Supplement to Prospectus for Phoenix Investor's Edge(R) Variable Annuity
PHL Variable Accumulation Account
This supplement amends the prospectus dated May 1, 2008 and should be read with
that prospectus. This supplement and the related prospectus together constitute
a new prospectus dated August , 2008.
The following changes are effective on August , 2008
Subject to state approval, the following new optional guaranteed benefit riders
are available for purchase with the contract:
. Phoenix Flexible Withdrawal Protector: A Guaranteed Minimum Withdrawal
Benefit which is also offered with an Extended Care Enhancement for an
additional fee
. Phoenix Retirement Protector: A Flexible Combination Benefit Rider
providing a GMWB and GMAB which is also offered with a guaranteed minimum
death benefit for an additional fee
Except where specified, all terms and conditions that apply to Phoenix Flexible
Withdrawal Protector apply equally whether or not you have added the Extended
Care Enhancement and all terms and conditions that apply to Phoenix Retirement
Protector apply equally whether or not you have added the guaranteed minimum
death benefit.
Once Phoenix Flexible Withdrawal Protector is approved in a state and we make
it available, GMWB 2007 will no longer be available to applicants in that
state. In addition to Phoenix Flexible Withdrawal Protector and Phoenix
Retirement Protector which are described below, the contract offers a
guaranteed minimum accumulation benefit (GMAB) and a guaranteed minimum income
benefit (GMIB), each of which can be elected separately. You may elect only one
of these riders for your contract and currently the riders are only available
at the time you buy the contract. Each rider has its own fee, is intended to
provide certain benefits, and may entail certain risks. This supplement along
with the prospectus provides information about those factors for the riders
available with the contract. You should carefully consider these factors in
consultation with your registered representative to determine if electing an
optional guaranteed benefit is suitable for your goals. You should know that
once a guaranteed benefit is terminated, you cannot re-elect or reinstate it.
Any amounts payable under an optional guaranteed benefit in excess of your
Contract Value are based on the claims-paying ability of PHL Variable Insurance
Company.
The following changes are made to the prospectus dated May 1, 2008
The following paragraph is added as the last paragraph in the section called
"Overview" on page 8.
You may elect one of the following optional benefits with the contract:
. a Guaranteed Minimum Accumulation Benefit (GMAB),
. a Guaranteed Minimum Income Benefit (GMIB),
. a Guaranteed Minimum Withdrawal Benefit (GMWB), also called Phoenix
Flexible Withdrawal Protector/SM/, available, for an additional fee,
with an Extended Care Enhancement, or
. a Flexible Combination Benefit Rider providing a GMWB and GMAB, also
called Phoenix Retirement Protector/SM/, available, for an additional
fee, with a guaranteed minimum death benefit.
We call these benefits "Optional Guaranteed Benefits". These benefits are
provided by rider and have their own fees. If you elect an Optional Guaranteed
Benefit other than GMIB, you must allocate all premium and contract value to an
asset allocation program we approve for use with these riders. For more
information, see "Deductions and Charges", "Additional Programs" and "Optional
Benefits".
The narrative preceding the table of "Optional Benefit Fees" on page 5 is
deleted and replaced with the following.
This table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including annual fund fees and
expenses, if you elect an optional benefit. These fees are charged in addition
to the annual Separate Account Expenses.
Only one of the following optional guaranteed benefits can be elected. Consult
with your financial advisor as to whether the GMAB, the GMIB, the Phoenix
Flexible Withdrawal Protector or the Phoenix Retirement Protector fits you
particular needs
The following information is added to the table of "Optional Benefit Fees"
beginning on page 5.
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PHOENIX FLEXIBLE WITHDRAWAL PROTECTOR
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) RIDER FEE/1/
Available August , 2008 subject to state approval
-----------------------------------------------------------------------------------------------------------------------------
Fees are expressed as a percentage of the greater of the Benefit Base/2/ and Contract Value
-----------------------------------------------------------------------------------------------------------------------------
Single Life Option Spousal Life Option
Maximum fee without Extended Care Enhancement......................................... 2.50% 2.50%
Maximum additional fee to add Extended Care Enhancement............................... 0.50% 0.50%
Current fees without Extended Care Enhancement by asset allocation program/3/
. AllianceBernstein VPS Balanced Wealth Strategy Portfolio........................ 0.90% 1.25%
. AllianceBernstein VPS Wealth Appreciation Strategy Portfolio.................... 1.45% 1.80%
. Franklin Templeton Founding Investment Strategy................................. 0.90% 1.25%
. Franklin Templeton Perspectives Allocation Model................................ 1.00% 1.35%
. Phoenix Dynamic Asset Allocation Series: Aggressive Growth...................... 1.45% 1.80%
. Phoenix Dynamic Asset Allocation Series: Growth................................. 1.25% 1.60%
. Phoenix Dynamic Asset Allocation Series: Moderate Growth........................ 1.00% 1.35%
. Phoenix Dynamic Asset Allocation Series: Moderate............................... 0.65% 1.00%
. Phoenix-Ibbotson Strategic Asset Allocation - Aggressive Portfolio.............. 1.25% 1.60%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderately Aggressive Portfolio... 1.00% 1.35%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderate Portfolio................ 0.90% 1.25%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderately Conservative Portfolio. 0.65% 1.00%
. Phoenix-Ibbotson Strategic Asset Allocation - Conservative Portfolio............ 0.65% 1.00%
Current additional fee to add Extended Care Enhancement/3/............................ 0.25% 0.25%
PHOENIX RETIREMENT PROTECTOR
FLEXIBLE COMBINATION BENEFIT RIDER FEE/1/
Available August , 2008 subject to state approval
---------------------------------------------------------------------------------------------------------------------------------
Fees are expressed as a percentage of the greatest of the GMWB Benefit Base/2/, GMAB
Benefit Base/2/ and Contract Value
---------------------------------------------------------------------------------------------------------------------------------
Single Life Option Spousal Life Option
Maximum fee without optional Guaranteed Minimum Death Benefit............................. 2.75% 2.75%
Maximum additional fee to add optional Guaranteed Minimum Death Benefit................... 0.50% 0.50%
Current fees without optional Guaranteed Minimum Death Benefit by asset allocation
program/4/
. AllianceBernstein VPS Balanced Wealth Strategy Portfolio............................ 1.20% 1.55%
. AllianceBernstein VPS Wealth Appreciation Strategy Portfolio........................ 1.85% 2.20%
. Franklin Templeton Founding Investment Strategy..................................... 1.20% 1.55%
. Franklin Templeton Perspectives Allocation Model.................................... 1.30% 1.65%
. Phoenix Dynamic Asset Allocation Series: Aggressive Growth.......................... 1.85% 2.20%
. Phoenix Dynamic Asset Allocation Series: Growth..................................... 1.65% 2.00%
. Phoenix Dynamic Asset Allocation Series: Moderate Growth............................ 1.30% 1.65%
. Phoenix Dynamic Asset Allocation Series: Moderate................................... 0.85% 1.20%
. Phoenix-Ibbotson Strategic Asset Allocation - Aggressive Portfolio.................. 1.65% 2.00%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderately Aggressive Portfolio....... 1.30% 1.65%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderate Portfolio.................... 1.20% 1.55%
. Phoenix-Ibbotson Strategic Asset Allocation - Moderately Conservative Portfolio..... 0.85% 1.20%
. Phoenix-Ibbotson Strategic Asset Allocation - Conservative Portfolio................ 0.85% 1.20%
Current additional fee to add optional Guaranteed Minimum Death Benefit/4/................ 0.35% 0.35%
/1/ The maximum fee shown in this table is the highest fee for this rider. A
different fee applies to various asset allocation options as shown above.
If you choose this rider, you must allocate all premium and contract value
to an approved asset allocation program. If you transfer from one asset
allocation program or option to another during a rider year, the fee
percentage you will pay for the rider will be the highest rider fee
associated with the various asset allocation programs in which your
contract value was invested during that rider year. The rider fee is
deducted on each contract anniversary when the rider is in effect for your
contract and is generally deducted on a pro rata basis from each investment
option, the GIA and the MVA in which the contract has value. Upon contract
surrender or rider termination, we will deduct a portion of the annual
rider fee for the portion of the contract year elapsed from the surrender
proceeds or the contract value, respectively.
/2/ The Benefit Base for Phoenix Flexible Withdrawal Protector, and the GMAB
Benefit Base and the GMWB Benefit Base under the Phoenix Retirement
Protector rider are amounts used to calculate the value of the benefit(s)
provided by the rider. These amounts are affected by various factors
including withdrawals and premium payments. See the description of these
riders in "Optional Benefits" for information about how each Benefit Base
is calculated and used.
/3/ We may change the current fees. If you accept an automatic step-up of the
Benefit Base as provided by the rider, you will then pay the current fee in
effect at the time of this step-up. See "Optional Benefits", "Phoenix
Flexible Withdrawal Protector", and "Automatic Step-Up" for a description
of the automatic step-up feature, the impact of a step-up on your rider
fee, and how you may decline a step-up.
/4/ We may change the current fees. If you elect an automatic step-up of the
GMWB Benefit Base or make an elective step-up of the GMAB Benefit Base as
provided by the rider, you will then pay the current fee in effect at the
time of this step-up. See "Optional Benefits", "Phoenix Retirement
Protector" for a description of the automatic step-up feature of the GMWB
component and the elective step-up feature of the GMAB component of this
rider, the impact of a step-up on your rider fee, and how you may decline
an automatic step-up of the GMWB component.
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The section called "Expense Examples" is deleted and replaced with the
following:
EXPENSE EXAMPLES
These examples will help you compare the cost of investing in the contract if
you elect the Phoenix Retirement Protector Rider with the optional Guaranteed
Minimum Death Benefit or, in the case of the examples for Death Benefit Option
3, if you elected the GMWB 2007 when it was available. These examples reflect
the maximum charges under the contract.
The examples for Death Benefit Options 1 and 2 include the maximum fee of 3.25%
for the Phoenix Retirement Protector Rider with the optional Guaranteed Minimum
Death Benefit. Death Benefit Option 3 was not offered as of May 1, 2007. The
Examples for Death Benefit Option 3 reflect the maximum fee for the GMWB 2007
which was the highest charge for an optional benefit during the time Death
Benefit Option 3 was available. These examples assume that optional benefit
charges are assessed as a percentage of Contract Value.
If you surrender your contract prior to the Maturity Date, or after the
Maturity Date under Variable Annuity Payment Options K or L, or if you
annuitize your contract at the end of the applicable time period, your maximum
costs would be:
Death Benefit Option 1
----------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$1,512 $2,857 $3,820 $7,050
Death Benefit Option 2
----------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$1,525 $2,892 $3,874 $7,125
Death Benefit Option 3/1/
-------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$1,385 $2,508 $3,269 $6,247
If you do not surrender or annuitize your contract at the end of the applicable
time period, your maximum costs would be:
Death Benefit Option 1
----------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$816 $2,368 $3,820 $7,050
Death Benefit Option 2
----------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$830 $2,406 $3,874 $7,125
Death Benefit Option 3/1/
-------------------------
1 Year 3 Years 5 Years 10 Years
------------------------------------------
$678 $1,998 $3,269 $6,247
These examples are intended to help you compare the cost of investing in the
contract with the cost of investing in other variable annuity contracts. These
costs include contract owner transaction expenses, maximum annual
administrative charges, maximum transfer charges, maximum contract fees,
maximum of all applicable riders and benefit fees, separate account annual
expenses and the maximum annual fund operating expenses that were charged for
the year ended 12/31/07.
The examples assume that you invest $10,000 in the contract for the time
periods indicated. The examples also assume that your investment has a 5%
return each year and assumes the maximum fees and expenses of any of the fund
and that you have allocated all of your contract value to the fund with the
maximum fees and expenses. Although your actual costs may be higher or lower
based on these assumptions, your costs are shown in the table to the left.
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The last two bullets of the section called "Allocation of Premiums and Contract
Value" on page 9 are deleted and replaced with the following:
. You may participate in one of the asset allocation programs we offer.
Participation in a program is optional, unless you elect an Optional
Guaranteed Benefit other than the Guaranteed Minimum Income Benefit
(GMIB). If you elect an Optional Guaranteed Benefit, other than the GMIB,
you must allocate all premium payments and Contract Value to one of the
programs approved for use with those benefits. We may offer other programs
in the future, however, whether those programs will be made available to
both current and prospective contract owners will be determined at the
sole discretion of the Company. For more information about the programs,
refer to "Asset Allocation and Strategic Programs" below.
The following information is added to the section of the "Contract Summary"
entitled "Deductions and Charges" beginning on page 9:
For the Phoenix Flexible Withdrawal Protector, the fee is equal to a
stated percentage multiplied by the greater of the Benefit Base and the
Contract Value. The fee for this rider depends on whether you choose the
single life option or the joint life option, and which asset allocation
model you have chosen for allocation of your premium payments and Contract
Values. Additionally, if you choose the Extended Care Enhancement for your
rider, we assess a charge for that feature. The current fees are shown in
the table of "Optional Benefit Fees". The fee for your rider may change if
you change asset allocation models or if you do not decline an automatic
step-up provided by the rider. If you change asset allocation programs
during a contract year and the rider fees related to the use of those
programs are different, you will pay the highest rider fee associated with
the various asset allocation programs in which your Contract Value was
invested during that contract year. Also, you will pay the current rider
fee then in effect beginning on the date of any automatic step-up of the
Benefit Base. See "Optional Benefits" for additional information about the
impact of an automatic step-up on your rider and your ability to decline a
step-up. The maximum fee for the Phoenix Flexible Withdrawal Protector is
2.50% without the Extended Care Enhancement and 3.00% if the rider is
elected with the Extended Care Enhancement.
For the Phoenix Retirement Protector, the fee is equal to a stated
percentage multiplied by the greatest of the GMWB Benefit Base, the GMAB
Benefit Base, and the Contract Value. The fee for this rider depends on
whether you choose the single life option or the joint life option, and
which asset allocation model you have chosen for allocation of your
premium payments and Contract Values. Additionally, if you choose the
Guaranteed Minimum Death Benefit option for your rider, we assess a charge
for that feature. The current fees are shown in the table of "Optional
Benefit Fees". The fee for your rider may change if you change asset
allocation models. If you change asset allocation programs during a
contract year and the rider fees related to the use of those programs are
different, you will pay the highest rider fee associated with the various
asset allocation programs in which your Contract Value was invested during
that contract year. Also, you will pay the current rider fee then in
effect beginning on the date of an automatic step-up of the GMWB Benefit
Base or elective step-up of the GMAB Benefit Base as provided by the
rider. See "Optional Benefits" for additional information about the impact
of an automatic or elective step-up on your rider and your ability to
decline an automatic step-up. The maximum fee for the Phoenix Retirement
Protector is 2.75% without the Guaranteed Minimum Death Benefit and 3.25%
if the rider is elected with the Guaranteed Minimum Death Benefit.
The "Note" which begins the section entitled "GIA" on page 12 is deleted and
replaced with the following:
Note: Currently, if you have the GMAB, GMWB, Phoenix Flexible Withdrawal
Protector or Phoenix Retirement Protector in effect for your contract, you
cannot transfer Contract Value or allocate premiums to the GIA. Your
premiums must be allocated to an asset allocation or strategic program. We
may remove this restriction at any time in the future, e.g. while you
participate in an Enhanced Dollar Cost Averaging Program.
The fourth sentence of the section entitled "MVA" on page 13 of the prospectus
is deleted and replaced with the following:
If you elect any Optional Guaranteed Benefit other than the Guaranteed
Minimum Income Benefit, you may not allocate premiums or transfer values
to the MVA.
The last sentence of each paragraph following the caption "Free Look Period" on
pages 12 and 36 is deleted and replaced with the following.
However, if applicable state law requires a return of premium payments
less any withdrawals, we will return the greater of premium payments less
any withdrawals or the Contract Value less any applicable surrender
charges.
The section entitled "Guaranteed Minimum Accumulation Benefit Fee" on page 14
is revised by adding the following as the second sentence.
For contracts issued between October 11, 2004 and April 30, 2008, the fee
was 0.50%.
The following new sections are added to the section called "Deductions and
Charges" on page 15.
TF1013 4
Phoenix Flexible Withdrawal Protector Fee
If you have elected Phoenix Flexible Withdrawal Protector for your contract,
we will deduct the rider fee on each rider anniversary while the rider is in
effect. Currently, the rider anniversary is the same as the contract
anniversary. The fee for this rider is a percentage of the greater of
Contract Value or the rider Benefit Base on the date the fee is deducted. We
calculate and deduct the rider fee amount after any applicable roll-up and
before any automatic step-up of the rider Benefit Base.
Sample calculation of the rider fee
Assume that you have reached the end of first rider year, and that your
rider fee percentage is 0.95%, your initial Benefit Base was $100,000,
you made an additional premium payment of $10,000 during the first
rider year and your Contract Value is $110,500. Also, assume that you
made no withdrawals during the rider year and that you have not elected
to opt-out of automatic step-ups.
The Benefit Base at the end of the first rider year is equal to the
Benefit Base on the rider date ($100,000) plus the amount of the
additional premium payment ($10,000) or $110,000.
Assume that your roll-up percentage is 6.5%. The roll-up amount is
equal to 6.5% multiplied by the Benefit Base on the rider date
($100,000) plus the sum of all subsequent premium payments made during
the first rider year or [6.5% * ($100,000 + $10,000)] = $7,150.
The Benefit Base after roll-up is the current Benefit Base ($110,000)
compared to the following amount: the Benefit Base on the rider date
($100,000) plus the roll-up amount for the first rider year ($7,150)
plus the subsequent premiums made during the first rider year
($10,000). The Benefit Base after roll-up is therefore $117,150
($100,000 + $7,150 + $10,000).
Your rider fee is $1,113 (0.95% of the greater of $110,500 and the
$117,150). This rider fee is assessed against your Contract Value and
your Contract Value becomes $109,387 ($110,500-$1,113).
When we calculate the step-up, we begin that calculation using the
current Contract Value, which in this example is $109,387.
The maximum fee percentage for Phoenix Flexible Withdrawal Protector is
2.50% and the maximum additional fee percentage to add the optional
Extended Care Enhancement is 0.50%. The current fee for Phoenix Flexible
Withdrawal Protector varies depending on whether the single life or
spousal life option is selected and which asset allocation program is
selected. An additional current fee amount is charged if you add the
Extended Care Enhancement. This fee is currently 0.25% for either the
single or spousal life option regardless of the asset allocation program
you select and is assessed along with and in the same manner as the fee
for the Phoenix Flexible Withdrawal Protector without the Extended Care
Enhancement. See the table of "Optional Benefit Fees" for details.
You should know that if you change asset allocation programs during a
rider year and the rider fees related to the use of those programs are
different, you will pay the highest rider fee associated with the
various asset allocation programs in which your Contract Value was
invested during that rider year. Additionally, we may increase your fee
on the date of any automatic step-up to the Benefit Base for this rider.
Sample calculation of the rider fee after transfer to an asset
allocation program with a higher rider fee percentage
Assume that at the beginning of your rider year, the rider fee for the
asset allocation program you chose was 0.85% and that, during the rider
year you chose to reallocate all your Contract Value to another
approved asset allocation program for which the rider fee was 1.05%.
At the end of this rider year, your rider fee percentage will be 1.05%.
This rider fee percentage is applied to the greater of the Benefit Base
and the Contract Value. If the Benefit Base was $100,000 and the
Contract Value was $98,000, then the rider fee would be $1,050 (1.05%
times $100,000).
In any case, the fee will not exceed the maximum percentage. See
"Optional Benefits", "Phoenix Flexible Withdrawal Protector" for
additional information on the potential impact of the step-up feature on
the rider fee and your ability to decline the step-up.
Unless we agree otherwise, the rider fee will be deducted from total
Contract Value with each investment option and, if allocation to the GIA
and MVA is then permitted, the GIA and MVA in which the contract has
value bearing a pro rata share of such fee based on the proportionate
value in each of those accounts.
If you surrender the contract on a date other than a contract
anniversary, we will deduct a proportional rider fee, calculated as
described below, from the amount paid on surrender. If the rider
terminates, we will deduct a proportional rider fee, calculated as
described below, on the date of termination. The proportional rider fee
is calculated by multiplying the fee percentage then in effect for the
rider by the greater of the Benefit Base or the Contract Value on the
date you surrender the contract or the date the rider terminates, as
applicable, and then multiplying this amount by the result of the number
of days elapsed in the rider year divided by the total number of days of
that year.
Phoenix Retirement Protector Fee
If you have elected the Phoenix Retirement Protector for your contract,
we will deduct the rider fee on each rider anniversary while the rider
is in effect. Currently, the rider anniversary is the same as the
contract anniversary. The fee for this rider is a
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percentage of the greatest of (a) Contract Value, (b) the GMAB Benefit
Base, and (c) the GMWB Benefit Base on the date the fee is deducted. The
rider fee amount is calculated and deducted after any applicable roll-up
of the GMWB Benefit Base and before any automatic step-up of the GMWB
Benefit Base and elective step-up of the GMAB Benefit Base. See the
section called "Optional Benefits", "Phoenix Retirement Protector" for a
description of the Benefit Base amounts, the roll-up and step-up
features.
The maximum fee percentage for Phoenix Retirement Protector is 2.75% and
the maximum additional fee percentage to add the optional guaranteed
minimum death benefit is 0.50%. The current fee for the Phoenix
Retirement Protector varies depending on whether the single life or
spousal life option is selected and which asset allocation program is
selected. An additional current fee amount is charged if you add the
optional guaranteed minimum death benefit. This fee is currently 0.35%
for either the single or spousal life option regardless of the asset
allocation program you select and is assessed along with and in the same
manner as the fee for the Phoenix Retirement Protector without the
Guaranteed Minimum Death Benefit. See the table of "Optional Benefit
Fees" for details.
You should know that if you change asset allocation programs during a
rider year and the rider fees related to the use of those programs are
different, you will pay the highest rider fee associated with the
various asset allocation programs in which your Contract Value was
invested during that rider year. Also, we may increase the rider fee for
your rider on the date of any automatic step-up of the GMWB Benefit Base
or elective step-up of the GMAB Benefit Base. In any case, the rider fee
will not exceed the maximum percentage. See "Optional Benefits" for
additional information on the potential impact of the automatic step-up
feature and the elective step-up feature on the rider fee and your
ability to decline the automatic step-up and/or not elect the elective
step-up.
Unless we agree otherwise, the rider fee will be deducted from total
Contract Value with each investment option, and, if allocation to the
GIA and MVA is then permitted, the GIA and MVA in which the contract has
value bearing a pro rata share of such fee based on the proportionate
value in each of those accounts.
If you surrender the contract on a date other than a contract
anniversary, we will deduct a proportional rider fee, calculated as
described below, from the amount paid on surrender. If the rider
terminates, we will deduct a proportional rider fee, calculated as
described below, on the date of termination. The proportional rider fee
is calculated by multiplying the fee percentage then in effect for the
rider by the greatest of the GMWB Benefit Base, the GMAB Benefit Base
and the Contract Value on the date you surrender the contract or the
date the rider terminates, as applicable, and then multiplying this
amount by the result of the number of days elapsed in the rider year
divided by the total number of days of that year.
The section called "Additional Programs" along with the sub-sections called
"Asset Allocation and Strategic Programs", "Selecting a Program and Option" and
"Program Required for GMAB and GMWB" beginning on page 18 are hereby deleted
and replaced with the following:
Additional Programs
If you have any Optional Guaranteed Benefit other than the Guaranteed
Minimum Income Benefit (GMIB), attached to your contract, you must elect and
continue to participate in an approved asset allocation program or the
Optional Guaranteed Benefit will terminate. All initial and subsequent
premium payments and Contract Value must be allocated to your chosen program
beginning on the date your chosen rider is effective, which currently must
be the contract date. There is no charge to participate in any approved
program; however, the fee for the Optional Guaranteed Benefit may vary
depending on the program you choose. See the table of "Optional Benefit
Fees".
Provided that you do not have any Optional Guaranteed Benefit riders
attached to your contract, you may elect any of the additional programs
described below at any time and at no charge.
We may discontinue, modify or amend these programs as well as offer new
programs or change the programs that are approved for use with the Optional
Guaranteed Benefits in the future.
Asset Allocation and Strategic Programs
Asset allocation and strategic programs are intended to optimize the
selection of investment options for a given level of risk tolerance, in
order to attempt to maximize returns and limit the effects of market
volatility. The asset allocation and strategic programs reflect the
philosophy that diversification among asset classes may help reduce
volatility and boost returns over the long term. An asset class is a
category of investments that have similar characteristics, such as stocks or
bonds. Within asset classes there are often further divisions. For example,
there may be divisions according to the size of the issuer (large cap, mid
cap, small cap) or type of issuer (government, corporate, municipal). We
currently offer several asset allocation programs many of which are approved
for use with the Optional Guaranteed Benefits. Information about the
programs we currently offer and whether each is approved for use with an
Optional Guaranteed Benefit is provided below.
For ease of reference throughout this section, we refer to the asset
allocation and strategic programs described, simply as "programs", and we
refer to the asset allocation options available within the programs, as
"options". We do not charge for
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participating in the programs or their options. You may participate in only
one asset allocation program at a time and your ability to use an asset
allocation program with Asset Rebalancing and Dollar Cost Averaging or
Enhanced Dollar Cost Averaging is limited as described in "Use of Dollar
Cost Averaging with Asset Rebalancing and Allocation Programs." Subject to
regulatory requirements and approvals, in the future we may modify or
eliminate any existing program or option within a program, or may offer
other asset allocation services which, at our discretion, may be available
to current and/or prospective contract owners. For the most current
information on any program or option, please contact your registered
representative.
Selecting a Program and Option-Contracts without Optional Guaranteed Benefits
If you have not elected an Optional Guaranteed Benefit for your contract,
you are not required to elect an asset allocation program but may do so if
you wish. If you are interested in electing a program, you should consult
with your registered representative to discuss your choices. For certain
programs, a questionnaire may be used to help you and your registered
representative assess your financial needs, investment time horizon, and
risk tolerance. You should periodically review these factors to determine if
you need to change programs or options.
When you participate in a program, all of your premium payments and Contract
Value will be allocated to the investment options in accordance with your
selected program and, if applicable, the option within that program. You
may, at any time, switch your current program or option, and may elect any
modified or new programs or options the Company may make available subject
to our rules then in effect. You may cancel your participation in a program
at any time, and later re-enroll in a program by contacting our Annuity
Operations Division. If a program is eliminated, we will notify you of the
elimination and you should consult with your registered representative to
choose among the other programs available at that time. To enroll in a
program, you must properly complete the election form we require and return
it to our Annuity Operations Division at the address shown on the first page
of your prospectus.
Selecting a Program and Option-Contracts with Optional Guaranteed Benefits
If you purchase a contract with an Optional Guaranteed Benefit, other than
the Guaranteed Minimum Income Benefit (GMIB), you must select one of the
approved programs through which to allocate your premium payments and
Contract Value. When you participate in one of the approved programs all
your premium payments and Contract Value will be allocated to the investment
options in accordance with your selected program and, if applicable, the
option within that program. You should consult with your registered
representative when you initially select a program and periodically review
your program with your registered representative to determine if you need to
change programs or options. You may, at any time, switch your current
program or option to another approved program and may elect any modified or
new programs or options the Company may make available subject to our rules
then in effect. Changing programs or options may change the fee for the
Optional Guaranteed Benefit on your contract. See the table of "Optional
Benefit Fees" for more information.
Although you may cancel your participation in a program, you should consult
your registered representative before doing so, as canceling the program
will cause your Optional Guaranteed Benefit to terminate without value. You
may later re-enroll in a program but re-enrollment will not reinstate an
Optional Guaranteed Benefit.
We currently offer the programs listed below. Except as noted, all programs
are approved programs for use with the Optional Guaranteed Benefits.
. AllianceBernstein VPS Wealth Appreciation Strategy Portfolio (only
available with Phoenix Flexible Withdrawal Protector and Phoenix
Retirement Protector)
. AllianceBernstein VPS Balanced Wealth Strategy Portfolio
. Franklin Templeton Founding Investment Strategy
. Franklin Templeton Perspectives Asset Allocation Model
. Phoenix-Ibbotson Strategic Asset Allocation, and
. Phoenix Dynamic Asset Allocation Series.
A brief description of each program follows.
. AllianceBernstein VPS Wealth Appreciation Strategy Portfolio
The AllianceBernstein VPS Wealth Appreciation Strategy portfolio invests
in an equity portfolio that is designed as a solution for investors who
seek equity returns but also want broad diversification of the related
risks across styles, capitalization ranges and geographic regions. In
managing the portfolio, the adviser efficiently diversifies between growth
and value equity investment styles, and between U.S. and non-U.S. markets.
Normally, the adviser's targeted blend for the equity portion of the
portfolio is an equal weighting of growth and value stocks (50% each). The
portfolio may also invest in real estate investment trusts, or REITs. This
asset allocation option is rebalanced as necessary in response to markets.
TF1013 7
. AllianceBernstein VPS Balanced Wealth Strategy
The AllianceBernstein VPS Balanced Wealth Strategy portfolio targets a
weighting of 60% equity securities and 40% debt securities with a goal of
providing moderate upside potential without excessive volatility.
Investments in real estate investment trusts, or REITs, are deemed to be
50% equity and 50% fixed-income for purposes of the overall target blend
of the portfolio. The targeted blend for the non-REIT portion of the
equity component is an equal weighting of growth and value stocks. This
asset allocation option is rebalanced as necessary in response to markets.
. Franklin Templeton Founding Investment Strategy
Through the Franklin Templeton Founding Investment Strategy, premium
payments and Contract Value are allocated to the three investment options
as listed below. On a monthly basis, we will rebalance the Contract Value
allocated to the three investment options back to the original allocation
percentages in each investment option.
. Franklin Income Securities Fund - 34%
. Mutual Shares Securities Fund - 33%
. Templeton Growth Securities Fund - 33%
. Franklin Templeton Perspectives Allocation Model
Through the Franklin Templeton Perspectives Allocation Model, premium
payments and Contract Value are allocated to the three investment options
as listed below. On a monthly basis, we will rebalance the Contract Value
allocated to the three investment options back to the original allocation
percentages in each investment option.
. Franklin Flex Cap Growth Securities Fund - 34%
. Mutual Shares Securities Fund - 33%
. Templeton Growth Securities Fund - 33%
. Phoenix-Ibbotson Strategic Asset Allocation
PHL Variable and Ibbotson Associates have developed five asset allocation
options, each comprised of selected combinations of investment options.
The options approved for use are:
. Conservative Portfolio which seeks conservation of capital and has a
portfolio allocation more heavily weighted in fixed income
investments than in equities.
. Moderately Conservative Portfolio which primarily seeks current
income, with capital growth as a secondary objective, and has a
portfolio allocation of approximately equal weightings in equities
and fixed income investments. Moderate Portfolio which seeks
long-term capital growth and current income with emphasis on current
growth, and has a portfolio allocation more heavily weighted in
equities than in fixed income investments. Moderately Aggressive
Portfolio which seeks long-term capital growth with current income as
a secondary objective, and has more than three quarters of the
portfolio in equities and less than one quarter in fixed income
investments.
. Aggressive Portfolio which seeks long-term capital growth and is
invested primarily in equities.
On a periodic basis (typically annually), Ibbotson evaluates the options
and updates them to respond to market conditions and to ensure style
consistency. If you select one of the Phoenix-Ibbotson options, your
premium payments (Contract Value for in force policies), however, will not
be allocated in accordance with the updated options unless you
specifically request we do so. If you elect to participate in this program
on and after September 10, 2007, on an annual basis, we will reallocate
the Contract Value allocated to the investment options included in the
program so that, following this reallocation, the percentage in each
investment option equals the percentage originally used for the program.
We will make this reallocation effective on the valuation date immediately
preceding each anniversary of your contract date for as long as the asset
allocation program is in effect for your contract. You should consult with
your registered representative for the most current information on this
program and the options within the program.
. Phoenix Dynamic Asset Allocation Series
The Phoenix Dynamic Asset Allocation Series are "funds of funds" that
invest in other mutual funds based on certain target percentages. The
series were designed on established principles of asset allocation and are
intended to provide various levels of potential total return at various
levels of risk. Asset allocations are updated quarterly, or more often,
depending on changes in the economy or markets. Each option is rebalanced
regularly to the most recent allocations. The options approved for use are:
. Phoenix Dynamic Asset Allocation Series: Moderate
. Phoenix Dynamic Asset Allocation Series: Moderate Growth
. Phoenix Dynamic Asset Allocation Series: Growth
. Phoenix Dynamic Asset Allocation Series: Aggressive Growth
TF1013 8
For contracts issued beginning on August , 2008, the Guaranteed Amount Factors
1 and 2 described in the "Guaranteed Amount" sub-section of the section called
"Optional Benefits" on page 21 are equal to 1.00. For contracts issued between
October 11, 2004 and August , 2008, the Guaranteed Amount Factors 1 and 2
were 1.05.
The section called GMWB 2007 on page 24 is replaced with the following
GMWB 2007 (issued between January 16, 2007 and August , 2008 or the
later date on which we begin offering Phoenix Flexible Withdrawal
Protector in your state)
GMWB 2007 (issued between January 16, 2007 and August , 2008 or the
later date on which we begin offering Phoenix Flexible Withdrawal
Protector in your state), guarantees that each contract year after the
Benefit Eligibility Date, you may take withdrawals up to the annual
benefit amount until the first death of any Covered Person, if the Single
Life Option is in effect, or until the last death of any Covered Person if
the Spousal Life Option is in effect even if your Contract Value reduces
to zero.
The following new sub-section is added to the section called "Guaranteed
Minimum Withdrawal Benefit (GMWB)" within the section called "Optional
Benefits" on page 24.
TF1013 9
Phoenix Flexible Withdrawal Protector:
A Guaranteed Minimum Withdrawal Benefit
Summary of Benefit
Beginning August , 2008, subject to state approval and our implementation
of the rider in the various states, you may purchase the Phoenix Flexible
Withdrawal Protector and may also select the optional Extended Care
Enhancement with the rider for an additional charge. When you elect the
Phoenix Flexible Withdrawal Protector, the GMWB component is automatically
included. You must elect the Extended Care Enhancement to be included as
part of the rider at the time you purchase the contract. Currently, these
benefits are only available for purchase at the time you buy the contract
and you may only purchase one Optional Guaranteed Benefit with the contract.
As with the other guaranteed minimum withdrawal benefits (GMWBs) that have
been offered with this contract, once you reach the date on which you can
access the benefit according to the rider's terms, Phoenix Flexible
Withdrawal Protector guarantees a minimum amount in payments or withdrawals
from the contract provided you remain within certain restrictions and
limitations which are described below. Phoenix Flexible Withdrawal Protector
provides a lifetime benefit for the lifetime of one person if the single
life option is elected, or for the lifetime of two spouses if the spousal
life option is elected . You should know that the rider does not provide
access to the benefit prior to the date the youngest Covered Person reaches
a particular age, which is currently age 60 for the single life option and
the younger spouse's age 65 for the spousal life option. We call the date on
which this occurs the Benefit Eligibility Date. See "Important Terms and
Conditions Related to Phoenix Flexible Withdrawal Protector" below for the
definition of "Covered Person" and other important terms. However, prior to
the Benefit Eligibility Date, the value of the benefit can increase as a
result of increases to the Benefit Base. See "Events and features causing
recalculation of the Benefit Base" below for details.
We call the annual amount of the rider's lifetime benefit, the Annual
Benefit Amount. As noted below, the Annual Benefit Amount represents two
distinct values depending on whether or not your Contract Value is greater
than zero. We calculate the Annual Benefit Amount on the later of the date
you make the first withdrawal and the Benefit Eligibility Date. On the date
it is calculated, the Annual Benefit Amount equals a percentage we call the
Annual Benefit Percentage, multiplied by a value we call the Benefit Base.
The Annual Benefit Percentage is an amount ranging from 0%-7% based on the
attained age of the youngest Covered Person on the date of the first
withdrawal from the contract. If you take a withdrawal before the Benefit
Eligibility Date, the Annual Benefit Percentage will be zero and then will
be permanently set to 5% on the Benefit Eligibility Date. The Benefit Base
is a value we calculate as described below for determining the Annual
Benefit Amount. Certain transactions and events under the contract can
increase or decrease the Benefit Base. In turn, these transactions and
events can increase or decrease the Annual Benefit Amount thereby affecting
the amount you receive in payments or withdrawals under the benefit. We
further define these terms, and describe the calculation of these values,
and how various contract transactions and events affect these values below.
Annual Benefit Amount when Contract Value is greater than zero: Guaranteed
Withdrawals
Provided that no withdrawals have been made from the contract prior to the
Benefit Eligibility Date (the youngest Covered Person's 60/th/ birthday for
the single life option and 65/th/ birthday for the spousal life option),
Phoenix Flexible Withdrawal Protector guarantees a minimum amount of
withdrawals you can take from the contract each year after the Benefit
Eligibility Date. This rider does not prevent you from taking withdrawals
from the contract at any time; however, taking withdrawals prior to the
Benefit Eligibility Date may significantly reduce or eliminate the value of
the rider benefit. Please see the chart of "Special Risks Associated with
Withdrawals" at the end of this section for details.
If you have taken withdrawals from the contract prior to the Benefit
Eligibility Date, a reduced withdrawal amount may still be available once
you reach the Benefit Eligibility Date. However, if you take withdrawals
before the Benefit Eligibility Date and these withdrawals cause both your
Contract Value and Benefit Base to become zero, your rider will terminate
without value. Since this is a lifetime benefit, postponing withdrawals too
long may limit the value of this rider because your remaining life
expectancy shortens as you age. You should carefully consider your plans for
taking withdrawals from the contract in considering whether this benefit is
appropriate for your goals.
After the Benefit Eligibility Date, withdrawals reduce the future value of
this benefit if they exceed the Annual Benefit Amount. We will reduce the
Benefit Base if cumulative withdrawals in a rider year are more than the
Annual Benefit Amount. This reduction affects the amount available for
future guaranteed withdrawals while the Contract Value is greater than zero
and for guaranteed payments when the Contract Value is zero. Please see the
chart of "Special Risks Associated with Withdrawals" at the end of this
section for details. Additionally, withdrawals that exceed the contract's
free withdrawal amount are subject to any surrender charges imposed under
the contract.
Annual Benefit Amount when Contract Value is zero: Guaranteed Payments
If your Contract Value goes to zero on or after the Benefit Eligibility Date
(the youngest Covered Person's 60/th/ birthday for the single life option
and 65/th/ birthday for the spousal life option), and you have met the
conditions of the benefit, the contract and all rights under the contract
and rider terminate but we will pay you the Annual Benefit Amount each year
until the first death of a Covered Person under the single life option or
until the death of the surviving spouse under the spousal life option.
TF1013 10
Asset Allocation or Strategic Program Requirement
If you purchase Phoenix Flexible Withdrawal Protector, you must select one
of the approved asset allocation programs when allocating your premium
payments and Contract Value. You should consult with your registered
representative when you initially select a program and periodically review
your program with your registered representative to determine if you need to
change programs. You may, at any time, switch your current program to
another approved program the Company may make available; however, the fee
for the rider may vary depending on the program or option you choose. See
the table of "Optional Benefit Fees" for details. We reserve the right to
restrict availability of investment options and programs.
Although you may cancel your participation in a program, you should consult
your registered representative before doing so, as canceling out of programs
altogether will cause the rider to terminate without value. You may request
to later re-enroll in a program however, re-enrollment will not reinstate
the rider. If a program is eliminated while the rider is in effect, we will
provide you notice and you must choose among the other approved programs
available by working with your registered representative to make an
appropriate selection and returning the form we require to the Annuity
Operations Division. Descriptions of the programs are found in "Asset
Allocation and Strategic Programs" above.
Important Terms and Conditions Related to Phoenix Flexible Withdrawal
Protector
Since the rider is purchased with the contract, the rider date is the same
as the contract date and rider years are measured the same as contract years.
"Annual Benefit Percentage" is a percentage we use to determine the Annual
Benefit Amount. The percentage varies by age as shown below and is
established on the date you make the first withdrawal from the contract. If
your first withdrawal is prior to the Benefit Eligibility Date (the youngest
Covered Person's 60/th/ birthday for the single life option or 65/th/
birthday for the spousal life option) this percentage is reset to 5% on the
Benefit Eligibility Date.
--------------------------------------------------------
Single Life Annual Benefit Spousal Life Annual Benefit
Attained Age Percentage Attained Age Percentage
--------------------------------------------------------
<60 0% <65 0%
--------------------------------------------------------
60-79 5% 65-79 5%
--------------------------------------------------------
80-84 6% 80-84 6%
--------------------------------------------------------
85+ 7% 85+ 7%
--------------------------------------------------------
"Benefit Eligibility Date" is the date the benefit provided by the rider is
first available to you.
. For the single life option, the Benefit Eligibility Date is the later
of the rider date and the date the youngest Covered Person, as
defined below, attains age 60.
. For the spousal life option, the Benefit Eligibility Date is the
later of the rider date and the date the youngest Covered Person
attains age 65. For the spousal life option, if either spouse dies
prior to the Benefit Eligibility Date, we will reset the Benefit
Eligibility Date to the later of the date of the first spousal death,
and the date the surviving spouse attains age 65.
"Covered Person(s)" means the person(s) whose life is used to determine the
duration of the lifetime Annual Benefit Amount payments. A Covered Person
must be a natural person.
. For the single life option, the Covered Person can be one or more
lives. If there is one natural person owner, the owner is the Covered
Person. If there are multiple natural person owners, all owners are
Covered Persons. If the owner is a non-natural person, all annuitants
named in the contract become the Covered Persons.
. For the spousal life option, Covered Persons must be two legal
spouses under federal law. If there is one natural person owner, the
owner and the owner's spouse must be the Covered Persons. The spouse
must be the sole beneficiary. If there are two spousal owners, the
Covered Persons are the spousal owners, and they must both be each
other's beneficiary. If there are multiple non-spousal owners, or if
the owner is a non-natural person, the spousal life option is not
allowed.
Benefit Base
The Benefit Base is the amount established for the sole purpose of
determining the Annual Benefit Amount. As noted above, while the Contract
Value is greater than zero, so long as you have reached the Benefit
Eligibility Date, the Annual Benefit Amount is the amount available for
withdrawals. When the Contract Value goes to zero, so long as you have
reached the Benefit Eligibility Date, the Annual Benefit Amount is the
amount we will pay to you each year.
Assuming the Phoenix Flexible Withdrawal Protector rider was issued on the
date the contract was issued, the Benefit Base on that date equals the
initial premium payment. Thereafter, the Benefit Base is re-calculated
whenever certain triggering events occur. At
TF1013 11
any time while the rider is in effect, we will reduce the Benefit Base if
cumulative withdrawals in a rider year are more than the Annual Benefit
Amount. Generally speaking, assuming no withdrawals have been taken, the
Benefit Base will be increased by additional premium payments, and may be
increased as a result of the roll-up and step-up features. However, under no
circumstances will the Benefit Base ever exceed a maximum amount. This
maximum amount is the sum of the Maximum Benefit Base Percentage, currently
500%, multiplied by the initial premium plus the Maximum Benefit Base
Percentage multiplied by the sum of subsequent premiums in the first rider
year, plus 100% of other subsequent premiums.
Sample calculation of the Maximum Benefit Base
Assume that the initial premium on the rider date was $100,000 and that
the Maximum Benefit Base Percentage was 500%. On the rider date, your
Maximum Benefit Base is $500,000 (500% times $100,000).
Now assume that you make an additional premium payment of $20,000 during
the first rider year. Your Maximum Benefit Base would be increased to
$600,000 [500,000 + (500% times $20,000)].
Then assume that you make another premium payment of $15,000, but that
this premium payment was made in the third rider year. Your Maximum
Benefit Base would be increased to $615,000 [$600,000 + (100% times
$15,000)].
Events and features causing recalculation of the Benefit Base
.. Premium Payments Received After the Rider Date
If we receive premium payments after the rider date, and no withdrawals have
been made from the contract, then we will increase the Benefit Base. The
Benefit Base will be increased by the dollar amount of each premium payment
on the date we receive it. However, if you then take withdrawals from the
contract in excess of your Annual Benefit Amount, we will reduce the Benefit
Base as described in "Taking Withdrawals" below.
If any withdrawal has been made from the contract on or prior to our receipt
of an additional premium, we will not increase the Benefit Base as a result
of premium payments made after the rider date.
.. Roll-up Feature
The GMWB rider includes a roll-up feature. A roll-up feature allows for an
increase, or "roll-up," in the Benefit Base during a specified period of
time, called the roll-up period so long as no withdrawals have been taken
from the contract. Currently, the roll-up period is the greater of the
10-year period since the rider date and 10 years from the last rider
anniversary on which an automatic step-up, described below, occurs. In no
event can the roll-up period extend beyond the time the younger Covered
Person attains a maximum age. This maximum age is the greater of age 80 or
the younger Covered Person's age on the rider date plus 10 years. The
increase in Benefit Base resulting from a roll-up is based upon a comparison
of different values on each rider anniversary, as specified below. For
calculation of the increase in Benefit Base provided by the roll-up feature,
"subsequent premium payments" means premium payments received after the
rider date, excluding premium payments received on any rider anniversary.
The roll-up amount is determined by multiplying the Benefit Base as of the
prior rider anniversary or, for the roll-up at the end of the first rider
year, the Benefit Base on the last valuation date of the first rider year by
a percentage, currently 6.5%.
.. Rider Anniversaries During the Roll-up Period
On each rider anniversary during the roll-up period, if no withdrawals have
been made, the Benefit Base will be re-calculated on that rider anniversary.
The re-calculated Benefit Base will be set equal to the greatest of the
following unless the automatic step-up feature has been suspended in which
case, it will be set to the greater of the latter two values described below:
. the Contract Value then in effect, (after all fees have been deducted,
and provided the automatic step-up feature has not been suspended);
. the Benefit Base then in effect; and
. the sum of (i) the Benefit Base on the prior rider anniversary, (ii) the
roll-up amount for the prior rider year, and (iii) subsequent premium
payments received during the prior rider year.
Once a withdrawal has been taken from the contract, the roll-up feature will
be discontinued, and no further roll-up calculations will occur.
.. The Rider Anniversary Following the End of the Roll-Up Period when (1) the
youngest Covered Person has not yet attained age 70 and (2) the youngest
Covered Person has attained age 70.
If the roll-up period has ended, and no withdrawals have been made from the
contract, we will re-calculate the Benefit Base on the rider anniversary
following the end of the roll-up period. The amount of the re-calculated
Benefit Base will depend on whether the youngest Covered Person has attained
the Benefit Base Multiplier Age, currently age 70, by that rider
anniversary. For each situation, the recalculated Benefit Base is determined
as described below.
TF1013 12
1. Assuming the youngest Covered Person has not attained age 70 by the
rider anniversary immediately following the end of the roll-up period,
then on that rider anniversary, the Benefit Base will be set equal to
the greatest of the following, unless the automatic step-up feature has
been suspended in which case, it will be set to the greater of the
latter two values described below:
. the Contract Value then in effect, (after all fees have been
deducted, provided the automatic step-up feature has not been
suspended);
. the Benefit Base then in effect;
. the sum of (i) the Benefit Base on the prior rider anniversary,
(ii) the roll-up amount for the prior rider year, if any, and
(iii) subsequent premium payments received during the prior rider
year.
2. Assuming the youngest Covered Person has attained age 70 by the rider
anniversary immediately following the end of the roll-up period, then on
that rider anniversary, the Benefit Base will be set equal to the
greatest of the following, unless the automatic step-up feature has been
suspended in which case, it will be set to the greater of the latter
three values described below:
. the Contract Value then in effect, (after all fees have been
deducted, provided the automatic step-up feature has not been
suspended);
. the Benefit Base then in effect;
. the Benefit Base Multiplier, currently 200%, multiplied by the
sum of (i) the Benefit Base on the rider date, and (ii) all
subsequent premium payments received during the first rider year;
. the sum of (i) the Benefit Base on the prior rider anniversary,
(ii) the roll-up amount for the prior rider year, if any, and
(iii) subsequent premium payments received during the prior rider
year.
.. Rider Anniversary Next Following Youngest Covered Person's 70/th/ Birthday
Occurring after the Rider Anniversary Immediately Following the End of the
Roll-Up Period
Assuming no withdrawals have been taken and the youngest Covered Person
attained age 70 after the rider anniversary immediately following the end of
the roll-up-period, then, on the next rider anniversary following the date
the youngest Covered Person attains age 70, the Benefit Base will be set
equal to the greatest of the following, unless the automatic step-up feature
has been suspended in which case, it will be set to the greater of the
latter two values described below:
. the Contract Value then in effect, after all fees have been deducted,
(provided the automatic step-up feature has not been suspended);
. the Benefit Base then in effect;
. the Benefit Base Multiplier, currently 200%, multiplied by the sum of
(i) the Benefit Base on the rider date and (ii) all subsequent
premium payments received during the first rider year.
.. Each Rider Anniversary After the Earlier of the First Withdrawal and the
Rider Anniversary Following the End of the Roll-Up Period (except Rider
Anniversary next following youngest Covered Person's 70/th/ birthday
occurring after the Rider Anniversary immediately following the end of the
Roll-Up Period)
On each rider anniversary after the earlier of the first withdrawal and the
rider anniversary following the end of the roll-up period, we will
re-calculate the Benefit Base. The Benefit Base will be set equal to the
greater of the following unless the automatic step-up feature has been
suspended, in which case it will be set to the Benefit Base then in effect:
. the Contract Value then in effect, after all fees have been deducted,
(provided the automatic step-up feature, described below, has not
been suspended); and
. the Benefit Base then in effect.
.. Automatic Step-Up Feature
The Phoenix Flexible Withdrawal Protector rider includes an automatic
step-up feature. Like the roll-up feature, the automatic step-up feature
allows for an increase in the Benefit Base. At set intervals, currently on
each anniversary of the rider date, we will automatically compare the
Contract Value, after deduction of all fees, to the Benefit Base then in
effect. If the Contract Value, after deduction of all fees, is greater than
such Benefit Base, we will automatically increase, or "step-up" the Benefit
Base to equal the Contract Value. Any step-up occurs after any roll-up as
described above. You should know the fee percentage for the rider may be
increased if we step-up the Benefit Base. You can decline the step up and
any associated fee increase by contacting us no later than seven days prior
to the rider anniversary. If you decline the step-up, the automatic step-up
will not occur and the automatic step-up feature will be suspended
immediately. If you decline an automatic step-up in the Benefit Base, we
will continue to calculate any roll-ups as described above. Assuming your
rider is still in effect at the next step-up interval, you may reactivate
the automatic step-up option by contacting us at the phone number or address
provided on the first page of the prospectus.
TF1013 13
.. Taking Withdrawals
The following section describes how taking withdrawals may impact the
Benefit Base. Whether withdrawals will change the Benefit Base depends on
whether they exceed the Annual Benefit Amount. The Annual Benefit Amount is
not available to you for withdrawals or payments unless you have reached the
Benefit Eligibility Date, which is generally the date the youngest Covered
Person attains age 60 if the single life option is in effect or the date the
younger spouse attains age 65, if the spousal life option is in effect.
. If cumulative withdrawals in any rider year do not exceed the Annual
Benefit Amount then in effect, the Benefit Base will not be reduced.
. If a withdrawal causes the cumulative withdrawals in any rider year to
exceed the Annual Benefit Amount, the amount withdrawn in excess of the
Annual Benefit Amount and any subsequent withdrawals in that rider year
are all considered excess withdrawals. Each excess withdrawal will
reduce the Benefit Base in the same proportion as the Contract Value is
reduced by the excess withdrawal. This reduction in the Benefit Base
reduces the amount of future permitted withdrawals and may also reduce
any amount available for guaranteed payments if the Contract Value goes
to zero.
. You should know that, currently, withdrawals taken to meet Required
Minimum Distribution requirements as defined by the Internal Revenue
Code are not considered to exceed the Annual Benefit Amount and
therefore do not reduce the Benefit Base. However, we may change this
rule at our discretion in which case such withdrawals taken following
this change may be considered excess withdrawals as described below.
For IRA and qualified plan contracts, cumulative withdrawals during a
rider year will be considered excess withdrawals only if they exceed the
greatest of (a), (b) and (c), where:
(a) =the current Annual Benefit Amount;
(b) =the RMD for the 1st calendar year during the rider year; and
(c) =the RMD for the 2nd calendar year during the same rider year.
Sample calculations showing the effect of a withdrawal that is equal to the
Annual Benefit Amount and then a withdrawal that is more than the Annual
Benefit Amount
Assume that your Contract Value is $100,000 and your Benefit Base is
$120,000. Assume you are making your first withdrawal and that you have
already reached the Benefit Eligibility Date.
Since this is your first withdrawal (and it is occurring after the Benefit
Eligibility Date), the Annual Benefit Percentage is determined by the
youngest Covered Person's attained age on the date of first withdrawal.
Assume this Annual Benefit Percentage is 5%. The Annual Benefit Amount
therefore is $6,000, which is 5% multiplied by the Benefit Base (5% times
$120,000). Now assume that the withdrawal amount is $6,000. Since your
cumulative withdrawals during the rider year have not exceeded the Annual
Benefit Amount, the amount withdrawn is not considered to be an excess
withdrawal and there is no adjustment to your Benefit Base. So your
Contract Value will decrease to $94,000 as a result of your withdrawal,
but your Benefit Base will remain at $120,000.
Assume that later that rider year, you withdraw an additional $10,000 and
that the Contract Value prior to the withdrawal was $96,000. Your Contract
Value would reduce to $86,000 as a result of the second withdrawal. Your
cumulative withdrawals for the year are now $16,000, which exceeds your
Annual Benefit Amount by $10,000. The excess withdrawal reduced your
Contract Value by 10.42% ($10,000 divided by $96,000), and accordingly,
your Benefit Base is reduced by 10.42%, from $120,000 to $107,500. Your
Annual Benefit Amount would be recalculated as 5% of $107,500 or $5,375.
You should know that withdrawals from the contract have other potential
consequences, including potential imposition of surrender charges and premium
taxes, and federal income tax consequences. Withdrawals, including withdrawals
taken to meet Required Minimum Distribution requirements that do not exceed the
Annual Benefit Amount are considered to be within the contract's free
withdrawal amount. However, withdrawals above the Annual Benefit Amount,
including withdrawals taken to meet Required Minimum Distribution requirements,
are subject to any surrender charges imposed under the contract. Please see
"Surrender of Contract and Withdrawals" and "Federal Income Taxes" for more
information.
Extended Care Enhancement
The Extended Care Enhancement is an optional feature available with the Phoenix
Flexible Withdrawal Protector rider that allows for an increase in the Annual
Benefit Amount when the Covered Person is confined to a nursing home, and meets
the conditions specified below. As with other benefits provided by the rider,
this benefit is available only on and after the Benefit Eligibility Date. This
feature is subject to state availability.
Conditions
We will increase the Annual Benefit Amount when the Covered Person has been
confined to a nursing home as defined below for a least one day of the rider
year, and has met the elimination period and waiting period requirements. This
increase in the Annual Benefit
TF1013 14
Amount lasts for the same amount of time the Covered Person is confined and is
calculated as described below. To meet the elimination period requirements, the
Covered Person must have been confined to a nursing home for at least 180
consecutive days within the last 365 days. To meet the waiting period
requirements, the Covered Person must not have been confined to a nursing home
12 months before the rider date and at least 12 months must have elapsed since
the rider date.
. A nursing home is a facility that is licensed to operate pursuant to the
laws and regulations of the state in which is it located as a nursing
home to provide 24-hour convalescent and related nursing care services 7
days a week by an on-site registered nurse on a continuing inpatient
basis for persons who are chronically ill or who otherwise require
assistance in performing the basic activities of daily living. The
facility must provide care prescribed by a physician and performed or
supervised by a registered graduate nurse. In addition the facility must
have a planned program of policies and procedures developed with the
advice of, and periodically reviewed by, at least one physician.
. A nursing home does not include a hospital (acute care), a
rehabilitation hospital, an assisted living facility, a facility for the
treatment of alcoholism, drug addiction, mental illness, or nervous
disorders, a rest home (a home for the aged or a retirement home), a
residential care facility, or any other facility which does not, as its
primary function, provide assistance in performing the basic activities
of daily living.
No benefits under the Extended Care Enhancement feature will be provided if
other similar benefits have been purchased through the Company, or any of its
subsidiaries or affiliates.
If the Extended Care Enhancement feature is in effect, and you have met the
above conditions, we will determine the Annual Benefit Amount by multiplying
the Benefit Base by a specified percentage, currently 200%, multiplied by the
Annual Benefit Amount Percentage. When the Covered Person is no longer confined
to a nursing home, we will reduce the Annual Benefit Amount to that which is
ordinarily provided under the Phoenix Flexible Withdrawal Benefit.
Payment of the Annual Benefit Amount when the Contract Value is greater than
zero
You may take withdrawals equal to the Annual Benefit Amount each year the
Contract Value is greater than zero. You can establish a Systematic Withdrawal
Program for payments equal to a specified amount or can request payments
according to your own schedule. See "Systematic Withdrawal Program" for
additional details about how to use this program and the program's restrictions.
Payment of the Annual Benefit Amount when the Contract Value is zero
If, when the Contract Value goes to zero, the Benefit Base is greater than
zero, then, one month after the later of the date the Contract Value goes to
zero and the Benefit Eligibility Date, we will begin to pay you equal monthly
payments of an amount that will equal the Annual Benefit Amount divided by
twelve. We will make these payments under the single life option or spousal
life option, whichever you selected at the time you purchased the rider. For
the single life option, all Covered Persons must be living on the date we make
the first payment, and for the spousal life option, at least one spouse must be
living. Payments will continue until the first death of any Covered Person(s)
for the single life option, or until the death of the surviving spouse for the
spousal life option. We may change the payment frequency to annual if a monthly
payment would be otherwise less than any minimum payment requirement.
Maximum Maturity Date Benefit
If your Contract Value is greater than zero and you cannot extend the maturity
date of the contract any later, this rider allows you to exchange the Contract
Value for lifetime payments equal to the Annual Benefit Amount in lieu of
applying the Contract Value to one of the annuity payment options offered under
the contract. Otherwise, your contract will enter the annuity period and you
may choose any of the annuity options then available. See "The Annuity Period".
Termination of Phoenix Flexible Withdrawal Benefit
The rider will terminate without value on the date the first of any of the
following events occur:
1.any Covered Person is changed;
2.annuity payments begin under an annuity payment option as described in the
contract;
3.the contract, to which the rider is attached, terminates;
4.the owner elects to terminate the rider;
5.any portion of the Contract Value is no longer invested in one of the
approved asset allocation programs;
6.the Contract Value and Benefit Base are both reduced to zero;
7.any Covered Person under the single life option, or the surviving Covered
Person under the spousal life option dies; or
8.you assign any rights or interest in the rider.
TF1013 15
Once the rider is terminated it cannot be reinstated and the pro rata portion
of the rider fee will be deducted from the Contract Value on the date the rider
terminates.
Special Risks Associated with Withdrawals
The following chart demonstrates special risks that are associated with taking
withdrawals when the Phoenix Flexible Withdrawal Protector is attached to a
contract when the Contract Value and Benefit Base are both greater than zero.
Whether or not a withdrawal is considered "permitted" or "excess" is described
in the section "Taking Withdrawals", in the description of the Benefit Base.
When the Contract Value is reduced to zero, lifetime payments will begin and
withdrawals are no longer allowed from the contract.
---------------------------------------------------------------------------------------------------------------------------
Permitted
Scenario No Withdrawals Withdrawals
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Automatic Contract Value reduction X
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Reduction to Benefit Base
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Gives you the highest potential Annual Benefit Amount available under the rider/1/ X
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Cancels your ability to have subsequent premium payments automatically increase the
Benefit Base X
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
During the roll-up period, cancels your ability to "roll-up" and increase your Benefit Base X
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Reduces the likelihood of an automatic step-up/2/ X
---------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Excess
Scenario Withdrawals
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Automatic Contract Value reduction X
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Reduction to Benefit Base X
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Gives you the highest potential Annual Benefit Amount available under the rider/1/
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Cancels your ability to have subsequent premium payments automatically increase the
Benefit Base X
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
During the roll-up period, cancels your ability to "roll-up" and increase your Benefit Base X
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Reduces the likelihood of an automatic step-up/2/ X
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Permitted
Scenario No Withdrawals Withdrawals
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Premium payments increase the Benefit Base X
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Potential to terminate the rider without value if reduces the Contract Value to zero
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Permanently sets the Annual Benefit Percentage X
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Permanently sets the Annual Benefit Amount if the Contract Value is reduced to zero and
the Benefit Base is greater than zero X
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Potential surrender charges
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Potential premium taxes and/or federal income tax consequences X
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Excess
Scenario Withdrawals
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Premium payments increase the Benefit Base
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Potential to terminate the rider without value if reduces the Contract Value to zero X
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Permanently sets the Annual Benefit Percentage X
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Permanently sets the Annual Benefit Amount if the Contract Value is reduced to zero and
the Benefit Base is greater than zero
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Potential surrender charges X
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Potential premium taxes and/or federal income tax consequences X
-------------------------------------------------------------------------------------------------------
/1/ The potential Annual Benefit Amount is greatest if at the end of the
roll-up period, no withdrawals have been made and the youngest Covered
Person has attained the Benefit Base Multiplier Age.
/2/ In order to obtain an automatic step-up, your Contract Value must be
greater than your Benefit Base on the rider anniversary. If you make
withdrawals, your Contract Value will automatically decline, therefore
reducing the likelihood that your Contract Value will be greater than your
Benefit Base on your next rider anniversary, thus also reducing the
likelihood that you will be able to step-up your Benefit Base.
The following new sub-section is added to the section called "Optional
Benefits" beginning on page 24.
TF1013 16
Phoenix Retirement Protector: A Flexible Combination Benefit
Summary of Benefit
Beginning August , 2008, subject to state approval and our implementation of
the rider in the various states, you may purchase the Phoenix Retirement
Protector for an additional charge. Currently, this benefit is only available
for purchase at the time you buy the contract and you may only purchase one
Optional Guaranteed Benefit with the contract. Phoenix Retirement Protector
combines two different guarantees into one rider: (i) a guaranteed minimum
accumulation benefit ("GMAB"), and a(ii) a guaranteed minimum withdrawal
benefit ("GMWB"). In addition, you may select an optional guaranteed minimum
death benefit ("GMDB") with the Phoenix Retirement Protector for an additional
charge. When you elect the Phoenix Retirement Protector, the GMAB and GMWB
components are automatically included. You must elect the GMDB component to be
included as part of the rider at the time you purchase the contract. By
purchasing this rider, you are able to obtain a GMAB and a GMWB through the
same contract. This may be appropriate if, at the time you purchase your
contract you want to be able to use the contract either for maximum
accumulation or for maximum ability to provide payments; however, you should
know that certain actions which have a positive impact on one component of the
benefit may have a negative impact on another component of the benefit. As a
result, you should carefully consider the impacts of various events and
transactions on each benefit component. Additionally, some of the terms and
features of the GMAB and GMWB components of this benefit are different from the
individually offered GMAB and GMWB riders. The fee is also different from the
fees for those riders. You should carefully review the terms and conditions of
each Optional Guaranteed Benefit with your registered representative to
determine which, if any, is appropriate for your contract. The basic benefits
and risks of each component of Phoenix Retirement Protector are described below
and the sections that follow provide more detailed descriptions of how the
benefits are calculated.
The GMAB component of Phoenix Retirement Protector guarantees a return of a
specified percentage of premium after a waiting period regardless of the
performance of the asset allocation program(s) in which your premiums and
Contract Value have been invested. This feature may be important to you if you
are interested in maximizing your Contract Value during the accumulation
period. The GMAB does not in any way guarantee the performance of any of the
investment choices under the contract. Due to the potential negative effects of
withdrawals on this benefit, you should know that this benefit may have limited
usefulness if the contract is subject to the IRS minimum distribution
requirements. As a result, you should consult with your tax adviser before
selecting a rider with a GMAB feature.
The GMWB component guarantees a minimum amount in payments or withdrawals from
the contract provided you remain within certain restrictions and limitations
which are described below. When you elect this benefit you choose whether to
take withdrawals and payments under the single life option, or the spousal life
option. Once you make this election, you cannot change it. This choice affects
the amount of benefit you may be entitled to receive at various ages and, once
your contract value goes to zero, the life for which benefit payments will be
made.
Contract Value is greater than zero: Guaranteed Withdrawals
While the Contract Value is greater than zero, if you have met the GMWB's
terms and conditions, the GMWB component guarantees that you can make
withdrawals from the contract up to the Non-Lifetime Annual Benefit Amount,
or the Lifetime Annual Benefit Amount, as these terms are defined below. The
Non-Lifetime Annual Benefit Amount becomes available for withdrawals on the
rider date. The Lifetime Annual Benefit Amount becomes available for
withdrawals on the date the youngest Covered Person covered by the rider
reaches a particular age, which is currently age 60 for the single life
option and age 65 for the spousal life option. We call this date the GMWB
Benefit Eligibility Date. We permanently set the percentage we use in
computing the Lifetime Annual Benefit Amount on the later of the date of the
first withdrawal and the GMWB Benefit Eligibility Date. In addition, if you
take a withdrawal prior to the GMWB Benefit Eligibility Date, including a
withdrawal of the Non-Lifetime Annual Benefit Amount, not only will you
reduce your GMWB Benefit Base but you will also reduce the Lifetime Annual
Benefit Amount that will become available on the GMWB Benefit Eligibility
Date.
When you make withdrawals less than the greater of the Non-Lifetime Annual
Benefit Amount and the Lifetime Annual Benefit Amount, you will not reduce
the GMWB Benefit Base. When you make withdrawals within the Non-Lifetime
Annual Benefit Amount, you will not reduce your Non-Lifetime Annual Benefit
Amount. When you make withdrawals within the Lifetime Annual Benefit Amount,
you will not reduce your Lifetime Annual Benefit Amount.
Like Phoenix Flexible Withdrawal Protector, an alternative GMWB available
under this contract, this benefit does not prevent you from taking
withdrawals from the contract at any time; however, taking withdrawals prior
to the GMWB Benefit Eligibility Date or in excess of the Lifetime Annual
Benefit Amount may significantly reduce or eliminate the value of the
lifetime guarantees provided by the GMWB component of Phoenix Retirement
Protector. Please see the chart of "Special Risks Associated with
Withdrawals" at the end of this section for details. You should know that
withdrawals from the contract have other potential consequences, including
potential imposition of surrender charges and premium taxes, and federal
income tax consequences. Withdrawals that do not exceed the greater of the
Non-Lifetime and Lifetime Annual Benefit Amounts, including withdrawals
taken to meet Required Minimum Distributions, are considered to be within
the contract's free withdrawal amount and are not subject to surrender
charges
TF1013 17
under the contract. However, withdrawals, including withdrawals taken to
meet Required Minimum Distributions, that exceed the greater of the
Non-Lifetime and Lifetime Annual Benefit Amounts, as defined below and the
contract's free withdrawal amount are subject to any surrender charges
imposed under the contract. Please see "Surrender of Contract and
Withdrawals" and "Federal Income Taxes" for more information.
Generally, the amount used to determine withdrawals or payments, called the
"GMWB Benefit Base", is increased by premium payments and certain features
of the GMWB and is reduced by withdrawals that exceed the greater of the
annual benefit amounts. We have described how premium payments, features of
the rider and withdrawals affect the benefit in the section "GMWB Component"
below.
Contract Value is reduced to zero: Guaranteed Payments
If your Contract Value goes to zero and you have met the conditions of the
benefit, the contract and all rights under the contract and rider terminate,
and you must choose between lifetime or non-lifetime payments. You should
know that the GMWB component does not provide a lifetime benefit amount
prior to the GMWB Benefit Eligibility Date.
If both the lifetime and non-lifetime options are available to you and you
choose lifetime payments, we will pay you the Lifetime Annual Benefit Amount
each year until the first death of a Covered Person under the single life
option or until the death of the surviving spouse under the spousal life
options. If you choose non-lifetime payments, we will pay you the
Non-Lifetime Annual Benefit Amount until the GMWB Benefit Base is reduced to
zero.
As noted above, the Phoenix Retirement Protector offers a guaranteed minimum
death benefit (GMDB) component which you can elect for an additional fee. The
benefit provides a higher GMDB than is provided under the contract so long as
the GMDB Benefit Base under the rider exceeds the GMDB under the contract. You
may wish to consider this benefit if your goal is to provide a higher death
benefit.
Asset Allocation or Strategic Program Requirement
If you purchase Phoenix Retirement Protector, you must select one of the
approved asset allocation programs when allocating your premium payments and
Contract Value. You should consult with your registered representative when you
initially select a program and periodically review your program with your
registered representative to determine if you need to change programs. You may,
at any time, switch your current program to another approved program the
Company may make available; however, the fee for the rider may vary depending
on the program or option you choose. See the table of "Optional Benefit Fees"
for details. We reserve the right to restrict availability of investment
options.
Although you may cancel your participation in a program, you should consult
your registered representative before doing so, as canceling out of programs
altogether will cause the rider to terminate without value. You may request to
later re-enroll in a program however re-enrollment will not reinstate the
Phoenix Retirement Protector rider. If a program is eliminated while the rider
is in effect, we will provide you notice and you must choose among the other
approved programs available by working with your registered representative to
make an appropriate selection and returning the form we require to the Annuity
Operations Division. Descriptions of the programs are found in "Asset
Allocation and Strategic Programs" above.
Important Terms and Conditions related to Phoenix Retirement Protector
Currently, we offer this benefit only at the time you buy a contract. As a
result, the rider date is the same as the contract date and rider years are the
same as contract years.
(i)Guaranteed Minimum Accumulation Benefit ("GMAB") Component
The GMAB component of the rider guarantees a return of a specified percentage
of premiums after each GMAB Waiting Period. A GMAB Waiting Period represents
the period of time that must elapse before you qualify for benefits under the
GMAB component of the rider. Currently, the GMAB Waiting Period is 10 years,
measured from the rider date. The amount of the benefit available after the
waiting period depends on the relationship of the Contract Value to a value we
call the "GMAB Benefit Base", which is described below. After the initial GMAB
Waiting Period, we will automatically compare the GMAB Benefit Base to the
Contract Value after all fees have been deducted. If the GMAB Benefit Base is
greater than the Contract Value after all fees have been deducted, we will add
an additional amount to your Contract Value and therefore your new Contract
Value will equal the GMAB Benefit Base. Whenever such addition occurs, a new
GMAB Waiting Period begins. In addition, you may elect to increase, or
"step-up" the GMAB Benefit Base as specified below. A new GMAB Waiting Period
also begins when you step-up the GMAB Benefit Base. Each new GMAB Waiting
Period supersedes any GMAB Waiting Period already in progress and delays the
time when we will determine if an additional amount will be added to the
Contract Value.
TF1013 18
GMAB Benefit Base
As noted above, we compare the Contract Value to the GMAB Benefit Base to
determine if an additional amount will be added to the Contract Value at the
end of each GMAB Waiting Period. Assuming the rider was issued on the date the
contract was issued, the GMAB Benefit Base is equal to the initial premium
payment. Thereafter, the GMAB Benefit Base is re-calculated whenever certain
triggering events occur. Generally speaking, the GMAB Benefit Base will be
increased by a percentage of subsequent premium payments, and may be increased
by the elective step up feature. Under no circumstances will the GMAB Benefit
Base ever exceed a maximum amount equal to 500% of subsequent premiums in the
first rider year, plus 100% of other subsequent premiums. The GMAB Benefit Base
will be set equal to zero on the date the Contract Value is reduced to zero.
Events and features causing recalculation of the GMAB Benefit Base
. Premium Payments Received After the Rider Date
The GMAB Benefit Base will be increased by 100% of any premium payment received
after the rider date and within the first rider year in each GMAB Waiting
Period. Premiums received following the first rider anniversary within each
GMAB Waiting Period do not increase the GMAB Benefit Base.
Sample calculation showing the effect of subsequent premium payments on GMAB
Benefit Base
Assume the rider date is June 12, 2009 and that your initial premium
payment on the rider date is $100,000. Your GMAB Benefit Base is set equal
to $100,000.
Assume that you make an additional premium payment of $10,000 on
August 24, 2009. Since this premium payment was made in the first year
during the GMAB Waiting Period, 100% of the premium payment is added to
the GMAB Benefit Base. Thus the GMAB Benefit Base is increased to $110,000.
Assume that you make another premium payment of $10,000 on April 5, 2012.
Also assume that you have not made an elective GMAB Step-Up since the
rider date. Since this premium payment was made in the third year during
the GMAB Waiting Period, the GMAB Benefit Base is not increased.
. Elective GMAB Step-Up
You may elect to increase, or "step up" the GMAB Benefit Base each rider year
when the Contract Value is greater than the GMAB Benefit Base. To elect to step
up the GMAB Benefit Base, you must notify us of this election at least 7 days
before the end of the rider year. Then we will increase the GMAB Benefit Base
to equal the Contract Value on the rider anniversary and a new GMAB Waiting
Period will begin. If the GMWB automatic step-up has been suspended (see
"Automatic Step-Up Feature" under Guaranteed Minimum Withdrawal Benefit
Component below), you may not elect the GMAB step-up until you have reactivated
the GMWB automatic step-up.
Sample calculation showing the effect of the elective GMAB Step-Up
Assume the rider date is June 12, 2009 and that your initial premium
payment on the rider date is $100,000. Your GMAB Benefit Base is set equal
to $100,000.
Assume that as you approach your June 12, 2015 rider anniversary, you wish
to make an elective GMAB Step-Up because your Contract Value has increased
since the rider date. Assume that you provide notice more than seven days
prior to this anniversary of your request to step up and that you have not
opted out of the GMWB step-ups.
Assume that on June 12, 2015 that Contract Value is $170,000. Since you
have elected a GMAB step-up, your GMAB Benefit Base is increased to
$170,000 and you begin a new GMAB Waiting Period.
Assume that you make an additional premium payment of $10,000 on
August 24, 2015. Since this premium payment was made in the first rider
year of the current GMAB Waiting Period, the GMAB Benefit Base is
increased by the amount of the premium payment. Thus the GMAB Benefit Base
is increased to $180,000
. First Day Following the End of Each GMAB Waiting Period
On the first day following the end of each GMAB Waiting Period, if the GMAB
Benefit Base is less than the Contract Value, the GMAB Benefit Base will be set
equal to the Contact Value, after all fees have been deducted.
. Withdrawals from the Contract
On the date of any withdrawal from the contract, the GMAB Benefit Base will be
reduced in the same proportion as the Contract Value is reduced by the
withdrawal.
Sample calculation showing the effect of withdrawals on the GMAB Benefit Base
Assume the rider date is June 12, 2009 and that your initial premium
payment on the rider date is $100,000. Your GMAB Benefit Base is set equal
to $100,000.
Assume you make a withdrawal of $14,000 on September 7, 2015 and that your
Contract Value on that date was $140,000. In this case, the reduction in
Contract Value is 10% ($14,000 divided by $140,000), and accordingly, your
GMAB Benefit Base is reduced by 10% to $90,000 ($100,000 * 10% = $10,000
and $100,000 - $10,000 = $90,000).
TF1013 19
Important Considerations Regarding These Events
If your intention is to obtain the benefit provided by the GMAB component at
the earliest possible date, you need to complete the initial GMAB Waiting
Period, currently ten years. This means that: (1) your initial premium plus
subsequent premium payments made in the first rider year is the amount that you
wish to guarantee; and (2) you should not make subsequent premium payments
after the first rider year or elect to step up your GMAB Benefit Base in the
first ten rider years. You should also understand that although making
additional premium payments after the first rider year may reduce the benefit
that could be paid at the end of the initial GMAB waiting period, they have the
potential to increase the GMAB Benefit Base (elective GMAB Step-Up) and the
GMWB Benefit Base. You should work with your registered representative to
determine what decision best suits your financial needs.
(ii)Guaranteed Minimum Withdrawal Benefit ("GMWB") Component
The GMWB component of this rider provides for a lifetime and non-lifetime
guaranteed minimum withdrawal benefit. On the rider date, you must choose
between the single life option and the spousal life option and you cannot
change your election. On the date the Contract Value is reduced to zero, you
must choose between lifetime and non-lifetime payments.
The following terms are important to an understanding of this component.
"Annual Benefit Percentage" is a percentage we use to determine the Annual
Benefit Amount. The Non-Lifetime Annual Benefit Percentage is currently 7%. For
the Lifetime Annual Benefit Percentage, the percentage varies by age as shown
below and is established on the date you make the first withdrawal from the
contract. If your first withdrawal is prior to the GMWB Benefit Eligibility
Date (youngest Covered Person's 60/th/ birthday for the single life option or
65/th/ birthday for the spousal life option), this percentage is permanently
set to 5% on the GMWB Benefit Eligibility Date.
Lifetime Lifetime
Single Life Annual Benefit Spousal Life Annual Benefit
Attained Age Percentage Attained Age Percentage
--------------------------------------------------------
< 60 0% <65 0%
--------------------------------------------------------
60-79 5% 65-79 5%
--------------------------------------------------------
80-84 6% 80-84 6%
--------------------------------------------------------
85+ 7% 85+ 7%
"Covered Person(s)" means the person(s) whose life is used to determine the
duration of lifetime payments. A Covered Person must be a natural person
For the single life option, the Covered Person can be one or more lives. If
there is one natural person owner, the owner is the Covered Person. If there
are multiple natural person owners, all owners are Covered Persons. If the
owner is a non-natural person, all annuitants named in the contract become
the Covered Persons.
For the spousal life option, Covered Persons must be two legal spouses under
federal law. If there is one natural person owner, the owner and the owner's
spouse must be the Covered Persons. The spouse must be the sole beneficiary.
If there are two spousal owners, the Covered Persons are the spousal owners,
and they must both be each other's beneficiary. If there are multiple
non-spousal owners, or if the owner is a non-natural person, the spousal
life option is not allowed.
"GMWB Benefit Base" is the amount established for the sole purpose of
determining the Lifetime and Non-Lifetime Annual Benefit Amount. As noted
above, while the Contract Value is greater than zero, the Lifetime or
Non-Lifetime Annual Benefit Amount is the amount available for withdrawals.
When the Contract Value goes to zero the Lifetime or Non-Lifetime Annual
Benefit Amount is the amount we will pay to you each year.
On the rider date, the GMWB Benefit Base is equal to the initial premium.
Thereafter, the GWMB Benefit Base is recalculated whenever certain triggering
events occur. Generally speaking, assuming no withdrawals have been taken, the
GMWB Benefit Base will be increased by additional premium payments, and may be
increased as a result of the roll-up and step-up features. However, under no
circumstances will the GMWB Benefit Base ever exceed a maximum amount. This
maximum amount is the sum of 500% of the initial premium plus 500% of
subsequent premiums in the first rider year, plus 100% of other subsequent
premiums. We will reduce the GMWB Benefit Base if cumulative withdrawals in a
rider year are more than the greater of the Lifetime and Non-Lifetime Annual
Benefit Amounts.
"GMWB Benefit Eligibility Date" means the date your Lifetime Annual Benefit
Amount becomes available to you.
. For the single life option, the GMWB Benefit Eligibility Date is the
later of the rider date and the date the youngest Covered Person, as
defined below, attains age 60.
TF1013 20
. For the spousal life option, the GMWB Benefit Eligibility Date is
the later of the rider date and the date the youngest Covered Person
attains age 65. For the spousal life option, if either spouse dies
prior to the GMWB Benefit Eligibility Date, we will reset the
Benefit Eligibility Date to the later of the date of the first
spousal death, and the date the surviving spouse attains age 65.
The Non-Lifetime Annual Benefit Amount
The Non-Lifetime Annual Benefit Amount represents two distinct values,
depending on whether your Contract Value is greater than zero, or whether it
has reduced to zero. While your Contract Value is greater than zero, the
Non-Lifetime Annual Benefit Amount represents the maximum amount you can
withdraw each year without reducing your Non-Lifetime Annual Benefit Amount. If
your Contract Value is reduced to zero, and non-lifetime payments are elected,
the Non-Lifetime Annual Benefit Amount represents the annual amount we will pay
you until the GMWB Benefit Base is reduced to zero.
On the rider date, the Non-Lifetime Annual Benefit Amount is equal to a
percentage of the GMWB Benefit Base. We call this percentage the "Non-Lifetime
Annual Benefit Percentage". The percentage for your rider is shown on the rider
specification page and is currently 7%. We may change this percentage in the
future and this change would affect riders issued beginning on the date we make
the change. After the rider date, the Non-Lifetime Annual Benefit Amount is
recalculated whenever any of the following triggering events occur.
Events causing recalculation of the Non-Lifetime Annual Benefit Amount
. GMWB Automatic Step-Ups or GMWB Roll-Ups
Each year when a GMWB automatic step-up or GMWB roll-up occurs, the
Non-Lifetime Annual Benefit Amount will be equal to the greater of the
current Non-Lifetime Annual Benefit Amount; and the Non-Lifetime Annual
Benefit Percentage multiplied by the current GMWB Benefit Base.
. Premium Payments Received After the Rider Date
If we receive premium payments after the rider date, and no withdrawals
have been made from the contract, then we will increase the Non-Lifetime
Annual Benefit Amount on the date we apply premium payments. The amount
of this increase is determined by multiplying the Non-Lifetime Annual
Benefit Percentage by the amount of the premium payment. However, if you
then take withdrawals from the contract in excess of the Non-Lifetime
Annual Benefit Amount, we will reduce the Non-Lifetime Annual Benefit
Amount as described in "Taking Withdrawals" below.
. Taking Withdrawals
The following section describes how taking withdrawals will impact the
Non-Lifetime Annual Benefit Amount. The Non-Lifetime Annual Benefit
Amount may be the only benefit amount available to you under the GMWB
component unless you have reached the GMWB Benefit Eligibility Date,
which is generally the date the youngest Covered Person attains age 60
if the single life option is in effect, or the date the younger spouse
attains age 65, if the spousal life option is in effect.
. Taking withdrawals from the contract may impact the Non-Lifetime
Annual Benefit Amount depending on whether they exceed the
Non-Lifetime Annual Benefit Amount. If cumulative withdrawals in any
rider year do not exceed the Non-Lifetime Annual Benefit Amount in
that year, the Non-Lifetime Annual Benefit Amount will not be reduced.
. If a withdrawal causes the cumulative withdrawals in any rider year
to exceed the Non-Lifetime Annual Benefit Amount, the amount
withdrawn in excess of the Non-Lifetime Annual Benefit Amount and any
subsequent withdrawals in that rider year are all considered
non-lifetime excess withdrawals. Each non-lifetime excess withdrawal
will reduce the Non-Lifetime Annual Benefit Amount in the same
proportion as the Contract Value is reduced by the non-lifetime
excess withdrawal.
. You should know that, currently, withdrawals taken to meet Required
Minimum Distribution requirements as defined by the Internal Revenue
Code do not reduce the Non-Lifetime Annual Benefit Amount. However,
we may change this rule at our discretion in which case such
withdrawals taken following this change may be considered excess
withdrawals as described below.
For IRA and qualified plan contracts, cumulative withdrawals
during a rider year will be considered non-lifetime excess
withdrawals only if they exceed the greatest of (a), (b) and (c),
where:
(a) =the current Non-Lifetime Annual Benefit Amount;
(b) =the RMD for the 1st calendar year during the rider year; and
(c) =the RMD for the 2nd calendar year during the same rider year.
Withdrawals from the contract have other potential consequences,
including potential imposition of surrender charges and premium taxes,
and federal income tax consequences. Withdrawals, including withdrawals
taken to meet Required Minimum Distribution requirements that do not
exceed the greater of the Non-Lifetime and Lifetime Annual Benefit
Amounts are considered to be within the contract's free withdrawal
amount. However, withdrawals that exceed the greater of the
TF1013 21
Non-Lifetime and Lifetime Annual Benefit Amounts, including withdrawals
taken to meet Required Minimum Distribution requirements, are subject to
any surrender charges imposed under the contract. Please see "Surrender
of Contract and Withdrawals" and "Federal Income Taxes" for more
information.
The Lifetime Annual Benefit Amount
Like the Non-Lifetime Annual Benefit Amount, the Lifetime Annual Benefit Amount
represents two distinct values, depending on whether your Contract Value is
greater than zero, or whether it has reduced to zero. While your Contract Value
is greater than zero, the Lifetime Annual Benefit Amount represents the maximum
amount you can withdraw each year without reducing your Lifetime Annual Benefit
Amount. If your Contract Value is reduced to zero, and lifetime payments are
elected, the Lifetime Annual Benefit Amount represents the annual lifetime
amount we will pay.
We calculate the Lifetime Annual Benefit Amount on the later of the date of the
first withdrawal and the GMWB Benefit Eligibility Date as follows:
. Lifetime Annual Benefit Amount calculated on the GMWB Benefit
Eligibility Date: the Lifetime Annual Benefit Amount equals the Lifetime
Annual Benefit Percentage, as shown above, multiplied by the lesser of
the GMWB Benefit Base and the Contract Value.
. Lifetime Annual Benefit Amount calculated on the date of the first
withdrawal, following the GMWB Benefit Eligibility Date: the Lifetime
Annual Benefit Amount equals the Lifetime Annual Benefit Percentage
multiplied by the GMWB Benefit Base.
The Lifetime Annual Benefit Amount is recalculated whenever any of the
following triggering events occur.
Events causing recalculation of the Lifetime Annual Benefit Amount
. GMWB Automatic Step-Up
Each year when a GMWB Automatic Step-Up occurs, the Lifetime Annual
Benefit Amount will be equal to the greater of the current Lifetime
Annual Benefit Amount; and the Lifetime Annual Benefit Percentage
multiplied by the GMWB Benefit Base.
. Taking Withdrawals
The following section describes how taking withdrawals may impact the
Lifetime Annual Benefit Amount. Whether withdrawals will change the
Lifetime Annual Benefit Amount depends on whether they exceed this
amount. Your Lifetime Annual Benefit Amount is not available to you for
withdrawals or payments unless you have reached the GMWB Benefit
Eligibility Date, which is generally the date the youngest Covered
Person attains age 60 if the single life option is in effect, or the
date the younger spouse attains age 65, if the spousal life option is in
effect.
. If cumulative withdrawals in any rider year do not exceed the
Lifetime Annual Benefit Amount in that year, the Lifetime Annual
Benefit Amount will not be reduced.
. If a withdrawal causes the cumulative withdrawals in any rider year
to exceed the Lifetime Annual Benefit Amount, the amount withdrawn in
excess of the Lifetime Annual Benefit Amount and any subsequent
withdrawals in that rider year are all considered lifetime excess
withdrawals. Each lifetime excess withdrawal will reduce the Lifetime
Annual Benefit Amount in the same proportion as the Contract Value is
reduced by the lifetime excess withdrawal.
. You should know that, currently, withdrawals taken to meet Required
Minimum Distribution requirements as defined by the Internal Revenue
Code do not reduce the Lifetime Annual Benefit Amount. However, we
may change this rule at our discretion in which case such withdrawals
taken following this change may be considered lifetime excess
withdrawals and reduce the Lifetime Annual Benefit Amount as
described below.
For IRA and qualified plan contracts, cumulative withdrawals during a
rider year will be considered excess withdrawals only if they exceed
the greatest of (a), (b) and (c), where:
(a) =the current Lifetime Annual Benefit Amount;
(b) =the RMD for the 1st calendar year during the rider year; and
(c) =the RMD for the 2nd calendar year during the same rider year.
Withdrawals from the contract have other potential consequences, including
potential imposition of surrender charges and premium taxes, and federal
income tax consequences. Withdrawals, including withdrawals taken to meet
Required Minimum Distribution requirements that do not exceed the greater of
the Non-Lifetime and Lifetime Annual Benefit Amounts are considered to be
within the contract's free withdrawal amount. However, withdrawals that
exceed the greater of the Non-Lifetime and Lifetime Annual Benefit Amounts,
including withdrawals taken to meet Required Minimum Distribution
requirements, are subject to any surrender charges imposed under the
contract. Please see "Surrender of Contract and Withdrawals" and "Federal
Income Taxes" for more information.
TF1013 22
Events causing recalculation of the GMWB Benefit Base
. Premium Payments Received After the Rider Date
If we receive premium payments after the rider date, and no withdrawals
have been made from the contract, then we will increase the GMWB Benefit
Base. The GMWB Benefit Base will be increased by the dollar amount of
each premium payment on the date we receive it. However, if you then
take withdrawals from the contract, we will reduce the GMWB Benefit Base
as described in "Taking Withdrawals" below. If withdrawals have been
made from the contract on or prior to our receipt of additional premium,
we will not increase the GMWB Benefit Base as a result of premium
payments made after the rider date.
. Roll-up Feature
The GMWB roll-up feature allows for an increase, or "roll-up," in the
GMWB Benefit Base during a specified period of time, called the GMWB
roll-up period, so long as no withdrawals have been taken from the
contract. Currently, the roll-up period is the greater of the 10-year
period since the rider date and 10 years from the last rider anniversary
on which a GMWB automatic step-up, described below, occurs. In no event
can the roll-up period extend beyond the time the younger Covered Person
attains a maximum age. This maximum age is the greater of age 80 or the
younger Covered Person's age on the rider date plus 10 years. The
increase in GMWB Benefit Base resulting from the roll-up is based upon a
comparison of the following three values on each rider anniversary:
(i) Contract Value, (ii) GMWB Benefit Base, and (iii) the sum of the
GMWB Benefit Base on the prior rider anniversary plus the roll-up amount
for the prior rider year, plus subsequent premium payments received
during the prior rider year. For calculation of the increase in GMWB
Benefit Base provided by the roll-up feature, "subsequent premium
payments" means premiums received after the rider date, excluding
premium payments received on any rider anniversary. The roll-up amount
is determined by multiplying the GMWB Benefit Base on the prior rider
anniversary, or for the roll-up in the first rider year, the GMWB
Benefit Base on the last valuation date of the first rider year by a
percentage, currently 6.5%.
. Each Rider Anniversary During the GMWB Roll-Up Period
On each rider anniversary, if no withdrawals have been made, the
re-calculated GMWB Benefit Base will be set equal to the greatest of the
following, unless the GMWB automatic step-up feature has been suspended
in which case, it will be set to the greater of the latter two values
described below:
. the Contract Value then in effect, (after all fees have been deducted,
and provided the GMWB automatic step-up feature has not been
suspended);
. the GMWB Benefit Base then in effect; and
. the sum of (i) the GMWB Benefit Base on the prior rider anniversary,
(ii) the roll-up amount for the prior rider year, and (iii) subsequent
premium payments received during the prior rider year.
Once a withdrawal has been taken from the contract the GMWB roll-up feature
will be discontinued and no further roll-up calculations will occur.
. The Rider Anniversary Following the End of the GMWB Roll-Up Period when
(1) the youngest Covered Person has not yet attained age 70 and (2) the
youngest Covered Person has attained age 70.
If the GMWB roll-up period has ended, and no withdrawals have been made
from the contract, we will re-calculate the GMWB Benefit Base on the rider
anniversary following the end of the GMWB roll-up period. The amount of
the re-calculated GMWB Benefit Base will depend on whether the youngest
Covered Person has attained the Benefit Base Multiplier Age, currently age
70. For each situation, the recalculated Benefit Base is determined as
described below
1.Assuming the youngest Covered Person has not yet attained age 70 by the
rider anniversary immediately following the end of the GMWB roll-up
period, then on that rider anniversary, the GMWB Benefit Base will be
set equal to the greatest of the following, unless the GMWB automatic
step-up feature has been suspended in which case, it will be set to the
greater of the latter two values described below:
. the Contract Value then in effect, (after all fees have been
deducted, provided the GMWB automatic step-up feature has not been
suspended);
. the GMWB Benefit Base then in effect; and
. the sum of (i) the GMWB Benefit Base on the prior rider anniversary,
(ii) the roll-up amount for the prior rider year, and
(iii) subsequent premium payments received during the prior rider
year.
2.Assuming the youngest Covered Person has attained age 70 by the rider
anniversary immediately following the end of the GMWB roll-up period,
then on that rider anniversary, the GMWB Benefit Base will be set equal
to the greatest of the following, unless the GMWB automatic step-up
feature has been suspended in which case, it will be set to the greater
of the latter three values described below:
. the Contract Value then in effect, (after all fees have been
deducted, provided the GMWB automatic step-up feature has not been
suspended);
TF1013 23
. the GMWB Benefit Base then in effect;
. the Benefit Base Multiplier, currently 200%, multiplied by the sum of
(i) the GMWB Benefit Base on the rider date, plus (ii) all subsequent
premium payments received during the first rider year;
. the sum of (i) the GMWB Benefit Base on the prior rider anniversary,
(ii) the roll-up amount for the prior rider year, and
(iii) subsequent premium payments received during the prior rider
year.
. Rider Anniversary Following Youngest Covered Person's 70/th/ Birthday
Occurring After the Rider Anniversary Immediately Following the End of the
Roll-Up Period
Assuming no withdrawals have been taken and the youngest Covered Person
attains age 70 after the rider anniversary immediately following the end
of the roll-up period, then on the next rider anniversary following the
date the youngest Covered Person attains age 70, the Benefit Base will be
set equal to the greatest of the following, unless the GMWB automatic
step-up feature has been suspended in which case, it will be set to the
greater of the latter two values described below:
. the Contract Value then in effect, after all fees have been deducted,
(provided the GMWB automatic step-up feature has not been suspended);
. the GMWB Benefit Base then in effect;
. the Benefit Base Multiplier, currently 200%, multiplied by sum of the
GMWB Benefit Base on the rider date plus all subsequent premium
payments received during the first rider year.
. Each Rider Anniversary After the Earlier of the First Withdrawal and the
Rider Anniversary Following the End of the GMWB Roll-Up Period (except
Rider Anniversary next following youngest Covered Person's 70/th/ birthday
after the end of the Roll-Up Period)
On each rider anniversary after the earlier of the first withdrawal and
the rider anniversary following the end of the GMWB roll-up period, we
will re-calculate the GMWB Benefit Base. The GMWB Benefit Base will be set
equal to the greater of the following, unless the GMWB automatic step-up
feature has been suspended, in which case, it will be set to the GMWB
Benefit Base then in effect:
. the Contract Value then in effect, after all fees have been deducted,
(provided the GMWB automatic step-up feature, described below, has
not been suspended); and
. the GMWB Benefit Base then in effect.
. GMWB Automatic Step-Up Feature
The GMWB component of Phoenix Retirement Protector includes an automatic
step-up feature. Like the GMWB roll-up feature, the GMWB automatic step-up
feature allows for an increase in the GMWB Benefit Base. At set intervals,
currently on each anniversary of the rider date, we will automatically
compare the Contract Value, after deduction of all fees, to the GMWB
Benefit Base then in effect. If the Contract Value, after deduction of all
fees, is greater than such GMWB Benefit Base, we will automatically
increase, or "step-up" the GMWB Benefit Base to equal the Contract Value.
You should know that the fee percentage for the rider may be increased if
we step-up the GMWB Benefit Base. You can decline the increase by
contacting us no later than seven days prior to the rider anniversary. If
you decline the step-up, the GMWB automatic step-up will not occur, and
the automatic GMWB step-up feature will be suspended immediately and GMAB
step-ups provided under the GMAB component of the rider cannot be elected.
If you decline a GMWB automatic step-up in the GMWB Benefit Base, we will
continue to calculate any roll-ups as described above. Also, you will pay
the current rider fee then in effect beginning on the date of any
automatic step-up of the Benefit Base. Assuming your rider is still in
effect at the next step-up interval, you may reactivate the automatic GMWB
step-up option by contacting us at the phone number or address provided on
the first page of the prospectus.
. Taking Withdrawals
The following section describes how taking withdrawals may impact the GMWB
Benefit Base. Whether withdrawals will change the GMWB Benefit Base
depends on whether and by how much the withdrawals taken in a rider year
exceed the annual benefit amounts.
. If cumulative withdrawals in any rider year are less than or equal to
the greater of the Lifetime Annual Benefit Amount then in effect and
the Non-Lifetime Annual Benefit Amount then in effect and the GMWB
Benefit Base will be reduced by the dollar amount of each withdrawal.
. If a withdrawal causes the cumulative withdrawals during a rider year
to exceed the greater of the Non-Lifetime Annual Benefit Amount and
the Lifetime Annual Benefit Amount, the amount withdrawn in excess of
such amount and any subsequent withdrawals in that rider year are all
considered excess withdrawals. Each excess withdrawal will reduce the
GMWB Benefit Base in the same proportion as the Contract Value is
reduced by the excess withdrawal.
TF1013 24
. You should know that, currently, withdrawals taken to meet Required
Minimum Distribution requirements as defined by the Internal Revenue
Code are not considered to exceed the annual benefit amounts and
therefore do not reduce the Benefit Base. However, we may change this
rule at our discretion in which case such withdrawals taken following
this change may be considered excess withdrawals as described below.
For IRA and qualified plan contracts, cumulative withdrawals during a
rider year will be considered excess withdrawals only if they exceed
the greatest of (a), (b) and (c) where:
(a) = the greater of the current Non-Lifetime Annual Benefit Amount
and the Lifetime Annual Benefit Amount;
(b) = the RMD for the 1st calendar year during the rider year; and
(c) = the RMD for the 2nd calendar year during the same rider year.
Withdrawals from the contract have other potential consequences,
including potential imposition of surrender charges and premium taxes,
and federal income tax consequences. Withdrawals that do not exceed the
annual benefit amounts, including withdrawals taken to meet Required
Minimum Distributions, are considered to be within the contract's free
withdrawal amount. However, withdrawals that exceed both the
Non-Lifetime Annual Benefit Amount and the contract's free withdrawal
amount, including withdrawals taken to meet Required Minimum
Distributions are subject to any surrender charges imposed under the
contract. Please see "Surrender of Contract and Withdrawals" and
"Federal Income Taxes" for more information.
Payment of the Lifetime or Non-Lifetime Annual Benefit Amount when the Contract
Value is greater than zero
You may take withdrawals equal to the Lifetime Annual Benefit Amount or
Non-Lifetime Annual Benefit Amount then in effect each year when the Contract
Value is greater than zero. The Lifetime Annual Benefit Amount is available for
withdrawals following the GMWB Benefit Eligibility Date and the Non-Lifetime
Annual Benefit Amount is available for withdrawals on and after the rider date.
You can establish a Systematic Withdrawal Program for payments of a specified
amount or can request payments according to your own schedule. See "Systematic
Withdrawal Program" for additional details about how to use this program and
the program's restrictions.
Payment of the Lifetime or Non-Lifetime Annual Benefit Amount when the Contract
Value goes to zero
If, when the Contract Value goes to zero, the GMWB Benefit Base is greater than
zero, you must choose between receiving non-lifetime and lifetime monthly
payments.
We may, at our discretion, permit or require other payment frequencies subject
only to our minimum amount per payment requirement.
. Non-Lifetime Payments
If the GMWB Benefit Base is greater than zero you may choose to receive
monthly non-lifetime payments. The non-lifetime payments will be equal
to one twelfth of Non-Lifetime Annual Benefit Amount. Payments will
begin one month after the Contract Value is reduced to zero and will end
when the GMWB Benefit Base is reduced to zero. The GMWB Benefit Base is
reduced by each non-lifetime payment.
. Lifetime Payments
If the GMWB Benefit Base is greater than zero, you may choose to receive
monthly lifetime payments. The lifetime benefit payments will be equal
to one twelfth of Lifetime Annual Benefit Amount. Payments will begin
one month following later of the date the Contract Value goes to zero
and the GMWB Benefit Eligibility Date. We will make these payments under
the single life option or spousal life option, whichever you selected at
the time you purchased the rider. For the single life option, all
Covered Persons must be living on the date we make the first payment,
and for the spousal life option, at least one spouse must be living.
Payments will continue until the first death of any Covered Person(s)
for the single life option, or until the death of the surviving spouse
for the spousal life option.
Maximum Maturity Date Benefit
If your Contract Value is greater than zero and you cannot extend the maturity
date of the contract any later, this rider allows you to exchange the Contract
Value for lifetime payments equal to the Lifetime Annual Benefit Amount or
non-lifetime payments equal to the Non-Lifetime Annual Benefit Amount in lieu
of applying the Contract Value to one of the annuity payment options offered
under the contract. Otherwise, your contract will enter the annuity period and
you may choose any of the annuity options then available. See "The Annuity
Period"
(iii) GuaranteedMinimum Death Benefit ("GMDB")
The GMDB component of the Phoenix Retirement Protector rider is optional. The
GMDB component guarantees a minimum death benefit if the GMDB Benefit Base,
which is the same as the GMWB Benefit Base prior to the GMDB Maximum Age, is
greater than the death benefit payable under the contract when any Covered
Person dies prior to the earliest of the following dates:
1.the maturity date of the contract,
2.the date the Contract Value is reduced to zero,
TF1013 25
3.the rider anniversary following the date the oldest Covered Person attains
a particular age specified in rider. We call this the GMDB Maximum Age.
Currently, this age is 80.
If the GMDB Benefit Base is greater than the death benefit payable under the
contract, this optional GMDB guarantees an additional death benefit amount.
This guaranteed amount is the difference between the contract's death benefit
and the GMDB Benefit Base. You should know that this optional component does
not provide any value once the Contract Value goes to zero or the oldest
Covered Person attains age the GMDB Maximum Age.
Sample calculation showing the value of the GMDB component before and after
the GMDB Maximum Age
Death Prior to Age 80
Assume you die prior to attaining age 80. Assume the death benefit
available under your contract is equal $125,000 on the date of death.
Further assume that the GMDB Benefit Base is equal to $130,000 on the date
of death. The optional GMDB will pay you an additional death benefit amount
equal to $5,000.
Death After Age 80
Assume you die after attaining age 80. Assume the death benefit available
under your contract is equal $95,000 on the date of death. The GMDB Death
Benefit Base is equal to your contract value or $80,000 on the date of
death. The optional GMDB will not pay you an additional death benefit
amount. You will receive the $95,000 death benefit available under your
base contract.
Termination of Phoenix Retirement Protector Rider
The rider will terminate without value on the date the first of any of the
following events occur:
. any Covered Person is changed;
. annuity payments begin under an annuity payment option as described in
the base contract;
. the contract, to which the rider is attached, terminates;
. the owner elects to terminate the rider;
. that any portion of the Contract Value is no longer invested in one of
the approved asset allocation programs;
. the Contract Value and GMWB Benefit Base are both reduced to zero;
. if the Contract Value has been reduced to zero and lifetime payments
have been elected, if any Covered Person under the Single Life Option,
or the surviving Covered Person under the Spousal Life Option dies;
. you assign any rights or interest in this rider.
Once the rider is terminated, it cannot be reinstated.
TF1013 26
Special Risks Associated with Withdrawals
The following chart demonstrates special risks associated with taking
withdrawals when the Phoenix Retirement Protector Rider is attached to a
contract when the Contract Value and Benefit Base are both greater than zero.
Whether or not a withdrawal is considered "permitted" or "excess" is described
in the section "Taking Withdrawals", in the description of the GMWB Benefit
Base. When the Contract Value is reduced to zero, non-lifetime or lifetime
payments (whichever selected) will begin and withdrawals are no longer allowed
from the contract.
-----------------------------------------------------------------------------------------------------------------------------
Permitted
Scenario No Withdrawals Withdrawals
-----------------------------------------------------------------------------------------------------------------------------
Automatic Contract Value reduction X
-----------------------------------------------------------------------------------------------------------------------------
Reduction to GMWB Benefit Base and GMAB Benefit Base X
-----------------------------------------------------------------------------------------------------------------------------
Reduction to current Non-Lifetime Annual Benefit Amount
-----------------------------------------------------------------------------------------------------------------------------
Reduction to current Lifetime Annual Benefit Amount
-----------------------------------------------------------------------------------------------------------------------------
Gives you the highest potential Annual Benefit Amount available under the rider/1/ X
-----------------------------------------------------------------------------------------------------------------------------
Cancels your ability to have subsequent premium payments automatically increase the GMWB
Benefit Base X
-----------------------------------------------------------------------------------------------------------------------------
During the roll-up period, cancels your ability to "roll-up" and increase your GMWB Benefit Base X
-----------------------------------------------------------------------------------------------------------------------------
Reduces the likelihood of a GMWB automatic step-up/2/ X
-----------------------------------------------------------------------------------------------------------------------------
Premium payments increase the GMWB Benefit Base X
-----------------------------------------------------------------------------------------------------------------------------
Potential to terminate the rider without value if reduces the Contract Value to zero
-----------------------------------------------------------------------------------------------------------------------------
Permanently sets the Lifetime Annual Benefit Percentage X
-----------------------------------------------------------------------------------------------------------------------------
Permanently sets the Lifetime and Non-Lifetime Annual Benefit Amounts if the Contract Value is
reduced to zero and the GMWB Benefit Base is greater than zero X
-----------------------------------------------------------------------------------------------------------------------------
Potential surrender charges
-----------------------------------------------------------------------------------------------------------------------------
Potential premium taxes and/or federal income tax consequences X
-----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Excess
Scenario Withdrawals
-------------------------------------------------------------------------------------------------------------
Automatic Contract Value reduction X
-------------------------------------------------------------------------------------------------------------
Reduction to GMWB Benefit Base and GMAB Benefit Base X
-------------------------------------------------------------------------------------------------------------
Reduction to current Non-Lifetime Annual Benefit Amount X
-------------------------------------------------------------------------------------------------------------
Reduction to current Lifetime Annual Benefit Amount X
-------------------------------------------------------------------------------------------------------------
Gives you the highest potential Annual Benefit Amount available under the rider/1/
-------------------------------------------------------------------------------------------------------------
Cancels your ability to have subsequent premium payments automatically increase the GMWB
Benefit Base X
-------------------------------------------------------------------------------------------------------------
During the roll-up period, cancels your ability to "roll-up" and increase your GMWB Benefit Base X
-------------------------------------------------------------------------------------------------------------
Reduces the likelihood of a GMWB automatic step-up/2/ X
-------------------------------------------------------------------------------------------------------------
Premium payments increase the GMWB Benefit Base
-------------------------------------------------------------------------------------------------------------
Potential to terminate the rider without value if reduces the Contract Value to zero X
-------------------------------------------------------------------------------------------------------------
Permanently sets the Lifetime Annual Benefit Percentage X
-------------------------------------------------------------------------------------------------------------
Permanently sets the Lifetime and Non-Lifetime Annual Benefit Amounts if the Contract Value is
reduced to zero and the GMWB Benefit Base is greater than zero
-------------------------------------------------------------------------------------------------------------
Potential surrender charges X
-------------------------------------------------------------------------------------------------------------
Potential premium taxes and/or federal income tax consequences X
-------------------------------------------------------------------------------------------------------------
/1/ The potential Annual Benefit Amount is greatest if at the end of the
roll-up period, no withdrawals have been made and the youngest Covered
Person has attained the Benefit Base Multiplier Age.
/2/ In order to obtain a GMWB automatic step-up, your Contract Value must be
greater than your GMWB Benefit Base on the rider anniversary. If you make
withdrawals, your Contract Value will automatically decline, therefore
reducing the likelihood that your Contract Value will be greater than your
Benefit Base on your next rider anniversary, thus also reducing the
likelihood that you will be able to step-up your Benefit Base.
PLEASE KEEP THIS INFORMATION WITH YOUR PROSPECTUS
TF1013 27