option agreement and hypothetical investment results and are not projections or indications of future results. The Company does not guarantee or even suggest that any Subaccount, Contract or agreement issued by it would generate these or similar monthly payments for any period of time. Each chart is for illustration purposes only and does not represent future variable annuity payments or future investment returns.The first variable annuity payment in each year under an actual settlement option agreement issued in connection with an actual Contract will be more or less than those shown if the actual returns of the Subaccount(s) selected by the Owner are different from the hypothetical returns. Because a Subaccount’s investment return will fluctuate over time, variable annuity payments actually received by a payee will be more or less than those shown in this illustration. Also, in an actual case, the total amount of variable annuity payments ultimately received will depend upon the settlement option selected and the life of the payee. See the Prospectus section titled “SETTLEMENT OPTIONS—Election of Settlement Options and Annuity Payments.”
Assumptions on Which the Hypothetical Settlement Option Agreement and Contract are Based. Each chart reflects a hypothetical supplemental agreement and Contract. These, in turn, are based on the following assumptions:
| · | The hypothetical Contract is a Non-Qualified Contract |
| · | The supplemental agreement is issued in consideration of proceeds from the hypothetical Contract |
B-1
| · | The proceeds applied under the agreement represent the entire Net Accumulated Value of the Contract and are allocated to a single Subaccount |
| · | The single Subaccount has annual constant rates of return before fees and expenses of 0.00%, 3.04%, 6.08%, 9.04%, and 12.00% |
| · | Assumed Interest Rate is 4% per year |
| · | The payee elects to receive monthly variable annuity payments |
| · | The proceeds applied to the purchase of annuity units as of the effective date of the agreement under the annuity settlement option selected results in an initial variable annuity payment of $1,000 |
For a discussion of how an Owner or payee may elect to receive monthly, quarterly, semi-annual or annual variable annuity payments, see “SETTLEMENT OPTIONS.”
Assumed Interest Rate. Among the most important factors that determines the amount of each variable annuity payment is the Assumed Interest Rate. Under supplemental agreements available as of the date of this Prospectus, the Assumed Interest Rate is 4%. Variable annuity payments will increase in size from one annuity payment date to the next if the annualized net rate of return during that time is greater than the Assumed Interest Rate, and will decrease if the annualized net rate of return over the same period is less than the Assumed Interest Rate. (The Assumed Interest Rate is an important component of the net investment factor.) For a detailed discussion of the Assumed Interest Rate and net investment factor, see “SETTLEMENT OPTIONS.”
The $1,000 Initial Monthly Variable Annuity Payment. The hypothetical supplemental agreement has an initial monthly variable annuity payment of $1,000. The dollar amount of the first variable annuity payment under an actual agreement will depend upon:
| · | the amount of proceeds applied |
| · | the annuity settlement option selected |
| · | the annuity purchase rates in the supplemental agreement on the effective date |
| · | the Assumed Interest Rate under the supplemental agreement on the effective date |
| · | the age of the payee |
| · | in most cases, the sex of the payee |
For each column in each chart, the entire proceeds are allocated to a Subaccount having a constant rate of return as shown at the top of the column. However, under an actual settlement option agreement, proceeds are often allocated among several Subaccounts. The dollar amount of the first variable annuity payment attributable to each Subaccount is determined under an actual agreement by dividing the dollar value of the proceeds applied to that Subaccount as of the effective date by $1,000, and multiplying the result by the annuity purchase rate in the agreement for the settlement option selected. The amount of the first variable annuity payment is the sum of the first payments attributable to each Subaccount to which proceeds were allocated. For a detailed discussion of how the first variable annuity payment is determined, see “SETTLEMENT OPTIONS.”
B-2
Initial Monthly Payments for Each Year Shown,
Assuming a Constant Rate of Return under Alternative Investment Scenarios and
Deduction of Guaranteed Maximum Mortality and Expense Risk Charge
| Contract Year | 0.00% Gross -2.28% Net | 3.04% Gross 0.76% Net | 6.08% Gross 380% Net | 9.04% Gross 6.76% Net | 12.00% Gross 9.72% Net | ||||||||||
| 1 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1000.00 | |||||
| 2 | 940 | 969 | 998 | 1,027 | 1,055 | ||||||||||
| 3 | 883 | 939 | 996 | 1,054 | 1,113 | ||||||||||
| 4 | 830 | 909 | 994 | 1,082 | 1,174 | ||||||||||
| 5 | 779 | 881 | 992 | 1,110 | 1,239 | ||||||||||
| 6 | 732 | 854 | 990 | 1,140 | 1,307 | ||||||||||
| 7 | 688 | 827 | 989 | 1,170 | 1,379 | ||||||||||
| 8 | 647 | 801 | 987 | 1,201 | 1,455 | ||||||||||
| 9 | 608 | 776 | 985 | 1,233 | 1,535 | ||||||||||
| 10 | 571 | 752 | 983 | 1,266 | 1,619 | ||||||||||
| 11 | 536 | 729 | 981 | 1,299 | 1,708 | ||||||||||
| 12 | 504 | 706 | 979 | 1,334 | 1,802 | ||||||||||
| 13 | 474 | 684 | 977 | 1,369 | 1,901 | ||||||||||
| 14 | 445 | 663 | 975 | 1,406 | 2,006 | ||||||||||
| 15 | 418 | 642 | 973 | 1,443 | 2,116 | ||||||||||
| 16 | 393 | 622 | 972 | 1,481 | 2,233 | ||||||||||
| 17 | 369 | 603 | 970 | 1,521 | 2,355 | ||||||||||
| 18 | 347 | 584 | 968 | 1,561 | 2,485 | ||||||||||
| 19 | 326 | 566 | 966 | 1,602 | 2,622 | ||||||||||
| 20 | 306 | 548 | 964 | 1,645 | 2,766 | ||||||||||
| 21 | 288 | 531 | 962 | 1,688 | 2,918 | ||||||||||
| 22 | 270 | 514 | 960 | 1,733 | 3,078 | ||||||||||
| 23 | 254 | 498 | 959 | 1,779 | 3,248 | ||||||||||
| 24 | 239 | 483 | 957 | 1,827 | 3,426 | ||||||||||
| 25 | 224 | 468 | 955 | 1,875 | 3,615 | ||||||||||
B-3
Initial Monthly Payments for Each Year Shown,
Assuming a Constant Rate of Return under Alternative Investment Scenarios and
Deduction of Current Mortality and Expense Risk Charge
| Contract Year | 0.00% Gross –2.08% Net | 3.04% Gross 0.96% Net | 6.08% Gross 4.00% Net | 9.04% Gross 6.96% Net | 12.00% Gross 9.92% Net | |||||
| 1 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | |||||
| 2 | 942 | 971 | 1,000 | 1,028 | 1,057 | |||||
| 3 | 886 | 942 | 1,000 | 1,058 | 1,117 | |||||
| 4 | 835 | 915 | 1,000 | 1,088 | 1,181 | |||||
| 5 | 786 | 888 | 1,000 | 1,119 | 1,248 | |||||
| 6 | 740 | 862 | 1,000 | 1,151 | 1,319 | |||||
| 7 | 697 | 837 | 1,000 | 1,183 | 1,394 | |||||
| 8 | 656 | 812 | 1,000 | 1,217 | 1,473 | |||||
| 9 | 618 | 789 | 1,000 | 1,252 | 1,557 | |||||
| 10 | 581 | 766 | 1,000 | 1,287 | 1,646 | |||||
| 11 | 547 | 743 | 1,000 | 1,324 | 1,740 | |||||
| 12 | 515 | 722 | 1,000 | 1,362 | 1,839 | |||||
| 13 | 485 | 700 | 1,000 | 1,400 | 1,943 | |||||
| 14 | 457 | 680 | 1,000 | 1,440 | 2,054 | |||||
| 15 | 430 | 660 | 1,000 | 1,481 | 2,171 | |||||
| 16 | 405 | 641 | 1,000 | 1,523 | 2,294 | |||||
| 17 | 381 | 622 | 1,000 | 1,567 | 2,425 | |||||
| 18 | 359 | 604 | 1,000 | 1,611 | 2,563 | |||||
| 19 | 338 | 586 | 1,000 | 1,657 | 2,709 | |||||
| 20 | 318 | 569 | 1,000 | 1,704 | 2,863 | |||||
| 21 | 300 | 552 | 1,000 | 1,753 | 3,026 | |||||
| 22 | 282 | 536 | 1,000 | 1,803 | 3,198 | |||||
| 23 | 266 | 521 | 1,000 | 1,854 | 3,380 | |||||
| 24 | 250 | 505 | 1,000 | 1,907 | 3,573 | |||||
| 25 | 236 | 491 | 1,000 | 1,961 | 3,776 |
B-4
CILAC VA Prospectus
Calculation of 1st Year Expenses
The first year expenses are the sum of the fund expenses, surrender charge, mortality and risk expense, and administrative expense. Rider charges are not assessed in the first policy year; they are assessed starting at the beginning of the second policy year.
The average accumulated value is needed to calculate all of these except for the administrative expense. The average accumulated value is the arithmetic average of the beginning of year and end of year accumulated values.
Example 1
The end of year accumulated value is calculated by applying the net rate of return to the beginning of year accumulated value. In year 1, the net rate of return is 5% - 1.47% - 1.40% - 0.11% = 2.13%.
End of Year Accumulated Value = 10,000 * (1.0213) = 10,202
Average Accumulated Value = (10,000 + 10,202) / 2 = 10,101
Fund Expenses = 1.47% * 10,101 = 148.48
Mortality and Expense Charge = 1.40% * 10,101 = 141.41
Administration Expense = 0.11% * 10,101 = 11.11
Surrender Charges:
Ex 1.1, 1.2:
SC = 10,202 * 7% = 714.14
Ex 1.3:
SC is waived
Total Expenses:
Ex 1.1, 1.2:
1015.14 = 148.48 + 141.41 + 714.14 + 11.11
Ex 1.3:
301.00 = 148.48 + 141.41 + 11.11
Example 2
The end of year accumulated value is calculated by applying the net rate of return to the beginning of year accumulated value. In year 1, the net rate of return is 5% - 0.35% - 1.40% - 0.11% = 3.14%.
End of Year Accumulated Value = 10,000 * (1.0314) = 10,314
Average Accumulated Value = (10,000 + 10,314) / 2 = 10,157
Fund Expenses = 0.35% * 10,157 = 35.55
Mortality and Expense Charge = 1.40% * 10,157 = 142.20
Administration Expense = 0.11% * 10,157 = 11.17
Surrender Charges:
Ex 1.1, 1.2:
SC = 10,314 * 7% = 721.98
Ex 1.3:
SC is waived
Total Expenses:
Ex 1.1, 1.2:
910.90 = 35.55 + 142.20 + 11.17 + 721.98
Ex 1.3:
188.92 = 35.55 + 142.20 + 11.17
Examples 3 & 4
Examples 3 and 4 produce the same numbers as Examples 1 and 2, respectively, because the presence of riders does not impact the year 1 calculations.