--------------------------------------------------------------------------------
5900 "O" Street
Lincoln, NE 68510
October 5, 2007
Via Electronic Mail
Sally Samuel, Senior Counsel
Office of Insurance Products
Division of Investment Management
Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549
Re: Ameritas Life Insurance Corp. ("Ameritas") and
Ameritas Variable Separate Account VA-2, 1940 Act No. 811-05192
("Separate Account")
OVERTURE Medley! Flexible Premium Deferred Variable Annuity,
1933 Act No. 333-142483
Post-Effective Amendment No. 1 on Form N-4 Pursuant to Rule 485(a)
Dear Ms. Samuel:
This letter is in response to your comments, received by telephone September 27,
2007, for the Rule 485(a) post-effective amendment to the registration statement
for the above-referenced Separate Account filed with the Securities and Exchange
Commission ("SEC") on August 17, 2007. The primary purpose of the Amendment is
to add a guaranteed lifetime withdrawal benefit to the product. The proposed
effective date for the Amendment is November 5, 2007.
Following are your comments and our responses to each.
1. Page 1. In the last full paragraph, the word "Ameritas" should be deleted
and the Securities Act of 1933 file number for the product should be
provided, in order to more effectively direct Policy owners to product
information on the SEC website.
Response: We revised the directions and replaced "Ameritas" with
"333-142483."
2. Page 5. Footnote 1 should be removed, so long as the chart shows the
maximum fees. Heading text "and Current Fees" should be deleted, but a
footnote can be used to state that the current fees are the same as the
maximum fees. A footnote may state that fees may differ in different states
but would never exceed the maximum in the chart.
Response: The chart shows the maximum fees. Heading text "and Current Fees"
is deleted. The footnote is revised to state that the current fees are the
same as the maximum fees and that fees may differ in different states but
would never exceed the maximum in the chart.
3. Page 7. You requested that we confirm that all waivers in the portfolio
expense chart are contractual and extend through the period when this
prospectus is intended to be marketed.
Response: We confirm that all waivers shown in the portfolio expense chart
are contractual through at least April 30, 2008, after which date we expect
to distribute prospectuses Dated May 1, 2008 using December 31, 2007
portfolio expenses.
4. Page 7. You requested that we confirm that all portfolio acquired fees are
shown in the portfolio expense chart.
Response: All acquired fees reported to us by the fund companies are shown
in the portfolio expense chart. However, we recently learned that acquired
fees for certain portfolios had not been reported to us by the fund
earlier, and have updated the chart. (We also are preparing supplements to
submit to the SEC and distribute to Policy Owners for all products affected
by this matter. We expect to file these supplements on or about Friday
October 12, 2007.)
5. Page 9 and 10.Annuity expense example charts should list the most expensive
option first, then the next expensive, etc. With the Overture Medley!
product, this means that the GLWB joint spousal option should be listed
first, then the GLWB single life option, then the maximum without the GLWB
rider, followed by the minimum expenses line.
Response: We re-ordered the examples charts with the GLWB joint spousal
option first, the GLWB single life option next, then the maximum without
the GLWB rider, followed by minimum expenses.
6. Page 12. GLWB charges should specify the amount or rate of the charge and
not cross-reference to the Policy. The prospectus should be a "stand-alone"
document.
Response: We removed the sentence that referred to the Policy, and we added
a reference to the Charges section of the prospectus, where the full chart
of charges is presented. Providing rates only in this required location
reduces the potential for error (or omission) if they are changed in the
future.
7. Page 15. The Fixed Account section needed to have a sentence added stating
that, "Assets in the Fixed Account are subject to claims by the company's
creditors."
Response: We added the required sentence, and we also deleted the sentence
"Refer to the Policy for additional details regarding the Fixed Account."
(See Item 6, above.)
8. Pages 19 and 34. We need to disclose what riders require the use of a model
asset allocation program and should list those models that are acceptable
for each such rider.
Response: We named the GLWB rider on page 19 and listed the four models
that can be used with the rider on each of these pages.
9. Page 20. The Value+ example should be retained for those current Policy
owners who have selected this option.
Response: We re-inserted the Value + "example" paragraph and modified it to
reflect the past tense, since that feature will no longer be available in
new policies.
10. Page 32. The first GLWB paragraph repeated a sentence.
Response: We deleted the first use of the sentence and kept it at the end
of the paragraph.
11. Page 32. "Age nearest birthday" is not a defined term, nor is it clear to
the intended reader.
Response: We deleted the phrase "age nearest birthday" and added text to
specify ages that meet each attained age used in this section.
12. Page 32. Two sentences at the end of the page should be deleted, as they
refer the reader to the Policy. (See Items 6 and 7, above.)
Response: We removed both sentences that referred the reader to the Policy.
We also removed similar text sentences in the "Rider Charges" section on
page 34 and two places on page 35.
13. Page 35. You requested that we specify any dollar limits on withdrawals.
Response: We added text regarding the minimum withdrawal amount and
referring the reader to the Withdrawals section of the prospectus.
14. Page 37. In the Death Benefit section, use of the term "Remaining Balance"
seems inconsistent, first indicating the value of the Remaining Balance is
zero, then stating distributions would be made "until... the Remaining
Balance is zero." Response: The first use of the term is in close proximity
to text that states, "If... the Policy value is zero, (emphasis added)." We
revised this sentence by qualifying the term "Remaining Balance" with its
definitional reference to the GLWB rider's Benefit Base. The GLWB rider
Benefit Base would not necessarily be the same amount as the Policy value,
nor would it reach zero at the same time that the value of the Policy
reached zero.
15. Part C. Exhibits. Cross-references to exhibits used in prior filings should
include mention of the exhibit number (or letter) used in the referenced
filing.
Response: We will provide the exhibit number or letter from the prior
referenced filing in each footnote used on future Exhibits pages.
In addition to responses to your comments, we revised this prospectus for
supplements filed subsequent to our submitting Post Effective Amendment No. 1 on
August 17, 2007. These revisions include:
A. Removing all references to the Calvert Social Small Cap Growth Portfolio,
which was merged into the Calvert Social Mid Cap Portfolio, following a
meeting of shareholders of the funds on September 27, 2007. Ameritas filed
a supplement to this effect on September 28, 2007. Pages 1, 7-8, 14, and
A:2.
B. Temporarily suspending Internal Revenue Code 403(b) exchanges and transfers
until such time as procedures and agreements can be established with plan
sponsors. Ameritas filed a supplement to this effect on October 1, 2007.
Pages 39 and B:6.
Ameritas is also considering adopting its own disruptive trading procedures
consistent with Rule 22c-2, and may file a supplement to this effect. This could
result in revised text on page 17.
We acknowledge that the separate account is responsible for the adequacy and
accuracy of the disclosure in the filings, staff comments or changes to
disclosure in response to staff comments in the filings reviewed by the staff do
not foreclose the Commission from taking any action with respect to the filing,
and the separate account may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
If you have any questions or comments concerning this letter, please telephone
me at 402-467-7894, or our lead securities attorney, Ann Diers, at 402-467-7847.
Thank you for your assistance.
Sincerely,
/s/ Sally R. Bredensteiner
Sally R. Bredensteiner
Assistant Counsel
Ameritas Life Insurance Corp.
PROSPECTUS: November 5, 2007
[Ameritas Life Insurance Corp. Logo]
A UNIFI Company
OVERTURE MEDLEY SM
Flexible Premium
Deferred Variable Annuity Policy
Ameritas Variable Separate Account VA-2
This prospectus describes the Policy, especially its Separate Account.
The Policy is designed to help you, the Policy Owner, invest on a tax-deferred
basis and meet long-term financial goals. It provides a menu of optional
features for you to select from to meet your particular needs; ask your sales
representative or us which of these are available in your state. As an annuity,
it also provides you with several ways to receive regular income from your
investment. An initial minimum payment is required. Further investment is
optional.
You may allocate all or part of your investment among variable
investment options (where you have the investment risk, including possible loss
of principal) with allocated indirect interests in these non-publicly traded
portfolios:
AIM FUNDS CALVERT PORTFOLIOS MFS
AIM V.I. Dynamics - Series I CVS Income New Discovery - Initial Class
ALGER - Class O CVS Social Balanced Strategic Income - Initial Class
Alger American Balanced CVS Social Equity Utilities - Initial Class
AMERICAN CENTURY(R) CVS Social International Equity SUMMIT
VP Income & Growth CVS Social Mid Cap Growth Nasdaq-100 Index
AMERITAS PORTFOLIOS DREYFUS Russell 2000 Small Cap Index
Ameritas Core Strategies MidCap Stock - Service Shares S&P MidCap 400 Index
Ameritas Income & Growth FIDELITY (R) (Service Class 2) THIRD AVENUE
Ameritas Index 500 VIP Asset Manager SM Third Avenue Value
Ameritas MidCap Growth VIP Asset Manager: Growth (R) VAN KAMPEN
Ameritas MidCap Value VIP Contrafund (R) Emerging Markets Equity - Class I
Ameritas Money Market VIP Equity-Income Global Value Equity - Class I
Ameritas Small Capitalization VIP Growth International Magnum - Class I
Ameritas Small Company Equity VIP High Income U.S. Real Estate - Class I
VIP Investment Grade Bond
VIP Overseas
or you may allocate part of your investment to a Fixed Account fixed interest
rate option (where we have the investment risk and guarantee a certain return on
your investment).
The Policy includes a Guaranteed Lifetime Withdrawal Benefit ("GLWB") rider,
which if activated, guarantees a series of annualized withdrawals from your
Policy, regardless of the Policy value, until the death of the last surviving
Covered Person. Policy expenses are higher when the GLWB is activated and if
other optional features are selected.
A Statement of Additional Information, dated May 1, 2007, and other
information about us and the Policy is on file with the Securities and Exchange
Commission ("SEC") and is incorporated into this prospectus by reference. For a
free copy, access it on the SEC's Web site (www.sec.gov, select "Search for
Company Filings," select "Companies & Other Filers," then type File Number
"333-142483"), or write or call us. The Table of Contents for the Statement of
Additional Information is on the last page of this prospectus.
The SEC does not pass upon the accuracy or adequacy of this
prospectus, and has not approved or disapproved the
Policy. Any representation to the contrary is a
criminal offense.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Ameritas Life Insurance Corp. (we, us, our, Ameritas)
Service Center, P.O. Box 82550, Lincoln, Nebraska 68501.
1-800-745-1112. www.ameritas.com
Contacting Us. To answer your questions or to send additional premium, contact
your sales representative or write or call us at:
Ameritas Life Insurance Corp.
Service Center
P.O. Box 82550
Lincoln, Nebraska 68501
Or
5900 "O" Street
Lincoln, Nebraska 68510
Telephone: 1-800-745-1112
Fax: 1-402-467-7335
variable.ameritas.com
Express mail packages should be sent to our street address, not our P.O. Box
address.
Remember, the Correct Form of Written Notice "in good order" is important for us
to accurately process your Policy elections and changes. Many forms can be found
on the on-line services section of our Web site. Or, call us at our toll-free
number and we will send you the form you need and tell you the information we
require.
Facsimile Written Notice. To provide you with timely service, we accept some
Written Notice by facsimile. However, by not requiring your original signature,
there is a greater risk unauthorized persons can manipulate your signature and
make changes on your Policy (including withdrawals) without your knowledge. We
are entitled to act upon facsimile signatures that reasonably appear to us to be
genuine.
Make checks payable to:
"Ameritas Life Insurance Corp."
TABLE OF CONTENTS Begin on Page
DEFINED TERMS...............................................3
POLICY OVERVIEW.............................................4
Policy Operation and Features
Tax-Qualified Plans
CHARGES.....................................................5
Examples of Expenses
FINANCIAL INFORMATION......................................10
CHARGES EXPLAINED..........................................10
Withdrawal Charge
Mortality and Expense Risk Charge
Administrative Charges
Transfer Fee
Tax Charges
403(b) Tax Sheltered Annuity Charges
Fees Charged by the Portfolios
Value+ Option Charge
Guaranteed Lifetime Withdrawal Benefit ("GLWB") Charge
Other Optional Feature Charges
Waiver of Certain Charges
INVESTMENT OPTIONS.........................................13
Separate Account Variable Investment Options
Adding, Deleting, or Substituting Variable Investment Options
Fixed Account Fixed Interest Rate Option
Transfers
Third Party Services
Disruptive Trading Procedures
Systematic Transfer Programs:
Dollar Cost Averaging, Portfolio Rebalancing, Earnings Sweep
Model Asset Allocation Program
Value+ Option
IMPORTANT POLICY PROVISIONS................................21
Policy Application and Issuance
Your Policy Value
Telephone Transactions
Death of Annuitant
Delay of Payments
Beneficiary
Minor Owner or Beneficiary
Policy Changes
Policy Termination
Optional Features
POLICY DISTRIBUTIONS.......................................25
Withdrawals
Loans
Death Benefits
Annuity Income Benefits
GLWB Rider
FEDERAL INCOME TAX MATTERS.................................38
MISCELLANEOUS..............................................40
About Our Company
Distribution of the Policies
Voting Rights
Legal Proceedings
APPENDIX A: Accumulation Unit Values......................A:1
APPENDIX B: Tax-Qualified Plan Disclosures................B:1
IMSA....................................................Last Page
Thank You. If You Have Questions,
Statement of Additional Information Table of Contents
-2-
DEFINED TERMS
Accumulation Units are an accounting unit of measure used to calculate the
Policy value allocated to Subaccounts of the Separate Account. It is similar to
a share of a mutual fund. The Policy describes how Accumulation Units are
calculated.
Annuity Date is the date annuity income payments are scheduled to begin. This
date is identified on the Policy Schedule page of your Policy. You may change
this date, as permitted by the Policy and described in this prospectus.
Business Day is each day that the New York Stock Exchange is open for trading.
Cash Surrender Value is the Policy value less applicable withdrawal charge,
Policy fee, outstanding loans, and any premium tax charge not previously
deducted.
Owner, you, your is you - the person(s) or legal entity who may exercise all
rights and privileges under the Policy. If there are joint Owners, the
signatures of both Owners are needed to exercise rights under the Policy.
Policy Year/Month/Anniversary are measured from respective anniversary dates of
the date of issue of this Policy.
Subaccount is a division within the Separate Account for which Accumulation
Units are separately maintained. Each Subaccount corresponds to a single
underlying non-publicly traded portfolio issued through a series fund.
We, us, our, Ameritas - Ameritas Life Insurance Corp.
Written Notice or Request - Written notice, signed by you, on a form approved by
or acceptable to us, that gives us the information we require and is received at
Ameritas, Service Center, P.O. Box 82550, Lincoln, NE 68501 (or 5900 "O" Street,
Lincoln, NE 68510), fax 1-402-467-7335. Call us if you have questions about what
form or information is required.
This prospectus may only be used to offer the Policy where
the Policy may lawfully be sold. The Policy, and certain
features described in this prospectus, may not be available in
all states.
If your Policy is issued as part of a qualified plan under
the Internal Revenue Code, refer to any plan documents
and disclosures for information about how some of the
benefits and rights of the Policy may be affected.
-3-
POLICY OVERVIEW
The following is intended as a summary. Please read each section of
this prospectus for additional detail.
Prior to May 1, 2007, the Policies described in this prospectus were
offered and issued by Ameritas Variable Life Insurance Company ("AVLIC").
Effective May 1, 2007, AVLIC merged into Ameritas, and the Separate Account
(formerly named Ameritas Variable Life Insurance Company Separate Account VA-2)
was transferred from AVLIC to Ameritas. Policies previously issued by AVLIC now
are Policies of Ameritas, which will service and maintain those Policies in
accordance with their terms. (For more information about the merger see, "About
Our Company" in this prospectus.)
The OVERTURE MEDLEY! Policy is a variable annuity savings vehicle
offering a variety of investment options to help meet long-term financial goals.
The Policy includes a menu of feature options for you to select from to meet
your particular needs; not all will be available in all states. Associated
charges are discussed in this prospectus' CHARGES and CHARGES EXPLAINED
sections. You can allocate your premiums among a wide spectrum of investment
options. In the Separate Account variable investment options you may gain or
lose money on your investment. In the Fixed Account option, we guarantee you
will earn a fixed rate of interest. The investment options are described on this
prospectus' cover and the INVESTMENT OPTIONS section.
The Policy is a deferred annuity: it has an accumulation (or deferral)
period and an annuity income period.
A significant advantage of the Policy is that it provides the ability to
accumulate capital on a tax-deferred basis. The purchase of a Policy to fund a
tax-qualified retirement account does not provide any additional tax deferred
treatment beyond the treatment provided by the tax-qualified retirement plan
itself. However, the Policy does provide benefits such as lifetime income
payments, family protection through death benefits and guaranteed fees.
Accumulation Period. During the accumulation period, any earnings that
you leave in the Policy are not taxed. During this period you can invest
additional money into the Policy, transfer amounts among the investment options,
and withdraw some or all of the value of your Policy. Some restrictions may
apply to transfers (especially to transfers into and out of the Fixed Account).
Withdrawals may be subject to a withdrawal charge, income tax and a penalty tax.
Annuity Income Period. The accumulation period ends and the annuity
income period begins on a date you select or the later of the fifth Policy
Anniversary or Anniversary nearest the annuitant's 85th birthday. During the
annuity income period, we will make periodic payments to the annuitant, unless
you specify otherwise. You can select payments that are guaranteed to last for
the annuitant's entire life or for some other period. Some or all of each
payment will be taxable.
POLICY OPERATION AND FEATURES
Premiums.
o Minimum initial premium: $25,000.
o Minimum additional premium: $1,000, or $50 per month if through a regularly
billed program.
o Additional premiums will not be accepted, without our approval, on or after
the later of (i) the Policy Anniversary following your or the annuitant's
85th birthday or (ii) the Annuity Date.
Investment Options.
o Variable investment option allocations are invested in Subaccounts of the
Separate Account, which in turn invest in corresponding underlying
portfolios. Fixed Account allocations are invested in our general account
and we guarantee a fixed rate of interest.
o You may transfer among investments, subject to limits. Dollar cost
averaging, portfolio rebalancing and earnings sweep systematic investment
programs are available.
Deductions from Assets.
(See CHARGES on next pages.)
Withdrawals.
o Withdrawal charges apply to withdrawals under the base Policy. Two optional
"free withdrawal" features are available, for a charge. After a premium is
received, withdrawal charges apply for 9 years or, for a charge, 7 years or
5 years.
o Each withdrawal must be at least $250.
o An optional Guaranteed Lifetime Withdrawal Benefit ("GLWB") is also
available.
Annuity Income.
o Several fixed annuity income options are available.
Death Benefit.
o A standard death benefit is paid upon the death of the Owner unless the
guaranteed minimum death benefit is payable.
Optional Features.
o Other optional features available are listed in the prospectus' IMPORTANT
POLICY PROVISIONS section. Most can only be elected at Policy issue and
only if you are then not older than age 70.
TAX-QUALIFIED PLANS
The Policy can be used to fund a tax-qualified plan such as an IRA or Roth IRA
(including for rollovers from tax-sheltered annuities), SEP, or SIMPLE IRA,
Tax-Sheltered Annuities, etc. This prospectus generally addresses the terms that
affect a non-tax-qualified annuity. If your Policy funds a tax-qualified plan,
read the Qualified Plan Disclosures in this prospectus' Appendix B to see how
they might change your Policy rights and requirements. Contact us if you have
questions about the use of the Policy in these or other tax-qualified plans.
-4-
CHARGES (x= Base Policy; y = Optional Feature Fee)
The following tables describe the fees and expenses that you will pay
when buying, owning, and surrendering the Policy. The first table describes the
fees and expenses that you will pay at the time that you buy the Policy,
surrender the Policy, or transfer Policy value between investment options.
--------------------------------------------------------------------------------------------------------------------
TRANSACTION FEES
--------------------------------------------------------------------------------------------------------------------
Guaranteed Maximum Fees
--------------------------------------------------------------------------------------------------------------------
PREMIUM WITHDRAWAL CHARGES (1) Years since receipt of premium:
(deducted as a % of each premium withdrawn)
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
1 2 3 4 5 6 7 8 9 10+
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
x 9-Year Base Policy Withdrawal Charge 8% 8% 8% 7% 7% 6% 5% 4% 2% 0%
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
y 7 Year Withdrawal Feature Charge 7% 6% 5% 4% 3% 2% 1% 0% - -
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
y 5 Year Withdrawal Feature Charge 7% 7% 6% 4% 2% 0% - - - -
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
y 403(b) TSA Endorsement 7 Year Withdrawal Charge 8% 8% 8% 7% 6% 5% 3% 0% - -
-------------------------------------------------------- ----- ----- ----- ----- ----- ---- ----- ----- ----- ------
-------------------- --------------------
Guaranteed
Maximum Current Fees
Fees
-------------------------------------------------------------------------------- -------------------- --------------------
TRANSFER FEE (per transfer)
x First 15 transfers per Policy Year NONE NONE
x Over 15 transfers in one Policy Year, we may charge ... $10 $10
-------------------------------------------------------------------------------- -------------------- --------------------
STATE PREMIUM TAXES (rates vary by state)(1) 0% to 3.5%
-------------------------------------------------------------------------------- -------------------- --------------------
LOAN ORIGINATION FEE
x on Policies issued after 1/1/02 with the 403(b) Tax Sheltered Annuity $40 $25
Endorsement
(not applicable to Policies issued prior to 1/1/02 or in states where
fee not approved).
Waived if loan repayment is established on an automatic basis.
-------------------------------------------------------------------------------- -------------------- --------------------
The next table describes the fees and expenses that you will pay
periodically during the time that you own the Policy, to equal the annualized
charges shown, not including Subaccount portfolio operating fees and expenses.
------------------------------------------------------------------------------------------------------ --------------------
ANNUAL FEES and EXPENSES
-------------------------------------------------------------------------------- --------------------- --------------------
Guaranteed
Maximum Current Fees
Fees
-------------------------------------------------------------------------------- -------------------- --------------------
ANNUAL POLICY FEES
Waived if Policy value is at least $50,000 on a Policy Anniversary.
-------------------------------------------------------------------------------- -------------------- --------------------
x ANNUAL POLICY FEE $40 NONE
y Optional MINIMUM INITIAL PREMIUM feature ANNUAL POLICY FEE $40 $36
Waived for 403(b) Policies issued with the 403(b) Minimum Initial Premium
Rider in Policy Years when total annual net premium (premiums less
withdrawals) is $2,000 or greater.
------------------------------------------------------------------------------------------------------ --------------------
ANNUAL WITHDRAWAL FEES
Deducted monthly to equal the annual % shown.
-------------------------------------------------------------------------------- -------------------- --------------------
x Base Policy Withdrawal Charge: NONE NONE
y ANNUAL FEES FOR OPTIONAL WITHDRAWAL CHARGE FEATURES:
y 7 Year Withdrawal Charge Feature 0.40% 0.30%
y 5 Year Withdrawal Charge Feature 0.60% 0.45%
y 403(b) Tax Sheltered Annuity Endorsement (2) 0.40% 0.20%
------------------------------------------------------------------------------------------------------ --------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
Deducted daily from assets allocated to the Separate Account to equal
the annual % shown.
-------------------------------------------------------------------------------- -------------------- --------------------
x MORTALITY & EXPENSE RISK CHARGE 0.75% 0.60%
x ADMINISTRATIVE EXPENSE FEE 0.25% 0.20%
------------------------------------------------------------------------------------------------------ --------------------
(1) Current Fees are the same as Guaranteed Maximum Fees. Premium Withdrawal
Charges may differ in some states, but will not exceed the maximum.
(2) Tax rates and timing of payment vary by state and may change. Currently we
do not charge for state taxes other than premium taxes, although we reserve the
right to levy charges for taxes or other economic burdens in the future. See the
CHARGES EXPLAINED section.
(3) REQUIRED for 403(b) Policies issued after 1/1/02. 403(b) TSA Endorsement
7-Year Premium Withdrawal Charge schedule applies in all states except TX, SC
and WA; in those states a 9-Year Premium Withdrawal Charge schedule applies.
-5-
--------------------------------------------------------------------------------- ---------------- -----------------
MORE OPTIONAL RIDER/ENDORSEMENT FEATURE FEES
Deducted monthly from Policy value to equal the annual % shown.
--------------------------------------------------------------------------------- ---------------- -----------------
Guaranteed
Maximum Current
Fees Fees
--------------------------------------------------------------------------------- ---------------- -----------------
y MINIMUM INITIAL PREMIUM Feature 0.55% 0.25%
(waived if Policy value is at least $50,000)
--------------------------------------------------------------------------------- ---------------- -----------------
y FREE WITHDRAWAL PRIVILEGE Features 0.15% 0.05%
y 10% "Free" Withdrawal Feature
y Expanded "Free" Withdrawal Feature 0.40% 0.20%
--------------------------------------------------------------------------------- ---------------- -----------------
y GUARANTEED MINIMUM DEATH BENEFIT Features 0.55% 0.25%
y 1- Year "Periodic Step-Up" Guaranteed Minimum Death Benefit
y "5% Roll-Up" Guaranteed Minimum Death Benefit 0.75% 0.35%
y "Greater Of" Guaranteed Minimum Death Benefit 0.80% 0.37%
--------------------------------------------------------------------------------- ---------------- -----------------
y ESTATE PROTECTION BENEFIT ("EPB") 0.40% 0.20%
Issue ages 0-70
Issue ages 71-80 0.80% 0.60%
--------------------------------------------------------------------------------- ---------------- -----------------
y EXPANDED ESTATE PROTECTION BENEFIT ("EEPB") 0.45% 0.25%
Issue ages 0-70
Issue ages 71-80 1.00% 0.80%
--------------------------------------------------------------------------------- ---------------- -----------------
y 403(b) TAX SHELTERED ANNUITY ENDORSEMENT (3)
--------------------------------------------------------------------------------- ---------------- -----------------
y TSA MINIMUM INITIAL PREMIUM RIDER 0.60% 0.35%
Waived once Policy value is at least $50,000 on a Policy Year
anniversary.
--------------------------------------------------------------------------------- ---------------- -----------------
y 403(b) HARDSHIP WAIVER RIDER 0.25% 0.15%
--------------------------------------------------------------------------------- ---------------- -----------------
y TSA NO WITHDRAWAL CHARGE RIDERS 0.45% 0.25%
Large Case (Initial premium is $25,000 or greater.)
Small Case (Initial premium is less than $25,000.)
When Policy value is $50,000 or less ... 0.55% 0.30%
Once Policy value exceeds $50,000 ... 0.45% 0.25%
--------------------------------------------------------------------------------- ---------------- -----------------
y VALUE+ OPTION (5) 0.55% 0.42%
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
o GUARANTEED LIFETIME WITHDRAWAL BENEFIT ("GLWB")
(Deducted from the Policy value monthly during the Accumulation and
Withdrawal Phases. There are no fees during the Inactive Phase.)
Single Life 0.95% 0.60%
Joint Spousal - for non-qualified plans only 1.10% 0.75%
--------------------------------------------------------------------------------- ---------------- -----------------
Total Cost of Highest Combination of Features (1) 4.30% 2.62%
-------------------------------------------------------------------------------------------------------------------
PORTFOLIO COMPANY OPERATING EXPENSES
The next table shows the minimum and maximum total operating expenses
charged by the portfolio companies, before and after any waivers or reductions,
that you may pay periodically during the time that you own the contract,
followed by a table showing additional information for each portfolio company.
More detail concerning each portfolio company's fees and expenses is contained
in the prospectus for each portfolio company.
------------------------------------------------------------------------------- -------------------- --------------------
TOTAL ANNUAL PORTFOLIO COMPANY OPERATING EXPENSES
Expenses that are deducted from portfolio company assets, including Minimum Maximum
management fees, distribution and/or service (12b-1) fees, and other
expenses
------------------------------------------------------------------------------- -------------------- --------------------
Before any Waivers and Reductions 0.38% (1) 1.86% (2)
------------------------------------------------------------------------------- -------------------- ------------------
After any Waivers and Reductions (explained in the footnotes to the Portfolio 0.36% (1) 1.86% (2)
Expenses Table at the end of this section)
------------------------------------------------------------------------------- -------------------- ------------------
(1) Ameritas Money Market Portfolio.
(2) CVS Social International Equity Portfolio.
(4) REQUIRED for 403(b) Policies issued after 1/1/02. 403(b) TSA Endorsement
7-Year Premium Withdrawal Charge schedule in all states except TX, SC and WA; in
those states the base Policy 9-Year Premium Withdrawal Charge schedule applies.
The PA 7-year schedule varies from this chart. (We will provide you with the
correct schedule for your state prior to your purchase of a Policy.) The
endorsement also includes loan feature, and waiver of withdrawal charge upon
disability or separation from service after the ninth Policy Year anniversary.
(5) The Value+ Option is not available for Policies issued on or after November
5, 2007.
(6) The Guaranteed Maximum Fees total consists of the Mortality and Expense Risk
Charge, Administrative Expense Fee, 9-Year Base Policy Withdrawal Charge,
Minimum Initial Premium Feature, Expanded "Free" Withdrawal Feature, "Greater
Of" Guaranteed Minimum Death Benefit, Expanded Estate Protection Benefit, and
GLWB Joint Spousal.
-6-
-----------------------------------------------------------------------------------------------------------------------------
Acquired
Fund Fees Total Total Expenses
Subaccount's underlying Management 12b-1 Other and Portfolio Waivers and after waivers and
Portfolio Name Fees Fees* Fees Expenses Fees Reductions reductions if any
---------------------------------------------- --------- --------- ------------ ------------ ------------- ------------------
AIM FUNDS(1)
AIM V.I. Dynamics - Series I 0.75% - 0.38% 0.01% (2) 1.14% 0.01% 1.13% (3) (4)
ALGER - Class O
Alger American Balanced (5) 0.71% - 0.15% - 0.86% 0.04% 0.82% (6)
AMERICAN CENTURY(R)
VP Income & Growth 0.70% - - - 0.70% - 0.70% (7)
AMERITAS PORTFOLIOS (8), (9)
Ameritas Core Strategies 0.80% - 0.14% - 0.94% - 0.94%(10)
Ameritas Income & Growth 0.675% - 0.105% - 0.78% - 0.78%(10)
Ameritas Index 500 ** 0.29% - 0.17% - 0.46% 0.08% 0.38%
Ameritas MidCap Growth 0.85% - 0.18% - 1.03% 0.09% 0.94%
Ameritas MidCap Value 0.97% - 0.18% - 1.15% - 1.15%(10)
Ameritas Money Market 0.25% - 0.13% - 0.38% 0.02% 0.36%
Ameritas Small Capitalization 0.90% - 0.27% - 1.17% 0.17% 1.00%
Ameritas Small Company Equity 1.17% - 0.40% - 1.57% 0.24% 1.33%
CALVERT PORTFOLIOS
CVS Income 0.70% - 0.20% - 0.90% - 0.90% (10)
CVS Social Balanced 0.70% - 0.21% - 0.91% - 0.91% (10)
CVS Social Equity 0.70% - 0.45% - 1.15% 0.07% 1.08% (8) (10)
CVS Social International Equity 1.10% - 0.76% - 1.86% - 1.86% (10)
CVS Social Mid Cap Growth 0.90% - 0.27% - 1.17% - 1.17% (10)
DREYFUS
MidCap Stock - Service Shares 0.75% 0.25% 0.05% 0.01% 1.05% - 1.06% (11)
FIDELITY (R) (Service Class 2)
VIP Asset Manager SM 0.52% 0.25% 0.15% - 0.92% - 0.92% (12)
VIP Asset Manager: Growth (R) 0.57% 0.25% 0.23% - 1.05% - 1.05% (13)
VIP Contrafund (R) 0.57% 0.25% 0.09% - 0.91% - 0.91% (12)
VIP Equity-Income 0.47% 0.25% 0.10% - 0.82% - 0.82% (12)
VIP Growth 0.57% 0.25% 0.12% - 0.94% - 0.94% (12)
VIP High Income 0.57% 0.25% 0.15% - 0.97% - 0.97%
VIP Investment Grade Bond 0.32% 0.25% 0.12% - 0.69% - 0.69%
VIP Overseas 0.72% 0.25% 0.16% - 1.13% - 1.13% (12)
MFS
New Discovery - Initial Class 0.90% - 0.13% - 1.03% - 1.03% (14)
Strategic Income - Initial Class 0.75% - 0.61% - 1.36% 0.48% (15,16) 0.88% (14)
Utilities - Initial Class 0.75% - 0.11% - 0.86% - 0.86% (14)
SUMMIT (17)
Nasdaq-100 Index 0.35% - 0.30% - 0.65% - 0.65% (18)
Russell 2000 Small Cap Index 0.35% - 0.30% 0.02% 0.67% - 0.67%
S&P MidCap 400 Index 0.30% - 0.22% 0.01% 0.53% - 0.53%
THIRD AVENUE
Third Avenue Value 0.90% - 0.27% - 1.17% - 1.17%
VAN KAMPEN
Emerging Markets Equity - Class I 1.23% - 0.40% - 1.63% 0.01% 1.62% (19)
Global Value Equity - Class I 0.67% - 0.38% - 1.05% - 1.05%
International Magnum - Class I 0.80% - 0.38% - 1.18% 0.09% 1.09%(19)
U.S. Real Estate - Class I 0.74% - 0.27% - 1.01% - 1.01%
------------------------------------------------------------------------------------------------------------------------
(1) Except as otherwise noted, figures shown in the table are for the year ended
December 31, 2006 and are expressed as a percentage of the Fund's average daily
net assets. There is no guarantee that actual expenses will be the same as those
shown in the table
(2) Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the fund
invests. You incur these fees and expenses indirectly through the valuation of
the fund's investment in those investment companies. As a result, the Total
Expenses after Waivers and Reductions may exceed the Fund's limit on Total
Portfolio Fees, if any. The impact of the acquired fund fees and expense are
included in the total returns of the Fund.
(3) The Fund's advisor has contractually agreed to waive advisory fees and/or
reimburse expenses of Series I shares to the extent necessary to limit Total
Annual Fund Operating Expenses of Series I shares to 1/30% of average daily net
assets. The expense limitation agreement is in effect through at least April 30,
2008.
(4) Through April 30, 2008, the Fund's advisor has contractually agreed to waive
a portion of its advisory fees to the extent necessary so that the advisory fees
payable by the Fund does not exceed a specified maximum annual advisory fee
rate, wherein the fee rate includes breakpoints and is based upon net asset
levels. The Fund's maximum annual advisory fee rate ranges from 0.745% (for
average net assets up to $250 million) to 0.64% (for average net assets over $10
billion).
(5) Previously, the portfolio's Advisory Fees included an additional .04% in
Administrative Fees that are now included in Other Expenses.
(6) Effective December 1, 2006 through November 30, 2011, the Manager has
contractually agreed to waive .04% of its Advisory Fees.
-7-
(7) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase. The fund expenses are as of
December 31, 2006, and are based on the most recent shareholder report.
(8) The portfolio Advisor (Calvert Asset Management Company, Inc.) has
contractually agreed to limit annual portfolio operating expenses through April
30, 2008, as reflected above, except for Ameritas Core Strategies and Ameritas
MidCap Value which have caps of 0.95% and 1.50%, respectively. Under the terms
of the contractual expense limitation, operating expenses do not include
interest expense, brokerage commissions, taxes and extraordinary expenses. Each
Portfolio has an expense offset arrangement with the custodian bank whereby the
custodian's fees may be paid indirectly by credits earned on the Portfolio's
cash on deposit with the bank. These credits are used to reduce the Portfolio's
expenses. Under those circumstances where the Advisor has provided to the
Portfolio a contractual expense limitation, and to the extent any expense offset
credits are earned, the Advisor may benefit from the expense offset arrangement
and the Advisor's obligation under the contractual limitation may be reduced by
the credits earned.
(9) Management fees for the Ameritas Portfolios include both the investment
advisory fee and administrative service fee. The administrative service fee is
0.05% of the portfolio's average daily net assets.
(10) "Total Fees" reflect an indirect fee and fees before waivers. Indirect fees
result from the Portfolio's offset arrangement with the custodian bank whereby
the custodian's fees may be paid indirectly by credits earned on the Portfolio's
cash on deposit with the bank. These credits are used to reduce the Portfolio's
expenses. Net operating expenses after reductions for fees paid indirectly and
fee waivers would be as follows:
Ameritas Core Strategies 0.91%
Ameritas Income & Growth 0.77%
Ameritas MidCap Value 1.11%
CVS Income 0.87%
CVS Social Balanced 0.90%
CVS Social Equity 1.07%
CVS Social International Equity 1.79%
CVS Social Mid Cap Growth 1.15%
CVS Social Small Cap Growth 1.37%
(11) The Dreyfus Corporation has agreed, until December 31, 2007, to waive
receipt of its fees and/or assume the expenses of the portfolio so that the
expenses (excluding taxes, brokerage commissions, extraordinary expenses,
interest expenses and commitment fees on borrowings) do not exceed .90 of 1%.
(12) A portion of the brokerage commissions that the fund pays may be reimbursed
and used to reduce the fund's expenses. In addition, through arrangements with
the fund's custodian, credits realized as a result of uninvested cash balances
are used to reduce the fund's custodian expenses. These offsets may be
discontinued at any time. Including these reductions, the total class operating
expenses would have been:
VIP Asset Manager: Service Class 2 0.90%
VIP Contrafund: Service Class 2 0.90%
VIP Growth: Service Class 2 0.92%
VIP Overseas: Service Class 2 1.06%
(13) A portion of the brokerage commissions that the fund pays may be reimbursed
and used to reduce the fund's expenses. These offsets may be discontinued at any
time. Including this reduction, the total class operating expenses would have
been 1.02%.
(14) The fund has entered into an expense offset arrangement that reduces the
fund's custodian fee based upon the amount of cash maintained by the fund with
its custodian and dividend disbursing agent. Such fee reduction is not reflected
in the table. Had this fee reduction been taken into account, "Net Expenses"
would be lower.
(15) MFS has agreed in writing to bear the funds' expenses such that "Other
Expenses", determined without giving effect to the expense offset arrangements
described above, do not exceed 0.15% annually. This written agreement excludes
management fees, distribution and service fees, taxes, extraordinary expenses,
brokerage and transaction costs and investment-related expenses and will
continue until at least April 30, 2008.
(16) Effective August 1, 2006, MFS has agreed in writing to reduce its
management fee to 0.70% on average daily net assets up to $1 billion. During the
fund's most recent fiscal year, this reduction amounted to 0.02%. This written
agreement will remain in effect until modified by the fund's Board of Trustees.
(17) Figures are based on the actual expenses incurred by the Portfolio for the
year ended December 31, 2006. Actual Portfolio expenses may vary.
(18) The fund does not bear any direct operating expenses above the amount
disclosed; any additional direct operating expenses are borne by the adviser
according to the terms of the advisory agreement. Expenses of Acquired Funds are
not included in this arrangement.
(19) The fees disclosed reflect gross ratios prior to any voluntary
waivers/reimbursements of expenses by the adviser. The adviser has voluntarily
agreed to waive a portion or all of its management fee and/or reimburse expenses
to the extent necessary so that total annual operating expenses, excluding
certain investment related expenses such as foreign country tax expense and
interest expense on borrowing, do not exceed the "Operating Expense Limitation"
in the below table. The adviser may terminate these voluntary waivers at any
time at its sole discretion. After such reductions, the "Management Fee", "Other
Expenses" and "Total Annual Expenses", would be as follows:
Operating Expense Management Other Total Annual
Limitation Fees Expenses Expenses
Emerging Markets Equity Class I 1.60% (a) 1.22% 0.40% 1.62%
International Magnum Class I 1.05% (b) 0.71% 0.38% 1.09%
(a) UIF Emerging Market Equity expense cap decreased from 1.65% to
1.60% on June 1, 2006.
(b) UIF International Magnum expense cap changed from 1.15% to 1.05%
on June 1, 2006.
* Portfolios pay 12b-1 fees to us pursuant to Rule 12b-1 under the Investment
Company Act of 1940, which allows investment companies to pay fees out of
portfolio assets to those who sell and distribute portfolio shares. Some
portfolios may also pay 0.05 to 0.25 percent of annual portfolio assets for our
providing shareholder support and marketing services.
** "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by us. The Product is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Product. The Statement of Additional
Information sets forth certain additional disclaimers and limitations of
liabilities on behalf of S&P as set forth in the Licensing Agreement between us
and S&P.
-8-
EXAMPLES OF EXPENSES
The Examples below are intended to help you compare the cost of
investing in the Policy with the cost of investing in other variable annuity
policies. These costs include Policy owner transaction expenses, contract fees,
separate account annual expenses, and Subaccount underlying portfolio fees and
expenses.
The Examples assume that you invest $10,000 in the Policy for the time
periods indicated. The Examples also assume that your investment has a 5% return
each year and assume the underlying portfolio and Policy fees and expenses
indicated. The example amounts are illustrative only, and should not be
considered a representation of past or future expenses. Your actual expenses may
be higher or lower than those shown in the chart. Please note that although the
examples assume $10,000 premium to aid comparisons, our minimum premium for this
Policy is $25,000.
9-year Withdrawal Charge
------------------------------------------------------------------------------------
Surrender Policy at the Annuitize Policy at the Policy is neither
end of the time period.($) end of the time period.($) surrendered nor
annuitized. ($)
------------------------------------------------------------------------------------
EXAMPLE 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,451 $2,725 $3,862 $6,095 $1,451 $1,925 $3,162 $6,095 $651 $1,925 $3,162 $6,095
joint spousal (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,437 $2,685 $3,800 $5,998 $1,437 $1,885 $3,100 $5,998 $637 $1,885 $3,100 $5,998
single life (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Policy Expenses $1,345 $2,428 $3,401 $5,344 $1,345 $1,628 $2,701 $5,344 $545 $1,628 $2,701 $5,344
without GLWB Rider(1)
-------------------------------------------------------------------------------------------------------------------
Minimum Policy Expenses (2) $918 $1,168 $1,338 $1,409 $918 $368 $638 $1,409 $118 $368 $638 $1,409
-------------------------------------------------------------------------------------------------------------------
(1) Maximum Policy Expense Fees. This example assumes maximum charges of 1.00%
for Separate Account annual expenses, a $40 guaranteed maximum Policy fee
(although our current base Policy fee is $0), 2.20% of other Policy value annual
expenses for the most expensive combination of optional features with a 9-year
Withdrawal Charge (the Minimum Initial Premium, Expanded Free Withdrawal,
Expanded Estate Protection Benefit, and "Greater Of" Guaranteed Minimum Death
Benefit), applicable guaranteed maximum fee for the Guaranteed Lifetime
Withdrawal Benefit optional feature (0.95% for single life, 1.10% for joint
spousal) plus the maximum fees and expenses before any waivers or reductions of
any of the portfolio companies (1.86%).
(2) Minimum Policy Expense Fees. This example assumes current charges of 0.80%
for Separate Account annual expenses, plus the minimum fees and expenses after
any waivers or reductions of any of the portfolio companies (0.36%).
7-year Withdrawal Charge
------------------------------------------------------------------------------------
Surrender Policy at the Annuitize Policy at the Policy is neither
end of the time period. end of the time period. surrendered nor
($) ($) annuitized. ($)
------------------------------------------------------------------------------------
EXAMPLE 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,390 $2,531 $3,622 $6,345 $1,390 $2,031 $3,322 $6,345 $690 $2,031 $3,322 $6,345
joint spousal (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,375 $2,491 $3,562 $6,253 $1,375 $1,991 $3,262 $6,253 $675 $1,991 $3,262 $6,253
single life (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Policy Expenses $1,284 $2,237 $3,172 $5,628 $1,287 $1,737 $2,872 $5,628 $584 $1,737 $2,872 $5,628
without GLWB Rider (1)
-------------------------------------------------------------------------------------------------------------------
Minimum Policy Expenses (2) $849 $962 $1,097 $1,746 $849 $462 $797 $1,746 $149 $462 $797 $1,746
-------------------------------------------------------------------------------------------------------------------
(1) Maximum Policy Expense Fees. This example assumes maximum charges of 1.00%
for Separate Account annual expenses, a $40 guaranteed maximum Policy fee
(although our current base Policy fee is $0), 2.60% of other Policy value annual
expenses for the most expensive combination of optional features with a 7-year
Withdrawal Charge (the Minimum Initial Premium, Expanded Free Withdrawal,
Expanded Estate Protection Benefit, "Greater Of" Guaranteed Minimum Death
Benefit), and 7-year Withdrawal Charge, applicable guaranteed maximum fee for
the Guaranteed Lifetime Withdrawal Benefit optional feature (0.95% for single
life, 1.10% for joint spousal) plus the maximum fees and expenses before any
waivers or reductions of any of the portfolio companies (1.86%).
(2) Minimum Policy Expense Fees. This example assumes current charges of 0.80%
for Separate Account annual expenses, 0.30% for a 7-year Withdrawal Charge
feature, plus the minimum fees and expenses after any waivers or reductions of
any of the portfolio companies (0.36 %).
-9-
5-year Withdrawal Charge
------------------------------------------------------------------------------------
Surrender Policy at the Annuitize Policy at the Policy is neither
end of the time period. end of the time period. surrendered nor
($) ($) annuitized. ($)
------------------------------------------------------------------------------------
EXAMPLE 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,409 $2,683 $3,601 $6,465 $1,409 $2,083 $3,401 $6,465 709 $2,083 $3,401 $6,465
joint spousal (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Expenses with GLWB - $1,394 $2,644 $3,524 $6,375 $1,394 $2,044 $3,342 $6,375 $694 $2,044 $3,342 $6,375
single life (1)
-------------------------------------------------------------------------------------------------------------------
Maximum Policy Expenses - $1,303 $2,391 $3,156 $5,766 $1,303 $1,791 $2,956 $5,766 $603 $1,791 $2,956 $5,766
without GLWB Rider (1)
-------------------------------------------------------------------------------------------------------------------
Minimum Policy Expenses (2) $864 $1,108 $1,076 $1,911 $864 $508 $876 $1,911 $164 $508 $876 $1,911
-------------------------------------------------------------------------------------------------------------------
(1) Maximum Policy Expense Fees. This example assumes maximum charges of 1.00%
for Separate Account annual expenses, a $40 guaranteed maximum Policy fee
(although our current base Policy fee is $0), 2.80% of other Policy value annual
expenses for the most expensive combination of optional features with a 5-year
Withdrawal Charge (the Minimum Initial Premium, Expanded Free Withdrawal,
Expanded Estate Protection Benefit, "Greater Of" Guaranteed Minimum Death
Benefit), and 5-year Withdrawal Charge, applicable guaranteed maximum fee for
the Guaranteed Lifetime Withdrawal Benefit optional feature (0.95% for single
life, 1.10% for joint spousal) plus the maximum fees and expenses before any
waivers or reductions of any of the portfolio companies (1.86%).
(2) Minimum Policy Expense Fees. This example assumes current charges of 0.80%
for Separate Account annual expenses, 0.45% for a 5-year Withdrawal Charge
feature, plus the minimum fees and expenses after any waivers or reductions of
any of the portfolio companies (0.36%).
FINANCIAL INFORMATION
We provide Accumulation Unit value history for each of the Separate
Account variable investment options. Financial statements of the Subaccounts of
the Separate Account and our company are included in the Statement of Additional
Information. To learn how to get a copy, see the front or back page of this
prospectus.
CHARGES EXPLAINED (x = Base Policy Fee; y = Optional Feature Fee)
The following adds to information provided in the CHARGES section.
Please review both prospectus sections for information on charges.
WITHDRAWAL CHARGE
x We will deduct a withdrawal charge from Policy value upon a full
surrender or partial withdrawal. We may also deduct a withdrawal charge from
Policy value on the date annuity income payments begin from amounts applied to
provide annuity payments. We do not assess a withdrawal charge on premiums after
the second year since receipt that are then applied to the Life or Joint and
Last Survivor annuity income options. This charge partially covers our
distribution costs, including commissions and other promotional costs. Any
deficiency is met from our general account, including amounts derived from the
mortality and expense risk charge. If your Policy is issued as a 403(b) TSA
Policy, any withdrawal charges will be waived after our receipt of satisfactory
Written Notice on withdrawals:
(a) upon your separation of service after 9 years from the Policy Date;
(b) due to your disability within the meaning of Code Section 72(m)(7)
prior to your age 65.
The amount of a partial withdrawal you request plus any withdrawal
charge is deducted from the Policy value on the date we receive your withdrawal
request. Partial withdrawals (including any charge) are deducted from the
Subaccounts and the Fixed Account on a pro rata basis, unless you instruct us
otherwise. The oldest premium is considered to be withdrawn first, the next
oldest premium is considered to be withdrawn next, and so on (a "first-in,
first-out" basis). All premiums are deemed to be withdrawn before any earnings.
Optional Withdrawal Charge Features
y The optional withdrawal charge features are deducted monthly from
Policy value. These fees continue as long as the Policy is in force. Your
election of one of the optional withdrawal charge features must be made at issue
of the Policy.
-10-
Optional Free Withdrawal Features
The base Policy does not have any free withdrawal features (allowing
withdrawals not subject to a withdrawal charge).
y Two optional free withdrawal features are available: See the POLICY
DISTRIBUTIONS: Withdrawals section of this prospectus for details about these
features. These optional features have current fees which are deducted monthly
from Policy value. These fees continue as long as the Policy is in force.
y The TSA No Withdrawal Charge Rider and Hardship Waiver Rider fees are
deducted monthly from Policy value. Withdrawal charge fee rates are less for
Large Policies (initial premium $25,000 or more) than for Small Policies. The
withdrawal charge fee rate is also reduced when the Policy value exceeds $50,000
on a Policy Year anniversary. These optional feature fees continue as long as
the Policy is in force.
MORTALITY AND EXPENSE RISK CHARGE
x We impose a daily fee to compensate us for the mortality and expense
risks we have under the Policy. This fee is reflected in the Accumulation Unit
values for each Subaccount.
Our mortality risk arises from our obligation to make annuity payments
and to pay death benefits prior to the Annuity Date. The mortality risk we
assume is that annuitants will live longer than we project, so our cost in
making annuity payments will be higher than projected. However, an annuitant's
own longevity, or improvement in general life expectancy, will not affect the
periodic annuity payments we pay under your Policy. Another mortality risk we
assume is that at your death the death benefit we pay will be greater than the
Policy value.
Our expense risk is that our costs to administer your Policy will
exceed the amount we collect through administrative charges.
If the mortality and expense risk charge does not cover our costs, we
bear the loss, not you. If the charge exceeds our costs, the excess is our
profit. If the withdrawal charge does not cover our Policy distribution costs,
the deficiency is met from our general account assets, which may include
amounts, if any, derived from this mortality and expense risk charge.
ADMINISTRATIVE CHARGES
Administrative fees help us cover our cost to administer your Policy.
Administrative Expense Fee
x This annual fee is reflected in the Accumulation Unit values for each
Subaccount.
Annual Policy Fee
x We reserve the right to charge an annual Policy fee.
y The optional Minimum Initial Premium feature has a current annual
Policy fee.
Any Policy fee is deducted from your Policy value on the last Business
Day of each Policy Year and upon a complete surrender. This fee is levied by
canceling Accumulation Units and making a deduction from the Fixed Account. It
is deducted from each Subaccount and the Fixed Account in the same proportion
that the value in each Subaccount and the Fixed Account bears to the total
Policy value. For the optional Minimum Initial Premium feature for TSA Policies,
we will also waive the annual Policy fee for Policy Years when total net premium
(premium less withdrawals) is $2,000 or greater. We currently waive any Policy
fee if the Policy value is at least $50,000 on a Policy Anniversary.
TRANSFER FEE
The first 15 transfers per Policy Year from Subaccounts or the Fixed
Account are free. A transfer fee may be imposed for any transfer in excess of 15
per Policy Year. The transfer fee is deducted pro rata from each Subaccount
(and, if applicable, the Fixed Account) in which the Owner is invested.
TAX CHARGES
Some states and municipalities levy a tax on annuities, currently
ranging from 0% to 3.5% of your premiums. These tax rates, and the timing of the
tax, vary and may change. Presently, we deduct the charge for the
-11-
tax in those states with a tax either (a) from premiums as they are received, or
(b) upon applying proceeds to an annuity income option.
No charges are currently made for taxes other than premium taxes. We
reserve the right to levy charges in the future for taxes or other economic
burdens resulting from taxes that we determine are properly attributable to the
Separate Account.
403(b) TAX SHELTERED ANNUITY CHARGES
403(b) Tax Sheltered Annuity endorsements issued after 1/1/02 include a
403(b) TSA Endorsement 7-Year Withdrawal Charge schedule in all states except
TX, SC and WA; in those states the base Policy 9-Year Withdrawal Charge schedule
applies. The 403(b) TSA Endorsement also includes a loan feature, and waiver of
withdrawal charge upon disability or separation from service after the ninth
Policy Year anniversary.
FEES CHARGED BY THE PORTFOLIOS
x Each Subaccount's underlying portfolio has investment advisory fees
and expenses. They are set forth in this prospectus' CHARGES section and
described in more detail in each fund's prospectus. A portfolio's fees and
expenses are not deducted from your Policy value. Instead, they are reflected in
the daily value of portfolio shares which, in turn, will affect the daily
Accumulation Unit value of the Subaccounts. These fees and expenses help to pay
the portfolio's investment advisory and operating expenses.
VALUE+ OPTION CHARGE
o If you elected the Value+ Option, your current Separate Account
annual expenses will total 1.22% of the average net asset value for the first
nine Policy Years, assuming no charges for other riders. If you did not elect
the Value+ Option, your current Separate Account annual expenses will be 0.80%
for all Policy Years, again assuming no charges for other riders. If you elected
the Value+ Option, your Separate Account annual expenses will total 1.22% of the
average net asset value for the first nine Policy Years, assuming no charges for
other riders.
o GUARANTEED LIFETIME WITHDRAWAL BENEFIT ("GLWB") CHARGE
The guaranteed maximum and current annual charges for the GLWB rider
are listed in the CHARGES section of this prospectus. Each fee is stated as a
percentage that is multiplied by the Policy value. The current charge will be
deducted from the Policy value on each Monthly Anniversary, beginning with the
Rider Activation Date. If you activate this rider, the charges for the Policy
and for the rider will be deducted on a pro-rata basis from all subaccounts in
the asset allocation model you select.
The rider charge is subject to change upon Rider Activation Date, rider
anniversary, or upon reset as described in the Reset Feature section of the
rider description. The rider charge will not exceed the guaranteed maximum fee
for this rider listed in the CHARGES section. The rider charge will not be
deducted while the rider is inactive, after the Policy value reduces to zero, or
if the rider is terminated.
OTHER OPTIONAL FEATURE CHARGES
y Charges for each of the other optional features are shown in this
prospectus' CHARGES section.
WAIVER OF CERTAIN CHARGES
When the Policy is sold in a manner that results in savings of sales or
administrative expenses, we reserve the right to waive all or part of any fee we
charge under the Policy (excluding fees charged by the portfolios). Factors we
consider include one or more of the following: size and type of group to whom
the Policy is issued; amount of expected premiums; relationship with us
(employee of us or an affiliated company, receiving distributions or making
transfers from other policies we or one of our affiliates issue or transferring
amounts held under qualified retirement plans we or one of our affiliates
sponsor); type and frequency of administrative and sales services provided; or
level of annual maintenance fee and withdrawal charges. In an exchange of
another policy we or an affiliated company issued and where the withdrawal
charge has been waived, the withdrawal charge for this Policy may be determined
based on the dates premiums were received in the prior policy. Any fee waiver
will not be discriminatory and will be done according to our rules in effect at
the time the Policy is issued. We reserve the right to change these rules. The
right to waive any charges may be subject to state approval.
-12-
INVESTMENT OPTIONS
We recognize you have very personal goals and investment strategies.
The Policy allows you to choose from a wide array of investment options - each
chosen for its potential to meet specific investment objectives.
You may allocate all or a part of your premiums among the Separate
Account variable investment options or the Fixed Account fixed interest rate
option. Allocations must be in whole percentages and total 100%. The variable
investment options, which invest in underlying portfolios, are listed and
described in this section of this prospectus.
The value of your Policy will go up () or down () based on the investment
performance of the variable investment options you choose. The investment
results of each variable investment option are likely to differ significantly,
and vary over time. They do not earn a fixed interest rate. Please consider
carefully, and on a continuing basis, which investment options best suit your
long-term investment objectives and risk tolerance.
SEPARATE ACCOUNT VARIABLE INVESTMENT OPTIONS
The Separate Account provides you with variable investment options in
the form of underlying portfolio investments. Each underlying portfolio is an
open-end investment management company. When you allocate investments to an
underlying portfolio, those investments are placed in a Subaccount of the
Separate Account corresponding to that portfolio, and the Subaccount in turn
invests in the portfolio. The Policy value of your Policy depends directly on
the investment performance of the portfolios that you select.
The underlying portfolios in the Separate Account are NOT publicly traded mutual
funds, and are NOT the same as publicly traded mutual funds with very similar
names. They are only available as separate account investment options in life
insurance or variable annuity policies issued by insurance companies, or through
participation in certain qualified pension or retirement plans.
Even if the investment options and policies of some underlying portfolios
available under the Policy may be very similar to the investment objectives and
policies of publicly traded mutual funds that may be managed by the same
investment adviser, the investment performance and results of the portfolios
available under the Policy may vary significantly from the investment results of
such other publicly traded mutual funds.
You should read the prospectuses for the underlying portfolios together with
this prospectus for more information.
The Separate Account is registered with the SEC as a unit investment
trust. However, the SEC does not supervise the management or the investment
practices or policies of the Separate Account or Ameritas. The Separate Account
was established as a separate investment account of Ameritas Variable Life
Insurance Company ("AVLIC") under Nebraska law on May 28, 1987. Effective May 1,
2007, AVLIC merged with and into Ameritas, and the Separate Account was
transferred to Ameritas. Ameritas is now the issuer of the Policies and is the
"Depositor" of the Separate Account. (See "About Our Company" in the prospectus
for further information.) Under Nebraska law, Ameritas owns the Separate Account
assets, but they are held separately from our other assets and are not charged
with any liability or credited with any gain of business unrelated to the
Separate Account. Any and all distributions made by the underlying portfolios,
with respect to the shares held by the Separate Account, will be reinvested in
additional shares at net asset value. We are responsible to you for meeting the
obligations of the Policy, but we do not guarantee the investment performance of
any of the variable investment options' underlying portfolios. We do not make
any representations about their future performance.
You bear the risk that the variable investment
options you select may fail to meet their
objectives, that they could go down in value,
and that you could lose principal.
Each Subaccount's underlying portfolio operates as a separate
investment fund, and the income or losses of one generally has no effect on the
investment performance of any other. Complete descriptions of each variable
investment option's investment objectives and restrictions and other material
information related to an investment in the variable investment option are
contained in the prospectuses for each of the series funds which accompany this
prospectus.
The Separate Account Subaccount underlying portfolios listed below are
designed primarily as investments for variable annuity and variable life
insurance policies issued by insurance companies. They are not publicly traded
mutual funds available for direct purchase by you. There is no assurance the
investment objectives will be met.
This information is just a summary for each underlying portfolio. You
should read the series fund prospectus for an underlying portfolio accompanying
this prospectus for more information about that portfolio, including detailed
information about the portfolio's fees and expenses, investment strategy and
investment objective. To get a copy of any portfolio prospectus, contact your
representative or us as shown on the Table of Contents page or the last page of
this prospectus.
-13-
---------------------------------------- -----------------------------------------------------------------------
Separate Account
Portfolio Summary of Investment Strategy/Fund Type
---------------------------------------- --------------------------------------------------------------------------
AIM FUNDS Offered through AIM Variable Insurance Funds
Advised by AIM Advisors, Inc.
---------------------------------------- --------------------------------------------------------------------------
AIM V.I. Dynamics - Series I Investment objective is long-term capital growth.
---------------------------------------- --------------------------------------------------------------------------
ALGER (Class O) Offered through The Alger American Fund
Advised by Fred Alger Management, Inc.
---------------------------------------- --------------------------------------------------------------------------
Alger American Balanced Seeks current income and long-term capital appreciation.
---------------------------------------- --------------------------------------------------------------------------
AMERICAN CENTURY(R) Offered through American Century Variable Portfolios, Inc.
Advised by American Century Investment Management, Inc.
---------------------------------------- --------------------------------------------------------------------------
VP Income & Growth The fund seeks capital growth by investing in common
stocks. Income is a secondary objective.
---------------------------------------- --------------------------------------------------------------------------
AMERITAS PORTFOLIOS Offered through Calvert Variable Series, Inc. Ameritas Portfolios*
- subadvisor Advised by Calvert Asset Management Company, Inc.
---------------------------------------- --------------------------------------------------------------------------
Ameritas Core Strategies - Thornburg Growth and secondarily, income.
Investment Management, Inc.
---------------------------------------- --------------------------------------------------------------------------
Ameritas Income & Growth - Fred Alger Income and secondarily, growth.
Management, Inc. (Fred Alger)
---------------------------------------- --------------------------------------------------------------------------
Ameritas Index 500 - Summit Investment
Partners, Inc. (through April 29, 2007,
the subadvisor was SSgA Funds Investment results that correspond to total return of common stocks
Management, Inc. (SSgA)) publicly traded in U.S., as represented by the S&P 500 Index.
---------------------------------------- --------------------------------------------------------------------------
Ameritas MidCap Growth - Fred Alger Growth
---------------------------------------- --------------------------------------------------------------------------
Ameritas MidCap Value - RiverSource Growth.
Investments, LLC (through April 29,
2007, the subadvisor was Harris
Associates, L.P.)
---------------------------------------- --------------------------------------------------------------------------
Ameritas Money Market - No Subadvisor Money Market
---------------------------------------- --------------------------------------------------------------------------
Ameritas Small Capitalization - Eagle Growth.
Asset Management, Inc.
---------------------------------------- --------------------------------------------------------------------------
Ameritas Small Company Equity - OFI Growth.
Institutional Asset Management Inc.
---------------------------------------- --------------------------------------------------------------------------
CALVERT PORTFOLIOS Offered through Calvert Variable Series, Inc. Calvert Portfolios*
- subadvisor Advised by Calvert Asset Management Company, Inc.
---------------------------------------- --------------------------------------------------------------------------
CVS Income - No Subadvisor Income.
---------------------------------------- --------------------------------------------------------------------------
CVS Social Balanced - Equity Portion: Income and Growth.
New Amsterdam Partners LLC (New
Amsterdam) and SSgA; Fixed Income
Portion: No Subadvisor
---------------------------------------- --------------------------------------------------------------------------
CVS Social Equity - Atlanta Capital Growth.
Management Company, L.L.C.
---------------------------------------- --------------------------------------------------------------------------
CVS Social International Equity - Growth.
Acadian Asset Management, Inc.
---------------------------------------- --------------------------------------------------------------------------
CVS Social Mid Cap Growth - New Growth.
Amsterdam
---------------------------------------- --------------------------------------------------------------------------
DREYFUS Offered through Dreyfus Investment Portfolios
Advised by The Dreyfus Corporation
---------------------------------------- --------------------------------------------------------------------------
MidCap Stock - Service Shares Seeks returns greater than the total return performance of
publicly traded common stocks of medium-sized domestic in the
aggregate, as represented by the Standard and Poor's MidCap 400 Index.
---------------------------------------- --------------------------------------------------------------------------
FIDELITY (R) - Service Class 2 Offered through Variable Insurance Products
Advised by Fidelity Management & Research Company
---------------------------------------- --------------------------------------------------------------------------
VIP Asset Manager SM Seeks high total return with reduced risk over the long term by
allocating assets among stocks, bonds and short-term instruments.
---------------------------------------- --------------------------------------------------------------------------
VIP Asset Manager: Growth(R) Seeks to maximize total return by allocating assets among stocks, bonds
and short-term instruments and other investments.
---------------------------------------- --------------------------------------------------------------------------
VIP Contrafund(R) Seeks long-term capital appreciation.
---------------------------------------- --------------------------------------------------------------------------
VIP Equity-Income Seeks reasonable income, to achieve yield which exceeds the
composite yield on the securities comprising the S&P 500.
---------------------------------------- --------------------------------------------------------------------------
VIP Growth Seeks capital appreciation.
---------------------------------------- --------------------------------------------------------------------------
VIP High Income Income and Growth.
---------------------------------------- --------------------------------------------------------------------------
VIP Investment Grade Bond Bond.
---------------------------------------- --------------------------------------------------------------------------
VIP Overseas Seeks long-term growth.
---------------------------------------- --------------------------------------------------------------------------
MFS - Initial Class Offered through MFS Variable Insurance Trust
Advised by Massachusetts Financial Services Company
---------------------------------------- --------------------------------------------------------------------------
New Discovery Capital appreciation.
---------------------------------------- --------------------------------------------------------------------------
Strategic Income Seeks total return with an emphasis on high current income, but
also considering capital appreciation..
---------------------------------------- --------------------------------------------------------------------------
Utilities Total return.
---------------------------------------- --------------------------------------------------------------------------
-14-
Separate Account
Portfolio Summary of Investment Strategy/Fund Type
---------------------------------------- --------------------------------------------------------------------------
SUMMIT Offered through Summit Mutual Funds Inc. Summit Pinnacle Series*
Advised by Summit Investment Partners, Inc.
---------------------------------------- --------------------------------------------------------------------------
Nasdaq-100 Index Growth.
---------------------------------------- --------------------------------------------------------------------------
Russell 2000 Small Cap Index Growth.
---------------------------------------- --------------------------------------------------------------------------
S&P MidCap 400 Index Growth.
---------------------------------------- --------------------------------------------------------------------------
THIRD AVENUE Offered through Third Avenue Variable Series Trust
Advised by Third Avenue Management LLC
---------------------------------------- --------------------------------------------------------------------------
Third Avenue Value Long-term capital appreciation.
---------------------------------------- --------------------------------------------------------------------------
VAN KAMPEN Offered through The Universal Institutional Funds, Inc.
Advised by Morgan Stanley Investment Management Inc.
dba "Van Kampen"
---------------------------------------- --------------------------------------------------------------------------
Emerging Markets Equity - Class I Long-term capital appreciation by investing primarily in
growth-oriented equity securities of issuers in emerging
market countries.
---------------------------------------- --------------------------------------------------------------------------
Global Value Equity - Class I Long-term capital appreciation by investing primarily in equity
securities of issuers throughout the world, including U.S. issuers.
---------------------------------------- --------------------------------------------------------------------------
International Magnum - Class I Long-term capital appreciation by investing primarily
in equity securities of non-U.S. issuers domiciled in EAFE countries.
---------------------------------------- --------------------------------------------------------------------------
U.S. Real Estate - Class I Above average current income and long-term capital appreciation by
investing primarily in equity securities of companies in the U.S.
real estate industry, including real estate investment trusts.
-------------------------------------------------------------------------------------------------------------------
* These funds and their investment advisers are part of the UNIFI Mutual Holding
Company, the ultimate parent of Ameritas.
Adding, Deleting, or Substituting Variable Investment Options
We do not control the Subaccounts' underlying portfolios, so we
cannot guarantee that any of the portfolios will always be available. We retain
the right to change the investments of the Separate Account, and to eliminate
the shares of any Subaccount's underlying portfolio and substitute shares of
another series fund portfolio. If the shares of the underlying portfolio are no
longer available for investment or if, in our judgment, investment in the
portfolio would be inappropriate in view of the purposes of the Separate
Account, we will first notify you and receive any necessary SEC and state
approval before making such a change. New Separate Account underlying portfolios
may be added, or existing funds eliminated, when, in our sole discretion,
conditions warrant a change. If a portfolio is eliminated, we will ask you to
reallocate any amount in the eliminated portfolio and/or change any future
allocations to that eliminated portfolio. If you do not reallocate these
amounts, and/or change any future allocations, we will automatically reinvest
them in the Ameritas Money Market Subaccount.
New Separate Account underlying portfolios may be added, or existing
funds eliminated, when, in our sole discretion, conditions warrant a change. If
a portfolio is eliminated, we will ask you to reallocate any amount in the
eliminated portfolio. If you do not reallocate these amounts, we will
automatically reinvest them in the Ameritas Money Market Subaccount.
If we make a portfolio substitution or change, we may change the Policy
to reflect the substitution or change. Our Separate Account may be (i) operated
as an investment management company or any other form permitted by law, (ii)
deregistered with the SEC if registration is no longer required, or (iii)
combined with one or more other separate accounts. To the extent permitted by
law, we also may transfer assets of the Separate Account to other accounts.
FIXED ACCOUNT FIXED INTEREST RATE OPTION
There is one fixed interest rate option ("Fixed Account"), where
we bear the investment risk. We guarantee that you will earn a minimum interest
rate that will yield at least 3% per year, compounded annually. We may declare a
higher current interest rate. However, you bear the risk that we will not credit
more interest than will yield the minimum guaranteed rate per year for the life
of the Policy. We have sole discretion over how assets allocated to the Fixed
Account are invested, and we bear the risk that those assets will perform better
or worse than the amount of interest we have declared. Assets in the Fixed
Account are subject to claims by creditors of the company. The focus of this
prospectus is to disclose the Separate Account aspects of the Policy. The Fixed
Account investment option is not available for Policies issued in the States of
Oregon or Washington.
All amounts allocated to the Fixed Account become assets of our general account.
Interest in the general account has not been registered with the SEC and is not
subject to SEC regulation, nor is the general account registered as an
investment company with the SEC. Therefore, SEC staff have not reviewed the
Fixed Account disclosures in this prospectus.
We reserve the right to credit a bonus interest to premium payments
made to the Fixed Account for Policy Owners who participate in the Enhanced
Dollar Cost Averaging ("EDCA") program. The EDCA will be available for new
premium only, not transfers from other Subaccounts or the Fixed Account. New
premium includes any money noted on an application. Each premium allocated to
the EDCA must be at least $1,500. We will transfer premiums allocated to the
EDCA monthly over a period of six months, beginning one month after the date of
premium receipt. In the event you withdraw or transfer monies allocated to the
EDCA, we will stop crediting
-15-
interest under the EDCA program and transfer any remaining balance to the
Ameritas Money Market Subaccount. We reserve the right to discontinue offering
the EDCA program at any time.
TRANSFERS
The Policy is designed for long-term investment, not for use with
professional "market timing" services or use with programmed, large or frequent
transfers. Excessive transfers could harm other policy owners, annuitants and
beneficiaries by having a detrimental effect on investment portfolio management.
In addition to the right of the Portfolio to impose redemption fees on
short-term trading, we reserve the right to reject any specific premium
allocation or transfer request, if in the judgment of a Subaccount portfolio
fund advisor, a Subaccount portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or if Policy owners
would otherwise potentially be adversely affected.
Transferring money out of a Subaccount within 60 days of a purchase may
be considered market timing. However, any portfolio fund advisor may establish
their own standards, and each transaction may be evaluated on its own.
Ultimately the portfolio fund advisor has the authority to make this
determination.
Subject to restrictions during the "right to examine period" and prior
to the Annuity Date, you may transfer Policy value from one Subaccount to
another, from the Separate Account to the Fixed Account, or from the Fixed
Account to any Subaccount, subject to these rules:
Transfer Rules:
o A transfer is considered any single request to move assets from
one or more Subaccounts or the Fixed Account to one or more of
the other Subaccounts or the Fixed Account.
o We must receive notice of the transfer - either Written Notice,
an authorized telephone transaction, or by Internet when
available. Transfer requests by facsimile, telephone, or Internet
must be sent to us by 3:00 p.m. Central Time for same-day
processing. Requests received later are processed on the next
trading day. Fax requests must be sent to us at 402-467-7923. If
requests are faxed elsewhere, we will process them as of the day
they are received by our trading unit.
o The transferred amount must be at least $250, or the entire
Subaccount or Fixed Account value if it is less. (If the value
remaining after a transfer will be less than $250 in a Subaccount
or $100 in the Fixed Account, we will include that amount as part
of the transfer.)
- If the Dollar Cost Averaging systematic transfer program is
used, then the minimum transfer amount out of a Subaccount
or the Fixed Account is the lesser of $100 or the balance in
the Subaccount or Fixed Account. Under this program, the
maximum amount that may be transferred from the Fixed
Account each month is 1/36th of the value of the Fixed
Account at the time the Dollar Cost Averaging program is
established. While a Dollar Cost Averaging program is in
effect, elective transfers out of the Fixed Account are
prohibited.
- The Portfolio Rebalancing and Earnings Sweep systematic
transfer programs have no minimum transfer limits.
o The first 15 transfers each Policy Year are free. Thereafter,
transfers may result in a $10 charge for each transfer. This fee
is deducted on a pro-rata basis from balances in all Subaccounts
and the Fixed Account; it is not subtracted from the amount of
the transfer. Transfers under any systematic transfer program do
count toward the 15 free transfer limit.
o A transfer from the Fixed Account (except made pursuant to a
systematic transfer program):
- may be made only once each Policy Year;
- may be delayed up to six months;
- is limited during any Policy Year to the greater of:
- 25% of the Fixed Account value on the date of the
transfer during that Policy Year;
- the greatest amount of any similar transfer out of the
Fixed Account during the previous 13 months; or
- $1,000.
o We reserve the right to limit transfers, or to modify transfer
privileges, and we reserve the right to change the transfer rules
at any time.
o If the Policy value in any Subaccount falls below $250, we may
transfer the remaining balance, without charge, to the Ameritas
Money Market Subaccount.
o In the event you authorize telephone or Internet transfers, we are
not liable for telephone or Internet instructions that we in good
faith believe you authorized. We will employ reasonable procedures
to confirm that instructions are genuine.
THIRD-PARTY SERVICES
Where permitted and subject to our rules, we may accept your
authorization to have a third party (such as your sales representative or
someone else you name) exercise transfers or investment allocations on your
behalf. Third-party transfers and allocations are subject to the same rules as
all other transfers and allocations. You can make this election on the
application or by sending us Written Notice. Please note that any person or
entity you authorize to make transfers or allocations on your behalf, including
any investment advisory, asset allocation, money
-16-
management or timing service, does so independently from any agency relationship
they may have with us for the sale of the Policies. They are accountable to you
alone for such transfers or allocations. We are not responsible for such
transfers or allocations on your behalf, or recommendations to you, by such
third-party services. You should be aware that fees charged by such third
parties for their service are separate from and in addition to fees paid under
the Policy.
DISRUPTIVE TRADING PROCEDURES
The Policy is not designed to serve as a vehicle for frequent trading
in response to short-term fluctuations in the market. Such frequent trading,
programmed transfers, or transfers that are large in relation to the total
assets of a Subaccount's underlying portfolio can disrupt management of a
Subaccount's underlying portfolio and raise expenses. This in turn can hurt
performance of an affected Subaccount and therefore hurt your Policy's
performance.
Organizations or individuals that use market timing investment strategies and
make frequent or other disruptive transfers should not purchase the Policy.
Policy Owners should be aware that we are contractually obligated
to provide Policy Owner transaction data relating to trading activities to the
underlying funds on written request and, on receipt of written instructions from
a fund, to restrict or prohibit further purchases of transfers by Policy Owners
identified by an underlying fund as having engaged in transactions that violate
the trading policies of the fund.
We reserve the right to reject or restrict, in our sole discretion,
transfers initiated by a market timing organization or individual or other party
authorized to give transfer instructions. We further reserve the right to impose
restrictions on transfers that we determine, in our sole discretion, will
disadvantage or potentially hurt the rights or interests of other Policy Owners.
Restrictions may include changing, suspending or terminating telephone, on-line
and facsimile transfer privileges. We will enforce any Subaccount underlying
portfolio manager's restrictions imposed upon transfers considered by the
manager to be disruptive. Our disruptive trading procedures may vary from
Subaccount to Subaccount, and may also vary due to differences in operational
systems and contract provisions. However, any Subaccount restrictions will be
uniformly applied.
There is no assurance that the measures we take will be effective in
preventing market timing or other excessive transfer activity. Our ability to
detect and deter disruptive trading and to consistently apply our disruptive
trading procedures may be limited by operational systems and technological
limitations. The discretionary nature of our disruptive trading procedures may
result in some Policy owners being able to market time while other Policy owners
bear the harm associated with timing. Also, because other insurance companies
and retirement plans may invest in Subaccount underlying portfolios, we cannot
guarantee that Subaccount underlying portfolios will not suffer harm from
disruptive trading within contracts issued by them.
Excessive Transfers
We reserve the right to restrict transfers if we determine you are
engaging in a pattern of transfers that may disadvantage Policy Owners.
In making this determination, we will consider, among other things:
o the total dollar amount being transferred;
o the number of transfers you make over a period of time;
o whether your transfers follow a pattern designed to take
advantage of short term market fluctuations, particularly within
certain Subaccount underlying portfolios;
o whether your transfers are part of a group of transfers made by a
third party on behalf of individual Policy Owners in the group;
and
o the investment objectives and/or size of the Subaccount
underlying portfolio.
Third Party Traders
We reserve the right to restrict transfers by any firm or any other
third party authorized to initiate transfers on behalf of multiple
Policy Owners if we determine such third party trader is engaging in a
pattern of transfers that may disadvantage Policy Owners. In making
this determination, we may, among other things:
o reject the transfer instructions of any agent acting under a
power of attorney on behalf of more than one Policy Owner, or
o reject the transfer or exchange instructions of individual Policy
Owners who have executed transfer forms which are submitted by
market timing firms or other third parties on behalf of more than
one Policy Owner.
We will notify affected Policy Owners before we limit transfers, modify
transfer procedures or refuse to complete a transfer. Transfers made pursuant to
participation in a dollar cost averaging, portfolio rebalancing, earnings sweep
or asset allocation program are not subject to these disruptive trading
procedures. See the sections of this prospectus describing those programs for
the rules of each program.
-17-
SYSTEMATIC TRANSFER PROGRAMS
We offer several systematic transfer programs. We reserve the right to
alter or terminate these programs upon thirty days written notice.
Dollar Cost Averaging
The Dollar Cost Averaging program allows you to automatically transfer,
on a periodic basis, a set dollar amount or percentage from the Ameritas Money
Market Subaccount or the Fixed Account to any other Subaccount(s) or the Fixed
Account. Requested percentages are converted to a dollar amount. You can begin
Dollar Cost Averaging when you purchase the Policy or later. You can increase or
decrease the amount or percentage of transfers or discontinue the program at any
time. Dollar Cost Averaging is intended to limit loss by resulting in the
purchase of more Accumulation Units when a portfolio's value is low, and fewer
units when its value is high. However, there is no guarantee that such a program
will result in a higher Policy value, protect against a loss, or otherwise
achieve your investment goals.
As discussed at "Fixed Account Fixed Interest Rate Option," we also
reserve the right to credit bonus interest on purchase payments allocated to the
Fixed Account for Policy Owners who participate in the Enhanced Dollar Cost
Averaging program. We refer to this bonus interest as EDCA. The Dollar Cost
Averaging program and/or the EDCA program may not be available in all states and
in all markets or through all broker-dealers who sell the Policies.
Dollar Cost Averaging Program Rules:
o There is no additional charge for the Dollar Cost Averaging
program.
o We must receive notice of your election and any changed
instruction - either Written Notice, by telephone transaction
instruction, or by Internet when available.
o Automatic transfers can only occur monthly.
o The minimum transfer amount out of the Ameritas Money Market
Subaccount or the Fixed Account is the lesser of $250 or the
balance in the Subaccount or Fixed Account. Under this program,
the maximum amount that may be transferred from the Fixed Account
each month is 1/36th of the Fixed Account value at the time
Dollar Cost Averaging is established. While a Dollar Cost
Averaging program is in effect, elective transfers out of the
Fixed Account are prohibited. There is no maximum transfer amount
limitation applicable to any of the Subaccounts.
o Dollar Cost Averaging program transfers cannot begin before the
end of a Policy's "right to examine" period.
o You may specify that transfers be made on the 1st through the
28th day of the month. Transfers will be made on the date you
specify (or if that is not a Business Day, then on the next
Business Day). If you do not select a date, the program will
begin on the next Policy Month date following the date the
Policy's "right to examine" period ends.
o You can limit the number of transfers to be made, in which case
the program will end when that number has been made. Otherwise,
the program will terminate when the amount remaining in the
Ameritas Money Market Subaccount or the Fixed Account is less
than $100.
o Dollar Cost Averaging is not available when the Portfolio
Rebalancing Program is elected.
Portfolio Rebalancing
The Portfolio Rebalancing program allows you to rebalance your Policy
value among designated Subaccounts only as you instruct. You may change your
rebalancing allocation instructions at any time. Any change will be effective
when the next rebalancing occurs.
Portfolio Rebalancing Program Rules:
o There is no additional charge for the Portfolio Rebalancing
program.
o The Fixed Account is excluded from this program.
o You must request the rebalancing program, give us your
rebalancing instructions, or request to end this program either
by Written Notice, by telephone transaction instruction, or by
Internet when available.
o You may have rebalancing occur quarterly, semi-annually or
annually.
Earnings Sweep
The Earnings Sweep program allows you to sweep earnings from your
Subaccounts to be rebalanced among designated investment options (Subaccounts or
the Fixed Account), either based on your original Policy allocation of premiums
or pursuant to new allocation instructions. You may change your Earnings Sweep
program instructions at any time. Any change will be effective when the next
sweep occurs.
Earnings Sweep Program Rules:
o There is no additional charge for the Earnings Sweep program.
o The Fixed Account is included in this program.
o You must request the Earnings Sweep program, give us your
allocation instructions, or request to end this program either by
Written Notice, by telephone transaction instruction, or by
Internet when available.
o You may have your earnings sweep quarterly, semi-annually or
annually.
-18-
MODEL ASSET ALLOCATION PROGRAM
We may offer a model asset allocation program. However, you always have
the ability to construct your own asset allocation plan from among the
investment options available in your Policy. Model asset allocation programs are
intended to match model risk tolerance and investment objectives with the
investment options available in your Policy.
To assist you in your selection of an asset allocation model, our Model
Asset Allocation program uses the Morningstar Asset Allocator. This tool was
developed by Morningstar Associates, LLC ("Morningstar") and is offered to you
through a license agreement between Morningstar and our affiliate Ameritas
Investment Corp. ("AIC"). The Model Asset Allocation program consists of five
models, ranging from aggressive to conservative. Morningstar provides AIC with
ongoing recommendations and monitoring of the portfolios that comprise the
models.
To participate in the asset allocation program:
o AIC will serve as your investment adviser fiduciary for the
program solely for purposes of development of the models and
periodic updates to the models. You must give AIC your written
consent and discretionary authority for AIC to give us
instructions to allocate your premiums (or, for an existing
Policy, Policy value) pursuant to the allocations of the model
you select. AIC will also periodically instruct us to change your
allocations consistent with any changes to the model made by AIC
as recommended by Morningstar. AIC has no discretionary authority
to execute any other transfers for your Policy.
o You must complete the Morningstar Asset Allocator Questionnaire.
o You must allocate all of your Policy value to one asset
allocation model. We must receive notice of your asset allocation
model election either by written notice or Internet (when
available) before we can begin a program for you. Only you can
select which model is best for you. The Asset Allocator
Questionnaire can be an aid, but neither it nor AIC will make
this decision for you. You may wish to consult with your own
financial professional to determine whether participation in the
program is best for you, and if so, which model is most suitable.
o Each calendar quarter we will automatically rebalance the
Subaccount values to be consistent with the allocation
percentages for the program model that you elected. Such
rebalancing will be disclosed in quarterly statements to you.
Performance of each model is updated daily on our website and is
available upon request.
o Annually, AIC will re-evaluate and may make changes to each
investment level model based upon Morningstar's recommendations.
When AIC updates the models, we will send you written notice of
the updated models at least 30 days in advance of the date the
updated models are to be effective. If you wish to accept the
changes in your selected model, you will not need to take any
action, as your Policy value and any subsequent premium will be
automatically reallocated pursuant to the updated model. If you
do not wish to accept the changes to your selected model, you can
change to a different model or withdraw from the Model Asset
Allocation program.
o If you are currently participating in a Model Asset Allocation
model and you make changes to your allocations outside the model,
you will not receive future notifications of model changes. You
will then be considered as having withdrawn from the Model Asset
Allocation program and as having cancelled your relationship with
AIC for purposes of implementing the program with your Policy.
o AIC is compensated by us as principal underwriter for the
Policies. We and AIC may also receive fees for administrative
services from other portfolios in the models. This additional
compensation and related responsibilities may create conflicts of
interest as AIC determines what portfolios should be in the
models. However, we believe this risk is reduced or eliminated by
contracting with Morningstar to independently evaluate and
recommend the selection, allocation weighting, and periodic
updates regarding portfolios in the models.
The GLWB rider requires that, beginning on the rider activation date,
you may participate only in certain asset allocation models. The models
available for use with the GLWB rider are: Capital Growth, Moderate, Balanced,
and Conservative. The GLWB rider will terminate if you withdraw from a
designated model or allocate any portion of your subsequent premium payments to
an investment option that is not consistent with the listed models.
There is no additional charge for selecting the Model Asset Allocation
program. Although asset allocation programs are intended to mitigate investment
risk, there is still a risk that investing pursuant to a model will still lose
value. For information about risks of participating in the Model Asset
Allocation program and more detail about the program, including more information
about conflicts of interest, ask for a copy of this prospectus' Statement of
Additional Information. More information about AIC's role as investment advisor
for the program is available on AIC's Form ADV Part II which is delivered to you
at the time you subscribe to the program. We may modify or discontinue the model
asset allocation program at any time.
-19-
y VALUE+ OPTION
The Value+ Option is not available for Policies issued on or after
November 5, 2007.
If you elected the Value+ Option, we will credit a bonus (the "Credit")
to your Policy value. The Credit will be 4% on all premium payments you make
during the first twelve months of the Policy. The Credit will be funded from our
general account and will be credited proportionately among the investment
options you select for premiums. For premium payments received in Policy Years
two through nine, we will credit lesser amounts equal to 4% times the decreasing
ratios in the following schedule:
Year Formula Reduced Credit
---- ------- --------------
2 4% x 8/9 3.56%
3 4% x 7/9 3.11%
4 4% x 6/9 2.67%
5 4% x 5/9 2.22%
6 4% x 4/9 1.78%
7 4% x 3/9 1.33%
8 4% x 2/9 0.89%
9 4% x 1/9 0.44%
Value+ Option Credits are treated as "earnings" for purposes of
determining withdrawal charges and free withdrawal amounts on surrenders and
partial withdrawals. Similarly, Credits are not treated as an "investment in the
contract" for tax purposes. (See discussion of Withdrawals and Value+ Option
Recapture, below.)
Value+ Option Charge
The annualized charge for the Value+ Option is currently 0.42% of the
Policy value, which will be deducted each monthly activity date for the first
nine Policy Years. We expect to make a profit on this option. If you expect to
surrender the Policy in the first nine Policy Years, you should not elect the
Value+ Option because the benefit from the Credit would be less than the charges
paid for it. An Owner who holds a Policy for at least nine years will benefit
from electing the Value+ Option. After nine Policy Years, both the Policy value
and the Cash Surrender Value received upon full surrender of the Policy will be
greater if the Value+ Option is elected, than if it had not been elected.
Withdrawals and Value+ Option Recapture
If the Value+ Option has been elected, all withdrawals and
annuitizations during the first seven Policy Years will be subject to recapture
of a portion of the Credit Value. The amount of the Credit Value assumed to be
withdrawn is equal to the total withdrawal from the Policy value times the ratio
of the Credit Value to the Policy value. In the first Policy Year, the Credit
Value recaptured by Ameritas is one hundred percent (100%) of the Credit Value
withdrawn. In Policy Years two through seven, we will reduce the recapture ratio
one-ninth each year according to the following schedule:
Year Percentage
2 89%
3 78%
4 67%
5 56%
6 44%
7 33%
EXAMPLE: If you paid $100 in premium in the first Policy Year, we
credited $4 under this option. If at the end of five years this initial $4
credit has a value equal to $5 (Credit Value), we would recapture $2.80 (0.56 X
$5), in the event you surrender your Policy.
No recapture will occur after the seventh Policy Year, and the Credit
Value will be vested, subject to future increases or decreases for investment
gains or losses. If you elected one of the optional free withdrawal charge
riders, we will not recapture Credit Value on free withdrawal amounts. For
purposes of calculating the withdrawal charge, withdrawals are considered to
come from the oldest premium payment first, then the next oldest and so
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forth. Credit Value recaptured will be proportionate from your investment option
allocations at the time of the withdrawal.
No recapture of the Credit Value will take place:
o if the Policy is annuitized and applied to a life contingent
income option (assuming no premiums paid for two years prior to
annuitization),
o if a death benefit becomes payable, or
o if distributions are required in order to meet minimum
distributions requirements under the Internal Revenue Code.
In no event will the total dollar amount of the surrender charge plus
recapture of the Credit Value exceed that percentage of premium stated below
during the first seven years after a premium payment:
Age (in years) of Maximum Percentage of
Premium Payment Premium
1 12.5%
2 11.1%
3 10.2%
4 10.0%
5 9.0%
6 8.0%
7 7.0%
IMPORTANT POLICY PROVISIONS (y = optional feature)
The OVERTURE MEDLEY! Policy is a flexible premium deferred variable
annuity policy. The Policy allows you to save and invest your assets on a
tax-deferred basis. A feature of the Policy distinguishing it from non-annuity
investments is its ability to guarantee annuity payments to you for as long as
the annuitant lives or for some other period you select. In addition, if you die
before those payments begin, the Policy will pay a death benefit to your
beneficiary. Many key rights and benefits under the Policy are summarized in
this prospectus. You may obtain a copy of the Policy from us. The Policy can
be purchased as a tax-qualified or nonqualified annuity. The Policy remains in
force until surrendered for its Cash Surrender Value, or until all proceeds have
been paid under an annuity income option or as a death benefit.
POLICY APPLICATION AND ISSUANCE
To purchase a Policy, you must submit an application and a minimum
initial premium. A Policy usually will be issued only if you and the annuitant
are age 0 through 85, rounded to the nearest birthday. We reserve the right to
reject any application or premium for any reason.
Replacing an existing annuity policy is not always your best choice. Evaluate
any replacement carefully.
If your application is in good order upon receipt, we will credit your
initial net premium to the Policy value in accordance with the "right to
examine" rules in your state within two Business Days after the later of the
date we receive your application or the date we receive your premium. If the
application is incomplete or otherwise not in good order, we will contact you
within five Business Days to explain the delay; at that time we will refund your
initial premium unless you consent to our retaining it to apply it to your
Policy once all Policy issuance requirements are met.
The Policy Date is the date two Business Days after we receive your
application and initial premium. It is the date used to determine Policy
Anniversaries and Policy Years. No Policy will be dated on or after the 29th day
of a month. (This does not affect how premium is credited; see the paragraph
above.)
You can purchase a tax-qualified Policy as part of Section 401(a)
pension or profit-sharing plans, or IRA, Roth IRA, SIMPLE IRA, SEP, 403(b)
(TSAs), and Section 457 deferred compensation plans, subject to certain
limitations. See this prospectus' FEDERAL INCOME TAX MATTERS section for
details. Call us to see if the Policy may be issued as part of other kinds of
plans or arrangements.
Application in Good Order
All application questions must be answered, but particularly note these
requirements:
o The Owner's and the annuitant's full name, Social Security
number, and date of birth must be included.
o Your premium allocations must be completed in whole percentages,
and total 100%.
o Initial premium must meet minimum premium requirements.
o Your signature and your agent's signature must be on the
application.
o Identify the type of plan, whether it is nonqualified or, if it
is qualified, state the type of qualified plan.
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o City, state and date application was signed must be completed.
o If you have one, please give us your e-mail address to facilitate
receiving updated Policy information by electronic delivery.
o There may be forms in addition to the application required by law
or regulation, especially when a qualified plan or replacement is
involved.
o Your agent must be both properly licensed and appointed with us.
Premium Requirements
Your premium checks should be made payable to "Ameritas Life Insurance
Corp." We may postpone crediting any payment made by check to your Policy until
the check has been honored by your bank. Payment by certified check, banker's
draft, or cashier's check will be promptly applied. Under our electronic fund
transfer program, you may select a monthly payment schedule for us to
automatically deduct premiums from your bank account or other sources. Total
premiums for all annuities held with us for the same annuitant or Owner may not
exceed $1 million without our consent.
Initial Premium
o The only premium required. All others are optional.
o Must be at least $25,000. If you purchase the optional Minimum
Initial Premium feature, it must be at least $2,000 for all plans,
except 403(b) tax-sheltered annuities. The initial premium for a
403(b) Policy may be as low as $0 so long as the annualized
planned premium is at least $600 and the minimum modal premium is
at least $50. We have the right to change these premium
requirements.
Additional Premiums
o Must be at least $1,000; $50 if payments are established as part
of a regularly billed program (electronic funds transfer, payroll
deduction, etc.) or a tax-qualified plan. We have the right to
change these premium requirements.
o Will not be accepted, without our approval, on or after the later
of (i) the Policy Anniversary following your or the annuitant's
85th birthday or (ii) the Annuity Date.
Allocating Your Premiums
You may allocate your premiums among the variable investment options
and the Fixed Account fixed interest rate option. Initial allocations in your
Policy application will be used for additional premiums until you change your
allocation.
o Allocations must be in whole percentages, and total 100%.
o You may change your allocation by sending us Written Notice or
through an authorized telephone transaction. The change will
apply to premiums received on or after the date we receive your
Written Notice or authorized telephone transaction.
o All premiums will be allocated pursuant to your instructions on
record with us, except your initial premium and any additional
premiums received during your Policy's "right to examine" period
may be subject to special requirements.
"Right to Examine" Period Allocations
Return of Value State. In states that permit us to refund your Policy
value upon your cancellation of the Policy during the "right to examine" period,
we will allocate your initial premium to your selected variable investment
options on the date of issue of the Policy.
Return of Premium States. In states that require us to refund at least
your full premium upon your cancellation of the Policy during the "right to
examine" period and for all IRA plan Policies, we will hold your initial premium
in the Ameritas Money Market Subaccount for 13 days. Then, we will invest your
initial premium in the investment options pursuant to your application
instruction. (Any additional premiums we receive during the "right to examine"
period plus 3 days will be allocated in the same manner.) If, at the end of the
"right to examine" period, you decide to cancel your Policy, we will refund the
greater of the Policy value or premiums paid.
YOUR POLICY VALUE
On your Policy's date of issue, the Policy value equals the initial
premium less any charge for applicable premium taxes. On any Business Day
thereafter, the Policy value equals the sum of the values in the Separate
Account variable investment options and the Fixed Account. The Policy value is
expected to change from day to day, reflecting the expenses and investment
experience of the selected variable investment options (and interest earned in
the Fixed Account options) as well as the deductions for charges under the
Policy.
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Separate Account Value
Premiums or transfers allocated to Subaccounts are accounted for in
Accumulation Units. The Policy value held in the Separate Account Subaccounts on
any Business Day is determined by multiplying each Subaccount's Accumulation
Unit value by the number of Allocation Units held in the Subaccount allocated to
the Policy. Each Subaccount's Accumulation Unit value is calculated at the end
of each Business Day as follows:
(a) the per share net asset value of the Subaccount's underlying
portfolio as of the end of the current Business Day plus any
dividend or capital gain distribution declared and unpaid by the
underlying portfolio during that Business Day, times the number
of shares held by the Subaccount, before the purchase or
redemption of any shares on that date; minus
(b) the daily administrative expense fee; minus
(c) the daily mortality and expense risk charge; and this result
divided by
(d) the total number of Accumulation Units held in the Subaccount on
the Business Day before the purchase or redemption of any
Accumulation Units on that day.
When transactions are made to or from a Subaccount, the actual dollar
amounts are converted to Accumulation Units. The number of Accumulation Units
for a transaction is equal to the dollar amount of the transaction divided by
the Accumulation Unit value on the Business Day the transaction is made.
An investment in money market funds is neither insured nor guaranteed
by the U.S. Government. There can be no assurance that the funds will be able to
maintain a stable net asset value of $1.00 per share.
Fixed Account Value
The Policy value of the Fixed Account on any Business Day equals:
(a) the Policy value of the Fixed Account at the end of the preceding
Policy Month; plus
(b) any net premiums credited since the end of the previous Policy
Month; plus
(c) any transfers from the Subaccounts credited to the Fixed Account
since the end of the previous Policy Month; minus
(d) any transfers and transfer fee from the Fixed Account to the
Subaccounts since the end of the previous Policy Month; minus
(e) any partial withdrawal and withdrawal charge taken from the Fixed
Account since the end of the previous Policy Month; minus
(f) the Fixed Account's share of the annual Policy fee on the Policy
Anniversary; minus
(g) the Fixed Account's share of charges for any optional features;
plus
(h) interest credited on the Fixed Account balance.
TELEPHONE TRANSACTIONS
Telephone Transactions Permitted
o Transfers among investment options.
o Establish systematic transfer programs.
o Change of premium allocations.
How to Authorize Telephone Transactions
o Upon your authorization on the Policy application or in Written Notice to
us, you, your registered representative or a third person named by you may
do telephone transactions on your behalf.
o You bear the risk of the accuracy of any designated person's instructions
to us.
Telephone Transaction Rules
o Must be received by close of the New York Stock Exchange ("NYSE") (usually
3 p.m. Central Time); if later, the transaction will be processed the next
day the NYSE is open.
o Will be recorded for your protection.
o For security, you or your authorized designee must provide your Social
Security number and/or other identification information.
o May be discontinued at any time as to some or all Owners.
We are not liable for following telephone transaction instructions we reasonably
believe to be genuine.
DEATH OF ANNUITANT
Upon the annuitant's death prior to 30 days before the Annuity Date,
you may generally name a new annuitant. If any Owner is the annuitant, then upon
that Owner's death, the Policy's applicable death benefit becomes payable to the
named beneficiary(ies). However, if the beneficiary is the deceased Owner's
spouse, then upon that Owner's death the spouse may be permitted under federal
tax law to become the new Owner of the Policy and to name an annuitant and
different beneficiaries.
DELAY OF PAYMENTS
We will usually pay any amounts requested as a full surrender or
partial withdrawal from the Separate Account within 7 days after we receive your
Written Notice. We can postpone such payments or any transfers out
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of a Subaccount if: (i) the NYSE is closed for other than customary weekend and
holiday closings; (ii) trading on the
NYSE is restricted; (iii) an emergency exists as determined by the SEC, as a
result of which it is not reasonably practical to dispose of securities, or not
reasonably practical to determine the value of the net assets of the Separate
Account; or (iv) the SEC permits delay for the protection of security holders.
The applicable rules of the SEC will govern as to whether the conditions in
(iii) or (iv) exist.
We may defer payments of a full surrender or partial withdrawals or a
transfer from the Fixed Account for up to 6 months from the date we receive your
Written Notice, after we request and receive approval from the department of
insurance of the State where the Policy is delivered.
BENEFICIARY
You may change your beneficiary by sending Written Notice to us, unless
the named beneficiary is irrevocable. Once we record and acknowledge the change,
it is effective as of the date you signed the Written Notice. The change will
not apply to any payments made or other action taken by us before recording. If
the named beneficiary is irrevocable you may change the named beneficiary only
by Written Notice signed by both you and the beneficiary. If more than one named
beneficiary is designated, and you fail to specify their interest, they will
share equally.
If there are joint Owners, the surviving joint Owner will be deemed the
beneficiary, and the beneficiary named in the Policy application or subsequently
changed will be deemed the contingent beneficiary. If both joint Owners die
simultaneously, the death benefit will be paid to the contingent beneficiary.
If the beneficiary is your surviving spouse, the spouse may elect
either to receive the death benefit, in which case the Policy will terminate, or
to continue the Policy in force with the spouse as Owner. The surviving spouse
may not continue the Guaranteed Lifetime Withdrawal Benefit rider when the
single life option was selected and the Policy was issued under an Internal
Revenue Code Section 401, 403(b) or 457 qualified plan.
If the named beneficiary dies before you, then your estate is the
beneficiary until you name a new beneficiary.
MINOR OWNER OR BENEFICIARY
A minor may not own the Policy solely in the minor's name and cannot
receive payments directly as a Policy beneficiary. Contrary to common belief, in
most states parental status does not automatically give parents the power to
provide an adequate release to us to make beneficiary payments to the parent for
the minor's benefit. A minor can "own" a Policy through the trustee of a trust
established for the minor's benefit, or through the minor's named and court
appointed guardian, who owns the Policy in his or her capacity as trustee or
guardian. Where a minor is a named beneficiary, we are able to pay the minor's
beneficiary payments to the minor's trustee or guardian. Some states allow us to
make such payments up to a limited amount directly to parents. Parents seeking
to have a minor's interest made payable to them for the minor's benefit are
encouraged to check with their local court to determine the process to be
appointed as the minor's guardian; it is often a very simple process that can be
accomplished without the assistance of an attorney. If there is no adult
representative able to give us an adequate release for payment of the minor's
beneficiary interest, we will retain the minor's interest on deposit until the
minor attains the age of majority.
POLICY CHANGES
Any change to your Policy is only effective if on a form acceptable to
us, and then only once it is received at our Service Office and recorded on our
records. Information on how to contact us to determine what information is
needed and where you can get various forms for Policy changes is shown on this
Prospectus' first two pages and last page.
POLICY TERMINATION
We may treat any partial withdrawal that leaves a Cash Surrender Value
of less than $1,000 as a complete surrender of the Policy. See this prospectus'
POLICY DISTRIBUTIONS: Withdrawals section for more information.
If you have paid no premiums during the previous 36-month period, we
have the right to pay you the total value of your Policy in a lump sum and
cancel the Policy if (i) the Cash Surrender Value is less than $1,000 (does not
apply to IRAs), or (ii) the paid-up lifetime income annuity benefit at
maturity, based on an accumulation of the Policy value to maturity, would be
less than $20 per month. We will not impose a withdrawal charge on involuntary
terminations.
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y OPTIONAL FEATURES
This Policy allows you the opportunity to select, and pay for, only
those variable annuity policy features you want by "unbundling" features that
are often incorporated into a base variable annuity policy. Check with your
sales representative or us before selecting an optional feature, as some may not
be available in your state on the effective date of this prospectus. These
optional features are currently only available at Policy issue, and most are
only available if you are then not older than age 70. Some of these features are
not available in some states. For features not available in your state on the
date of your purchase, we may make them available to existing Owners for a
limited time after the feature becomes available. Each of the optional features
is principally described in the prospectus sections noted below:
Optional Feature Prospectus Section Where It Is Covered
---------------- --------------------------------------
y Minimum Initial Premium.....................................IMPORTANT POLICY PROVISIONS:
Policy Application and Issuance
y Withdrawal Charge Period....................................CHARGES: Withdrawal Charge
y Free Withdrawal Privilege...................................POLICY DISTRIBUTIONS: Withdrawals
y Guaranteed Minimum Death Benefit............................POLICY DISTRIBUTIONS: Death Benefits
y 403(b) Tax Sheltered Annuity Endorsement....................POLICY DISTRIBUTIONS: Withdrawals and
(REQUIRED for 403(b) Policies) APPENDIX B: Tax Qualified Plan Disclosures
y Value+ Option...............................................INVESTMENT OPTIONS: Value+ Option
y Estate Protection Benefit ("EPB") and
Expanded Estate Protection Benefit ("EEPB")..............POLICY DISTRIBUTIONS: Death Benefits
Charges for each of the optional features are shown in this prospectus' CHARGES
section.
POLICY DISTRIBUTIONS (y = Optional Feature)
There are several ways to take all or part of your investment out of
your Policy, both before and after the Annuity Date. Tax penalties and
withdrawal charges may apply to amounts taken out of your Policy before the
Annuity Date. Your Policy also provides a death benefit (including, for an
additional charge, an optional feature guaranteed minimum death benefit) that
may be paid upon your death prior to the Annuity Date. All or part of a death
benefit may be taxable.
WITHDRAWALS
You may withdraw, by Written Notice, all or part of your Policy's Cash
Surrender Value prior to the Annuity Date. Amounts withdrawn (except for
optional feature "free" partial withdrawals you may have elected, described
below) are subject to a withdrawal charge. Following a full surrender of the
Policy, or at any time the Policy value is zero, all your rights in the Policy
end. Total surrender requires you to return your Policy to us.
For purposes of the withdrawal charge only, premiums are deemed to be
withdrawn before any earnings; this means that there may be no withdrawal charge
if the amount of the withdrawal is less than or equal to premiums received at
least "x" years prior to the withdrawal and not considered having been
previously withdrawn, where "x" is the number of years in the withdrawal charge
period. Of premium considered withdrawn, the oldest premium is considered
withdrawn first, the next oldest premium is considered withdrawn next, and so on
(a "first-in, first-out" procedure). (This is different than taxation order,
which generally considers the last premium withdrawn first - a "last-in,
first-out" procedure.)
Withdrawal Rules
Withdrawals must be by Written Notice. A request for a systematic
withdrawal plan must be on our form and must specify a date for the
first payment, which must be the 1st through 28th day of the month.
o Minimum withdrawal is $250.
o We may treat any partial withdrawal that leaves a Cash Surrender
Value of less than $1,000 as a complete surrender of the Policy.
o Withdrawal results in cancellation of Accumulation Units from
each applicable Subaccount and deduction of Policy value from any
Fixed Account option. If you do not specify which investment
option(s) from which to take the withdrawal, it will be taken
from each investment option in the proportion that the Policy
value in each investment option bears to the total Policy value.
o The total amount paid to you upon total surrender of the Policy
(taking any prior partial withdrawals into account) may be less
than the total premiums made, because we will deduct any charges
owed but not yet paid (including withdrawal charges), a premium
tax charge may apply to withdrawals, and because you bear the
investment risk for all amounts you allocate to the Separate
Account.
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o Unless you give us Written Notice not to withhold taxes from a
withdrawal, we must withhold 10% of the taxable amount withdrawn
to be paid as a federal tax, as well as any amounts required by
state laws to be withheld for state income taxes.
We will allow facsimile request forms and signatures to be used for the
purpose of a "Written Notice" authorizing withdrawals from your Policy. You may
complete and execute a withdrawal form and send it to our Service Center fax
number, 402-467-7335. We offer this method of withdrawal as a service to meet
your needs when turnaround time is critical. However, by not requiring an
original signature there is a greater possibility that unauthorized persons can
manipulate your signature and make changes on your Policy (including
withdrawals) without your knowledge.
Systematic Withdrawal Plan
The systematic withdrawal plan allows you to automatically withdraw
payments of a pre-determined dollar amount or fixed percentage of Policy value
from a specified investment option monthly, quarterly, semi-annually or
annually. We can support and encourage your use of electronic fund transfer of
systematic withdrawal plan payments to an account of yours that you specify to
us. The fixed dollar amount of systematic withdrawals may be calculated in
support of Internal Revenue Service minimum distribution requirements over the
lifetime of the annuitant. No systematic withdrawal may be established after the
28th of each month. Although this plan mimics annuity payments, each
distribution is a withdrawal that may be taxable and subject to the charges and
expenses described above; you may wish to consult a tax advisor before
requesting this plan.
y "Free" Withdrawal Features
The following features allow access to certain Policy value without
being subject to withdrawal charges. There is a charge for these features. For
information about the charge for these features, see this prospectus' CHARGES
and CHARGES EXPLAINED sections. For all Policies that are not issued pursuant to
a 403(b) tax sheltered annuity plan, either the 10% "Free" Withdrawal Feature or
the Expanded "Free" Withdrawal Feature must be elected at issue of the Policy.
For all Policies that are issued pursuant to a 403(b) tax sheltered annuity
plan, one of the 403(b) TSA No Withdrawal Charge Riders must be elected at issue
of the Policy.
y 10% "Free" Withdrawal Feature.
This feature allows you to withdraw, each Policy Year, up to 10%
of your Policy value without deduction of a withdrawal charge. Under this
feature, Policy value is considered withdrawn on the same basis as in the base
Policy (first premiums on a first-in first-out basis, then earnings). The 10%
amount is determined at the time the withdrawal is made and is reduced by all
prior free withdrawals in that Policy Year. If you do not withdraw the 10%
amount in a Policy Year, you may not carry forward the unused "free" withdrawal
amount into the next Policy Year.
y Expanded "Free" Withdrawal Feature.
This feature allows you to withdraw, without a withdrawal charge,
each Policy Year, up to the greater of a stated percentage of your Policy value,
minus prior "free" withdrawals taken since Policy issue, or any of your
accumulated Policy earnings. (Accumulated Policy earnings are the excess of the
Policy value over the net of premiums paid, plus any Value+ Credit amount, less
any previous withdrawals of premium. Note that Value+ is not available for
Policies issued on and after November 5, 2007.) Under this feature, for purposes
of the withdrawal charge only, earnings are considered withdrawn before premium,
and premium is considered withdrawn on a first-in first-out basis. (This is
different than taxation order, which generally considers the last premium
withdrawn first - a "last-in, first-out" procedure.) The stated percentage of
Policy value available as a "free" withdrawal each Policy Year is 15% the first
year, 30% the second year, and 45% the third and subsequent years. The
percentage amount is determined at the time the withdrawal is made.
y 403(b) TSA Hardship Waiver Rider.
This Rider, available only for Policies issued pursuant to a
403(b) tax sheltered annuity plan and which can only be attached to the Policy
at issue, waives Withdrawal Charges for withdrawals of Policy value made while
the Owner/annuitant is suffering a hardship as defined under applicable law and
with satisfactory Written Notice to us.
y 403(b) TSA No Withdrawal Charge Riders.
These Riders, available only for Policies issued as 403(b) tax
sheltered annuities and which can only be attached to the Policy at issue, allow
the Policy to be issued without any withdrawal charges.
LOANS (403(b) PLANS ONLY)
Loans are only available if your Policy is a Tax Sheltered Annuity
(sometimes called a "TSA" or "403(b) plan") under federal tax law and your
Policy value is at least $5,000. The Owners can take loans from the Policy value
beginning one year after the Policy is issued up to the Annuity Date, and cannot
take out more than one loan each Policy Year. Loans are subject to the terms of
the Policy, the plan, and federal tax law. We reserve the right to modify the
terms of a loan to comply with changes in applicable law, or to reject any loan
request if we believe it may violate the terms of the plan or applicable law.
(We are not responsible for compliance of a loan request with plan
requirements.) On Policies issued after 1/1/02 with the 403(b) Tax Sheltered
Annuity Endorsement, we may charge a fee (currently $25; guaranteed maximum is
$40) for each loan as loan origination expenses; however, this
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fee will be waived if loan repayment is established on an automatic basis.
(This charge does not apply to Policies issued prior to 1/1/02 or to loans made
in states where origination fees are not approved.)
Minimum and Maximum Loan Amounts
Minimum - $1,000. Each loan must individually satisfy this minimum
amount.
Maximum - We will calculate the maximum nontaxable loan amount based
upon information provided by the plan participant or the employer. Loans may be
taxable if a participant has additional loans from other plans. The total of all
your outstanding TSA loans must not exceed the lesser of (i) $50,000 reduced by
the highest outstanding balance owed during the previous 12 months, or (ii) 50%
of your Policy value.
How Loans are Processed
All loans are made from our general account. We transfer Policy value
to our general account as security for the loan. The transfer is made in
proportion to assets in and among the Subaccounts and in the Fixed Account,
unless you give us different allocation instructions. No withdrawal charge is
levied upon Policy value transfers related to loan processing. We are usually
able to process a loan request within seven Business Days.
Loan Interest
Interest rate charged on loan balance: guaranteed maximum rate is 8%;
we may declare a lower current interest rate.
Interest rate credited to Policy value that is collateral for the loan:
guaranteed minimum rate is 3%; we may declare a higher current interest rate.
Specific loan terms are disclosed at the time of loan application or
issuance.
Loan Repayment
Loans must be repaid within 5 years, or 20 years if the loan is used to
purchase your principal residence. Loan repayments must be identified as such;
if they are not, we will treat them as additional premium payments and they will
not reduce the outstanding loan. Loan repayments must be substantially level and
made at least quarterly. Loan repayments will consist of principal and interest
in amounts set forth in the loan agreement. Repayments are allocated to the
Subaccounts and Fixed Account pursuant to your then current investment option
allocation instructions. Any repayment due under the loan that is unpaid for 90
days will cause the loan balance to become immediately due without notice. The
loan will then be treated as a deemed Policy distribution and reported as income
to be taxed to the Owner.
Any Policy loan balance must be repaid prior to the activation
of the GLWB rider. Once the GLWB rider is activated, no Policy loans may be
taken.
Policy Distributions, including Annuity Income Payments
While a loan is outstanding, any Policy distributions made, including
annuity income payments, will be reduced by the amount of the outstanding loan
plus accrued interest.
Transferring the Policy
We reserve the right to restrict any transfer of the Policy while a
loan is outstanding.
DEATH BENEFITS
We will pay the death benefit after we receive Due Proof of Death of an
Owner's death or as soon thereafter as we have sufficient information about the
beneficiary to make the payment. Death benefits may be paid pursuant to an
annuity income option to the extent allowed by applicable law and any settlement
agreement in effect at your death. If the beneficiary does not make an annuity
income option election within 60 days of our receipt of Due Proof of Death, we
will issue a lump-sum payment to the beneficiary.
In most cases, when death benefit proceeds are paid in a lump sum, we
will pay the death benefit proceeds by establishing an interest bearing account
for the beneficiary, in the amount of the death benefit proceeds payable. The
same interest rate schedule and other account terms will apply to all
beneficiary accounts in place at any given time. We will send the beneficiary a
checkbook within 7 days after we receive all the required documents, and the
beneficiary will have immediate access to the account simply by writing a check
for all or any part of the amount of the death benefit proceeds payable. The
account is part of our general account. It is not a bank account and it is not
insured by the FDIC or any other government agency. As part of our general
account, it is subject to the claims of our creditors. We receive a benefit from
all amounts left in the general account.
If an Owner of the Policy is a corporation, trust or other
non-individual, we treat the primary annuitant as an Owner for purposes of the
death benefit. The "primary annuitant" is that individual whose life affects the
timing or the amount of the death benefit payout under the Policy. A change in
the primary annuitant will be treated as the death of an Owner.
If the annuitant is an Owner or joint Owner, the annuitant's death is
treated as the Owner's death.
If the annuitant is not an Owner and the annuitant dies before the
Annuity Date, the Owner may name a new annuitant if such Owner(s) is not a
corporation or other non-individual or if such Owner is the trustee of an
Internal Revenue Code Section 401(a) retirement plan. If the Owner does not name
a new annuitant, the Owner will become the annuitant.
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If your spouse is the Policy beneficiary, annuitant, or a joint Owner,
special tax rules apply. See the IRS Required Distribution Upon Death of Owner
section below.
We will deduct any applicable premium tax not previously deducted from
the death benefit payable.
Standard Death Benefit
Upon any Owner's death before the Annuity Date, the Policy will end,
and we will pay a death benefit to your beneficiary. The death benefit equals
the larger of:
(a) your Policy value (without deduction of the withdrawal charge) on
the later of the date we receive Due Proof of Death or an annuity
payout option election less any charge for applicable premium
taxes; or
(b) the sum of net premiums, less partial withdrawals.
Upon any Owner's death on or after the Annuity Date and before all
proceeds have been paid, no death benefit is payable, but any remaining proceeds
will be paid to the designated annuity benefit payee based on the annuity income
option in effect at the time of death.
IRS Required Distribution Upon Death of Owner
Federal law requires that if your Policy is tax non-qualified and you
die before the Annuity Date, then the entire value of your Policy must be
distributed within 5 years of your death. The 5-year rule does not apply to that
portion of the proceeds which (a) is for the benefit of an individual
beneficiary; and (b) will be paid over the lifetime or the life expectancy of
that beneficiary as long as payments begin not later than one year after the
date of your death. Special rules may apply to your surviving spouse. The
Statement of Additional Information has a more detailed description of these
rules. Other required distribution rules apply to tax-qualified Policies and are
described in this prospectus' Appendix B.
Tables Illustrating Benefits Upon Death
The following tables illustrate benefits payable, if any, upon death of
a party to the Policy for most, but not necessarily all, situations. The terms
of any Policy rider or qualified plan funded by the Policy may change this
information. Please consult your own legal and tax advisor for advice. You may
contact us for more information.
If death occurs before the Annuity Date:
If death occurs before the Annuity Date:
If the deceased is... and... and... then the...
-------------------- ------------------ ------------------------- ------------------------------------------------
-------------------- ------------------ ------------------------- --------------------------------------------------
any Policy Owner - - - - - - Policy beneficiary receives the death benefit.
-------------------- ------------------ ------------------------- --------------------------------------------------
any Policy Owner the beneficiary - - - the surviving spouse may elect to become the
is the Policy Policy Owner and continue the Policy, or may
Owner's have the Policy end and receive the death
surviving spouse benefit.
-------------------- ------------------ ------------------------- --------------------------------------------------
the annuitant a Policy Owner there is no named the Policy continues with the Policy Owner as
is living contingent or joint the Policy annuitant unless the Owner names a
annuitant new annuitant.
-------------------- ------------------ ------------------------- --------------------------------------------------
the annuitant the Policy Owner - - - the annuitant's death is treated as a Policy
is a non-person Owner's death.
-------------------- ------------------ ------------------------- --------------------------------------------------
an annuitant a Policy Owner the contingent or joint contingent annuitant becomes the annuitant, and
is living annuitant is living the Policy continues.
-------------------- ------------------ ------------------------- --------------------------------------------------
If death occurs on or after the Annuity Date:
If the deceased is... and... then the...
-------------------- ------------------ -------------------------------------------------------------------------
-------------------- ------------------ ----------------------------------------------------------------------------
any Policy Owner There is a surviving Policy Owner remains as Owner for purposes of distributing any
living joint remaining Policy proceeds pursuant to the annuity income option then in
Owner, and effect. If the annuity benefit payee was the deceased Policy Owner, the
the annuitant is surviving Owner receives the proceeds. If the payee is other than the
living deceased Owner, proceeds continue to be paid to the payee until the
paye's death, then are paid to the Policy beneficiary.
-------------------- ------------------ ----------------------------------------------------------------------------
any Policy Owner There is no Policy beneficiary becomes the Policy Owner for purposes of distributing
surviving joint any remaining Policy proceeds pursuant to the annuity income option then
Owner, and in effect. If the annuity benefit payee was the Owner, then the Policy
the annuitant is beneficiary receives the proceeds. If the payee is other than the Owner,
living proceeds continue to be paid to the payee until the payee's death, then
are paid to the Policy beneficiary.
-------------------- ------------------ ----------------------------------------------------------------------------
any Policy any Policy Owner Policy Owner (or other named payee) receives distribution of any remaining
annuitant is living Policy proceeds pursuant to the annuity income option then in effect.
-------------------- ------------------ ----------------------------------------------------------------------------
the annuitant the annuitant is Policy beneficiary becomes the Policy Owner for purposes of distributing
also the Policy any remaining Policy proceeds pursuant to the annuity income option then
Owner in effect. If the annuity benefit payee was the Owner, then the Policy
beneficiary receives the proceeds. If the payee is other than the Owner,
proceeds continue to be paid to the payee until the payee's death, then
are paid to the Policy beneficiary.
-------------------- ------------------ ----------------------------------------------------------------------------
Optional Death Benefit Features
y Optional Guaranteed Minimum Death Benefit Features
You may elect one of three optional Guaranteed Minimum Death Benefit
features, for a charge. Your election must be made when the Policy is issued,
and only if you and the annuitant are then not older than age 70. Your election
cannot be changed or revoked. Each feature ends at your age 85. Under these
features, if the Owner is not a natural person, you cannot change the annuitant
after the guaranteed minimum death benefit feature is elected. Each of the
options provides the opportunity to enhance the Policy's death benefit if
Subaccount underlying
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portfolios should sharply decrease in value. See this prospectus' CHARGES and
CHARGES EXPLAINED sections for information on the charge for these optional
features.
y Optional "Periodic Step-Up" Guaranteed Minimum Death Benefit
This feature provides an amount greater than the standard death benefit
under certain conditions. This greater amount is referred to as the GMDB. During
the first Policy Year, the GMDB is zero. Until the termination of this feature,
the GMDB is the step-up benefit, defined as (a) plus (b) minus (c) minus (d),
where:
(a) is the greater of:
(i) the Policy value as of the most recent step-up date; or
(ii) the step-up benefit immediately preceding the most recent
step-up date
(b) is any premiums paid since the most recent step-up date
(c) is any partial withdrawals, including withdrawal charges, since
the most recent step-up date
(d) is a proportional adjustment for each partial withdrawal made
since the most recent step-up date.
The proportional adjustment, which will never be less than zero, is described
more fully in your Policy. It equals the step-up benefit minus the Policy value,
times the ratio of the partial withdrawal amount divided by the Policy value.
The step-up benefit and Policy value used to compute the proportional adjustment
are prior to the partial withdrawal.
The step-up interval is stated in your Policy's schedule page for this
feature. The step-up benefit for your attained ages 80-84 is the step-up benefit
on the Policy Anniversary nearest your 80th birthday adjusted by adding
subsequent premiums paid and subtracting withdrawals made. The step-up benefit
expires upon termination of this feature, which is the Policy Anniversary
nearest your 85th birthday.
y Optional 5% Roll-up Guaranteed Minimum Death Benefit
This feature provides an amount greater than the standard death benefit
under certain conditions. This greater amount is referred to as the GMDB. Until
the termination of this feature, the GMDB is the roll-up benefit, defined as the
greater of (a) or (b), where:
(a) is the current Policy value, and
(b) is the total of premiums paid less withdrawals (net premiums)
accumulated at 5% simple interest, not to exceed 200% of net
premiums.
The roll-up benefit is reduced by a proportional adjustment for partial
withdrawals. This adjustment, which will never be less than zero, is described
more fully in your Policy. It equals the roll-up benefit minus the Policy value,
times the ratio of the partial withdrawal amount divided by the Policy value.
The roll up benefit and Policy value used to compute this adjustment are prior
to the partial withdrawal.
The accumulation of net premiums, as described in (b) above, stops on
the anniversary nearest your 80th birthday. The roll-up benefit for your
attained ages 80-84 is the roll-up benefit on the Policy Anniversary nearest
your 80th birthday adjusted by subsequent premiums and withdrawals. The roll-up
benefit expires upon termination of this feature, which is the Policy
Anniversary nearest your 85th birthday.
y Optional "Greater of" Guaranteed Minimum Death Benefit
This feature provides an amount greater than the standard death benefit
under certain conditions. This greater amount is referred to as the GMDB. Until
the termination of this feature, the GMDB is the greater of the step-up benefit
GMDB or the roll-up benefit GMDB.
y Optional Estate Protection Benefit Features
y Estate Protection Benefit
For an additional charge you may purchase the Estate Protection Benefit
("EPB"). The EPB must be elected and purchased at the time you apply for your
Policy, and cannot be canceled once elected. We will credit this benefit to the
Policy value upon death of the Policy Owner, in addition to your standard death
benefit and any optional guaranteed minimum death benefit that you elected. For
joint Policy Owners, we will credit this benefit to the Policy value on the
first death of a Policy Owner. On an annual basis, the charge for the EPB is
determined by age of the Policy Owner at issue, as follows:
Current Fee Guaranteed Maximum Fee
Issue ages 0-70 0.20% 0.40%
Issue ages 71-80 0.60% 0.80%
This charge for the EPB is assessed monthly and applied to the Policy value for
the life of the Policy Owner. This benefit must be elected prior to Policy issue
and may not be revoked once elected.
Calculation of the Benefit:
The amount of the EPB will be equal to 40% of the difference between
your Policy value and the net premium payments used for determining the benefit
base, provided the difference does not exceed 100% of the net premiums. The EPB
benefit is determined using the Policy value before the payment of any other
optional Guaranteed Minimum Death Benefit. The EPB benefit is calculated as
follows:
40% X Benefit Base; where:
Benefit Base = (PVD - NPBB) < Benefit Cap, such that:
PVD = the Policy value on the date of the Policy Owner's death
prior to any death benefit calculations; NPBB = net premiums used
for the determination of the Benefit Base, which are premiums
allocated to Policy value less a proportionate share of any
withdrawal based on the value of net premiums in relation to the
Policy value times the amount of the withdrawal at the time of
withdrawal. On each
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Policy Anniversary, NPBB is reset to the
lesser of net premiums (NP) or the Policy value as of that
anniversary, where:
NP = net premiums, which are premiums allocated to Policy value
less a proportionate share of any withdrawal based on the value
of net premiums in relation to the Policy value times the amount
of the withdrawal at the time of withdrawal, and Benefit Cap =
100% of net premiums (NP) reduced by premiums received within a
certain period of time prior to death. If death occurs in the
first Policy Year, there is no reduction for premiums received
prior to death. If death occurs in the second Policy Year, all
premiums received in the second Policy Year reduce the net
premium amount. If death occurs after the second Policy Year,
only premiums received within the 12-month period prior to death
reduce the net premium amount.
EXAMPLE
Assume the following items:
(a) Death occurs in Policy Year 5
(b) Policy value at time of death is $90,000 (PVD =
$90,000)
(c) Net premiums adjusted for withdrawals is $53,000 (NP =
$53,000)
(d) Net premiums used for the determination of the Benefit
Base is $50,000 (NPBB = $50,000)
(e) Premium received within 12 months prior to death =
$14,000
From this information, the following is determined:
(a) Benefit Cap = $53,000 - $14,000 = $39,000
(b) Benefit Base = $90,000 - $50,000 = $40,000,
which is greater than the Benefit Cap, so
the Benefit Base = $39,000
(c) EPB amount = 40% of $39,000 = $15,600
With the reset of NPBB, a benefit may be available if the net premiums
exceed the Policy value on the date of the Policy Owner's death.
y Expanded Estate Protection Benefit ("EEPB")
For an additional charge, you may purchase the Expanded Estate
Protection Benefit ("EEPB") option in lieu of the EPB if you intend to exchange
your existing annuity for an OVERTURE MEDLEY! Policy. The exchange must qualify
for tax-free exchange treatment under the Internal Revenue Code. You should
consider purchasing this benefit if you have significant amounts of taxable gain
in your existing annuity contract and you intend to exchange such contract. The
EEPB is available only at Policy issue and once elected it may not be revoked.
The EEPB may be purchased for an annual charge applied as a percentage
of Policy value based upon the age of the Policy Owner at time of issue, as
follows:
Current Fee Guaranteed Maximum Fee
Issue ages 0-70 0.25% 0.45%
Issue ages 71-80 0.80% 1.00%
Calculation of the Benefit:
The amount of the EEPB will be equal to 40% of the sum of: (a) the
difference between your Policy value and the net premium payments used to
determine the benefit base, and (b) a certain percentage of the premium
exchanged into the Policy, provide the sum does not exceed 100% of the net
premiums. The EEPB benefit is determined using the Policy value before the
payment of any other optional Guaranteed Minimum Death Benefit. The EEPB benefit
is calculated as follows:
40% X Benefit Base; where:
Benefit Base = [(PVD - NPBB) + (z% x Transfer Premium)] < Benefit Cap,
such that:
PVD, NPBB, NP, and Benefit Cap have the same meanings as stated above
for the EPB benefit;
Transfer Premiums = premiums received as a result of a tax-free
exchange or transfer. This includes premiums that qualify for IRC
Section 1035 exchange treatment, and premiums that are a result of
transfer, rollover, conversion or recharacterization; and
z = a percentage that varies by the number of years since receipt
of appropriate Transfer Premiums as follows:
Years Since Receipt %
1 10
2 20
3 30
4 40
5+ 50
EXAMPLE
Assume the following items:
(a) Death occurs in Policy Year 3;
(b) Policy value at time of death is $110,000
(PVD = $110,000);
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(c) Net premiums adjusted for withdrawals is $73,000 (NP =
$73,000);
(d) Net premiums used for the determination of the Benefit
Base is $70,000
(NPBB = $70,000)
(e) Transfer Premiums, which were all paid in Policy Year
1, are $10,000 (Transfer Premiums = $10,000);
(f) Premium received within 12 months prior to death =
$31,000.
From this information, the following is determined:
(a) Benefit Cap = $73,000 - $31,000 = $42,000;
(b) Benefit Base =[($110,000 - $70,000) + (30% x $10,000)]
= $43,000, which is greater than the Benefit Cap, so
Benefit Base = $42,000; and
(c) EEPB amount = 40% of $42,000 = $16,800
With the reset of NPBB, a benefit may be available if the net premiums
exceed the Policy value on the date of the Policy Owner's death.
With respect to IRAs, if you are purchasing the EPB or EEPB for your
IRA, our understanding of current law is that the tax status of optional death
benefits such as EPB and EEPB is unclear. To resolve any uncertainty, we may
ask the Internal Revenue Service to approve the use of all optional death
benefits in IRAs, including the Estate Protection Benefit and Expanded Estate
Protection Benefit. We believe that use of the EPB and EEPB endorsements and
other optional death benefits should not result in adverse tax treatment. We may
in our sole discretion and in compliance with our adopted procedures, accept or
reject IRA contributions to purchase a contract with optional benefits. However,
WE CAN GIVE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE WILL APPROVE THE USE
OF THE OPTIONAL DEATH BENEFITS IN IRAS. THEREFORE, THE POLICY OWNERS BEAR THE
RISK OF ANY ADVERSE TAX TREATMENT.
ANNUITY INCOME BENEFITS
A primary function of an annuity contract, like this Policy, is to
provide annuity payments to the payee(s) you name. You will receive the annuity
benefits unless you designate another payee(s). The level of annuity payments is
determined by your Policy value, the annuitant's sex (except where prohibited by
law) and age, and the annuity income option selected. All or part of your Policy
Cash Surrender Value may be placed under one or more annuity income options.
Annuity payments may be subject to a withdrawal charge. A withdrawal
charge is not applied on the Annuity Date for premiums applied after the second
year since receipt to the Life or Joint and Last Survivor annuity income
options. However, the withdrawal charge does apply to Policy value placed under
other annuity income options.
Annuity payments:
- require investments to be allocated to our general account, so are
not variable.
- may be subject to a withdrawal charge.
- may be taxable and, if premature, subject to a tax penalty.
Annuity payments must be made to individuals receiving payments on
their own behalf, unless otherwise agreed to by us. Any annuity income option is
only effective once we acknowledge it. We may require initial and ongoing proof
of the Owner's or annuitant's age or survival. Unless you specify otherwise, the
payee is the Owner.
Payments under the annuity income options are fixed annuity payments
based on a fixed rate of interest at or higher than the minimum effective annual
rate which is guaranteed to yield 3% on an annual basis. We have sole discretion
whether or not to pay a higher interest rate for annuity income options 1, 2, or
3 (see below). Current immediate annuity rates for options 4 or 5 for the same
class of annuities are used if higher than the guaranteed amounts (guaranteed
amounts are based upon the tables contained in the Policy). The guaranteed
amounts are based on the 1983 Table "a" Individual Annuity Table projected 17
years, and an interest rate which is guaranteed to yield 3% on an annual basis.
Current interest rates, and further information, may be obtained from us. The
amount of each fixed annuity payment is set and begins on the Annuity Date, and
does not change.
When Annuity Income Payments Begin
You select the Annuity Date by completing an election form that you can
request from us at any time. If you do not specify a date, the Annuity Date will
be the later of the Policy Anniversary nearest the annuitant's 85th birthday or
the fifth Policy Anniversary. Tax-qualified Policies may require an earlier
Annuity Date. You may change this date by sending Written Notice for our receipt
at least 30 days before the then current Annuity Date.
Selecting an Annuity Income Option
You choose the annuity income option by completing an election form
that you can request from us at any time. You may change your selection during
your life by sending Written Notice for our receipt at least 30 days before the
date annuity payments are scheduled to begin. If no selection is made by then,
we will apply the Policy Cash Surrender Value to make annuity payments under
annuity income option 4 providing lifetime income payments.
The longer the guaranteed or projected annuity income option period, the lower
the amount of each annuity payment.
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If you die before the Annuity Date (and the Policy is in force), your
beneficiary may elect to receive the death benefit under one of the annuity
income options (unless applicable law or a settlement agreement dictate
otherwise).
Annuity Income Options
Once fixed annuity payments under an annuity income option begin, they
cannot be changed. (We may allow the beneficiary to transfer amounts applied
under options 1, 2 or 3 to option 4, 5 or 6 after the Annuity Date. However, we
reserve the right to discontinue this practice.) When the Owner dies, we will
pay any unpaid guaranteed payments to your beneficiary. Upon the last payee's
death, we will pay any unpaid guaranteed payments to that payee's estate.
Note: If you elect an annuity income option based on a life contingency
(option 4 or 5), it is possible that only one annuity payment would be made
under the annuity option if the annuitant dies before the due date of the second
annuity payment, only two annuity payments would be made if the annuitant died
before the due date of the third annuity payment, etc. This would not happen if
you elect an annuity income option guaranteeing either the amount or duration
of payments, or just paying interest (options 1, 2 or 3).
Part or all of any annuity payment may be taxable as ordinary income.
If, at the time annuity payments begin, you have not given us Written Notice to
not withhold federal income taxes, we must by law withhold such taxes from the
taxable portion of each annuity payment and remit it to the Internal Revenue
Service. (Withholding is mandatory for certain tax-qualified Policies.)
We may pay your Policy proceeds to you in one sum if they are less than
$1,000, or when the annuity income option chosen would result in periodic
payments of less than $20. If any annuity payment would be or becomes less than
$20, we also have the right to change the frequency of payments to an interval
that will result in payments of at least $20. In no event will we make payments
under an annuity option less frequently than annually.
The annuity income options are:
1. Interest Payment. While proceeds remain on deposit, we annually credit
interest to the proceeds. The interest may be paid to the payee or added to the
amount on deposit.
2. Designated Amount Annuity. Proceeds are paid in monthly installments of a
specified amount over at least a 5-year period until proceeds, with interest,
have been fully paid.
3. Designated Period Annuity. Proceeds are paid in monthly installments for the
specified period chosen. Monthly incomes for each $1,000 of proceeds, which
include interest, are illustrated by a table in the Policy.
4. Lifetime Income Annuity. Proceeds are paid as monthly income during the
annuitant's life. Variations provide for guaranteed payments for a period of
time.
5. Joint and Last Survivor Lifetime Income Annuity. Proceeds are paid as monthly
income during the joint annuitants' lives and until the last of them dies.
6. Lump Sum. Proceeds are paid in one sum.
GLWB RIDER
A Guaranteed Lifetime Withdrawal Benefit ("GLWB") rider is part of
your Policy at the time of issue if the Policy issue date is on or after
November 5, 2007 and if the rider is approved in your state. The rider may be
issued in its Inactive Phase for any issue age 0 - 85. It may be issued in an
active status when the Policy owner is age 49 years, six months and one day
("attained age 50") through age 85 years, 6 months ("attained age 85"). Active
status riders will be either in the Accumulation Phase or the Withdrawal Phase.
You may activate the rider subject to the terms and conditions stated below.
The GLWB rider provides a withdrawal benefit that guarantees a series
of annualized withdrawals from the Policy, regardless of the Policy value, until
the death of the last Covered Person.
-32-
o GLWB Definitions
Benefit phases are defined as:
o Inactive Phase. The period of time when this rider is inactive. The
owner chooses when to end the Inactive Phase, but it cannot end before
the Youngest Age 50.
o Accumulation Phase. The period of time between the Rider Activation
Date and the first date of the Withdrawal Phase.
o Withdrawal Phase. The period of time beginning with the occurrence of
the first withdrawal as outlined in the Withdrawal Phase section,
below.
o Guaranteed Phase. The period of time during which Lifetime Withdrawal
Benefit Amount payments continue to be made, although the Policy value
has been reduced to zero.
Benefit Base. The amount used in conjunction with a lifetime distribution factor
to determine the Lifetime Withdrawal Benefit Amount.
Covered Person(s).
o The owner(s) of the Policy or;
o The annuitant(s) if the owner of the Policy is a non-natural person,
such as a trust or;
o The spouses at the time the joint spousal option is selected. Once the
rider is activated, no changes to the Covered Persons will be
permitted.
Excess Withdrawal. The portion of any withdrawal taken during the Withdrawal
Phase that makes the total of all withdrawals in a Rider Year exceed the
Lifetime Withdrawal Benefit Amount in that Rider Year.
Lifetime Withdrawal Benefit Amount ("LWBA"). The maximum amount that can be
withdrawn under this rider during a Rider Year without reducing the Benefit
Base.
Maximum Anniversary Policy Value. The highest Policy value on any Policy
Anniversary during the 10-year period after the later of the Rider Activation
Date or the most recent reset date.
Monthly Anniversary. The same date in a succeeding month as the Policy Date.
Premium Accumulation Value. The sum of premiums paid, accumulated at an annual
compound rate of interest for a 10-year period during the Accumulation Phase
beginning with the later of the Rider Activation Date or the most recent reset
date. The rate of interest is:
o 5% for the Rider Year in which no withdrawal is taken
o 0% for the Rider Year in which a withdrawal is taken
The initial Premium Accumulation Value is determined as follows:
o If the Rider Activation Date is the same as the Policy date, it is
equal to the initial premium.
o If the Rider Activation Date is after the Policy date, it is equal to
the Policy value as of the Rider Activation Date.
Remaining Balance. The most recently determined Benefit Base minus the sum of
all withdrawals made since the later of the beginning of the Withdrawal Phase or
the most recent step-up of the Benefit Base. The Remaining Balance will never be
less than zero.
Rider Activation Date. The end of the Inactive Phase and the beginning of the
Accumulation Phase or the Withdrawal Phase. It must coincide with a Monthly
Anniversary and cannot occur before the Youngest Age 50.
Rider Year. For the first Rider Year, the period of time from the Rider
Activation Date to the next Policy Anniversary. Subsequent Rider Years will
coincide with Policy Years.
RMD. The required minimum distribution amount as defined by Internal Revenue
Code Section 401(a)(9) and related Code provisions. It is based on the previous
year-end Policy value of the Policy to which this rider is attached, including
the present value of additional benefits provided under the Policy and any other
riders attached to the Policy to the extent required to be taken into account
under IRS guidance.
Youngest Age. The attained age of the youngest Covered Person.
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Inactive Phase
The following apply during the Inactive Phase:
o No charges for the rider will be deducted from the Policy value.
o No restrictions are imposed on withdrawals other than those provided
by the base Policy.
o No restrictions are imposed on asset allocations other than those
provided by the base Policy.
o No determinations are made of Premium Accumulation Value, Maximum
Anniversary Policy Value, or Benefit Base as they apply to the
benefits and provisions of the GLWB rider.
The end of the Inactive Phase coincides with the Rider Activation Date.
o Activation of Rider
Rider Activation Date
The rider will be activated on the Monthly Anniversary following our
receipt of the properly completed service forms and your written consent
granting AIC discretionary authority as described in the Model Asset Allocation
program and below, but no earlier than the Youngest Age 50.
Once the rider is activated, no Policy loans may be taken.
Rider Charges
The Guaranteed Maximum Charge and the Current Charge for the rider are
shown in the CHARGES section of this prospectus. Other information about the
rider charges is discussed in the CHARGES EXPLAINED section.
Asset Allocation
Beginning on the Rider Activation Date, the GLWB rider limits
individual transfers and future premium allocations otherwise permitted by the
Policy. By activating the rider, you agree that your Policy value will be
invested in one of certain allowable allocation models while the rider is
active, and you agree to a rebalancing schedule. The models available for use
with the GLWB rider are: Capital Growth, Moderate, Balanced, and Conservative.
You are permitted to transfer your total Policy value from one allowable
allocation model to another allowable allocation model. AIC will serve as your
investment adviser fiduciary solely for purposes of development of the asset
allocation models and periodic updates to the models or deletion of models
available under the GLWB.
The conditions of the Model Asset Allocation Program will apply.
However, changes to your allocations outside the allowable models will terminate
the rider. Only you can select the allowable asset asset model best for you. AIC
will not make this decision for you.
Premium payments made to the Policy value during the Accumulation Phase
and Withdrawal Phase will be credited proportionally to the subaccounts in the
asset allocation model you have selected. All withdrawals will be deducted
proportionally from the subaccounts in the asset allocation model.
We have the right to discontinue access to an allocation model. If an
allocation model will be discontinued, we will notify you within 30 days prior
to the change. If after 30 days you have not selected another allowable
allocation model, we will transfer all funds from the discontinued allocation
model to a default model as specified in the notice. You may later request to
transfer your total Policy value from the default model to any of the remaining
asset allocation models.
We will notify you in the event any transaction you request will
involuntarily cause your GLWB rider to terminate for failure to invest according
to an allowable asset allocation model. We will require you to sign a form to
terminate your GLWB rider and request the investment option change. Until the
service form is received in good order in our office, we will not complete your
requested change.
Continuation of Rider by Surviving Spouse for Single Life Option
This section applies only to Policies issued as tax non-qualified, or
to Policies issued as traditional, SEP, SIMPLE, or Roth IRAs. Continuation of
the rider is not available to a surviving spouse when the single life option was
selected and the Policy was issued under a qualified plan established by the
applicable provisions of Internal Revenue Code Sections 401, 403(b) or 457.
-34-
If the Covered Person dies during the Accumulation Phase of the rider
and if the surviving spouse of the deceased Covered Person elects to continue
the policy in accordance with its terms, the surviving spouse may elect to add
the rider for his or her life.
a. If the surviving spouse has not reached attained age 50, the rider
will become inactive and will enter the Inactive Phase.
b. If the surviving spouse has reached attained age 50, the rider will
continue in the Accumulation Phase and the Premium Accumulation Value
and Maximum Anniversary Policy Value will be set equal to the Policy
value. The charge for the rider will equal the charge in effect for
new issues of the same rider and will not exceed the maximum charge as
stated in the CHARGES section of this prospectus.
If the Covered Person dies during the Withdrawal Phase, and if the
surviving spouse of the deceased Covered Person elects to continue the Policy in
accordance with its terms, the surviving spouse may continue the Policy and the
rider. The LWBA in effect on the date of the Covered Person's death will be paid
until such time that the Remaining Balance is reduced to zero. No step-up of the
Benefit Base is available after the Covered Person's death.
o Accumulation Phase
Reset Feature
On each Policy Anniversary during the Accumulation Phase, the Premium
Accumulation Value will be reset to the Policy value, if it is greater.
At the time of a reset:
1. A new 10-year period begins for:
a. Premium Accumulation Value; and,
b. Comparison of anniversary Policy values to determine the
Maximum Anniversary Policy Value.
2. The charge for the rider will equal the charge in effect for new
issues of the same rider.
3. If the charge increases, we will notify you within 30 days prior
to the Policy Anniversary. The charge for the rider will be
specified in the notice and will not exceed the maximum charge as
stated in the CHARGES section of this prospectus.
4. You can decline the charge increase by sending us written notice
no later than 10 days prior to the Policy Anniversary. If you
decline the charge increase, the reset feature will be suspended
and the charge percentage will remain unchanged for the current
Policy Year. On each subsequent Policy Anniversary during the
Accumulation Phase you will have the option to accept any
available reset.
On and after each reset, the provisions of the rider will apply in the
same manner as they applied when the rider was originally activated. The
deduction of charges, limitations on withdrawals, and any future reset options
available on and after the most recent reset will again apply and will be
measured from the most recent reset.
Withdrawals
You are permitted one withdrawal per Rider Year during the Accumulation
Phase without initiating the Withdrawal Phase. (The withdrawal must be at least
$250 and conform to other terms in the WITHDRAWALS section of this prospectus.)
You must indicate your wish to exercise this provision at the time you request
the withdrawal. The withdrawal can be no sooner than 30 days after the Policy
Issue Date. A second request for a withdrawal in a Rider Year will automatically
transition the rider to the Withdrawal Phase as described below.
A withdrawal will reduce the Premium Accumulation Value and the
Maximum Anniversary Policy Value in the same proportion that the withdrawal
amount has to the Policy value prior to the withdrawal. The Premium Accumulation
Value and Maximum Anniversary Policy Value after the withdrawal, respectively,
will be equal to (a), minus the result of multiplying (a) by the quotient of (b)
divided by (c) as shown in the following formula :
a - (a * (b / c))
where:
a = Premium Accumulation Value or Maximum Anniversary Policy
Value prior to the withdrawal;
b = withdrawal amount;
c = Policy value prior to the withdrawal
Taking a withdrawal under this provision will reduce the annual rate of interest
for the Premium Accumulation Value to 0% for the Rider Year in which the
withdrawal is taken.
-35-
o Withdrawal Phase
You may choose to begin withdrawal payments no sooner than 30 days
after the Policy Issue Date and no later than 60 days after the date we receive
the properly completed service form in our office.
Benefit Base
The Benefit Base is established at the beginning of the Withdrawal
Phase. It is not used to determine other benefits or features of the Policy or
the rider.
The initial Benefit Base equals the greatest of the following,
determined at the beginning of the Withdrawal Phase:
o Policy value
o Premium Accumulation Value
o Maximum Anniversary Policy Value
The Benefit Base is adjusted downward due to an Excess Withdrawal and
upward due to step-up or additional premium payments.
Lifetime Withdrawal Benefit Amount
We guarantee that you can withdraw up to the LWBA during the Withdrawal
Phase, regardless of Policy value, until the death of the last Covered Person.
Total withdrawals in a Rider Year that do not exceed the LWBA will not be
subject to withdrawal charges as provided by the base Policy and any other rider
issued with the base Policy.
The LWBA is determined by applying the lifetime distribution factor to
the Benefit Base. The lifetime distribution factor corresponds to the Youngest
Age at the beginning of the Withdrawal Phase. The lifetime distribution factor
is established from the following schedule; it never changes once it is
established:
o 4.0% - ages 50 through 54
o 4.5% - ages 55 through 59
o 5.0% - ages 60 through 64
o 5.5% - ages 65 through 69
o 6.0% - ages 70 through 74
o 6.5% - ages 75 through 79
o 7.0% - age 80 and older
At any time that the Benefit Base is adjusted, the LWBA is re-determined by
applying the lifetime distribution factor to the adjusted Benefit Base
You have the choice of receiving withdrawals on an annual, semi-annual,
quarterly, or monthly basis. If periodic withdrawals would be or become less
than $100, we will change the frequency of withdrawals to an interval that will
result in a payment of at least $100.
Impact of Withdrawals on Benefit Base
Withdrawals taken during the Withdrawal Phase may impact the Benefit
Base. Total withdrawals in a Rider Year up to the LWBA will not reduce the
Benefit Base and will not impact the LWBA. Also, if you are required to take RMD
from the Policy and the RMD exceeds the LWBA, the portion of the RMD that is
greater than the LWBA will not be treated as an Excess Withdrawal. However, any
withdrawal amount that causes total withdrawals in a Rider Year to exceed the
greater of the LWBA or the RMD will be treated as an Excess Withdrawal.
At the time a withdrawal is taken, if the total withdrawals in a Rider
Year exceed the LWBA, the excess will be considered as an Excess Withdrawal.
Excess Withdrawals will proportionally reduce the Benefit Base. The proportional
reduction in the Benefit Base is equal to the quotient of (x) divided by the
result of subtracting (z) minus (x) from (y):
_____x____
-
(y - (z - x))
where:
x = Excess Withdrawal amount with respect to LWBA; y = Policy
value immediately prior to the withdrawal; z = total amount of
the current withdrawal.
-36-
A reduction in the Benefit Base will reduce the LWBA.
No Excess Withdrawals will be allowed when the Policy value is zero. If
an Excess Withdrawal reduces the LWBA to an amount less than $100, we will pay
the Remaining Balance in a lump sum. The rider and its benefits will be
terminated.
Step-Up of Benefit Base
On each Policy Anniversary during the Withdrawal Phase, we will compare
the Policy value to the Benefit Base. If the Policy value is greater than the
Benefit Base on any anniversary, we will increase the Benefit Base to equal the
Policy value and recalculate the LWBA, which will increase the LWBA.
Additional Premiums
Additional premium payments made during the Withdrawal Phase will:
1. increase the Policy value according to the provisions of the
Policy; and,
2. increase the Benefit Base; and,
3. increase the LWBA.
Premium payments made during the Withdrawal Phase may not exceed
$100,000 during a Policy Year without our prior approval. Premium payments will
not be accepted if the Policy value is zero.
o Guaranteed Phase
If a withdrawal (including an RMD) reduces the Policy value to zero
and at least one Covered Person is still living, the following will apply:
a. the monthly rider charge will no longer be deducted; and,
b. the LWBA will be provided until the death of the last surviving
Covered Person under a series of pre-authorized withdrawals
according to a frequency selected by the owner, but no less
frequently than annually; and,
c. no additional premiums will be accepted; and,
d. no additional step-ups will occur; and,
e. any Remaining Balance will not be available for payment in a lump
sum and may not be applied to provide payments under an annuity
option; and,
f. the Policy and any other riders will cease to provide any death
benefits.
o Death Benefit
Upon the death of the last Covered Person, the beneficiary will select
to receive either the Death Benefit as provided by the Policy and other riders,
as applicable, or the distribution of the Remaining Balance accomplished through
the payment of the LWBA subject to the IRS regulations as relating to RMD until
such time that the Remaining Balance is zero.
If the last surviving Covered Person dies and the Policy value is zero
as of the date of death, any Remaining Balance of the Benefit Base will be
distributed to the Beneficiary through the payment of the LWBA until such time
that the Remaining Balance is zero.
o Termination of Rider
Except as otherwise provided under the Continuation of Rider by
Surviving Spouse for Single Life Option, the rider will terminate without value
on the earliest occurrence of any of the following dates:
1. the date of death of the last surviving Covered Person;
2. the date there is a change of owner;
3. the date annuity payments commence under an annuity income option
as described in the Policy;
4. the date an Excess Withdrawal is taken such that the LWBA is less
than $100;
5. the date any asset allocation requirement is violated;
6. the date a loan is taken from the Policy, as applicable, during
the Accumulation Phase or the Withdrawal Phase;
7. the date the owner(s) provides us with written notice to
terminate either the rider or the Policy.
If annuity payments are to commence under number 3 above at the maximum Annuity
Date, the owner may select one of the following options:
a. apply the Policy value under an annuity income option described
in the Policy, or
b. receive periodic annualized payments equal to the LWBA that would
otherwise be determined at that time through a life contingent
annuity.
-37-
FEDERAL INCOME TAX MATTERS
This discussion of how federal income tax laws may affect investment in
your variable annuity is based on our understanding of current laws as
interpreted by the Internal Revenue Service ("IRS"). It is NOT intended as tax
advice. All information is subject to change without notice. We make no attempt
to review any state or local laws, or to address estate or inheritance laws or
other tax consequences of annuity ownership or receipt of distributions. You
should consult a competent tax adviser to learn how tax laws apply to your
annuity interests.
Section 72 of the Internal Revenue Code of 1986, as amended, (the
"Code") governs taxation of annuities in general and Code Section 817 provides
rules regarding the tax treatment of variable annuities. Other Code sections may
also impact taxation of your variable annuity investment and/or earnings.
Tax Deferrals During Accumulation Period
An important feature of variable annuities is tax-deferred treatment of
earnings during the accumulation phase. An individual owner is not taxed on
increases in the value of a Policy until a withdrawal occurs, either in the form
of a non-periodic payment or as annuity payments under the settlement option
selected.
Taxation of Withdrawals
Withdrawals are included in gross income to the extent of any allocable
income. Any amount in excess of the investment in the Policy is allocable to
income. Accordingly, withdrawals are treated as coming first from the earnings,
then, only after the income portion is exhausted, as coming from principal.
If you make a withdrawal, not only is the income portion of such a
distribution subject to federal income taxation, but a 10% penalty may apply.
However, the penalty does not apply to distributions:
o after the taxpayer reaches age 59 1/2;
o upon the death of the owner;
o if the taxpayer is defined as totally disabled;
o as periodic withdrawals that are a series of substantially equal
periodic payments made at least annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and the beneficiary;
o under an immediate annuity; or
o under certain other limited circumstances.
Taxation of Annuity Payments
Earnings from a variable annuity are taxable only upon withdrawal and
are treated as ordinary income. Generally, the Code provides for the return of
your investment in an annuity policy in equal tax-free amounts over the annuity
payout period. Fixed annuity payment amounts may be excluded from taxable income
based on the ratio of the investment in the Policy to the total expected value
of annuity payments. If you elect variable annuity payments, the amount excluded
from taxable income is determined by dividing the investment in the Policy by
the total number of expected payments. The balance of each payment is taxable
income. After you recover your investment in the Policy, any payment you receive
is fully taxable. (If a variable payment is less than the excludable amount you
should contact your tax adviser to determine how to report any investment not
recovered.) The taxable portion of any annuity payment is taxed at ordinary
income tax rates.
Taxation of Death Proceeds
A death benefit paid under the Policy is taxable income to the
beneficiary. The rules on taxation of an annuity apply. Estate taxes may also
apply to your estate, even if all or a portion of the benefit is subject to
federal income taxes. To be treated as an annuity, a Policy must provide that:
(1) if an annuitant dies: (a) on or after the annuity starting date, and (b)
before the entire interest in the Policy is distributed, the balance will be
distributed at least as rapidly as under the method being used at the date of
death, and (2) if the annuitant dies before the annuity starting date, the
entire interest must be distributed within five years of death. If distributed
in a lump sum, the death benefit amount is taxed in the same manner as a full
withdrawal. If the beneficiary is the surviving spouse of the owner, it is
possible to continue deferring taxes on the accrued and future income of the
Policy until payments are made to the surviving spouse.
-38-
Tax Treatment of Assignments and Transfers
An assignment or pledge of an annuity Policy is treated as a
withdrawal. Also, the Code (particularly for tax-qualified plans) and ERISA in
some circumstances prohibit such transactions, subjecting them to income tax
penalties and additional excise tax. Therefore, you should consult a competent
tax adviser if you wish to assign or pledge your Policy.
Tax Treatments by Type of Owner
A Policy held by an entity other than a natural person, such as a
corporation, estate or trust, usually is not treated as an annuity for federal
income tax purposes unless annuity payments start within a year. The income on
such a Policy is taxable in the year received or accrued by the owner. However,
this rule does not apply if the owner is acting as an agent for an individual or
is an estate that acquired the Policy as a result of the death of the decedent.
Nor does it apply if the Policy is held by certain qualified plans, is held
pursuant to a qualified funding trust (structured settlement plan), or if an
employer purchased the Policy under a terminated qualified plan. You should
consult your tax adviser before purchasing a Policy to be owned by a non-natural
person.
Annuity Used to Fund Qualified Plan
The Policy is designed for use with various qualified plans. The Policy
will not provide additional tax deferral benefits if it is used to fund a
qualified plan. However, Policy features and benefits other than tax deferral
may make it an appropriate investment for a qualified plan. Tax rules for
qualified plans are very complex and vary according to the type and terms of the
plan, as well as individual facts and circumstances. Each purchaser should
obtain advice from a competent tax advisor prior to purchasing a Policy issued
under a qualified plan.
The income on tax sheltered annuity (TSA) and individual retirement
annuity (IRA) investments is tax deferred; therefore, any income on variable
annuities held by such plans does not receive an additional tax deferral. You
should review the annuity features, including all benefits and expenses, prior
to purchasing a variable annuity as a TSA or IRA. Tax qualified annuities may be
purchased as investments for:
o Tax Sheltered Annuities, Code Section 403(b);
o Individual Retirement Annuities (IRAs), Code Section 408(b);
o Simplified Employee Pension (SEP IRA), Code Section 408(k);
o Savings Incentive Match Plans for Employees (SIMPLE IRA), Code Section
408(p); and
o Roth IRAs, Code Section 408A.
The Company reserves the right to limit the availability of the Policy for use
with any of the plans listed above or to modify the Policy to conform to tax
requirements. Some retirement plans are subject to requirements that we have not
incorporated into our administrative procedures. Unless we specifically consent,
we are not bound by plan requirements to the extent that they conflict with the
terms of the Policy.
On July 26, 2007, the Internal Revenue Service ("IRS") published new
regulations for tax sheltered annuity contracts under Internal Revenue Code
Section 403(b). While most of these provisions will become effective January 1,
2009, the new regulations on tax-free exchanges of contracts became effective
September 24, 2007. The new 403(b) regulations allow for the exchange of annuity
contracts if the plan sponsor (employer) and the contract provider (insurance
company) agree to share certain information. This contrasts with prior rules,
when a contract owner (employee) and the insurer(s) could complete an exchange
without directly involving the plan sponsor.
Therefore, Ameritas is temporarily suspending 403(b) exchanges
(both incoming and outgoing) and 403(b) trustee-to-trustee transfers. We expect
to resume permitted exchanges and transfers as soon as practical. Toward this
goal, we are working with 403(b) plan sponsors to establish written agreements
consistent with the new regulations, and we will rely upon guidelines the IRS
issues to help assure that the steps we and your plan sponsors take will
maintain the tax-deferred nature of your 403(b) contract. If you must
discontinue your 403(b) annuity while exchanges are suspended, you may submit
paperwork to initiate a withdrawal or a rollover to an IRA or to another
qualified plan, if a distributable event has occurred (such as attainment of age
59 1/2, severance from employment, death, disability, or qualified reservist
distribution and circumstances allow). Our service center is available to assist
you with any of your contract needs.
Tax Impact on Account Value
Certain Policy credits are treated as taxable "earnings" and not
"investments" for tax purposes. Taxable earnings are considered paid out first,
followed by the return of your premiums (investment amounts). In addition,
taxation order generally considers the last premium withdrawn first ("last-in,
first-out").
-39-
MISCELLANEOUS
ABOUT OUR COMPANY
Ameritas Life Insurance Corp. issues the Policy described in this
prospectus and is responsible for providing each Policy's insurance and annuity
benefits. Prior to May 1, 2007, AVLIC issued the Policy. Effective May 1, 2007,
AVLIC merged with and into Ameritas ("Merger"). AVLIC was a wholly-owned
subsidiary of Ameritas. On the date of the Merger, Ameritas Life Insurance Corp.
acquired from AVLIC all of AVLIC's assets, and became directly liable for
AVLIC's liabilities and obligations with respect to all policies issued by AVLIC
then outstanding.
The Merger was approved by the boards of directors of Ameritas and
AVLIC. The Merger also received regulatory approval from the State of Nebraska
Department of Insurance, the state of domicile of Ameritas and AVLIC. The Merger
did not affect the terms of, or the rights and obligations under your Policy,
other than to reflect the change to the company that guarantees your Policy
benefits from AVLIC to Ameritas. You will receive a Policy endorsement from
Ameritas that reflects the change from AVLIC to Ameritas. The Merger also did
not result in any adverse tax consequences for any Policy owners.
Ameritas is a stock life insurance company organized under the
insurance laws of the State of Nebraska, in business since 1887. We are an
indirect wholly owned subsidiary of UNIFI Mutual Holding Company. Our address is
5900 "O" Street, Lincoln, Nebraska, 68510. (See the TABLE OF CONTENTS page of
this prospectus, or the cover page or last page for information on how to
contact us.)
We are engaged in the business of issuing life insurance and annuities,
group dental and vision insurance, retirement plans and 401(k) plans throughout
the United States (except New York). The UNIFI companies are a diversified
family of financial services businesses offering the above-listed products and
services as well as mutual funds and other investments, financial planning,
banking, and public financing.
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("AIC"), 5900 "O" Street, Lincoln, Nebraska
68510, is the principal underwriter of the Policies. AIC is a direct
majority-owned subsidiary of Ameritas. AIC enters into contracts with various
broker-dealers ("Distributors") to distribute Policies. All persons selling the
Policy will be registered representatives of the Distributors, and will also be
licensed as insurance agents to sell variable insurance products. AIC is
registered with the Securities and Exchange Commission as a broker-dealer and is
a member of the National Association of Securities Dealers, Inc. Commissions
paid to all distributors may be up to a total of 7.5% of premiums. We may also
pay other distribution expenses, marketing support allowances, conference
sponsorship fees and production incentive bonuses. The list of broker-dealers to
whom we pay conference sponsorship fees (typically ranging from $10,000 to
$25,000) and marketing support allowances may change from time to time, but in
calendar year 2006 the list included the following firms: Harbour Investments,
Investacorp, Inc., Investors Capital Corp, and Horace Mann Investors, Inc. These
distribution expenses do not result in any additional charges under the Policy
other than those described in this prospectus' CHARGES EXPLAINED section.
VOTING RIGHTS
As a Policy Owner, you may have voting rights in the portfolios whose
shares underlie the Subaccounts you are invested in. You will receive proxy
material, reports, and other materials relating to each underlying portfolio in
which you have voting rights. If you send us written voting instructions, we
will follow your instructions in voting the Portfolio shares attributable to
your Policy. If you do not send us written instructions, we will vote the shares
attributable to your Policy in the same proportions as we vote the shares for
which we have received instructions from other Policy Owners. We will vote
shares that we hold in the same proportions as we vote the shares for which we
have received instructions from other Policy Owners. It is possible that a small
number of Policy owners can determine the outcome of a voting proposal. The
underlying portfolios may not hold routine annual shareholder meetings.
LEGAL PROCEEDINGS
As of the date of this prospectus, there are no proceedings affecting
the Separate Account, or that are material in relation to our total assets.
-40-
APPENDIX A: Accumulation Unit Values
The following table shows Accumulation Unit values at the beginning and
end of the periods indicated as well as the number of Accumulation Units
outstanding for each Subaccount variable investment option portfolio as of the
end of the periods indicated. The financial statements of the Subaccounts can be
found in the Statement of Additional Information. (See the cover and back page
to learn how to get a copy of the Statement of Additional Information.)
-------------------------------------------------- -------- --------------- ----------------- -----------------------
Number (#) of
Value ($) at Accumulation Units
Subaccount (inception date) Year Value($) at End of Year At End of Year
Inception (December 31) (December 31)
-------------------------------------------------- -------- --------------- ----------------- -----------------------
AIM FUNDS
-------------------------------------------------- -------- --------------- ----------------- -----------------------
AIM V.I. Dynamics - Series I (01/01/2001) 2001 16.60 12.646 87,960
2002 8.547 173,480
2003 11.688 255,901
2004 13.142 292,998
2005 14.435 259,477
2006 16.629 255,036
-------------------------------------------------- -------- --------------- ----------------- -----------------------
ALGER - Class O
Alger American Balanced (01/01/2001) 2001 13.56 13.410 207,825
2002 11.674 317,627
2003 13.788 463,258
2004 14.302 553,737
2005 15.384 481,743
2006 15.983 417,019
-------------------------------------------------- -------- --------------- ----------------- -----------------------
AMERICAN CENTURY
VP Income & Growth (01/01/2001) 2001 6.93 6.471 433,115
2002 5.178 909,031
2003 6.646 1,642,598
2004 7.450 2,236,273
2005 7.733 2,660,008
2006 8.983 3,076,650
-------------------------------------------------- -------- --------------- ----------------- -----------------------
AMERITAS PORTFOLIOS
Ameritas Core Strategies (10/31/2003) 2003 14.79 16.185 340,812
2004 17.355 480,203
2005 18.707 617,264
2006 22.579 859,579
Ameritas Income & Growth (01/01/2001) 2001 16.10 13.999 116,359
2002 9.665 189,688
2003 12.470 288,623
2004 13.343 416,581
2005 13.864 1,777,100
2006 15,161 1,539,401
Ameritas Index 500 (01/01/2001) 2001 144.49 129.292 25,162
2002 99.715 45,106
2003 126.880 75,875
2004 139.088 95,080
2005 144.301 89,301
2006 165.165 82,686
Ameritas MidCap Growth (01/01/2001) 2001 32.76 31.790 42,310
2002 22.117 89,019
2003 32.323 152,188
2004 36.362 217,959
2005 40.141 287,425
2006 43.506 316,573
Ameritas MidCap Value (01/01/2001) 2001 15.00 17.716 170,533
2002 15.116 401,478
2003 19.382 531,163
2004 20.993 668,687
2005 22.046 999,761
2006 24.842 1,239,361
Ameritas Money Market (01/01/2001) 2001 1.00 1.030 13,882,321
2002 1.039 20,980,677
2003 1.041 16,549,336
2004 1.045 13,216,208
2005 1.068 12,454,164
2006 1.110 16,085,844
-------------------------------------------------- -------- --------------- ----------------- -----------------------
-A:1-
-------------------------------------------------- -------- --------------- ----------------- -----------------------
Ameritas Small Capitalization (01/01/2001) 2001 36.90 29.194 11,599
2002 18.764 42,634
2003 25.854 88,031
2004 26.250 125,468
2005 26.725 158,213
2006 31.965 194,490
-------------------------------------------------- -------- --------------- ----------------- -----------------------
Ameritas Small Company Equity (01/01/2001) 2001 15.00 19.727 101,570
2002 18.148 224,687
2003 24.474 278,296
2004 27.966 349,258
2005 27.213 404,639
2006 29.194 354,606
-------------------------------------------------- -------- --------------- ----------------- -----------------------
CALVERT PORTFOLIOS
CVS Income (05/01/2002) 2002 15.00 15.915 196,245
2003 17.798 475,748
2004 18.657 935,247
2005 19.196 1,487,915
2006 20.007 1,933,118
CVS Social Balanced (01/01/2001) 2001 1.964 1.851 455,566
2002 1.614 1,232,673
2003 1.911 1,879,583
2004 2.052 2,131,849
2005 2.151 1,829,391
2006 2.321 1,962,968
CVS Social Equity (05/01/2002) 2002 15.00 12.887 36,489
2003 15.622 144,402
2004 16.606 273,384
2005 17.223 285,289
2006 18.805 288,474
CVS Social International Equity (01/01/2001) 2001 19.30 14.486 15,726
2002 12.228 77,458
2003 15.976 168,181
2004 18.694 309,928
2005 20.389 296,955
2006 25.796 341,020
CVS Social Mid Cap Growth (01/01/2001) 2001 29.49 27.075 26,631
2002 19.288 59,271
2003 25.200 102,501
2004 27.332 150,162
2005 27.229 129,286
2006 28.871 138,555
-------------------------------------------------- -------- --------------- ----------------- -----------------------
DREYFUS
MidCap Stock - Service Shares (11/01/2002) 2002 12.17 12.033 3,790
2003 15.699 85,176
2004 17.790 163,245
2005 19.226 161,486
2006 20.537 172,611
-------------------------------------------------- -------- --------------- ----------------- -----------------------
FIDELITY (Service Class 2)
VIP Asset Manager (01/01/2001) 2001 13.89 14.275 127,031
2002 12.889 181,645
2003 15.048 216,010
2004 15.701 276,775
2005 16.165 237,995
2006 17.181 210,278
VIP Asset Manager: Growth (01/01/2001) 2001 15.61 12.347 17,035
2002 10.315 21,715
2003 12.592 50,389
2004 13.195 69,339
2005 13.557 65,253
2006 14.354 61,424
VIP Contrafund(R) (01/01/2001) 2001 22.89 20.549 64,084
2002 18.438 206,580
2003 23.452 446,856
2004 26.792 767,894
2005 31.005 1,235,831
2006 34.275 1,526,651
-A:2-
VIP Equity-Income (01/01/2001) 2001 25.11 22.436 143,316
2002 18.449 317,475
2003 23.802 596,628
2004 26.265 821,828
2005 27.509 1,202,755
2006 32.729 1,509,056
VIP Growth (01/01/2001) 2001 41.63 33.115 81,472
2002 22.908 172,691
2003 30.127 293,933
2004 30.820 420,603
2005 32.258 518,529
2006 34.105 625,970
VIP High Income (01/01/2001) 2001 8.12 6.318 175,675
2002 6.478 486,540
2003 8.147 1,059,483
2004 8.841 1,293,209
2005 8.973 1,476,568
2006 9.884 1,710,492
VIP Investment Grade Bond (01/01/2001) 2001 12.63 12.734 302,145
2002 13.916 925,800
2003 14.490 1,156,571
2004 14.977 1,413,321
2005 15.140 1,743,207
2006 15.641 1,948,921
VIP Overseas (01/01/2001) 2001 19.81 13.719 33,056
2002 10.831 89,523
2003 15.372 213,241
2004 17.279 427,850
2005 20.362 852,293
2006 23.791 1,270,006
-------------------------------------------------- -------- --------------- ----------------- -----------------------
MFS
New Discovery - Initial Class (01/01/2001) 2001 15.64 15.665 110,102
2002 10.630 187,083
2003 14.103 251,217
2004 14.903 291,624
2005 15.560 240,329
2006 17.477 225,733
Strategic Income - Initial Class (01/01/2001) 2001 10.08 10.416 18,160
2002 11.208 95,693
2003 12.275 215,479
2004 13.118 377,445
2005 13.260 526,508
2006 14.032 646,058
Utilities - Initial Class (01/01/2001) 2001 22.97 17.739 118,165
2002 13.600 127,935
2003 18.338 204,463
2004 23.685 331,367
2005 27.454 475,120
2006 35.751 530,253
-------------------------------------------------- -------- --------------- ----------------- -----------------------
SUMMIT
Nasdaq-100 Index (01/01/2001) 2001 6.06 4.432 177,238
2002 2.749 433,419
2003 4.054 844,345
2004 4.428 865,611
2005 4.450 756,282
2006 4.709 684,034
Russell 2000 Small Cap Index (01/01/2001) 2001 9.57 9.622 61,252
2002 7.539 98,539
2003 10.938 211,076
2004 12.771 327,689
2005 13.179 276,468
2006 15.375 313,643
S&P MidCap 400 Index (01/01/2001) 2001 11.40 11.683 70,378
2002 9.839 122,614
2003 13.155 231,485
2004 15.106 336,499
2005 16.777 394,840
2006 18.262 479,718
-------------------------------------------------- -------- --------------- ----------------- -----------------------
-A:3-
-------------------------------------------------- -------- --------------- ----------------- -----------------------
THIRD AVENUE
Third Avenue Value (01/01/2001) 2001 14.82 17.171 240,548
2002 15.216 474,992
2003 21.518 724,909
2004 25.594 1,026,292
2005 29.105 1,164,416
2006 33.431 1,263,537
------------------------------------------------- -------- --------------- ----------------- -----------------------
VAN KAMPEN
Emerging Markets Equity - Class I (01/01/2001) 2001 7.02 6.586 14,050
2002 5.954 40,625
2003 8.842 115,632
2004 10.799 185,530
2005 14.341 539,504
2006 19.512 744,164
Global Value Equity - Class I (01/01/2001) 2001 13.12 12.176 109,697
2002 10.047 209,773
2003 12.856 325,982
2004 14.480 511,509
2005 15.203 524,612
2006 18.281 455,123
International Magnum - Class I ((01/01/2001) 2001 11.77 9.448 33,989
2002 7.801 65,732
2003 9.862 107,888
2004 11.484 141,267
2005 12.655 179,984
2006 15.710 244,472
U.S. Real Estate - Class I (01/01/2001) 2001 11.44 12.555 55,666
2002 12.364 237,247
2003 16.870 294,834
2004 22.828 464,510
2005 26.509 508,529
2006 36.304 601,795
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-A:4-
APPENDIX B: Tax-Qualified Plan Disclosures
Disclosure Summary for IRA, SEP IRA, SIMPLE IRA, and Roth IRA plans....Page B: 1
Disclosure Summary for 403(b) Tax Sheltered Annuity plan...............Page B: 6
---------------------------------------------- ---------------------------------
DISCLOSURE SUMMARY For annuity policies issued as a:
| Regular IRA
AMERITAS LIFE INSURANCE CORP. | SEP IRA
| SIMPLE IRA
| Roth IRA
---------------------------------------------- ---------------------------------
The Internal Revenue Service (IRS) requires us to provide you this disclosure
statement. This Disclosure Statement explains the rules governing your
Individual Retirement Account (IRA). The disclosure reflects our current
understanding of the law, but for personal tax advice you should consult a
lawyer or other licensed tax expert to learn how the applicable tax laws apply
to your situation. This Disclosure Summary is NOT intended as, nor does it
constitute, legal or tax advice. For further information about IRAs, contact any
district office of the IRS, or consult IRS Publication 590: Individual
Retirement Arrangements.
If you have any questions about your Policy, please contact us at the address
and telephone number shown below.
YOUR RIGHT TO CANCEL
You may cancel your IRA within seven days after the date you receive this
disclosure statement. To revoke your plan and receive a refund for the amount
paid for your IRA, you must send a signed and dated written notice to cancel
your Policy no later than the seventh day after issuance to us at:
Ameritas Life Insurance Corp.
Service Center, Attn: Annuity Service Team
P.O. Box 82550
Lincoln, NE 68501
Telephone 1-800-745-1112
Your revocation will be effective on the date of the postmark (or certification
or registration, if applicable), if sent by United States mail, properly
addressed and by first class postage prepaid. After seven days following receipt
of this Disclosure Statement, you cannot cancel.
PROVISIONS OF IRA LAW
This disclosure is applicable when our variable annuity Policy is used for a
Regular IRA, Spousal IRA, Rollover IRA, or a Roth IRA. Additionally, this
disclosure provides basic information for when our variable annuity Policy is
used for a Simplified Employee Pension (SEP)-IRA, or Savings Incentive Match
Plan for Employees (SIMPLE)-IRA. A separate Policy must be purchased for each
individual under each arrangement/plan. While Internal Revenue Code ("IRC")
provisions for IRAs are similar for all such arrangements/plans, certain
differences are set forth below.
REGULAR IRA
Eligibility
You are eligible to establish a Regular IRA if you are younger than age 70 1/2
and if, at any time during the year, you receive compensation or earned income
that is includible in your gross income. Your spouse may also establish a
"spousal IRA" that you may contribute to out of your compensation or earned
income for any year before the year in which your spouse reaches age 70 1/2. To
contribute to a spousal IRA, you and your spouse must file a joint tax return
for the taxable year.
Additionally, regardless of your age, you may transfer funds from another IRA or
certain qualified plans to a "Rollover IRA", which is described below.
-B:1-
Annual Contribution Limits
You may make annual contributions to a Regular IRA of up to the Annual
Contribution Limit ($4,000 for 2005 through 2007, and $5,000 in 2008 and after),
or 100% of your earned income or compensation, whichever is less. If you are age
50 or older, the Annual Contribution Limits are increased by $1,000, so long as
your earned income or compensation is greater than the Annual Contribution
Limit. Beginning in 2009, the Annual Contribution Limits will be increased by
the IRS to reflect inflation.
If you and your spouse both work and have compensation that is includible in
your gross income, each of you can annually contribute to a separate Regular IRA
up to the lesser of the Annual Contribution Limit or 100% of your compensation
or earned income. However, if one spouse earns less than the Annual Contribution
limit, but both spouses together earn at least twice the Annual Contribution
Limit, it may be advantageous to use the spousal IRA. The total contributions to
both IRAs may not exceed the lesser of twice the Annual Contribution Limit or
100% of you and your spouse's combined compensation or earned income.
The combined limit on contributions to both Regular and Roth IRAs for a single
calendar year for you may not exceed the Annual Contribution Limit (or twice the
Annual Contribution Limit for a couple filing jointly).
Distributions from another IRA or certain other qualified plans may be "rolled
over" into a Regular IRA and such rollover contributions are not limited by this
annual maximum.
Contributions must be made by the due date, not including extensions, for filing
your tax return. A contribution made between January 1 and the filing due date
for your return must be submitted with written direction that it is being made
for the prior tax year or it will be treated as made for the current tax year.
The amount of permissible contributions may or may not be tax-deductible
depending on whether you are an active participant in an employer sponsored
retirement plan and whether your adjusted gross income ("AGI") is above the
phase-out level.
Deductibility of Contributions
Contributions made for the tax year are fully deductible if neither you nor your
spouse (if married) is an active participant in an employer-sponsored retirement
plan (including qualified pension, profit sharing, stock bonus, 401(k), or
403(b) plans, SEP plans, SIMPLE IRA, SIMPLE 401(k) plans, and certain
governmental plans for any part of such year.
If you are an active participant in an employer sponsored retirement plan you
may make deductible contributions if your Adjusted Gross Income (AGI) is below a
threshold level of income. For single taxpayers and married taxpayers (who are
filing jointly and are both active participants) the available deduction is
reduced proportionately over a phaseout range. If you are married and an active
participant in an employer retirement plan, but file a separate tax return from
your spouse, your deduction is phased out between $0 and $10,000 of AGI.
Active participants with income above the phaseout range are not entitled to an
IRA deduction. The phaseout limits are scheduled to increase as follows:
Married Filing Jointly Single/Head of Household
---------------------- ------------------------
Year AGI AGI
----
2004 $65,000 - $ 75,000 $45,000 - $55,000
2005 $70,000 - $ 80,000 $50,000 - $60,000
2006 $75,000 - $ 85,000 $50,000 - $60,000
2007+ $80,000 - $ 100,000 $50,000 - $60,000
If you are not an active participant in an employer sponsored plan, but your
spouse is an active participant, you may take a full deduction for your IRA
contribution (other than to a Roth IRA) if your AGI is below $150,000; if you
are not an active participant but your spouse is, the maximum deductible
contribution for you is phased out at AGIs between $150,000 and $160,000.
Even if you will not be able to deduct the full amount of your Regular IRA
contribution, you can still contribute up to the Annual Contribution Limit with
all or part of the contribution being non-deductible. The combined total must
not exceed your Annual Contribution Limit. Any earnings on all your Regular IRA
contributions accumulate tax-free until you withdraw them.
Excess Contributions
If you contribute in excess of the maximum contribution limit allowed in any
year, the excess contribution could be subject to a 6% excise tax. The excess is
taxed in the year the excess contribution is made and each year that the excess
remains in your Regular IRA.
If you should contribute more than the maximum amount allowed, you can eliminate
the excess contribution as follows:
You may withdraw the excess contribution and net earnings attributable to
it before the due date for filing your federal income tax in the year the excess
contribution was made. Any earnings so distributed will be taxable in the year
for which the contribution was made and may be subject to the 10% premature
distribution tax.
If you elect not to withdraw an excess contribution, you may apply the
excess against the contribution limits in a later year. This is allowed to the
extent you under-contribute in the later year. The 6% excise tax will be imposed
in the year you make the excess contribution and each subsequent year, until
eliminated. To the extent an excess contribution is absorbed in a subsequent
year by contributing less than the maximum deduction allowable for that year,
the amount absorbed will be deductible in the year applied (provided you are
eligible to take a deduction).
Distributions From Your Regular IRA During Your Life
You may take distributions from your Regular IRA at any time. However, there is
a 10% premature distribution tax on the amount includible in your gross income
distributed prior to you attaining age 59 1/2, unless: (1) the distributions
made to a beneficiary on or after the owner's death; (2) distribution is made
because of your permanent disability; (3) the distribution is part of a series
of substantially equal periodic payments (made at least annually) that do not
exceed your life expectant or the life expectancy of you and your designated
beneficiary; (4) the distribution is made for medical expenses which exceed 7.5%
of your adjusted gross income; (5) the distribution is made to purchase health
insurance for the individual and/or his or her spouse and dependents if he or
she: (a) has received unemployment compensation for 12 consecutive weeks or
more; (b) the distributions are made during the tax year that the unemployment
compensation is paid or the following tax year;
-B:2-
and (c) the individual has not been re-employed for 60 days or more; (6) the
distribution is made for certain qualified higher education expenses of the
taxpayer, the taxpayer's spouse, or any child or grandchild of the taxpayer or
the taxpayer's spouse; (7) the distribution is made for the qualified first-time
home buyer expenses (up to a lifetime maximum of $10,000) incurred by you or
your spouse or a child, grandchild, parent or grandparent of you or your spouse;
or (8) distributions to satisfy a levy issued by the IRS. Generally, the part of
a distribution attributable to non-deductible contributions is not includable in
income and is not subject to the 10% penalty.
When you reach age 70 1/2 you must elect to receive Required Minimum
Distributions no later than April 1 following the year in which you reach age 70
1/2 whether or not you have retired (Required Distribution Date). There is a
minimum amount which you must withdraw by the Required Distribution Date and by
each December 31 thereafter. You should consult with your own tax or financial
advisor with regard to the calculation of the amount of your minimum
distribution each year to make sure this requirement is met. Failure to take the
Required Minimum Distribution could result in an additional tax of 50% of the
amount not taken.
Distributions From Your Regular IRA After Your Death
If you die before all the funds in your Regular IRA have been distributed, the
remaining funds will be distributed to your designated beneficiary as required
below and as selected by such beneficiary.
If you die before the Required Distribution Date, your designated beneficiary
must withdraw the funds remaining as follows: 1) distributed no later than
December 31 of the calendar year in which the fifth anniversary of your death
occurs; or 2) distributed over the life or life expectancy of the named
beneficiary and must begin on or before December 31 of the calendar year
following the year of your death. However, if the named beneficiary is your
spouse; payments may begin before December 31 of the calendar year in which you
would have reached age 70 1/2. If you did not designate a beneficiary, the funds
remaining shall be distributed within five years after your death.
If you die after Required Minimum Distribution payments have begun, your
designated beneficiary must select to have the remaining amount of your Regular
IRA distributed over the longer of 1) the beneficiary's life expectancy or 2)
your remaining life expectancy beginning no later than December 31 of the
calendar year following the year of your death. If you do not designate a proper
beneficiary, your interest is distributed over your remaining life expectancy.
Your surviving spouse, if the sole beneficiary, may elect to treat your Regular
IRA as his or her own Regular IRA.
Tax Consequences
Amounts paid to you or your beneficiary from your Regular IRA are taxable as
ordinary income, except that you recover your nondeductible Regular IRA
contributions tax-free. If a minimum distribution is not made from your IRA for
a tax year in which it is required, the excess of the amount that should have
been distributed over the amount that was actually distributed is subject to an
excise tax of 50%.
Tax-Free Rollovers
Under certain circumstances, you, your spouse, or your former spouse (pursuant
to a qualified domestic relations order) may roll over all or a portion of your
distribution from another Regular IRA, a 401(a) qualified retirement plan,
401(k) plan, 403(b) plan, governmental 457plan, or SIMPLE plan into a Regular
IRA. Such an event is called a Tax-Free Rollover and is a method for
accomplishing continued tax deferral on otherwise taxable distributions from
said plans. Rollover contributions are not subject to the contribution limits on
Regular IRA contributions, but also are not tax deductible.
There are two ways to make a Tax-Free Rollover to your IRA:
1. Participant Rollovers are accomplished by contributing part or all of the
eligible distribution (which includes amounts withheld for federal income tax
purposes) to your new IRA within 60 days following receipt of the distribution.
Participant Rollover amounts are subject to a mandatory 20% federal income tax
withholding except Participant Rollovers from another Regular IRA. Regular IRA
to Regular IRA Rollovers are limited to one per distributing plan per 12 month
period. However, you may transfer Regular IRA assets to another Regular IRA
(where you do not directly receive a distribution) and such transfers are not
subject to this limitation. Distributions from a SIMPLE IRA may not be rolled
over or transferred to an IRA (which isn't a SIMPLE IRA) during the 2-year
period following the date you first participate in any SIMPLE Plan maintained by
your employer.
2. Direct Rollovers are made by instructing the plan trustee, custodian, or
issuer to pay the eligible portion of your distribution directly to the trustee,
custodian or issuer of the receiving IRA. Direct Rollover amounts are not
subject to mandatory federal income tax withholding.
Certain distributions are not considered to be eligible for Rollover and
include:
a. distributions which are part of a series of substantially equal
periodic payments (made at least annually) for 10 years or more;
b. required minimum distributions made during or after the year you reach
age 70 1/2;
c. any hardship distributions made under the terms of the plan; and
d. amounts in excess of the cash (except for certain loan offset amounts)
or in excess of the proceeds from the sale of property distributed.
Under certain circumstances, you may roll over all or a portion of your eligible
distribution from your Regular IRA to a 401(a) qualified retirement plan, 401(k)
plan, 403(b) plan, or governmental 457 (No Regular IRA Rollovers to Simple IRAs
are allowed). However, you may not roll after-tax contributions from your
Regular IRA to a 401(a), 401(k) plan, 403(b) plan, or governmental 457 plan.
For rules applicable to rollovers or transfers to Roth IRAs, see the paragraphs
on Roth IRA, next page.
-B:3-
SEP IRA
A SEP Plan allows self-employed people and small business owners to establish
SEP IRAs for the business owner and eligible employees, if any. SEP IRAs have
specific eligibility and contribution limits (as described in IRS Form
5305-SEP); otherwise SEP IRAs follow the same rules as Regular IRAs.
SIMPLE IRA
SIMPLE IRAs operate in connection with a SIMPLE Plan maintained by an eligible
employer. Each participating employee has a SIMPLE IRA to receive contributions
under the plan. SIMPLE IRAs have specific eligibility, contribution, and
tax-withdrawal penalties (as described in IRS Form 5304-SIMPLE); otherwise,
SIMPLE IRAs follow the same rules as Regular IRAs.
ROTH IRA
Eligibility
You are eligible to make annual contributions to a Roth IRA if you receive
compensation from employment, earnings from self-employment, or alimony, and
your (and your spouse's) AGI is within the limits described below. Also, you may
contribute to a different Roth IRA, established by your spouse (spousal Roth
IRA), out of your compensation or earned income for any year. Unlike Regular
IRAs, if eligible, you may contribute to a Roth IRA even after age 70 1/2.
Limit on Annual Contributions
You can make annual contributions to a Roth IRA of up to the Annual Contribution
Limit or 100% of your compensation or earned income, whichever is less, subject
to the limitations below. The Annual Contribution Limit is $4,000 for 2005
through 2007, and $5,000 thereafter. If you are age 50 or older, the Annual
Contribution Limits are increased by $1,000 per year, so long as your earned
income or compensation is greater than the Annual Contribution Limit. Beginning
in 2009, the Annual Contribution Limits will be increased by the IRS to reflect
inflation.
If each spouse earns at least the Annual Contribution Limit, each may make the
maximum contribution to his or her Roth IRA, subject to the limitations
discussed below. However, if one spouse earns less than the Annual Contribution
limit, but both spouses together earn at least twice the Annual Contribution
Limit, it may be advantageous to use the spousal Roth IRA. The total
contributions to both Roth IRAs may not exceed the lesser of twice the Annual
Contribution Limit or 100% of you and your spouse's combined compensation or
earned income.
The Annual Contribution limit is the maximum that can be contributed to all IRAs
(Roth and Regular) by an individual in a year. The maximum amount that may be
contributed to your Roth IRA is always reduced by any amount that you have
contributed to your Regular IRAs for the year.
The maximum amount you or your spouse may contribute to a Roth IRA is limited
based on your tax filing status and your (and your spouse's) AGI. You may
contribute the maximum contribution to your Roth IRA if you are single and your
AGI is less than $95,000. Your ability to contribute to your Roth IRA is phased
out at $110,000. You may contribute the maximum contribution to your Roth IRA if
you are married filing jointly and your AGI is less than $150,000. Your ability
to contribute to your Roth IRA is phased out at $160,000.
Roth IRA contributions must be made by the due date, not including extensions,
for filing your tax return. A contribution made between January 1 and the filing
due date for your return, must be submitted with written direction that it is
being made for the prior tax year or it will be treated as made for the current
tax year.
Deductibility of Contributions
Unlike a Regular IRA, contributions to your Roth IRA are not deductible.
Excess Contributions
If you contribute in excess of the maximum contribution limit allowed in any
year, the excess contribution could be subject to a 6% excise tax. The excess is
taxed in the year the excess contribution is made and each year that the excess
remains in your Roth IRA.
If you should contribute more than the maximum amount allowed, you can eliminate
the excess contribution as follows:
o You may withdraw the excess contribution and net earnings attributable to it
before the due date for filing your federal income tax in the year the excess
contribution was made. Any earnings so distributed will be taxable in the year
for which the contribution was made and may be subject to the 10% premature
distribution tax.
o If you elect not to withdraw an excess contribution, you may apply the excess
against the contribution limits in a later year. This is allowed to the extent
you under-contribute in the later year. The 6% excise tax will be imposed in the
year you make the excess contribution and each subsequent year, until
eliminated. To the extent an excess contribution is absorbed in a subsequent
year by contributing less than the maximum deduction allowable for that year,
the amount absorbed will be deductible in the year applied (provided you are
eligible to take a deduction).
Tax on Withdrawals From Your Roth IRA
You can make withdrawals from your Roth IRA at any time and the principal
amounts that you contributed are always available to be withdrawn by you
tax-free. Withdrawal of amounts considered earnings or growth will also be
tax-free if the following requirements are met: 1) the withdrawal must satisfy
the five-year holding period and be made either on or after you reach 59 1/2,
due to your death or disability, or for qualified first-time homebuyer expenses.
If the requirements for a tax-free withdrawal are not met, a withdrawal
consisting of your own prior contribution amounts for your Roth IRA will not be
considered taxable in the year you receive it, nor will the 10% penalty apply. A
non-qualified withdrawal that is considered earnings on your contributions is
includible in your gross income and may be subject to the 10% withdrawal
penalty. Also, the 10% premature distribution penalty tax may apply to
conversion amounts distributed even though they are not includable in income, if
the distribution is made within the 5-taxable-year period beginning on the first
day of the individual's taxable year in which the conversion contribution was
made.
-B:4-
Required Payments From Your Roth IRA
Unlike a Regular IRA, while you are living, there are no distribution
requirements for your Roth IRA.
After your death, if you have begun to receive distributions under an annuity
option (not including an interest only option), the remaining Policy value will
continue to be distributed to your designated beneficiary according to the terms
of the elected options, provided that method satisfies IRC requirements.
If you die before your entire interest in the Policy is distributed, your entire
interest in your Roth IRA generally must be distributed no later than the end of
the fifth calendar year after your death occurs ("five-year payout rule"). Your
designated beneficiary may elect to receive distributions over a period not
longer than his or her life expectancy, if the election is made and
distributions begin on or before the end of the year following the year of your
death. Otherwise, the entire benefit must be paid under the five-year payout
rule.
If the designated beneficiary is your surviving spouse, the spouse may elect to
treat the Roth IRA as his or her own.
Rollovers and Conversions
You may roll over any amount from an existing Roth IRA to another Roth IRA.
Under certain circumstances, you may also convert an existing Regular IRA to a
Roth IRA. You can roll over distributions from a traditional IRA to a Roth IRA
if your AGI is $100,000 or less and you convert such amounts within 60 days
after distribution. Note that contributions to a Roth IRA are not deductible and
income limits apply. There may be additional income tax consequences upon such a
conversion. You will have excess contributions if the amount you convert to a
Roth IRA plus your contributions to all of your IRAs exceed your IRA
contribution limits for the year. To avoid the 6% excise tax on excess
contributions, you must withdraw the excess contributions plus earnings before
your tax return due date or recharacterize the contribution, if permitted.
Consult your financial adviser to determine other considerations when converting
a traditional IRA to a Roth IRA.
Rollovers from a 401(a) qualified retirement plan, 401(k) plan, 403(b) plan, or
governmental 457 plan to a Roth IRA are not allowed.
Recharacterization
You may correct an IRA contribution or conversion by recharacterizing your
contribution or conversion. For example, you may have converted from a Regular
IRA to a Roth IRA and learn later you were not eligible to make the conversion.
You may accomplish a recharacterization by making a trustee-to-trustee transfer
(including any net income attributable to the contribution) from the first IRA
to the second IRA, on or before your tax return due date for reporting the
contribution to the first IRA. Once the transfer is made, the election is
irrevocable. Recharacterizing a contribution treats it as contributed to the
second IRA on the same date as initially contributed to the first IRA. If you
elect to recharacterize a contribution, you must report it on your Federal
income tax return as made to the second IRA, instead of the first. Consult your
tax adviser before recharacterizing a contribution.
GENERAL INFORMATION AND RESTRICTIONS FOR ALL IRAS
Lump Sum Distribution
If you decide to receive the entire value of your IRA Plan in one lump sum, the
full amount is taxable when received (except as to non-deductible contributions
to a Regular IRA or to a Roth IRA, or "qualified distributions" from a Roth
IRA), and is not eligible for the special 5 or 10 year averaging tax rules under
IRC Section 402 on lump sum distributions which may be available for other types
of Qualified Retirement Plans.
Nontransferability
You may not transfer, assign or sell your IRA to anyone (except in the case of
transfer incident to divorce).
Nonforfeitability
The value of your IRA belongs to you at all times, without risk of forfeiture.
Loans and Prohibited Transactions
If you engage in a so-called prohibited transaction as defined by the Internal
Revenue Code, your IRA will be disqualified and the entire taxable balance in
your Regular IRA account, and the amount of earnings or gains in your Roth IRA
account, will be taxed as ordinary income in the year of the transaction. You
may also have to pay the 10% penalty tax. For example, IRAs do not permit loans.
You may not borrow from your IRA (including Roth IRAs) or pledge it as security
for a loan. A loan would disqualify your entire IRA and be treated as a
distribution. It would be includable in your taxable income in the year of
violation and subject to the 10% penalty tax on premature distributions. A
pledge of your IRA as security for a loan would cause a constructive
distribution of the portion pledged and also be subject to the 10% penalty tax.
Financial Disclosure
Contributions to your IRA will be invested in a variable annuity Policy. The
variable annuity Policy, its operation, and all related fees and expenses are
explained in detail in the prospectus to which this Disclosure Statement is
attached.
Growth in the value of your variable annuity Policy IRA cannot be guaranteed or
projected. The income and expenses of your variable annuity Policy will affect
the value of your IRA. Dividends from net income earned are reduced by
investment advisory fees and also by certain other costs. For an explanation of
these fees and other costs, please refer to your prospectus.
STATUS OF OUR IRA PLAN
We may, but are not obligated to, seek IRS approval of your Regular IRA or Roth
IRA form. Approval by the IRS is optional to us as the issuer. Approval by the
IRS is to form only and does not represent a determination of the merits of the
Regular IRA or Roth IRA.
-B:5-
-------------------------------------------- -----------------------------------
DISCLOSURE SUMMARY For annuity policies issued as a:
TAX SHELTERED ANNUITY
AMERITAS LIFE INSURANCE CORP. Under IRC Section 403(b)
-------------------------------------------- -----------------------------------
The Policy may be purchased by you or your employer as part of a retirement plan
under Internal Revenue Code (IRC) Section 403(b). This section provides a
summary of benefits afforded a tax-qualified retirement plan under IRC 403(b),
and the prospectus' CHARGES and CHARGES EXPLAINED sections describe applicable
costs. You should refer to the Policy and Riders for a full description of the
benefits and charges of purchasing the Policy for an IRC 403(b) plan.
Notice Regarding Exchanges
On July 26, 2007, the Internal Revenue Service ("IRS") published new regulations
for tax sheltered annuity contracts under Internal Revenue Code Section 403(b).
Therefore, Ameritas is temporarily suspending 403(b) exchanges (both incoming
and outgoing) and 403(b) trustee-to-trustee transfers. Please see the FEDERAL
INCOME TAX MATTERS section of this prospectus for more information.
CONTRIBUTIONS
Contributions under the Policy must be remitted by the Employer. You may, with
our agreement, (i) transfer to the Policy any amount held under a contract or
account that meets the requirements of IRC Section 403(b) ("Transferred Funds"),
or (ii) roll over contributions from a contract or account that meets the
requirements of IRC Sections 403(b) or 408(d)(3)(A)(iii). If you make a transfer
as described in (i) above, you must tell us the portion, if any, of the
Transferred Funds which are (a) exempt from the payment restrictions described
below and (b) eligible for delayed distribution under the Required Minimum
Distribution provision below. If you do not tell us, then we will treat all such
amounts as being subject to the applicable tax restrictions. Any Transferred
Funds from a contract not issued by us will be reduced by the amount of any tax
charge that applies, as we determine.
Contributions to the Policy are limited to your exclusion allowance for the year
computed as required by IRC Sections 403(b), 415, and 402(g), which is $15,500
for 2007. Unless this Policy is purchased under an ERISA Plan and "employer
contributions" may be made, all contributions are made by your Employer under a
salary reduction agreement you enter into with your Employer. Your salary
reduction contributions are "elective deferrals" and cannot exceed the elective
deferral limitations under IRC Section 415 which apply to this Policy and all
other 403(b), 401(k), or SIMPLE plans, contracts or arrangements with your
Employer. If contributions to the Policy inadvertently cause the excess deferral
limit to be violated, such deferrals must be distributed by April 15 of the
following calendar year, subject to any Policy withdrawal charge that may be
applicable.
In the case of an individual who is 50 or older, the annual cash contribution
limit is increased by $5000 for 2007. This amount may be increased for inflation
in future years.
Notwithstanding any provision of the Policy to the contrary, contributions will
be permitted with respect to qualified military service in accordance with the
requirements of IRC Section 414(u), if applicable, and limited to limits imposed
by IRC Section 403(b).
We reserve the right to reject or refund any contributions when we believe doing
so is necessary for the Policy to comply with IRC Section 403(b) or the Plan.
LOANS
For 403(b) TSA Policies issued after 1/1/02, we may charge a reasonable fee
(currently $25; guaranteed maximum is $40) for each loan as loan origination
expenses; however, this fee will be waived if loan repayment is established on
an automatic basis.
Other loan provisions are described in this Prospectus' DISTRIBUTION section
Loans provision.
DISTRIBUTIONS
When Annuity Income Payments Begin
Your selection of an Annuity Date for annuity income payments to begin is
subject to the maximum maturity age, if any, stated in the Policy Data pages. If
you choose an Annuity Date later than age 70 1/2, you must withdraw at least the
required minimum distribution required by tax regulations that apply, unless you
elect to satisfy these requirements through other 403(b) arrangements you may
have.
Permitted Distributions
Distributions of Policy value will only be permitted:
o upon the Owner's separation of service;
o after the Owner's age 59 1/2;
o due to disability within the meaning of IRC Section 72(m)(7);
o in the case of salary reduction contributions only , due to
financial hardship.
Distributions may be further restricted if we are notified of more restrictive
Plan limits. Withdrawal charges may apply to distributions.
Despite the distribution restrictions stated above, we will permit distributions
of salary deferrals in excess of IRC limits contributed to the Policy, and any
allocable gain or loss, including that for the "gap period" between the end of
the taxable year and distribution date,
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provided you notify us in writing by March 1 of the year following the taxable
year of the excess deferral and certify the amount of the excess deferral.
Distributions attributable to contributions transferred from a custodial account
qualified under IRC Section 403(b)(7) or from an annuity under IRC Section
403(b)(1) shall be subject to the same or, where there has been more than one
transfer, more stringent distribution requirements as they were subject to prior
to the transfer, unless otherwise permitted by law or regulation.
If your employer has established an ERISA plan under IRC Section 403(b), we will
restrict any distributions under the Policy pursuant to IRC Sections 401(a)(11)
and 417.
Trustee-to-trustee transfers to another 403(b) qualified plan are not considered
a distribution and are not restricted.
If the Owner's employer has established an ERISA plan under IRC Section 403(b),
any distributions under this Policy will be restricted, as provided in IRC
Sections 401(a)(11) and 417.
Direct Rollover Option
A distributee under the Policy, or the distributee's surviving spouse, or the
spouse of the distributee's former spouse who is an alternate payee under a
qualified domestic relations order (as defined in IRC Section 414(p))
(collectively, the "distributee" for purposes of this paragraph), may elect to
have any portion of an eligible distribution paid directly to an eligible
retirement plan specified by the distributee as a direct rollover. (For purposes
of a direct rollover, an eligible retirement plan includes 403(b) annuity
policies, qualified retirement plans under 401(a), 401(k) plans, IRAs and 457
governmental plans.) The direct rollover option is not available to the extent
that a minimum distribution is required under IRC Section 401(a)(9). The direct
rollover option also does not apply to Policy distributions permitted and made
on account of a hardship. We reserve the right to determine the amount of the
required minimum distribution.
If Policy annuity payments have already begun, a direct rollover option does not
apply to those payments being paid: (a) in substantially equal periodic payments
for a period of ten years or more; or, (b) as part of a life annuity.
Required Minimum Distributions
Distributions under the Policy made on or after January 1, 2003 will be subject
to Required Minimum Distribution requirements of IRC ss.401(a)(9) pursuant to
final and temporary regulations issued by the IRS in 2002.
Required Minimum Distribution payments for this Policy must be computed for the
calendar year you turn age 70 1/2 and for each year thereafter. The Required
Minimum Distribution payments you compute must start no later than April 1 of
the calendar year after you turn age 70 1/2, except as otherwise noted below,
and except that if your employer is a church or government organization, the
start date is the later of this date or April 1 of the calendar year after you
retire.
Payments of your annual Required Minimum Distribution calculated for this Policy
may be made from this Policy or from another 403(b) arrangement that you
maintain, if permitted by Internal Revenue Service rules. These payments may be
made under any method permitted for 403(b) Plans and acceptable to us; several
of your Policy's annuity income options fulfill the IRC requirements.
If you die after Required Minimum Distribution payments have begun, the
remaining amount of your Policy value must continue to be paid at least as
quickly as under the calculation and payment method being used before your
death.
If you die before Required Minimum Distribution payments begin, payment of your
Policy value must be completed no later than December 31 of the calendar year in
which the fifth anniversary of your death occurs, except to the extent that a
choice is made to receive death benefit payments under (a) and (b) below:
(a) If payments are to be made to a beneficiary, then the Policy value may
be paid over the life or life expectancy of the named beneficiary.
Such payments must begin on or before December 31 of the calendar year
which follows the year of your death.
(b) If the named beneficiary is your spouse, the date that payments must
begin under (a) above will not be before (i) December 31 of the
calendar year which follows the year of your death or, if later, (ii)
December 31 of the calendar year in which you would have reached age
70 1/2.
CONVERSION OF A 403(b) POLICY TO A NON-403(b) QUALIFIED POLICY
The IRC only permits you to maintain a 403(b) Policy while you are covered under
a 403(b) Plan. Upon no longer being covered under a 403(b) plan, you may "roll
over" some or all of your 403(b) Policy assets into another tax-qualified
annuity policy, including an Individual Retirement Annuity policy. Should you
need to exercise such a roll over, you may elect to convert your existing 403(b)
Policy with us into an IRA Policy. Because certain distributions are permitted
under IRC Section 403(b) that are not permitted for IRAs, any conversion may
result in a loss of certain benefits (such as 403(b) permitted hardship
withdrawals). Upon such a conversion, your 403(b) Tax Sheltered Annuity
Endorsement (and related charges) will be replaced with an Individual Retirement
Annuity Endorsement (and any related charges) to assure continued compliance of
your Policy with applicable tax law. You will receive full disclosure about the
effect of any such conversion prior to making your election.
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