[LOGO] Kate Johnson - Second Vice President
Life & Annuity Compliance
Life & Annuity State Compliance Office
One American Row Hartford, CT 06102-5056
(860) 403-5685
August 11, 2008
Min S. Oh, Esq.
Staff Attorney
Office of Insurance Products
Division of Investment Management
U. S. Securities and Exchange Commission
Mail Stop 4644
100 F Street, NE
Washington, DC 20549-4644
Re:Post-Effective Amendment No. 20 to Registration Statement on Form N-4, File
Nos. 333-68164 and 811-08914
Dear Mr. Oh:
Below please find our responses to the staff's additional comments provided
orally on August 7, 2008 regarding the referenced Post-Effective Amendment.
This response letter is accompanied by a clean and marked version of the
supplement for your reference.
1. As a follow-up to additional comment number 7regarding the examples of
how roll ups are calculated during and after the roll up period as discussed
in, respectively, the third and fourth diamond points on page 10.
RESPONSE: We have revised the examples to remove extraneous references to
the "current Benefit Base", and also revised the last bullet point of the
last example to clarify the Benefit Base used in that calculation. We have
also replaced the use of the term "current" as modifying other values with
operational definitions of the values themselves.
2. Further comment to additional comment 10(c)-reconcile response to
disclosure on page 25 of the supplement. Please review the response and
corresponding disclosure and revise for accuracy and consistency.
RESPONSE: We have further revised the sections to clarify whether particular
disclosure reflects events on or after the Benefit Eligibility Date.
3. Follow-up to comment originally provided as follows:
Confirm the accuracy of the statement that a withdrawal prior to the
GMWB Benefit Eligibility Date, including a withdrawal of the
Non-Lifetime Annual Benefit Amount, will reduce the GMWB Benefit Base
and also reduce the Lifetime Annual Benefit Amount that will become
available on the GMWB Benefit Eligibility Date.
Ensure the consistency of the response with the new disclosure on page 31, the
last paragraph on page 22 and the existing disclosure on pages 26-27.
RESPONSE: We have revised the statement to indicate that a withdrawal prior to
the GMWB Benefit Eligibility Date will reduce the GMWB Benefit Base and may
reduce the Lifetime Annual Benefit Amount. We have also revised the paragraph
immediately preceding the section entitled "Contract Value reduced to zero:
Guaranteed Payments" to clarify that all withdrawals reduce the GMWB Benefit
Base. We have made other clarifications regarding the effect of different
withdrawals at particular times. We believe the disclosure contained in the
"Summary of Benefit" section and the "Taking Withdrawals" sections is
consistent.
Please contact me with any questions regarding these responses.
Sincerely,
/s/Mary K. (Kate) Johnson
--------------------------
Mary K. (Kate) Johnson
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/SM/: A Guaranteed Minimum
Withdrawal Benefit which is also offered with an Extended Care
Enhancement for an additional fee
. Phoenix Retirement Protector/SM/: 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. Taking
withdrawals from the contract while the Phoenix Flexible Withdrawal Protector
or Phoenix Retirement Protector is in effect may reduce the benefits of the
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 your
particular needs.
1
The following information is added to the table of "Optional Benefit Fees"
beginning on page 5.
PHOENIX FLEXIBLE WITHDRAWAL PROTECTOR/SM/
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%
Range of current fees without Extended Care Enhancement/3/....... 1.45%-0.65% 1.80%-1.00%
Current additional fee to add Extended Care Enhancement/3/....... 0.25% 0.25%
PHOENIX RETIREMENT PROTECTOR/SM/
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%
Range of current fees without optional Guaranteed Minimum Death
Benefit/4/..................................................... 1.85%-0.85% 2.20%-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 below.
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 and, if allocation to the GIA and MVA is then
permitted, 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 we calculate solely to determine the value of
the benefit(s) provided by the rider and unlike the Contract Value, are
not available for withdrawals or surrenders. 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.
2
/3/ The current fees for the Phoenix Flexible Withdrawal Protector by asset
allocation model are shown below.
Single Spousal
Life Life
Asset Allocation Models Option Option
----------------------- ------ -------
. 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%
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/ The current fees for the Phoenix Retirement Protector rider by asset
allocation model are shown below.
Single Spousal
Life Life
Asset Allocation Models Option Option
----------------------- ------ -------
. 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%
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.
3
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 your maximum costs
at the end of the applicable time period 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.
4
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.
5
The following information is added to the section of the "Contract Summary"
entitled "Deductions and Charges" as a new paragraph preceding the description
of the fee for GMWB located on page 10:
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 following the section called "Deductions
and Charges"; "Guaranteed Minimum Withdrawal Benefit Fee" on page 15.
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.
6
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 current Benefit Base ($110,000)
plus the roll-up amount for the first rider year ($7,150). The Benefit
Base after roll-up is therefore $117,150 ($110,000 + $7,150).
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.
If you do not decline an automatic step-up, you will pay the current
rider fee then in effect beginning on the date of any automatic step-up
of the Benefit Base.
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.
7
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 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. If you do not decline an
automatic step-up of the GMWB Benefit Base or you elect a step-up of the
GMAB Benefit Base, you will pay the current rider fee then in effect
beginning on the date of any step-up of the applicable 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
8
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 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
9
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.
. 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.
10
. 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
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.
11
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.
Phoenix Flexible Withdrawal Protector/SM/:
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 then guarantees a minimum amount of
withdrawals you can take from the contract each year after the Benefit
Eligibility Date. This amount is the Annual Benefit Amount. The Annual
Benefit Amount is not available for guaranteed withdrawals prior to the
Benefit Eligibility Date. The 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, the Benefit Base will be reduced by the withdrawal in the
same proportion as the Contract Value is reduced by the withdrawal. See
"Taking Withdrawals". So long as your remaining Benefit Base is greater than
zero when you reach the Benefit Eligibility Date, we will then calculate the
Annual Benefit Amount that becomes available to you at that time. The Annual
Benefit Amount will be equal to the Annual Benefit Percentage multiplied by
the Benefit Base on that 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.
12
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. The
Annual Benefit Amount is not available for guaranteed payments until the
Benefit Eligibility Date.
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.
13
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 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. Additionally, the Benefit Base may be increased at a
particular rider anniversary following the end of the roll-up period by an
aspect of the roll-up feature we call the Benefit Base Multiplier. We
describe events and features causing recalculation of the Benefit Base
below. 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 such withdrawal.
.. 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. The roll-up feature is only available to
you if no withdrawals have been taken from the contract. Currently, the
roll-up period continues until the 10/th/ rider anniversary following the
later of the rider date and 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%.
If you have not taken withdrawals from the contract and therefore are
eligible for the roll-up feature of the rider, we will consider an
additional value in recalculating the Benefit Base on the rider anniversary
at or following the end of the roll-up period on which the youngest Covered
Person has attained age 70. This additional value applies the Benefit Base
Multiplier, currently 200%, to the sum of the Benefit Base on the rider date
plus subsequent premium received in the first rider year. The recalculation
of the Benefit Base under the various situations that can exist at the end
of the roll-up period is described below.
14
. 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 greater of the
following unless the automatic step-up feature has been suspended in which
case, it will be set to the second of the 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 sum of (i) the Benefit Base on the prior rider anniversary plus
any premium payments since the prior rider anniversary and (ii) the
roll-up amount for the prior rider year, if any.
Assume that you have reached a rider anniversary and that you are
still in your roll-up period and have not made any withdrawals.
Assume further that your Benefit Base as of your prior rider
anniversary was $100,000, your Contract Value is $105,000, you have
not made any subsequent premium payments during the prior rider year
and the automatic step-up has not been suspended.
Your Benefit Base will be re-calculated on your rider anniversary to
be the greater of the following:
. Contract Value = $105,000
. Sum of (i) and (ii) = $106,500
(i) Benefit Base on prior rider anniversary = $100,000
(ii) Roll-Up Amount for prior rider year = $100,000 x 6.5% =
$6,500
Your Benefit Base will be $106,500.
. 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.
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 greater of the following, unless the automatic step-up
feature has been suspended in which case, it will be set to the
latter of the 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 sum of (i) the Benefit Base on the prior rider anniversary
plus any premium payments since the prior rider anniversary and
(ii) the roll-up amount for the prior rider year, if any.
Assume that you have reached the rider anniversary following the end
of the roll-up period, the youngest Covered Person has not yet
attained age 70 and you have not made any withdrawals. Assume further
that your Benefit Base as of your prior rider anniversary was
$176,257, your Contract Value is $105,000, you have not made any
subsequent premium payments during the prior rider year and the
automatic step-up has not been suspended.
Your Benefit Base will be re-calculated on your rider anniversary to
be the greater of the following:
. Contract Value = $105,000
. Sum of (i) and (ii) = $187,714
(i) Benefit Base on prior rider anniversary = $176,257
(ii) Roll-Up Amount for prior rider year = $176,257 x 6.5% =
$11,457
Your Benefit Base will be $187,714.
15
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 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 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
plus any premium payments since the prior rider anniversary and
(ii) the roll-up amount for the prior rider year, if any.
Assume that you have reached the rider anniversary following the end
of the roll-up period, the youngest Covered Person has attained age
70 and you have not made any withdrawals. Assume further that, your
Benefit Base as of your prior rider anniversary was $176,257, your
Benefit Base on the rider date was $100,000, your Contract Value is
$105,000, you have not made any subsequent premium payments after the
rider date and the automatic step-up has not been suspended.
Your Benefit Base will be re-calculated on your rider anniversary to
be the greatest of the following:
. Contract Value = $105,000
. 200% x Sum of (i) and (ii) = $200,000
(i) Benefit Base on the rider date = $100,000
(ii) Subsequent premium payments = $0
. Sum of (i) and (ii) = $187,714
(i) Benefit Base on prior rider anniversary = $176,257
(ii) Roll-Up Amount for prior rider year = $176,257 x 6.5% =
$11,457
Your Benefit Base will be $200,000.
. 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 on the prior rider anniversary plus any premium
payments since the prior rider anniversary;
. 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.
Assume that you reached the rider anniversary following the end of
the roll-up period several years ago, but still have not made any
withdrawals from the contract. However, the youngest Covered Person
celebrated his 70/th/ birthday during the prior rider year. Assume
further, your Benefit Base on the prior rider anniversary was
$180,000, your Benefit Base on the rider date was $100,000, your
Contract Value is $105,000, you have not made any subsequent premium
payments after the rider date and the automatic step-up has not been
suspended.
Your Benefit Base will be re-calculated on your rider anniversary to
be the greatest of the following:
. Contract Value = $105,000
. Benefit Base on prior rider anniversary = $180,000
200% x Sum of (i) and (ii) = $200,000
(i) Benefit Base on the rider date = $100,000
(ii) Subsequent premium payments = $0
Your Benefit Base will be $200,000.
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. 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 second of the two values
described below:
. 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 on the prior rider anniversary adjusted for any
withdrawals taken since the prior rider anniversary plus, if no
withdrawals have been made, any premium payments made since the prior
rider anniversary.
Assume that you made a withdrawal from the contract. Assume further,
your Benefit Base on prior rider anniversary was $106,500, your Contract
Value is $110,000 and the automatic step-up has not been suspended.
Your Benefit Base will be re-calculated on your rider anniversary to be
the greater of the following:
. Contract Value = $110,000
. Benefit Base on prior rider anniversary = $106,500
Your Benefit Base will be $110,000.
. 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; that is, the Benefit Base on the prior rider anniversary plus any
premium payments made since the prior rider anniversary. 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. If you do not decline the automatic step-up, you will pay
the current rider fee then in effect beginning on the date of any automatic
step-up of 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.
. Taking Withdrawals
The following section describes how taking withdrawals may impact the
Benefit Base. Prior to the Benefit Eligibility Date, a withdrawal will
reduce the Benefit Base by the same proportion as Contract Value is reduced
by the withdrawal. If the Benefit Base is greater than the Contract Value at
the time of the withdrawal, the withdrawal will reduce the Benefit Base by
more than the withdrawal amount as shown in the example below. Then, on 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,
we will calculate the Annual Benefit Amount using the reduced Benefit Base.
Assume the Contract Value is $50,000 and the Benefit Base is $75,000. A
withdrawal of $5,000 is made prior to the Benefit Eligibility Date. The
Contract Value is reduced by 10% ($5,000 / $50,000) as a result of the
withdrawal. Therefore, the Benefit Base is reduced by 10% or $7,500. The
new Benefit Base is $75,000 - $7,500 = $67,500.
After you reach the Benefit Eligibility Date, whether withdrawals will
reduce the Benefit Base depends on whether cumulative withdrawals in any
rider year exceed the Annual Benefit Amount as described below. The Annual
Benefit Amount is not available to you for withdrawals or payments unless
you have reached the Benefit Eligibility Date.
. If cumulative withdrawals in any rider year after the Benefit
Eligibility Date do not exceed the Annual Benefit Amount then in effect,
the Benefit Base will not be reduced.
17
. If a withdrawal causes the cumulative withdrawals in any rider year
after the Benefit Eligibility Date 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 after the Benefit
Eligibility Date 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 in a rider
year after the Benefit Eligibility Date 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 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 twelve months
following the rider date. If you are confined to a nursing home during the
waiting period, you will never be eligible for benefits under the Extended Care
Enhancement.
. 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
18
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
The Annual Benefit Amount is not available to you before the Benefit
Eligibility Date. After you reach the Benefit Eligibility Date, 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
The Annual Benefit Amount is not available to you before the Benefit
Eligibility Date. 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.
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.
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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 Excess
Scenario No Withdrawals Withdrawals Withdrawals
-------- -------------- ----------- -----------
Automatic Contract Value reduction X X
Reduction to Benefit Base X
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 X
Cancels your ability to "roll-up" and increase your Benefit Base X X
Reduces the likelihood of an automatic step-up/2/ X X
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Permitted Excess
Scenario No Withdrawals Withdrawals Withdrawals
-------- -------------- ----------- -----------
Premium payments increase the Benefit Base X
Potential to terminate the rider without value if reduces the Contract Value to zero X
Permanently sets the Annual Benefit Percentage X 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 X
Potential premium taxes and/or federal income tax consequences X 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.
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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 (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.
. For example, the GMAB component offered under Phoenix Retirement
Protector provides for a step-up of the GMAB Benefit Base and a new
10-year GMAB waiting period at the end of each GMAB waiting period; the
stand-alone GMAB rider does not provide for a step-up and only provides
the initial 10-year waiting period. You might want to consider the GMAB
component offered under Phoenix Retirement Protector if you want the
opportunity to lock-in market gains or if you have a longer investment
horizon and could potentially benefit from multiple waiting periods.
However, if you simply want a return of first-year premium at the end of
the initial 10-year waiting period, then the individually offered GMAB
may be more appropriate for you.
. For example, the GMWB component offered under Phoenix Retirement
Protector provides for a lifetime and a non-lifetime Annual Benefit
Amount and allows you to choose between lifetime and non-lifetime
payments when the contract value is reduced to zero; the stand-alone
GMWB rider only provides a lifetime Annual Benefit Amount. You might
want to consider the GMWB component offered under Phoenix Retirement
Protector if you want the flexibility to guarantee lifetime income
payments or income payments over a specified period of time or if you
want the flexibility to defer the decision between lifetime and
non-lifetime payments to the date the Contract Value is reduced to zero.
However, if you know that you won't have a need for non-lifetime income
payments, then the individually offered GMWB may be more appropriate for
you.
. In addition, if, on the date your contract is issued, you don't know
what your future accumulation and/or income needs may be, Phoenix
Retirement Protector may be appropriate for you because it provides a
GMAB and GMWB through the same contract and allows you to defer the
decision between accumulation and income. However, if, on the issue
date, you know what your future accumulation or income needs will be
(and you know you won't have a need for both accumulation and income
benefits), then the individually offered GMWB or GMAB may be more
appropriate for you.
. The fee is also different for the individually offered GMWB and GMAB
riders as compared to Phoenix Retirement Protector.
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
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.
22
The GMWB Component
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 each year 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 is not
available for withdrawals until 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. The Non-Lifetime Annual Benefit Amount
equals a percentage, currently 7% multiplied by a value we call the "GMWB
Benefit Base". The Lifetime Annual Benefit Amount equals a percentage we
call the "Lifetime Annual Benefit Percentage" multiplied by the GMWB Benefit
Base or, if the first withdrawal occurs prior to the GMWB Benefit
Eligibility Date, by the lesser of the GMWB Benefit Base and the Contract
Value. The Lifetime Annual Benefit Percentage ranges from 0%-7% based on the
attained age of the youngest Covered Person on the date of the first
withdrawal.
Withdrawals from the contract affect the Non-Lifetime Annual Benefit Amount,
the Lifetime Annual Benefit Amount, and the GMWB Benefit Base differently.
See the "Taking Withdrawals" sections in the description of the GMWB
Component for a fuller discussion of the impact of withdrawals.
Generally, withdrawals within the Non-Lifetime Annual Benefit Amount taken
at any time do not reduce the Non-Lifetime Annual Benefit Amount.
Withdrawals prior to the GMWB Benefit Eligibility Date affect the Lifetime
Annual Benefit Amount in several ways.
. First, if you take a withdrawal from the contract prior to the GMWB
Benefit Eligibility Date, the Lifetime Annual Benefit Percentage is
permanently set to 5% on the GMWB Benefit Eligibility Date.
. In addition, if you take a withdrawal prior to the GMWB Benefit
Eligibility Date
. You will reduce your GMWB Benefit Base and, if this reduced GMWB
Benefit Base is less than the Contract Value when you reach the GMWB
Benefit Eligibility Date, we will use the reduced GMWB Benefit Base
in calculating the Lifetime Annual Benefit Amount on the GMWB Benefit
Eligibility Date. The amount by which the GMWB Benefit Base will be
reduced depends on whether cumulative withdrawals in that rider year
are greater than the Non-Lifetime Annual Benefit Amount. If you take
a withdrawal at any time (before or after the GMWB Benefit
Eligibility Date), the GMWB Benefit Base will be reduced by the
dollar amount of the withdrawal if cumulative withdrawals in a rider
year are less than the Non-Lifetime Annual Benefit Amount, and in the
same proportion as the Contract Value is reduced by the withdrawal if
cumulative withdrawals in a rider year are greater than the
Non-Lifetime Annual Benefit Amount.
. You may also reduce the Lifetime Annual Benefit Amount that becomes
available to you on the GMWB Benefit Eligibility Date because we will
use a different calculation to determine the Lifetime Annual Benefit
Amount than we would had a withdrawal not been taken. If a withdrawal
is taken prior to the GMWB Benefit Eligibility Date, then when you
reach the GMWB Benefit Eligibility Date and we first calculate the
Lifetime Annual Benefit Amount it is equal to the Lifetime Annual
Benefit Percentage multiplied by the lesser of the GMWB Benefit Base
and the Contract Value on the GMWB Benefit Eligibility Date. If the
first withdrawal is made after the GMWB Benefit Eligibility Date, the
Lifetime Annual Benefit Amount is equal to the Lifetime Annual
Benefit Percentage multiplied by the GMWB Benefit Base on the date of
the first withdrawal.
23
Once you have reached the GMWB Benefit Eligibility Date, when you make
withdrawals within the Lifetime Annual Benefit Amount, you will not reduce
the Lifetime Annual Benefit Amount.
Also, the GMWB Benefit Base is reduced, either by the dollar amount of the
withdrawal or in the same proportion as Contract Value is reduced by a
withdrawal as described above regardless of whether the withdrawal is taken
before or after the GMWB Benefit Eligibility Date. The GMWB Benefit Base may
be increased by premium payments and certain features of the GMWB. We have
described how premium payments, features of the rider, and withdrawals
affect the benefit in the section "GMWB Component" below.
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 as described above and in 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 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.
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.
GMDB Component
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.
24
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.
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.
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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.
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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).
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.
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"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. Additionally, the
GMWB Benefit Base may be increased at a particular rider anniversary following
the end of the roll-up period by an aspect of the roll-up feature we call the
Benefit Base Multiplier. We describe events and features causing recalculation
of the GMWB Benefit Base below. 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.
. 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 GMWB 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
Non-Lifetime Annual Benefit Amount in effect prior to the GMWB automatic
step-up; and the Non-Lifetime Annual Benefit Percentage multiplied by
the GMWB Benefit Base after any step-up or roll-up calculation.
. 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.
If any withdrawals have been made from the contract on or prior to our
receipt of an additional premium, we will not increase the GMWB Benefit
Base as a result of premium payments made after such withdrawal.
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. 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 at any time 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 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
The Lifetime Annual Benefit Amount is not available until you reach 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. 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 after the GMWB Benefit Eligibility Date
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 after the GMWB Benefit
Eligibility Date.
We first 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 after any GMWB step-up or roll-up
calculations.
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 Lifetime Annual
Benefit Amount in effect prior to the GMWB automatic step-up; and the
Lifetime Annual Benefit Percentage multiplied by the GMWB Benefit Base
after the step-up or roll-up calculation.
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. Taking Withdrawals
The following section describes how taking withdrawals may impact the
Lifetime Annual Benefit Amount. Withdrawals taken prior to the GMWB
Benefit Eligibility Date affect the Lifetime Annual Benefit Amount that
becomes available to you on the GMWB Benefit Eligibility Date because we
use one of the two calculations described above to determine your
Lifetime Annual Benefit Amount on the GMWB Benefit Eligibility Date
depending on whether you have taken a withdrawal prior to that date.
Additionally, withdrawals prior to the GMWB Benefit Eligibility Date
will reduce the GMWB Benefit Base that is used in initially calculating
the Lifetime Annual Benefit Amount. Then, once you reach the GMWB
Benefit Eligibility Date, whether withdrawals will change the Lifetime
Annual Benefit Amount depends on whether they exceed the Lifetime Annual
Benefit Amount.
. If cumulative withdrawals in any rider year following the GMWB
Benefit Eligibility Date 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
following the GMWB Benefit Eligibility Date 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 after the GMWB
Benefit Eligibility Date 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 in a
rider year after the GMWB Benefit Eligibility Date 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.
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 any withdrawal has 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
such withdrawal.
. 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. The roll-up feature is only available to you if no withdrawals have
been taken from the contract. Currently, the GMWB roll-up period continues
until the 10/th/ rider anniversary following the later of the rider date and
the last rider anniversary on which a GMWB automatic step-up, described
below, occurs. In no event can the GMWB 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
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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%.
If you have not taken withdrawals from the contract and therefore are
eligible for the roll-up feature of the rider, we will consider an
additional value in recalculating GMWB Benefit Base on the rider anniversary
at or following the end of the GMWB roll-up period on which the youngest
Covered Person has attained age 70. This additional value applies the
Benefit Base Multiplier, currently 200%, to the sum of the GMWB Benefit Base
on the rider date plus subsequent premium received in the first rider year.
The recalculation of the GMWB Benefit Base under the various situations that
can exist at the end of the GMWB roll-up period is described below.
. 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 greater of the
following, unless the GMWB automatic step-up feature has been suspended in
which case, it will be set to the second of the 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 sum of (i) the GMWB Benefit Base on the prior rider anniversary
plus any premium payments since the prior rider anniversary and
(ii) the roll-up amount for the prior rider year, if any.
Assume that you have reached a rider anniversary and that you are still
in your GMWB roll-up period and have not made any withdrawals. Assume
further that your GMWB Benefit Base as of your last rider anniversary
was $100,000, your Contract Value is $105,000, you have not made any
subsequent premium payments during the prior rider year and the GMWB
automatic step-up has not been suspended.
Your GWMB Benefit Base will be re-calculated on your rider anniversary
to be the greater of the following:
. Contract Value = $105,000
. Sum of (i) and (ii) = $106,500
(i) GMWB Benefit Base on prior rider anniversary= $100,000
(ii) Roll-Up Amount for prior rider year = $100,000 x 6.5% = $6,500
Your GMWB Benefit Base will be $106,500.
. 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 greater of the following, unless the
GMWB automatic step-up feature has been suspended in which case, it
will be set to the second of the 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);
31
. the sum of (i) the GMWB Benefit Base on the prior rider
anniversary plus any premium payments since the prior rider
anniversary and (ii) the roll-up amount for the prior rider year,
if any.
Assume that you have reached the rider anniversary following the end of
the GMWB roll-up period, the youngest Covered Person has not yet
attained age 70 and you have not made any withdrawals. Assume further
your GMWB Benefit Base as of your last rider anniversary was $176,257,
your Contract Value is $105,000, you have not made any subsequent
premium payments during the prior rider year and the GMWB automatic
step-up has not been suspended.
Your GMWB Benefit Base will be re-calculated on your rider anniversary
to be the greatest of the following:
. Contract Value = $105,000
. Sum of (i) and (ii) = $187,714
(i) GMWB Benefit Base on prior rider anniversary = $176,257
(ii) Roll-Up Amount for prior rider year = $176,257 x 6.5% = $11,457
Your GMWB Benefit Base will be $187,714.
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 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 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 plus any premium payments since the prior rider
anniversary and (ii) the roll-up amount for the prior rider year,
if any.
Assume that you have reached the rider anniversary following the end of
the GMWB roll-up period, the youngest Covered Person has attained age 70
and you have not made any withdrawals. Assume further your GMWB Benefit
Base as of your last rider anniversary was $176,257, your GMWB Benefit
Base on the rider date was $100,000, your Contract Value is $105,000,
you have not made any subsequent premium payments after the rider date
and the GMWB automatic step-up has not been suspended.
Your GMWB Benefit Base will be re-calculated on your rider anniversary
to be the greatest of the following:
. Contract Value = $105,000
. 200% x Sum of (i) and (ii) = $200,000
(i) GMWB Benefit Base on the rider date = $100,000
(ii) Subsequent premium payments = $0
. Sum of (i) and (ii) = $187,714
(i) GMWB Benefit Base on prior rider anniversary= $176,257
(ii) GMWB Roll-Up Amount for prior rider year = $176,257 x 6.5% =
$11,457
Your GMWB Benefit Base will be $200,000.
. Rider Anniversary Next Following Youngest Covered Person's 70/th/
Birthday Occurring After the Rider Anniversary Immediately Following the
End of the GMWB 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 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 on the prior rider anniversary plus any
premium payments since the prior rider anniversary;
. 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.
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Assume that you reached the rider anniversary following the end of the
GMWB roll-up period several years ago, but still have not made any
withdrawals from the contract. However, the youngest Covered Person
celebrated his 70/th/ birthday during the prior rider year. Assume
further, your GMWB Benefit Base on the prior rider anniversary was
$180,000, your GMWB Benefit Base on the rider date was $100,000, your
Contract Value is $105,000, you have not made any subsequent premium
payments after the rider date and the GMWB automatic step-up has not
been suspended.
Your GMWB Benefit Base will be re-calculated on your rider anniversary
to be the greatest of the following:
. Contract Value = $105,000
. GMWB Benefit Base on prior rider anniversary= $180,000
. 200% x Sum of (i) and (ii) = $200,000
(i) GMWB Benefit Base on the rider date = $100,000
(ii) Subsequent premium payments = $0
Your GMWB Benefit Base will be $200,000.
. 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 GMWB 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 second of the two
values described below:
. 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 on the prior rider anniversary adjusted for any
withdrawals taken since the prior rider anniversary plus, if no
withdrawals have been made, any premium payments made since the prior
rider anniversary.
Assume that you are out of the GMWB roll-up period. Assume further, your
GMWB Benefit Base on the prior rider anniversary is $106,500, your
Contract Value is $110,000 and the GMWB automatic step-up has not been
suspended.
Your GMWB Benefit Base will be re-calculated on your rider anniversary
to be the greater of the following:
. Contract Value = $110,000
. GMWB Benefit Base on prior rider anniversary = $106,500
Your GMWB Benefit Base will be $110,000.
. 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; that is, the GMWB Benefit Base on the prior rider
anniversary plus any premium payments made since the prior rider
anniversary. 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. If you do not decline the automatic step-up, you will pay the current
rider fee then in effect beginning on the date of any automatic step-up of
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. 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.
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. Taking Withdrawals
The following section describes how taking withdrawals will impact the GMWB
Benefit Base. The GMWB Benefit Base is reduced for all withdrawals
regardless of whether they occur before or after 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. The
amount by which the GMWB Benefit Base is reduced for withdrawals depends on
whether and by how much the withdrawals taken in a rider year exceed the
Non-Lifetime Annual Benefit Amount. However, you should know that, if you
make a withdrawal prior to the GMWB Benefit Eligibility Date, you may also
reduce the Lifetime Annual Benefit Amount that becomes available to you on
the GMWB Benefit Eligibility Date because we will use the lesser of the GMWB
Benefit Base and the Contract Value to calculate your Lifetime Annual
Benefit Amount on the GMWB Benefit Eligibility Date.
. 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, 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.
. 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 for
purposes of recalculating the GMWB Benefit Base will reduce the GMWB
Benefit Base by the dollar amount of each withdrawal. 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 the greater of the Non-Lifetime and Lifetime Annual Benefit
Amounts 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
Each year when the Contract Value is greater than zero, you may take
withdrawals equal to the Lifetime Annual Benefit Amount so long as you have
reached the GMWB Benefit Eligibility Date. You may take withdrawals equal to
the Non-Lifetime Annual Benefit Amount then in effect at any time when the
Contract Value is greater than zero. 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. The Lifetime Annual Benefit Amount is not available to you before the
GMWB Benefit Eligibility Date.
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.
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. 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)Guaranteed Minimum 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,
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.
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Once the rider is terminated, it cannot be reinstated.
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 Excess
Scenario No Withdrawals Withdrawals Withdrawals
-------- -------------- ----------- -----------
Automatic Contract Value reduction X X
Reduction to GMWB Benefit Base and GMAB Benefit Base X 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/ X
Cancels your ability to have subsequent premium payments automatically increase the
GMWB Benefit Base X X
Cancels your ability to "roll-up" and increase your GMWB Benefit Base X X
Reduces the likelihood of a GMWB automatic step-up/2/ X X
Premium payments increase the GMWB Benefit Base X
Potential to terminate the rider without value if reduces the Contract Value to zero X
Permanently sets the Lifetime Annual Benefit Percentage X 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 X
Potential premium taxes and/or federal income tax consequences X X
/1/ The potential Annual Benefit Amount is greatest if at the end of the GMWB
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
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