AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 2009
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
(Exact Name of Registrant)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2426091
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-5740
(Address and telephone number of principal executive offices)
THOMAS C. CASTANO
SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4780
(Name, address and telephone number of agent for service)
Copies to:
CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
751 BROAD STREET
NEWARK, NJ 07102-2992
(973) 802-6997
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box:. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [_]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [_]
Indicate by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] Smaller reporting company [_]
Calculation of Registration fee
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Proposed Proposed
Title of each class of Amount maximum maximum
securities to be to be offering price aggregate Amount of
registered registered* per unit* offering price registration fee**
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Market-value adjustment
annuity contracts (or
modified guaranteed
annuity contracts) $40,000,000 $1,572.00
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* Securities are not issued in predetermined units
** In this filling, Pruco Life Insurance Company of New Jersey is registering
$40,000,000 of Securities and paying a fee of $1,572.00 therefor.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission may determine.
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STRATEGIC PARTNERS/SM/ PLUS 3 VARIABLE ANNUITY
PROSPECTUS: MAY 1, 2008
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This Prospectus describes an Individual Variable Annuity Contract offered by
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) and the
Pruco Life of New Jersey Flexible Premium Annuity Account. Pruco Life of New
Jersey offers several different annuities which your representative may be
authorized to offer to you. Each Annuity has different features and benefits
that may be appropriate for you based on your financial situation, your age
and how you intend to use the Annuity. Please note that selling broker-dealer
firms through which the contract is sold may decline to make available to
their customers certain of the optional features and investment options
offered generally under the contract. Alternatively, such firms may restrict
the availability of the optional benefits that they do make available to their
customers (e.g., by imposing a lower maximum issue age for certain optional
benefits than what is prescribed generally under the contract). Please speak
to your registered representative for further details. The different features
and benefits include variations in death benefit protection and the ability to
access your annuity's Contract Value. The fees and charges under the annuity
contract and the compensation paid to your representative may also be
different among each annuity. Differences in compensation among different
annuity products could influence a registered representative's decision as to
which annuity to recommend to you. If you are purchasing the contract as a
replacement for existing variable annuity or variable life coverage, you
should consider, among other things, any surrender or penalty charges you may
incur when replacing your existing coverage. Pruco Life of New Jersey is an
indirect wholly-owned subsidiary of the Prudential Insurance Company of
America.
THE FUNDS
Strategic Partners Plus 3 offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds.
Currently, portfolios of the following underlying mutual funds are being
offered: The Prudential Series Fund, Advanced Series Trust, Evergreen Variable
Annuity Trust, Nationwide Variable Insurance Trust, and Janus Aspen Series
(see next page for list of portfolios currently offered).
You may choose between two basic versions of Strategic Partners Plus 3. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Strategic
Partners Plus 3, some charges and expenses may be higher than if you choose
the version without the credit. Those higher charges could exceed the amount
of the credit under some circumstances, particularly if you withdraw purchase
payments within a few years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
Please read this prospectus before purchasing a Strategic Partners Plus 3
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information
about the mutual funds. When you invest in a variable investment option that
is funded by a mutual fund, you should read the mutual fund prospectus and
keep it for future reference. The Risk Factors section relating to the market
value adjustment option appears in the Summary.
TO LEARN MORE ABOUT STRATEGIC PARTNERS PLUS 3
To learn more about the Strategic Partners Plus 3 variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2008. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life of New Jersey also files
other reports with the SEC. All of these filings can be reviewed and copied at
the SEC's offices, and can also be obtained from the SEC's Public Reference
Section, 100 F Street, N.E., Washington, D.C. 20549. (See SEC file numbers
333-49230 and 333-103473), or obtained from us, free of charge. You may obtain
information on the operation of the Public Reference Room by calling the SEC
at (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that
contains the Strategic Partners Plus 3 SAI, material incorporated by
reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is set forth in
Section 11 of this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
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THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS
THE SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A
CRIMINAL OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT
IS SUBJECT TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT
IN STRATEGIC PARTNERS PLUS 3 IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
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Strategic Partners/SM/ is a service mark of the Prudential Insurance Company
of America.
P2401NY
The Prudential Series Fund
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Growth Asset Allocation Portfolio
SP Davis Value Portfolio
SP International Growth Portfolio
SP International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
Advanced Series Trust
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Allocation Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST Investment Grade Bond Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST Neuberger Berman Small-Cap Growth Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST QMA US Equity Alpha Portfolio
AST Small-Cap Growth Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
AST T. Rowe Price Large-Cap Growth Portfolio
AST UBS Dynamic Alpha Strategy Portfolio
AST Western Asset Core Plus Bond Portfolio
Evergreen Variable Annuity Trust
Evergreen VA Balanced Fund
Evergreen VA Fundamental Large Cap Fund
Evergreen VA Growth Fund
Evergreen VA International Equity Fund
Evergreen VA Omega Fund
Evergreen VA Special Values Fund
Nationwide Variable Insurance Trust
Gartmore NVIT Developing Markets Fund
Janus Aspen Series
Large Cap Growth Portfolio -- Service Shares
CONTENTS
PART I: STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY...................................... 1
GLOSSARY................................................................................. 2
SUMMARY.................................................................................. 7
RISK FACTORS............................................................................. 11
SUMMARY OF CONTRACT EXPENSES............................................................. 12
EXPENSE EXAMPLES......................................................................... 17
PART II: STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11............................... 19
SECTION 1: WHAT IS THE STRATEGIC PARTNERS PLUS 3 VARIABLE ANNUITY?....................... 20
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"........................................... 21
SECTION 2: WHAT INVESTMENT OPTIONS CAN I CHOOSE?......................................... 21
VARIABLE INVESTMENT OPTIONS............................................................ 21
FIXED INTEREST RATE OPTIONS............................................................ 34
MARKET VALUE ADJUSTMENT OPTION......................................................... 35
TRANSFERS AMONG OPTIONS................................................................ 36
ADDITIONAL TRANSFER RESTRICTIONS....................................................... 37
DOLLAR COST AVERAGING.................................................................. 38
ASSET ALLOCATION PROGRAM............................................................... 38
AUTO-REBALANCING....................................................................... 38
SCHEDULED TRANSACTIONS................................................................. 39
VOTING RIGHTS.......................................................................... 39
SUBSTITUTION........................................................................... 39
SECTION 3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE (ANNUITIZATION)?. 39
PAYMENT PROVISIONS..................................................................... 39
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT....................... 40
OPTION 1: ANNUITY PAYMENTS FOR A FIXED PERIOD........................................ 40
OPTION 2: LIFE INCOME ANNUITY OPTION................................................. 40
OTHER ANNUITY OPTIONS................................................................ 40
TAX CONSIDERATIONS..................................................................... 40
GUARANTEED MINIMUM INCOME BENEFIT...................................................... 40
GMIB ROLL-UP......................................................................... 41
GMIB OPTION 1: SINGLE LIFE PAYOUT OPTION............................................. 42
GMIB OPTION 2: JOINT LIFE PAYOUT OPTION.............................................. 42
HOW WE DETERMINE ANNUITY PAYMENTS...................................................... 43
SECTION 4: WHAT IS THE DEATH BENEFIT?.................................................... 44
BENEFICIARY............................................................................ 44
CALCULATION OF THE DEATH BENEFIT....................................................... 44
GUARANTEED MINIMUM DEATH BENEFIT....................................................... 45
GMDB STEP-UP......................................................................... 45
SPECIAL RULES IF JOINT OWNERS.......................................................... 45
PAYOUT OPTIONS......................................................................... 45
BENEFICIARY CONTINUATION OPTION........................................................ 46
SPOUSAL CONTINUANCE OPTION............................................................. 48
SECTION 5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS?.................................... 49
LIFETIME FIVE INCOME BENEFIT........................................................... 49
SPOUSAL LIFETIME FIVE INCOME BENEFIT................................................... 55
HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT............................................. 58
HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT (HD7)...................................... 65
SPOUSAL HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT (SHD7)............................. 71
SECTION 6: WHAT IS THE INCOME APPRECIATOR BENEFIT?....................................... 79
INCOME APPRECIATOR BENEFIT............................................................. 79
CALCULATION OF THE INCOME APPRECIATOR BENEFIT.......................................... 79
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE....................... 80
i
SECTION 7: HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS 3 CONTRACT?....................... 81
PURCHASE PAYMENTS....................................................................... 81
ALLOCATION OF PURCHASE PAYMENTS......................................................... 82
CREDITS................................................................................. 82
CALCULATING CONTRACT VALUE.............................................................. 83
SECTION 8: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT?............................................................................... 83
INSURANCE AND ADMINISTRATIVE CHARGES.................................................... 83
WITHDRAWAL CHARGE....................................................................... 84
CONTRACT MAINTENANCE CHARGE............................................................. 85
GUARANTEED MINIMUM INCOME BENEFIT CHARGE................................................ 85
INCOME APPRECIATOR BENEFIT CHARGE....................................................... 85
BENEFICIARY CONTINUATION OPTION CHARGES................................................. 86
TAXES ATTRIBUTABLE TO PREMIUM........................................................... 86
TRANSFER FEE............................................................................ 86
COMPANY TAXES........................................................................... 86
UNDERLYING MUTUAL FUND FEES............................................................. 87
SECTION 9: HOW CAN I ACCESS MY MONEY?..................................................... 87
WITHDRAWALS DURING THE ACCUMULATION PHASE............................................... 87
AUTOMATED WITHDRAWALS................................................................... 87
SUSPENSION OF PAYMENTS OR TRANSFERS..................................................... 88
SECTION 10: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT?............................................................................... 88
SECTION 11: OTHER INFORMATION............................................................. 96
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY.............................................. 96
THE SEPARATE ACCOUNT.................................................................... 97
SALE AND DISTRIBUTION OF THE CONTRACT................................................... 97
LITIGATION.............................................................................. 99
ASSIGNMENT..............................................................................
FINANCIAL STATEMENTS.................................................................... 99
STATEMENT OF ADDITIONAL INFORMATION..................................................... 99
HOUSEHOLDING............................................................................ 99
MARKET VALUE ADJUSTMENT FORMULA......................................................... 100
APPENDIX A - ACCUMULATION UNIT VALUES...................................................... A-1
APPENDIX B - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU........................... B-1
APPENDIX C - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE BENEFIT.............. C-1
APPENDIX D - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME SEVEN BENEFIT AND SPOUSAL
HIGHEST DAILY LIFETIME SEVEN............................................................. D-1
ii
PART I SUMMARY
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STRATEGIC PARTNERS PLUS 3 PROSPECTUS
1
PART I: STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
GLOSSARY
We have tried to make this Prospectus as easy to read and understand as
possible. By the nature of the contract, however, certain technical words or
terms are unavoidable. We have identified the following as some of these words
or terms.
Accumulation Phase
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
Adjusted Contract Value
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes
and withdrawal charges.
Annual Income Amount
Under the Lifetime Five Income Benefit and Highest Daily Lifetime Seven
Benefit, an amount that you can withdraw each year as long as the annuitant
lives. For the Highest Daily Lifetime Five Benefit only, we refer to an amount
that you can withdraw each year as long as the annuitant lives as the "Total
Annual Income Amount." The Annual Income Amount is set initially as a
percentage of the Protected Withdrawal Value, but will be adjusted to reflect
subsequent purchase payments, withdrawals, and any step-up. Under the Spousal
Lifetime Five Income Benefit and Spousal Highest Daily Lifetime Seven Benefit,
the Annual Income Amount is paid until the later death of two natural persons
who are each other's spouses at the time of election and at the first death of
one of them.
Annual Withdrawal Amount
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining.
The Annual Withdrawal Amount is set initially to equal 7% of the initial
Protected Withdrawal Value, but will be adjusted to reflect subsequent
purchase payments, withdrawals, and any step-up.
Annuitant
The person whose life determines the amount of income payments that we will
make. Except as indicated below, if the annuitant dies before the annuity
date, the co-annuitant (if any) becomes the annuitant if the contract's
requirements for changing the annuity date are met. If, upon the death of the
annuitant, there is no surviving eligible co-annuitant, and the owner is not
the annuitant, then the owner becomes the annuitant.
Generally, if an annuity is owned by an entity and the entity has named a
co-annuitant, the co-annuitant will become the annuitant upon the death of the
annuitant, and no death benefit is payable. Unless we agree otherwise, the
contract is eligible to have a co-annuitant designation only if the entity
that owns the contract is (1) a plan described in Internal Revenue Code
Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an entity
described in Code Section 72(u)(1) (or any successor Code section thereto); or
(3) a custodial account established pursuant to the provisions in Code
Section 408(a) (or any successor Code section thereto) ("Custodial Account").
Where the contract is held by a Custodial Account, the co-annuitant will not
automatically become the annuitant upon the death of the annuitant. Upon the
death of the annuitant, the Custodial Account will have the choice, subject to
our rules, to either elect to receive the death benefit or elect to continue
the contract. If the Custodial Account continues the contract, then the
Contract Value as of the date of due proof of death of the annuitant will
reflect the amount that would have been payable had a death benefit been paid.
Annuity Date
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the
annuitant due to the death of the annuitant, and the co-annuitant is older
than the annuitant, then the annuity date will be based on the age of the
co-annuitant, provided that the contract's requirements for changing the
annuity date are met (e.g., the co-annuitant cannot be older than a specified
age). If the co-annuitant is younger than the annuitant, then the annuity date
will remain unchanged.
Beneficiary
The person(s) or entity you have chosen to receive a death benefit.
2
Benefit Fixed Rate Account
An investment option offered as part of this Annuity that is used only if you
have elected the Highest Daily Lifetime Five Income Benefit. Amounts allocated
to the Benefit Fixed Rate Account earn a fixed rate of interest, and are held
within our general account. You may not allocate purchase payments to the
Benefit Fixed Rate Account. Rather, Contract Value is transferred to the
Benefit Fixed Rate Account only under the asset transfer feature of this
benefit.
Business Day
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
Co-Annuitant
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No Co-annuitant may be designated if the
owner is a non-natural person.
Contract Date
The date we accept your initial purchase payment and all necessary paperwork
in good order at the Prudential Annuity Service Center. Contract anniversaries
are measured from the contract date. A contract year starts on the contract
date or on a contract anniversary.
Contract Owner, Owner, or You
The person entitled to the ownership rights under the contract.
Contract Value
This is the total value of your contract, equal to the sum of the values of
your investment in each investment option you have chosen. Your Contract Value
will go up or down based on the performance of the investment options you
choose.
Contract with Credit
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make and has higher withdrawal charges and insurance
and administrative costs, and may provide lower interest rates for fixed rate
options than the Contract Without Credit.
Contract without Credit
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges and insurance and administrative costs than the Contract
With Credit.
Credit
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Bonus credits generally
are not recaptured once the free look period expires. Our reference in the
preceding sentence to "generally are not recaptured" refers to the fact that
we have the contractual right to deduct, from the death benefit we pay, the
amount of any credit corresponding to a purchase payment made within one year
of death.
Death Benefit
If a death benefit is payable, the beneficiary you designate will receive, at
a minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation.
The Guaranteed Minimum Death Benefit is available for an additional charge.
See Section 4, "What Is The Death Benefit?"
Designated Life
For purposes of the Spousal Lifetime Five Income Benefit and Spousal Highest
Daily Lifetime Seven Income Benefit, a Designated Life refers to each of two
natural persons who are each other's spouses at the time of election of the
benefit and at the first death of one of them.
Dollar Cost Averaging Fixed Rate Option (DCA Fixed Rate Option)
An investment option that offers a fixed rate of interest for a selected
period during which periodic transfers are automatically made to selected
variable investment options or to the one-year fixed interest rate option.
Enhanced Protected Withdrawal Value
Under the Highest Daily Lifetime Five Benefit only, a sum that we add to your
existing Protected Withdrawal Value, provided that you have not made any
withdrawal during the first ten years that your Highest Daily Lifetime Five
Benefit has been in effect and you otherwise meet the conditions set forth in
the rider and this prospectus.
3
GLOSSARY continued
Excess Income/Excess Withdrawal
Under the Lifetime Five Income Benefit, Spousal Lifetime Five Income Benefit,
Highest Daily Lifetime Five Income Benefit, Highest Daily Lifetime Seven
Income Benefit and Spousal Highest Daily Lifetime Seven Income Benefit, Excess
Income refers to cumulative withdrawals that exceed the Annual Income Amount
(the Total Annual Income Amount for Highest Daily Lifetime Five). Under the
Lifetime Five Income Benefit, Excess Withdrawal refers to cumulative
withdrawals that exceed the Annual Withdrawal Amount.
Fixed Interest Rate Options
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic
transfers are made to selected variable investment options or to the one-year
fixed rate option.
Good Order
An instruction received at the Prudential Annuity Service Center, utilizing
such forms, signatures and dating as we require, which is sufficiently clear
that we do not need to exercise any discretion to follow such instructions.
Guarantee Period
A period of time during which your invested purchase payment in the market
value adjustment option earns interest at the declared rate. We may offer one
or more guarantee periods.
Guaranteed Minimum Death Benefit (GMDB)
An optional feature available for an additional charge that guarantees that
the death benefit that the beneficiary receives will be no less than a certain
GMDB protected value.
GMDB Protected Value
The amount guaranteed under the Guaranteed Minimum Death Benefit, which equals
the GMDB step-up value. The GMDB protected value will be subject to certain
age restrictions and time durations, however, it will still increase by
subsequent invested purchase payments and reduce proportionally by withdrawals.
GMDB Step-Up
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon
death, even if the Contract Value has declined. For example, if the GMDB
step-up were set at $100,000 on a contract anniversary, and the Contract Value
subsequently declined to $80,000 on the date of death, the GMDB step-up value
would nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
Guaranteed Minimum Income Benefit (GMIB)
An optional feature available for an additional charge that guarantees that
the income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB Protected Value
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit. The value is calculated
daily and is equal to the GMIB roll-up, until the GMIB roll-up either reaches
its cap or if we stop applying the annual interest rate based on the age of
the annuitant, number of contract anniversaries or number of years since last
GMIB reset. At such point, the GMIB protected value will be increased by any
subsequent invested purchase payments, and any withdrawals will proportionally
reduce the GMIB protected value. The GMIB protected value is not available as
a cash surrender benefit or a death benefit, nor is it used to calculate the
cash surrender value or death benefit.
GMIB Reset
You may elect to "step-up" or "reset" your GMIB protected value if your
Contract Value is greater than the current GMIB protected value. Upon exercise
of the reset provision, your GMIB protected value will be reset to equal your
current Contract Value. You are limited to two resets over the life of your
contract, provided that certain annuitant age requirements are met.
GMIB Roll-Up
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the Contract Value at the time of the reset)
compounded daily at an effective annual interest rate starting on the date
each invested purchase payment is made, subject to a cap, and reduced
proportionally by withdrawals.
4
Highest Daily Lifetime Five/SM/ Income Benefit
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of a principal value called
the Total Protected Withdrawal Value. Subject to our rules regarding the
timing and amount of withdrawals, we guarantee these withdrawal amounts,
regardless of the impact of market performance on your Contract Value.
Highest Daily Lifetime Seven/SM /Income Benefit
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of a principal value called
the Protected Withdrawal Value. Subject to our rules regarding the timing and
amount of withdrawals, we guarantee these withdrawal amounts, regardless of
the impact of market performance on your Contract Value. Highest Daily
Lifetime Seven is the same class of optional benefit as our Highest Daily
Lifetime Five Income benefit, but differs (among other things) with respect to
how the Protected Withdrawal Value is calculated and to how the lifetime
withdrawals are calculated.
Income Appreciator Benefit (IAB)
An optional feature that may be available for an additional charge that
provides a supplemental living benefit based on earnings under the contract.
IAB Automatic Withdrawal Payment Program
A series of payments consisting of a portion of your Contract Value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB Credit
An amount we add to your Contract Value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the
Income Appreciator Benefit during the accumulation phase.
Income Options
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity
options.
Income Phase
The period during which you receive income payments under the contract.
Invested Purchase Payments
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
Joint Owner
The person named as the joint owner, who shares ownership rights with the
owner as defined in the contract. A joint owner must be a natural person.
Lifetime Five/SM /Income Benefit
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your Contract Value, subject to our rules regarding the
timing and amount of withdrawals. There are two options - one is designed to
provide an annual withdrawal amount for life and the other is designed to
provide a greater annual withdrawal amount (than the first option) as long as
there is Protected Withdrawal Value. We also offer a variant of the Lifetime
Five Income Benefit to certain spousal owners - see "Spousal Lifetime Five
Income Benefit."
Market Value Adjustment
An adjustment to your Contract Value or withdrawal proceeds that is based on
the relationship between interest you are currently earning within the market
value adjustment option and prevailing interest rates. This adjustment may be
positive or negative.
Market Value Adjustment Option
Under the Contract Without Credit, this investment option may offer various
guarantee periods and pays a fixed rate of interest with respect to each
guarantee period. We impose a market value adjustment on withdrawals or
transfers that you make from this option prior to the end of its guarantee
period.
Net Purchase Payments
Your total purchase payments less any withdrawals you have made.
5
GLOSSARY continued
Proportional Withdrawals
A method that involves calculating the percentage of your Contract Value that
each prior withdrawal represented when withdrawn. In general, proportional
withdrawals result in a reduction to the applicable benefit value by reducing
such value in the same proportion as the Contract Value was reduced by the
withdrawal as of the date the withdrawal occurred.
Protected Withdrawal Value
Under the Lifetime Five Income Benefit, Spousal Lifetime Five Income Benefit,
Highest Daily Lifetime Seven Income Benefit and Spousal Highest Daily Lifetime
Seven Income Benefit, an amount that we guarantee regardless of the investment
performance of your Contract Value. For the Highest Daily Lifetime Five
Benefit only, we refer to an amount that we guarantee regardless of the
investment performance of your Contract Value as the "Total Protected
Withdrawal Value".
Prudential Annuity Service Center
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
(888) PRU-2888. Prudential's Web site is www.prudential.com.
Purchase Payments
The amount of money you pay us to purchase the contract. Generally, you can
make additional purchase payments at any time during the accumulation phase.
Separate Account
Purchase payments allocated to the variable investment options are held by us
in a separate account called the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account. The separate account is set apart from all of the
general assets of Pruco Life of New Jersey.
Spousal Lifetime Five/SM /Income Benefit
An optional feature available for an additional charge that guarantees the
ability to withdraw amounts equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on the Contract Value, subject to our rules regarding the
timing and amount of withdrawals. Under the Spousal Lifetime Five Income
Benefit, an annual income amount is paid until the later death of two natural
persons who are each other's spouses at the time of election and at the first
death of one of them.
Spousal Highest Daily Lifetime Seven/SM /Income Benefit
The spousal version of the Highest Daily Lifetime Seven Income Benefit.
Spousal Highest Daily Lifetime Seven is the same class of optional benefit as
our Spousal Lifetime Five Income benefit, but differs (among other things)
with respect to how the Protected Withdrawal Value is calculated and to how
the lifetime withdrawals are calculated.
Statement of Additional Information
A document containing certain additional information about the Strategic
Partners Plus 3 variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a
part of this prospectus. To learn how to obtain a copy of the Statement of
Additional Information, see the front cover of this prospectus.
Tax Deferral
This is a way to increase your assets without currently being taxed.
Generally, you do not pay taxes on your contract earnings until you take money
out of your contract. You should be aware that tax favored plans (such as
IRAs) already provide tax deferral regardless of whether they invest in
annuity contracts. See Section 10, "What Are The Tax Considerations Associated
With The Strategic Partners Plus 3 Contract?"
Variable Investment Option
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life of New Jersey that invests in a particular mutual fund is referred
to in your contract as a subaccount.
6
SUMMARY FOR SECTIONS 1-11
For a more complete discussion of the following topics, see the corresponding
section in Part II of the prospectus.
SECTION 1
What Is The Strategic Partners Plus 3 Variable Annuity?
The Strategic Partners Plus 3 variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company of New
Jersey (Pruco Life of New Jersey, we or us). The contract allows you to invest
on a tax-deferred basis in variable investment options, fixed interest rate
options, and the market value adjustment option. The contract is intended for
retirement savings or other long-term investment purposes and provides for a
death benefit.
There are two basic versions of the Strategic Partners Plus 3 variable annuity.
Contract With Credit.
.. provides for a bonus credit that we add to each purchase payment that you
make,
.. has higher withdrawal charges and insurance and administrative costs than
the Contract Without Credit,
.. may provide lower interest rates for fixed interest rate options than the
Contract Without Credit, and
.. does not offer the market value adjustment option.
Contract Without Credit.
.. does not provide a credit,
.. has lower withdrawal charges and insurance and administrative costs than
the Contract With Credit.
.. may provide higher interest rates for fixed interest rate options than the
Contract With Credit, and
.. offers the market value adjustment option.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum
interest rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed,
to earn at least the minimum interest rate dictated by applicable state law,
if any.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
.. During the accumulation phase, any earnings grow on a tax-deferred basis
and are generally only taxed as income when you make a withdrawal.
.. The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or
not to make such contract amendments available to contracts that already have
been issued.
If you change your mind about owning Strategic Partners Plus 3, you may cancel
your contract within 10 days after receiving it (or whatever period is
required by applicable law). This time period is referred to as the "Free
Look" period.
7
SUMMARY FOR SECTIONS 1-11 continued
SECTION 2
What Investment Options Can I Choose?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be
of interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options or in a market
value adjustment option.
SECTION 3
What Kind Of Payments Will I Receive During The Income Phase? (Annuitization)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income
payments will be no less than a value that is based on a certain "GMIB
protected value" applied to the GMIB guaranteed annuity purchase rates. See
Section 3, "What Kind Of Payments Will I Receive During The Income Phase?"
The Lifetime withdrawal benefits, (each discussed in Section 5) and the Income
Appreciator Benefit (discussed in Section 6) each may provide an additional
amount upon which your annuity payments are based.
SECTION 4
What Is The Death Benefit?
In general, if the sole owner or first to die of the owner or joint owner dies
before the income phase of the contract begins, the person(s) or entity that
you have chosen as your beneficiary will receive, at a minimum, the greater of
(i) the Contract Value, (ii) either the base death benefit or, for a higher
insurance and administrative cost, a potentially larger Guaranteed Minimum
Death Benefit (GMDB).
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal
to the "GMDB protected value" of the highest value of the contract on any
contract anniversary, which we call the "GMDB step-up value".
On the date we receive proof of death in good order, in lieu of paying a death
benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Option, if the conditions that we describe,
in Section 4, are met.
SECTION 5
What Are The Lifetime Withdrawal Benefits?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your Contract Value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options - one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the Contract Value allocated to the variable
investment options. This charge is in addition to the charge for the
applicable death benefit.
In addition to the Lifetime Five Income Benefit, we offer a benefit called the
Spousal Lifetime Five Income Benefit. The Spousal Lifetime Five Income benefit
is similar to the Lifetime Five Income Benefit, except that it is offered only
to those who are each other's spouses at the time the benefit is elected, and
the benefit offers only a Life Income Benefit (not the Withdrawal Benefit).
The charge for the Spousal Lifetime Five Income Benefit is a daily fee equal
on an annual basis to 0.75% of the Contract Value allocated to the variable
investment options. The charge is in addition to the charge for the applicable
death benefit.
8
The Highest Daily Lifetime Five is similar to our Lifetime Five and Spousal
Lifetime Five benefits, in that under each such benefit, there is a "protected
withdrawal value" that serves as the basis for withdrawals you can make. As we
discuss in more detail later, we guarantee this protected withdrawal value,
even if your Contract Value declines. Thus, as a participant in one of these
benefits, you are assured of a certain amount that you can withdraw, even if
there is a significant decline in the securities markets. Highest Daily
Lifetime Five benefit differs from Lifetime Five and Spousal Lifetime Five
primarily in that (a) the Protected Withdrawal Value is determined based on
the highest daily Contract Value and (b) we require you to participate in an
asset transfer program, under which your Contract Value may be transferred
periodically between the variable investment options and the benefit Fixed
Rate Account (which is part of our general account). This formula is described
more fully in Appendix C. We operate the asset transfer program under a
formula, which is described in the portion of Section 5 concerning the Highest
Daily Lifetime Five benefit. As discussed in Section 5, when you elect Highest
Daily Lifetime Five, the asset transfer formula is made a part of your annuity
contract, and thus may not be altered thereafter. However, we do reserve the
right to amend the formula for new-issued annuity contracts that elect Highest
Daily Lifetime Five and for existing contracts that elect the benefit in the
future. As we discuss in more detail later in this prospectus, this required
asset transfer program helps us manage our financial exposure under Highest
Daily Lifetime Five, by moving assets out of the variable investment options
in the event of securities market declines. In essence, we seek to preserve
the value of these assets, by transferring them to a more stable account. Of
course, the formula also contemplates the transfer of assets from the Benefit
Fixed Rate Account to the variable investment options in certain other
scenarios.
Finally, we offer Highest Daily Lifetime Seven, an optional feature available
for an additional charge that guarantees your ability to withdraw amounts
equal to a percentage of a principal value called the Protected Withdrawal
Value. Subject to our rules regarding the timing and amount of withdrawals, we
guarantee these withdrawal amounts, regardless of the impact of market
performance on your Contract Value. Highest Daily Lifetime Seven is the same
class of optional benefit as our Lifetime Five Income benefit, but differs
(among other things) with respect to how the Protected Withdrawal Value is
calculated and to how the lifetime withdrawals are calculated. Spousal Highest
Daily Lifetime Seven is the spousal version of Highest Daily Lifetime Seven,
and thus offers lifetime payments until the second-to-die of two spouses.
SECTION 6
What Is The Income Appreciator Benefit?
The Income Appreciator Benefit is an optional benefit, available for an
additional charge, that provides an additional income amount during the
accumulation period or upon annuitization. The Income Appreciator Benefit is
designed to provide you with additional funds that can be used to help defray
the impact taxes may have on distributions from your contract. You can
activate this benefit in one of three ways, as described in Section 6. Note,
however, that the annuitization options within this benefit are limited.
SECTION 7
How Can I Purchase A Strategic Partners Plus 3 Contract?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000
or more, unless we are prohibited under applicable state law from insisting on
such prior approval. Generally, you can make additional purchase payments of
$500 ($100 if made through electronic funds transfer) or more at any time
during the accumulation phase of the contract. Your representative can help
you fill out the proper forms. The Contract With Credit provides for the
allocation of a credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. In
addition, certain age limits apply to certain features and benefits described
herein.
SECTION 8
What Are The Expenses Associated With The Strategic Partners Plus 3 Contract?
The contract has insurance features and investment features, both of which
have related costs and charges.
.. Each year (or upon full surrender) we deduct a contract maintenance charge
if your Contract Value is less than $75,000. This charge is currently equal
to the lesser of $30 or 2% of your Contract Value. We do not impose the
contract maintenance charge if your Contract Value is $75,000 or more.
.. For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable
investment options (except as indicated), depending on the death benefit
(or other) option that you choose. The daily cost is equivalent to an
annual charge as follows:
-- 1.40% if you choose the base death benefit.
-- 1.65% if you choose the step-up Guaranteed Minimum Death Benefit option
(i.e., 0.25% in addition to the base death benefit charge).
-- 0.60% if you choose the Lifetime Five Income benefit (1.50% maximum
charge). This charge is in addition to the charge for the applicable
death benefit.
9
SUMMARY FOR SECTIONS 1-11 continued
-- 0.75% if you choose the Spousal Lifetime Five Income benefit (1.50%
maximum charge). This charge is in addition to the charge for the
applicable death benefit.
-- 0.60% if you choose the Highest Daily Lifetime Five benefit (1.50%
maximum charge). This charge is in addition to the charge for the
applicable death benefit.
-- 0.60% of the Protected Withdrawal Value if you choose the Highest Daily
Lifetime Seven benefit (1.50% maximum charge). This charge is in
addition to the charge for the applicable death benefit.
-- 0.75% of the Protected Withdrawal Value if you choose the Spousal
Highest Daily Lifetime Seven Income benefit (1.50% maximum charge). This
charge is in addition to the charge for the applicable death benefit.
.. We impose an additional insurance and administrative charge of 0.10%
annually for the Contract With Credit.
.. We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your Contract Value on
the contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after May 1, 2004 (0.45%
for all other contracts), of the average GMIB protected value (1.00%
maximum charge).
.. We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your Contract Value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your Contract Value.
.. There are also expenses associated with the mutual funds. For 2007, the
fees of these funds ranged from 0.37% to 1.65% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable
arrangements. In general, these expense waivers and comparable arrangements
are not guaranteed, and may be terminated at any time.
.. If you withdraw money less than seven contract anniversaries after making a
purchase payment, then you may have to pay a withdrawal charge on all or
part of the withdrawal. This charge ranges from 1-7% for the Contract
Without Credit and 5-8% for the Contract With Credit.
For more information, including details about other possible charges under the
contract, see "Summary Of Contract Expenses" and Section 8, "What Are The
Expenses Associated With The Strategic Partners Plus 3 Contract?"
SECTION 9
How Can I Access My Money?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. For the Contract Without Credit, if
you withdraw money less than seven contract anniversaries after making a
purchase payment, we may impose a withdrawal charge ranging from 1-7%. For the
Contract With Credit, we may impose a withdrawal charge ranging from 5-8%.
Under the market value adjustment option, you will be subject to a market
value adjustment if you make a withdrawal or transfer from the option prior to
the end of a guarantee period.
We offer optional living benefits - the Lifetime Five Income Benefit, Spousal
Lifetime Five Income Benefit, Highest Daily Lifetime Five Benefit, Highest
Daily Lifetime Seven Income Benefit, and Spousal Highest Daily Lifetime Seven
Benefit under which we guarantee that certain amounts will be available to you
for withdrawal, regardless of market-related declines in your Contract Value.
You need not participate in any of these benefits in order to withdraw some or
all of your money. You also may access your Income Appreciator benefit through
withdrawals.
SECTION 10
What Are The Tax Considerations Associated With The Strategic Partners Plus 3
Contract?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as a
withdrawal of earnings, which are taxed as ordinary income. If you are younger
than age 59 1/2 when you take money out, you may be charged a 10% federal tax
penalty on the earnings in addition to ordinary taxation. A portion of the
payments you receive during the income phase is considered a partial return of
your original investment and therefore will not be taxable as income.
Generally, all amounts withdrawn from an Individual Retirement Annuity (IRA)
contract (excluding Roth IRAs) are taxable and subject to the 10% penalty if
withdrawn prior to age 59 1/2.
SECTION 11
Other Information
This contract is issued by Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey), an indirect subsidiary of The Prudential Insurance
Company of America, and sold by registered representatives of affiliated and
unaffiliated broker/dealers.
10
RISK FACTORS
There are various risks associated with an investment in the Market Value
Adjustment Option that we summarize below.
Issuer Risk. The Market Value Adjustment Option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life of New Jersey, and thus backed by the financial strength
of that company. If Pruco Life of New Jersey were to experience significant
financial adversity, it is possible that Pruco Life of New Jersey's ability to
pay interest and principal under the Market Value Adjustment Option and fixed
interest rate options and to fulfill its insurance guarantees could be
impaired.
Risks Related To Changing Interest Rates. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life
of New Jersey holds to support the Market Value Adjustment Option.
Nonetheless, the market value adjustment formula reflects the effect that
prevailing interest rates have on those bonds and other instruments. If you
need to withdraw your money prior to the end of a guarantee period and during
a period in which prevailing interest rates have risen above their level when
you made your purchase, you will experience a "negative" market value
adjustment. When we impose this market value adjustment, it could result in
the loss of both the interest you have earned and a portion of your purchase
payments. Thus, before you commit to a particular guarantee period, you should
consider carefully whether you have the ability to remain invested throughout
the guarantee period. In addition, we cannot, of course, assure you that the
Market Value Adjustment Option will perform better than another investment
that you might have made.
Risks Related To The Withdrawal Charge. We may impose withdrawal charges on
amounts withdrawn from the Market Value Adjustment Option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
11
SUMMARY OF CONTRACT EXPENSES
The purpose of this summary is to help you to understand the costs you will
pay for Strategic Partners Plus 3. The following tables describe the fees and
expenses that you will pay when buying, owning, and surrendering the contract.
The first table describes the fees and expenses that you will pay at the time
that you buy the contract, surrender the contract, or transfer cash value
between investment options.
For more detailed information, including additional information about current
and maximum charges, see Section 8, "What Are The Expenses Associated With The
Strategic Partners Plus 3 Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
-------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
-------------------------------------------------
WITHDRAWAL CHARGE /1/
-------------------------------------------------
NUMBER OF CONTRACT
ANNIVERSARIES SINCE CONTRACT CONTRACT
PURCHASE PAYMENT WITH CREDIT WITHOUT CREDIT
-------------------------------------------------
0 8% 7%
-------------------------------------------------
1 8% 6%
-------------------------------------------------
2 8% 5%
-------------------------------------------------
3 8% 4%
-------------------------------------------------
4 7% 3%
-------------------------------------------------
5 6% 2%
-------------------------------------------------
6 5% 1%
-------------------------------------------------
7 0% 0%
-------------------------------------------------
MAXIMUM TRANSFER FEE
-----------------------------------------------
Each transfer after 12/ 2/ $30.00
-----------------------------------------------
Each transfer after 20 $10.00
(Beneficiary Continuation Option only)
-----------------------------------------------
1 Each contract year, you may withdraw a specified amount of your Contract
Value without incurring a withdrawal charge. We will waive the withdrawal
charge if we pay a death benefit or under certain other circumstances. See
"Withdrawal Charge" in Section 8.
2 Currently, we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of
$30, but have no current intention to do so. We will not charge you for
transfers made in connection with Dollar Cost Averaging and
Auto-Rebalancing or transfers from the market value adjustment option at
the end of a guarantee period, and do not count them toward the limit of 12
free transfers per year.
12
The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including underlying mutual
fund fees and expenses.
- ---------------------------------------------------------------------------------------------
PERIODIC ACCOUNT EXPENSES
- ---------------------------------------------------------------------------------------------
Maximum Contract Maintenance Charge and Contract $30.00
Charge Upon Full Withdrawal /3/
- ---------------------------------------------------------------------------------------------
Maximum Annual Contract Fee If Contract Value is less lesser of $30 or 2% of Contract Value
than $25,000
(Beneficiary Continuation Option only)
- ---------------------------------------------------------------------------------------------
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED BENEFITS
As a Percentage of Contract Value in Variable Investment Options
(except as indicated):
- ---------------------------------------------------------------------------------------------
----------------------------------------------------------
CONTRACT CONTRACT
WITH WITHOUT
CREDIT CREDIT
----------------------------------------------------------
Base Death Benefit 1.50% 1.40%
----------------------------------------------------------
Maximum Charge for Lifetime Five /4/ 1.50% 1.50%
----------------------------------------------------------
Maximum Charge for Spousal Lifetime 1.50% 1.50%
Five /4/
----------------------------------------------------------
Maximum Charge for Highest Daily 1.50% 1.50%
Lifetime Five Income Benefit /4/
----------------------------------------------------------
Maximum Charge for Highest Daily 1.50% 1.50%
Lifetime Seven Income Benefit /4/
----------------------------------------------------------
Maximum Charge for Spousal Highest 1.50% 1.50%
Daily Lifetime Seven Income Benefit
/4/
----------------------------------------------------------
Lifetime Five Income Benefit 0.60% 0.60%
(current charge)
----------------------------------------------------------
Spousal Lifetime Five Income Benefit 0.75% 0.75%
(current charge)
----------------------------------------------------------
Highest Daily Lifetime Five Income 0.60% 0.60%
Benefit
(current charge)
----------------------------------------------------------
Highest Daily Lifetime Seven Income 0.60% 0.60%
Benefit
(current charge) assessed against
Protected Withdrawal Value /5/
----------------------------------------------------------
Spousal Highest Daily Lifetime Seven 0.75% 0.75%
Income Benefit
(current charge) assessed against
Protected Withdrawal Value /5/
----------------------------------------------------------
Guaranteed Minimum Death Benefit 1.75% 1.65%
Option - Step-Up
----------------------------------------------------------
Maximum Annual Guaranteed Minimum 1.00% 1.00%
Income Benefit Charge and Charge
Upon Certain Withdrawals - as a
percentage of average GMIB Protected
Value /6/
----------------------------------------------------------
Annual Guaranteed Minimum Income 0.50% 0.50%
Benefit Charge and Charge Upon
Certain Withdrawals
(for contracts sold on or after
May 1, 2004) - as a percentage of
average GMIB Protected Value (current
charge) /6/
----------------------------------------------------------
Annual Income Appreciator Benefit 0.25% 0.25%
Charge and Charge Upon Certain
Withdrawals /7/
----------------------------------------------------------
Settlement Service Charge 1.00% 1.00%
(if the Owner's Beneficiary elects
the Beneficiary Continuation Option)
/8/
----------------------------------------------------------
3 Currently, we waive this fee if your Contract Value is greater than or
equal to $75,000. If your Contract Value is less than $75,000, we currently
charge the lesser of $30 or 2% of your Contract Value. This is a single fee
that we assess (a) annually or (b) upon full withdrawal made on a date
other than a contract anniversary.
4 We have the right to increase the charge for each of these benefits up to
the 1.50% maximum upon a step-up, or for a new election of each such
benefit. However, we have no present intention of increasing the charges
for those benefits to that maximum level.
5 With respect to Highest Daily Lifetime Seven and Spousal Highest Daily
Lifetime Seven, the 0.60% charge and 0.75% charge, respectively, is
assessed against the Protected Withdrawal Value. With respect to each of
Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven,
one-fourth of the annual charge is deducted at the end of each quarter,
where the quarters are part of years that have as their anniversary the
date that the benefit was elected. The fee is taken out of Contract Value
in the variable investment options. These optional benefits are not
available under the Beneficiary Continuation Option.
6 We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after
May 1, 2004 (0.45% for all other contracts), of the average GMIB protected
value, which is calculated daily and generally is equal to the GMIB roll-up
value. The fee is withdrawn from each variable investment option in the
same proportion as the Contract Value allocated to that variable investment
option represents to the total Contract Value in all variable investment
options. Subject to certain age or duration restrictions, the roll-up value
is the total of all invested purchase payments (after a reset, the Contract
Value at the time of the reset) compounded daily at an effective annual
rate of 5%, subject to a cap of 200% of all invested purchase payments.
Withdrawals reduce both the roll-up value and the 200% cap. When the GMIB
roll-up is increasing at an effective annual interest rate of 5%, the
reduction is equal to the amount of the withdrawal for the first 5% of the
roll-up value, calculated as of the latest contract
13
SUMMARY OF CONTRACT EXPENSES continued
anniversary (or contract date). The amount of the withdrawal in excess of
5% of the roll-up value further reduces the roll-up value and 200% cap
proportionally to the additional reduction in Contract Value after the
first 5% withdrawal occurs. We assess this fee each contract anniversary
and when you begin the income phase of your contract. We also assess this
fee if you make a full withdrawal, but prorate the fee based on the portion
of the contract year that has elapsed since the full annual fee was most
recently deducted. If you make a partial withdrawal, we will assess the
prorated fee if the remaining Contract Value after the withdrawal would be
less than the amount of the prorated fee; otherwise we will not assess the
fee at that time. We reserve the right to increase this charge up to the
maximum indicated upon any reset of the benefit or new election.
7 We impose this charge only if you choose the Income Appreciator Benefit.
The charge for this benefit is based on an annual rate of 0.25% of your
Contract Value. The Income Appreciator Benefit charge is calculated: on
each contract anniversary, on the annuity date, upon the death of the sole
owner or first to die of the owner or joint owner prior to the annuity
date, upon a full or partial withdrawal, and upon a subsequent purchase
payment. The fee is based on the Contract Value at the time of the
calculation, and is prorated based on the portion of the contract year
since the date that the charge was last deducted. Although it may be
calculated more often, it is deducted only: on each contract anniversary,
on the annuity date, upon the death of the sole owner or first to die of
the owner or joint owner prior to the annuity date, upon a full withdrawal,
and upon a partial withdrawal if the Contract Value remaining after such
partial withdrawal is not enough to cover the then-applicable charge. With
respect to full and partial withdrawals, we prorate the fee based on the
portion of the contract year that has elapsed since the full annual fee was
most recently deducted. We reserve the right to calculate and deduct the
fee more frequently than annually, such as quarterly.
8 The other Insurance and Administrative Expense charges do not apply if you
are a beneficiary under the Beneficiary Continuation Option. Instead, the
Settlement Service Charge set forth here applies, if your beneficiary
elects the Beneficiary Continuation Option. The 1.00% charge is an annual
charge that is assessed daily against the assets in the variable investment
options.
--------------------------------------------
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
--------------------------------------------
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management
fees, distribution and/or service (12b-1) fees, and other expenses) charged by
the underlying mutual funds that you may pay periodically during the time that
you own the contract. More detail concerning each underlying mutual fund's
fees and expenses is contained below and in the prospectus for each underlying
mutual fund. The minimum and maximum total operating expenses depicted below
are based on historical fund expenses for the year ended December 31, 2007.
Fund expenses are not fixed or guaranteed by the Strategic Partners Plus 3
contract, and may vary from year to year.
------------------------------------------------------
MINIMUM MAXIMUM
------------------------------------------------------
Total Annual Underlying Mutual Fund 0.37% 1.65%
Operating Expenses*
------------------------------------------------------
* See "Summary of Contract Expenses" - Underlying Mutual Fund Portfolio
Annual Expenses for more detail on the expenses of the underlying mutual
funds.
- --------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
- --------------------------------------------------------------------------------------------------------
For the year ended December 31, 2007
----------------------------------------------------------
UNDERLYING PORTFOLIO Management Other 12b-1 Fees Acquired Total Annual
Fee/ 4/ Expenses Portfolio Fees Portfolio
& Expenses/ 6/ Expenses
- --------------------------------------------------------------------------------------------------------
Advanced Series Trust /1,3/
AST Advanced Strategies 0.85% 0.15% 0.00% 0.04% 1.04%
AST Aggressive Asset Allocation /2/ 0.15% 0.03% 0.00% 0.96% 1.14%
AST AllianceBernstein Core Value 0.75% 0.11% 0.00% 0.00% 0.86%
AST AllianceBernstein Growth & Income 0.75% 0.08% 0.00% 0.00% 0.83%
AST American Century Income & Growth 0.75% 0.11% 0.00% 0.00% 0.86%
AST American Century Strategic Allocation 0.85% 0.25% 0.00% 0.00% 1.10%
AST Balanced Asset Allocation /2/ 0.15% 0.01% 0.00% 0.90% 1.06%
AST Capital Growth Asset Allocation /2/ 0.15% 0.01% 0.00% 0.93% 1.09%
AST Cohen & Steers Realty Portfolio 1.00% 0.12% 0.00% 0.00% 1.12%
AST Conservative Asset Allocation /2/ 0.15% 0.02% 0.00% 0.87% 1.04%
AST DeAM Large-Cap Value 0.85% 0.11% 0.00% 0.00% 0.96%
AST DeAM Small-Cap Value 0.95% 0.18% 0.00% 0.00% 1.13%
AST Federated Aggressive Growth 0.95% 0.11% 0.00% 0.00% 1.06%
AST First Trust Balanced Target 0.85% 0.11% 0.00% 0.00% 0.96%
AST First Trust Capital Appreciation Target 0.85% 0.11% 0.00% 0.00% 0.96%
AST Goldman Sachs Concentrated Growth 0.90% 0.10% 0.00% 0.00% 1.00%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.12% 0.00% 0.00% 1.12%
AST High Yield 0.75% 0.12% 0.00% 0.00% 0.87%
AST Investment Grade Bond /5/ 0.65% 0.99% 0.00% 0.00% 1.64%
14
- ----------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
- ----------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2007
-------------------------------------------------------------
UNDERLYING PORTFOLIO Management Other 12b-1 Fees Acquired Total Annual
Fee/ 4/ Expenses/ 1/ Portfolio Fees Portfolio
& Expenses/ 6/ Expenses/ 3/
- ----------------------------------------------------------------------------------------------------------------
AST JPMorgan International Equity 0.87% 0.13% 0.00% 0.00% 1.00%
AST Large-Cap Value 0.75% 0.08% 0.00% 0.00% 0.83%
AST Lord Abbett Bond-Debenture 0.80% 0.11% 0.00% 0.00% 0.91%
AST Marsico Capital Growth 0.90% 0.08% 0.00% 0.00% 0.98%
AST MFS Global Equity 1.00% 0.21% 0.00% 0.00% 1.21%
AST MFS Growth 0.90% 0.12% 0.00% 0.00% 1.02%
AST Mid-Cap Value 0.95% 0.14% 0.00% 0.00% 1.09%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.10% 0.00% 0.00% 1.00%
AST Neuberger Berman Mid-Cap Value 0.89% 0.10% 0.00% 0.00% 0.99%
AST Neuberger Berman Small-Cap Growth 0.95% 0.12% 0.00% 0.00% 1.07%
AST PIMCO Limited Maturity Bond 0.65% 0.11% 0.00% 0.00% 0.76%
AST Preservation Asset Allocation /2/ 0.15% 0.03% 0.00% 0.82% 1.00%
AST QMA US Equity Alpha 1% 0.63% 0.00% 0.00% 1.63%
AST Small-Cap Growth 0.90% 0.15% 0.00% 0.00% 1.05%
AST Small-Cap Value 0.90% 0.10% 0.00% 0.00% 1.00%
AST T. Rowe Price Asset Allocation 0.85% 0.12% 0.00% 0.00% 0.97%
AST T. Rowe Price Global Bond 0.80% 0.13% 0.00% 0.00% 0.93%
AST T. Rowe Price Natural Resources 0.90% 0.10% 0.00% 0.00% 1.00%
AST T. Rowe Price Large-Cap Growth 0.88% 0.08% 0.00% 0.00% 0.96%
AST UBS Dynamic Alpha Strategy 1.00% 0.13% 0.00% 0.02% 1.15%
AST Western Asset Core Plus Bond /5/ 0.70% 0.10% 0.00% 0.02% 0.82%
The Prudential Series Fund /7,8,9/
Equity Portfolio 0.45% 0.02% 0.00% 0.00% 0.47%
Global Portfolio 0.75% 0.06% 0.00% 0.00% 0.81%
Jennison Portfolio 0.60% 0.02% 0.00% 0.00% 0.62%
Money Market Portfolio 0.40% 0.03% 0.00% 0.00% 0.43%
Stock Index Portfolio /10/ 0.35% 0.02% 0.00% 0.00% 0.37%
Value Portfolio 0.40% 0.03% 0.00% 0.00% 0.43%
SP Aggressive Growth Asset Allocation Portfolio 0.05% 0.06% 0.00% 0.85% 0.96%
SP Balanced Asset Allocation Portfolio 0.05% 0.01% 0.00% 0.79% 0.85%
SP Conservative Asset Allocation Portfolio 0.05% 0.02% 0.00% 0.75% 0.82%
SP Davis Value Portfolio 0.75% 0.05% 0.00% 0.00% 0.80%
SP Growth Asset Allocation Portfolio 0.05% 0.01% 0.00% 0.83% 0.89%
SP International Growth Portfolio 0.85% 0.09% 0.00% 0.00% 0.94%
SP International Value Portfolio 0.90% 0.09% 0.00% 0.00% 0.99%
SP Mid Cap Growth Portfolio 0.80% 0.07% 0.00% 0.00% 0.87%
SP PIMCO High Yield Portfolio 0.60% 0.09% 0.00% 0.00% 0.69%
SP PIMCO Total Return Portfolio 0.60% 0.07% 0.00% 0.00% 0.67%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.05% 0.00% 0.00% 0.65%
SP Small Cap Value Portfolio 0.90% 0.06% 0.00% 0.00% 0.96%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.25% 0.00% 0.00% 1.15%
Janus Aspen Series
Large Cap Growth Portfolio--Service Shares 0.64% 0.02% 0.25% 0.01% 0.92%
Nationwide Variable Insurance Trust
Gartmore NVIT Developing Markets 1.05% 0.35% 0.25% N/A 1.65%
Evergreen Variable Annuity Trust /11/
Evergreen VA Balanced 0.30% 0.22% 0.00% 0.02% 0.54%
Evergreen VA Fundamental Large Cap 0.58% 0.17% 0.00% 0.00% 0.75%
Evergreen VA Special Values 0.78% 0.18% 0.00% 0.01% 0.97%
15
SUMMARY OF CONTRACT EXPENSES continued
- ----------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
- ----------------------------------------------------------------------------------------------
For the year ended December 31, 2007
----------------------------------------------------------
UNDERLYING PORTFOLIO Management Other 12b-1 Fees Acquired Total Annual
Fee/ 4/ Expenses Portfolio Fees Portfolio
& Expenses/ 6/ Expenses
- ----------------------------------------------------------------------------------------------
Evergreen VA Growth 0.70% 0.20% 0.00% 0.01% 0.91%
Evergreen VA International Equity 0.39% 0.24% 0.00% 0.00% 0.63%
Evergreen VA Omega 0.52% 0.19% 0.00% 0.00% 0.71%
1 The Fund has entered into arrangements with the issuers of the variable
insurance products offering the Portfolios under which the Fund compensates
the issuers 0.10% for providing ongoing services to Portfolio shareholders
in lieu of the Fund providing such services directly to
shareholders. Amounts paid under these arrangements are included in "Other
Expenses." Subject to the expense limitations set forth below, for each
Portfolio of the Fund other than the Dynamic Asset Allocation Portfolios,
0.03% of the 0.10% administrative services fee is voluntarily waived. The
Dynamic Asset Allocation Portfolios do not directly pay any portion of the
0.10% administrative service fee. The Acquired Portfolios in which the
Dynamic Asset Allocation Portfolios invest, however, are subject to the
administrative services fee. With respect to the AST QMA US Equity Alpha
Portfolio, "Other Expenses" includes dividend expenses on short sales and
interest expenses on short sales. Our reference above to the Dynamic Asset
Allocation Portfolios refers to these portfolios: AST Aggressive Asset
Allocation, AST Balanced Asset Allocation, AST Capital Growth Asset
Allocation, AST Conservative Asset Allocation, and AST Preservation Asset
Allocation.
2 Some of the Portfolios invest in other investment companies (the Acquired
Portfolios). For example, each Dynamic Asset Allocation Portfolio invests
primarily in shares of other Portfolios of Advanced Series Trust. Investors
in a Portfolio indirectly bear the fees and expenses of the Acquired
Portfolios. The expenses shown under "Acquired Portfolio Fees and Expenses"
represent a weighted average of the expense ratios of the Acquired
Portfolios in which each Portfolio invested during the year ended
December 31, 2007. The Dynamic Asset Allocation Portfolios do not pay any
transaction fees when purchasing or redeeming shares of the Acquired
Portfolios. Our reference above to the Dynamic Asset Allocation Portfolios
refers to these portfolios: AST Aggressive Asset Allocation, AST Balanced
Asset Allocation, AST Capital Growth Asset Allocation, AST Conservative
Asset Allocation, and AST Preservation Asset Allocation.
3 Prudential Investments LLC and AST Investment Services, Inc. have
voluntarily agreed to waive a portion of their management fee and/or limit
total expenses (expressed as an annual percentage of average daily
net assets) for certain Portfolios of the Fund. These arrangements, which
are set forth as follows, may be discontinued or otherwise modified at any
time. AST American Century Strategic Allocation: 1.25%; AST Cohen & Steers
Realty: 1.45%; AST DeAM Small-Cap Value: 1.14%; AST Goldman Sachs
Concentrated Growth: 0.86%; AST Goldman Sachs Mid-Cap Growth: 1.12%; AST
High Yield: 0.88%; AST JPMorgan International Equity: 1.01%; AST Large-Cap
Value: 1.20%; AST Lord Abbett Bond-Debenture: 0.88%; AST MFS Global
Equity: 1.18%; AST MFS Growth: 1.35%; AST Marsico Capital Growth: 1.35%;
AST Mid-Cap Value: 1.45%; AST Neuberger Berman Mid-Cap Growth: 1.25%; AST
Neuberger Berman Mid-Cap Value: 1.25%; AST PIMCO Limited Maturity
Bond: 1.05%; AST T. Rowe Price Asset Allocation: 1.25%; AST T. Rowe Price
Natural Resources: 1.35%.
4 The management fee rate shown in the "management fees" column represents
the actual fee rate paid by the indicated Portfolio for the fiscal year
ended December 31, 2007, except that the fee rate shown does not reflect
the impact of any voluntary management fee waivers that may be applicable
and which would result in a reduction in the fee rate paid by the
Portfolio. The management fee rate for certain Portfolios may include
"breakpoints" which are reduced fee rates that are applicable at specified
levels of Portfolio assets; the effective fee rates shown in the table
reflect and incorporate any fee "breakpoints" which may be applicable.
5 The Western Asset Core Plus Bond Portfolio is based on estimated expenses
for 2008 and current period average daily net assets. The AST Investment
Grade Bond Portfolio expenses are based on estimated expenses for 2008 at
an estimated asset level.
6 Acquired Fund Fees and Expenses are not fees or expenses incurred by the
fund directly but are expenses of the investment companies in which the
fund invests. You incur these fees and expenses indirectly through the
valuation of the fund's investment in those investment companies. As a
result, the Total Annual Portfolio Operating Expenses listed above may
exceed the expense limit numbers. The impact of the acquired fund fees and
expenses are included in the total returns of the Fund.
7 Investors incur certain fees and expenses in connection with an investment
in the Fund's Portfolios. The table shows the fees and expenses that you
may incur if you invest in Class 1 shares of the Portfolios through a
variable annuity contract. The fees and expenses shown below are based the
fees and expenses incurred in the year ended December 31, 2007 (except as
explained in the footnotes) and are expressed as a percentage of the
average daily net assets of each Portfolio. The table does not include
annuity contract charges. Because annuity contract charges are not
included, the total fees and expenses that you will incur will be higher
than the fees and expenses set forth in the following table. See this
prospectus for the fees and expenses under the annuity contract.
8 Some of the Portfolios invest in other investment companies (the Acquired
Portfolios). For example, each SP Asset Allocation Portfolio invests in
shares of other Portfolios of the Fund, and some Portfolios invest in other
funds, including the Dryden Core Investment Fund. Investors in a Portfolio
indirectly bear the fees and expenses of the Acquired Portfolios. The
expenses shown in the column "Acquired Portfolio Fees and Expenses"
represent a weighted average of the expense ratios of the Acquired
Portfolios in which each Portfolio invested during the year ended
December 31, 2007. The SP Asset Allocation Portfolios do not pay any
transaction fees when purchasing or redeeming shares of the Acquired
Portfolios. Each of the Asset Allocation Portfolios is responsible for the
payment of its own "Other Expenses," including, without limitation,
custodian fees, legal fees, trustee fees and audit fee, in accordance with
the terms of the management agreement.
9 Prudential Investments LLC has voluntarily agreed to waive a portion of its
management fee and/or limit total expenses (expressed as an annual
percentage of average daily net assets) for certain Portfolios of the Fund.
These arrangements, which are set forth as follows for Class 1 shares, may
be discontinued or otherwise modified at any time. Stock Index Portfolio:
0.75%; Value Portfolio: 0.75%; SP International Growth Portfolio: 1.24%; SP
Mid Cap Growth Portfolio: 1.00%; SP Small Cap Value Portfolio: 1.05%; SP
Strategic Partners Focused Growth Portfolio: 1.25%.
10 The Portfolio's contractual management fee rate is as follows: 0.35% for
average net assets up to $4 billion, and 0.30% for average net assets in
excess of $4 billion.
11 The Total Annual Portfolio Operating Expenses excludes expense reductions.
16
EXPENSE EXAMPLES
These examples are intended to help you compare the cost of investing in the
contract with the cost of investing in other variable annuity contracts. These
costs include contract owner transaction expenses, contract fees, separate
account annual expenses, and underlying mutual fund fees and expenses.
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 assume the maximum fees and expenses of any of the mutual
funds, which do not reflect any expense reimbursements or waivers. Although
your actual costs may be higher or lower, based on these assumptions, your
costs would be as indicated in the tables that follow.
Example 1a: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You
Withdraw All Your Assets
This example assumes that:
.. You invest $10,000 in the Contract With Credit,
.. You choose the Step-Up Guaranteed Minimum Death Benefit,
.. You choose the Guaranteed Minimum Income Benefit (for contracts sold on or
after May 1, 2004),
.. You choose the Income Appreciator Benefit,
.. You allocate all of your assets to the variable investment option having
the maximum total operating expenses,*
.. The investment has a 5% return each year,
.. The mutual fund's total operating expenses remain the same each year,
.. For each optional benefit charge, we deduct the maximum charge rather than
any current charge, and
.. You withdraw all your assets at the end of the indicated period.
* Note: Not all portfolios offered are available if you elect certain
optional benefits.
Example 1b: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the
indicated period.
Example 2a: Contract With Credit: Base Death Benefit, and You Withdraw All
Your Assets
This example assumes that:
.. You invest $10,000 in the Contract With Credit,
.. You do not choose any optional insurance benefit,
.. You allocate all of your assets to the variable investment option having
the maximum total operating expenses,*
.. The investment has a 5% return each year,
.. The mutual fund's total operating expenses remain the same each year,
.. For each optional benefit charge, we deduct the maximum charge rather than
any current charge, and
.. You withdraw all your assets at the end of the indicated period.
Example 2b: Contract With Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the
indicated period.
Example 3a: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You
Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
Example 3b: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract Without Credit.
17
EXPENSE EXAMPLES continued
Example 4a: Contract Without Credit: Base Death Benefit; and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract Without Credit.
Example 4b: Contract Without Credit: Base Death Benefit; and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract Without Credit.
Notes For Expense Examples:
These Examples should not be considered a representation of past or future
expenses.
Actual expenses may be greater or less than those shown.
Note that withdrawal charges (which are reflected in Examples 1a, 2a, 3a and
4a) are assessed in connection with some annuity options, but not others.
The values shown in the 10 year column are the same for Example 1a and 1b, 2a
and 2b, 3a and 3b, and 4a and 4b. This is because if 10 years have elapsed
since your last purchase payment, we would no longer deduct withdrawal charges
when you make a withdrawal.
The examples use an average contract maintenance charge, which we calculated
based on our general estimate of the total contract fees we expect to collect
in 2008. Your actual fees will vary based on the amount of your contract and
your specific allocation among the investment options.
A table of accumulation unit values appears in Appendix A to this prospectus.
Contract With Credit: Step-up Guaranteed Minimum Death Benefit Option,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit
Example 1a: If You Withdraw Your Assets Example 1b: If You Do Not Withdraw Your Assets
----------------------------------------------------------------------------------------
1 yr 3 yrs 5 yrs 10 yrs 1 yr 3 yrs 5 yrs 10 yrs
----------------------------------------------------------------------------------------
$1,267 $2,298 $3,235 $5,161 $515 $1,546 $2,577 $5,161
----------------------------------------------------------------------------------------
Contract With Credit: Base Death Benefit
Example 2a: If You Withdraw Your Assets Example 2b: If You Do Not Withdraw Your Assets
----------------------------------------------------------------------------------------
1 yr 3 yrs 5 yrs 10 yrs 1 yr 3 yrs 5 yrs 10 yrs
----------------------------------------------------------------------------------------
$1,114 $1,854 $2,523 $3,879 $362 $1,102 $1,865 $3,879
----------------------------------------------------------------------------------------
Contract Without Credit: Step-up Guaranteed Minimum Death Benefit Option,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit
Example 3a: If You Withdraw Your Assets Example 3b: If You Do Not Withdraw Your Assets
----------------------------------------------------------------------------------------
1 yr 3 yrs 5 yrs 10 yrs 1 yr 3 yrs 5 yrs 10 yrs
----------------------------------------------------------------------------------------
$1,115 $1,908 $2,704 $4,887 $485 $1,458 $2,434 $4,887
----------------------------------------------------------------------------------------
Contract Without Credit: Base Death Benefit
Example 4a: If You Withdraw Your Assets Example 4b: If You Do Not Withdraw Your Assets
----------------------------------------------------------------------------------------
1 yr 3 yrs 5 yrs 10 yrs 1 yr 3 yrs 5 yrs 10 yrs
----------------------------------------------------------------------------------------
$968 $1,480 $2,015 $3,640 $338 $1,030 $1,745 $3,640
----------------------------------------------------------------------------------------
18
PART II SECTIONS 1-11
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS PLUS 3 PROSPECTUS
19
1: WHAT IS THE STRATEGIC PARTNERS PLUS 3 VARIABLE ANNUITY?
The Strategic Partners Plus 3 Variable Annuity is a contract between you, the
owner, and US, Pruco Life Insurance Company of New Jersey (Pruco Life of New
Jersey, we or us).
Under our contract, in exchange for your payment to us, we promise to pay you
a guaranteed income stream that can begin any time on or after the first
contract anniversary. Your annuity is in the accumulation phase until you
decide to begin receiving annuity payments. The date you begin receiving
annuity payments is the annuity date. On the annuity date, your contract
switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral
means that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other
investment that you may use in connection with your retirement plan or
arrangement.
There are two basic versions of Strategic Partners Plus 3 variable annuity.
Contract With Credit.
.. provides for a bonus credit that we add to each purchase payment that you
make,
.. has higher withdrawal charges and insurance and administrative costs than
the Contract Without Credit,
.. may provide a lower interest rate for the fixed interest rate options than
the Contract Without Credit, and
.. does not offer the market value adjustment option.
Contract Without Credit.
.. does not provide a credit,
.. has lower withdrawal charges and insurance and administrative costs than
the Contract With Credit,
.. may provide a higher interest rate for the fixed interest rate options than
the Contract With Credit, and
.. offers the Market Value Adjustment Option.
Unless we state otherwise, when we use the word contract, it applies to both
versions.
In replacing another annuity you may own, please consider all charges
associated with that annuity. Credits applicable to bonus products, such as
the Contract With Credit, should not be viewed as an offset of any surrender
charge that applies to another annuity contract you may currently own.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Plus 3 if you anticipate having to withdraw a significant
amount of your purchase payments within a few years of making those purchase
payments.
Strategic Partners Plus 3 is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options and a market value adjustment
option. The market value adjustment option is only available in the Contract
Without Credit. If you select variable investment options, the amount of money
you are able to accumulate in your contract during the accumulation phase
depends upon the investment performance of the underlying mutual fund(s)
associated with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your Contract Value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights under
the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
20
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Plus 3, you may cancel
your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the
contract either to the representative who sold it to you, or to the Prudential
Annuity Service Center at the address shown on the first page of this
prospectus. You will receive a refund equal to your Contract Value (plus the
amount of any fees or other charges) as of the date you surrendered your
contract.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your Contract Value.
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE?
The contract gives you the choice of allocating your purchase payments to any
of the variable investment options, fixed interest rate options, and a market
value adjustment option.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their
shares to both variable annuity and variable life separate accounts of
different insurance companies, which could create the kinds of risk that are
described in more detail in the current prospectus for the underlying mutual
fund. The current prospectuses for the underlying mutual funds also contain
other important information about the mutual funds. When you invest in a
variable investment option that is funded by a mutual fund, you should read
the mutual fund prospectus and keep it for future reference. The mutual fund
options that you select are your choice. We do not recommend or endorse any
particular underlying mutual fund.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment
of their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. What appears in the chart below is
merely a summary - please consult the portfolio's prospectus for a
comprehensive discussion of the portfolio's investment policies. There is no
guarantee that any portfolio will meet its investment objective. The name of
the adviser/subadviser for each portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index
Portfolio, Prudential Value Portfolio, and each "SP" Portfolio of the
Prudential Series Fund, are managed by an indirect wholly-owned subsidiary of
Prudential Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
subadvisers to manage specific portions of a portfolio, and the portion
managed by a subadviser may vary from 0% to 100% of the portfolio's assets.
The subadvisers that manage some or all of a Prudential Series Fund portfolio
are listed on the following chart.
Please note that we restrict the investment options in which you can
participate, if you elect certain optional benefits. Thus, your participation
in those benefits could result in your missing investment opportunities that
might arise in investment options from which you are excluded. (Of course,
potentially missing investment opportunities in investment options in which
you do not participate is an inherent consequence of any investment choice,
and generally speaking, it is your decision as to how to invest your Purchase
Payments).
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual
fund.
Pruco Life of New Jersey has entered into agreements with certain underlying
portfolios and/or the investment adviser or distributor of such portfolios.
Pruco Life of New Jersey may provide administrative and support services to
such portfolios pursuant to the terms of these agreements and under which it
receives a fee of up to 0.55% annually (as of May 1, 2008) of the average
assets allocated to the portfolio under the contract. These agreements,
including the fees paid and services provided, can vary for each underlying
mutual fund whose portfolios are offered as sub-accounts.
In addition, an investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement,
defraying the costs of, or paying directly for, among other things, marketing
and/or administrative services and/or
21
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
other services they provide in connection with the contract. These services
may include, but are not limited to: sponsoring or co-sponsoring various
promotional, educational or marketing meetings and seminars attended by
distributors, wholesalers, and/or broker dealer firms' registered
representatives, and creating marketing material discussing the contract,
available options, and underlying portfolios. The amounts paid depend on the
nature of the meetings, the number of meetings attended by the adviser,
sub-adviser, or distributor, the number of participants and attendees at the
meetings, the costs expected to be incurred, and the level of the adviser's,
sub-adviser's or distributor's participation. These payments or reimbursements
may not be offered by all advisers, sub-advisers, or distributors, and the
amounts of such payments may vary between and among each adviser, sub-adviser,
and distributor depending on their respective participation. During 2007, with
regard to amounts that were paid under these kinds of arrangements, the
amounts ranged from approximately $750 to approximately $946,934. These
amounts may have been paid to one or more Prudential-affiliated insurers
issuing individual variable annuities.
Upon the introduction of the Advanced Series Trust Asset Allocation Portfolios
on December 5, 2005, we ceased offering the Prudential Series Fund Asset
Allocation Portfolios to new purchasers and to existing contract owners who
had not previously invested in those Portfolios.
However, a contract owner who had Contract Value allocated to a Prudential
Series Fund Asset Allocation Portfolio prior to December 5, 2005 may continue
to allocate purchase payments to that Portfolio after that date. In addition,
after December 5, 2005, we ceased offering the Prudential Series Fund SP Large
Cap Value Portfolio to new purchasers and to existing contract owners who had
not previously invested in that Portfolio. However, a contract owner who had
Contract Value allocated to the SP Large Cap Value Portfolio prior to
December 5, 2005 may continue to allocate purchase payments to that Portfolio
after that date.
-------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------------
ADVANCED SERIES TRUST
-------------------------------------------------------------------------
ASSET AST Advanced Strategies Portfolio: LSV Asset
ALLOCA- seeks a high level of absolute Management;
TION/ return. The Portfolio invests Marsico Capital
BALANCED primarily in a diversified portfolio Management, LLC;
of equity and fixed income Pacific Investment
securities across different Management
investment categories and investment Company LLC
managers. The Portfolio pursues a (PIMCO); T. Rowe
combination of traditional and Price Associates,
non-traditional investment Inc.; William Blair
strategies. & Company, LLC
-------------------------------------------------------------------------
ASSET AST Aggressive Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC
Series Trust Portfolios. Under
normal market conditions, the
Portfolio will devote approximately
100% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
92.5% to 100%) and the remainder of
its net assets to underlying
portfolios investing primarily in
debt securities and money market
instruments (with a range of 0% -
7.5%).
-------------------------------------------------------------------------
LARGE AST AllianceBernstein Core Value AllianceBernstein
CAP Portfolio: seeks long-term capital L.P.
VALUE growth by investing primarily in
common stocks. The subadviser
expects that the majority of the
Portfolio's assets will be invested
in the common stocks of large
companies that appear to be
undervalued. Among other things, the
Portfolio seeks to identify
compelling buying opportunities
created when companies are
undervalued on the basis of investor
reactions to near-term problems or
circumstances even though their
long-term prospects remain sound.
The subadviser seeks to identify
individual companies with earnings
growth potential that may not be
recognized by the market at large.
-------------------------------------------------------------------------
22
------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
------------------------------------------------------------------------
LARGE AST AllianceBernstein Growth & AllianceBernstein
CAP Income Portfolio: seeks long-term L.P.
VALUE growth of capital and income while
attempting to avoid excessive
fluctuations in market value. The
Portfolio normally will invest in
common stocks (and securities
convertible into common stocks). The
subadviser will take a
value-oriented approach, in that it
will try to keep the Portfolio's
assets invested in securities that
are selling at reasonable valuations
in relation to their fundamental
business prospects.
------------------------------------------------------------------------
LARGE AST American Century Income & Growth American Century
CAP Portfolio: seeks capital growth with Investment
VALUE current income as a secondary Management, Inc.
objective. The Portfolio invests
primarily in common stocks that
offer potential for capital growth,
and may, consistent with its
investment objective, invest in
stocks that offer potential for
current income. The subadviser
utilizes a quantitative management
technique with a goal of building an
equity portfolio that provides
better returns than the S&P 500
Index without taking on significant
additional risk and while attempting
to create a dividend yield that will
be greater than the S&P 500 Index.
------------------------------------------------------------------------
ASSET AST American Century Strategic American Century
ALLOCA- Allocation Portfolio: seeks Investment
TION/ long-term capital growth with some Management, Inc.
BALANCED regular income. The Portfolio will
invest, under normal circumstances,
in any type of U.S. or foreign
equity security that meets certain
fundamental and technical standards.
The portfolio managers will draw on
growth, value and quantitative
investment techniques in managing
the equity portion of the Portfolio
and diversify the Portfolio's
investments among small, medium and
large companies.
------------------------------------------------------------------------
ASSET AST Balanced Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC
Series Trust Portfolios. Under
normal market conditions, the
Portfolio will devote approximately
75% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
67.5% to 80%), and 25% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 20.0%
to 32.5%).
------------------------------------------------------------------------
ASSET AST Capital Growth Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC
Series Trust Portfolios. Under
normal market conditions, the
Portfolio will devote approximately
65% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
57.5% to 72.5%, and 35% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 27.5%
to 42.5%).
------------------------------------------------------------------------
SPECIALTY AST Cohen & Steers Realty Portfolio: Cohen & Steers
seeks to maximize total return Capital
through investment in real estate Management, Inc.
securities. The Portfolio pursues
its investment objective by
investing, under normal
circumstances, at least 80% of its
net assets in common stocks and
other equity securities issued by
real estate companies, such as real
estate investment trusts (REITs).
Under normal circumstances, the
Portfolio will invest substantially
all of its assets in the equity
securities of real estate companies,
i.e., a company that derives at
least 50% of its revenues from the
ownership, construction, financing,
management or sale of real estate or
that has at least 50% of its assets
in real estate. Real estate
companies may include real estate
investment trusts (REITs).
------------------------------------------------------------------------
ASSET AST Conservative Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC
Series Trust Portfolios. Under
normal market conditions, the
Portfolio will devote approximately
55% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
47.5% to 62.5%), and 45% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 37.5%
to 52.5%.
------------------------------------------------------------------------
23
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
---------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
---------------------------------------------------------------------------
LARGE AST DeAM Large-Cap Value Portfolio: Deutsche
CAP seeks maximum growth of capital by Investment
VALUE investing primarily in the value Management
stocks of larger companies. The Americas, Inc.
Portfolio pursues its objective,
under normal market conditions, by
primarily investing at least 80% of
the value of its assets in the
equity securities of large-sized
companies included in the Russell
1000(R) Value Index. The subadviser
employs an investment strategy
designed to maintain a portfolio of
equity securities which approximates
the market risk of those stocks
included in the Russell 1000(R)
Value Index, but which attempts to
outperform the Russell 1000(R) Value
Index through active stock selection.
---------------------------------------------------------------------------
SMALL AST DeAM Small-Cap Value Portfolio: Deutsche
CAP seeks maximum growth of investors' Investment
VALUE capital by investing primarily in Management
the value stocks of smaller Americas, Inc.
companies. The Portfolio pursues its
objective, under normal market
conditions, by primarily investing
at least 80% of its total assets in
the equity securities of small-sized
companies included in the Russell
2000(R) Value Index. The subadviser
employs an investment strategy
designed to maintain a portfolio of
equity securities which approximates
the market risk of those stocks
included in the Russell 2000(R)
Value Index, but which attempts to
outperform the Russell 2000(R) Value
Index.
---------------------------------------------------------------------------
SMALL AST Federated Aggressive Growth Federated Equity
CAP Portfolio: seeks capital growth. The Management
GROWTH Portfolio pursues its investment Company of
objective by investing primarily in Pennsylvania/
the stocks of small companies that Federated Global
are traded on national security Investment
exchanges, NASDAQ stock exchange and Management Corp.;
the over- the-counter-market. Small Federated MDTA
companies will be defined as LLC
companies with market
capitalizations similar to companies
in the Russell 2000 Growth Index.
---------------------------------------------------------------------------
ASSET AST First Trust Balanced Target First Trust Advisors
ALLOCA- Portfolio: seeks long-term capital L.P.
TION/ growth balanced by current income.
BALANCED The Portfolio seeks to achieve its
objective by investing approximately
65% in common stocks and
approximately 35% in fixed income
securities. The Portfolio allocates
the equity portion of the portfolio
across five uniquely specialized
strategies - The Dow(R) Target
Dividend, the Value Line(R) Target
25, the Global Dividend Target 15,
the NYSE(R) International Target 25,
and the Target Small Cap. Each
strategy employs a quantitative
approach by screening common stocks
for certain attributes and/or using
a multi-factor scoring system to
select the common stocks. The fixed
income allocation is determined by
the Dow Jones Income strategy which
utilizes certain screens to select
bonds from the Dow Jones Corporate
Bond Index or like-bonds not in the
index.
---------------------------------------------------------------------------
ASSET AST First Trust Capital Appreciation First Trust Advisors
ALLOCA- Target Portfolio: seeks long-term L.P.
TION/ capital growth. The Portfolio seeks
BALANCED to achieve its objective by
investing approximately 80% in
common stocks and 20% in fixed
income securities. The portfolio
allocates the equity portion of the
portfolio across five uniquely
specialized strategies - the Value
Line(R) Target 25, the Global
Dividend Target 15, the Target Small
Cap, the Nasdaq(R) Target 15, and
the NYSE(R) International Target 25.
Each strategy employs a quantitative
approach by screening common stocks
for certain attributes and/or using
a multi-factor scoring system to
select the common stocks. The fixed
income allocation is determined by
the Dow Jones Income strategy which
utilizes certain screens to select
bonds from the Dow Jones Corporate
Bond Index or like-bonds not in the
index.
---------------------------------------------------------------------------
LARGE AST Goldman Sachs Concentrated Goldman Sachs
CAP Growth Portfolio: seeks long-term Asset Management,
GROWTH growth of capital. The Portfolio L.P.
will pursue its objective by
investing primarily in equity
securities of companies that the
subadviser believes have the
potential to achieve capital
appreciation over the long-term. The
Portfolio seeks to achieve its
investment objective by investing,
under normal circumstances, in
approximately 30 - 45 companies that
are considered by the subadviser to
be positioned for long-term growth.
---------------------------------------------------------------------------
24
------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
------------------------------------------------------------------------
MID CAP AST Goldman Sachs Mid-Cap Growth Goldman Sachs
GROWTH Portfolio: seeks long-term capital Asset Management,
growth. The Portfolio pursues its L.P.
investment objective, by investing
primarily in equity securities
selected for their growth potential,
and normally invests at least 80% of
the value of its assets in
medium-sized companies. Medium-sized
companies are those whose market
capitalizations (measured at the
time of investment) fall within the
range of companies in the Russell
Mid-cap Growth Index. The subadviser
seeks to identify individual
companies with earnings growth
potential that may not be recognized
by the market at large.
------------------------------------------------------------------------
FIXED AST High Yield Portfolio: seeks Pacific Investment
INCOME maximum total return, consistent Management
with preservation of capital and Company LLC
prudent investment management. The (PIMCO)
Portfolio invests, under normal
circumstances, at least 80% of its
net assets plus any borrowings for
investment purposes (measured at
time of purchase) in high yield,
fixed-income securities that, at the
time of purchase, are non-investment
grade securities. Such securities
are commonly referred to as "junk
bonds".
------------------------------------------------------------------------
FIXED AST Investment Grade Bond Portfolio: Prudential
INCOME seeks the highest potential total Investment
return consistent with its specified Management, Inc.
level of risk tolerance to meet the
parameters established to support
the Highest Daily Lifetime Seven
benefits and maintain liquidity to
support changes in market conditions
for a fixed duration (weighted
average maturity) of about 6 years.
Please note that you may not make
purchase payments to this Portfolio,
and that this Portfolio is available
only with certain living benefits.
------------------------------------------------------------------------
INTER- AST JPMorgan International Equity J.P. Morgan
NATIONAL Portfolio: seeks long-term capital Investment
EQUITY growth by investing in a diversified Management, Inc.
portfolio of international equity
securities. The Portfolio seeks to
meet its objective by investing,
under normal market conditions, at
least 80% of its assets in a
diversified portfolio of equity
securities of companies located or
operating in developed non-U.S.
countries and emerging markets of
the world. The equity securities
will ordinarily be traded on a
recognized foreign securities
exchange or traded in a foreign
over-the-counter market in the
country where the issuer is
principally based, but may also be
traded in other countries including
the United States.
------------------------------------------------------------------------
LARGE AST Large-Cap Value Portfolio: seeks Dreman Value
CAP current income and long-term growth Management LLC;
VALUE of income, as well as capital Hotchkis and Wiley
appreciation. The Portfolio invests, Capital
under normal circumstances, at least Management LLC;
80% of its net assets in common J.P. Morgan
stocks of large capitalization Investment
companies. Large capitalization Management, Inc.
companies are those companies with
market capitalizations within the
market capitalization range of the
Russell 1000 Value Index.
------------------------------------------------------------------------
FIXED AST Lord Abbett Bond-Debenture Lord, Abbett & Co.
INCOME Portfolio: seeks high current income LLC
and the opportunity for capital
appreciation to produce a high total
return. The Portfolio invests, under
normal circumstances, at least 80%
of the value of its assets in fixed
income securities. The Portfolio
allocates its assets principally
among fixed income securities in
four market sectors: U.S. investment
grade securities, U.S. high yield
securities, foreign securities
(including emerging market
securities) and convertible
securities. Under normal
circumstances, the Portfolio invests
in each of the four sectors
described above. However, the
Portfolio may invest substantially
all of its assets in any one sector
at any time, subject to the
limitation that at least 20% of the
Portfolio's net assets must be
invested in any combination of
investment grade debt securities,
U.S. Government securities and cash
equivalents. The Portfolio may also
make significant investments in
mortgage-backed securities. Although
the Portfolio expects to maintain a
weighted average maturity in the
range of five to twelve years, there
are no restrictions on the overall
Portfolio or on individual
securities. The Portfolio may invest
up to 20% of its net assets in
equity securities.
------------------------------------------------------------------------
25
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
-------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------------
LARGE AST Marsico Capital Growth Marsico Capital
CAP Portfolio: seeks capital growth. Management, LLC
GROWTH Income realization is not an
investment objective and any income
realized on the Portfolio's
investments, therefore, will be
incidental to the Portfolio's
objective. The Portfolio will pursue
its objective by investing primarily
in common stocks of large companies
that are selected for their growth
potential. Large capitalization
companies are companies with market
capitalizations within the market
capitalization range of the Russell
1000 Growth Index. In selecting
investments for the Portfolio, the
subadviser uses an approach that
combines "top down" macroeconomic
analysis with "bottom up" stock
selection. The "top down" approach
identifies sectors, industries and
companies that may benefit from the
trends the subadviser has observed.
The subadviser then looks for
individual companies with earnings
growth potential that may not be
recognized by the market at large,
utilizing a "bottom up" stock
selection process. The Portfolio
will normally hold a core position
of between 35 and 50 common stocks.
The Portfolio may hold a limited
number of additional common stocks
at times when the Portfolio manager
is accumulating new positions,
phasing out existing or responding
to exceptional market conditions.
-------------------------------------------------------------------------
INTER- AST MFS Global Equity Portfolio: Massachusetts
NATIONAL seeks capital growth. Under normal Financial Services
EQUITY circumstances the Portfolio invests Company
at least 80% of its assets in equity
securities. The Portfolio will
invest in the securities of U.S. and
foreign issuers (including issuers
in emerging market countries). While
the portfolio may invest its assets
in companies of any size, the
Portfolio generally focuses on
companies with relatively large
market capitalizations relative to
the markets in which they are traded.
-------------------------------------------------------------------------
LARGE AST MFS Growth Portfolio: seeks Massachusetts
CAP long-term capital growth and future, Financial Services
GROWTH rather than current income. Under Company
normal market conditions, the
Portfolio invests at least 80% of
its net assets in common stocks and
related securities, such as
preferred stocks, convertible
securities and depositary receipts,
of companies that the subadviser
believes offer better than average
prospects for long-term growth. The
subadviser uses a "bottom up" as
opposed to a "top down" investment
style in managing the Portfolio.
-------------------------------------------------------------------------
MID CAP AST Mid Cap Value Portfolio: seeks EARNEST Partners
VALUE to provide capital growth by LLC; WEDGE
investing primarily in Capital
mid-capitalization stocks that Management, LLP
appear to be undervalued. The
Portfolio generally invests, under
normal circumstances, at least 80%
of the value of its net assets in
mid- capitalization companies.
Mid-capitalization companies are
generally those that have market
capitalizations, at the time of
purchase, within the market
capitalization range of companies
included in the Russell Midcap Value
Index during the previous 12-months
based on month-end data.
-------------------------------------------------------------------------
MID CAP AST Neuberger Berman Mid-Cap Growth Neuberger Berman
GROWTH Portfolio: seeks capital growth. Management Inc.
Under normal market conditions, the
Portfolio invests at least 80% of
its net assets in the common stocks
of mid-capitalization companies.
Mid-capitalization companies are
those companies whose market
capitalization is within the range
of market capitalizations of
companies in the Russell Midcap(R)
Growth Index. Using fundamental
research and quantitative analysis,
the subadviser looks for
fast-growing companies that are in
new or rapidly evolving industries.
-------------------------------------------------------------------------
MID CAP AST Neuberger Berman Mid-Cap Value Neuberger Berman
VALUE Portfolio: seeks capital growth. Management Inc.
Under normal market conditions, the
Portfolio invests at least 80% of
its net assets in the common stocks
of medium capitalization companies.
For purposes of the Portfolio,
companies with market
capitalizations that fall within the
range of the Russell Midcap(R) Index
at the time of investment are
considered medium capitalization
companies. Some of the Portfolio's
assets may be invested in the
securities of large-cap companies as
well as in small-cap companies.
Under the Portfolio's value-oriented
investment approach, the subadviser
looks for well-managed companies
whose stock prices are undervalued
and that may rise in price before
other investors realize their worth.
-------------------------------------------------------------------------
26
------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
------------------------------------------------------------------------
SMALL AST Neuberger Berman Small-Cap Neuberger Berman
CAP Growth Portfolio: seeks maximum Management Inc.
GROWTH growth of investors' capital from a
portfolio of growth stocks of
smaller companies. The Portfolio
pursues its objective, under normal
circumstances, by primarily
investing at least 80% of its total
assets in the equity securities of
small-sized companies included in
the Russell 2000 Growth(R) Index.
------------------------------------------------------------------------
ASSET AST Niemann Capital Growth Asset Neimann Capital
ALLOCA- Allocation Portfolio: seeks the Management Inc.
TION/ highest potential total return
GROWTH consistent with its specified level
of risk tolerance. Under normal
circumstances, at least 90% of the
Portfolio's assets will be invested
in other portfolios of Advanced
Series Trust (the underlying
portfolios) while no more than 10%
of the Portfolio's assets may be
invested in exchange traded funds
(ETFs). Under normal market
conditions, the Portfolio will
devote from 60% to 80% of its net
assets to underlying portfolios and
ETFs investing primarily in equity
securities, and from 20% to 40% of
its net assets to underlying
portfolios and ETFs investing
primarily in debt securities and
money market instruments.
------------------------------------------------------------------------
FIXED AST PIMCO Limited Maturity Bond Pacific Investment
INCOME Portfolio: seeks to maximize total Management
return consistent with preservation Company LLC
of capital and prudent investment (PIMCO)
management. The Portfolio will
invest in a portfolio of
fixed-income investment instruments
of varying maturities. The average
portfolio duration of the Portfolio
generally will vary within a one- to
three- year time frame based on the
subadviser's forecast for interest
rates.
------------------------------------------------------------------------
ASSET AST Preservation Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC
Series Trust Portfolios. Under
normal market conditions, the
Portfolio will devote approximately
35% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
27.5% to 42.5%), and 65% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 57.5%
to 72.5%.
------------------------------------------------------------------------
LARGE AST QMA US Equity Portfolio Quantitative
CAP (formerly known as AST Management
BLEND AllianceBernstein Managed Index 500 Associates LLC
Portfolio): seeks to produce returns
that exceed those of the benchmark.
The portfolio utilizes a long/short
investment strategy and will
normally invest at least 80% of its
net assets plus borrowings in equity
and equity related securities of
issuers traded on a securities
exchange or market in the US. The
benchmark index is the Russell
1000(R) which is comprised of stocks
representing more than 90% of the
market cap of the US market and
includes the largest 1000 securities
in the Russell 3000(R) index.
------------------------------------------------------------------------
SMALL AST Small-Cap Growth Portfolio: Eagle Asset
CAP seeks long-term capital growth. The Management;
GROWTH Portfolio pursues its objective by Neuberger Berman
investing, under normal Management Inc.
circumstances, at least 80% of the
value of its assets in
small-capitalization companies.
Small-capitalization companies are
those companies with a market
capitalization, at the time of
purchase, no larger than the largest
capitalized company included in the
Russell 2000(R) Index at the time of
the Portfolio's investment.
------------------------------------------------------------------------
SMALL AST Small-Cap Value Portfolio: seeks ClearBridge
CAP to provide long-term capital growth Advisors, LLC;
VALUE by investing primarily in Dreman Value
small-capitalization stocks that Management LLC;
appear to be undervalued. The J.P. Morgan
Portfolio invests, under normal Investment
circumstances, at least 80% of the Management, Inc.;
value of its net assets in small Lee Munder
capitalization stocks. Small Investments, Ltd
capitalization stocks are the stocks
of companies with market
capitalization that are within the
market capitalization range of the
Russell 2000(R) Value Index.
------------------------------------------------------------------------
27
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
--------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------------
ASSET AST T. Rowe Price Asset Allocation T. Rowe Price
ALLOCA- Portfolio: seeks a high level of Associates, Inc.
TION/ total return by investing primarily
BALANCED in a diversified portfolio of fixed
income and equity securities. The
Portfolio normally invests
approximately 60% of its total
assets in equity securities and 40%
in fixed income securities. This mix
may vary depending on the
subadviser's outlook for the
markets. The subadviser concentrates
common stock investments in larger,
more established companies, but the
Portfolio may include small and
medium-sized companies with good
growth prospects. The fixed income
portion of the Portfolio will be
allocated among investment grade
securities, high yield or "junk"
bonds, emerging market securities,
foreign high quality debt securities
and cash reserves.
--------------------------------------------------------------------------
FIXED AST T. Rowe Price Global Bond T. Rowe Price
INCOME Portfolio: seeks to provide high International, Inc.
current income and capital growth by
investing in high-quality foreign
and U.S. dollar-denominated bonds.
The Portfolio will invest at least
80% of its total assets in fixed
income securities. The Portfolio
invests in all types of bonds,
including those issued or guaranteed
by U.S. or foreign governments or
their agencies and by foreign
authorities, provinces and
municipalities as well as investment
grade corporate bonds, mortgage and
asset-backed securities, and
high-yield bonds of U.S. and foreign
issuers. The Portfolio generally
invests in countries where the
combination of fixed-income returns
and currency exchange rates appears
attractive, or, if the currency
trend is unfavorable, where the
subadviser believes that the
currency risk can be minimized
through hedging. The Portfolio may
also invest up to 20% of its assets
in the aggregate in below
investment-grade, high-risk bonds
("junk bonds"). In addition, the
Portfolio may invest up to 30% of
its assets in mortgage- related
(including mortgage dollar rolls and
derivatives, such as collateralized
mortgage obligations and stripped
mortgage securities) and
asset-backed securities.
--------------------------------------------------------------------------
LARGE AST T. Rowe Price Large-Cap Growth T. Rowe Price
CAP Portfolio: seeks long-term growth of Associates, Inc.
GROWTH capital by investing predominantly
in the equity securities of a
limited number of large, carefully
selected, high-quality U.S.
companies that are judged likely to
achieve superior earnings growth.
The Portfolio takes a growth
approach to investment selection and
normally invests at least 80% of its
net assets in the common stocks of
large companies. Large companies are
defined as those whose market cap is
larger than the median market cap of
companies in the Russell 1000 Growth
Index as of the time of purchase.
--------------------------------------------------------------------------
SPECIALTY AST T. Rowe Price Natural Resources T. Rowe Price
Portfolio: seeks long-term capital Associates, Inc.
growth primarily through the common
stocks of companies that own or
develop natural resources (such as
energy products, precious metals and
forest products) and other basic
commodities. The Portfolio invests,
under normal circumstances, at least
80% of the value of its assets in
natural resource companies. The
Portfolio may also invest in
non-resource companies with the
potential for growth. The Portfolio
looks for companies that have the
ability to expand production, to
maintain superior exploration
programs and production facilities,
and the potential to accumulate new
resources. Although at least 50% of
Portfolio assets will be invested in
U.S. securities, up to 50% of total
assets also may be invested in
foreign securities.
--------------------------------------------------------------------------
ASSET AST UBS Dynamic Alpha Portfolio: UBS Global Asset
ALLOCA- seeks to maximize total return, Management
TION/ consisting of capital appreciation (Americas) Inc.
BALANCED and current income. The Portfolio
invests in securities and financial
instruments to gain exposure to
global equity, global fixed income
and cash equivalent markets,
including global currencies. The
Portfolio may invest in equity and
fixed income securities of issuers
located within and outside the
United States or in open-end
investment companies advised by UBS
Global Asset Management (Americas)
Inc., the Portfolio's subadviser, to
gain exposure to certain global
equity and global fixed income
markets.
--------------------------------------------------------------------------
FIXED AST Western Asset Core Plus Bond Western Asset
INCOME Portfolio: seeks to maximize total Management
return, consistent with prudent Company
investment management and liquidity
needs, by investing to obtain its
average specified duration. The
Portfolio's current target average
duration is generally 2.5 to 7
years. The Portfolio pursues this
objective by investing in all major
fixed income sectors with a bias
towards non-Treasuries.
--------------------------------------------------------------------------
28
-------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
-------------------------------------------------------------------------
LARGE Equity Portfolio: seeks long-term ClearBridge
CAP growth of capital. The Portfolio Advisors, LLC;
BLEND invests at least 80% of its Jennison Associates
investable assets in common stocks LLC
of major established corporations as
well as smaller companies that the
subadvisers believe offer attractive
prospects of appreciation.
-------------------------------------------------------------------------
INTER- Global Portfolio: seeks long-term LSV Asset
NATIONAL growth of capital. The Portfolio Management;
EQUITY invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign Management, LLC;
and U.S. companies. Each subadviser T. Rowe Price
for the Portfolio generally will use Associates, Inc.;
either a "growth" approach or a William Blair &
"value" approach in selecting either Company, LLC
foreign or U.S. common stocks.
-------------------------------------------------------------------------
LARGE Jennison Portfolio: seeks long-term Jennison Associates
CAP growth of capital. The Portfolio LLC
GROWTH invests primarily in equity
securities of major, established
corporations that the subadviser
believes offer above-average growth
prospects. The Portfolio may invest
up to 30% of its total assets in
foreign securities. Stocks are
selected on a company-by-company
basis using fundamental analysis.
Normally 65% of the Portfolio's
total assets are invested in equity
and equity- related securities of
companies with capitalization in
excess of $1 billion.
-------------------------------------------------------------------------
FIXED Money Market Portfolio: seeks Prudential
INCOME maximum current income consistent Investment
with the stability of capital and Management, Inc.
the maintenance of liquidity. The
Portfolio invests in high-quality
short-term money market instruments
issued by the U.S. Government or its
agencies, as well as by corporations
and banks, both domestic and
foreign. The Portfolio will invest
only in instruments that mature in
thirteen months or less, and which
are denominated in U.S. dollars.
-------------------------------------------------------------------------
ASSET SP Aggressive Growth Asset Prudential
ALLOCA- Allocation Portfolio: seeks to Investments LLC
TION/ obtain the highest potential total
BALANCED return consistent with the specified
level of risk tolerance. The
Portfolio may invest in any other
Portfolio of the Fund (other than
another SP Asset Allocation
Portfolio), the AST Marsico Capital
Growth Portfolio of Advanced Series
Trust (AST), and the AST
International Value Portfolio of AST
(the Underlying Portfolios). Under
normal circumstances, the Portfolio
generally will focus on equity
Underlying Portfolios but will also
invest in fixed-income Underlying
Portfolios.
-------------------------------------------------------------------------
ASSET SP Balanced Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios). The
Portfolio will invest in equity and
fixed-income Underlying Portfolios.
-------------------------------------------------------------------------
ASSET SP Conservative Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios).
Under normal circumstances, the
Portfolio generally will focus on
fixed-income Underlying Portfolios
but will also invest in equity
Underlying Portfolios.
-------------------------------------------------------------------------
29
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
------------------------------------------------------------------------
LARGE SP Davis Value Portfolio: seeks Davis Selected
CAP growth of capital. The Portfolio Advisers, L.P.
VALUE invests primarily in common stocks
of U.S. companies with market
capitalizations within the market
capitalization range of the Russell
1000 Value Index. It may also invest
in stocks of foreign companies and
U.S. companies with smaller
capitalizations. The subadviser
attempts to select common stocks of
businesses that possess
characteristics that the subadviser
believe foster the creation of
long-term value, such as proven
management, a durable franchise and
business model, and sustainable
competitive advantages. The
subadviser aims to invest in such
businesses when they are trading at
a discount to their intrinsic worth.
There is a risk that "value" stocks
can perform differently from the
market as a whole and other types of
stocks and can continue to be
undervalued by the markets for long
periods of time.
------------------------------------------------------------------------
ASSET SP Growth Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios).
Under normal circumstances, the
Portfolio generally will focus on
equity Underlying Portfolios but
will also invest in fixed- income
Underlying Portfolios.
------------------------------------------------------------------------
INTER- SP International Growth Portfolio: Marsico Capital
NATIONAL seeks long-term capital Management, LLC;
EQUITY appreciation. The Portfolio invests William Blair &
primarily in equity-related Company, LLC.
securities of foreign issuers. The
Portfolio invests primarily in the
common stock of large and
medium-sized foreign companies,
although it may also invest in
companies of all sizes. Under normal
circumstances, the Portfolio invests
at least 65% of its total assets in
common stock of foreign companies
operating or based in at least five
different countries, which may
include countries with emerging
markets. The Portfolio looks
primarily for stocks of companies
whose earnings are growing at a
faster rate than other companies or
which offer attractive growth
potential.
------------------------------------------------------------------------
INTER- SP International Value Portfolio: LSV Asset
NATIONAL seeks long-term capital Management;
EQUITY appreciation. The Portfolio normally Thornburg
invests at least 80% of the Investment
Portfolio's assets in equity Management, Inc.
securities. The Portfolio will
invest at least 65% of its net
assets in the equity securities of
companies in at least three
different countries, without limit
as to the amount of assets that may
be invested in a single country.
------------------------------------------------------------------------
MID CAP SP Mid Cap Growth Portfolio: seeks Neuberger Berman
GROWTH long-term growth of capital. The Management Inc.
Portfolio normally invests at least
80% of investable assets in common
stocks and related securities, such
as preferred stocks, convertible
securities and depositary receipts
of companies with medium market
capitalizations, which the
subadviser believes have
above-average growth potential. The
Portfolio generally defines medium
market capitalization companies as
those companies with market
capitalizations within the market
capitalization range of the Russell
Mid Cap Growth(R) Index. The
Portfolio's investments may include
securities listed on a securities
exchange or traded in the
over-the-counter markets. The
subadviser uses a bottom-up and
top-down analysis in managing the
Portfolio. This means that
securities are selected based upon
fundamental analysis, as well as a
top-down approach to diversification
by industry and company, and by
paying attention to macro-level
investment themes. The Portfolio may
invest in foreign securities
(including emerging markets
securities).
------------------------------------------------------------------------
FIXED SP PIMCO High Yield Portfolio: seeks Pacific Investment
INCOME to maximize total return consistent Management
with preservation of capital and Company LLC
prudent investment management. The (PIMCO)
Portfolio normally invests at least
80% of its investable assets in a
diversified portfolio of
high-yield/high-risk debt securities
rated below high grade but rated at
least CCC by Moody's Investor
Services, Inc. or equivalently rated
by Standard & Poor's Rating Group or
fitch, or, if unrated, determined by
the subadviser to be of comparable
quality.
------------------------------------------------------------------------
30
-------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------------
FIXED SP PIMCO Total Return Portfolio: Pacific Investment
INCOME seeks to maximize total return Management
consistent with preservation of Company LLC
capital and prudent investment (PIMCO)
management. The Portfolio will
invest in a diversified portfolio of
fixed-income investment instruments
of varying maturities.
-------------------------------------------------------------------------
MID CAP SP Prudential U.S. Emerging Growth Jennison Associates
GROWTH Portfolio: seeks long-term capital LLC
appreciation. The Portfolio normally
invests at least 80% of investable
assets in equity securities of small
and medium sized U.S. companies that
the subadviser believes have the
potential for above-average earnings
growth. The subadviser seeks to
invest in companies that it believes
are poised to benefit from an
acceleration of growth or an
inflection point in a company's
growth rate that is not currently
reflected in the stock price. The
team uses a research-intensive
approach based on internally
generated fundamental research.
-------------------------------------------------------------------------
SMALL SP Small-Cap Value Portfolio: seeks ClearBridge
CAP long-term capital appreciation. The Advisors, LLC;
VALUE Portfolio normally invests at least Goldman Sachs
80% its net assets plus borrowings Asset Management,
for investment purposes in the L.P.
equity securities of small
capitalization companies. The
Portfolio generally defines small
capitalization companies as those
companies with market capitalization
within the market capitalization
range of the Russell 2000 Value
Index. The Portfolio focuses on
equity securities that are believed
to be undervalued in the marketplace.
-------------------------------------------------------------------------
LARGE SP Strategic Partners Focused Growth AllianceBernstein
CAP Portfolio: seeks long-term growth of L.P.; Jennison
GROWTH capital. The Portfolio normally Associates LLC
invests at least 65% of total assets
in equity-related securities of U.S.
companies that the subadvisers
believe to have strong capital
appreciation potential. The
Portfolio's strategy is to combine
the efforts of two subadvisers and
to invest in the favorite stock
selection ideas of three portfolio
managers (two of whom invest as a
team). Each subadviser to the
Portfolio utilizes a growth style:
Jennison selects approximately 20
securities and AllianceBernstein
selects approximately 30 securities.
The portfolio managers build a
portfolio with stocks in which they
have the highest confidence and may
invest more than 5% of the
Portfolio's assets in any one
issuer. The Portfolio is
nondiversified, meaning it can
invest a relatively high percentage
of its assets in a small number of
issuers. Investing in a
nondiversified portfolio,
particularly a portfolio investing
in approximately 50 equity-related
securities, involves greater risk
than investing in a diversified
portfolio because a loss resulting
from the decline in the value of one
security may represent a greater
portion of the total assets of a
nondiversified portfolio.
-------------------------------------------------------------------------
LARGE Stock Index Portfolio: seeks Quantitative
CAP investment results that generally Management
BLEND correspond to the performance of Associates LLC
publicly-traded common stocks. With
the price and yield performance of
the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) as the
benchmark, the Portfolio normally
invests at least 80% of investable
assets in S&P 500 stocks. The S&P
500 represents more than 70% of the
total market value of all
publicly-traded common stocks and is
widely viewed as representative of
publicly-traded common stocks as a
whole. The Portfolio is not
"managed" in the traditional sense
of using market and economic
analyses to select stocks. Rather,
the portfolio manager purchases
stocks in proportion to their
weighting in the S&P 500.
-------------------------------------------------------------------------
LARGE Value Portfolio: seeks capital Jennison Associates
CAP appreciation. The Portfolio invests LLC
VALUE primarily in common stocks that the
subadviser believes are undervalued
- those stocks that are trading
below their underlying asset value,
cash generating ability and overall
earnings and earnings growth. There
is a risk that "value" stocks can
perform differently from the market
as a whole and other types of stocks
and can continue to be undervalued
by the markets for long periods of
time. Normally at least 65% of the
Portfolio's total assets is invested
in the common stock and convertible
securities of companies that the
subadviser believes will provide
investment returns above those of
the Russell 1000(R) Value Index and,
over the long term, the S&P 500
Index. Most of the investments will
be securities of large
capitalization companies. The
Portfolio may invest up to 25% of
its total assets in real estate
investment trusts (REITs) and up to
30% of its total assets in foreign
securities.
-------------------------------------------------------------------------
31
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
-----------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-----------------------------------------------------------------------
NATIONWIDE VARIABLE INSURANCE TRUST
-----------------------------------------------------------------------
INTER- Gartmore NVIT Developing Markets NWD Management
NATIONAL Fund: seeks long-term capital & Research Trust/
EQUITY appreciation, under normal Gartmore Global
conditions by investing at least 80% Partners
of the value of its net assets in
equity securities of companies of
any size based in the world's
developing market countries. Under
normal market conditions,
investments are maintained in at
least six countries at all times
with no more than 35% of the value
of its net assets invested in
securities of any one country.
-----------------------------------------------------------------------
JANUS ASPEN SERIES
-----------------------------------------------------------------------
LARGE Janus Aspen Series: Large Cap Growth Janus Capital
CAP Portfolio - Service Shares: seeks Management LLC
GROWTH long-term growth of capital in a
manner consistent with the
preservation of capital. The
Portfolio invests under normal
circumstances, at least 80% of its
net assets in common stocks of
large-sized companies. Large-sized
companies are those whose market
capitalizations fall within the
range of companies in the Russell
1000(R) Index at the time of
purchase. The portfolio managers
apply a "bottom up" approach in
choosing investments. In other
words, the portfolio managers look
at companies one at a time to
determine if a company is an
attractive investment opportunity
and if it is consistent with the
Portfolio's investment policies. If
the portfolio managers are unable to
find such investments, the
Portfolio's uninvested assets may be
held in cash or similar investments,
subject to the Portfolio's specific
investment policies.
Within the parameters of its
specific investment policies, the
Portfolio may invest in foreign
equity and debt securities, which
may include investments in emerging
markets.
The Portfolio may also lend
portfolio securities on a short-term
or long-term basis, up to one-third
of its total assets.
-----------------------------------------------------------------------
EVERGREEN VARIABLE ANNUITY TRUST
-----------------------------------------------------------------------
ASSET Evergreen VA Balanced: seeks capital Evergreen
ALLOCA- growth and current income. The Investment
TION/ Portfolio invests in a portfolio of Management
BALANCED equity and debt securities chosen Company, LLC
for the potential for current income
and capital growth. The proportion
of the Fund's assets invested in
fixed income and equity securities
will change based on the portfolio
manager's assessment of economic
conditions and investment
opportunities. The Portfolio
normally invests at least 25% of its
assets in fixed income securities.
The equity portion of the Portfolio
may include principally common and
preferred stocks of U.S. companies
across a broad range of market
capitalizations, but will generally
maintain a dollar-weighted average
market capitalization within the
market capitalization range tracked
by the Russell 1000 Index. The
Portfolio's manager will seek out
companies that she believes have
strong fundamental attributes and
growth prospects with valuations
that leave ample room for capital
appreciation. The Portfolio's fixed
income investments may include U.S.
government securities, corporate
bonds, convertible bonds,
mortgage-backed securities,
asset-backed securities,
collateralized mortgage obligations
(CMOs) and other income producing
securities. The Portfolio may invest
without limit in securities rated
below investment grade (or unrated
securities determined by the
portfolio manager to be of
comparable quality). The Fund may,
but will not necessarily, use a
variety of derivative instruments,
such as structured notes, futures
and options, and swaps agreements,
as an alternative to investments
directly in income-producing
securities or to manage risk. The
Portfolio may also, but will not
necessarily, enter into foreign
currency exchange contracts to hedge
against adverse changes in currency
exchange rates related to non-US
dollar denominated holdings. The
Portfolio can invest up to 25% of
its assets in foreign equity and
fixed income securities.
-----------------------------------------------------------------------
32
-------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------
LARGE Evergreen VA Fundamental Large Cap: Evergreen
CAP seeks capital growth with the Investment
VALUE potential for current income. The Management
Portfolio invests, under normal Company, LLC
conditions, at least 80% of its
assets in common stocks of large
U.S. companies (i.e., companies
whose market capitalizations fall
within the market capitalization
range of the companies tracked by
the Russell 1000(R) Index, measured
at the time of purchase). The
Portfolio earns current income from
dividends paid on equity securities
and may seek additional income
primarily by investing up to 20% of
its assets in convertible bonds,
including below investment grade
bonds, and convertible preferred
stocks of any quality. The Portfolio
may invest up to 20% of its assets
in foreign securities. The
Portfolio's stock selection is based
on a diversified style of equity
management that allows the Portfolio
to invest in both value- and growth-
oriented equity securities. "Value"
securities are securities which the
Portfolio's manager believes are
currently undervalued in the
marketplace. "Growth" stocks are
stocks of companies which the
Portfolio's manager believes have
anticipated earnings ranging from
steady to accelerated growth. The
Portfolio's manager utilizes an
intrinsic value approach to look for
companies that he believes are
temporarily undervalued in the
marketplace, sell at a discount to
their private market values and
display certain characteristics such
as earning a high return on premium
to cost of capital or a sustainable
competitive advantage in their
industry.
-------------------------------------------------------------------
SMALL Evergreen VA Growth: seeks long-term Evergreen
CAP capital growth. The Portfolio Investment
GROWTH invests at least 75% of its assets Management
in common stocks of small- and Company, LLC
medium-sized companies (i.e.,
companies whose market
capitalizations fall within the
market capitalization range of the
companies tracked by the Russell
2000(R) Growth Index, measured at
the time of purchase). The remaining
portion of the Portfolio's assets
may be invested in companies of any
size. The Portfolio's managers
employ a growth-style of equity
management and will generally seek
to purchase stocks of companies that
have demonstrated earnings growth
potential which they believe is not
yet reflected in the stock's market
price. The Portfolio's managers
consider potential earnings growth
above the average earnings growth of
companies included in the Russell
2000(R) Growth Index as a key factor
in selecting investments.
-------------------------------------------------------------------
INTER- Evergreen VA International Equity: Evergreen
NATIONAL seeks long-term capital growth and Investment
EQUITY secondarily, modest income. The Management
Portfolio will normally invest at Company, LLC
least 80% of its assets in equity
securities issued by, in the
manager's opinion, established and
quality non-U.S. companies located
in countries with developed markets.
The Portfolio may purchase
securities across all market
capitalizations. The Portfolio
normally invests at least 65% of its
assets in securities of companies in
at least three countries (other than
the U.S.). The Portfolio may also
invest in emerging markets. The
Portfolio's managers seek both
growth and value opportunities For
growth investments, the Portfolio's
manager seeks, among other things,
good business models, good
management and growth in cash flows.
For value investments, the
Portfolio's manager seeks, among
other things, companies that are
undervalued in the marketplace
compared to their assets. The
Portfolio normally intends to seek
modest income from dividends paid by
its equity holdings. Other than cash
and cash equivalents, the Portfolio
intends to invest substantially all
of its assets in the securities of
non-U.S. issuers.
-------------------------------------------------------------------
SPECIALTY Evergreen VA Omega: seeks long-term Evergreen
capital growth. The Portfolio Investment
invests primarily, and under normal Management
conditions substantially all of its Company, LLC
assets, in common stocks of U.S.
companies across any market
capitalizations. The Portfolio's
manager employs a growth style of
equity management that seeks to
emphasizes companies with cash flow
growth, sustainable competitive
advantages, returns on invested
capital above their cost of capital
and the ability to manage for
profitable growth that can create
long-term value for shareholders.
-------------------------------------------------------------------
33
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
----------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
----------------------------------------------------------------
SMALL Evergreen VA Special Values: seeks Evergreen
CAP capital growth in the value of its Investment
VALUE shares. The Portfolio normally Management
invests at least 80% of its assets Company, LLC
in common stocks of small U.S.
companies (i.e. companies whose
market capitalizations fall within
the market capitalization range of
the companies tracked by the Russell
2000(R) Index, measured at the time
of purchase). The remaining 20% of
the Portfolio's assets may be
represented by cash or invested in
various cash equivalents or common
stocks of any market capitalization.
The Portfolio's manager seeks to
limit the investment risk of small
company investing by seeking stocks
that trade below what the manager
considers their intrinsic value. The
Portfolio's manager looks
specifically for various growth
triggers, or catalysts, that will
bring the stock's price into line
with its actual or potential value,
such as new products, new
management, changes in regulation
and/or restructuring potential.
----------------------------------------------------------------
FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
.. a one-year fixed interest rate option, and
.. a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your
money earning interest at different rates and each interest rate period
maturing at a different time. While these interest rates may change from time
to time, they will not be less than the minimum interest rate dictated by
applicable state law. We may offer lower interest rates for Contracts With
Credit than for Contracts Without Credit. The interest rates we pay on the
fixed interest rate options may be influenced by the asset-based charges
assessed against the Separate Account.
Payments allocated to the fixed interest rate options become part of Pruco
Life of New Jersey's general assets. Please note that if you elect Highest
Daily Lifetime Five, you cannot invest in either of these fixed interest rate
options.
One-year Fixed Interest Rate Option
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this
option for more than one year.
Dollar Cost Averaging Fixed Rate Option
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. You may not transfer
from other investment options to the DCA Fixed Rate Option. Transfers to the
one-year fixed interest rate option will remain in the general account.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$2,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transferred
to the selected variable investment option, or to the one-year fixed interest
rate option in either six or twelve monthly installments, and you may not
change that number of monthly installments after you have chosen the DCA Fixed
Rate Option. You may allocate to both the six-month and twelve-month options.
(In the future, we may make available other numbers of transfers and other
transfer schedules - for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if
you choose a twelve-payment transfer schedule, each transfer generally will
equal 1/12th of the amount
34
you allocated to the DCA Fixed Rate Option. In either case, the final transfer
amount generally will also include the credited interest. You may change at
any time the investment options into which the DCA Fixed Rate Option assets
are transferred. You may make a one time transfer of the remaining value out
of your DCA Fixed Rate Option, if you so choose. Transfers from the DCA Fixed
Rate Option do not count toward the maximum number of free transfers allowed
under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all or
part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we will
recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
Under the Market Value Adjustment Option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will
be no less than the minimum interest rate dictated by applicable state law
with respect to any guarantee period. This option is only available in the
Contract Without Credit. The Market Value Adjustment Option is registered
separately from the variable investment options, and the amount of market
value adjustment option securities registered is stated in that registration
statement.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE 30-DAY
PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL BE
SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at
least $1,000 if you choose this option.
We refer to interest rates as annual rates, although we credit interest within
each guarantee period on a daily basis. The daily interest that we credit is
equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center
until the earliest to occur of any of the following events: (a) full surrender
of the contract, (b) commencement of annuity payments or settlement, (c) end
of the guarantee period, (d) transfer of the value in the guarantee period,
(e) payment of a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a)withdraw or transfer the value of the guarantee period,
(b)allocate the value to another available guarantee period or other
investment option (provided that the new guarantee period ends prior to the
annuity date). You will receive the interest rate applicable on the date we
receive your instruction, or
(c)apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
Contract Value in your maturing guarantee period, we will reinvest the amount
in the Prudential Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) listed immediately above, you
will receive the current interest rate applicable to the guarantee period
having the same duration as the guarantee period that just matured, which is
offered on the day immediately following the end of the matured guarantee
period. However, if at that time we do not offer a guarantee period with the
same duration as that which matured, you will then receive the current
interest rate applicable to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed by
us and the interest amount that your money will earn is guaranteed by us to be
at least the minimum interest rate dictated by applicable state law.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life of New Jersey.
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2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
Market Value Adjustment
When you allocate a purchase payment or transfer Contract Value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected by
changes in interest rates, among other factors. The market value adjustment
that we assess against your Contract Value if you withdraw or transfer outside
the 30-day period discussed above involves our attributing to you a portion of
our investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in
a reduction of the withdrawal proceeds that you receive). For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining Contract Value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
.. We determine the market value adjustment according to a mathematical
formula, which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we
also provide hypothetical examples of how the formula works.
.. A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
.. In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the Contract Value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFIT IN YOUR GUARANTEE PERIOD DOES NOT DEPEND ON THE
INVESTMENT PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE HOLD WITH
RESPECT TO YOUR GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET VALUE
ADJUSTMENT, WE DO NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS AND
OTHER INSTRUMENTS THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. The minimum
transfer amount is the lesser of $250 or the amount in the investment option
from which the transfer is to be made. In addition, you can transfer your
Contract Value out of a market value adjustment guarantee period into another
market value adjustment guarantee period, into a variable investment option,
or into a one-year fixed interest rate option, although a market value
adjustment will apply to any transfer you make outside the 30-day period
discussed above. You may transfer Contract Value into the Market Value
Adjustment Option at any time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be
genuine. Your transfer request will take effect at the end of the business day
on which it was received in good order by us, or by certain entities that we
have specifically designated. Our business day generally closes at 4:00 p.m.
Eastern time. Our business day may close earlier, for example if regular
trading on the New York Stock Exchange closes early. Transfer requests
received after the close of the business day will take effect at the end of
the next business day.
With regard to the Market Value Adjustment Option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer
from the market value adjustment option, but you do not specify the guarantee
period from which funds are to be taken, then we will transfer funds from the
guarantee period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE DCA
FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE ONE
YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. (As noted in the
fee table, we have different transfer charges under the Beneficiary
Continuation Option).
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Currently we charge $25 for each transfer after the twelfth in a contract
year, and we have the right to increase this charge up to $30. (Dollar Cost
Averaging and Auto-Rebalancing transfers do not count toward the 12 free
transfers per year.)
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing",
(ii) will treat multiple transfer requests submitted on the same business day
as a single transfer, and (iii) do not count any transfer that involves one of
our systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction
costs, or affect performance. For those reasons, the contract was not designed
for persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in
any contract year for all existing or new contract owners, and to take the
other actions discussed below. We also reserve the right to limit the number
of transfers in any contract year or to refuse any transfer request for an
owner or certain owners if: (a) we believe that excessive transfer activity
(as we define it) or a specific transfer request or group of transfer requests
may have a detrimental effect on accumulation unit values or the share prices
of the underlying mutual funds; or (b) we are informed by a fund (e.g., by the
fund's portfolio manager) that the purchase or redemption of fund shares must
be restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate
amount of a trade or trades represented a relatively large proportion of the
total assets of a particular underlying mutual fund. In furtherance of our
general authority to restrict transfers as described above, and without
limiting other actions we may take in the future, we have adopted the
following specific restrictions:
.. With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such
amount into a particular variable investment option, and within 30 calendar
days thereafter transfer (the "Transfer Out") all or a portion of that
amount into another variable investment option, then upon the Transfer Out,
the former variable investment option becomes restricted (the "Restricted
Option"). Specifically, we will not permit subsequent transfers into the
Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not (i) count transfers made in
connection with one of our systematic programs, such as asset allocation
and automated withdrawals and (ii) categorize as a transfer the first
transfer that you make after the contract date, if you make that transfer
within 30 calendar days after the contract date. Even if an amount becomes
restricted under the foregoing rules, you are still free to redeem the
amount from your contract at any time.
.. We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable
investment option on the business day subsequent to the business day on
which the exchange request was received. Before implementing such a
practice, we would issue a separate written notice to contract owners that
explains the practice in detail. In addition, if we do implement a delayed
exchange policy, we will apply the policy on a uniform basis to all
contracts in the relevant class.
.. The portfolios may have adopted their own policies and procedures with
respect to excessive trading of their respective shares, and we reserve the
right to enforce these policies and procedures. The prospectuses for the
portfolios describe any such policies and procedures, which may be more or
less restrictive than the policies and procedures we have adopted. Under
SEC rules, we are required to: (1) enter into a written agreement with each
portfolio or its principal underwriter that obligates us to provide to the
portfolio promptly upon request certain information about the trading
activity of individual contract owners, and (2) execute instructions from
the portfolio to restrict or prohibit further purchases or transfers by
specific contract owners who violate the excessive trading policies
established by the portfolio. In addition, you should be aware that some
portfolios may receive "omnibus" purchase and redemption orders from other
insurance companies or intermediaries such as retirement plans. The omnibus
orders reflect the aggregation and netting of multiple orders from
individual owners of variable insurance contracts and/or individual
retirement plan participants. The omnibus nature of these orders may limit
the portfolios in their ability to apply their excessive trading policies
and procedures. In addition, the other insurance companies and/or
retirement plans may have different policies and procedures or may not have
any such policies and procedures because of contractual limitations. For
these reasons, we cannot guarantee that the portfolios (and thus the
contract owners) will not be harmed by transfer activity relating to other
insurance companies and/or retirement plans that may invest in the
portfolios.
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2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
.. A portfolio also may assess a short term trading fee in connection with a
transfer out of the variable investment option investing in that portfolio
that occurs within a certain number of days following the date of
allocation to the variable investment option. Each portfolio determines the
amount of the short term trading fee and when the fee is imposed. The fee
is retained by or paid to the portfolio and is not retained by us. The fee
will be deducted from your Contract Value, to the extent permitted by law.
At present, no Portfolio has adopted a short-term trading fee.
.. If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
.. We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract
owners who own variable life insurance or variable annuity contracts
(regardless of jurisdiction) that do not impose the above-referenced
transfer restrictions, might make more numerous and frequent transfers than
contract owners who are subject to such limitations. Because contract
owners who are not subject to the same transfer restrictions may have the
same underlying mutual fund portfolios available to them, unfavorable
consequences associated with such frequent trading within the underlying
mutual fund (e.g., greater portfolio turnover, higher transaction costs, or
performance or tax issues) may affect all contract owners. Apart from
jurisdiction-specific and contract differences in transfer restrictions, we
will apply these rules uniformly, and will not waive a transfer restriction
for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar
amount or a percentage out of any variable investment option into any other
variable investment option or the one-year fixed interest rate option. You can
have these automatic transfers occur monthly, quarterly, semiannually or
annually. By investing amounts on a regular basis instead of investing the
total amount at one time, dollar cost averaging may decrease the effect of
market fluctuation on the investment of your purchase payment. Of course,
dollar cost averaging cannot ensure a profit or protect against loss in
declining markets.
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
Your transfers will occur on the last calendar day of each transfer period you
have selected, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on a particular transfer date, the
transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging
feature is available only during the contract accumulation phase and is
offered without charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you
a questionnaire to complete that will help determine a program that is
appropriate for you. Your asset allocation will be prepared based on your
answers to the questionnaire. You will not be charged for this service, and
you are not obligated to participate or to invest according to program
recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns
over the long term. However, asset allocation does not guarantee a profit or
protect against a loss. You are not obligated to participate or to invest
according to the program recommendations. We do not intend to provide any
personalized investment advice in connection with these programs and you
should not rely on these programs as providing individualized investment
recommendations to you. The asset allocation programs do not guarantee better
investment results. We reserve the right to terminate or change the asset
allocation programs at any time. You should consult your representative before
electing any asset allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to
shift. For example, an investment option that initially holds only a small
percentage of your assets could perform much better than another investment
option. Over time, this option could increase to a larger percentage of your
assets than you desire. You can direct us to automatically rebalance your
assets to return to your original allocation percentage or to a
38
subsequent allocation percentage you select. We will rebalance only the
variable investment options that you have designated. The DCA account cannot
participate in this feature.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is
open on that date. If the New York Stock Exchange is not open on that date,
the rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the
asset allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) or 72(q) of the Internal Revenue Code of 1986, as
amended (Code), and annuity payments. Scheduled transactions are processed and
valued as of the date they are scheduled, unless the scheduled day is not a
business day. In that case, the transaction will be processed and valued on
the next business day, unless (with respect to required minimum distributions,
substantially equal periodic payments under Section 72(t) or 72(q) of the
Code, and annuity payments only), the next business day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior business day.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by
the variable investment options. However, we vote the shares of the mutual
funds according to voting instructions we receive from contract owners. When a
vote is required, we will mail you a proxy which is a form that you need to
complete and return to us to tell us how you wish us to vote. When we receive
those instructions, we will vote all of the shares we own on your behalf in
accordance with those instructions. We will vote fund shares for which we do
not receive instructions, and any other shares that we own in our own right,
in the same proportion as shares for which we receive instructions from
contract owners. This voting procedure is sometimes referred to as "mirror
voting" because, as indicated in the immediately preceding sentence, we mirror
the votes that are actually cast, rather than decide on our own how to vote.
In addition, because all the shares of a given mutual fund held within our
separate account are legally owned by us, we intend to vote all of such shares
when that underlying fund seeks a vote of its shareholders. As such, all such
shares will be counted towards whether there is a quorum at the underlying
fund's shareholder meeting and towards the ultimate outcome of the vote. Thus,
under "mirror voting," it is possible that the votes of a small percentage of
contract owners who actually vote will determine the ultimate outcome. We may
change the way your voting instructions are calculated if it is required or
permitted by federal or state regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in
existing funds. We would not do this without the approval of the Securities
and Exchange Commission (SEC) and any necessary state insurance departments.
You will be given specific notice in advance of any substitution we intend to
make.
3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION)
PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the first contract
anniversary. Annuity payments must begin no later than the later of the
contract anniversary coinciding with or next following the annuitant's 90th
birthday or the tenth contract anniversary.
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners Plus 3 variable annuity contract offers an optional
Guaranteed Minimum Income Benefit, which we describe below. Your annuity
options vary depending upon whether you choose this benefit.
Please note that annuitization essentially involves converting your Contract
Value to an annuity payment stream, the length of which depends on the terms
of the applicable annuity option. Thus, once annuity payments begin, your
death benefit is determined solely under the terms of the applicable annuity
payment option, and you no longer participate in any optional living benefit
(unless you have annuitized under that benefit).
39
3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION) continued
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement
options." During the income phase, all of the annuity options under this
contract are fixed annuity options. This means that your participation in the
variable investment options ends on the annuity date. If an annuity option is
not selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by
applicable law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION
CANNOT BE CHANGED AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY
PAYMENT OPTIONS DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE AN
OPTIONAL LIFETIME WITHDRAWAL BENEFIT, THERE ARE ADDITIONAL ANNUITY PAYMENT
OPTIONS THAT ARE ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS
PROSPECTUS FOR ADDITIONAL DETAILS.
Option 1
Annuity Payments for a Fixed Period: Under this option, we will make equal
payments for the period chosen, up to 25 years (but not to exceed life
expectancy). The annuity payments may be made monthly, quarterly,
semiannually, or annually, as you choose, for the fixed period. If the
annuitant dies during the income phase, payments will continue to the
beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
Option 2
Life Income Annuity Option: Under this option, we will make annuity payments
monthly, quarterly, semiannually, or annually as long as the annuitant is
alive. If the annuitant dies before we have made 10 years worth of payments,
we will pay the beneficiary in one lump sum the present value of the annuity
payments scheduled to have been made over the remaining portion of that 10
year period, unless we were specifically instructed that such remaining
annuity payments continue to be paid to the beneficiary. The present value of
the remaining annuity payments is calculated by using the interest rate used
to compute the amount of the original 120 payments. The interest rate will be
at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
required minimum distribution provisions under the tax law when selecting your
annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked. You may not elect both
GMIB and the Lifetime Five Income Benefit.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the
annual interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described
below. At this point, the GMIB protected value will be increased by any
subsequent invested purchase payments and reduced proportionally by
withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
.. The annuitant must be 75 or younger in order for you to elect the
Guaranteed Minimum Income Benefit.
.. If you choose the Guaranteed Minimum Income Benefit, we will impose an
annual charge equal to 0.50% for contracts sold on or after May 1, 2004
(0.45% for all other contracts) of the average GMIB protected value
described below. The maximum GMIB charge is 1.00% of average GMIB protected
value. Please note that the charge is calculated based on average GMIB
protected value, not Contract Value. Thus, for example, the fee would not
decline on account of a reduction in Contract Value.
.. Under the contract terms governing the GMIB, we can require GMIB
participants to invest only in designated underlying mutual funds or can
require GMIB participants to invest according to an asset allocation model.
Owners electing this benefit currently must allocate contract value to one
or more of the following asset allocation portfolios of the Advanced Series
Trust
40
(we reserve the right to change these required portfolios on a prospective
basis): AST Capital Growth Asset Allocation Portfolio, AST Balanced Asset
Allocation Portfolio, AST Conservative Asset Allocation Portfolio, AST
Preservation Asset Allocation Portfolio, AST Advanced Strategies Portfolio,
AST First Trust Balanced Target Portfolio, AST First Trust Capital
Appreciation Target Portfolio, or AST T. Rowe Price Asset Allocation
Portfolio.
.. TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING
PERIOD IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7th CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET
(AS DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING
WITH THE DATE OF THE MOST RECENT RESET. IN LIGHT OF THIS WAITING PERIOD
UPON RESETS, IT IS NOT RECOMMENDED THAT YOU RESET YOUR GUARANTEED MINIMUM
INCOME BENEFIT IF THE REQUIRED BEGINNING DATE UNDER IRS MINIMUM
DISTRIBUTION REQUIREMENTS WOULD COMMENCE DURING THE 7 YEAR WAITING PERIOD.
SEE "MINIMUM DISTRIBUTIONS REQUIREMENTS AND PAYMENT OPTION" IN SECTION 10
FOR ADDITIONAL INFORMATION ON IRS REQUIREMENTS.
Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the income
phase with the Guaranteed Minimum Income Benefit by submitting the necessary
forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset,
the Contract Value at the time of the reset), increased daily at an effective
annual interest rate of 5% starting on the date each invested purchase payment
is made, until the cap is reached (GMIB roll-up cap). We will reduce this
amount by the effect of withdrawals. The GMIB roll-up cap is equal to two
times each invested purchase payment (for a reset, two times the sum of
(1) the Contract Value at the time of the reset, and (2) any invested purchase
payments made subsequent to the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
.. the contract anniversary coinciding with or next following the annuitant's
80th birthday,
.. the 7th contract anniversary, or
.. 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced proportionally by withdrawals.
Effect of Withdrawals
In any contract year when the GMIB protected value is increasing at the rate
of 5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value calculated on the contract anniversary (or,
during the first contract year, on the contract date). Any withdrawals made
after the dollar-for-dollar limit has been reached will proportionally reduce
the GMIB protected value. We calculate the proportional reduction by dividing
the Contract Value after the withdrawal by the Contract Value immediately
following the withdrawal of any available dollar-for-dollar amount. The
resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%. In each
contract year during which the GMIB protected value has stopped increasing at
the 5% rate, withdrawals will reduce the GMIB protected value proportionally.
The GMIB roll-up cap is reduced by the sum of all reductions described above.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are
January 1, 2006; 2.) an initial purchase payment of $250,000; 3.) an initial
GMIB protected value of $250,000; 4.) an initial 200% cap of $500,000; and 5.)
an initial dollar-for-dollar limit of $12,500 (5% of $250,000):
Example 1. Dollar-for-dollar Reduction
A $10,000 withdrawal is taken on February 1, 2006 (in the first contract
year). No prior withdrawals have been taken. Immediately prior to the
withdrawal, the GMIB protected value is $251,038.10 (the initial value
accumulated for 31 days at an annual effective rate of 5%). As the amount
withdrawn is less than the dollar-for-dollar limit:
.. The GMIB protected value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
.. The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $500,000 to $490,000).
.. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first contract year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
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3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION) continued
Example 2. Dollar-for-dollar and Proportional Reductions
A second $10,000 withdrawal is taken on March 1, 2006 (still within the first
contract year). Immediately before the withdrawal, the Contract Value is
$220,000 and the GMIB protected value is $241,941.95. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
.. The GMIB protected value is first reduced by the Remaining Limit (from
$241,941.95 to $239,441.95).
.. The result is then further reduced by the ratio of A to B, where:
.. A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
.. B is the Contract Value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,441.95 X (1 -
($7,500/$217,500)), or $231,185.33.
.. The GMIB 200% cap is reduced by the sum of all reductions above ($490,000 -
$2,500 - $8,256.62, or $479,243.38).
.. The Remaining Limit is set to zero (0) for the balance of the first
contract year.
Example 3. Dollar-for-dollar Limit in Second Contract Year
A $10,000 withdrawal is made on the first anniversary of the contract date,
January 1, 2007 (second contract year). Prior to the withdrawal, the GMIB
protected value is $240,837.69. The dollar-for-dollar limit is equal to 5% of
this amount, or $12,041.88. As the amount withdrawn is less than the
dollar-for-dollar limit:
.. The GMIB protected value is reduced by the amount withdrawn (i.e., reduced
by $10,000, from $240,837.69 to $230,837.69).
.. The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,243.38 to $469,243.38).
.. The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.88 to $2,041.88).
GMIB Reset Feature
You may elect to "reset" your GMIB protected value to equal your current
Contract Value twice over the life of the contract. You may only exercise this
reset option if the annuitant has not yet reached his or her 76th birthday. If
you reset, you must wait a new 7-year period from the most recent reset to
exercise the Guaranteed Minimum Income Benefit. Further, we will reset the
GMIB roll-up cap to equal two times the GMIB protected value as of such date.
Additionally, if you reset, we will determine the GMIB payout amount by using
the GMIB guaranteed annuity purchase rates (specified in your contract) based
on the number of years since the most recent reset. These purchase rates may
be less advantageous than the rates that would have applied absent a reset.
Payout Amount
The Guaranteed Minimum Income Benefit payout amount is based on the age and
sex of the annuitant (and, if there is one, the co-annuitant). After we first
deduct a charge for any applicable premium taxes that we are required to pay,
the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout
option, applied to the GMIB guaranteed annuity purchase rates (which are
generally less favorable than the annuity purchase rates for annuity
payments not involving GMIB) and based on the annuity payout option as
described below, or
2) the adjusted Contract Value - that is, the value of the contract adjusted
for any market value adjustment minus any charge we impose for premium
taxes and withdrawal charges - as of the date you exercise the GMIB payout
option applied to the current annuity purchase rates then in use.
GMIB Annuity Payout Options
We currently offer two Guaranteed Minimum Income Benefit annuity payout
options. Each option involves payment for at least a period certain of ten
years. In calculating the amount of the payments under the GMIB we apply
certain assumed interest rates, equal to 2% annually for a waiting period of
7-9 years, and 2.5% annually for waiting periods of 10 years or longer for
contracts sold on or after May 1, 2004 (and 2.5% annually for a waiting period
of 7-9 years, 3% annually for a waiting period of 10-14 years, and 3.5%
annually for waiting periods of 15 years or longer for all other contracts).
GMIB Option 1
Single Life Payout Option: We will make monthly payments for as long as the
annuitant lives, with payments for a period certain. We will stop making
payments after the later of the death of the annuitant or the end of the
period certain.
GMIB Option 2
Joint Life Payout Option: In the case of an annuitant and co-annuitant, we
will make monthly payments for the joint lifetime of the annuitant and
co-annuitant, with payments for a period certain. If the co-annuitant dies
first, we will continue to make payments until the later of the death of the
annuitant and the end of the period certain. If the annuitant dies first, we
will continue to make
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payments until the later of the death of the co-annuitant and the end of the
period certain, but if the period certain ends first, we will reduce the
amount of each payment to 50% of the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly,
semi-annually or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing
of your purchase payments, your GMIB protected value is increasing in ways we
did not intend. In determining whether to limit purchase payments, we will
look at purchase payments which are disproportionately larger than your
initial purchase payment and other actions that may artificially increase the
GMIB protected value. Certain state laws may prevent us from limiting your
subsequent purchase payments. You must exercise one of the GMIB payout options
described above no later than 30 days after the later of the contract
anniversary coinciding with or next following the annuitant's attainment of
age 90 or the 10th contract anniversary.
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your Contract Value declines
significantly due to negative investment performance. If your Contract Value
is not significantly affected by negative investment performance, it is
unlikely that the purchase of GMIB will result in your receiving larger
annuity payments than if you had not purchased GMIB. This is because the
assumptions that we use in computing the GMIB, such as the annuity purchase
rates, (which include assumptions as to age-setbacks and assumed interest
rates), are more conservative than the assumptions that we use in computing
non-GMIB annuity payout options. Therefore, you may generate higher income
payments if you were to annuitize a lower Contract Value at the current
annuity purchase rates, than if you were to annuitize under the GMIB with a
higher GMIB protected value than your Contract Value but at the annuity
purchase rates guaranteed under the GMIB.
Terminating The Guaranteed Minimum Income Benefit
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is
fully surrendered, on the date the death benefit is payable to your
beneficiary (unless your surviving spouse elects to continue the contract), or
on the date that your Contract Value is transferred to begin making annuity
payments. The GMIB may also be terminated if you designate a new annuitant who
would not be eligible to elect the GMIB based on his or her age at the time of
the change.
Upon termination of the GMIB, we will deduct the charge from your Contract
Value for the portion of the contract year since the prior contract
anniversary (or the contract date if in the first contract year).
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our
distributing to you in increments the value that you have accumulated. We make
these incremental payments either over a specified time period (e.g., 15
years) (fixed period annuities) or for the duration of the life of the
annuitant (and possibly co-annuitant) (life annuities). There are certain
assumptions that are common to both fixed period annuities and life annuities.
In each type of annuity, we assume that the value you apply at the outset
toward your annuity payments earns interest throughout the payout period. For
annuity options within the GMIB, this interest rate ranges from 2% to 2.5% for
contracts sold on or after May 1, 2004 (and 2.5% to 3.5% for all other
contracts). For non-GMIB annuity options, the guaranteed minimum rate is 3%.
The GMIB guaranteed annuity purchase rates in your contract depict the minimum
amounts we will pay (per $1000 of adjusted Contract Value). If our current
annuity purchase rates on the annuity date are more favorable to you than the
guaranteed rates, we will make payments based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
Fixed Period Annuities
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted Contract Value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
Life Annuities
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or
co-annuitant's life expectancy, including the following:
.. The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
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3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION) continued
Guaranteed and GMIB Annuity Payments
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such
a reduced age, we base our calculations on a younger person, who generally
would live longer and therefore draw life annuity payments over a longer time
period. Given the longer pay-out period, the payments made to the younger
person would be less than those made to an older person. We make two such age
adjustments:
1) First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by either
(a) four years, for life annuities under the GMIB sold in contracts on or
after May 1, 2004 or (b) two years, with respect to guaranteed payments
under life annuities not involving GMIB, as well as GMIB payments under
contracts not described in (a) immediately above. For the reasons explained
above in this section, the four year age reduction causes a greater
reduction in the amount of the annuity payments than does the two-year age
reduction.
2) Second, for life annuities under both versions of GMIB as well as
guaranteed payments under life annuities not involving GMIB, we make a
further age reduction according to the table in your contract entitled
"Translation of Adjusted Age." As indicated in the table, the further into
the future the first annuity payment is, the longer we expect the person
receiving those payments to live, and the more we reduce the annuitant's
(or co-annuitant's) age.
Current Annuity Payments
Immediately above, we have referenced how we determine annuity payments based
on "guaranteed" annuity purchase rates. By "guaranteed" annuity purchase
rates, we mean the minimum annuity purchase rates that are set forth in your
annuity contract and thus contractually guaranteed by us. "Current" annuity
purchase rates, in contrast, refer to the annuity purchase rates that we are
applying to contracts that are entering the annuity phase at a given point in
time. These current annuity purchase rates vary from period to period,
depending on changes in interest rates and other factors. We do not guarantee
any particular level of current annuity purchase rates. When calculating
current annuity purchase rates, we use the actual age of the annuitant (or
co-annuitant), rather than any reduced age.
4: WHAT IS THE DEATH BENEFIT?
The Death Benefit Feature Protects The Contract Value For The Beneficiary.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless
you change it at a later date. A change of beneficiary will take effect on the
date you sign the change request form, provided we receive the form in good
order. Unless an irrevocable beneficiary has been named, during the
accumulation period, you can change the beneficiary at any time before the
owner or last survivor, if there are spousal joint owners, dies. However, if
the contract is jointly owned, the owner must name the joint owner and the
joint owner must name the owner as the beneficiary. For entity-owned
contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the owner or joint owner dies during the accumulation phase, we will, upon
receiving the appropriate proof of death and any other needed documentation in
good order (proof of death), pay a death benefit to the beneficiary designated
by the deceased owner or joint owner. If there is a sole owner and there is
only one beneficiary who is the owner's spouse on the date of death, then the
surviving spouse may continue the contract under the Spousal Continuance
Option. If there are an owner and joint owner of the contract, and the owner's
spouse is both the joint owner and the beneficiary on the date of death, then,
at the death of the first to die, the death benefit will be paid to the
surviving owner or the surviving owner may continue the contract under the
Spousal Continuance Option.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current Contract Value (as of the time we receive proof of death in
good order). If you have purchased the Contract With Credit, we will first
deduct any credit corresponding to a purchase payment made within one year
of death. We impose no market value adjustment on Contract Value held
within the market value adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, if
you have chosen the Guaranteed Minimum Death Benefit (GMDB), the GMDB
protected value.
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GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole owner or the first to die of
the owner or joint owner during the accumulation phase.
The GMDB protected value option equals the GMDB step-up. The GMDB protected
value is calculated daily.
GMDB Step-Up
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE
80 ON THE CONTRACT DATE, the GMDB step-up before the first contract
anniversary is the initial invested purchase payment increased by subsequent
invested purchase payments, and proportionally reduced by the effect of
withdrawals. The GMDB step-up on each contract anniversary will be the greater
of the previous GMDB step-up and the Contract Value as of such contract
anniversary. Between contract anniversaries, the GMDB step-up will increase by
invested purchase payments and reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the Contract Value
on the later of:
.. the contract anniversary coinciding with or next following the sole or
older owner's 80th birthday, or
.. the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current Contract Value is $100,000 and the protected value is $80,000. The
owner makes a withdrawal that reduces the Contract Value by 25% (including the
effect of any withdrawal charges). The new protected value is $60,000, or 75%
of what it was before the withdrawal.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB
step-up to the greater of the then current GMDB step-up or the Contract Value
as of that contract anniversary. Thereafter, we will only increase the GMDB
protected value by subsequent invested purchase payments and proportionally
reduce it by withdrawals.
Special rules apply if the beneficiary is the spouse of the owner and the
contract does not have a joint owner. In that case, upon the death of the
owner, the spouse will have the choice of the following:
.. If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Option are met, then the
contract can continue, and the spouse will become the new owner of the
contract; or
.. The spouse can receive the death benefit. A surviving spouse who is
eligible for the Spousal Continuance Option must choose between that
benefit and receiving the death benefit during the first 60 days following
our receipt of proof of death.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the
Contract Value on the date the change of ownership occurs, and for purposes of
computing the future death benefit, we will treat that Contract Value as a
purchase payment occurring on that date.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the
time that one dies, the Spousal Continuance Option may apply. If the contract
has an owner and a joint owner and they are not spouses at the time one dies,
we will pay the death benefit and the contract will end.
PAYOUT OPTIONS
Originally, a beneficiary could, within 60 days of providing proof of death,
take the death benefit as follows:
With respect to a death benefit paid before March 19, 2007, the death benefit
payout options were:
Choice 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option within sixty days, the beneficiary will receive this
payout option.
Choice 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first-to-die of the owner or joint owner.
45
4: WHAT IS THE DEATH BENEFIT? continued
The entire death benefit will include any increases or losses resulting from
the performance of the variable or fixed interest rate options during this
period. During this period the beneficiary may: reallocate the Contract Value
among the variable, fixed interest rate, or the market value adjustment
options; name a beneficiary to receive any remaining death benefit in the
event of the beneficiary's death; and make withdrawals from the Contract
Value, in which case, any such withdrawals will not be subject to any
withdrawal charges. However, the beneficiary may not make any purchase
payments to the contract.
During this 5 year period, we will continue to deduct from the death benefit
proceeds the charges and costs that were associated with the features and
benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner.
Any portion of the death benefit not applied under Choice 3 within one year of
the date of death of the first to die must be distributed within five years of
that date of death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 9, "What Are The Tax Considerations Associated
With The Strategic Partners Plus Contract?"
With respect to a death benefit paid on or after March 19, 2007, unless the
surviving spouse opts to continue the contract (or spousal continuance is
required under the terms of your contract), a beneficiary of the death benefit
may, within 60 days of providing proof of death, also take the death benefit
as indicated above, or as follows:
.. As a lump sum. If the beneficiary does not choose a payout option within
sixty days, the beneficiary will be paid in this manner; or
.. As payment of the entire death benefit within a period of 5 years from the
date of death; or
.. As a series of payments not extending beyond the life expectancy of the
beneficiary, or over the life of the beneficiary. Payments under this
option must begin within one year of the date of death; or
.. As the beneficiary continuation option, described immediately below.
BENEFICIARY CONTINUATION OPTION
Instead of receiving the death benefit in a single payment, or under an
annuity option, a beneficiary may also take the death benefit under an
alternative death benefit payment option, as provided by the Code. This
"Beneficiary Continuation Option" is described below and is available for an
IRA, Roth IRA, SEP IRA, 403(b), or a non-qualified contract.
Under the Beneficiary Continuation Option:
.. The owner's contract will be continued in the owner's name, for the benefit
of the beneficiary.
.. The beneficiary will incur a Settlement Service Charge which is an annual
charge assessed on a daily basis against the average assets allocated to
the Sub-accounts. The charge is 1.00% per year.
.. The beneficiary will incur an annual maintenance fee equal to the lesser of
$30 or 2% of Contract Value if the Contract Value is less than $25,000 at
the time the fee is assessed. The fee will not apply if it is assessed 30
days prior to a surrender request.
.. The initial Contract Value will be equal to any death benefit (including
any optional death benefit) that would have been payable to the beneficiary
if they had taken a lump sum distribution.
.. The available variable investment options will be among those available to
the Owner at the time of death, however certain variable investment options
may not be available.
.. The beneficiary may request transfers among variable investment options,
subject to the same limitations and restrictions that applied to the Owner.
Transfers in excess of 20 per year will incur a $10 transfer fee.
.. No additional Purchase Payments can be applied to the contract.
.. The basic death benefit and any optional benefits elected by the Owner will
no longer apply to the beneficiary.
.. The beneficiary can request a withdrawal of all or a portion of the
Contract Value at any time without application of any applicable CDSC
unless the Beneficiary Continuation Option was the payout predetermined by
the owner and the owner restricted the beneficiary's withdrawal rights.
.. Withdrawals are not subject to CDSC.
.. Upon the death of the beneficiary, any remaining Contract Value will be
paid in a lump sum to the person(s) named by the beneficiary, unless the
beneficiary named a successor who may continue receiving payments.
Currently only investment options corresponding to Portfolios of the Advanced
Series Trust and the Prudential Money Market Portfolio of The Prudential
Series Fund are available under the Beneficiary Continuation Option.
46
Your beneficiary will be provided with a prospectus and a settlement agreement
that will describe this option. Please contact us for additional information
on the availability, restrictions and limitations that will apply to a
beneficiary under the beneficiary continuation option. We may pay compensation
to the selling broker-dealer based on amounts held in the Beneficiary
Continuation Option.
Alternative Death Benefit Payment Options - Contracts Owned By Individuals
(Not Associated With Tax-Favored Plans)
Except in the case of Spousal Continuance as described below, upon your death,
certain distributions must be made under the contract. The required
distributions depend on whether you die before you start taking annuity
payments under the contract or after you start taking annuity payments under
the contract.
If you die on or after the annuity date, the remaining portion of the interest
in the contract must be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
In the event of your death before the annuity date, the death benefit must be
distributed:
.. by December 31st of the year including the five year anniversary of the
date of death; or
.. as a series of annuity payments not extending beyond the life expectancy of
the beneficiary or over the life of the beneficiary. Payments under this
option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming due,
a beneficiary can elect to receive the death benefit proceeds under the
Beneficiary Continuation Option as described above in the section entitled
"Beneficiary Continuation Option," or as a series of fixed annuity payments.
See the section entitled "What Kind of Payments Will I Receive During the
Income Phase?"
Alternative Death Benefit Payment Options - Contracts Held by Tax-Favored Plans
The Code provides for alternative death benefit payment options when a
contract is used as an IRA, 403(b) or other "qualified investment" that
requires minimum distributions. Upon your death under an IRA, 403(b) or other
"qualified investment", the designated beneficiary may generally elect to
continue the contract and receive Required Minimum Distributions under the
contract, instead of receiving the death benefit in a single payment. The
available payment options will depend on whether you die before the date
Required Minimum Distributions under the Code were to begin, whether you have
named a designated beneficiary and whether the beneficiary is your surviving
spouse.
.. If you die after a designated beneficiary has been named, the death benefit
must be distributed by December 31st of the year including the five year
anniversary of the date of death, or as periodic payments not extending
beyond the life or life expectancy of the designated beneficiary (provided
such payments begin by December 31st of the year following the year of
death). However, if your surviving spouse is the beneficiary, the death
benefit can be paid out over the life or life expectancy of your spouse
with such payments beginning no later than December 31st of the year
following the year of death or December 31st of the year in which you would
have reached age 70 1/2, which ever is later. Additionally, if the contract
is payable to (or for the benefit of) your surviving spouse, that portion
of the contract may be continued with your spouse as the owner.
.. If you die before a designated beneficiary is named and before the date
required minimum distributions must begin under the Code, the death benefit
must be paid out within five years from the date of death. For contracts
where multiple beneficiaries have been named and at least one of the
beneficiaries does not qualify as a designated beneficiary and the account
has not been divided into separate accounts by December 31st of the year
following the year of death, such contract is deemed to have no designated
beneficiary.
.. If you die before a designated beneficiary is named and after the date
Required Minimum Distributions must begin under the Code, the death benefit
must be paid out at least as rapidly as under the method then in effect.
For contracts where multiple beneficiaries have been named and at least one
of the beneficiaries does not qualify as a designated beneficiary and the
account has not been divided into separate accounts by December 31st of the
year following the year of death, such contract is deemed to have no
designated beneficiary.
A beneficiary has the flexibility to take out more each year than mandated
under the Required Minimum Distribution rules.
Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment"
continue to be tax deferred. Amounts withdrawn each year, including amounts
that are required to be withdrawn under the Minimum Distribution rules, are
subject to tax. You may wish to consult a professional tax advisor for tax
advice as to your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date Required Minimum Distributions must begin under
the Code.
The tax consequences to the beneficiary may vary among the different death
benefit payment options. See the Tax Considerations section of this
prospectus, and consult your tax advisor.
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4: WHAT IS THE DEATH BENEFIT? continued
SPOUSAL CONTINUANCE OPTION
This option is available if, on the date we receive proof of the owner's death
(or annuitant's death, for custodial contracts) in good order (1) there is
only one owner of the contract and there is only one beneficiary who is the
owner's spouse, or (2) there are an owner and joint owner of the contract, and
the joint owner is the owner's spouse and the owner's beneficiary under the
contract or 3) the contract is held by a Custodial Account and the custodian
of the account has elected to continue the contract, and designate the
surviving spouse as annuitant. Continuing the contract in the latter scenario
will result in the contract no longer qualifying for tax deferral under the
Internal Revenue Code. However, such tax deferral should result from the
ownership of the contract by the Custodial Account. Spousal continuance may be
available where the contract is owned by certain other types of entity-owners.
Please consult your tax or legal adviser.
In no event, however, can the annuitant be older than the maximum age for
annuitization on the date of the owner's death, nor can the surviving spouse
be older than 95 on the date of the owner's death (or the annuitant's death,
in the case of a custodially-owned contract referenced above). Assuming the
above conditions are present, the surviving spouse (or custodian, for the
custodially-owned contracts referenced above) can elect the Spousal
Continuance Option, but must do so no later than 60 days after furnishing
proof of death in good order.
Upon activation of the Spousal Continuance Option, the Contract Value is
adjusted to equal the amount of the death benefit to which the surviving
spouse would have been entitled. This Contract Value will serve as the basis
for calculating any death benefit payable upon the death of the surviving
spouse. We will allocate any increase in the adjusted Contract Value among the
variable, fixed interest rate or market value adjustment options in the same
proportions that existed immediately prior to the spousal continuance
adjustment. We will waive the $1,000 minimum requirement for the market value
adjustment option.
Under the Spousal Continuance Option, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the
Spousal Continuance Option. However, we will continue to impose withdrawal
charges on purchase payments made after activation of this benefit. In
addition, the Contract Value allocated to the market value adjustment option
will remain subject to a potential market value adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Option, we will adjust the Contract Value to equal the greater of:
.. the Contract Value, or
.. the sum of all invested purchase payments (adjusted for withdrawals).
IF YOU HAVE ELECTED THE GMDB STEP-UP, we will adjust the Contract Value to
equal the greater of:
.. the Contract Value, or
.. the GMDB step-up.
After we have made the adjustment to Contract Value set out immediately above,
we will continue to compute the GMDB step-up under the surviving spousal
owner's contract, and will do so in accordance with the preceding discussion
in this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death
benefit payable under the Guaranteed Minimum Death Benefit provisions of the
contract. The contract may not be continued upon the death of a spouse who had
assumed ownership of the contract through the exercise of the Spousal
Continuance Option.
IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be continued for
the surviving spousal owner. All provisions of the Guaranteed Minimum Income
Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will remain the same as
on the date of the owner's death. If the GMIB reset feature was never
exercised, the surviving spousal owner can exercise the GMIB reset feature
twice. If the original owner had previously exercised the GMIB reset feature
once, the surviving spousal owner can exercise the GMIB reset once. However,
the surviving spouse (or new annuitant designated by the surviving spouse)
must be under 76 years of age at the time of reset. If the original owner had
previously exercised the GMIB reset feature twice, the surviving spousal owner
may not exercise the GMIB reset at all. If the attained age of the surviving
spouse at activation of the Spousal Continuance Option, when added to the
remainder of the GMIB waiting period to be satisfied, would preclude the
surviving spouse from utilizing the Guaranteed Minimum Income Benefit, we will
revoke the Guaranteed Minimum Income Benefit under the contract at that time
and we will no longer charge for that benefit.
IF YOU ELECTED ONE OF THE LIFETIME WITHDRAWAL BENEFITS, on the owner's death,
the Benefit will end. However, if the owner's surviving spouse would be
eligible to acquire the Benefit as if he/she were a new purchaser, then the
surviving spouse may continue the Benefit under the Spousal Continuance Option.
48
IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death (or
first-to-die, in the case of joint owners), the Income Appreciator Benefit
will end unless the contract is continued by the deceased owner's surviving
spouse under the Spousal Continuance Option. If the contract is continued by
the surviving spouse, we will continue to pay the balance of any Income
Appreciator Benefit payments until the earliest to occur of the following:
(a) the date on which 10 years' worth of IAB automatic withdrawal payments or
IAB credits, as applicable, have been paid, (b) the latest date on which
annuity payments would have had to have commenced had the owner not died
(i.e., the later of the contract anniversary next following the annuitant's
90th birthday or the 10th contract anniversary), or (c) the later of the 10th
contract anniversary or the contract anniversary next following the surviving
spouse's 90th birthday (or the annuitant's 90th birthday if other than the
surviving spouse).
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force
for 7 contract years. If the attained age of the surviving spouse at
activation of the Spousal Continuance Option, when added to the remainder of
the Income Appreciator Benefit waiting period to be satisfied, would preclude
the surviving spouse from utilizing the Income Appreciator Benefit, we will
revoke the Income Appreciator Benefit under the contract at that time and we
will no longer charge for that benefit. If the Income Appreciator Benefit has
been in force for 7 contract years or more, but the benefit has not been
activated, the surviving spouse may activate the benefit at any time after the
contract has been continued. If the Income Appreciator Benefit is activated
after the contract is continued by the surviving spouse, the Income
Appreciator Benefit calculation will exclude any amount added to the contract
at the time of spousal continuance resulting from any death benefit value
exceeding the Contract Value.
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS?
LIFETIME FIVE/SM /INCOME BENEFIT (LIFETIME FIVE)/SM/
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an
initial principal value (called the "Protected Withdrawal Value"), regardless
of the impact of market performance on your Contract Value, subject to our
rules regarding the timing and amount of withdrawals. There are two options
-one is designed to provide an annual withdrawal amount for life (the "Life
Income Benefit") and the other is designed to provide a greater annual
withdrawal amount (than the first option) as long as there is Protected
Withdrawal Value (adjusted as described below) (the "Withdrawal Benefit"). If
there is no Protected Withdrawal Value, the Withdrawal Benefit will be zero.
You do not choose between these two options; each option will continue to be
available as long as the annuity has a Contract Value and Lifetime Five is in
effect. Certain benefits under Lifetime Five may remain in effect even if the
Contract Value is zero. The option may be appropriate if you intend to make
periodic withdrawals from your contract and wish to ensure that market
performance will not affect your ability to receive annual payments. You are
not required to make withdrawals - the guarantees are not lost if you withdraw
less than the maximum allowable amount each year.
Lifetime Five is subject to certain restrictions described below.
.. Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Lifetime Five Income
Benefit.
.. The annuitant must be at least 45 years old when Lifetime Five is elected.
.. Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit or Income Appreciator Benefit.
.. Owners electing this benefit prior to December 5, 2005, were required to
allocate Contract Value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit after December 5, 2005
must allocate Contract Value to one or more of the following asset
allocation portfolios of Advanced Series Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, AST Preservation Asset Allocation
Portfolio, AST Advanced Strategies Portfolio, AST First Trust Balanced
Target Portfolio, AST First Trust Capital Appreciation Target Portfolio,
AST T. Rowe Price Asset Allocation Portfolio, AST American Century
Strategic Allocation Portfolio, or AST UBS Dynamic Alpha Portfolio. As
specified in this paragraph, you generally must allocate your Contract
Value in accordance with the then-available option(s) that we may
prescribe, in order to elect and maintain Lifetime Five. If, subsequent to
your election of the benefit, we change our requirements for how Contract
Value must be allocated under the benefit, that new requirement will apply
only to new elections of the benefit, and will not compel you to
re-allocate your Contract Value in accordance with our newly-adopted
requirements. All subsequent transfers and purchase payments will be
subject to the new investment limitations.
49
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Protected Withdrawal Value
The Protected Withdrawal Value is used to determine the amount of each annual
payment under the Life Income Benefit and the Withdrawal Benefit. The initial
Protected Withdrawal Value is determined as of the date you make your first
withdrawal under your contract following your election of Lifetime Five. The
initial Protected Withdrawal Value is equal to the greater of:
(A)the Contract Value on the date you elect Lifetime Five, plus any additional
Purchase Payments (and any Credits), each growing at 5% per year from the
date of your election of the benefit, or application of the Purchase
Payment to your contract, as applicable, until the date of your first
withdrawal or the 10th anniversary of the benefit effective date, if
earlier;
(B)the Contract Value on the date of the first withdrawal from your contract,
prior to the withdrawal;
(C)the highest Contract Value on each contract anniversary, plus subsequent
Purchase Payments (plus any Credits) prior to the first withdrawal or the
10th anniversary of the benefit effective date, if earlier.
With respect to A and C above, after the 10th anniversary of the benefit
effective date, each value is increased by the amount of any subsequent
Purchase Payments (plus any Credits).
.. If you elect Lifetime Five at the time you purchase your contract, the
Contract Value will be your initial purchase payment.
For existing contract owners who are electing the Lifetime Five Benefit, the
Contract Value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
Step-Up of the Protected Withdrawal Value
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your Contract Value is greater than the Protected
Withdrawal Value.
If you elected the Lifetime Five program on or after March 20, 2006, then:
.. you are eligible to step-up the Protected Withdrawal Value on or after the
1st anniversary of the first withdrawal under the Lifetime Five program
.. the Protected Withdrawal Value can be stepped up again on or after the 1st
anniversary of the preceding step-up.
If you elected the Lifetime Five program prior to March 20, 2006 and that
original election remains in effect:
.. you are eligible to step-up the Protected Withdrawal Value on or after the
5th anniversary of the first withdrawal under the Lifetime Five program
.. the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary of the preceding step-up.
In either scenario (i.e., elections before or after March 20, 2006) if you
elect to step-up the Protected Withdrawal Value under the program, and on the
date you elect to step-up, the charges under the Lifetime Five program have
changed for new purchasers, you may be subject to the new charge at the time
of step-up. Upon election of the step-up, we increase the Protected Withdrawal
Value to be equal to the then current Contract Value. For example, assume your
initial Protected Withdrawal Value was $100,000 and you have made cumulative
withdrawals of $40,000, reducing the Protected Withdrawal Value to $60,000. On
the date you are eligible to step-up the Protected Withdrawal Value, your
Contract Value is equal to $75,000. You could elect to step-up the Protected
Withdrawal Value to $75,000 on the date you are eligible. If your current
Annual Income Amount and Annual Withdrawal Amount are less than they would be
if we did not reflect the step-up in Protected Withdrawal Value, then we will
increase these amounts to reflect the step-up as described below.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force.
If you elected Lifetime Five on or after March 20, 2006 and have also elected
the Auto Step-Up feature:
.. the first Auto Step-Up opportunity will occur on the 1st contract
anniversary that is at least one year after the later of (1) the date of
the first withdrawal under Lifetime Five or (2) the most recent step-up.
.. your Protected Withdrawal Value will only be stepped-up if 5% of the
Contract Value is greater than the Annual Income Amount by any amount.
.. if at the time of the first Auto Step-Up opportunity, 5% of the Contract
Value is not greater than the Annual Income Amount, an Auto Step-Up
opportunity will occur on each successive contract anniversary until a
step-up occurs.
.. once a step-up occurs, the next Auto Step-Up opportunity will occur on the
1st contract anniversary that is at least one year after the most recent
step-up.
50
If you elected Lifetime Five prior to March 20, 2006 and have also elected the
Auto Step-Up feature:
.. the first Auto Step-Up opportunity will occur on the contract anniversary
that is at least five years after the later of (1) the date of the first
withdrawal under Lifetime Five or (2) the most recent step-up.
.. your Protected Withdrawal Value will only be stepped-up if 5% of the
Contract Value is greater than the Annual Income Amount by 5% or more.
.. if at the time of the first Auto Step-Up opportunity, 5% of the Contract
Value does not exceed the Annual Income Amount by 5% or more, an Auto
Step-Up opportunity will occur on each successive contract anniversary
until a step-up occurs.
.. once a step-up occurs, the next Auto Step-Up opportunity will occur on the
contract anniversary that is at least 5 years after the most recent step-up.
In either scenario (i.e., elections before or after March 20, 2006), if on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up. Subject to our rules and
restrictions, you will still be permitted to manually step-up the Protected
Withdrawal Value even if you elect the Auto Step-Up feature.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected
Withdrawal Value and on the greater of a "dollar-for-dollar" basis or a pro
rata basis for withdrawals in a contract year in excess of that amount until
the Protected Withdrawal Value is reduced to zero. At that point, the Annual
Withdrawal Amount will be zero until such time (if any) as the contract
reflects a Protected Withdrawal Value (for example, due to a step-up or
additional purchase payments being made into the contract).
Annual Income Amount Under the Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will
not reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of
the Excess Income to the Contract Value immediately prior to such withdrawal
(see examples of this calculation below). Reductions include the actual amount
of the withdrawal, including any withdrawal charges that may apply. A
withdrawal can be considered Excess Income under the Life Income Benefit even
though it does not exceed the Annual Withdrawal Amount under the Withdrawal
Benefit. When you elect a step-up, your Annual Income Amount increases to
equal 5% of your Contract Value after the step-up if such amount is greater
than your Annual Income Amount. Your Annual Income Amount also increases if
you make additional purchase payments. The amount of the increase is equal to
5% of any additional purchase payments. Any increase will be added to your
Annual Income Amount beginning on the day that the step-up is effective or the
purchase payment is made. A determination of whether you have exceeded your
Annual Income Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Income Amount will not offset the effect of
a withdrawal that exceeded the Annual Income Amount at the time the withdrawal
was made.
Annual Withdrawal Amount Under the Withdrawal Benefit
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except
with regard to required minimum distributions) by the result of the ratio of
the Excess Withdrawal to the Contract Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include
the actual amount of the withdrawal, including any withdrawal charges that may
apply. When you elect a step-up, your Annual Withdrawal Amount increases to
equal 7% of your Contract Value after the step-up if such amount is greater
than your Annual Withdrawal Amount. Your Annual Withdrawal Amount also
increases if you make additional purchase payments. The amount of the increase
is equal to 7% of any additional purchase payments. A determination of whether
you have exceeded your Annual Withdrawal Amount is made at the time of each
withdrawal; therefore, a subsequent increase in the Annual Withdrawal Amount
will not offset the effect of a withdrawal that exceeded the Annual Withdrawal
Amount at the time the withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each contract year.
.. If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
.. If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income Benefit in any contract year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
51
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of
$250,000; 3.) the Contract Value on February 1, 2006 is equal to $265,000; and
4.) the first withdrawal occurs on March 1, 2006 when the Contract Value is
equal to $263,000.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a)Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33
(b)Contract Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c)Contract Value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7%
of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
Example 1. Dollar-for-Dollar Reduction
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
.. Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
.. Annual Withdrawal Amount for future contract years remains at $18,550
.. Remaining Annual Income Amount for current contract year = $13,250 -
$10,000 = $3,250
.. Annual Income Amount for future contract years remains at $13,250
.. Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
Example 2. Dollar-for-Dollar and Proportional Reductions
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
. Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
. Annual Withdrawal Amount for future contract years remains at $18,550
. Remaining Annual Income Amount for current contract year = $0
. Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
. Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X
$13,250 = $93
. Annual Income Amount for future contract years = $13,250 - $93 = $13,157
. Protected Withdrawal Value is reduced by $15,000 from $265,000 to
$250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
. Remaining Annual Withdrawal Amount for current contract year = $0
. Excess of withdrawal over the Annual Withdrawal Amount ($25,000 -
$18,550 = $6,450) reduces Annual Withdrawal Amount for future contract
years.
. Reduction to Annual Withdrawal Amount = Excess Withdrawal/Contract Value
before Excess Withdrawal X Annual Withdrawal Amount = $6,450/($263,000 -
$18,550) X $18,550 = $489
. Annual Withdrawal Amount for future contract years = $18,550 - $489 =
$18,061
. Remaining Annual Income Amount for current contract year = $0
. Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
. Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X
$13,250 = $623
. Annual Income Amount for future contract years = $13,250 - $623 = $12,627
. Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
. Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
. Proportional reduction = Excess Withdrawal/Contract Value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
. Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
52
Example 3. Step-Up of the Protected Withdrawal Value
If the Annual Income Amount ($13,250) is withdrawn each year starting on
March 1, 2006 for a period of 3 years, the Protected Withdrawal Value on
February 1, 2012 would be reduced to $225,250 {$265,000 - ($13,250 X 3)}. If a
step-up is elected on February 1, 2012, and the Contract Value on February 1,
2012 is $280,000, then the following values would result:
.. Protected Withdrawal Value = Contract Value on February 1, 2012 = $280,000
.. Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped up Protected Withdrawal Value
is 5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000.
.. Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore the Annual
Withdrawal Amount is increased to $19,600.
.. Because the Contract Date and Effective Date of Lifetime Five for this
example is prior to March 20, 2006, if the step-up request on February 1,
2012 was due to the election of the auto step-up feature, we would first
check to see if an auto step-up should occur by checking to see if 5% of
the Contract Value exceeds the Annual Income Amount by 5% or more. 5% of
the Contract Value is equal to 5% of $280,000, which is $14,000. 5% of the
Annual Income Amount ($13,250) is $662.50, which added to the Annual Income
Amount is $13,912.50. Since 5% of the Contract Value is greater than
$13,912.50, the step-up would still occur in this scenario, and all of the
values would be increased as indicated above. Had the Contract Date and
effective date of the Lifetime Five Benefit been on or after March 20,
2006, the step-up would still occur because 5% of the Contract Value is
greater than the Annual Income Amount.
Benefits Under Lifetime Five
.. If your Contract Value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your Contract Value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent contract years we make payments
that equal either the Annual Income Amount or the Annual Withdrawal Amount.
You will not be able to change the option after your election and no
further purchase payments will be accepted under your contract. If you do
not make an election, we will pay you annually under the Life Income
Benefit. To the extent that cumulative withdrawals in the current contract
year that reduced your Contract Value to zero are more than the Annual
Income Amount but less than or equal to the Annual Withdrawal Amount and
amounts are still payable under the Withdrawal Benefit, you will receive
the payments under the Withdrawal Benefit. In the year of a withdrawal that
reduced your Contract Value to zero, we will make an additional payment to
equal any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Contract Value equals zero no
further purchase payments will be accepted under your contract.
.. If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
1. apply your Contract Value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
.. In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with
five payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the Contract Value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to
begin.
53
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Other Important Considerations
.. Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
.. Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the Contract Value or surrender
value, but any withdrawal will decrease the Contract Value by the amount of
the withdrawal (plus any applicable withdrawal charges). If you surrender
your contract, you will receive the current Contract Value, not the
Protected Withdrawal Value.
.. You can make withdrawals from your contract while your Contract Value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides
a guarantee that if your Contract Value declines due to market performance,
you will be able to receive your Protected Withdrawal Value or Annual
Income Amount in the form of periodic benefit payments.
Election of Lifetime Five
Lifetime Five can be elected at the time you purchase your contract, or after
the contract date. Elections of Lifetime Five are subject to our eligibility
rules and restrictions. The contract owner's Contract Value as of the date of
election will be used as the basis to calculate the initial Protected
Withdrawal Value, the initial Annual Withdrawal Amount, and the initial Annual
Income Amount.
Termination of Lifetime Five
Lifetime Five terminates automatically when your Protected Withdrawal Value
and Annual Income Amount reach zero. You may terminate Lifetime Five at any
time by notifying us. If you terminate Lifetime Five, any guarantee provided
by the benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
.. upon your surrender of the contract,
.. upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five Benefit if your spouse elects the Spousal Continuance Option
and your spouse would then be eligible to elect the Benefit as if he/she
were a new purchaser),
.. upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
.. upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes
the benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you generally will only be
permitted to re-elect the benefit or elect another lifetime withdrawal benefit
on any anniversary of the contract date that is at least 90 calendar days from
the date the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and prior
to March 20, 2006, and you terminate Lifetime Five, there will be no waiting
period before you can re-elect the benefit or elect Spousal Lifetime Five.
However, once you choose to re-elect/elect, the waiting period described above
will apply to subsequent re-elections. If you elected Lifetime Five after the
time you purchased your contract, but prior to March 20, 2006, and you
terminate Lifetime Five, you must wait until the contract anniversary
following your cancellation before you can re-elect the benefit or elect
Spousal Lifetime Five. Once you choose to re-elect/elect, the waiting period
described above will apply to subsequent re-elections. We reserve the right to
limit the re-election/ election frequency in the future. Before making any
such change to the re-election/election frequency, we will provide prior
notice to contract owners who have an effective Lifetime Five Income Benefit.
Additional Tax Considerations for Qualified Contracts
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. Roth IRAs are not subject to these rules during
the owner's lifetime. The amount required under the Code may exceed the Annual
Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as required minimum distribution provisions under the tax law.
54
SPOUSAL LIFETIME FIVE/SM /INCOME BENEFIT (SPOUSAL LIFETIME FIVE)/SM/
Spousal Lifetime Five must be elected based on two Designated Lives, as
described below. Each Designated Life must be at least 55 years old when the
benefit is elected. Spousal Lifetime Five is not available if you elect any
other optional living or death benefit. As long as your Spousal Lifetime Five
Income Benefit is in effect, you must allocate your Contract Value in
accordance with the then permitted and available option(s). Owners electing
this benefit currently must allocate contract value to one or more of the
following asset allocation portfolios of the Advanced Series Trust (we reserve
the right to change these required portfolios on a prospective basis): AST
Capital Growth Asset Allocation Portfolio, AST Balanced Asset Allocation
Portfolio, AST Conservative Asset Allocation Portfolio, AST Preservation Asset
Allocation Portfolio, AST Advanced Strategies Portfolio, AST First Trust
Balanced Target Portfolio, AST First Trust Capital Appreciation Target
Portfolio, AST T. Rowe Price Asset Allocation Portfolio, AST American Century
Strategic Allocation Portfolio, or AST UBS Dynamic Alpha Strategy Portfolio.
Currently, if you elect Spousal Lifetime Five and subsequently terminate the
benefit, there may be a restriction on your ability to re-elect Spousal
Lifetime Five and elect another lifetime withdrawal benefit. We reserve the
right to further limit the election frequency in the future. Before making any
such change to the election frequency, we will provide prior notice to
contract owners who have an effective Spousal Lifetime Five Income Benefit.
We offer a benefit that guarantees until the later death of two natural
persons that are each other's spouses at the time of election of Spousal
Lifetime Five and at the first death of one of them (the "Designated Lives",
each a "Designated Life") the ability to withdraw an annual amount (Spousal
Life Income Benefit) equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of market performance
on the Contract Value, subject to our rules regarding the timing and amount of
withdrawals. The Spousal Life Income Benefit may remain in effect even if the
Contract Value is zero. Spousal Lifetime Five may be appropriate if you intend
to make periodic withdrawals from your annuity, wish to ensure that market
performance will not affect your ability to receive annual payments and you
wish either spouse to be able to continue the Spousal Life Income Benefit
after the death of the first. You are not required to make withdrawals as part
of the benefit - the guarantees are not lost if you withdraw less than the
maximum allowable amount each year under the rules of the benefit.
KEY FEATURE - Initial Protected Withdrawal Value.
The Protected Withdrawal Value is used to determine the amount of each annual
payment under the Spousal Life Income Benefit. The initial Protected
Withdrawal Value is determined as of the date you make your first withdrawal
under your contract following your election of Spousal Lifetime Five. The
initial Protected Withdrawal Value is equal to the greater of:
(A)the Contract Value on the date you elect Spousal Lifetime Five, plus any
additional Purchase Payments (and any Credits), each growing at 5% per year
from the date of your election of the benefit, or application of the
Purchase Payment to your contract, as applicable, until the date of your
first withdrawal or the 10th anniversary of the benefit effective date, if
earlier;
(B)the Contract Value on the date of the first withdrawal from your contract,
prior to the withdrawal;
(C)the highest Contract Value on each contract anniversary, plus subsequent
Purchase Payments (plus any Credits) prior to the first withdrawal or the
10th anniversary of the benefit effective date, if earlier.
With respect to A and C above, after the 10th anniversary of the benefit
effective date, each value is increased by the amount of any subsequent
Purchase Payments (plus any Credits).
.. If you elect Spousal Lifetime Five at the time you purchase your contract,
the Contract Value will be your initial purchase payment (plus any credits).
.. For existing contract owners who are electing the Spousal Lifetime Five
Benefit, the Contract Value on the date of your election of Spousal
Lifetime Five will be used to determine the initial Protected Withdrawal
Value.
Annual Income Amount Under the Spousal Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Spousal Lifetime Five, if your cumulative withdrawals
in a contract year are less than or equal to the Annual Income Amount, they
will not reduce your Annual Income Amount in subsequent contract years, but
any such withdrawals will reduce the Annual Income Amount on a
dollar-for-dollar basis in that contract year. If your cumulative withdrawals
are in excess of the Annual Income Amount ("Excess Income"), your Annual
Income Amount in subsequent years will be reduced (except with regard to
required minimum distributions) by the result of the ratio of the Excess
Income to the Contract Value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of
the withdrawal, including any withdrawal charges that may apply.
You may elect to step-up your Annual Income Amount if, due to positive market
performance, 5% of your Contract Value is greater than the Annual Income
Amount. You are eligible to step-up the Annual Income Amount on or after the
1st anniversary of the first withdrawal under Spousal Lifetime Five. The
Annual Income Amount can be stepped up again on or after the 1st anniversary
of the preceding step-up. If you elect to step-up the Annual Income Amount,
and on the date you elect to step-up, the charges under Spousal Lifetime Five
have changed for new purchasers, you may be subject to the new charge at the
time of such step-up. When you elect a step-up, your Annual Income Amount
increases to equal 5% of your Contract Value after the step-up.
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Your Annual Income Amount also increases if you make additional Purchase
Payments. The amount of the increase is equal to 5% of any additional Purchase
Payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the Purchase Payment is made. A
determination of whether you have exceeded your Annual Income Amount is made
at the time of each withdrawal; therefore a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 1st contract anniversary that is at
least one year after the later of (1) the date of the first withdrawal under
Spousal Lifetime Five or (2) the most recent step-up. At this time, your
Annual Income Amount will be stepped-up if 5% of your Contract Value is
greater than the Annual Income Amount by any amount. If 5% of the Contract
Value does not exceed the Annual Income Amount, then an Auto Step-Up
opportunity will occur on each successive contract anniversary until a step-up
occurs. Once a step-up occurs, the next Auto Step-Up opportunity will occur on
the 1st contract anniversary that is at least 1 year after the most recent
step-up. If, on the date that we implement an Auto Step-Up to your Annual
Income Amount, the charge for Spousal Lifetime Five has changed for new
purchasers, you may be subject to the new charge at the time of such step-up.
Subject to our rules and restrictions, you will still be permitted to manually
step-up the Annual Income Amount even if you elect the Auto Step-Up feature.
Spousal Lifetime Five does not affect your ability to make withdrawals under
your contract or limit your ability to request withdrawals that exceed the
Annual Income Amount. Under Spousal Lifetime Five, if your cumulative
withdrawals in a contract year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent contract
years, but any such withdrawals will reduce the Annual Income Amount on a
dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount
under Spousal Lifetime Five Income Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
contract years.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Annual Income Amount assume: 1.) the contract date and the
effective date of Spousal Lifetime Five are February 1, 2005; 2.) an initial
purchase payment of $250,000; 3.) the Contract Value on February 1, 2006 is
equal to $265,000; and 4.) the first withdrawal occurs on March 1, 2006 when
the Contract Value is equal to $263,000. The values set forth here are purely
hypothetical, and do not reflect the charge for the Spousal Lifetime Five
Income Benefit.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a)Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33
(b)Contract Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c)Contract Value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit
(5% of $265,000).
Example 1. Dollar-for-Dollar Reduction
If $10,000 was withdrawn (less than the Annual Income Amount) on March 1,
2006, then the following values would result:
.. Remaining Annual Income Amount for current contract year = $13,250 -
$10,000 = $3,250
.. Annual Income Amount for future contract years remains at $13,250
Example 2. Dollar-for-Dollar and Proportional Reductions
If $15,000 was withdrawn (more than the Annual Income Amount) on March 1,
2006, then the following values would result:
.. Remaining Annual Income Amount for current contract year = $0
.. Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
.. Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $1,750 / ($263,000 - $13,250) X
$13,250 = $93
.. Annual Income Amount for future contract years = $13,250 - $93 = $13,157
Example 3. Step-Up of the Annual Income Amount
If a step-up of the Annual Income Amount is requested on February 1, 2010 or
the Auto Step-Up feature was elected, the step-up would occur because 5% of
the Contract Value, which is $14,000 (5% of $280,000), is greater than the
Annual Income Amount of $13,250. The new Annual Income Amount will be equal to
$14,000.
56
Benefits Under Spousal Lifetime Five
.. To the extent that your Contract Value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount and amounts are still payable under the Spousal Life Income Benefit,
we will make an additional payment for that contract year equal to the
remaining Annual Income Amount for the contract year, if any. Thus, in that
scenario, the remaining Annual Income Amount would be payable even though
your Contract Value was reduced to zero. In subsequent contract years we
make payments that equal the Annual Income Amount as described above. No
further purchase payments will be accepted under your contract. We will
make payments until the first of the Designated Lives to die, and will
continue to make payments until the death of the second Designated Life as
long as the Designated Lives were spouses at the time of the first death.
To the extent that cumulative withdrawals in the current contract year that
reduced your Contract Value to zero are more than the Annual Income Amount,
the Spousal Life Income Benefit terminates and no additional payments will
be made.
.. If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
1. apply your Contract Value to any annuity option available; or
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will
make payments until the first of the Designated Lives to die, and will
continue to make payments until the death of the second Designated Life
as long as the Designated Lives were spouses at the time of the first
death.
We must receive your request in a form acceptable to us at our office.
.. In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with five payments certain using the same
basis that is used to calculate the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the same basis that is used to calculate
the single life fixed annuity rates guaranteed in your contract; and
2. the Contract Value.
.. If no withdrawal was ever taken, we will determine an initial Protected
Withdrawal Value and calculate an Annual Income Amount as if you made your
first withdrawal on the date the annuity payments are to begin.
Other Important Considerations
.. Withdrawals under Spousal Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
.. Withdrawals made while Spousal Lifetime Five is in effect will be treated,
for tax purposes, in the same way as any other withdrawals under the
contract. Spousal Lifetime Five does not directly affect the Contract Value
or surrender value, but any withdrawal will decrease the Contract Value by
the amount of the withdrawal (plus any applicable withdrawal charges). If
you surrender your contract, you will receive the current surrender value.
.. You can make withdrawals from your contract while your Contract Value is
greater than zero without purchasing Spousal Lifetime Five. Spousal
Lifetime Five provides a guarantee that if your Contract Value declines due
to market performance, you will be able to receive your Annual Income
Amount in the form of periodic benefit payments.
.. In general, you must allocate your Contract Value in accordance with the
then-available option(s) that we may prescribe, in order to elect and
maintain Spousal Lifetime Five. If, subsequent to your election of the
benefit, we change our requirements for how Contract Value must be
allocated under the benefit, that new requirement will apply only to new
elections of the benefit, and will not compel you to re-allocate your
Contract Value in accordance with our newly-adopted requirements. All
subsequent transfers and purchase payments will be subject to the new
investment limitations.
.. There may be circumstances where you will continue to be charged the full
amount for Spousal Lifetime Five even when the benefit is only providing a
guarantee of income based on one life with no survivorship.
.. In order for the surviving Designated Life to continue Spousal Lifetime
Five upon the death of an owner, the Designated Life must elect to assume
ownership of the contract under the Spousal Continuation Option.
Election of and Designations of Spousal Lifetime Five
Spousal Lifetime Five can only be elected based on two Designated Lives.
Designated Lives must be natural persons who are each other's spouses at the
time of election of the benefit and at the death of the first of the
Designated Lives to die. Currently, the benefit may only be elected where the
contract owner, annuitant and beneficiary designations are as follows:
.. One contract owner, where the annuitant and the contract owner are the same
person and the beneficiary is the contract owner's spouse. The contract
owner/annuitant and the beneficiary each must be at least 55 years old at
the time of election; or
.. Co-contract owners, where the contract owners are each other's spouses. The
beneficiary designation must be the surviving spouse. The first named
contract owner must be the annuitant. Both contract owners must each be 55
years old at the time of election.
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
.. One contract owner, where the owner is a custodial account established to
hold retirement assets for the benefit of the annuitant pursuant to the
provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto) ("Custodial Account"), the beneficiary is the
Custodial Account, and the spouse of the annuitant is the co-annuitant.
Both the annuitant and co-annuitant must each be at least 55 years old at
the time of election. When the contract is set up in this manner, in order
for Spousal Lifetime Five to be continued after the death of the first
designated life (the annuitant), the custodian must have elected to
continue the contract, with the second designated life (the co-annuitant)
named as annuitant.
No ownership changes or annuitant changes will be permitted once this benefit
is elected. However, if the contract is co-owned, the contract owner that is
not the annuitant may be removed without affecting the benefit.
Spousal Lifetime Five can be elected at the time that you purchase your
contract. We also offer existing contract owners the option to elect Spousal
Lifetime Five after the contract date of their contract, subject to our
eligibility rules and restrictions. Your Contract Value as of the date of
election will be used as a basis to calculate the initial Protected Withdrawal
Value and the Annual Income Amount.
Currently, if you terminate Spousal Lifetime Five, you may only be permitted
to re-elect the benefit or elect the another lifetime withdrawal benefit on
any anniversary of the contract date that is at least 90 calendar days from
the date the benefit was last terminated.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit.
Termination of Spousal Lifetime Five
Spousal Lifetime Five terminates automatically when your Annual Income Amount
equals zero. You may terminate Spousal Lifetime Five at any time by notifying
us. If you terminate Spousal Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective and certain
restrictions on re-election of the benefit will apply as described above. We
reserve the right to further limit the frequency election in the future.
Spousal Lifetime Five terminates upon your surrender of the contract, upon the
first Designated Life to die if the contract is not continued, upon the second
Designated Life to die or upon your election to begin receiving annuity
payments.
The charge for Spousal Lifetime Five will no longer be deducted from your
Contract Value upon termination of the benefit.
Additional Tax Considerations for Qualified Contracts
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your contract beginning
after age 70 1/2. Roth IRAs are not subject to these rules during the contract
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as required minimum distribution under the tax law.
HIGHEST DAILY LIFETIME FIVE/SM /INCOME BENEFIT (HD5)/SM/
We offer a benefit that guarantees until the death of the single designated
life the ability to withdraw an annual amount (the "Total Annual Income
Amount") equal to a percentage of an initial principal value (the "Total
Protected Withdrawal Value") regardless of the impact of market performance on
the Contract Value, subject to our program rules regarding the timing and
amount of withdrawals. The benefit may be appropriate if you intend to make
periodic withdrawals from your Contract, and wish to ensure that market
performance will not affect your ability to receive annual payments. You are
not required to make withdrawals as part of the program - the guarantees are
not lost if you withdraw less than the maximum allowable amount each year
under the rules of the benefit. We discuss Highest Daily Lifetime Five in
greater detail immediately below. In addition, please see the Glossary section
of this prospectus for definitions of some of the key terms used with this
benefit. As discussed below, we require that you participate in our asset
transfer program in order to participate in Highest Daily Lifetime Five, and
in the Appendices to this prospectus, we set forth the formula under which we
make those asset transfers.
Currently, if you elect Highest Daily Lifetime Five and subsequently terminate
the benefit, you will not be able to re-elect Highest Daily Lifetime Five, and
may have a waiting period until you can elect another lifetime withdrawal
benefit. Specifically, you may be permitted to elect another lifetime
withdrawal benefit only on an anniversary of the contract date that is at
least 90 calendar days from the date that Highest Daily Lifetime Five was
terminated. We reserve the right to further limit the election frequency in
the future. The income benefit under Highest Daily Lifetime Five currently is
based on a single "designated life" who is at least 55
58
years old on the date that the benefit is acquired. The Highest Daily Lifetime
Five Benefit is not available if you elect any other optional living benefit,
although you may elect any optional death benefit. As long as your Highest
Daily Lifetime Five Benefit is in effect, you must allocate your Contract
Value in accordance with the then-permitted and available investment option(s)
with this program.
As discussed below, a key component of Highest Daily Lifetime Five is the
Total Protected Withdrawal Value, which is an amount that is distinct from
Contract Value. Because each of the Total Protected Withdrawal Value and Total
Annual Income Amount is determined in a way that is not solely related to
Contract Value, it is possible for the Contract Value to fall to zero, even
though the Total Annual Income Amount remains. You are guaranteed to be able
to withdraw the Total Annual Income Amount for the rest of your life, provided
that you have not made "excess withdrawals." Excess withdrawals, as discussed
below, will reduce your Total Annual Income Amount. Thus, you could experience
a scenario in which your Contract Value was zero, and, due to your excess
withdrawals, your Total Annual Income Amount also was reduced to zero. In that
scenario, no further amount would be payable under Highest Daily Lifetime Five.
KEY FEATURE - Total Protected Withdrawal Value
The Total Protected Withdrawal Value is used to determine the amount of the
annual payments under Highest Daily Lifetime Five. The Total Protected
Withdrawal Value is equal to the greater of the Protected Withdrawal Value and
any Enhanced Protected Withdrawal Value that may exist. We describe how we
determine Enhanced Protected Withdrawal Value, and when we begin to calculate
it, below. If you do not meet the conditions described below for obtaining
Enhanced Protected Withdrawal Value, then Total Protected Withdrawal Value is
simply equal to Protected Withdrawal Value.
The Protected Withdrawal Value initially is equal to the Contract Value on the
date that you elect Highest Daily Lifetime Five. On each business day
thereafter, until the earlier of the first withdrawal or ten years after the
date of your election of the benefit, we recalculate the Protected Withdrawal
Value. Specifically, on each such business day (the "Current Business Day"),
the Protected Withdrawal Value is equal to the greater of:
.. the Protected Withdrawal Value for the immediately preceding business day
(the "Prior Business Day"), appreciated at the daily equivalent of 5%
annually during the calendar day(s) between the Prior Business Day and the
Current Business Day (i.e., one day for successive business days, but more
than one calendar day for business days that are separated by weekends
and/or holidays), plus the amount of any Purchase Payment (including any
associated Credit) made on the Current Business Day; and
.. the Contract Value.
If you have not made a withdrawal prior to the tenth anniversary of the date
you elected Highest Daily Lifetime Five (which we refer to as the "Tenth
Anniversary"), we will continue to calculate a Protected Withdrawal Value. On
or after the Tenth Anniversary and up until the date of the first withdrawal,
your Protected Withdrawal Value is equal to the greater of the Protected
Withdrawal Value on the Tenth Anniversary or your Contract Value.
The Enhanced Protected Withdrawal Value is only calculated if you do not take
a withdrawal prior to the Tenth Anniversary. Thus, if you do take a withdrawal
prior to the Tenth Anniversary, you are not eligible to receive Enhanced
Protected Withdrawal Value. If no such withdrawal is taken, then on or after
the Tenth Anniversary up until the date of the first withdrawal, the Enhanced
Protected Withdrawal Value is equal to the sum of:
(a)200% of the Contract Value on the date you elected Highest Daily Lifetime
Five;
(b)200% of all Purchase Payments (and any associated Credits) made during the
one-year period after the date you elected Highest Daily Lifetime Five; and
(c)100% of all Purchase Payments (and any associated Credits) made more than
one year after the date you elected Highest Daily Lifetime Five, but prior
to the date of your first withdrawal.
We cease these daily calculations of the Protected Withdrawal Value and
Enhanced Protected Withdrawal Value (and therefore, the Total Protected
Withdrawal Value) when you make your first withdrawal. However, as discussed
below, subsequent Purchase Payments (and any associated Credits) will increase
the Total Annual Income Amount, while "excess" withdrawals (as described
below) may decrease the Total Annual Income Amount.
KEY FEATURE - Total Annual Income Amount Under the Highest Daily Lifetime Five
Benefit
The initial Total Annual Income Amount is equal to 5% of the Total Protected
Withdrawal Value. For purposes of the asset transfer formula described below,
we also calculate a Highest Daily Annual Income Amount, which is initially
equal to 5% of the Protected Withdrawal Value. Under the Highest Daily
Lifetime Five Benefit, if your cumulative withdrawals in a Contract Year are
less than or equal to the Total Annual Income Amount, they will not reduce
your Total Annual Income Amount in subsequent Contract Years, but any such
withdrawals will reduce the Total Annual Income Amount on a dollar-for-dollar
basis in that Contract Year. If your cumulative withdrawals are in excess of
the Total Annual Income Amount ("Excess Income"), your Total Annual Income
Amount in subsequent years will be reduced (except with regard to required
minimum distributions) by the result of the ratio of the Excess Income to the
Contract Value immediately prior to such withdrawal (see examples of this
calculation below). Reductions
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
include the actual amount of the withdrawal, including any withdrawal charge
that may apply. A Purchase Payment that you make will increase the
then-existing Total Annual Income Amount by an amount equal to 5% of the
Purchase Payment (including the amount of any associated Credits).
An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as
part of this benefit. As detailed in this paragraph, the Highest Quarterly
Auto Step-Up feature can result in a larger Total Annual Income Amount if your
Contract Value increases subsequent to your first withdrawal. We begin
examining the Contract Value for purposes of this feature starting with the
anniversary of the Contract Date (the "Contract Anniversary") immediately
after your first withdrawal under the benefit. Specifically, upon the first
such Contract Anniversary, we identify the Contract Value on the business days
corresponding to the end of each quarter that (i) is based on your Contract
Year, rather than a calendar year; (ii) is subsequent to the first withdrawal;
and (iii) falls within the immediately preceding Contract Year. If the end of
any such quarter falls on a holiday or a weekend, we use the next business
day. We multiply each of those quarterly Contract Values by 5%, adjust each
such quarterly value for subsequent withdrawals and Purchase Payments, and
then select the highest of those values. If the highest of those values
exceeds the existing Total Annual Income Amount, we replace the existing
amount with the new, higher amount. Otherwise, we leave the existing Total
Annual Income Amount intact. In later years, (i.e., after the first Contract
Anniversary after the first withdrawal) we determine whether an automatic
step-up should occur on each Contract Anniversary, by performing a similar
examination of the Contract Values on the end of the four immediately
preceding quarters. If, on the date that we implement a Highest Quarterly Auto
Step-Up to your Total Annual Income Amount, the charge for Highest Daily
Lifetime Five has changed for new purchasers, you may be subject to the new
charge at the time of such step-up. Prior to increasing your charge for
Highest Daily Lifetime Five upon a step-up, we would notify you, and give you
the opportunity to cancel the automatic step-up feature. If you receive notice
of a proposed step-up and accompanying fee increase, you should carefully
evaluate whether the amount of the step-up justifies the increased fee to
which you will be subject.
The Highest Daily Lifetime Five program does not affect your ability to make
withdrawals under your contract, or limit your ability to request withdrawals
that exceed the Total Annual Income Amount. Under Highest Daily Lifetime Five,
if your cumulative withdrawals in a Contract Year are less than or equal to
the Total Annual Income Amount, they will not reduce your Total Annual Income
Amount in subsequent Contract Years, but any such withdrawals will reduce the
Total Annual Income Amount on a dollar-for-dollar basis in that Contract Year.
If, cumulatively, you withdraw an amount less than the Total Annual Income
Amount in any Contract Year, you cannot carry-over the unused portion of the
Total Annual Income Amount to subsequent Contract Years.
Examples of dollar-for-dollar and proportional reductions and the Highest
Quarterly Auto Step-Up are set forth below. The values depicted here are
purely hypothetical, and do not reflect the charges for the Highest Daily
Lifetime Five benefit or any other fees and charges. Assume the following for
all three examples:
.. The Contract Date is December 1, 2006.
.. The Highest Daily Lifetime Five benefit is elected on March 5, 2007.
Dollar-for-Dollar Reductions
On May 2, 2007, the Total Protected Withdrawal Value is $120,000, resulting in
a Total Annual Income Amount of $6,000 (5% of $120,000). Assuming $2,500 is
withdrawn from the Contract on this date, the remaining Total Annual Income
Amount for that Contract Year (up to and including December 1, 2007) is
$3,500. This is the result of a dollar-for-dollar reduction of the Total
Annual Income Amount - $6,000 less $2,500 = $3,500.
Proportional Reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on August 6, 2007 and the Contract Value at the time of this withdrawal
is $110,000. The first $3,500 of this withdrawal reduces the Total Annual
Income Amount for that Contract Year to $0. The remaining withdrawal amount -
$1,500 - reduces the Total Annual Income Amount in future Contract Years on a
proportional basis based on the ratio of the excess withdrawal to the Contract
Value immediately prior to the excess withdrawal. (Note that if there were
other withdrawals in that Contract Year, each would result in another
proportional reduction to the Total Annual Income Amount).
60
Here is the calculation:
Contract Value before withdrawal $110,000.00
Less amount of "non" excess withdrawal $ 3,500.00
Contract Value immediately before excess withdrawal of $1,500 $106,500.00
Excess withdrawal amount $ 1,500.00
Divided by Contract Value immediately before excess withdrawal $106,500.00
Ratio 1.41%
Total Annual Income Amount $ 6,000.00
Less ratio of 1.41% $ 84.51
Total Annual Income Amount for future Contract Years $ 5,915.49
Highest Quarterly Auto Step-Up
On each Contract Anniversary date, the Total Annual Income Amount is
stepped-up if 5% of the highest quarterly value since your first withdrawal
(or last Contract Anniversary in subsequent years), adjusted for excess
withdrawals and additional Purchase Payments, is higher than the Total Annual
Income Amount, adjusted for excess withdrawals and additional Purchase
Payments.
Continuing the same example as above, the Total Annual Income Amount for this
Contract Year is $6,000. However, the excess withdrawal on August 6 reduces
this amount to $5,915.49 for future years (see above). For the next Contract
Year, the Total Annual Income Amount will be stepped-up if 5% of the highest
quarterly Contract Value, adjusted for withdrawals, is higher than $5,915.49.
Here are the calculations for determining the quarterly values. Only the
June 1 value is being adjusted for excess withdrawals as the September 1 and
December 1 Business Days occur after the excess withdrawal on August 6.
Highest Quarterly Adjusted Total
Value (adjusted with Annual Income Amount
withdrawal and (5% of the Highest
Date* Contract Value Purchase Payments)** Quarterly Value)
------------------------------------------------------------------------------
June 1, 2007 $118,000.00 $118,000.00 $5,900.00
------------------------------------------------------------------------------
August 6, 2007 $110,000.00 $112,885.55 $5,644.28
------------------------------------------------------------------------------
September 1, 2007 $112,000.00 $112,885.55 $5,644.28
------------------------------------------------------------------------------
December 1, 2007 $119,000.00 $119,000.00 $5,950.00
------------------------------------------------------------------------------
* In this example, the Contract Anniversary date is December 1. The quarterly
valuation dates are every three months thereafter -
March 1, June 1, September 1, and December 1. In this example, we do not
use the March 1 date as the first withdrawal took place after March 1. The
Contract Anniversary Date of December 1 is considered the fourth and final
quarterly valuation date for the year.
** In this example, the first quarterly value after the first withdrawal is
$118,000 on June 1, yielding an adjusted Total Annual Income Amount of
$5,900.00. This amount is adjusted on August 6 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Contract Value of $118,000 on June 1 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Total Annual Income
Amount for the Contract Year), resulting in an adjusted Contract Value
of $114,500 before the excess withdrawal.
. This amount ($114,500) is further reduced by 1.41% (this is the ratio in
the above example which is the excess withdrawal divided by the Contract
Value immediately preceding the excess withdrawal) resulting in a
Highest Quarterly Value of $112,885.55.
The adjusted Total Annual Income Amount is carried forward to the next
quarterly anniversary date of September 1. At this time, we compare this
amount to 5% of the Contract Value on September 1. Since the June 1 adjusted
Total Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of
$112,000), we continue to carry $5,644.28 forward to the next and final
quarterly anniversary date of December 1. The Contract Value on December 1 is
$119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28,
the adjusted Total Annual Income Amount is reset to $5,950.00.
In this example, 5% of the December 1 value yields the highest amount of
$5,950.00. Since this amount is higher than the current year's Total Annual
Income Amount of $5,915.49 adjusted for excess withdrawals, the Total Annual
Income Amount for the next Contract Year, starting on December 2, 2007 and
continuing through December 1, 2008, will be stepped-up to $5,950.00.
Benefits Under the Highest Daily Lifetime Five Program.
To the extent that your Contract Value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Total Annual Income
Amount and amounts are still payable under Highest Daily Lifetime Five, we
will make an additional payment, if any, for that Contract Year equal to the
remaining Total Annual Income Amount for the Contract Year. Thus, in that
scenario, the remaining Total Annual Income Amount would be payable even
though your Contract Value was reduced to zero. In subsequent Contract Years
we make payments that equal the Total Annual Income Amount as described in
this section. We will make payments until the death of the single designated
life. To the extent that cumulative withdrawals in the current Contract Year
that reduced your Contract Value to zero are more than the Total Annual Income
Amount, the Highest Daily Lifetime Five benefit terminates, and no additional
payments will be made.
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
If annuity payments are to begin under the terms of your Contract, or if you
decide to begin receiving annuity payments and there is a Total Annual Income
Amount due in subsequent Contract Years, you can elect one of the following
two options:
(1)apply your Contract Value to any annuity option available; or
(2)request that, as of the date annuity payments are to begin, we make annuity
payments each year equal to the Total Annual Income Amount. We will make
payments until the death of the single designated life.
We must receive your request in a form acceptable to us at our office.
In the absence of an election when mandatory annuity payments are to begin, we
will make annual annuity payments in the form of a single life fixed annuity
with ten payments certain, by applying the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1)the present value of the future Total Annual Income Amount payments. Such
present value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your Contract; and
(2)the Contract Value.
. If no withdrawal was ever taken, we will calculate the Total Annual
Income Amount as if you made your first withdrawal on the date that
annuity payments are to begin.
. Please note that payments that we make under this benefit after the
contract anniversary coinciding with or next following the annuitant's
95th birthday will be treated as annuity payments.
Other Important Considerations
.. Withdrawals under the Highest Daily Lifetime Five benefit are subject to
all of the terms and conditions of the Contract, including any withdrawal
charge.
.. Withdrawals made while the Highest Daily Lifetime Five Benefit is in effect
will be treated, for tax purposes, in the same way as any other withdrawals
under the Contract. The Highest Daily Lifetime Five Benefit does not
directly affect the Contract Value or surrender value, but any withdrawal
will decrease the Contract Value by the amount of the withdrawal (plus any
applicable withdrawal charge). If you surrender your Contract, you will
receive the current surrender value.
.. You can make withdrawals from your Contract while your Contract Value is
greater than zero without purchasing the Highest Daily Lifetime Five
Benefit. The Highest Daily Lifetime Five Benefit provides a guarantee that
if your Contract Value declines due to market performance, you will be able
to receive your Total Annual Income Amount in the form of periodic benefit
payments. Please note that the payments that we make under this benefit
after the contract anniversary coinciding with or next following the
Annuitant's 95/th birthday will be treated as annuity payments.
.. Upon inception of the benefit, 100% of your Contract Value must be
allocated to the permitted Sub-accounts. However, the asset transfer
component of the benefit as described below may transfer Contract Value to
the Benefit Fixed Rate Account as of the effective date of the benefit in
some circumstances.
.. You cannot allocate Purchase Payments or transfer Contract Value to a Fixed
Interest Rate Option if you elect Highest Daily Lifetime Five.
.. Transfers to and from the Sub-accounts and the Benefit Fixed Rate Account
triggered by the asset transfer component of the benefit will not count
toward the maximum number of free transfers allowable under the Contract.
.. In general, you must allocate your Contract Value in accordance with the
then available investment option(s) that we may prescribe in order to elect
and maintain the Highest Daily Lifetime Five benefit. If, subsequent to
your election of the benefit, we change our requirements for how Contract
Value must be allocated under the benefit, the new requirement will apply
only to new elections of the benefit, and we will not compel you to
re-allocate your Contract Value in accordance with our newly-adopted
requirements. Subsequent to any change in requirements, transfers of
Contract Value and allocation of additional Purchase Payments may be
subject to the new investment limitations.
Election of and Designations Under the Program
For Highest Daily Lifetime Five, there must be either a single Owner who is
the same as the Annuitant, or if the Contract is entity-owned, there must be a
single natural person Annuitant. In either case, the Annuitant must be at
least 55 years old.
Any change of the Annuitant under the Contract will result in cancellation of
Highest Daily Lifetime Five. Similarly, any change of Owner will result in
cancellation of Highest Daily Lifetime Five, except if (a) the new Owner has
the same taxpayer identification number as the previous owner (b) both the new
Owner and previous Owner are entities or (c) the previous Owner is a natural
person and the new Owner is an entity.
62
Currently, if you terminate the Highest Daily Lifetime Five benefit, you will
(a) not be permitted to re-elect the benefit and (b) may be allowed to elect
another lifetime withdrawal benefit only on any anniversary of the Contract
Date that is at least 90 calendar days from the date the Highest Daily
Lifetime Five Benefit was terminated. We reserve the right to further limit
the election frequency in the future. Before making any such change to the
election frequency, we will provide prior notice to Owners who have an
effective Highest Daily Lifetime Five benefit.
Termination of the Program
You may terminate the benefit at any time by notifying us. If you terminate
the benefit, any guarantee provided by the benefit will terminate as of the
date the termination is effective, and certain restrictions on re-election
will apply as described above. The benefit terminates: (i) upon your
termination of the benefit (ii) upon your surrender of the Contract (iii) upon
your election to begin receiving annuity payments (iv) upon the death of the
Annuitant (v) if both the Contract Value and Total Annual Income Amount equal
zero or (vi) if you fail to meet our requirements for issuing the benefit.
Upon termination of Highest Daily Lifetime Five, we cease deducting the charge
for the benefit. With regard to your investment allocations, upon termination
we will: (i) leave intact amounts that are held in the variable investment
options, and (ii) transfer all amounts held in the Benefit Fixed Rate Account
(as defined below) to your variable investment options, based on your existing
allocation instructions or (in the absence of such existing instructions) pro
rata (i.e. in the same proportion as the current balances in your variable
investment options).
Return of Principal Guarantee
If you have not made a withdrawal before the Tenth Anniversary, we will
increase your Contract Value on that Tenth Anniversary (or the next business
day, if that anniversary is not a business day), if the requirements set forth
in this paragraph are met. On the Tenth Anniversary, we add:
(a)your Contract Value on the day that you elected Highest Daily Lifetime
Five; and
(b)the sum of each Purchase Payment you made (including any Credits) during
the one-year period after you elected the benefit.
If the sum of (a) and (b) is greater than your Contract Value on the Tenth
Anniversary, we increase your Contract Value to equal the sum of (a) and (b),
by contributing funds from our general account. If the sum of (a) and (b) is
less than or equal to your Contract Value on the Tenth Anniversary, we make no
such adjustment. The amount that we add to your Contract Value under this
provision will be allocated to each of your variable investment options and
the Benefit Fixed Rate Account (described below), in the same proportion that
each such investment option bears to your total Contract Value, immediately
prior to the application of the amount. Any such amount will not be considered
a purchase payment when calculating your Total Protected Withdrawal Value,
your death benefit, or the amount of any other optional benefit that you may
have selected, and therefore will have no direct impact on any such values at
the time we add this amount. This potential addition to Contract Value is
available only if you have elected Highest Daily Lifetime Five and if you meet
the conditions set forth in this paragraph. Thus, if you take a withdrawal
prior to the Tenth Anniversary, you are not eligible to receive the Return of
Principal Guarantee.
Upon termination, we may limit or prohibit investment in the fixed interest
rate options.
Asset Transfer Component of Highest Daily Lifetime Five
As indicated above, we limit the sub-accounts to which you may allocate
Contract Value if you elect Highest Daily Lifetime Five. For purposes of this
benefit, we refer to those permitted sub-accounts as the "Permitted
Sub-accounts". The Permitted Sub-accounts are identified in the contract
application. As a requirement of participating in Highest Daily Lifetime Five,
we require that you participate in our specialized asset transfer program,
under which we may transfer Contract Value between the Permitted Sub-accounts
and a fixed interest rate account that is part of our general account (the
"Benefit Fixed Rate Account"). We determine whether to make a transfer, and
the amount of any transfer, under a non-discretionary formula, discussed
below. The Benefit Fixed Rate Account is available only with this benefit, and
thus you may not allocate Purchase Payments to that Account. The interest rate
that we pay with respect to the Benefit Fixed Rate Account is reduced by an
amount that corresponds generally to the charge that we assess against your
variable sub-accounts for Highest Daily Lifetime Five. The Benefit Fixed Rate
Account is not subject to the Investment Company Act of 1940 or the Securities
Act of 1933.
Under the asset transfer component of Highest Daily Lifetime Five, we monitor
your Contract Value daily and, if necessary, systematically transfer amounts
between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate
Account. Any transfer would be made in accordance with a formula, which is set
forth in the schedule supplement to the endorsement for this benefit (and also
appears in the Appendices to this prospectus). Speaking generally, the
formula, which we apply each business day, operates as follows. The formula
starts by identifying your Protected Withdrawal Value for that day and then
multiplies that figure by 5%, to produce a projected (i.e., hypothetical)
Highest Daily Annual Income Amount. Then, using our actuarial tables, we
produce an estimate of the total amount we would target in our allocation
model, based on the projected Highest Daily Annual Income Amount each year for
the rest of your life. In the formula, we refer to that value as the "Target
Value" or "L". If you have already made a withdrawal, your projected Highest
Daily Annual Income Amount (and thus your Target Value) would take into
63
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
account any automatic step-up that was scheduled to occur according to the
step-up formula described above. Next, the formula subtracts from the Target
Value the amount held within the Benefit Fixed Rate Account on that day, and
divides that difference by the amount held within the Permitted Sub-accounts.
That ratio, which essentially isolates the amount of your Target Value that is
not offset by amounts held within the Benefit Fixed Rate Account, is called
the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage
(currently 83%), it means essentially that too much Target Value is not offset
by assets within the Benefit Fixed Rate Account, and therefore we will
transfer an amount from your Permitted Sub-accounts to the Benefit Fixed Rate
Account. Conversely, if the Target Ratio falls below a certain percentage
(currently 77%), then a transfer from the Benefit Fixed Rate Account to the
Permitted Sub-accounts would occur. Note that the formula is calculated with
reference to the Highest Daily Annual Income Amount, rather than with
reference to the Total Annual Income Amount.
As you can glean from the formula, a downturn in the securities markets (i.e.,
a reduction in the amount held within the Permitted Sub-accounts) may cause us
to transfer some of your variable Contract Value to the Benefit Fixed Rate
Account, because such a reduction will tend to increase the Target Ratio.
Moreover, certain market return scenarios involving "flat" returns over a
period of time also could result in the transfer of money to the Benefit Fixed
Rate Account. In deciding how much to transfer, we use another formula, which
essentially seeks to rebalance amounts held in the Permitted Sub-accounts and
the Benefit Fixed Rate Account so that the Target Ratio meets a target, which
currently is equal to 80%. Once you elect Highest Daily Lifetime Five, the
ratios we use will be fixed. For newly issued annuities that elect Highest
Daily Lifetime Five and existing annuities that elect Highest Daily Lifetime
Five, however, we reserve the right to change the ratios.
While you are not notified when your contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the Benefit Fixed Rate Account. The
formula by which the reallocation triggers operate is designed primarily to
mitigate the financial risks that we incur in providing the guarantee under
Highest Daily Lifetime Five.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
.. Not make any transfer; or
.. If a portion of your Contract Value was previously allocated to the Benefit
Fixed Rate Account, transfer all or a portion of those amounts to the
Permitted Sub-accounts, based on your existing allocation instructions or
(in the absence of such existing instructions) pro rata (i.e., in the same
proportion as the current balances in your variable investment options).
Amounts taken out of the Benefit Fixed Rate Account will be withdrawn for
this purpose on a last-in, first-out basis (an amount renewed into a new
guarantee period under the Benefit Fixed Rate Account will be deemed a new
investment for purposes of this last-in, first-out rule); or
.. Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest that
you earn on such transferred amount will be equal to the annual rate that
we have set for that day, and we will credit the daily equivalent of that
annual interest until the earlier of one year from the date of the transfer
or the date that such amount in the Benefit Fixed Rate Account is
transferred back to the Permitted Sub-accounts.
If a significant amount of your Contract Value is systematically transferred
to the Benefit Fixed Rate Account during periods of market declines or low
interest rates, less of your Contract Value may be available to participate in
the investment experience of the Permitted Sub-accounts if there is a
subsequent market recovery. Under the reallocation formula that we employ, it
is possible that over time a significant portion, and under certain
circumstances all, of your Contract Value may be allocated to the Benefit
Fixed Rate Account. Note that if your entire Contract Value is transferred to
the Benefit Fixed Rate Account, then based on the way the formula operates,
that value would remain in the Benefit Fixed Rate Account unless you made
additional purchase payments to the Permitted Sub-accounts, which could cause
Contract Value to transfer out of the Benefit Fixed Rate Account.
Additional Tax Considerations
If you purchase a contract as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the minimum distribution rules under
the Code require that you begin receiving periodic amounts from your contract
beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for
which the participant is not a greater than 5 percent owner of the employer,
this required beginning date can generally be deferred to retirement, if
later. Roth IRAs are not subject to these rules during the owner's lifetime.
The amount required under the Code may exceed the Total Annual Income Amount,
which will cause us to increase the Total Annual Income Amount in any Contract
Year that required minimum distributions due from your Contract are greater
than such amounts. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as required minimum distribution under the tax law. Please note, however,
that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn
to satisfy required minimum distribution rules, will cause you to lose the
ability to receive Enhanced Protected Withdrawal Value and an amount under the
Return of Principal Guarantee.
64
As indicated, withdrawals made while the Highest Daily Lifetime Five Benefit
is in effect will be treated, for tax purposes, in the same way as any other
withdrawals under the contract. Please see the Tax Considerations section of
the prospectus for a detailed discussion of the tax treatment of withdrawals.
We do not address each potential tax scenario that could arise with respect to
this Benefit here. However, we do note that if you participate in Highest
Daily Lifetime Five through a non-qualified annuity, and your annuity has
received Enhanced Protected Withdrawal Value and/or an additional amount under
the Return of Principal Guarantee, as with all withdrawals, once all purchase
payments are returned under the contract, all subsequent withdrawal amounts
will be taxed as ordinary income.
HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (HD7)/SM/
Highest Daily Lifetime Seven is offered as an alternative to Lifetime Five,
Spousal Lifetime Five, and Highest Daily Lifetime Five. Currently, if you
elect Highest Daily Lifetime Seven and subsequently terminate the benefit, you
may have a waiting period until you can elect Spousal Lifetime Five, Lifetime
Five, Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime Seven.
See "Election of and Designations under the Program" below for details. The
income benefit under Highest Daily Lifetime Seven currently is based on a
single "designated life" who is at least 55 years old on the date that the
benefit is acquired. The Highest Daily Lifetime Seven Benefit is not available
if you elect any other optional living benefit, although you may elect any
optional death benefit. As long as your Highest Daily Lifetime Seven Benefit
is in effect, you must allocate your Contract Value in accordance with the
then permitted and available investment option(s) with this program. In the
application for this benefit, we specify the permitted investment options -
you may also contact us or your registered representative for further
information.
We offer a benefit that guarantees until the death of the single designated
life the ability to withdraw an annual amount (the "Annual Income Amount")
equal to a percentage of an initial principal value (the "Protected Withdrawal
Value") regardless of the impact of market performance on the Contract Value,
subject to our program rules regarding the timing and amount of withdrawals.
The benefit may be appropriate if you intend to make periodic withdrawals from
your Contract, and wish to ensure that market performance will not affect your
ability to receive annual payments. You are not required to make withdrawals
as part of the program - the guarantees are not lost if you withdraw less than
the maximum allowable amount each year under the rules of the benefit. As
discussed below, we require that you participate in our asset transfer program
in order to participate in Highest Daily Lifetime Seven, and in Appendix D to
this prospectus, we set forth the formula under which we make those asset
transfers.
As discussed below, a key component of Highest Daily Lifetime Seven is the
Protected Withdrawal Value. Because each of the Protected Withdrawal Value and
Annual Income Amount is determined in a way that is not solely related to
Contract Value, it is possible for the Contract Value to fall to zero, even
though the Annual Income Amount remains. You are guaranteed to be able to
withdraw the Annual Income Amount for the rest of your life, provided that you
have not made "excess withdrawals." Excess withdrawals, as discussed below,
will reduce your Annual Income Amount. Thus, you could experience a scenario
in which your Contract Value was zero, and, due to your excess withdrawals,
your Annual Income Amount also was reduced to zero. In that scenario, no
further amount would be payable under Highest Daily Lifetime Seven.
KEY FEATURE - Protected Withdrawal Value
The Protected Withdrawal Value is used to calculate the initial Annual Income
Amount. On the effective date of the benefit, the Protected Withdrawal Value
is equal to your Contract Value. On each business day thereafter, until the
earlier of the tenth anniversary of benefit election (the "Tenth Anniversary
Date") or the date of the first withdrawal, the Protected Withdrawal Value is
equal to the "Periodic Value" described in the next paragraph.
The "Periodic Value" initially is equal to the Contract Value on the effective
date of the benefit. On each business day thereafter, until the earlier of the
first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic
Value. We stop determining the Periodic Value upon the earlier of your first
withdrawal after the effective date of the benefit or the Tenth Anniversary
Date. On each business day (the "Current Business Day"), the Periodic Value is
equal to the greater of:
(1)the Periodic Value for the immediately preceding business day (the "Prior
Business Day") appreciated at the daily equivalent of 7% annually during
the calendar day(s) between the Prior Business Day and the Current Business
Day (i.e., one day for successive Business Days, but more than one calendar
day for business days that are separated by weekends and/or holidays), plus
the amount of any adjusted Purchase Payment made on the Current business
day; and
(2)the Contract Value.
If you make a withdrawal prior to the Tenth Anniversary Date, the Protected
Withdrawal Value on the date of the withdrawal is equal to the greatest of:
a. the Contract Value; or
b. the Periodic Value on the date of the withdrawal.
65
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
If you have not made a withdrawal on or before the Tenth Anniversary Date,
your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is
equal to the greatest of:
(1)the Contract Value; or
(2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent
adjusted Purchase Payments; or
(3)the sum of:
(a)200% of the Contract Value on the effective date of the benefit;
(b)200% of all adjusted Purchase Payments made within one year after the
effective date of the benefit; and
(c)all adjusted Purchase Payments made after one year following the
effective date of the benefit up to the date of the first withdrawal.
On and after the date of your first withdrawal, your Protected Withdrawal
Value is increased by the amount of any subsequent Purchase Payments, is
reduced by withdrawals, including your first withdrawal (as described below),
and is increased if you qualify for a step-up (as described below).
Irrespective of these calculations, your Protected Withdrawal Value will
always be at least equal to your Contract Value.
KEY FEATURE - Annual Income Amount Under the Highest Daily Lifetime Seven
Benefit
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value. The percentage depends on the age of the Annuitant on the
date of the first withdrawal after election of the benefit. The percentages
are: 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8%
for ages 85 and older. Under the Highest Daily Lifetime Seven benefit, if your
cumulative withdrawals in a contract year are less than or equal to the Annual
Income Amount, they will not reduce your Annual Income Amount in subsequent
contract years, but any such withdrawals will reduce the Annual Income Amount
on a dollar-for-dollar basis in that contract year. If your cumulative
withdrawals are in excess of the Annual Income Amount ("Excess Income"), your
Annual Income Amount in subsequent years will be reduced (except with regard
to required minimum distributions) by the result of the ratio of the Excess
Income to the Contract Value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of
the withdrawal, including any CDSC that may apply. Withdrawals of any amount
up to and including the Annual Income Amount will reduce the Protected
Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income
will reduce the Protected Withdrawal Value by the same ratio as the reduction
to the Annual Income Amount.
A Purchase Payment that you make will (i) increase the then-existing Annual
Income Amount by an amount equal to a percentage of the Purchase Payment
(including the amount of any associated Credits) based on the age of the
Annuitant at the time of the first withdrawal (the percentages are: 5% for
ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85
and older) and (ii) increase the Protected Withdrawal Value by the amount of
the Purchase Payment (including the amount of any associated Credits).
An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as
part of this benefit. As detailed in this paragraph, the Highest Quarterly
Auto Step-Up feature can result in a larger Annual Income Amount if your
Contract Value increases subsequent to your first withdrawal. We begin
examining the Contract Value for purposes of the Highest Quarterly Step-Up
starting with the anniversary of the Contract Date of the Annuity (the
"Contract Anniversary") immediately after your first withdrawal under the
benefit. Specifically, upon the first such Contract Anniversary, we identify
the Contract Value on the business days corresponding to the end of each
quarter that (i) is based on your contract year, rather than a calendar year;
(ii) is subsequent to the first withdrawal; and (iii) falls within the
immediately preceding contract year. If the end of any such quarter falls on a
holiday or a weekend, we use the next business day. Having identified each of
those quarter-end Contract Values, we then multiply each such value by a
percentage that varies based on the age of the Annuitant on the Contract
Anniversary as of which the step-up would occur. The percentages are 5% for
ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85
and older. Thus, we multiply each quarterly value by the applicable
percentage, adjust each such quarterly value for subsequent withdrawals and
Purchase Payments, and then select the highest of those values. If the highest
of those values exceeds the existing Annual Income Amount, we replace the
existing amount with the new, higher amount. Otherwise, we leave the existing
Annual Income Amount intact. In later years, (i.e., after the first Contract
Anniversary after the first withdrawal) we determine whether an automatic
step-up should occur on each Contract Anniversary, by performing a similar
examination of the Contract Values on the end of the four immediately
preceding quarters. At the time that we increase your Annual Income Amount, we
also increase your Protected Withdrawal Value to equal the highest quarterly
value upon which your step-up was based. If, on the date that we implement a
Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for
Highest Daily Lifetime Seven has changed for new purchasers, you may be
subject to the new charge at the time of such step-up. Prior to increasing
your charge for Highest Daily Lifetime Seven upon a step-up, we would notify
you, and give you the opportunity to cancel the automatic step-up feature. If
you receive notice of a proposed step-up and accompanying fee increase, you
should carefully evaluate whether the amount of the step-up justifies the
increased fee to which you will be subject.
66
The Highest Daily Lifetime Seven program does not affect your ability to make
withdrawals under your contract, or limit your ability to request withdrawals
that exceed the Annual Income Amount. Under Highest Daily Lifetime Seven, if
your cumulative withdrawals in an contract year are less than or equal to the
Annual Income Amount, they will not reduce your Annual Income Amount in
subsequent contract years, but any such withdrawals will reduce the Annual
Income Amount on a dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount in
any contract year, you cannot carry-over the unused portion of the Annual
Income Amount to subsequent contract years.
Examples of dollar-for-dollar and proportional reductions, and the Highest
Quarterly Auto Step-Up are set forth below. The values depicted here are
purely hypothetical, and do not reflect the charges for the Highest Daily
Lifetime Seven benefit or any other fees and charges. Assume the following for
all three examples:
.. The Contract Date is December 1, 2007
.. The Highest Daily Lifetime Seven benefit is elected on March 5, 2008
.. The Annuitant was 70 years old when he/she elected the Highest Daily
Lifetime Seven benefit
Dollar-for-Dollar Reductions
On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an
Annual Income Amount of $6,000 (since the Annuitant is younger than 75 at the
time of the 1st withdrawal, the Annual Income Amount is 5% of the Protected
Withdrawal Value, in this case 5% of $120,000). Assuming $2,500 is withdrawn
from the Annuity on this date, the remaining Annual Income Amount for that
contract year (up to and including December 1, 2008) is $3,500.
This is the result of a dollar-for-dollar reduction of the Annual Income
Amount - $6,000 less $2,500 = $3,500.
Proportional Reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on August 6, 2008 and the Contract Value at the time of this withdrawal
is $110,000. The first $3,500 of this withdrawal reduces the Annual Income
Amount for that contract year to $0. The remaining withdrawal amount - $1,500
- reduces the Annual Income Amount in future contract years on a proportional
basis based on the ratio of the excess withdrawal to the Contract Value
immediately prior to the excess withdrawal. (Note that if there were other
withdrawals in that contract year, each would result in another proportional
reduction to the Annual Income Amount).
Here is the calculation:
Contract Value before withdrawal $110,000.00
Less amount of "non" excess withdrawal $ 3,500.00
Contract Value immediately before excess withdrawal of $1,500 $106,500.00
Excess withdrawal amount $ 1,500.00
Divided by Contract Value immediately before excess withdrawal $106,500.00
Ratio 1.41%
Annual Income Amount $ 6,000.00
Less ratio of 1.41% $ 84.51
Annual Income Amount for future contract years $ 5,915.49
Highest Quarterly Auto Step-Up
On each Contract Anniversary date, the Annual Income Amount is stepped-up if
the appropriate percentage (based on the Annuitant's age on the Contract
Anniversary) of the highest quarterly value since your first withdrawal (or
last Contract Anniversary in subsequent years), adjusted for withdrawals and
additional Purchase Payments, is higher than the Annual Income Amount,
adjusted for excess withdrawals and additional Purchase Payments (plus any
Credits).
Continuing the same example as above, the Annual Income Amount for this
contract year is $6,000. However, the excess withdrawal on August 6 reduces
this amount to $5,915.49 for future years (see above). For the next contract
year, the Annual Income Amount will be stepped-up if 5% (since the youngest
Designated Life is younger than 75 on the date of the potential step-up) of
the highest quarterly Contract Value adjusted for withdrawals, is higher than
$5,915.49. Here are the calculations for determining the quarterly values.
Only the June 1 value is being adjusted for excess withdrawals as the
September 1 and December 1 business days occur after the excess withdrawal on
August 6.
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Highest Quarterly Adjusted Annual
Value (adjusted with Income Amount (5%
withdrawal and of the Highest
Date* Contract Value Purchase Payments)** Quarterly Value)
---------------------------------------------------------------------------
June 1, 2008 $118,000.00 $118,000.00 $5,900.00
---------------------------------------------------------------------------
August 6, 2008 $110,000.00 $112,885.55 $5,644.28
---------------------------------------------------------------------------
September 1, 2008 $112,000.00 $112,885.55 $5,644.28
---------------------------------------------------------------------------
December 1, 2008 $119,000.00 $119,000.00 $5,950.00
---------------------------------------------------------------------------
* In this example, the Contract Anniversary date is December 1. The quarterly
valuation dates are every three months thereafter -
March 1, June 1, September 1, and December 1. In this example, we do not
use the March 1 date as the first withdrawal took place after March 1. The
Contract Anniversary Date of December 1 is considered the fourth and final
quarterly valuation date for the year.
** In this example, the first quarterly value after the first withdrawal is
$118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00.
This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The
calculations for the adjustments are:
. The Contract Value of $118,000 on June 1 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the contract year), resulting in an adjusted Contract Value
of $114,500 before the excess withdrawal.
. This amount ($114,500) is further reduced by 1.41% (this is the ratio in
the above example which is the excess withdrawal divided by the Contract
Value immediately preceding the excess withdrawal) resulting in a
Highest Quarterly Value of $112,885.55.
The adjusted Annual Income Amount is carried forward to the next quarterly
anniversary date of September 1. At this time, we compare this amount to 5% of
the Contract Value on September 1. Since the June 1 adjusted Annual Income
Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to
carry $5,644.28 forward to the next and final quarterly anniversary date of
December 1. The Contract Value on December 1 is $119,000 and 5% of this amount
is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income
Amount is reset to $5,950.00.
In this example, 5% of the December 1 value yields the highest amount of
$5,950.00. Since this amount is higher than the current year's Annual Income
Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount
for the next contract year, starting on December 2, 2008 and continuing
through December 1, 2009, will be stepped-up to $5,950.00.
Benefits Under the Highest Daily Lifetime Seven Program
.. To the extent that your Contract Value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount or as a result of the fee that we assess for Highest Daily Lifetime
Seven, and amounts are still payable under Highest Daily Lifetime Seven, we
will make an additional payment, if any, for that contract year equal to
the remaining Annual Income Amount for the contract year. Thus, in that
scenario, the remaining Annual Income Amount would be payable even though
your Contract Value was reduced to zero. In subsequent contract years we
make payments that equal the Annual Income Amount as described in this
section. We will make payments until the death of the single designated
life. To the extent that cumulative withdrawals in the current contract
year that reduced your Contract Value to zero are more than the Annual
Income Amount, the Highest Daily Lifetime Seven benefit terminates, and no
additional payments are made. However, if a withdrawal in the latter
scenario was taken to meet required minimum distribution requirements under
the Annuity, then the benefit will not terminate, and we will continue to
pay the Annual Income Amount in the form of a fixed annuity.
.. If Annuity payments are to begin under the terms of your Annuity, or if you
decide to begin receiving Annuity payments and there is a Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
(1)apply your Contract Value to any Annuity option available; or
(2)request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will
make payments until the death of the single designated life.
We must receive your request in a form acceptable to us at our office.
In the absence of an election when mandatory annuity payments are to begin, we
will make annual annuity payments in the form of a single life fixed annuity
with ten payments certain, by applying the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such Annuity payments will be the
greater of:
(1)the present value of the future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed annuity
rates then currently available or the single life fixed annuity rates
guaranteed in your Annuity; and
(2)the Contract Value.
. If no withdrawal was ever taken, we will calculate the Annual Income
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
68
. Please note that payments that we make under this benefit after the
Contract Anniversary coinciding with or next following the annuitant's
95th birthday will be treated as annuity payments.
Other Important Considerations
.. Withdrawals under the Highest Daily Lifetime Seven benefit are subject to
all of the terms and conditions of the Contract, including any CDSC.
.. Withdrawals made while the Highest Daily Lifetime Seven Benefit is in
effect will be treated, for tax purposes, in the same way as any other
withdrawals under the Contract. The Highest Daily Lifetime Seven Benefit
does not directly affect the Contract Value or surrender value, but any
withdrawal will decrease the Contract Value by the amount of the withdrawal
(plus any applicable CDSC). If you surrender your Contract you will receive
the current surrender value.
.. You can make withdrawals from your Contract while your Contract Value is
greater than zero without purchasing the Highest Daily Lifetime Seven
benefit. The Highest Daily Lifetime Seven benefit provides a guarantee that
if your Contract Value declines due to market performance, you will be able
to receive your Annual Income Amount in the form of periodic benefit
payments.
.. Upon inception of the benefit, 100% of your Contract Value must be
allocated to the permitted Sub-accounts.
.. You cannot allocate Purchase Payments or transfer Contract Value to the AST
Investment Grade Bond Portfolio Sub-account (see description below) if you
elect this benefit. A summary description of the AST Investment Grade Bond
Portfolio appears within the prospectus section entitled "What Investment
Options Can I Choose?". Upon the initial transfer of your Account Value
into the AST Investment Grade Bond Portfolio, we will send a prospectus for
that Portfolio to you, along with your confirmation. In addition, you can
find a copy of the AST Investment Grade Bond Portfolio prospectus by going
to www.prudentialannuities.com.
.. Transfers to and from the elected Sub-accounts and an AST Investment Grade
Bond Portfolio Sub-account triggered by the asset transfer component of the
benefit will not count toward the maximum number of free transfers
allowable under the contract.
.. You must allocate your Account Value in accordance with the then available
investment option(s) that we may prescribe in order to elect and maintain
the Highest Daily Lifetime Seven Benefit. If, subsequent to your election
of the benefit, we change our requirements for how Account Value must be
allocated under the benefit, the new requirement will apply only to new
elections of the benefit, and we will not compel you to re-allocate your
Account Value in accordance with our newly adopted requirements.
.. The fee for Highest Daily Lifetime Seven is 0.60% annually of the Protected
Withdrawal Value. We deduct this fee at the end of each quarter, where each
such quarter is part of a year that begins on the effective date of the
benefit or an anniversary thereafter. Thus, on each such quarter-end (or
the next business day, if the quarter-end is not a business day), we deduct
0.15% of the Protected Withdrawal Value at the end of the quarter. We
deduct the fee pro rata from each of your Sub-accounts including the AST
Investment Grade Bond Portfolio Sub-account. Since this fee is based on the
Protected Withdrawal Value the fee for Highest Daily Lifetime Seven may be
greater than it would have been, had it been based on the Contract Value
alone. If the fee to be deducted exceeds the current Contract Value, we
will reduce the Contract Value to zero, and continue the benefit as
described above.
Election of and Designations Under the Program
For Highest Daily Lifetime Seven, there must be either a single Owner who is
the same as the Annuitant, or if the Contract is entity owned, there must be a
single natural person Annuitant. In either case, the Annuitant must be at
least 55 years old.
Any change of the Annuitant under the Contract will result in cancellation of
Highest Daily Lifetime Seven. Similarly, any change of Owner will result in
cancellation of Highest Daily Lifetime Seven, except if (a) the new Owner has
the same taxpayer identification number as the previous owner (b) ownership is
transferred from a custodian to the Annuitant, or vice versa or (c) ownership
is transferred from one entity to another entity.
Highest Daily Lifetime Seven can be elected at the time that you purchase your
Contract or after the Contract Date, subject to our eligibility rules and
restrictions.
Currently, if you terminate the Highest Daily Lifetime Seven benefit, you may
only be allowed to re-elect the benefit or elect another lifetime withdrawal
benefit on any anniversary of the Contract Date that is at least 90 calendar
days from the date the Highest Daily Lifetime Seven Benefit was terminated. We
reserve the right to further limit the election frequency in the future.
Similarly, we generally may permit those who have terminated Lifetime Five,
Spousal Lifetime Five, Highest Daily Lifetime Five or the Spousal Highest
Daily Lifetime Seven to elect Highest Daily Lifetime Seven only on an
anniversary of the Contract Date that is at least 90 calendar days from the
date that such benefit was terminated. We reserve the right to waive that
requirement.
69
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Return of Principal Guarantee
If you have not made a withdrawal before the Tenth Anniversary, we will
increase your Contract Value on that Tenth Anniversary (or the next business
day, if that anniversary is not a business day), if the requirements set forth
in this paragraph are met. On the Tenth Anniversary, we add:
a. your Contract Value on the day that you elected Highest Daily Lifetime
Seven; and
b. the sum of each Purchase Payment you made (including any Credits) during
the one-year period after you elected the benefit.
If the sum of (a) and (b) is greater than your Contract Value on the Tenth
Anniversary, we increase your Contract Value to equal the sum of (a) and (b),
by contributing funds from our general account. If the sum of (a) and (b) is
less than or equal to your Contract Value on the Tenth Anniversary, we make no
such adjustment. The amount that we add to your Contract Value under this
provision will be allocated to each of your variable investment options (other
than a bond Sub-account used with this benefit), in the same proportion that
each such Sub-account bears to your total Contract Value, immediately before
the application of the amount. Any such amount will not be considered a
Purchase Payment when calculating your Protected Withdrawal Value, your death
benefit, or the amount of any optional benefit that you may have selected, and
therefore will have no direct impact on any such values at the time we add
this amount. This potential addition to Contract Value is available only if
you have elected Highest Daily Lifetime Seven and if you meet the conditions
set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth
Anniversary, you are not eligible to receive the Return of Principal Guarantee.
Termination of the Program
You may terminate the benefit at any time by notifying us. If you terminate
the benefit, any guarantee provided by the benefit will terminate as of the
date the termination is effective, and certain restrictions on re-election
will apply as described above. The benefit terminates: (i) upon your
termination of the benefit (ii) upon your surrender of the Contract (iii) upon
your election to begin receiving annuity payments (although if you have
elected to take the Annual Income Amount in the form of Annuity payments, we
will continue to pay the Annual Income Amount), (iv) upon the death of the
Annuitant (v) if both the Contract Value and Annual Income Amount equal zero
or (vi) if you cease to meet our requirements for issuing the benefit (see
Elections and Designations under the Program).
Upon termination of Highest Daily Lifetime Seven other than upon the death of
the Annuitant, we impose any accrued fee for the benefit (i.e., the fee for
the pro-rated portion of the year since the fee was last assessed), and
thereafter we cease deducting the charge for the benefit. With regard to your
investment allocations, upon termination we will: (i) leave intact amounts
that are held in the variable investment options, and (ii) transfer all
amounts held in the AST Investment Grade Bond Portfolio Sub-account to your
variable investment options, based on your existing allocation instructions or
(in the absence of such existing instructions) pro rata (i.e. in the same
proportion as the current balances in your variable investment options).
Asset Transfer Component of Highest Daily Lifetime Seven
As indicated above, we limit the Sub-accounts to which you may allocate
Contract Value if you elect Highest Daily Lifetime Seven. For purposes of this
benefit, we refer to those permitted Sub-accounts as the "Permitted
Sub-accounts". As a requirement of participating in Highest Daily Lifetime
Seven, we require that you participate in our specialized asset transfer
program, under which we may transfer Contract Value between the Permitted
Sub-accounts and a specified bond fund within the Advanced Series Trust (the
"AST Investment Grade Bond Sub-account"). We determine whether to make a
transfer, and the amount of any transfer, under a non-discretionary formula,
discussed below. The AST Investment Grade Bond Sub-account is available only
with this benefit, and thus you may not allocate Purchase Payments to the AST
Investment Grade Bond Sub-account. Under the asset transfer component of
Highest Daily Lifetime Seven, we monitor your Contract Value daily and, if
dictated by the formula, systematically transfer amounts between the Permitted
Sub-accounts you have chosen and the AST Investment Grade Bond Sub-account.
Any transfer would be made in accordance with a formula, which is set forth in
the Appendices to this prospectus. Speaking generally, the formula, which we
apply each business day, operates as follows. The formula starts by
identifying an income basis for that day and then multiplies that figure by
5%, to produce a projected (i.e., hypothetical) income amount. Note that we
use 5% in the formula, irrespective of the Annuitant's attained age. Then we
produce an estimate of the total amount we would target in our allocation
model, based on the projected income amount and factors set forth in the
formula. In the formula, we refer to that value as the "Target Value" or "L".
If you have already made a withdrawal, your projected income amount (and thus
your Target Value) would take into account any automatic step-up, any
subsequent purchase payments, and any excess withdrawals. Next, the formula
subtracts from the Target Value the amount held within the AST Investment
Grade Bond Sub-account on that day, and divides that difference by the amount
held within the Permitted Sub-accounts. That ratio, which essentially isolates
the amount of your Target Value that is not offset by amounts held within the
AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If
the Target Ratio exceeds a certain percentage (currently 83%), it means
essentially that too much Target Value is not offset by assets within the AST
Investment Grade Bond Sub-account, and therefore we will transfer an amount
from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account.
Conversely, if the Target Ratio falls below a certain percentage (currently
77%), then a transfer from the AST Investment Grade Bond Sub-account to the
Permitted Sub-accounts would occur.
70
As you can glean from the formula, a downturn in the securities markets (i.e.,
a reduction in the amount held within the Permitted Sub-accounts) may cause us
to transfer some of your variable Contract Value to the AST Investment Grade
Bond Sub-account, because such a reduction will tend to increase the Target
Ratio. Moreover, certain market return scenarios involving "flat" returns over
a period of time also could result in the transfer of money to the AST
Investment Grade Bond Sub-account. In deciding how much to transfer, we use
another formula, which essentially seeks to re-balance amounts held in the
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that
the Target Ratio meets a target, which currently is equal to 80%. Once you
elect Highest Daily Lifetime Seven, the ratios we use will be fixed. For
newly-issued contracts that elect Highest Daily Lifetime Seven and existing
contracts that elect Highest Daily Lifetime Seven, however, we reserve the
right to change the ratios.
While you are not notified when your Contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the AST Investment Grade Bond
Sub-account. The formula by which the reallocation triggers operate is
designed primarily to mitigate the financial risks that we incur in providing
the guarantee under Highest Daily Lifetime Seven.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
.. Not make any transfer; or
.. If a portion of your Contract Value was previously allocated to the AST
Investment Grade Bond Sub-account, transfer all or a portion of those
amounts to the Permitted Sub-accounts, based on your existing allocation
instructions or (in the absence of such existing instructions) pro rata
(i.e., in the same proportion as the current balances in your variable
investment options). Amounts taken out of the AST Investment Grade Bond
Sub-account will be withdrawn for this purpose on a last-in, first-out
basis; or
.. Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account.
If a significant amount of your Contract Value is systematically transferred
to the AST Investment Grade Bond Sub-account during periods of market declines
or low interest rates, less of your Contract Value may be available to
participate in the investment experience of the Permitted Sub-accounts if
there is a subsequent market recovery. Under the reallocation formula that we
employ, it is possible that a significant portion of your Contract Value may
be allocated to the AST Investment Grade Bond Sub-account. Note that if your
entire Contract Value is transferred to the AST Investment Grade Bond
Sub-account, then based on the way the formula operates, that value would
remain in the AST Investment Grade Bond Sub-account unless you made additional
Purchase Payments to the Permitted Sub-accounts, which could cause Contract
Value to transfer out of the AST Investment Grade Bond Sub-account.
Additional Tax Considerations
If you purchase an annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the Required Minimum Distribution
rules under the Code provide that you begin receiving periodic amounts from
your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a
401(a) plan for which the participant is not a greater than five (5) percent
owner of the employer, this required beginning date can generally be deferred
to retirement, if later. Roth IRAs are not subject to these rules during the
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
Contract year that Required Minimum Distributions due from your Annuity are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as Required Minimum Distribution provisions under the tax
law. Please note, however, that any withdrawal you take prior to the Tenth
Anniversary, even if withdrawn to satisfy required minimum distribution rules,
will cause you to lose the ability to receive the Return of Principal
Guarantee and the guaranteed amount described above under "KEY FEATURE -
Protected Withdrawal Value".
As indicated, withdrawals made while this Benefit is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under the
contract. Please see the Tax Considerations section of the prospectus for a
detailed discussion of the tax treatment of withdrawals. We do not address
each potential tax scenario that could arise with respect to this Benefit
here. However, we do note that if you participate in Highest Daily Lifetime
Seven through a non-qualified annuity, as with all withdrawals, once all
Purchase Payments are returned under the contract, all subsequent withdrawal
amounts will be taxed as ordinary income.
SPOUSAL HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (SHD7)/SM/
Spousal Highest Daily Lifetime Seven is the spousal version of Highest Daily
Lifetime Seven. Currently, if you elect Spousal Highest Daily Lifetime Seven
and subsequently terminate the benefit, you may have a waiting period until
you can elect Spousal Lifetime Five, Lifetime Five, Highest Daily Lifetime
Seven, or Spousal Highest Daily Lifetime Seven. See "Election of and
Designations under the Program" below for details. Spousal Highest Daily
Lifetime Seven must be elected based on two Designated Lives, as described
below. Each Designated Life must be at least 59 1/2 years old when the benefit
is elected. Spousal Highest Daily Lifetime Seven is not available if you elect
any other optional living benefit. As long as your Spousal Highest Daily
Lifetime Seven Benefit is in effect, you must allocate your Contract Value in
accordance with the then permitted and available
71
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
investment option(s) with this program. In the application for this benefit,
we specify the permitted investment options - you may also contact us or your
registered representative for further information.
We offer a benefit that guarantees until the later death of two natural
persons who are each other's spouses at the time of election of the benefit
and at the first death of one of them (the "Designated Lives", and each, a
"Designated Life") the ability to withdraw an annual amount (the "Annual
Income Amount") equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of market performance
on the Contract Value, subject to our program rules regarding the timing and
amount of withdrawals. The benefit may be appropriate if you intend to make
periodic withdrawals from your Contract, wish to ensure that market
performance will not affect your ability to receive annual payments, and wish
either spouse to be able to continue the Spousal Highest Daily Lifetime Seven
benefit after the death of the first spouse. You are not required to make
withdrawals as part of the program - the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of
the benefit. As discussed below, we require that you participate in our asset
transfer program in order to participate in Spousal Highest Daily Lifetime
Seven, and in Appendix D to this prospectus, we set forth the formula under
which we make those asset transfers.
As discussed below, a key component of Spousal Highest Daily Lifetime Seven is
the Protected Withdrawal Value. Because each of the Protected Withdrawal Value
and Annual Income Amount is determined in a way that is not solely related to
Contract Value, it is possible for the Contract Value to fall to zero, even
though the Annual Income Amount remains. You are guaranteed to be able to
withdraw the Annual Income Amount until the death of the second Designated
Life, provided that there have not been "excess withdrawals." Excess
withdrawals, as discussed below, will reduce your Annual Income Amount. Thus,
you could experience a scenario in which your Contract Value was zero, and,
due to your excess withdrawals, your Annual Income Amount also was reduced to
zero. In that scenario, no further amount would be payable under Spousal
Highest Daily Lifetime Seven.
KEY FEATURE - Protected Withdrawal Value
The Protected Withdrawal Value is used to calculate the initial Annual Income
Amount. On the effective date of the benefit, the Protected Withdrawal Value
is equal to your Contract Value. On each business day thereafter, until the
earlier of the tenth anniversary of benefit election (the "Tenth Anniversary
Date") or the date of the first withdrawal, the Protected Withdrawal Value is
equal to the "Periodic Value" described in the next paragraph.
The "Periodic Value" initially is equal to the Contract Value on the effective
date of the benefit. On each business day thereafter, until the earlier of the
first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic
Value. We stop determining the Periodic Value upon the earlier of your first
withdrawal after the effective date of the benefit or the Tenth Anniversary
Date. On each business day (the "Current Business Day"), the Periodic Value is
equal to the greater of:
(1)the Periodic Value for the immediately preceding business day (the "Prior
Business Day") appreciated at the daily equivalent of 7% annually during
the calendar day(s) between the Prior Business Day and the Current Business
Day (i.e., one day for successive business Days, but more than one calendar
day for business days that are separated by weekends and/or holidays), plus
the amount of any adjusted Purchase Payment made on the Current Business
Day; and
(2)the Contract Value.
If you make a withdrawal prior to the Tenth Anniversary Date, the Protected
Withdrawal Value on the date of the withdrawal is equal to the greatest of:
a. the Contract Value; or
b. the Periodic Value on the date of the withdrawal.
If you have not made a withdrawal on or before the Tenth Anniversary Date,
your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is
equal to the greatest of:
(1)the Contract Value; or
(2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent
adjusted Purchase Payments; or
(3)the sum of:
(a)200% of the Contract Value on the effective date of the benefit;
(b)200% of all adjusted Purchase Payments made within one year after the
effective date of the benefit; and
(c)all adjusted Purchase Payments made after one year following the
effective date of the benefit up to the date of the first withdrawal.
72
On and after the date of your first withdrawal, your Protected Withdrawal
Value is increased by the amount of any subsequent Purchase Payments, is
reduced by withdrawals, including your first withdrawal (as described below),
and is increased if you qualify for a step-up (as described below).
Irrespective of these calculations, your Protected Withdrawal Value will
always be at least equal to your Contract Value.
KEY FEATURE - Annual Income Amount Under the Spousal Highest Daily Lifetime
Seven Benefit
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value. The percentage depends on the age of the youngest Designated
Life on the date of the first withdrawal after election of the benefit. The
percentages are: 5% for ages 79 and younger, 6% for ages 80 to 84, 7% for ages
85 to 89, and 8% for ages 90 and older. We use the age of the youngest
Designated Life even if that Designated Life is no longer a participant under
the Contract due to death or divorce. Under the Spousal Highest Daily Lifetime
Seven benefit, if your cumulative withdrawals in a contract year are less than
or equal to the Annual Income Amount, they will not reduce your Annual Income
Amount in subsequent contract years, but any such withdrawals will reduce the
Annual Income Amount on a dollar-for-dollar basis in that contract year. If
your cumulative withdrawals are in excess of the Annual Income Amount ("Excess
Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Contract Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply.
Withdrawals of any amount up to and including the Annual Income Amount will
reduce the Protected Withdrawal Value by the amount of the withdrawal.
Withdrawals of Excess Income will reduce the Protected Withdrawal Value by the
same ratio as the reduction to the Annual Income Amount. A Purchase Payment
that you make will (i) increase the then-existing Annual Income Amount by an
amount equal to a percentage of the Purchase Payment (including the amount of
any associated Credits) based on the age of the Annuitant at the time of the
first withdrawal (the percentages are: 5% for ages 79 and younger, 6% for ages
80-84, 7% for ages 85-89, and 8% for ages 90 and older) and (ii) increase the
Protected Withdrawal Value by the amount of the Purchase Payment (including
the amount of any associated Credits).
An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as
part of this benefit. As detailed in this paragraph, the Highest Quarterly
Auto Step-Up feature can result in a larger Annual Income Amount if your
Contract Value increases subsequent to your first withdrawal. We begin
examining the Contract Value for purposes of the Highest Quarterly Step-Up
starting with the anniversary of the Contract Date of the Annuity (the
"Contract Anniversary") immediately after your first withdrawal under the
benefit. Specifically, upon the first such Contract Anniversary, we identify
the Contract Value on the business days corresponding to the end of each
quarter that (i) is based on your contract year, rather than a calendar year;
(ii) is subsequent to the first withdrawal; and (iii) falls within the
immediately preceding contract year. If the end of any such quarter falls on a
holiday or a weekend, we use the next business day. Having identified each of
those quarter-end Contract Values, we then multiply each such value by a
percentage that varies based on the age of the youngest Designated Life on the
Contract Anniversary as of which the step-up would occur. The percentages are
5% for ages 79 and younger, 6% for ages 80-84, 7% for ages 85-89, and 8% for
ages 90 and older. Thus, we multiply each quarterly value by the applicable
percentage, adjust each such quarterly value for subsequent withdrawals and
Purchase Payments, and then select the highest of those values. If the highest
of those values exceeds the existing Annual Income Amount, we replace the
existing amount with the new, higher amount. Otherwise, we leave the existing
Annual Income Amount intact. In later years, (i.e., after the first Contract
Anniversary after the first withdrawal) we determine whether an automatic
step-up should occur on each Contract Anniversary, by performing a similar
examination of the Contract Values on the end of the four immediately
preceding quarters. At the time that we increase your Annual Income Amount, we
also increase your Protected Withdrawal Value to equal the highest quarterly
value upon which your step-up was based. If, on the date that we implement a
Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for
Spousal Highest Daily Lifetime Seven has changed for new purchasers, you may
be subject to the new charge at the time of such step-up. Prior to increasing
your charge for Spousal Highest Daily Lifetime Seven upon a step-up, we would
notify you, and give you the opportunity to cancel the automatic step-up
feature. If you receive notice of a proposed step-up and accompanying fee
increase, you should carefully evaluate whether the amount of the step-up
justifies the increased fee to which you will be subject.
The Spousal Highest Daily Lifetime Seven program does not affect your ability
to make withdrawals under your annuity, or limit your ability to request
withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily
Lifetime Seven, if your cumulative withdrawals in a contract year are less
than or equal to the Annual Income Amount, they will not reduce your Annual
Income Amount in subsequent contract years, but any such withdrawals will
reduce the Annual Income Amount on a dollar-for-dollar basis in that contract
year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount in
any contract year, you cannot carry-over the unused portion of the Annual
Income Amount to subsequent contract years.
Examples of dollar-for-dollar and proportional reductions, and the Highest
Quarterly Auto Step-Up are set forth below. The values depicted here are
purely hypothetical, and do not reflect the charges for the Spousal Highest
Daily Lifetime Seven benefit or any other fees and charges. Assume the
following for all three examples:
.. The Contract Date is December 1, 2007
.. The Spousal Highest Daily Lifetime Seven benefit is elected on March 5,
2008.
.. The youngest Designated Life was 70 years old when he/she elected the
Spousal Highest Daily Lifetime Seven benefit.
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5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
Dollar-for-Dollar Reductions
On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an
Annual Income Amount of $6,000 (since the youngest Designated Life is younger
than 80 at the time of the 1st withdrawal, the Annual Income Amount is 5% of
the Protected Withdrawal Value, in this case 5% of $120,000). Assuming $2,500
is withdrawn from the Annuity on this date, the remaining Annual Income Amount
for that contract year (up to and including December 1, 2008) is $3,500.
This is the result of a dollar-for-dollar reduction of the Annual Income
Amount - $6,000 less $2,500 = $3,500.
Proportional Reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on August 6, 2008 and the Contract Value at the time of this withdrawal
is $110,000. The first $3,500 of this withdrawal reduces the Annual Income
Amount for that contract year to $0. The remaining withdrawal amount - $1,500
- reduces the Annual Income Amount in future contract years on a proportional
basis based on the ratio of the excess withdrawal to the Contract Value
immediately prior to the excess withdrawal. (Note that if there were other
withdrawals in that contract year, each would result in another proportional
reduction to the Annual Income Amount).
Here is the calculation:
Contract Value before withdrawal $110,000.00
Less amount of "non" excess withdrawal $ 3,500.00
Contract Value immediately before excess withdrawal of $1,500 $106,500.00
Excess withdrawal amount $ 1,500.00
Divided by Contract Value immediately before excess withdrawal $106,500.00
Ratio 1.41%
Annual Income Amount $ 6,000.00
Less ratio of 1.41% $ 84.51
Annual Income Amount for future contract years $ 5,915.49
Highest Quarterly Auto Step-Up
On each Contract Anniversary date, the Annual Income Amount is stepped-up if
the appropriate percentage (based on the youngest Designated Life's age on the
Contract Anniversary) of the highest quarterly value since your first
withdrawal (or last Contract Anniversary in subsequent years), adjusted for
withdrawals and additional Purchase Payments, is higher than the Annual Income
Amount, adjusted for excess withdrawals and additional Purchase Payments (plus
any Credits).
Continuing the same example as above, the Annual Income Amount for this
contract year is $6,000. However, the excess withdrawal on August 6 reduces
this amount to $5,915.49 for future years (see above). For the next contract
year, the Annual Income Amount will be stepped-up if 5% (since the youngest
Designated Life is younger than 80 on the date of the potential step-up) of
the highest quarterly Contract Value adjusted for withdrawals, is higher than
$5,915.49. Here are the calculations for determining the quarterly values.
Only the June 1 value is being adjusted for excess withdrawals as the
September 1 and December 1 business days occur after the excess withdrawal on
August 6.
Highest Quarterly Adjusted Annual
Value (adjusted with Income Amount (5%
withdrawal and of the Highest
Date* Contract Value Purchase Payments)** Quarterly Value)
---------------------------------------------------------------------------
June 1, 2008 $118,000.00 $118,000.00 $5,900.00
---------------------------------------------------------------------------
August 6, 2008 $110,000.00 $112,885.55 $5,644.28
---------------------------------------------------------------------------
September 1, 2008 $112,000.00 $112,885.55 $5,644.28
---------------------------------------------------------------------------
December 1, 2008 $119,000.00 $119,000.00 $5,950.00
---------------------------------------------------------------------------
* In this example, the Contract Anniversary date is December 1. The quarterly
valuation dates are every three months thereafter -
March 1, June 1, September 1, and December 1. In this example, we do not
use the March 1 date as the first withdrawal took place after March 1. The
Contract Anniversary Date of December 1 is considered the fourth and final
quarterly valuation date for the year.
** In this example, the first quarterly value after the first withdrawal is
$118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00.
This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The
calculations for the adjustments are:
. The Contract Value of $118,000 on June 1 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the contract year), resulting in an adjusted Contract Value
of $114,500 before the excess withdrawal.
. This amount ($114,500) is further reduced by 1.41% (this is the ratio in
the above example which is the excess withdrawal divided by the Contract
Value immediately preceding the excess withdrawal) resulting in a
Highest Quarterly Value of $112,885.55.
74
The adjusted Annual Income Amount is carried forward to the next quarterly
anniversary date of September 1. At this time, we compare this amount to 5% of
the Contract Value on September 1. Since the June 1 adjusted Annual Income
Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to
carry $5,644.28 forward to the next and final quarterly anniversary date of
December 1. The Contract Value on December 1 is $119,000 and 5% of this amount
is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income
Amount is reset to $5,950.00.
In this example, 5% of the December 1 value yields the highest amount of
$5,950.00. Since this amount is higher than the current year's Annual Income
Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount
for the next contract year, starting on December 2, 2008 and continuing
through December 1, 2009, will be stepped-up to $5,950.00.
Benefits Under the Spousal Highest Daily Lifetime Seven Program
.. To the extent that your Contract Value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount or as a result of the fee that we assess for Spousal Highest Daily
Lifetime Seven, and amounts are still payable under Spousal Highest Daily
Lifetime Seven, we will make an additional payment, if any, for that
contract year equal to the remaining Annual Income Amount for the contract
year. Thus, in that scenario, the remaining Annual Income Amount would be
payable even though your Contract Value was reduced to zero. In subsequent
contract years we make payments that equal the Annual Income Amount as
described in this section. We will make payments until the death of the
first of the Designated Lives to die, and will continue to make payments
until the death of the second Designated Life as long as the Designated
Lives were spouses at the time of the first death. To the extent that
cumulative withdrawals in the current contract year that reduced your
Contract Value to zero are more than the Annual Income Amount, the Spousal
Highest Daily Lifetime Seven benefit terminates, and no additional payments
will be made. However, if a withdrawal in the latter scenario was taken to
meet required minimum distribution requirements under the contract, then
the benefit will not terminate, and we will continue to pay the Annual
Income Amount in the form of a fixed annuity.
.. If Annuity payments are to begin under the terms of your contract, or if
you decide to begin receiving annuity payments and there is a Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
(1)apply your Contract Value to any Annuity option available; or
(2)request that, as of the date Annuity payments are to begin, we make
Annuity payments each year equal to the Annual Income Amount. We will
make payments until the first of the Designated Lives to die, and will
continue to make payments until the death of the second Designated Life
as long as the Designated Lives were spouses at the time of the first
death. If, due to death of a Designated Life or divorce prior to
annuitization, only a single Designated Life remains, then annuity
payments will be made as a life annuity for the lifetime of the
Designated Life.
We must receive your request in a form acceptable to us at our office.
In the absence of an election when mandatory annuity payments are to begin, we
will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with ten payments certain, by applying the
greater of the annuity rates then currently available or the annuity rates
guaranteed in your contract. The amount that will be applied to provide such
annuity payments will be the greater of:
(1)the present value of the future Annual Income Amount payments. Such present
value will be calculated using the greater of the joint and survivor or
single (as applicable) life fixed annuity rates then currently available or
the joint and survivor or single (as applicable) life fixed annuity rates
guaranteed in your Contract; and
(2)the Contract Value.
. If no withdrawal was ever taken, we will calculate the Annual Income
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
. Please note that payments that we make under this benefit after the
Contract Anniversary coinciding with or next following the older of the
owner or Annuitant's 95th birthday, will be treated as annuity payments.
Other Important Considerations
.. Withdrawals under the Spousal Highest Daily Lifetime Seven Benefit are
subject to all of the terms and conditions of the contract, including any
CDSC.
.. Withdrawals made while the Spousal Highest Daily Lifetime Seven Benefit is
in effect will be treated, for tax purposes, in the same way as any other
withdrawals under the contract. The Spousal Highest Daily Lifetime Seven
Benefit does not directly affect the Contract Value or surrender value, but
any withdrawal will decrease the Contract Value by the amount of the
withdrawal (plus any applicable CDSC). If you surrender your contract you
will receive the current surrender value.
.. You can make withdrawals from your contract while your Contract Value is
greater than zero without purchasing the Spousal Highest Daily Lifetime
Seven Benefit. The Spousal Highest Daily Lifetime benefit provides a
guarantee that if your Contract Value declines due to market performance,
you will be able to receive your Annual Income Amount in the form of
periodic benefit payments.
.. Upon inception of the benefit, 100% of your Contract Value must be
allocated to the permitted Sub-accounts.
75
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
.. You cannot allocate Purchase Payments or transfer Contract Value to the AST
Investment Grade Bond Portfolio Sub-account (as described below) if you
elect this benefit. A summary description of the AST Investment Grade Bond
Portfolio appears within the prospectus section entitled "What Investment
Options Can I Choose?" Upon the initial transfer of your Account Value into
the AST Investment Grade Bond Portfolio, we will send a prospectus for that
Portfolio to you, along with your confirmation. In addition, you can find a
copy of the AST Investment Grade Bond Portfolio prospectus by going to
www.prudentialannuities.com.
.. You can make withdrawals from your contract without purchasing the Spousal
Highest Daily Lifetime Seven benefit. The Spousal Highest Daily Lifetime
Seven benefit provides a guarantee that if your Contract Value declines due
to market performance, you will be able to receive your Annual Income
Amount in the form of periodic benefit payments.
.. Transfers to and from the elected Sub-accounts and the AST Investment Grade
Bond Portfolio Sub-account triggered by the asset transfer component of the
benefit will not count toward the maximum number of free transfers
allowable under an Annuity.
.. You must allocate your Account Value in accordance with the then available
investment option(s) that we may prescribe in order to elect and maintain
the Spousal Highest Daily Lifetime Seven benefit. If, subsequent to your
election of the benefit, we change our requirements for how Account Value
must be allocated under the benefit, the new requirement will apply only to
new elections of the benefit, and we will not compel you to re-allocate
your Account Value in accordance with our newly adopted requirements.
.. The fee for Spousal Highest Daily Lifetime Seven is 0.75% annually of the
Protected Withdrawal Value. We deduct this fee at the end of each quarter,
where each such quarter is part of a year that begins on the effective date
of the benefit or an anniversary thereafter. Thus, on each such quarter-end
(or the next business day, if the quarter-end is not a business day), we
deduct 0.1875% of the Protected Withdrawal Value at the end of the quarter.
We deduct the fee pro rata from each of your Sub-accounts including the AST
Investment Grade Bond Sub-account. Since this fee is based on the Protected
Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven may be
greater than it would have been, had it been based on the Contract Value
alone. If the fee to be deducted exceeds the current Contract Value, we
will reduce the Contract Value to zero, and continue the benefit as
described above.
Election of and Designations Under the Program
Spousal Highest Daily Lifetime Seven can only be elected based on two
Designated Lives. Designated Lives must be natural persons who are each
other's spouses at the time of election of the program and at the death of the
first of the Designated Lives to die. Currently, Spousal Highest Daily
Lifetime Seven only may be elected where the Owner, Annuitant, and Beneficiary
designations are as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the beneficiary is the Owner's spouse. The Owner/Annuitant and the
beneficiary each must be at least 59 1/2 years old at the time of election;
or
.. Co-Annuity Owners, where the Owners are each other's spouses. The
beneficiary designation must be the surviving spouse, or the spouses named
equally. One of the owners must be the Annuitant. Each Owner must each be
at least 59 1/2 years old at the time of election; or
.. One Annuity Owner, where the Owner is a custodial account established to
hold retirement assets for the benefit of the Annuitant pursuant to the
provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto) ("Custodial Account"), the beneficiary is the
Custodial Account, and the spouse of the Annuitant is the Contingent
Annuitant. Both the Annuitant and the Contingent Annuitant each must be at
least 59 1/2 years old at the time of election.
We do not permit a change of Owner under this benefit, except as follows:
(a) if one Owner dies and the surviving spousal Owner assumes the Annuity or
(b) if the contract initially is co-owned, but thereafter the Owner who is not
the Annuitant is removed as Owner. We permit changes of beneficiary under this
benefit. If the Designated Lives divorce, the Spousal Highest Daily Lifetime
Seven benefit may not be divided as part of the divorce settlement or
judgment. Nor may the divorcing spouse who retains ownership of the contract
appoint a new Designated Life upon re-marriage.
Spousal Highest Daily Lifetime Seven can be elected at the time that you
purchase your contract or after the Contract Date, subject to our eligibility
rules and restrictions.
Currently, if you terminate the Spousal Highest Daily Lifetime Seven benefit,
you may only be allowed to re-elect the benefit or to elect another lifetime
withdrawal benefit on any anniversary of the Contract Date that is at least 90
calendar days from the date the Spousal Highest Daily Lifetime Seven Benefit
was terminated. We reserve the right to further limit the election frequency
in the future. Similarly, we generally may permit those who have terminated
Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five, or Highest
Daily Lifetime Seven to elect Spousal Highest Daily Lifetime Seven only on an
anniversary of the Contract Date that is at least 90 calendar days from the
date that such benefit was terminated. We reserve the right to waive that
requirement.
76
Return of Principal Guarantee
If you have not made a withdrawal before the Tenth Anniversary, we will
increase your Contract Value on that Tenth Anniversary (or the next business
day, if that anniversary is not a business day), if the requirements set forth
in this paragraph are met. On the Tenth Anniversary, we add:
a. your Contract Value on the day that you elected Spousal Highest Daily
Lifetime Seven; and
b. the sum of each Purchase Payment you made (including any Credits) during
the one-year period after you elected the benefit.
If the sum of (a) and (b) is greater than your Contract Value on the Tenth
Anniversary, we increase your Contract Value to equal the sum of (a) and (b),
by contributing funds from our general account. If the sum of (a) and (b) is
less than or equal to your Contract Value on the Tenth Anniversary, we make no
such adjustment. The amount that we add to your Contract Value under this
provision will be allocated to each of your variable investment options (other
than a bond Sub-account used with this benefit), in the same proportion that
each such Sub-account bears to your total Contract Value, immediately before
the application of the amount. Any such amount will not be considered a
Purchase Payment when calculating your Protected Withdrawal Value, your death
benefit, or the amount of any optional benefit that you may have selected, and
therefore will have no direct impact on any such values at the time we add
this amount. This potential addition to Contract Value is available only if
you have elected Spousal Highest Daily Lifetime Seven and if you meet the
conditions set forth in this paragraph. Thus, if you take a withdrawal prior
to the Tenth Anniversary, you are not eligible to receive the Return of
Principal Guarantee.
Termination of the Program
You may terminate the benefit at any time by notifying us. If you terminate
the benefit, any guarantee provided by the benefit will terminate as of the
date the termination is effective, and certain restrictions on re-election
will apply as described above. The benefit terminates: (i) if upon the death
of the first Designated Life, the surviving Designated Life opts to take the
death benefit under the contract (thus, the benefit does not terminate solely
because of the death of the first Designated Life), (ii) upon the death of the
second Designated Life, (iii) upon your termination of the benefit (although
if you have elected to take annuity payments in the form of the Annual Income
Amount, we will continue to pay the Annual Income Amount), (iv) upon your
surrender of the contract (v) upon your election to begin receiving annuity
payments (vi) if both the Contract Value and Annual Income Amount equal zero
or (vii) if you cease to meet our requirements for issuing the benefit (see
Election of and Designations under the Program).
Upon termination of Spousal Highest Daily Lifetime Seven other than upon death
of a Designated Life, we impose any accrued fee for the benefit (i.e., the fee
for the pro-rated portion of the year since the fee was last assessed), and
thereafter we cease deducting the charge for the benefit. With regard to your
investment allocations, upon termination we will: (i) leave intact amounts
that are held in the variable investment options, and (ii) transfer all
amounts held in the AST Investment Grade Bond Portfolio Sub-account (as
defined below) to your variable investment options, based on your existing
allocation instructions or (in the absence of such existing instructions) pro
rata (i.e. in the same proportion as the current balances in your variable
investment options).
Asset Transfer Component of Spousal Highest Daily Lifetime Seven
As indicated above, we limit the Sub-accounts to which you may allocate
Contract Value if you elect Spousal Highest Daily Lifetime Seven. For purposes
of this benefit, we refer to those permitted Sub-accounts as the "Permitted
Sub-accounts". As a requirement of participating in Spousal Highest Daily
Lifetime Seven, we require that you participate in our specialized asset
transfer program, under which we may transfer Contract Value between the
Permitted Sub-accounts and a specified bond fund within the Advanced Series
Trust (the "AST Investment Grade Bond Sub-account"). We determine whether to
make a transfer, and the amount of any transfer, under a non-discretionary
formula, discussed below. The AST Investment Grade Bond Sub-account is
available only with this benefit, and thus you may not allocate Purchase
Payments to the AST Investment Grade Bond Sub-account. Under the asset
transfer component of Spousal Highest Daily Lifetime Seven, we monitor your
Contract Value daily and, if dictated by the formula, systematically transfer
amounts between the Permitted Sub-accounts you have chosen and the AST
Investment Grade Bond Sub-account. Any transfer would be made in accordance
with a formula, which is set forth in the Appendix D to this prospectus.
Speaking generally, the formula, which we apply each business day, operates as
follows. The formula starts by identifying an income basis for that day and
then multiplies that figure by 5%, to produce a projected (i.e., hypothetical)
Highest Daily annual income amount. Note that we use 5% in the formula,
irrespective of the youngest Designated Life's attained age. Then we produce
an estimate of the total amount we would target in our allocation model, based
on the projected income amount and factors set forth in the formula. In the
formula, we refer to that value as the "Target Value" or "L". If you have
already made a withdrawal, your projected income amount (and thus your Target
Value) would take into account any automatic step-up, any subsequent purchase
payments, and any excess withdrawals. Next, the formula subtracts from the
Target Value the amount held within the AST Investment Grade Bond Sub-account
on that day, and divides that difference by the amount held within the
Permitted Sub-accounts. That ratio, which essentially isolates the amount of
your Target Value that is not offset by amounts held within the AST Investment
Grade Bond Sub-account, is called the "Target Ratio" or "r". If the Target
Ratio exceeds a certain percentage (currently 83%), it means essentially that
too much Target Value is not offset by assets within the AST Investment Grade
Bond Sub-account, and therefore we will transfer an amount from your Permitted
Sub-accounts to the AST Investment Grade Bond Sub-account Conversely, if the
Target Ratio falls below a certain percentage (currently 77%), then a transfer
from the AST Investment Grade Bond Sub-account to the Permitted Sub-accounts
would occur.
77
5: WHAT ARE THE LIFETIME WITHDRAWAL BENEFITS? continued
As you can glean from the formula, a downturn in the securities markets (i.e.,
a reduction in the amount held within the Permitted Sub-accounts) may cause us
to transfer some of your variable Contract Value to the AST Investment Grade
Bond Sub-account, because such a reduction will tend to increase the Target
Ratio. Moreover, certain market return scenarios involving "flat" returns over
a period of time also could result in the transfer of money to the AST
Investment Grade Bond Sub-account. In deciding how much to transfer, we use
another formula, which essentially seeks to re-balance amounts held in the
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that
the Target Ratio meets a target, which currently is equal to 80%. Once you
elect Spousal Highest Daily Lifetime Seven, the ratios we use will be fixed.
For newly-issued Annuities that elect Spousal Highest Daily Lifetime Seven and
existing Annuities that elect Spousal Highest Daily Lifetime Seven, however,
we reserve the right to change the ratios.
While you are not notified when your contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the AST Investment Grade Bond
Sub-account. The formula by which the reallocation triggers operate is
designed primarily to mitigate the financial risks that we incur in providing
the guarantee under Spousal Highest Daily Lifetime Seven.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
.. Not make any transfer; or
.. If a portion of your Contract Value was previously allocated to the AST
Investment Grade Bond Sub-account, transfer all or a portion of those
amounts to the Permitted Sub-accounts, based on your existing allocation
instructions or (in the absence of such existing instructions) pro rata
(i.e., in the same proportion as the current balances in your variable
investment options). Amounts taken out of the AST Investment Grade Bond
Sub-account will be withdrawn for this purpose on a last-in, first-out
basis; or
.. Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account.
If a significant amount of your Contract Value is systematically transferred
to the AST Investment Grade Bond Sub-account during periods of market declines
or low interest rates, less of your Contract Value may be available to
participate in the investment experience of the Permitted Sub-accounts if
there is a subsequent market recovery. Under the reallocation formula that we
employ, it is possible that a significant portion of your Contract Value may
be allocated to the AST Investment Grade Bond Sub-account. Note that if your
entire Contract Value is transferred to the AST Investment Grade Bond
Sub-account, then based on the way the formula operates, that value would
remain in the AST Investment Grade Bond Sub-account unless you made additional
Purchase Payments to the Permitted Sub-accounts, which could cause Contract
Value to transfer out of the AST Investment Grade Bond Sub-account.
Additional Tax Considerations
If you purchase an annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the Required Minimum Distribution
rules under the Code provide that you begin receiving periodic amounts from
your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a
401(a) plan for which the participant is not a greater than five (5) percent
owner of the employer, this required beginning date can generally be deferred
to retirement, if later. Roth IRAs are not subject to these rules during the
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
contract year that Required Minimum Distributions due from your Contract are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as Required Minimum Distribution provisions under the tax
law. Please note, however, that any withdrawal you take prior to the Tenth
Anniversary, even if withdrawn to satisfy required minimum distribution rules,
will cause you to lose the ability to receive the Return of Principal
Guarantee and the guaranteed amount described above under "KEY FEATURE -
Protected Withdrawal Value".
As indicated, withdrawals made while this benefit is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under the
contract. Please see the Tax Considerations section of the prospectus for a
detailed discussion of the tax treatment of withdrawals. We do not address
each potential tax scenario that could arise with respect to this benefit
here. However, we do note that if you participate in Spousal Highest Daily
Lifetime Seven through a non-qualified annuity, as with all withdrawals, once
all Purchase Payments are returned under the contract, all subsequent
withdrawal amounts will be taxed as ordinary income.
. Spousal Highest Daily Lifetime Seven Asset Allocation Formula. As
indicated above, Spousal Highest Daily Lifetime Seven uses the same
asset transfer formula as Highest Daily Lifetime Seven and uses the same
table of age-related factors. See Appendix D.
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6: WHAT IS THE INCOME APPRECIATOR BENEFIT?
INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit (IAB) is an optional, supplemental income
benefit that provides an additional income amount during the accumulation
period or upon annuitization. The Income Appreciator Benefit is designed to
provide you with additional funds that can be used to help defray the impact
taxes may have on distributions from your contract. IAB may be suitable for
you in other circumstances as well, which you can discuss with your registered
representative. Because individual circumstances vary, you should consult with
a qualified tax advisor to determine whether it would be appropriate for you
to elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
.. The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
.. If you choose the Income Appreciator Benefit, we will impose an annual
charge equal to 0.25% of your Contract Value. See Section 8, "What Are The
Expenses Associated With The Strategic Partners Plus 3 Contract?"
Activation of the Income Appreciator Benefit
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN
IN FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must
send us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
.. (IAB OPTION 1) at annuitization when determining an annuity payment;
.. (IAB OPTION 2) during the accumulation phase through the IAB automatic
withdrawal payment program; or
.. (IAB OPTION 3) during the accumulation phase as an Income Appreciator
Benefit credit to your contract over a 10-year period.
Income Appreciator Benefit payments are treated as earnings and may be subject
to tax upon withdrawal. See Section 10, "What Are The Tax Considerations
Associated With The Strategic Partners Plus 3 Contract?"
If you do not activate the benefit prior to the maximum annuitization age you
may lose all or part of the IAB.
CALCULATION OF THE INCOME APPRECIATOR BENEFIT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the
annuity date). We do this by multiplying the current earnings in the contract
by the applicable Income Appreciator Benefit percentage based on the number of
years the Income Appreciator Benefit has been in force. For purposes of
calculating the Income Appreciator Benefit:
.. earnings are calculated as the difference between the Contract Value and
the sum of all purchase payments;
.. earnings do not include (1) any amount added to the Contract Value as a
result of the Spousal Continuance Option, or (2) if we were to permit you
to elect the Income Appreciator Benefit after the contract date, any
earnings accrued under the contract prior to that election;
.. withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
.. the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has
been in force.
Number of Years Income Appreciator Benefit Income Appreciator
has been in Force Benefit Percentage
---------------------------------------------------------------
0-6 0%
---------------------------------------------------------------
7-9 15%
---------------------------------------------------------------
10-14 20%
---------------------------------------------------------------
15+ 25%
---------------------------------------------------------------
IAB Option 1 - Income Appreciator Benefit At Annuitization
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity date and add it to the adjusted Contract Value for purposes of
determining the amount available for annuitization. You may apply this amount
to any annuity or settlement option over the lifetime of the annuitant, joint
annuitants, or a period certain of at least 15 years (but not to exceed life
expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD
79
6: WHAT IS THE INCOME APPRECIATOR BENEFIT? continued
CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
Effect of Income Appreciator Benefit on Guaranteed Minimum Income Benefit
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we
use to calculate the annuity payout amount will be the greater of:
1. the adjusted Contract Value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown
in the contract.
If you exercise the Guaranteed Minimum Income Benefit feature and activate the
Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
Terminating the Income Appreciator Benefit
The Income Appreciator Benefit will terminate on the earliest of:
.. the date you make a total withdrawal from the contract;
.. the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Option;
.. the date the Income Appreciator Benefit amount is reduced to zero
(generally ten years after activation) under IAB Options 2 and 3;
.. the date of annuitization; or
.. the date the contract terminates.
Upon termination of the Income Appreciator Benefit, we cease imposing the
associated charge.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
You may choose IAB Option 1 at annuitization, but you may instead choose IAB
Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good order. Under IAB Options 2 and 3, you can
choose to have the Income Appreciator Benefit amounts paid or credited
monthly, quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY
REMAINING PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE
WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 - Income Appreciator Benefit Automatic Withdrawal Payment Program
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay
you the Income Appreciator Benefit amount in equal installments over a 10-year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal amount from your Contract Value, in which case each
combined payment must be at least $100.
The maximum automated withdrawal payment amount that you may receive from your
Contract Value under this Income Appreciator Benefit program in any contract
year during the 10-year period may not exceed 10% of the Contract Value as of
the date you activate the Income Appreciator Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in Contract Value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal
payment amounts, but not to amounts attributable to the Income Appreciator
Benefit.
After the ten-year payment period has ended, if the remaining Contract Value
is $2,000 or more, the contract will continue. If the remaining Contract Value
is less than $2,000 after the end of the 10-year payment period, we will pay
you the remaining Contract
80
Value and the contract will terminate. If the Contract Value falls below the
minimum amount required to keep the contract in force due solely to investment
results before the end of the 10-year payment period, we will continue to pay
the Income Appreciator Benefit amount for the remainder of the 10-year payment
period.
Discontinuing the Income Appreciator Benefit Automatic Withdrawal Payment
Program Under IAB Option 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the Contract Value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the Contract Value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the
variable investment options, fixed interest rate options, or the market value
adjustment option in the same proportions as your most recent purchase payment
allocation percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for
the 10-year payment period to the Contract Value in a lump sum before
determining the adjusted Contract Value. The adjusted Contract Value may be
applied to any annuity or settlement option that is paid over the lifetime of
the annuitant, joint annuitants, or a period certain of at least 15 years (but
not to exceed life expectancy).
IAB Option 3 - Income Appreciator Benefit Credit to Contract Value
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your Contract Value over a 10-year payment period.
We will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate options, or the market value
adjustment option in the same manner as your current allocation, unless you
direct us otherwise. We will waive the $1,000 minimum requirement for the
market value adjustment option. We will calculate the Income Appreciator
Benefit amount on the date we receive your written request in good order. Once
we have calculated the Income Appreciator Benefit, the Income Appreciator
Benefit credit will not be affected by changes in Contract Value due to the
investment performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your Contract
Value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the Contract
Value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment period
be applied to an annuity or settlement option that is paid over the lifetime
of the annuitants, joint annuitants, or a period certain of at least 15 years
(but not to exceed life expectancy).
Excess Withdrawals
During the 10 year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is withdrawn from your Contract Value in a contract
year that exceeds the sum of (1) 10% of the Contract Value as of the date the
Income Appreciator Benefit was activated plus (2) earnings since the Income
Appreciator Benefit was activated that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply
a new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the Contract Value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated
that have not been previously withdrawn do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year
is less than the excess withdrawal threshold, the difference between the
amount withdrawn and the threshold can be carried over to subsequent years on
a cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
Effect of Total Withdrawal on Income Appreciator Benefit. We will not make
Income Appreciator Benefit payments after the date you make a total withdrawal
of the contract surrender value.
7: HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS 3 CONTRACT?
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase
the contract. Unless we agree otherwise, and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means
other than electronic fund transfer of no
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7: HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS 3 CONTRACT? continued
less than $500 at any time during the accumulation phase. However, we impose a
minimum of $100 with respect to additional purchase payments made through
electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. Certain
age limits apply to certain features and benefits described herein. No
subsequent purchase payments may be made on or after the earliest of the 86th
birthday of:
.. the owner,
.. the joint owner,
.. the annuitant, or
.. the co-annuitant.
Currently, the maximum aggregate purchase payments you may make is $7 million.
We limit the maximum total purchase payments in any contract year other than
the first to $2 million absent our prior approval.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable or fixed interest rate investment options, or the market
value adjustment option based on the percentages you choose. The percentage of
your allocation to a particular investment option can range in whole
percentages from 0% to 100%.
When you make an additional purchase payment, it will be allocated in the same
way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000 and,
allocations to the market value adjustment option must be no less than $1,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order
at the Prudential Annuity Service Center. If, however, your first payment is
made without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our
business day generally closes at 4:00 p.m. Eastern time. Our business day may
close earlier, for example if regular trading on the New York Stock Exchange
closes early. Subsequent purchase payments received in good order after the
close of the business day will be credited on the following business day. With
respect to both your initial Purchase Payment and any subsequent Purchase
Payment that is pending investment in our Separate Account, we may hold the
amount temporarily in our general account and may earn interest on such
amount. You will not be credited with interest during that period.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered
representative.
Applicable laws designed to counter terrorists and prevent money laundering
might, in certain circumstances, require us to block a contract owner's
ability to make certain transactions, and thereby refuse to accept purchase
payments or requests for transfers, partial withdrawals, total withdrawals,
death benefits, or income payments until instructions are received from the
appropriate regulator. We also may be required to provide additional
information about you and your contract to government regulators.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
Contract Value with each purchase payment you make. The credit amount is
allocated to the variable or fixed interest rate investment options or the
market value adjustment option in the same percentages as the purchase payment.
The bonus credit that we pay with respect to any purchase payment depends on
(i) the age of the older of the owner or joint owner on the date on which the
purchase payment is made and (ii) the amount of the purchase payment.
Specifically,
.. if the elder owner is 80 or younger on the date that the purchase payment
is made, then we will add a bonus credit to the purchase payment equal to
4% if the purchase payment is less than $250,000; 5% if the purchase
payment is equal to or greater than $250,000 but less than $1 million; or
6% if the purchase payment is $1 million or greater; and
.. if the older owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
82
Under the Contract With Credit, if the owner returns the contract during the
free look period, we will recapture the bonus credits. If we pay a death
benefit under the contract, we have a contractual right to take back any
credit we applied within one year of the date of death.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down
depending on the investment performance of the variable investment options you
choose. To determine the value of your contract allocated to the variable
investment options, we use a unit of measure called an accumulation unit. An
accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option,
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes, and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to a variable investment option by the unit price of the
accumulation unit for that variable investment option. We calculate the unit
price for each investment option after the New York Stock Exchange closes each
day and then credit your contract. The value of the accumulation units can
increase, decrease, or remain the same from day to day.
We cannot guarantee that your Contract Value will increase or that it will not
fall below the amount of your total purchase payments.
8: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT?
There are charges and other expenses associated with the contract that reduce
the return on your investment. These charges and expenses are described below.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits
under the contracts. They are also designed, in the aggregate, to compensate
us for the risks of loss we assume pursuant to the contracts. If, as we
expect, the charges that we collect from the contracts exceed our total costs
in connection with the contracts, we will earn a profit. Otherwise, we will
incur a loss. The rates of certain of our charges have been set with reference
to estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that
the amount we collect from that charge will never be more than the amount of
such expense or risk. Nor does it mean that we may not also be compensated for
such expense or risk out of any other charges we are permitted to deduct by
the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
If you choose an optional benefit, the insurance and administrative cost
includes a charge to cover our assumption of the associated risk. The
mortality risk portion of the charge is for assuming the risk that the
annuitant(s) will live longer than expected based on our life expectancy
tables. When this happens, we pay a greater number of annuity payments. We
also incur the risk that the death benefit amount exceeds the Contract Value.
The expense risk portion of the charge is for assuming the risk that the
current charges will be insufficient in the future to cover the cost of
administering the contract. The administrative expense portion of the charge
compensates us for the expenses associated with the administration of the
contract. This includes preparing and issuing the contract; establishing and
maintaining contract records; preparation of confirmations and annual reports;
personnel costs; legal and accounting fees; filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other)
option that you choose.
The death benefit charge is equal to:
.. 1.40% on an annual basis if you choose the base death benefit, or
.. 1.65% on an annual basis if you choose the step-up Guaranteed Minimum Death
Benefit option (i.e., 0.25% in addition to the base death benefit charge).
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8: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT? continued
We impose an additional insurance and administrative charge of 0.10% annually
(of Contract Value attributable to the variable investment options) for the
Contract With Credit.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit or the Highest Daily Lifetime Five Benefit. We impose a
charge of 0.60% or 0.75% of the Protected Withdrawal Value for Highest Daily
Lifetime Seven and Spousal Highest Daily Lifetime Seven, respectively. We
impose an additional charge of 0.75% annually if you choose the Spousal
Lifetime Five Income Benefit. Upon any reset of the amounts guaranteed under
these benefits, we reserve the right to adjust the charge to that being
imposed at that time for new elections of the benefits.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from these
charges. Any profits made from these charges may be used by us to pay for the
costs of distributing the contracts. If you choose the Contract With Credit,
we will also use any profits from this charge to recoup our costs of providing
the credit.
If a fixed interest rate option is available under your contract, the interest
rate that we credit to that option may be reduced by an amount that
corresponds to the asset-based charges to which you are subject under the
variable investment options.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The amount and duration
of the withdrawal charge depends on whether you choose the Contract With
Credit or the Contract Without Credit. The withdrawal charge varies with the
number of contract anniversaries that have elapsed since each purchase payment
being withdrawn was made. Specifically, we maintain an "age" for each purchase
payment you have made by keeping track of how many contract anniversaries have
passed since the purchase payment was made.
The withdrawal charge is the percentage, shown below, of the amount withdrawn.
Number of Contract
Anniversaries since Contract with Credit Contract Without
the Date of each Withdrawal Credit Withdrawal
Purchase Payment Charge Charge
-------------------------------------------------------------
0 8% 7%
-------------------------------------------------------------
1 8% 6%
-------------------------------------------------------------
2 8% 5%
-------------------------------------------------------------
3 8% 4%
-------------------------------------------------------------
4 7% 3%
-------------------------------------------------------------
5 6% 2%
-------------------------------------------------------------
6 5% 1%
-------------------------------------------------------------
7 0% 0%
-------------------------------------------------------------
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary
will apply.
If you request a withdrawal, we will deduct an amount from the Contract Value
that is sufficient to pay the withdrawal charge, and provide you with the
amount requested.
If you request a full withdrawal, we will provide you with the full amount of
the Contract Value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your Contract Value
without incurring a withdrawal charge. We determine the "charge-free" amount
available to you in a given contract year on the contract anniversary that
begins that year. In calculating the charge-free amount, we divide purchase
payments into two categories - payments that are subject to a withdrawal
charge and those that are not. We determine the charge-free amount based only
on purchase payments that are subject to a withdrawal charge. The charge-free
amount in a given contract year is equal to 10% of the sum of all the purchase
payments subject to the withdrawal charge that you have made as of the
applicable contract anniversary. During the first contract year, the
charge-free amount is equal to 10% of the initial purchase payment.
84
When you make a withdrawal (including a withdrawal under a lifetime withdrawal
benefit), we will deduct the amount of the withdrawal first from the available
charge-free amount. Any excess amount will then be deducted from purchase
payments in excess of the charge-free amount and subject to applicable
withdrawal charges. Once you have withdrawn all purchase payments, additional
withdrawals will come from any earnings. We do not impose withdrawal charges
on earnings.
If a withdrawal or transfer is taken from a market value adjustment guarantee
period, prior to the expiration of the rate guarantee period, we will make a
market value adjustment to the withdrawal amount. We will then apply a
withdrawal charge to the adjusted amount.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup
our costs of providing the credit. However, we do not impose any withdrawal
charge on your withdrawal of a credit amount.
Withdrawal charges will never be greater than permitted by applicable law.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 10, "What Are The Tax
Considerations Associated With The Strategic Partners Plus 3 Contract?"
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your Contract
Value is less than $75,000, we will deduct the lesser of $30 or 2% of your
Contract Value, for administrative expenses. We may raise the level of the
Contract Value at which we waive this fee. The charge will be deducted
proportionately from each of the contract's variable investment options, fixed
interest rate options, and guarantee periods within the market value
adjustment option. This same charge will also be deducted when you surrender
your contract if your Contract Value is less than $75,000.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum
Income Benefit. FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2004, we will deduct a
charge equal to 0.50% per year of the average GMIB protected value for the
period the charge applies. FOR ALL OTHER CONTRACTS, this is an annual charge
equal to 0.45% of the average GMIB protected value for the period the charge
applies. We deduct the charge from your Contract Value on each of the
following events:
.. each contract anniversary,
.. when you begin the income phase of the contract,
.. upon a full withdrawal, and
.. upon a partial withdrawal if the remaining Contract Value would not be
enough to cover the then applicable Guaranteed Minimum Income Benefit
charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since
the full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value, it
does not increase or decrease based on changes to the annuity's Contract Value
due to market performance. If the GMIB protected value increases, the dollar
amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the Contract
Value allocated to the variable investment options. If you surrender your
contract, begin receiving annuity payments under the GMIB or any other annuity
payout option we make available during a contract year, or the GMIB
terminates, we will deduct the charge for the portion of the contract year
since the prior contract anniversary (or the contract date if in the first
contract year). Upon a full withdrawal or if the Contract Value remaining
after a partial withdrawal is not enough to cover the applicable Guaranteed
Minimum Income Benefit charge, we will deduct the charge from the amount we
pay you.
THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your Contract Value. The
Income Appreciator Benefit charge is calculated:
.. on each contract anniversary,
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8: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT? continued
.. on the annuity date,
.. upon the death of the sole owner or the first-to-die of the owner or joint
owner prior to the annuity date,
.. upon a full or partial withdrawal, and
.. upon a subsequent purchase payment.
The fee is based on the Contract Value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
.. on each contract anniversary,
.. on the annuity date,
.. upon the death of the sole owner or first to die of the owner or joint
owner prior to the annuity date,
.. upon a full withdrawal, and
.. upon a partial withdrawal if the Contract Value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option
bears to the total Contract Value. No market value adjustment will apply to
the portion of the charge deducted from the Market Value Adjustment Option.
Upon a full withdrawal, or if the Contract Value remaining after a partial
withdrawal is not enough to cover the then-applicable Income Appreciator
Benefit charge, the charge is deducted from the amount paid. The payment of
the Income Appreciator Benefit charge will be deemed to be made from earnings
for purposes of calculating other charges. THE FACT THAT WE MAY IMPOSE THE
CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A
WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB
charge during the 10-year payment period contemplated by IAB Options 2 and 3.
Moreover, you should realize that amounts credited to your Contract Value
under IAB Option 3 increase the Contract Value, and because the IAB fee is a
percentage of your Contract Value, the IAB fee may increase as a consequence
of those additions.
BENEFICIARY CONTINUATION OPTION CHARGES
If your beneficiary takes the Beneficiary Continuation Option, we deduct a
Settlement Service Charge. The charge is assessed daily against the average
assets allocated to the variable investment options, and is equal to an annual
charge of 1.00%. In addition, the beneficiary will incur an annual maintenance
fee equal to the lesser of $30 or 2% of Contract Value if the Contract Value
is less than $25,000 at the time the fee is assessed. The fee will not apply
if it is assessed 30 days prior to a surrender request. Finally, transfers in
excess of 20 per year will incur a $10 transfer fee.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may
make a deduction from the value of the contract to pay some or all of these
taxes. New York does not currently charge premium taxes on annuities. It is
our current practice not to deduct a charge for the federal tax associated
with deferred acquisition costs paid by us that are based on premium received.
However, we reserve the right to charge the contract owner in the future for
any such tax associated with deferred acquisition costs and any federal, state
or local income, excise, business or any other type of tax measured by the
amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer
fee pro-rata from the investment options from which the transfer is made. The
transfer fee is deducted before the market value adjustment, if any, is
calculated. There is a different transfer fee under the beneficiary
continuation option.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
86
In calculating our corporate income tax liability, we derive certain corporate
income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax
credits and corporate dividend received deductions. We do not pass these tax
benefits through to holders of the separate account annuity contracts because
(i) the contract owners are not the owners of the assets generating these
benefits under applicable income tax law and (ii) we do not currently include
company income taxes in the tax charges you pay under the contract. We reserve
the right to change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual
fund. Those funds charge fees that are in addition to the contract-related
fees described in this section. For 2007, the fees of these funds ranged from
0.37% to 1.65% annually. For certain funds, expenses are reduced pursuant to
expense waivers and comparable arrangements. In general, these expense waivers
and comparable arrangements are not guaranteed, and may be terminated at any
time. For additional information about these fund fees, please consult the
prospectuses for the funds.
9: HOW CAN I ACCESS MY MONEY?
You can Access Your Money by:
.. MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
.. CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum Contract Value that must remain in order to keep
your contract in force after a withdrawal is $2,000. If you request a
withdrawal amount that would reduce the Contract Value below this minimum, we
will withdraw the maximum amount available that, with the withdrawal charge,
would not reduce the Contract Value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after
we receive a withdrawal request in good order. We will deduct applicable
charges, if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you
indicate that the withdrawal is to originate from the market value adjustment
option, but you do not specify which guarantee period is to be involved, then
we will take the withdrawal from the guarantee period that has the least time
remaining until its maturity date. If you indicate that you wish to make a
withdrawal, but do not specify the investment options to be involved, then we
will take the withdrawal from your Contract Value on a pro rata basis from
each investment option that you have. In that situation, we will aggregate the
Contract Value in each of the guarantee periods that you have within the
market value adjustment option for purposes of making that pro rata
calculation. The portion of the withdrawal associated with the market value
adjustment option then will be taken from the guarantee periods with the least
amount of time remaining until the maturity date, irrespective of the original
length of the guarantee period. You should be aware that a withdrawal may
avoid a withdrawal charge based on the charge-free amount that we allow, yet
still be subject to a market value adjustment.
Income Taxes, Tax Penalties, and Certain Restrictions also may Apply to any
Withdrawal you make. For a more Complete Explanation, See Section 10.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals.
We will process your withdrawals at the end of the business day at the
intervals you specify. We will continue at these intervals until you tell us
otherwise. You can make withdrawals from any designated investment option or
proportionally from all investment options (other than a guarantee period
within the market value adjustment option). The minimum automated withdrawal
amount you can make is generally $100. An assignment of the contract
terminates any automated withdrawal program that you had in effect.
Income Taxes, Tax Penalties, Withdrawal Charges, and Certain Restrictions may
Apply to Automated Withdrawals. For a more Complete Explanation, See
Section 10.
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9: HOW CAN I ACCESS MY MONEY? continued
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
.. The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
.. Trading on the New York Stock Exchange is restricted;
.. An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
.. The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
10: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
PLUS 3 CONTRACT?
The tax considerations associated with an annuity vary depending on whether
the contract is (i) owned by an individual or non-natural person, and not
associated with a tax-favored retirement plan, or (ii) held under a
tax-favored retirement plan. We discuss the tax considerations for these
categories of contracts below. The discussion is general in nature and
describes only federal income tax law (not state or other tax laws). It is
based on current law and interpretations, which may change. The information
provided is not intended as tax advice. You should consult with a qualified
tax advisor for complete information and advice. References to purchase
payments below relate to your cost basis in your contract. Generally, your
cost basis in a contract not associated with a tax-favored retirement plan is
the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments. Cost
basis for a tax-favored retirement plan is provided only in limited
circumstances, such as for contributions to a Roth IRA or nondeductible IRA
contributions.
The discussion includes a description of certain spousal rights under the
contract, and our administration of such spousal rights and related tax
reporting accords with our understanding of the Defense of Marriage Act (which
defines a "marriage" as a legal union between a man and a woman and a "spouse"
as a person of the opposite sex). Depending on the state in which your annuity
is issued, we may offer certain spousal benefits to civil union couples. You
should be aware, however, that federal tax law does not recognize civil
unions. Therefore, we cannot permit a civil union partner to continue the
annuity upon the death of the first partner under the annuity's "spousal
continuance" provision. Civil union couples should consider that limitation
before selecting a spousal benefit under the annuity.
NONQUALIFIED ANNUITY CONTRACTS
In general, as used in this prospectus, a Nonqualified Annuity is owned by an
individual or non-natural person and is not associated with a tax-favored
retirement plan.
TAXES PAYABLE BY YOU
We believe this annuity is an annuity contract for tax purposes. Accordingly,
as a general rule, you should not pay any tax until you receive money under
the contract. Generally, annuity contracts issued by the same company (and
affiliates) to you during the same calendar year must be treated as one
annuity contract for purposes of determining the amount subject to tax under
the rules described below. Charges for investment advisory fees that are taken
from the contract are treated as a partial withdrawal from the contract and
will be reported as such to the contract owner.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract should be
treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding
these benefits.
You must commence annuity payments no later than the first day of the calendar
month next following the maximum Annuity Date for your contract. Please refer
to your annuity contract for the applicable maximum Annuity Date. For some of
our contracts, you are able to choose to defer the Annuity Date beyond the
default Annuity Date described in your contract. However, the IRS may not then
consider your contract to be an annuity under the tax law.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income,
rather than as return of purchase payments, until all gain has been withdrawn.
Once all gain has been
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withdrawn, payments will be treated as a nontaxable return of purchase
payments until all purchase payments have been returned. After all purchase
payments are returned, all subsequent amounts will be taxed as ordinary
income. You will generally be taxed on any withdrawals from the contract while
you are alive even if the withdrawal is paid to someone else. Withdrawals
under any of the optional living benefit programs or as a systematic payment
are taxed under these rules. If you assign or pledge all or part of your
contract as collateral for a loan, the part assigned generally will be treated
as a withdrawal. If you transfer your contract for less than full
consideration, such as by gift, you will also trigger tax on any gain in the
contract. This rule does not apply if you transfer the contract to your spouse
or under most circumstances if you transfer the contract incident to divorce.
If you choose to receive payments under an interest payment option, or a
beneficiary chooses to receive a death benefit under an interest payment
option, that election will be treated, for tax purposes, as surrendering your
annuity and will immediately subject any gain in the contract to income tax.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract. After the full amount of your purchase payments have been
recovered tax-free, the full amount of the annuity payments will be taxable.
If annuity payments stop due to the death of the annuitant before the full
amount of your purchase payments have been recovered, a tax deduction may be
allowed for the unrecovered amount.
TAX PENALTY FOR EARLY WITHDRAWAL FROM A NONQUALIFIED ANNUITY CONTRACT
You may owe a 10% tax penalty on the taxable part of distributions received
from your Nonqualified annuity contract before you attain age 59 1/2. Amounts
are not subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled;
.. generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually (please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years and modification of payments during that time period will result in
retroactive application of the 10% tax penalty); or
.. the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code), permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. Partial surrenders may be treated in the same way as tax-free
1035 exchanges of entire contracts, therefore avoiding current taxation of any
gains in the contract as well as the 10% tax penalty on pre-age 59 1/2
withdrawals. The IRS has reserved the right to treat transactions it considers
abusive as ineligible for this favorable partial 1035 exchange treatment. We
do not know what transactions may be considered abusive. For example we do not
know how the IRS may view early withdrawals or annuitizations after a partial
exchange. In addition, it is unclear how the IRS will treat a partial exchange
from a life insurance, endowment, or annuity contract into an immediate
annuity. As of the date of this prospectus, we will accept a partial 1035
exchange from a non-qualified annuity into an immediate annuity as a
"tax-free" exchange for future tax reporting purposes, except to the extent
that we, as a reporting and withholding agent, believe that we would be
expected to deem the transaction to be abusive. However, some insurance
companies may not recognize these partial surrenders as tax-free exchanges and
may report them as taxable distributions to the extent of any gain distributed
as well as subjecting the taxable portion of the distribution to the 10% tax
penalty. We strongly urge you to discuss any transaction of this type with
your tax advisor before proceeding with the transaction.
If an annuity is purchased through a tax-free exchange of a life insurance,
annuity or endowment contract that was purchased prior to August 14, 1982,
then any purchase payments made to the original contract prior to August 14,
1982 will be treated as made to the new contract prior to that date.
Generally, such pre-August 14, 1982 withdrawals are treated as a recovery of
your investment in the contract first until purchase payments made before
August 14, 1982 are withdrawn. Moreover, any income allocable to purchase
payments made before August 14, 1982, is not subject to the 10% tax penalty.
TAXES PAYABLE BY BENEFICIARIES
The Death Benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the Death
Benefit, as determined under federal law, is also included in the owner's
estate. Generally, the same tax rules described above would also apply to
amounts received by your beneficiary. Choosing any option other than a lump
sum Death Benefit may defer taxes. Certain minimum distribution requirements
apply upon your death, as discussed further below in the
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10: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
PLUS 3 CONTRACT? continued
Annuity Qualification section. Tax consequences to the beneficiary vary
depending upon the Death Benefit payment option selected. Generally, for
payment of the Death Benefit
.. As a lump sum payment: the beneficiary is taxed on gain in the contract.
.. Within 5 years of death of owner: the beneficiary is taxed as amounts are
withdrawn (in this case gain is treated as being distributed first).
.. Under an annuity or annuity settlement option with distribution beginning
within one year of the date of death of the owner: the beneficiary is taxed
on each payment (part will be treated as gain and part as return of
purchase payments).
Considerations for Contingent Annuitants: We may allow the naming of a
contingent annuitant when a Nonqualified annuity contract is held by a pension
plan or a tax favored retirement plan. In such a situation, the annuity may no
longer qualify for tax deferral where the annuity contract continues after the
death of the Annuitant. Note that in certain annuity contracts issued by Pruco
Life Insurance Company and Pruco Life Insurance Company of New Jersey, we
allow for the naming of a co-annuitant, which also is used to mean the
successor annuitant (and not another life used for measuring the duration of
an annuity payment option). Like in the case of a contingent annuitant, the
annuity may no longer qualify for tax deferral where the contract continues
after the death of the annuitant.
DISTRIBUTIONS
Taxable amounts distributed from an annuity are subject to federal and state
income tax reporting and withholding. In general, we will withhold federal
income tax from the taxable portion of such distribution based on the type of
distribution. In the case of an annuity or similar periodic payment, we will
withhold as if you are a married individual with three (3) exemptions unless
you designate a different withholding status. If no U.S. taxpayer
identification number is provided, we will automatically withhold using single
with zero exemptions as the default. In the case of all other distributions,
we will withhold at a 10% rate. You may generally elect not to have tax
withheld from your payments. An election out of withholding must be made on
forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident
aliens at a 30% rate. A different withholding rate may be applicable to a
nonresident alien based on the terms of an existing income tax treaty between
the United States and the nonresident alien's country. Please refer to the
discussion below regarding withholding rules for a Qualified annuity.
Regardless of the amount withheld by us, you are liable for payment of federal
and state income tax on the taxable portion of annuity distributions. You
should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
Entity Owners
Where a contract is held by a non-natural person (e.g. a corporation), other
than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract over its cost basis will be subject to tax annually.
Where a contract is structured so that it is owned by a grantor trust but the
annuitant is not the grantor, then the contract is required to terminate upon
the death of the grantor if the grantor pre-deceases the annuitant under
Section 72(s) of the Code. Under this circumstance, the contract value will be
paid out to the beneficiary and it is not eligible for the death benefit
provided under the contract.
ANNUITY QUALIFICATION
Diversification and Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
Sub-accounts of an annuity must be diversified, according to certain rules
under the Internal Revenue Code. Each portfolio is required to diversify its
investments each quarter so that no more than 55% of the value of its assets
is represented by any one investment, no more than 70% is represented by any
two investments, no more than 80% is represented by any three investments, and
no more than 90% is represented by any four investments. Generally, securities
of a single issuer are treated as one investment and obligations of each U.S.
Government agency and instrumentality (such as the Government National
Mortgage Association) are treated as issued by separate issuers. In addition,
any security issued, guaranteed or insured (to the extent so guaranteed or
insured) by the United States or an instrumentality of the U.S. will be
treated as a security issued by the U.S. Government or its instrumentality,
where applicable. We believe the portfolios underlying the variable investment
options of the annuity meet these diversification requirements.
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An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor
control rules will be met, the Treasury Department may promulgate guidelines
under which a variable annuity will not be treated as an annuity for tax
purposes if persons with ownership rights have excessive control over the
investments underlying such variable annuity. It is unclear whether such
guidelines, if in fact promulgated, would have retroactive effect. It is also
unclear what effect, if any, such guidelines might have on transfers between
the investment options offered pursuant to this Prospectus. We reserve the
right to take any action, including modifications to your annuity or the
investment options, required to comply with such guidelines if promulgated.
Any such changes will apply uniformly to affected owners and will be made with
such notice to affected owners as is feasible under the circumstances.
Required Distributions Upon Your Death for Nonqualified Annuity Contracts.
Upon your death, certain distributions must be made under the contract. The
required distributions depend on whether you die before you start taking
annuity payments under the contract or after you start taking annuity payments
under the contract. If you die on or after the Annuity Date, the remaining
portion of the interest in the contract must be distributed at least as
rapidly as under the method of distribution being used as of the date of
death. If you die before the Annuity Date, the entire interest in the contract
must be distributed within 5 years after the date of death, or as periodic
payments over a period not extending beyond the life or life expectancy of
such designated beneficiary (provided such payments begin within one year of
your death). Your designated beneficiary is the person to whom benefit rights
under the contract pass by reason of death, and must be a natural person in
order to elect a periodic payment option based on life expectancy or a period
exceeding five years. Additionally, if the annuity is payable to (or for the
benefit of) your surviving spouse, that portion of the contract may be
continued with your spouse as the owner. For Nonqualified annuity contracts
owned by a non-natural person, the required distribution rules apply upon the
death of the annuitant. This means that for a contract held by a non-natural
person (such as a trust) for which there is named a co-annuitant, then such
required distributions will be triggered by the death of the first
co-annuitants to die.
Changes in Your Annuity. We reserve the right to make any changes we deem
necessary to assure that your annuity qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
QUALIFIED ANNUITY CONTRACTS
In general, as used in this prospectus, a Qualified annuity is an annuity
contract with applicable endorsements for a tax-favored plan or a Nonqualified
annuity contract held by a tax-favored retirement plan.
The following is a general discussion of the tax considerations for Qualified
annuity contracts. This annuity may or may not be available for all types of
the tax-favored retirement plans discussed below. This discussion assumes that
you have satisfied the eligibility requirements for any tax-favored retirement
plan. Please consult your Financial Professional prior to purchase to confirm
if this contract is available for a particular type of tax-favored retirement
plan or whether we will accept the type of contribution you intend for this
contract.
A Qualified annuity may typically be purchased for use in connection with:
.. Individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code;
.. Roth IRAs under Section 408A of the Code;
.. A corporate Pension or Profit-sharing plan (subject to 401(a) of the Code);
.. H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the Code);
.. Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax
Deferred Annuities or TDAs);
.. Section 457 plans (subject to 457 of the Code).
A Nonqualified annuity may also be purchased by a 401(a) trust or custodial
IRA or Roth IRA account, or a Section 457 plan, which can hold other
permissible assets. The terms and administration of the trust or custodial
account or plan in accordance with the laws and regulations for 401(a) plans,
IRAs or Roth IRAs, or a Section 457 plan, as applicable, are the
responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts.
This means that when a tax favored plan invests in an annuity contract, it
generally does not result in any additional tax benefits (such as income tax
deferral and income tax free transfers).
TYPES OF TAX-FAVORED PLANS
IRAs. If you buy an annuity for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" and "Roth IRA
Disclosure Statement" which accompany the prospectus contain information about
eligibility, contribution limits, tax particulars, and other IRA information.
In addition to this information (some of which is summarized below), the IRS
requires that you have a "free look" after making an initial contribution to
the contract. During this time, you can cancel the annuity by
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10: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
PLUS 3 CONTRACT? continued
notifying us in writing, and we will refund all of the purchase payments under
the annuity (or, if provided by applicable state law, the amount credited
under the annuity, if greater), less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Subject to the minimum purchase payment
requirements of an annuity, you may purchase an annuity for an IRA in
connection with a "rollover" of amounts from a qualified retirement plan, as a
transfer from another IRA, by making a single contribution consisting of your
IRA contributions and catch-up contributions, if applicable, attributable to
the prior year and the current year during the period from January 1 to
April 15, or as a current year contribution. In 2008 the contribution limit is
$5,000. After 2008 the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing these individuals an additional $1,000 contribution each
year. The catch-up amount is not indexed for inflation.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy an annuity, you can make regular IRA
contributions under the annuity (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA. In some circumstances, non-spouse
beneficiaries may directly roll over to an IRA amounts due from qualified
plans, 403(b) plans, and governmental 457(b) plans.
Required Provisions. Contracts that are IRAs (or endorsements that are part of
the contract) must contain certain provisions:
.. You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
.. Your rights as owner are non-forfeitable;
.. You cannot sell, assign or pledge the contract;
.. The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
.. The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
.. Death and annuity payments must meet "required minimum distribution" rules
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As
taxable income, these distributions are subject to the general tax withholding
rules described earlier regarding a Nonqualified annuity. In addition to this
normal tax liability, you may also be liable for the following, depending on
your actions:
.. A 10% early withdrawal penalty described below;
.. Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
.. Failure to take a required minimum distribution, also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a SEP
must satisfy the same general requirements described under IRAs (above). There
are, however, some differences:
.. If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $46,000 in 2008 ($45,000 in 2007) or (b) 25% of your taxable
compensation paid by the contributing employer (not including the
employer's SEP contribution as compensation for these purposes). However,
for these purposes, compensation in excess of certain limits established by
the IRS will not be considered. In 2008, this limit is $230,000 ($225,000
for 2007);
.. SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
.. SEPs that contain a salary reduction or "SARSEP" provision prior to 1997
may permit salary deferrals up to $15,500 in 2008 with the employer making
these contributions to the SEP. However, no new "salary reduction" or
"SARSEPs" can be established after 1996. Individuals participating in a
SARSEP who are age 50 or above by the end of the year will be permitted to
contribute an additional $5,000 in 2008. These amounts are indexed for
inflation. These annuities are not available for SARSEPs. You will also be
provided the same information, and have the same "free look" period, as you
would have if you purchased the contract for a standard IRA.
ROTH IRAs. The "Roth IRA Disclosure Statement" contains information about
eligibility, contribution limits, tax particulars and other Roth IRA
information. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
.. Contributions to a Roth IRA cannot be deducted from your gross income;
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.. "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings and earnings will be taxed generally in the same
manner as distributions from a traditional IRA.
.. If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Subject to the minimum purchase payment requirements of an annuity, if you
meet certain income limitations you may purchase an annuity for a Roth IRA in
connection with a "rollover" of amounts of another traditional IRA, conduit
IRA, SEP, SIMPLE-IRA or Roth IRA by making a single contribution consisting of
your Roth IRA contributions and catch-up contributions, if applicable,
attributable to the prior year and the current year during the period from
January 1 to April 15 of the current year, or with a current contribution. The
Code permits persons who meet certain income limitations (generally, adjusted
gross income under $100,000) who are not married filing a separate return and
who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. Beginning
January 2008, an individual receiving an eligible rollover distribution from
an employer sponsored retirement plan under sections 401(a) or 403(b) of the
Code can directly roll over contributions to a Roth IRA, subject to the same
income limits. This conversion triggers current taxation (but is not subject
to a 10% early distribution penalty). Once an annuity has been purchased,
regular Roth IRA contributions will be accepted to the extent permitted by
law. In addition, an individual receiving an eligible rollover distribution
from a designated Roth account under an employer plan may roll over the
distribution to a Roth IRA even if the individual is not eligible to make
regular contributions to a Roth IRA. Until 2010, participants with an adjusted
gross income greater than $100,000 are not permitted to roll over funds from
an employer plan, including a Roth 401(k) distribution, to a Roth IRA.
TDAs. You may own a Tax Deferred Annuity (also known as a TDA, Tax Sheltered
Annuity (TSA), 403(b) plan or 403(b) annuity) generally if you are either an
employer or employee of a tax-exempt organization (as defined under Code
Section 501(c)(3)) or a public educational organization, and you may make
contributions to a TDA so long as your rights (or your employee's rights) to
the annuity are nonforfeitable. Contributions to a TDA, and any earnings, are
not taxable until distribution. You may also make contributions to a TDA under
a salary reduction agreement, generally up to a maximum of $15,500 in 2008.
Individuals participating in a TDA who are age 50 or above by the end of the
year will be permitted to contribute an additional $5,000 in 2008. This amount
is indexed for inflation. Further, you may roll over TDA amounts to another
TDA or an IRA. You may also roll over TDA amounts to a qualified retirement
plan, a SEP and a 457 government plan. A contract may generally only qualify
as a TDA if distributions of salary deferrals (other than "grandfathered"
amounts held as of December 31, 1988) may be made only on account of:
.. Your attainment of age 59 1/2;
.. Your severance of employment;
.. Your death;
.. Your total and permanent disability; or
.. Hardship (under limited circumstances, and only related to salary
deferrals, not including earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later. These distribution limits do not apply either to
transfers or exchanges of investments under the contract, or to any "direct
transfer" of your interest in the contract to another TDA or to a mutual fund
"custodial account" described under Code Section 403(b)(7). Employer
contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
Final regulations related to 403(b) contracts were issued in 2007. Under these
final regulations, certain contract exchanges may be accepted only if the
employer and the issuer have entered into the required information-sharing
agreements. Such agreements must be in place by January 1, 2009. We do not
currently accept transfers of funds under 403(b) contracts. Funds can only be
added to the contract as a current salary deferral under an agreement with
your employer or as a direct rollover from another employer plan. We intend to
begin accepting such transfers in the future when we can comply with the new
regulations.
REQUIRED MINIMUM DISTRIBUTIONS AND PAYMENT OPTIONS
If you hold the contract under an IRA (or other tax-favored plan), required
minimum distribution rules must be satisfied. This means that generally
payments must start by April 1 of the year after the year you reach age 70 1/2
and must be made for each year thereafter. For a TDA or a 401(a) plan for
which the participant is not a greater than 5% owner of the employer, this
required
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PLUS 3 CONTRACT? continued
beginning date can generally be deferred to retirement, if later. Roth IRAs
are not subject to these rules during the Owner's lifetime. The amount of the
payment must at least equal the minimum required under the IRS rules. Several
choices are available for calculating the minimum amount. More information on
the mechanics of this calculation is available on request. Please contact us
at a reasonable time before the IRS deadline so that a timely distribution is
made. Please note that there is a 50% tax penalty on the amount of any
required minimum distribution not made in a timely manner.
Required minimum distributions are calculated based on the sum of the account
value and the actuarial value of any additional death benefits and benefits
from optional riders that you have purchased under the contract. As a result,
the required minimum distributions may be larger than if the calculation were
based on the account value only, which may in turn result in an earlier (but
not before the required beginning date) distribution of amounts under the
annuity and an increased amount of taxable income distributed to the annuity
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the required minimum
distribution rules for an annuity without either beginning annuity payments or
surrendering the annuity. We will distribute to you the required minimum
distribution amount, less any other partial withdrawals that you made during
the year. Such amount will be based on the value of the contract as of
December 31 of the prior year, but is determined without regard to other
contracts you may own.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you.
If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs. If you inherit more than one Roth IRA from the same owner,
similar rules apply.
Required Distributions Upon Your Death for Qualified Annuity Contracts
Upon your death under an IRA, Roth IRA, 403(b) or other employer sponsored
plan, the designated beneficiary may generally elect to continue the contract
and receive required minimum distributions under the contract instead of
receiving the death benefit in a single payment. The available payment options
will depend on whether you die before the date required minimum distributions
under the Code were to begin, whether you have named a designated beneficiary
and whether that beneficiary is your surviving spouse.
.. If you die after a designated beneficiary has been named, the death benefit
must be distributed by December 31st of the year including the five year
anniversary of the date of death, or as periodic payments not extending
beyond the life or life expectancy of the designated beneficiary (as long
as payments begin by December 31st of the year following the year of
death). However, if your surviving spouse is the beneficiary, the death
benefit can be paid out over the life or life expectancy of your spouse
with such payments beginning no later than December 31st of the year
following the year of death or December 31st of the year in which you would
have reached age 70 1/2, which ever is later. Additionally, if the contract
is payable to (or for the benefit of) your surviving spouse, that portion
of the contract may be continued with your spouse as the owner.
.. If you die before a designated beneficiary is named and before the date
required minimum distributions must begin under the Code, the death benefit
must be paid out by December 31st of the year including the five year
anniversary of the date of death. For contracts where multiple
beneficiaries have been named and at least one of the beneficiaries does
not qualify as a designated beneficiary and the account has not been
divided into separate accounts by December 31st of the year following the
year of death, such contract is deemed to have no designated beneficiary.
.. If you die before a designated beneficiary is named and after the date
required minimum distributions must begin under the Code, the death benefit
must be paid out at least as rapidly as under the method then in effect.
For contracts where multiple beneficiaries have been named and at least one
of the beneficiaries does not qualify as a designated beneficiary and the
account has not been divided into separate accounts by December 31st of the
year following the year of death, such contract is deemed to have no
designated beneficiary.
A beneficiary has the flexibility to take out more each year than mandated
under the required minimum distribution rules.
Until withdrawn, amounts in a Qualified annuity contract continue to be tax
deferred. Amounts withdrawn each year, including amounts that are required to
be withdrawn under the required minimum distribution rules, are subject to
tax. You may wish to consult a professional tax advisor for tax advice as to
your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date required minimum distributions must begin under
the Code.
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TAX PENALTY FOR EARLY WITHDRAWALS FROM QUALIFIED ANNUITY CONTRACTS
You may owe a 10% tax penalty on the taxable part of distributions received
from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain
age 59 1/2. Amounts are not subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled; or
.. generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually. (Please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years. Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
We will withhold federal income tax at the rate of 20% for any eligible
rollover distribution paid by us to or for a plan participant, unless such
distribution is "directly" rolled over into another qualified plan, IRA
(including the IRA variations described above), SEP, 457 government plan or
TDA. An eligible rollover distribution is defined under the tax law as a
distribution from an employer plan under 401(a), a TDA or a 457 governmental
plan, excluding any distribution that is part of a series of substantially
equal payments (at least annually) made over the life expectancy of the
employee or the joint life expectancies of the employee and his designated
beneficiary, any distribution made for a specified period of 10 years or more,
any distribution that is a required minimum distribution and any hardship
distribution. Regulations also specify certain other items which are not
considered eligible rollover distributions. For all other distributions,
unless you elect otherwise, we will withhold federal income tax from the
taxable portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us.
If you do not file a certificate, we will automatically withhold federal taxes
on the following basis:
.. For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions. If no U.S. taxpayer identification number is provided, we will
automatically withhold using single with zero exemptions as the default; and
.. For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if
you fail to pay such taxes. There may be additional state income tax
withholding requirements.
ERISA REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from
receiving any benefit from any party dealing with the plan, as a result of the
sale of the contract. Administrative exemptions under ERISA generally permit
the sale of insurance/annuity products to plans, provided that certain
information is disclosed to the person purchasing the contract. This
information has to do primarily with the fees, charges, discounts and other
costs related to the contract, as well as any commissions paid to any agent
selling the contract. Information about any applicable fees, charges,
discounts, penalties or adjustments may be found in the applicable sections of
this Prospectus. Information about sales representatives and commissions may
be found in the sections of this Prospectus addressing distribution of the
annuities.
Other relevant information required by the exemptions is contained in the
contract and accompanying documentation.
Please consult with your tax advisor if you have any questions about ERISA and
these disclosure requirements.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS - QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income
to your spouse, unless your spouse waives that right. Similarly, if you are
married at the time of your death, federal law may require all or a portion of
the Death Benefit to be paid to your spouse, even if you designated someone
else as your beneficiary. A brief explanation of the applicable rules follows.
For more information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married at
the time your payments commence, federal law requires that benefits be paid to
you in the form of a "qualified joint and survivor annuity" (QJSA), unless you
and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the
plan pay a
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10: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
PLUS 3 CONTRACT? continued
Death Benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an
annuity for your spouse's lifetime and is called a "qualified pre-retirement
survivor annuity" (QPSA). If the plan pays Death Benefits to other
beneficiaries, you may elect to have a beneficiary other than your spouse
receive the Death Benefit, but only if your spouse consents to the election
and waives his or her right to receive the QPSA. If your spouse consents to
the alternate beneficiary, your spouse will receive no benefits from the plan
upon your death. Any QPSA waiver prior to your attaining age 35 will become
null and void on the first day of the calendar year in which you attain age
35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire Death Benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as
a periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution usually is not required. Upon your death, any Death Benefit will
be paid to your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to
IRAs and Roth IRAs, see the IRA Disclosure Statement or Roth IRA Disclosure
Statement, as applicable.
GENERATION-SKIPPING TRANSFERS
If you transfer your contract to a person two or more generations younger than
you (such as a grandchild or grandniece) or to a person that is more than
37 1/2 years younger than you, there may be generation-skipping transfer tax
consequences.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 11.
Additional Information
For additional information about federal tax law requirements applicable to
tax favored plans, see the "IRA Disclosure Statement," attached to this
prospectus.
11: OTHER INFORMATION
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a
stock life insurance company which was organized on September 17, 1982 under
the laws of the State of New Jersey. It is licensed to sell life insurance and
annuities in New Jersey and New York, and accordingly is subject to the laws
of each of those states.
Pruco Life of New Jersey is an indirect wholly-owned subsidiary of The
Prudential Insurance Company of America (Prudential), a New Jersey stock life
insurance company doing business since October 13, 1875. Prudential is an
indirect wholly-owned subsidiary of Prudential Financial, Inc. (Prudential
Financial), a New Jersey insurance holding company. As Pruco Life of New
Jersey's ultimate parent, Prudential Financial exercises significant influence
over the operations and capital structure of Pruco Life of New Jersey and
Prudential. However, neither Prudential Financial, Prudential, nor any other
related company has any legal responsibility to pay amounts that Pruco Life of
New Jersey may owe under the contract.
Pruco Life of New Jersey publishes annual and quarterly reports that are filed
with the SEC. These reports contain financial information about Pruco Life of
New Jersey that is annually audited by independent accountants. Pruco Life of
New Jersey's annual report for the year ended December 31, 2007, together with
subsequent periodic reports that Pruco Life of New Jersey files with the SEC,
are incorporated by reference into this prospectus. You can obtain copies, at
no cost, of any and all of this information, including the Pruco Life of New
Jersey annual report that is not ordinarily mailed to contract owners, the
more current reports and any subsequently filed documents at no cost by
contacting us at the address or telephone number listed on the cover. The SEC
file number for Pruco Life of New Jersey is 811-07975. You may read and copy
any filings made by Pruco Life of New Jersey with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain
information on the operation of the Public Reference Room by calling
(202) 551-8090. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC at http://www.sec.gov.
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Pruco Life of New Jersey conducts the bulk of its operations through staff
employed by it or by affiliated companies within the Prudential Financial
family. Certain discrete functions have been delegated to non-affiliates that
could be deemed "service providers" under the Investment Company Act of 1940.
The entities engaged by Pruco Life of New Jersey may change over time. As of
December 31, 2007, non-affiliated entities that could be deemed service
providers to Pruco Life of New Jersey and/or another insurer within the
Prudential Annuities business unit consisted of the following: ADP (proxy
tabulation services) located at 100 Burma Road Jersey City, New Jersey 07305,
Alliance-One Services Inc. (administration of variable life policies) located
at 55 Hartland Street East Hartford CT 06108, BISYS Retirement Services
(qualified plan administrator) located at 200 Dryden Road, Dresher, PA 19025,
Blue Frog Solutions, Inc. (order entry systems provider) located at 555 SW
12th Ave, Suite 202 Pompano Beach, FL 33069, EBIX Inc. (order-entry system)
located at 5 Concourse Parkway Suite 3200 Atlanta, GA 30328, Diversified
Information Technologies Inc. (records management) located at 123 Wyoming Ave
Scranton, PA 18503, Fosdick Fulfillment Corp. (fulfillment of prospectuses and
marketing materials) located at 26 Barnes Industrial Park Road North
Wallingford, CT 06492, Insurance Technologies (annuity illustrations) located
at Two South Cascade Avenue, Suite 200 Colorado Springs, CO 80903, Lason
Systems Inc. (contract printing and mailing) located at 1305 Stephenson
Highway Troy, MI 48083, Morningstar Associates LLC (asset allocation
recommendations) located at 225 West Wacker Drive, Chicago, IL 60606, Pershing
LLC (order-entry systems provider) located at One Pershing Plaza Jersey City,
NJ 07399, Personix (printing and fulfillment of confirmations and client
statements) located at 13100 North Promenade Boulevard Stafford, TX 77477, RR
Donnelley Receivables Inc. (printing annual reports and prospectuses) located
at 111 South Wacker Drive Chicago, IL 60606-4301, Stanton Group (qualified
plan administrator) located at Two Pine Tree Drive, Suite 400 Arden Hills, MN
55112 Attention: Alerus Retirement Solutions, State Street (accumulation unit
value calculations) located at State Street Financial Center One Lincoln
Street Boston, Massachusetts 02111, The Harty Press, Inc. (printing and
fulfillment of marketing materials) located at 25 James Street, New Haven, CT
06513, VG Reed & Sons Inc. (printing and fulfillment of annual reports)
located at 1002 South 12th Street Louisville, KY 40210, William B. Meyer
(printing and fulfillment of prospectuses and marketing materials) located at
255 Long Beach Boulevard Stratford, CT 06615.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (separate account), to hold the assets that
are associated with the variable annuity contracts. The separate account was
established under New Jersey law on May 20, 1996, and is registered with the
SEC under the Investment Company Act of 1940 as a unit investment trust, which
is a type of investment company. The assets of the separate account are held
in the name of Pruco Life of New Jersey and legally belong to us. These assets
are kept separate from all of our other assets and may not be charged with
liabilities arising out of any other business we may conduct. More detailed
information about Pruco Life of New Jersey, including its audited financial
statements, is provided in the SAI.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Annuities Distributors, Inc. (PAD), a wholly-owned subsidiary of
Prudential Annuities, Inc., is the distributor and principal underwriter of
the annuities offered through this prospectus. PAD acts as the distributor of
a number of annuity and life insurance products, and is the co-distributor of
the Advanced Series Trust. PAD's principal business address is One Corporate
Drive, Shelton, Connecticut 06484. PAD is registered as a broker-dealer under
the Securities Exchange Act of 1934 (Exchange Act), and is a member of the
Financial Institution Regulatory Authority (FINRA).
The contract is offered on a continuous basis. PAD enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our
appointed insurance agents under state insurance law. In addition, PAD may
offer the contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
8%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion
of Contract Value. We may also provide compensation to the distributing firm
for providing ongoing service to you in relation to the contract. Commissions
and other compensation paid in relation to the contract do not result in any
additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life of New Jersey and/or the contract on a
preferred or recommended company or product list and/or access to the firm's
registered representatives), we or PAD may enter into compensation
arrangements with certain broker/dealer firms with respect to certain or all
registered representatives of such firms under which such firms may receive
separate compensation or reimbursement for, among other things, training of
sales personnel and/or marketing and/or administrative services and/or other
services they provide to us or our affiliates. These services may include, but
are not limited to: educating customers of the firm on the contract's
features; conducting due diligence and analysis; providing office access,
operations and systems support; holding seminars intended to educate
registered representatives and make them more knowledgeable about the
contract; providing a dedicated marketing coordinator; providing priority
sales desk support; and providing expedited marketing compliance approval to
PAD. Further information about
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11: OTHER INFORMATION continued
the firms that are part of these compensation arrangements appears in the
Statement of Additional Information which is available without charge upon
request.
To the extent permitted by FINRA rules and other applicable laws and
regulations, PAD may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be
offered to all firms and the terms of such arrangements may differ between
firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PAD and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total purchase payments
made. Your registered representative can provide you with more information
about the compensation arrangements that apply upon the sale of the contract.
We or PAD also may compensate third-party vendors, for services that such
vendors render to broker-dealer firms. To the extent permitted by the FINRA
rules and other applicable laws and regulations, PAD may pay or allow other
promotional incentives or payments in the forms of cash or non-cash
compensation. These arrangements may not be offered to all firms and the terms
of such arrangements may differ between firms.
The list below identifies three general types of payments that PAD pays which
are broadly defined as follows:
.. Percentage Payments based upon "Assets under Management" or "AUM": This
type of payment is a percentage payment that is based upon the total amount
held in all Pruco Life of New Jersey products that were sold through the
firm (or its affiliated broker-dealers).
.. Percentage Payments based upon sales: This type of payment is a percentage
payment that is based upon the total amount of money received as Purchase
Payments under Pruco Life of New Jersey annuity products sold through the
firm (or its affiliated broker-dealers).
.. Fixed Payments: These types of payments are made directly to or in
sponsorship of the firm (or its affiliated broker-dealers). Examples of
arrangements under which such payments may be made currently include, but
are not limited to: sponsorships, conferences (national, regional and top
producer), speaker fees, promotional items and reimbursements to firms for
marketing activities or services paid by the firms and/or their individual
representatives. The amount of these payments varies widely because some
payments may encompass only a single event, such as a conference, and
others have a much broader scope. In addition, we may make payments upon
the initiation of a relationship for systems, operational and other support.
The list below includes the names of the firms (or their affiliated
broker/dealers) that we are aware (as of December 31, 2007) received payment
with respect to annuity business during 2007 (or as to which a payment amount
was accrued during 2007). The firms listed below include payments in
connection with products issued by Pruco Life Insurance Company and Pruco Life
Insurance Company of New Jersey. Your registered representative can provide
you with more information about the compensation arrangements that apply upon
the sale of the contract. During 2007, the least amount paid, and greatest
amount paid, were $2,072 and $1,325,582, respectively.
NAME OF FIRM:
Advantage Capital Corporation
AIG Financial Advisors, Inc.
Citigroup Global Markets, Inc.
Financial Network Investment Corp.
FSC Securities Corp.
ING Financial Partners
Merrill Lynch
Morgan Stanley
Multi-Financial Securities Corporation
Primevest
Raymond James & Associates
Raymond James Financial Services
Royal Alliance
Stifel Nicolaus & Co., Inc.
Sunamerica Securities, Inc.
UBS Financial Services
Wachovia
98
On July 1, 2003, Prudential Financial combined its retail securities brokerage
and clearing operations with those of Wachovia Corporation ("Wachovia"), and
formed Wachovia Securities Financial Holdings, LLC ("Wachovia Securities"), a
joint venture headquartered in Richmond, Virginia. Wachovia is the majority
owner and Prudential Financial, indirectly through subsidiaries, is a minority
owner of Wachovia Securities. The Strategic Partners Plus and Strategic
Partners Plus 3 variable annuities are sold through Wachovia Securities.
LITIGATION
Pruco Life of New Jersey is subject to legal and regulatory actions in the
ordinary course of its businesses. Pending legal and regulatory actions
include proceedings specific to Pruco Life of New Jersey and proceedings
generally applicable to business practices in the industries in which Pruco
Life of New Jersey operates. Pruco Life of New Jersey is subject to class
action lawsuits and individual lawsuits involving a variety of issues,
including sales practices, underwriting practices, claims payment and
procedures, additional premium charges for premiums paid on a periodic basis,
denial or delay of benefits, return of premiums or excessive premium charges
and breaching fiduciary duties to customers. In its annuity operations, Pruco
Life of New Jersey is subject to litigation involving class action lawsuits
and other litigation alleging, among other things, that Pruco Life of New
Jersey made improper or inadequate disclosures in connection with the sale of
annuity products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. Pruco Life of New Jersey is also
subject to litigation arising out of its general business activities, such as
its investments and third-party contracts. Regulatory authorities from time to
time make inquiries and conduct investigations and examinations relating
particularly to Pruco Life of New Jersey and its businesses and products. In
addition, Pruco Life of New Jersey, along with other participants in the
businesses in which Pruco Life of New Jersey engage, may be subject from time
to time to investigations, examinations and inquiries, in some cases
industry-wide, concerning issues or matters upon which such regulators have
determined to focus. In some of its pending legal and regulatory actions,
parties are seeking large and/or indeterminate amounts, including punitive or
exemplary damages. The outcome of a litigation or regulatory matter, and the
amount or range of potential loss at any particular time, is often inherently
uncertain.
Pruco Life of New Jersey's litigation and regulatory matters are subject to
many uncertainties, and given their complexity and scope, the outcome cannot
be predicted. It is possible that the results of operations or cash flow in a
particular quarterly or annual period could be materially affected by an
ultimate unfavorable resolution of pending litigation and regulatory matters
depending, in part, upon the results of operations or cash flow for such
period. In light of the unpredictability of Pruco Life of New Jersey's
litigation and regulatory matters, it is also possible that in certain cases
an ultimate unfavorable resolution of one or more pending litigation or
regulatory matters could have a material adverse effect on Pruco Life of New
Jersey's financial position. Management believes, however, that based on
information currently known to it, the ultimate outcome of all pending
litigation and regulatory matters, after consideration of applicable reserves
and rights to indemnification, is not likely to have a material adverse effect
on Pruco Life of New Jersey's financial position.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life of New Jersey,
the co-issuer of the Strategic Partners Plus 3 contract, are included in the
Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
.. Company
.. Experts
.. Principal Underwriter
.. Allocation of Initial Purchase Payment
.. Determination of Accumulation Unit Values
.. Financial Statements
.. Separate Account Financial Information
.. Company Financial Information
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and
shareholder reports to each consenting household, in lieu of sending a copy to
each contract owner that resides in the household. If you are a member of such
a household, you should be aware that you can revoke your consent to
householding at any time, and begin to receive your own copy of prospectuses
and shareholder reports, by calling (877) 778-5008.
99
11: OTHER INFORMATION continued
MARKET-VALUE ADJUSTMENT FORMULA
The general formula under which Pruco Life of New Jersey calculates the market
value adjustment applicable to a full or partial surrender, annuitization, or
settlement under Strategic Partners Plus 3 is set forth below. The market
value adjustment is expressed as a multiplier factor. That is, the Contract
Value after the market value adjustment ("MVA"), but before any withdrawal
charge, is as follows: Contract Value (after MVA) = Contract Value (before
MVA) X (1 + MVA). The MVA itself is calculated as follows:
MVA = [ ( 1 + I )//N/12// ] -1
---------
1 + J + .0025
where: I = the guaranteed credited interest rate (annual effective) for the given contract at the time of
withdrawal or annuitization or settlement.
J = the interpolated current credited interest rate offered on new money at the time of withdrawal,
annuitization, or settlement. (See below for the interpolation formula)
N = equals the remaining number of months in the contract's current guarantee period (rounded up)
at the time of withdrawal or annuitization or settlement.
The MVA formula with respect to contracts issued in New York is what is
depicted above. The formula uses an interpolated rate "J" as the current
credited interest rate. Specifically, "J" is the interpolated current credited
interest rate offered on new money at the time of withdrawal, annuitization,
or settlement. The interpolated value is calculated using the following
formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of
the current guarantee period.
Market Value Adjustment Example
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
.. Suppose a contract owner made an invested purchase payment of $10,000 on
July 1, 2005 and received a guaranteed interest rate of 6% for 5 years. A
request to surrender the contract is made on May 1, 2007. At the time, the
Contract Value will have accumulated to $11,127.11. The number of whole
years remaining in the guarantee period is 3.
.. On May 1, 2007 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 4%,
and for a guarantee period of 4 years (the number of whole years remaining
plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
N = 38
I = 6% (0.06)
J = [(61/365) X 0.05] + [((365- 61)/365) X 0.04] = 0.0417
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the power
of (38/12) -1 = 0.04871
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04871 = $542.00
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $542.00 = $11,669.11
100
The MVA may not always be positive. Here is an example where it is negative.
.. Suppose a contract owner made an invested purchase payment of $10,000 on
July 1, 2005 and received a guaranteed interest rate of 6% for 5 years. A
request to surrender the contract is made on May 1, 2007. At the time, the
Contract Value will have accumulated to $11,127.11. The number of whole
years remaining in the guarantee period is 3.
.. On May 1, 2007 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 7%,
and for a guarantee period of 4 years (the number of whole years remaining
plus 1) is 8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
N = 38
I = 6% (0.06)
J = [(61/365) X 0.08] + [((365 - 61)/365) X 0.07] = 0.0717
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the power
of (38/12) -1 = -0.04126
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04126) = -$459.10
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$459.10) = $10,668.10
101
APPENDIX A - ACCUMULATION UNIT VALUES
As we have indicated throughout this prospectus, the Strategic Partners Plus 3
Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We
maintain a unique unit value corresponding to each combination of such
contract features. Here we depict the historical unit values corresponding to
the contract features bearing the highest and lowest combinations of
asset-based charges. The remaining unit values appear in the Statement of
Additional Information, which you may obtain free of charge, by calling
(888) PRU-2888 or by writing to us at the Prudential Annuity Service Center,
P.O. Box 7960, Philadelphia, PA 19176. As discussed in the prospectus, if you
select certain optional benefits (e.g., Lifetime Five), we limit the
investment options to which you may allocate your Contract Value. In certain
of these accumulation unit value tables, we set forth accumulation unit values
that assume election of one or more of such optional benefits and allocation
of Contract Value to portfolios that currently are not permitted as part of
such optional benefits. Such unit values are set forth for general reference
purposes only, and are not intended to indicate that such portfolios may be
acquired along with those optional benefits.
STRATEGIC PARTNERS PLUS 3
Pruco Life Insurance Company of New Jersey
PROSPECTUS
ACCUMULATION UNIT VALUES: (Base Death Benefit 1.40)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -----------------------------------------------------------------------------------------
Jennison Portfolio
11/10/2003* to 12/31/2003 $1.18439 $1.24006 0
1/1/2004 to 12/31/2004 $1.24006 $1.34066 0
1/1/2005 to 12/31/2005 $1.34066 $1.51459 0
1/1/2006 to 12/31/2006 $1.51459 $1.52034 0
1/1/2007 to 12/31/2007 $1.52034 $1.67913 0
- -----------------------------------------------------------------------------------------
Prudential Equity Portfolio
11/10/2003* to 12/31/2003 $1.17721 $1.25778 0
1/1/2004 to 12/31/2004 $1.25778 $1.36350 0
1/1/2005 to 12/31/2005 $1.36350 $1.49905 0
1/1/2006 to 12/31/2006 $1.49905 $1.66417 0
1/1/2007 to 12/31/2007 $1.66417 $1.79403 0
- -----------------------------------------------------------------------------------------
Prudential Global Portfolio
11/10/2003* to 12/31/2003 $1.20571 $1.28481 0
1/1/2004 to 12/31/2004 $1.28481 $1.38861 0
1/1/2005 to 12/31/2005 $1.38861 $1.58951 0
1/1/2006 to 12/31/2006 $1.58951 $1.87567 0
1/1/2007 to 12/31/2007 $1.87567 $2.04345 0
- -----------------------------------------------------------------------------------------
Prudential Money Market Portfolio
11/10/2003* to 12/31/2003 $0.99549 $0.99449 0
1/1/2004 to 12/31/2004 $0.99449 $0.99063 0
1/1/2005 to 12/31/2005 $0.99063 $1.00520 0
1/1/2006 to 12/31/2006 $1.00520 $1.03840 81,579
1/1/2007 to 12/31/2007 $1.03840 $1.07563 81,591
- -----------------------------------------------------------------------------------------
Prudential Stock Index Portfolio
11/10/2003* to 12/31/2003 $1.15290 $1.22414 0
1/1/2004 to 12/31/2004 $1.22414 $1.33335 0
1/1/2005 to 12/31/2005 $1.33335 $1.37464 0
1/1/2006 to 12/31/2006 $1.37464 $1.56643 0
1/1/2007 to 12/31/2007 $1.56643 $1.62347 0
A-1
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------
Prudential Value Portfolio
11/10/2003* to 12/31/2003 $1.12896 $1.22392 0
1/1/2004 to 12/31/2004 $1.22392 $1.40386 0
1/1/2005 to 12/31/2005 $1.40386 $1.61508 0
1/1/2006 to 12/31/2006 $1.61508 $1.91044 0
1/1/2007 to 12/31/2007 $1.91044 $1.94400 0
- -------------------------------------------------------------------------------------------------------
SP Aggressive Growth Asset Allocation Portfolio
11/10/2003* to 12/31/2003 $1.21452 $1.27916 0
1/1/2004 to 12/31/2004 $1.27916 $1.44765 0
1/1/2005 to 12/31/2005 $1.44765 $1.57741 0
1/1/2006 to 12/31/2006 $1.57741 $1.77768 0
1/1/2007 to 12/31/2007 $1.77768 $1.91433 0
- -------------------------------------------------------------------------------------------------------
SP AIM Aggressive Growth Portfolio
11/10/2003* to 12/31/2003 $1.18805 $1.22149 0
1/1/2004 to 12/31/2004 $1.22149 $1.34749 0
1/1/2005 to 4/29/2005 $1.34749 $1.24414 0
- -------------------------------------------------------------------------------------------------------
SP AIM Core Equity Portfolio
11/10/2003* to 12/31/2003 $1.12456 $1.19626 0
1/1/2004 to 12/31/2004 $1.19626 $1.28343 0
1/1/2005 to 12/31/2005 $1.28343 $1.32432 0
1/1/2006 to 12/31/2006 $1.32432 $1.51572 0
1/1/2007 to 12/31/2007 $1.51572 $1.61162 0
- -------------------------------------------------------------------------------------------------------
SP T. Rowe Price Large-Cap Growth Portfolio
11/10/2003* to 12/31/2003 $1.13994 $1.17938 0
1/1/2004 to 12/31/2004 $1.17938 $1.23406 0
1/1/2005 to 12/31/2005 $1.23406 $1.41770 0
1/1/2006 to 12/31/2006 $1.41770 $1.48086 0
1/1/2007 to 12/31/2007 $1.48086 $1.58021 0
- -------------------------------------------------------------------------------------------------------
SP Balanced Asset Allocation Portfolio
11/10/2003* to 12/31/2003 $1.14798 $1.19393 0
1/1/2004 to 12/31/2004 $1.19393 $1.30793 0
1/1/2005 to 12/31/2005 $1.30793 $1.38790 0
1/1/2006 to 12/31/2006 $1.38790 $1.51519 0
1/1/2007 to 12/31/2007 $1.51519 $1.63393 0
- -------------------------------------------------------------------------------------------------------
SP Conservative Asset Allocation Portfolio
11/10/2003* to 12/31/2003 $1.10288 $1.13654 0
1/1/2004 to 12/31/2004 $1.13654 $1.22048 0
1/1/2005 to 12/31/2005 $1.22048 $1.27471 0
1/1/2006 to 12/31/2006 $1.27471 $1.36612 0
1/1/2007 to 12/31/2007 $1.36612 $1.47370 0
- -------------------------------------------------------------------------------------------------------
SP Davis Value Portfolio
11/10/2003* to 12/31/2003 $1.17037 $1.24835 0
1/1/2004 to 12/31/2004 $1.24835 $1.38531 0
1/1/2005 to 12/31/2005 $1.38531 $1.49631 0
1/1/2006 to 12/31/2006 $1.49631 $1.69738 0
1/1/2007 to 12/31/2007 $1.69738 $1.75049 0
- -------------------------------------------------------------------------------------------------------
SP Small-Cap Value Portfolio
11/10/2003* to 12/31/2003 $1.22255 $1.29026 0
1/1/2004 to 12/31/2004 $1.29026 $1.53570 0
1/1/2005 to 12/31/2005 $1.53570 $1.58443 0
1/1/2006 to 12/31/2006 $1.58443 $1.79078 0
1/1/2007 to 12/31/2007 $1.79078 $1.70189 0
A-2
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ----------------------------------------------------------------------------------------------------
SP Growth Asset Allocation Portfolio
11/10/2003* to 12/31/2003 $1.18371 $1.23975 0
1/1/2004 to 12/31/2004 $1.23975 $1.38211 0
1/1/2005 to 12/31/2005 $1.38211 $1.48911 0
1/1/2006 to 12/31/2006 $1.48911 $1.65769 0
1/1/2007 to 12/31/2007 $1.65769 $1.78549 0
- ----------------------------------------------------------------------------------------------------
SP Large Cap Value Portfolio
11/10/2003* to 12/31/2003 $1.13457 $1.21457 0
1/1/2004 to 12/31/2004 $1.21457 $1.41041 0
1/1/2005 to 12/31/2005 $1.41041 $1.48345 0
1/1/2006 to 12/31/2006 $1.48345 $1.73324 0
1/1/2007 to 12/31/2007 $1.73324 $1.66085 0
- ----------------------------------------------------------------------------------------------------
SP International Value Portfolio
11/10/2003* to 12/31/2003 $1.13314 $1.23393 0
1/1/2004 to 12/31/2004 $1.23393 $1.40924 0
1/1/2005 to 12/31/2005 $1.40924 $1.58122 0
1/1/2006 to 12/31/2006 $1.58122 $2.01320 0
1/1/2007 to 12/31/2007 $2.01320 $2.34427 0
- ----------------------------------------------------------------------------------------------------
SP MFS Capital Opportunities Portfolio
11/10/2003* to 12/31/2003 $1.14453 $1.20717 0
1/1/2004 to 12/31/2004 $1.20717 $1.33789 0
1/1/2005 to 4/29/2005 $1.33789 $1.25025 0
- ----------------------------------------------------------------------------------------------------
SP Mid Cap Growth Portfolio
11/10/2003* to 12/31/2003 $1.31609 $1.33928 0
1/1/2004 to 12/31/2004 $1.33928 $1.57888 0
1/1/2005 to 12/31/2005 $1.57888 $1.63898 0
1/1/2006 to 12/31/2006 $1.63898 $1.58504 0
1/1/2007 to 12/31/2007 $1.58504 $1.81642 0
- ----------------------------------------------------------------------------------------------------
SP PIMCO High Yield Portfolio
11/10/2003* to 12/31/2003 $1.16169 $1.19841 0
1/1/2004 to 12/31/2004 $1.19841 $1.29196 0
1/1/2005 to 12/31/2005 $1.29196 $1.32558 0
1/1/2006 to 12/31/2006 $1.32558 $1.43180 0
1/1/2007 to 12/31/2007 $1.43180 $1.46552 0
- ----------------------------------------------------------------------------------------------------
SP PIMCO Total Return Portfolio
11/10/2003* to 12/31/2003 $1.02971 $1.04684 0
1/1/2004 to 12/31/2004 $1.04684 $1.08689 0
1/1/2005 to 12/31/2005 $1.08689 $1.09767 0
1/1/2006 to 12/31/2006 $1.09767 $1.12250 0
1/1/2007 to 12/31/2007 $1.12250 $1.21148 0
- ----------------------------------------------------------------------------------------------------
SP Prudential U.S. Emerging Growth Portfolio
11/10/2003* to 12/31/2003 $1.35478 $1.36653 0
1/1/2004 to 12/31/2004 $1.36653 $1.63587 0
1/1/2005 to 12/31/2005 $1.63587 $1.90014 0
1/1/2006 to 12/31/2006 $1.90014 $2.05363 0
1/1/2007 to 12/31/2007 $2.05363 $2.36566 0
- ----------------------------------------------------------------------------------------------------
SP Small Cap Growth Portfolio
11/10/2003* to 12/31/2003 $1.29042 $1.30191 0
1/1/2004 to 12/31/2004 $1.30191 $1.27212 0
1/1/2005 to 12/31/2005 $1.27212 $1.28565 0
1/1/2006 to 12/31/2006 $1.28565 $1.42492 0
1/1/2007 to 12/31/2007 $1.42492 $1.49464 0
A-3
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio
11/10/2003* to 12/31/2003 $1.14518 $1.19388 0
1/1/2004 to 12/31/2004 $1.19388 $1.30209 0
1/1/2005 to 12/31/2005 $1.30209 $1.47863 0
1/1/2006 to 12/31/2006 $1.47863 $1.44859 0
1/1/2007 to 12/31/2007 $1.44859 $1.64616 0
- ------------------------------------------------------------------------------------------------------
SP Technology Portfolio
11/10/2003* to 12/31/2003 $1.32609 $1.34037 0
1/1/2004 to 12/31/2004 $1.34037 $1.32188 0
1/1/2005 to 4/29/2005 $1.32188 $1.18074 0
- ------------------------------------------------------------------------------------------------------
SP International Growth Portfolio
11/10/2003* to 12/31/2003 $1.26410 $1.35112 0
1/1/2004 to 12/31/2004 $1.35112 $1.55290 0
1/1/2005 to 12/31/2005 $1.55290 $1.78245 0
1/1/2006 to 12/31/2006 $1.78245 $2.12789 0
1/1/2007 to 12/31/2007 $2.12789 $2.50846 0
- ------------------------------------------------------------------------------------------------------
Evergreen Growth And Income Fund
12/5/2003* to 12/31/2003 $9.92203 $10.34285 0
1/1/2004 to 12/31/2004 $10.34285 $11.05580 0
1/1/2005 to 4/15/2005 $11.05580 $10.33082 0
- ------------------------------------------------------------------------------------------------------
Evergreen VA Balanced Fund
11/10/2003* to 12/31/2003 $1.08315 $1.12625 0
1/1/2004 to 12/31/2004 $1.12625 $1.18087 0
1/1/2005 to 12/31/2005 $1.18087 $1.22619 0
1/1/2006 to 12/31/2006 $1.22619 $1.32838 0
1/1/2007 to 12/31/2007 $1.32838 $1.39750 0
- ------------------------------------------------------------------------------------------------------
Evergreen VA Fundamental Large Cap Fund
12/5/2003* to 12/31/2003 $9.91859 $10.39784 0
1/1/2004 to 12/31/2004 $10.39784 $11.19868 0
1/1/2005 to 12/31/2005 $11.19868 $12.03990 0
1/1/2006 to 12/31/2006 $12.03990 $13.37882 0
1/1/2007 to 12/31/2007 $13.37882 $14.28687 0
- ------------------------------------------------------------------------------------------------------
Evergreen VA Growth Fund
11/10/2003* to 12/31/2003 $1.32545 $1.35076 0
1/1/2004 to 12/31/2004 $1.35076 $1.51675 0
1/1/2005 to 12/31/2005 $1.51675 $1.59343 0
1/1/2006 to 12/31/2006 $1.59343 $1.74499 0
1/1/2007 to 12/31/2007 $1.74499 $1.91089 0
- ------------------------------------------------------------------------------------------------------
Evergreen VA International Equity Fund
12/5/2003* to 12/31/2003 $9.98995 $10.44289 0
1/1/2004 to 12/31/2004 $10.44289 $12.27702 0
1/1/2005 to 12/31/2005 $12.27702 $14.04482 0
1/1/2006 to 12/31/2006 $14.04482 $17.05947 0
1/1/2007 to 12/31/2007 $17.05947 $19.34629 0
- ------------------------------------------------------------------------------------------------------
Evergreen VA Omega Fund
11/10/2003* to 12/31/2003 $1.30024 $1.33662 0
1/1/2004 to 12/31/2004 $1.33662 $1.41333 0
1/1/2005 to 12/31/2005 $1.41333 $1.44748 0
1/1/2006 to 12/31/2006 $1.44748 $1.51345 0
1/1/2007 to 12/31/2007 $1.51345 $1.67096 0
A-4
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- --------------------------------------------------------------------------------------------------------------------
Evergreen VA Special Values Fund
11/10/2003* to 12/31/2003 $1.17920 $1.25261 0
1/1/2004 to 12/31/2004 $1.25261 $1.48703 0
1/1/2005 to 12/31/2005 $1.48703 $1.62435 0
1/1/2006 to 12/31/2006 $1.62435 $1.94718 0
1/1/2007 to 12/31/2007 $1.94718 $1.77588 0
- --------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio
3/20/2006* to 12/31/2006 $9.99886 $10.68260 0
1/1/2007 to 12/31/2007 $10.68260 $11.53588 0
- --------------------------------------------------------------------------------------------------------------------
AST Aggressive Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99886 $9.99933 0
1/1/2006 to 12/31/2006 $9.99933 $11.40838 0
1/1/2007 to 12/31/2007 $11.40838 $12.32551 0
- --------------------------------------------------------------------------------------------------------------------
AST Alger All-Cap Growth Portfolio
3/14/2005* to 12/02/2005 $10.09338 $11.73323 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Core Value Portfolio
3/14/2005* to 12/31/2005 $10.07970 $10.33229 0
1/1/2006 to 12/31/2006 $10.33229 $12.36530 0
1/1/2007 to 12/31/2007 $12.36530 $11.75873 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Growth & Income Portfolio
3/14/2005* to 12/31/2005 $10.05481 $10.28681 0
1/1/2006 to 12/31/2006 $10.28681 $11.89718 0
1/1/2007 to 12/31/2007 $11.89718 $12.33375 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Growth + Value Portfolio
3/14/2005* to 12/02/2005 $10.05009 $11.34495 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Managed Index 500 Portfolio
3/14/2005* to 12/31/2005 $10.04988 $10.42169 0
1/1/2006 to 12/31/2006 $10.42169 $11.57321 0
1/1/2007 to 12/31/2007 $11.57321 $11.65038 0
- --------------------------------------------------------------------------------------------------------------------
AST American Century Income & Growth Portfolio
3/14/2005* to 12/31/2005 $10.06658 $10.35426 0
1/1/2006 to 12/31/2006 $10.35426 $11.93304 0
1/1/2007 to 12/31/2007 $11.93304 $11.75498 0
- --------------------------------------------------------------------------------------------------------------------
AST American Century Strategic Allocation Portfolio
formerly, AST American Century Strategic Balanced Portfolio
3/14/2005* to 12/31/2005 $10.04202 $10.33700 0
1/1/2006 to 12/31/2006 $10.33700 $11.18026 0
1/1/2007 to 12/31/2007 $11.18026 $12.00848 0
- --------------------------------------------------------------------------------------------------------------------
AST Balanced Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99886 $10.01933 0
1/1/2006 to 12/31/2006 $10.01933 $11.04402 0
1/1/2007 to 12/31/2007 $11.04402 $11.89376 0
- --------------------------------------------------------------------------------------------------------------------
AST Capital Growth Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99886 $10.00933 0
1/1/2006 to 12/31/2006 $10.00933 $11.22130 0
1/1/2007 to 12/31/2007 $11.22130 $12.14221 0
- --------------------------------------------------------------------------------------------------------------------
AST Cohen & Steers Realty Portfolio
3/14/2005* to 12/31/2005 $10.14710 $12.04155 0
1/1/2006 to 12/31/2006 $12.04155 $16.23834 0
1/1/2007 to 12/31/2007 $16.23834 $12.82033 0
A-5
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------------
AST Conservative Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99886 $10.02932 0
1/1/2006 to 12/31/2006 $10.02932 $10.93553 2,678
1/1/2007 to 12/31/2007 $10.93553 $11.76251 2,678
- -------------------------------------------------------------------------------------------------------------
AST DeAm Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.08492 $10.73678 0
1/1/2006 to 12/31/2006 $10.73678 $12.88954 0
1/1/2007 to 12/31/2007 $12.88954 $12.86054 0
- -------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Small-Cap Growth Portfolio
formerly, AST DeAm Small-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.01133 $10.33264 0
1/1/2006 to 12/31/2006 $10.33264 $10.98080 0
1/1/2007 to 12/31/2007 $10.98080 $12.85490 0
- -------------------------------------------------------------------------------------------------------------
AST DeAm Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04570 $10.03757 0
1/1/2006 to 12/31/2006 $10.03757 $11.87455 0
1/1/2007 to 12/31/2007 $11.87455 $9.62921 0
- -------------------------------------------------------------------------------------------------------------
AST Federated Aggressive Growth Portfolio
3/14/2005* to 12/31/2005 $9.99886 $10.98052 0
1/1/2006 to 12/31/2006 $10.98052 $12.22751 0
1/1/2007 to 12/31/2007 $12.22751 $13.40975 0
- -------------------------------------------------------------------------------------------------------------
AST First Trust Capital Appreciation Target Portfolio
3/20/2006* to 12/31/2006 $9.99886 $10.50452 0
1/1/2007 to 12/31/2007 $10.50452 $11.54148 0
- -------------------------------------------------------------------------------------------------------------
AST First Trust Balanced Target Portfolio
3/20/2006* to 12/31/2006 $9.99886 $10.60336 0
1/1/2007 to 12/31/2007 $10.60336 $11.35095 0
- -------------------------------------------------------------------------------------------------------------
AST UBS Dynamic Alpha Portfolio
formerly, AST Global Allocation Portfolio
3/14/2005* to 12/31/2005 $10.01541 $10.64464 0
1/1/2006 to 12/31/2006 $10.64464 $11.66754 0
1/1/2007 to 12/31/2007 $11.66754 $11.72906 0
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Concentrated Growth Portfolio
3/14/2005* to 12/31/2005 $10.03302 $10.78065 0
1/1/2006 to 12/31/2006 $10.78065 $11.69442 0
1/1/2007 to 12/31/2007 $11.69442 $13.14587 0
- -------------------------------------------------------------------------------------------------------------
AST High Yield Portfolio
3/14/2005* to 12/31/2005 $9.97681 $9.87825 0
1/1/2006 to 12/31/2006 $9.87825 $10.75063 0
1/1/2007 to 12/31/2007 $10.75063 $10.86456 0
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $9.99886 $10.60000 0
1/1/2006 to 12/31/2006 $10.60000 $11.11019 0
1/1/2007 to 12/31/2007 $11.11019 $13.07586 0
- -------------------------------------------------------------------------------------------------------------
AST JPMorgan International Equity Portfolio
3/14/2005* to 12/31/2005 $9.91389 $10.67460 0
1/1/2006 to 12/31/2006 $10.67460 $12.92733 0
1/1/2007 to 12/31/2007 $12.92733 $13.95132 0
- -------------------------------------------------------------------------------------------------------------
AST Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.07726 $10.57804 0
1/1/2006 to 12/31/2006 $10.57804 $12.35800 0
1/1/2007 to 12/31/2007 $12.35800 $11.82253 0
A-6
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -----------------------------------------------------------------------------------------------------
AST Lord Abbett Bond-Debenture Portfolio
3/14/2005* to 12/31/2005 $9.99886 $9.96977 0
1/1/2006 to 12/31/2006 $9.96977 $10.79596 0
1/1/2007 to 12/31/2007 $10.79596 $11.29424 0
- -----------------------------------------------------------------------------------------------------
AST Marsico Capital Growth Portfolio
3/14/2005* to 12/31/2005 $10.12625 $10.92526 0
1/1/2006 to 12/31/2006 $10.92526 $11.55444 0
1/1/2007 to 12/31/2007 $11.55444 $13.09923 0
- -----------------------------------------------------------------------------------------------------
AST MFS Global Equity Portfolio
3/14/2005* to 12/31/2005 $9.96626 $10.49866 0
1/1/2006 to 12/31/2006 $10.49866 $12.87030 0
1/1/2007 to 12/31/2007 $12.87030 $13.88494 0
- -----------------------------------------------------------------------------------------------------
AST MFS Growth Portfolio
3/14/2005* to 12/31/2005 $10.03693 $10.78089 0
1/1/2006 to 12/31/2006 $10.78089 $11.65979 0
1/1/2007 to 12/31/2007 $11.65979 $13.23519 0
- -----------------------------------------------------------------------------------------------------
AST Mid-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.06503 $10.37369 0
1/1/2006 to 12/31/2006 $10.37369 $11.68807 0
1/1/2007 to 12/31/2007 $11.68807 $11.84309 0
- -----------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.05576 $11.35869 0
1/1/2006 to 12/31/2006 $11.35869 $12.77698 0
1/1/2007 to 12/31/2007 $12.77698 $15.39741 0
- -----------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.02196 $10.90682 0
1/1/2006 to 12/31/2006 $10.90682 $11.91306 0
1/1/2007 to 12/31/2007 $11.91306 $12.12014 0
- -----------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond Portfolio
3/14/2005* to 12/31/2005 $9.99886 $10.07733 0
1/1/2006 to 12/31/2006 $10.07733 $10.31847 0
1/1/2007 to 12/31/2007 $10.31847 $10.86715 0
- -----------------------------------------------------------------------------------------------------
AST Preservation Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99886 $10.03931 0
1/1/2006 to 12/31/2006 $10.03931 $10.68916 0
1/1/2007 to 12/31/2007 $10.68916 $11.45988 0
- -----------------------------------------------------------------------------------------------------
AST Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04866 $10.66828 0
1/1/2006 to 12/31/2006 $10.66828 $12.63027 0
1/1/2007 to 12/31/2007 $12.63027 $11.75648 0
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.02867 $10.37610 0
1/1/2006 to 12/31/2006 $10.37610 $11.51159 0
1/1/2007 to 12/31/2007 $11.51159 $12.06970 0
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Global Bond Portfolio
3/14/2005* to 12/31/2005 $9.94939 $9.46839 0
1/1/2006 to 12/31/2006 $9.46839 $9.92364 0
1/1/2007 to 12/31/2007 $9.92364 $10.72994 0
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Natural Resources Portfolio
3/14/2005* to 12/31/2005 $10.00286 $11.76236 0
1/1/2006 to 12/31/2006 $11.76236 $13.44068 0
1/1/2007 to 12/31/2007 $13.44068 $18.62348 0
A-7
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ---------------------------------------------------------------------------------------------------------------
Gartmore NVIT Developing Markets Fund
formerly, Gartmore GVIT Developing Markets Fund
3/14/2005* to 12/31/2005 $9.88103 $12.08600 0
1/1/2006 to 12/31/2006 $12.08600 $16.04073 0
1/1/2007 to 12/31/2007 $16.04073 $22.70075 0
- ---------------------------------------------------------------------------------------------------------------
Janus Aspen Large Cap Growth Portfolio - Service Shares
11/10/2003* to 12/31/2003 $1.19749 $1.24622 0
1/1/2004 to 12/31/2004 $1.24622 $1.28061 0
1/1/2005 to 12/31/2005 $1.28061 $1.31370 0
1/1/2006 to 12/31/2006 $1.31370 $1.43985 0
1/1/2007 to 12/31/2007 $1.43985 $1.62992 0
- ---------------------------------------------------------------------------------------------------------------
AST Western Asset Core Plus Bond Portfolio
11/19/2007* to 12/31/2007 $9.99886 $9.98290 0
* Denotes the start date of these sub-accounts.
STRATEGIC PARTNERS PLUS 3
Pruco Life Insurance Company of New Jersey
PROSPECTUS
ACCUMULATION UNIT VALUES: (Contract w Credit, GMDB Step Up, Lifetime Five 2.35)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------
Jennison Portfolio
3/14/2005* to 12/31/2005 $10.06149 $11.75530 0
1/1/2006 to 12/31/2006 $11.75530 $11.69148 0
1/1/2007 to 12/31/2007 $11.69148 $12.79216 0
- -------------------------------------------------------------------------------------------------------
Prudential Equity Portfolio
3/14/2005* to 12/31/2005 $10.04786 $11.04459 0
1/1/2006 to 12/31/2006 $11.04459 $12.14826 0
1/1/2007 to 12/31/2007 $12.14826 $12.97438 0
- -------------------------------------------------------------------------------------------------------
Prudential Global Portfolio
3/14/2005* to 12/31/2005 $9.98604 $11.28141 0
1/1/2006 to 12/31/2006 $11.28141 $13.18913 0
1/1/2007 to 12/31/2007 $13.18913 $14.23485 0
- -------------------------------------------------------------------------------------------------------
Prudential Money Market Portfolio
3/14/2005* to 12/31/2005 $9.99996 $10.05988 0
1/1/2006 to 12/31/2006 $10.05988 $10.29637 0
1/1/2007 to 12/31/2007 $10.29637 $10.56765 0
- -------------------------------------------------------------------------------------------------------
Prudential Stock Index Portfolio
3/14/2005* to 12/31/2005 $10.05601 $10.32927 0
1/1/2006 to 12/31/2006 $10.32927 $11.66171 0
1/1/2007 to 12/31/2007 $11.66171 $11.97330 0
- -------------------------------------------------------------------------------------------------------
Prudential Value Portfolio
3/14/2005* to 12/31/2005 $10.03736 $11.20262 0
1/1/2006 to 12/31/2006 $11.20262 $13.12851 0
1/1/2007 to 12/31/2007 $13.12851 $13.23452 0
- -------------------------------------------------------------------------------------------------------
SP Aggressive Growth Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.03176 $10.92881 0
1/1/2006 to 12/31/2006 $10.92881 $12.20272 0
1/1/2007 to 12/31/2007 $12.20272 $13.01767 0
A-8
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ---------------------------------------------------------------------------------------------------
SP AIM Aggressive Growth Portfolio
3/14/2005* to 4/29/2005 $10.06871 $9.48129 0
- ---------------------------------------------------------------------------------------------------
SP AIM Core Equity Portfolio
3/14/2005* to 12/31/2005 $10.02504 $10.18592 0
1/1/2006 to 12/31/2006 $10.18592 $11.55011 0
1/1/2007 to 12/31/2007 $11.55011 $12.16632 0
- ---------------------------------------------------------------------------------------------------
SP T. Rowe Price Large-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.03004 $12.07261 0
1/1/2006 to 12/31/2006 $12.07261 $12.49351 0
1/1/2007 to 12/31/2007 $12.49351 $13.20717 0
- ---------------------------------------------------------------------------------------------------
SP Balanced Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.01701 $10.62086 217,259
1/1/2006 to 12/31/2006 $10.62086 $11.48697 267,163
1/1/2007 to 12/31/2007 $11.48697 $12.27114 264,631
- ---------------------------------------------------------------------------------------------------
SP Conservative Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.00706 $10.45020 108,808
1/1/2006 to 12/31/2006 $10.45020 $11.09607 138,562
1/1/2007 to 12/31/2007 $11.09607 $11.85756 136,267
- ---------------------------------------------------------------------------------------------------
SP Davis Value Portfolio
3/14/2005* to 12/31/2005 $10.02497 $10.57546 0
1/1/2006 to 12/31/2006 $10.57546 $11.88564 0
1/1/2007 to 12/31/2007 $11.88564 $12.14340 0
- ---------------------------------------------------------------------------------------------------
SP Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.05718 $10.45619 0
1/1/2006 to 12/31/2006 $10.45619 $11.70860 0
1/1/2007 to 12/31/2007 $11.70860 $11.02358 0
- ---------------------------------------------------------------------------------------------------
SP Growth Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.02889 $10.78726 260,567
1/1/2006 to 12/31/2006 $10.78726 $11.89830 310,629
1/1/2007 to 12/31/2007 $11.89830 $12.69644 277,354
- ---------------------------------------------------------------------------------------------------
SP Large Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.07568 $10.43081 0
1/1/2006 to 12/31/2006 $10.43081 $12.07470 0
1/1/2007 to 12/31/2007 $12.07470 $11.46255 0
- ---------------------------------------------------------------------------------------------------
SP International Value Portfolio
3/14/2005* to 12/31/2005 $9.91207 $10.61389 0
1/1/2006 to 12/31/2006 $10.61389 $13.38834 0
1/1/2007 to 12/31/2007 $13.38834 $15.44474 0
- ---------------------------------------------------------------------------------------------------
SP MFS Capital Opportunities Portfolio
3/14/2005* to 4/29/2005 $10.05589 $9.60153 0
- ---------------------------------------------------------------------------------------------------
SP Mid Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.02817 $10.64137 0
1/1/2006 to 12/31/2006 $10.64137 $10.19555 0
1/1/2007 to 12/31/2007 $10.19555 $11.57472 0
- ---------------------------------------------------------------------------------------------------
SP PIMCO High Yield Portfolio
3/14/2005* to 12/31/2005 $9.98883 $10.08741 0
1/1/2006 to 12/31/2006 $10.08741 $10.79348 0
1/1/2007 to 12/31/2007 $10.79348 $10.94485 0
- ---------------------------------------------------------------------------------------------------
SP PIMCO Total Return Portfolio
3/14/2005* to 12/31/2005 $9.99809 $10.11842 0
1/1/2006 to 12/31/2006 $10.11842 $10.25030 0
1/1/2007 to 12/31/2007 $10.25030 $10.95936 0
A-9
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- --------------------------------------------------------------------------------------------------------
SP Prudential U.S. Emerging Growth Portfolio
3/14/2005* to 12/31/2005 $10.03568 $11.68962 0
1/1/2006 to 12/31/2006 $11.68962 $12.51685 0
1/1/2007 to 12/31/2007 $12.51685 $14.28410 0
- --------------------------------------------------------------------------------------------------------
SP Small Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.03030 $10.46275 0
1/1/2006 to 12/31/2006 $10.46275 $11.48936 0
1/1/2007 to 12/31/2007 $11.48936 $11.93901 0
- --------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio
3/14/2005* to 12/31/2005 $10.07351 $11.93182 0
1/1/2006 to 12/31/2006 $11.93182 $11.58147 0
1/1/2007 to 12/31/2007 $11.58147 $13.03860 0
- --------------------------------------------------------------------------------------------------------
SP Technology Portfolio
3/14/2005* to 4/29/2005 $10.04303 $9.58801 0
- --------------------------------------------------------------------------------------------------------
SP International Growth Portfolio
formerly, SP William Blair International Growth
3/14/2005* to 12/31/2005 $9.92625 $11.24237 0
1/1/2006 to 12/31/2006 $11.24237 $13.29698 0
1/1/2007 to 12/31/2007 $13.29698 $15.52910 0
- --------------------------------------------------------------------------------------------------------
Evergreen Growth And Income Fund
3/14/2005* to 4/15/2005 $10.04464 $9.43348 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA Balanced Fund
3/14/2005* to 12/31/2005 $10.02744 $10.41725 0
1/1/2006 to 12/31/2006 $10.41725 $11.18100 0
1/1/2007 to 12/31/2007 $11.18100 $11.65298 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA Fundamental Large Cap Fund
3/14/2005* to 12/31/2005 $10.03976 $10.54636 0
1/1/2006 to 12/31/2006 $10.54636 $11.61075 0
1/1/2007 to 12/31/2007 $11.61075 $12.28308 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA Growth Fund
3/14/2005* to 12/31/2005 $10.02770 $10.67936 0
1/1/2006 to 12/31/2006 $10.67936 $11.58633 0
1/1/2007 to 12/31/2007 $11.58633 $12.56918 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA International Equity Fund
3/14/2005* to 12/31/2005 $9.89908 $10.94247 0
1/1/2006 to 12/31/2006 $10.94247 $13.16834 0
1/1/2007 to 12/31/2007 $13.16834 $14.79421 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA Omega Fund
3/14/2005* to 12/31/2005 $10.01727 $10.55728 0
1/1/2006 to 12/31/2006 $10.55728 $10.93606 0
1/1/2007 to 12/31/2007 $10.93606 $11.96146 0
- --------------------------------------------------------------------------------------------------------
Evergreen VA Special Values Fund
3/14/2005* to 12/31/2005 $10.04608 $10.63624 0
1/1/2006 to 12/31/2006 $10.63624 $12.63225 0
1/1/2007 to 12/31/2007 $12.63225 $11.41288 0
- --------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio
3/20/2006* to 12/31/2006 $9.99809 $10.60457 45,706
1/1/2007 to 12/31/2007 $10.60457 $11.34476 171,448
- --------------------------------------------------------------------------------------------------------
AST Aggressive Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99809 $9.99215 0
1/1/2006 to 12/31/2006 $9.99215 $11.29471 0
1/1/2007 to 12/31/2007 $11.29471 $12.08889 0
A-10
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- --------------------------------------------------------------------------------------------------------------------
AST Alger All-Cap Growth Portfolio
3/14/2005* to 12/02/2005 $10.09261 $11.65393 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Core Value Portfolio
3/14/2005* to 12/31/2005 $10.07893 $10.25500 0
1/1/2006 to 12/31/2006 $10.25500 $12.15923 0
1/1/2007 to 12/31/2007 $12.15923 $11.45490 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Growth & Income Portfolio
3/14/2005* to 12/31/2005 $10.05404 $10.20982 0
1/1/2006 to 12/31/2006 $10.20982 $11.69882 0
1/1/2007 to 12/31/2007 $11.69882 $12.01493 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Growth + Value Portfolio
3/14/2005* to 12/02/2005 $10.04932 $11.26832 0
- --------------------------------------------------------------------------------------------------------------------
AST Alliance Bernstein Managed Index 500 Portfolio
3/14/2005* to 12/31/2005 $10.04911 $10.34380 0
1/1/2006 to 12/31/2006 $10.34380 $11.38035 0
1/1/2007 to 12/31/2007 $11.38035 $11.34925 0
- --------------------------------------------------------------------------------------------------------------------
AST American Century Income & Growth Portfolio
3/14/2005* to 12/31/2005 $10.06581 $10.27670 0
1/1/2006 to 12/31/2006 $10.27670 $11.73408 0
1/1/2007 to 12/31/2007 $11.73408 $11.45102 0
- --------------------------------------------------------------------------------------------------------------------
AST American Century Strategic Allocation Portfolio
formerly, AST American Century Strategic Balanced Portfolio
3/14/2005* to 12/31/2005 $10.04126 $10.25966 0
1/1/2006 to 12/31/2006 $10.25966 $10.99392 0
1/1/2007 to 12/31/2007 $10.99392 $11.69820 52,424
- --------------------------------------------------------------------------------------------------------------------
AST Balanced Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99809 $10.01214 90,836
1/1/2006 to 12/31/2006 $10.01214 $10.93388 980,523
1/1/2007 to 12/31/2007 $10.93388 $11.66521 1,256,419
- --------------------------------------------------------------------------------------------------------------------
AST Capital Growth Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99809 $10.00213 16,400
1/1/2006 to 12/31/2006 $10.00213 $11.10927 431,061
1/1/2007 to 12/31/2007 $11.10927 $11.90879 733,560
- --------------------------------------------------------------------------------------------------------------------
AST Cohen & Steers Realty Portfolio
3/14/2005* to 12/31/2005 $10.14633 $11.95154 0
1/1/2006 to 12/31/2006 $11.95154 $15.96803 0
1/1/2007 to 12/31/2007 $15.96803 $12.48919 0
- --------------------------------------------------------------------------------------------------------------------
AST Conservative Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99809 $10.02210 74,062
1/1/2006 to 12/31/2006 $10.02210 $10.82649 516,020
1/1/2007 to 12/31/2007 $10.82649 $11.53653 613,366
- --------------------------------------------------------------------------------------------------------------------
AST DeAm Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.08415 $10.65644 0
1/1/2006 to 12/31/2006 $10.65644 $12.67469 0
1/1/2007 to 12/31/2007 $12.67469 $12.52816 0
- --------------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Small-Cap Growth Portfolio
formerly, AST DeAm Small-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.01056 $10.25531 0
1/1/2006 to 12/31/2006 $10.25531 $10.79758 0
1/1/2007 to 12/31/2007 $10.79758 $12.52249 0
A-11
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------------
AST DeAm Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04493 $9.96249 0
1/1/2006 to 12/31/2006 $9.96249 $11.67669 0
1/1/2007 to 12/31/2007 $11.67669 $9.38029 0
- -------------------------------------------------------------------------------------------------------------
AST Federated Aggressive Growth Portfolio
3/14/2005* to 12/31/2005 $9.99809 $10.89847 0
1/1/2006 to 12/31/2006 $10.89847 $12.02369 0
1/1/2007 to 12/31/2007 $12.02369 $13.06315 0
- -------------------------------------------------------------------------------------------------------------
AST First Trust Capital Appreciation Target Portfolio
3/20/2006* to 12/31/2006 $9.99809 $10.42774 36,460
1/1/2007 to 12/31/2007 $10.42774 $11.35028 97,045
- -------------------------------------------------------------------------------------------------------------
AST First Trust Balanced Target Portfolio
3/20/2006* to 12/31/2006 $9.99809 $10.52596 18,794
1/1/2007 to 12/31/2007 $10.52596 $11.16298 107,468
- -------------------------------------------------------------------------------------------------------------
AST UBS Dynamic Alpha Portfolio
formerly, AST Global Allocation Portfolio
3/14/2005* to 12/31/2005 $10.01465 $10.56503 0
1/1/2006 to 12/31/2006 $10.56503 $11.47316 0
1/1/2007 to 12/31/2007 $11.47316 $11.42601 32,337
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Concentrated Growth Portfolio
3/14/2005* to 12/31/2005 $10.03225 $10.70014 0
1/1/2006 to 12/31/2006 $10.70014 $11.49971 0
1/1/2007 to 12/31/2007 $11.49971 $12.80631 0
- -------------------------------------------------------------------------------------------------------------
AST High Yield Portfolio
3/14/2005* to 12/31/2005 $9.97604 $9.80433 0
1/1/2006 to 12/31/2006 $9.80433 $10.57148 0
1/1/2007 to 12/31/2007 $10.57148 $10.58384 0
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $9.99809 $10.52063 0
1/1/2006 to 12/31/2006 $10.52063 $10.92486 0
1/1/2007 to 12/31/2007 $10.92486 $12.73768 0
- -------------------------------------------------------------------------------------------------------------
AST JPMorgan International Equity Portfolio
3/14/2005* to 12/31/2005 $9.91312 $10.59475 0
1/1/2006 to 12/31/2006 $10.59475 $12.71200 0
1/1/2007 to 12/31/2007 $12.71200 $13.59092 0
- -------------------------------------------------------------------------------------------------------------
AST Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.07650 $10.49882 0
1/1/2006 to 12/31/2006 $10.49882 $12.15199 0
1/1/2007 to 12/31/2007 $12.15199 $11.51688 0
- -------------------------------------------------------------------------------------------------------------
AST Lord Abbett Bond-Debenture Portfolio
3/14/2005* to 12/31/2005 $9.99809 $9.89514 0
1/1/2006 to 12/31/2006 $9.89514 $10.61604 0
1/1/2007 to 12/31/2007 $10.61604 $11.00230 0
- -------------------------------------------------------------------------------------------------------------
AST Marsico Capital Growth Portfolio
3/14/2005* to 12/31/2005 $10.12548 $10.84339 0
1/1/2006 to 12/31/2006 $10.84339 $11.36178 0
1/1/2007 to 12/31/2007 $11.36178 $12.76067 0
- -------------------------------------------------------------------------------------------------------------
AST MFS Global Equity Portfolio
3/14/2005* to 12/31/2005 $9.96549 $10.42012 0
1/1/2006 to 12/31/2006 $10.42012 $12.65581 0
1/1/2007 to 12/31/2007 $12.65581 $13.52608 0
A-12
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ---------------------------------------------------------------------------------------------------------------
AST MFS Growth Portfolio
3/14/2005* to 12/31/2005 $10.03616 $10.70037 0
1/1/2006 to 12/31/2006 $10.70037 $11.46555 0
1/1/2007 to 12/31/2007 $11.46555 $12.89324 0
- ---------------------------------------------------------------------------------------------------------------
AST Mid-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.06426 $10.29604 0
1/1/2006 to 12/31/2006 $10.29604 $11.49314 0
1/1/2007 to 12/31/2007 $11.49314 $11.53682 0
- ---------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.05499 $11.27378 0
1/1/2006 to 12/31/2006 $11.27378 $12.56405 0
1/1/2007 to 12/31/2007 $12.56405 $14.99959 0
- ---------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.02120 $10.82531 0
1/1/2006 to 12/31/2006 $10.82531 $11.71445 0
1/1/2007 to 12/31/2007 $11.71445 $11.80676 0
- ---------------------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond Portfolio
3/14/2005* to 12/31/2005 $9.99809 $10.00170 0
1/1/2006 to 12/31/2006 $10.00170 $10.14603 0
1/1/2007 to 12/31/2007 $10.14603 $10.58573 0
- ---------------------------------------------------------------------------------------------------------------
AST Preservation Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99809 $10.03209 1,097
1/1/2006 to 12/31/2006 $10.03209 $10.58266 25,948
1/1/2007 to 12/31/2007 $10.58266 $11.23988 85,990
- ---------------------------------------------------------------------------------------------------------------
AST Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04790 $10.58843 0
1/1/2006 to 12/31/2006 $10.58843 $12.41972 0
1/1/2007 to 12/31/2007 $12.41972 $11.45244 0
- ---------------------------------------------------------------------------------------------------------------
AST T. Rowe Price Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.02791 $10.29859 0
1/1/2006 to 12/31/2006 $10.29859 $11.31993 0
1/1/2007 to 12/31/2007 $11.31993 $11.75789 118,836
- ---------------------------------------------------------------------------------------------------------------
AST T. Rowe Price Global Bond Portfolio
3/14/2005* to 12/31/2005 $9.94863 $9.39752 0
1/1/2006 to 12/31/2006 $9.39752 $9.75828 0
1/1/2007 to 12/31/2007 $9.75828 $10.45270 0
- ---------------------------------------------------------------------------------------------------------------
AST T. Rowe Price Natural Resources Portfolio
3/14/2005* to 12/31/2005 $10.00209 $11.67449 0
1/1/2006 to 12/31/2006 $11.67449 $13.21670 0
1/1/2007 to 12/31/2007 $13.21670 $18.14222 0
- ---------------------------------------------------------------------------------------------------------------
Gartmore NVIT Developing Markets Fund
formerly, Gartmore GVIT Developing Markets Fund
3/14/2005* to 12/31/2005 $9.88026 $11.99550 0
1/1/2006 to 12/31/2006 $11.99550 $15.77337 0
1/1/2007 to 12/31/2007 $15.77337 $22.11426 0
- ---------------------------------------------------------------------------------------------------------------
Janus Aspen Large Cap Growth Portfolio - Service Shares
3/14/2005 to 12/31/2005 $10.04403 $10.33887 0
1/1/2006 to 12/31/2006 $10.33887 $11.22671 0
1/1/2007 to 12/31/2007 $11.22671 $12.59046 0
- ---------------------------------------------------------------------------------------------------------------
AST Western Asset Core Plus Bond Portfolio
11/19/2007* to 12/31/2007 $9.99809 $9.97138 0
* Denotes the start date of these sub-accounts.
A-13
APPENDIX B - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company of New Jersey. Not all of these annuities may be
available to you due to state approval or broker-dealer offerings. You can
verify which of these annuities is available to you by asking your registered
representative, or by calling us at (888) PRU-2888. For comprehensive
information about each of these annuities, please consult the prospectus for
the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use
the annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits
such as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
.. Your age;
.. The amount of your investment and any planned future deposits into the
annuity;
.. How long you intend to hold the annuity (also referred to as investment
time horizon);
.. Your desire to make withdrawals from the annuity;
.. Your investment return objectives;
.. The effect of optional benefits that may be elected; and
.. Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each Strategic
Partners variable annuity. Please note that Strategic Partners Advisor and
Strategic Partners Select are no longer offered. The availability of optional
features, such as those noted in the chart, may increase the cost of the
contract. Therefore, you should carefully consider which features you plan to
use when selecting your annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the Contract Value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the
comparable value of each of the annuities (which reflects the charges
associated with the annuities) under the assumptions noted. In comparing the
values within the illustrations, a number of distinctions are evident. To
fully appreciate these distinctions, we encourage you to speak to your
registered representative and to read the prospectuses. However, we do point
out the following noteworthy items:
.. Strategic Partners Annuity One 3 / Plus 3 comes in both a bonus version and
a non-bonus version, each of which offers several optional insurance
features. A bonus is added to your purchase payments under the bonus
version, although the withdrawal charges under the bonus version are higher
than those under the non-bonus version. Although the non-bonus version
offers no bonus, it is accompanied by fixed interest rate options and a
market value adjustment option that may provide higher interest rates than
such options accompanying the bonus version.
.. Strategic Partners Flex Elite offers a shorter CDSC period than that under
Strategic Partners Annuity One 3/Plus 3, but does not offer Purchase
Payment Credits. Strategic Partners Flex Elite is not currently available
in New York.
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of Strategic
Partners variable annuity products. You should consider the investment
objectives, risks, charges and expenses of an investment in any contract
carefully before investing. Each product prospectus as well as the underlying
portfolio prospectuses contains this and other information about the variable
annuities and underlying investment options. Your registered representative
can provide you with prospectuses for one or more of these variable annuities
and the underlying portfolios and can help you decide upon the product that
would be most advantageous for you given your individual needs. Please read
the prospectuses carefully before investing.
B-1
Strategic Partners Strategic Partners
Advisor Select
- ---------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000
- ---------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & Non- 80 Qualified & 85 Non-
Qualified Qualified
- ---------------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 7 Years
Schedule (7%, 6%, 5%, 4%, 3%,
2%, 1%)
Contract date based
- ---------------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross purchase
Withdrawal /1/ payments per contract year,
cumulative up to 7 years or
70% of gross purchase
payments
- ---------------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.52%
Administration Charge
- ---------------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 or 2% of $30. Waived if Contract
(assessed annually) your Contract Value. Value is $50,000 or more
Waived if Contract value is
$50,000 or more
- ---------------------------------------------------------------------------------------------------------------------
Contract Credit No No
- ---------------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes 1-Year
- ---------------------------------------------------------------------------------------------------------------------
Market Value Adjustment No Yes 7-Year
Account (MVA)
- ---------------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No No
Averaging (DCA)
- ---------------------------------------------------------------------------------------------------------------------
Variable Investment as indicated in prospectus as indicated in prospectus
Options Available
- ---------------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: Purchase Contract Value
payment(s) Minus
proportionate
withdrawal(s) or Contract
Value
- ---------------------------------------------------------------------------------------------------------------------
Strategic Partners Strategic Partners
Annuity One 3/Plus 3 Annuity One 3/Plus 3
Non Bonus Bonus
- --------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000
- --------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & Non- 85 Qualified & Non-
Qualified Qualified
- --------------------------------------------------------------------------------------------------------------------
Withdrawal Charge 7 Years 7 Years
Schedule (7%, 6%, 5%, 4%, 3%, (8%, 8%, 8%, 8%, 7%,
2%, 1%) 6%, 5%)
Payment date based Payment date based
- --------------------------------------------------------------------------------------------------------------------
Annual Charge-Free 10% of gross purchase 10% of gross purchase
Withdrawal /1/ payments made as of last payments made as of last
contract anniversary per contract anniversary per
contract year contract year
- --------------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.50%
Administration Charge
- --------------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 or 2% of The lesser of $30 or 2% of
(assessed annually) your Contract Value. your Contract Value.
Waived if Contract Value Waived if Contract Value
is $75,000 or more is $75,000 or more
- --------------------------------------------------------------------------------------------------------------------
Contract Credit No Yes 3%-all amounts ages
81-85 4%-under $250,000
5%-$250,000-$999,999
6%-$1,000,000+
- --------------------------------------------------------------------------------------------------------------------
Fixed Rate Account Yes 1-Year Yes/ 2/ 1-Year
- --------------------------------------------------------------------------------------------------------------------
Market Value Adjustment Yes 1-10 Years No
Account (MVA)
- --------------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost Yes Yes
Averaging (DCA)
- --------------------------------------------------------------------------------------------------------------------
Variable Investment as indicated in prospectus as indicated in prospectus
Options Available
- --------------------------------------------------------------------------------------------------------------------
Evergreen Funds 6 - available in Strategic 6 - available in Strategic
Partners Plus 3 only Partners Plus 3 only
- --------------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: Purchase The greater of: Purchase
payment(s) minus payment(s) minus
proportionate proportionate
withdrawal(s) or Contract withdrawal(s) or Contract
Value Value
- --------------------------------------------------------------------------------------------------------------------
1 Withdrawals of taxable amounts will be subject to income tax, and prior to
age 59 1/2, may be subject to a 10% federal income tax penalty.
2 May offer lower interest rates for the fixed rate options than the interest
rates offered in the contracts without credit.
B-2
Strategic Partners
Strategic Partners Strategic Partners Annuity One 3/Plus 3
Advisor Select Non Bonus
- ----------------------------------------------------------------------------------------------------------------
Optional Death Benefit (for Step-Up Step-Up Step-Up
an additional cost),/ 3/
- ----------------------------------------------------------------------------------------------------------------
Living Benefits (for an Lifetime Five Income N/A Lifetime Five(LT5)
additional cost)/ 4/ Benefit Spousal Lifetime
Five(SLT5)
Highest Daily
Lifetime Five(HDLT5)
Highest Daily Lifetime
Seven(HDLT7) Spousal
Highest Daily Lifetime
Seven(SHDLT7)
Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator
Benefit (IAB)
- ----------------------------------------------------------------------------------------------------------------
Strategic Partners
Annuity One 3/Plus 3
Bonus
- -----------------------------------------------------------------------
Optional Death Benefit (for Step-Up
an additional cost),/ 3/
- -----------------------------------------------------------------------
Living Benefits (for an Lifetime Five(LT5)
additional cost)/ 4/ Spousal Lifetime
Five(SLT5)
Highest Daily
Lifetime Five(HDLT5)
Highest Daily Lifetime
Seven(HDLT7) Spousal
Highest Daily Lifetime
Seven(SHDLT7)
Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator
Benefit (IAB)
- -----------------------------------------------------------------------
3 For more information on these benefits, refer to section 4, "What Is The
Death Benefit?" in the Prospectus.
4 For more information on these benefits, refer to section 3, "What Kind of
Payments Will I Receive During The Income Phase?"; section 5, "What Are The
Lifetime Withdrawal Benefits?"; (discussing Lifetime Five, Spousal Lifetime
Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven) and section 6, "What Is The Income
Appreciator Benefit?" in the Prospectus.
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the
end of each of the contract years specified. The values shown below are based
on the following assumptions:
.. An initial investment of $100,000 is made into each contract earning a
gross rate of return of 0% and 6% and 10% respectively.
.. No subsequent deposits or withdrawals are made to/from the contract.
.. The hypothetical gross rates of return are reduced by the arithmetic
average of the fees and expenses of the underlying portfolios (as of
December 31, 2007) and the charges that are deducted from the contract at
the Separate Account level as follows:
.. 0.94% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes of
the illustrations, we do not reflect any expense reimbursements or expense
waivers that might apply and are described in the prospectus fee table.
Please note that because the SP Aggressive Growth Asset Allocation
Portfolio, the SP Balanced Asset Allocation Portfolio, the SP Conservative
Asset Allocation Portfolio, and the SP Growth Asset Allocation Portfolio
generally were closed to investors in 2005, the fees for such portfolios
are not reflected in the above-mentioned average. Evergreen Fund expenses
are excluded from this average.
.. The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore
reflecting the withdrawal charge applicable to that contract year. Note that a
withdrawal on the contract anniversary, or the day before the contract
anniversary, would be subject to the withdrawal charge applicable to the next
contract year, which usually is lower. The values that you actually experience
under a contract will be different from what is depicted here if any of the
assumptions we make here differ from your circumstances, however the relative
values for each product reflected below will remain the same. We will provide
you with a personalized illustration upon request.
B-3
0% GROSS RATE OF RETURN
SP FLEX ELITE II SPAO 3 NON BONUS SPAO 3 BONUS
------------------- ------------------- -------------------
ALL YEARS -2.57% ALL YEARS -2.30% ALL YEARS -2.40%
--------- --------- --------- --------- --------- ---------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
YR VALUE VALUE VALUE VALUE VALUE VALUE
-- --------- --------- --------- --------- --------- ---------
1 $97,467 $91,344 $97,707 $91,567 $101,516 $94,194
2 $94,944 $88,997 $95,461 $90,333 $ 99,084 $91,957
3 $92,484 $86,709 $93,266 $89,102 $ 96,710 $89,773
4 $90,086 $90,086 $91,122 $87,876 $ 94,394 $87,642
5 $87,750 $87,750 $89,027 $86,656 $ 92,133 $86,383
6 $85,473 $85,473 $86,980 $85,440 $ 89,926 $85,130
7 $83,254 $83,254 $84,980 $84,230 $ 87,772 $83,883
8 $81,091 $81,091 $83,026 $83,026 $ 85,669 $85,669
9 $78,983 $78,983 $81,117 $81,117 $ 83,617 $83,617
10 $76,928 $76,928 $79,252 $79,252 $ 81,614 $81,614
11 $74,926 $74,926 $77,430 $77,430 $ 79,659 $79,659
12 $72,975 $72,975 $75,650 $75,650 $ 77,751 $77,751
13 $71,073 $71,073 $73,911 $73,911 $ 75,888 $75,888
14 $69,219 $69,219 $72,177 $72,177 $ 74,071 $74,071
15 $67,413 $67,413 $70,483 $70,483 $ 72,262 $72,262
16 $65,652 $65,652 $68,829 $68,829 $ 70,497 $70,497
17 $63,936 $63,936 $67,212 $67,212 $ 68,774 $68,774
18 $62,264 $62,264 $65,633 $65,633 $ 67,093 $67,093
19 $60,634 $60,634 $64,089 $64,089 $ 65,451 $65,451
20 $59,045 $59,045 $62,582 $62,582 $ 63,849 $63,849
21 $57,497 $57,497 $61,109 $61,109 $ 62,286 $62,286
22 $55,988 $55,988 $59,670 $59,670 $ 60,760 $60,760
23 $54,518 $54,518 $58,263 $58,263 $ 59,270 $59,270
24 $53,085 $53,085 $56,890 $56,890 $ 57,816 $57,816
25 $51,688 $51,688 $55,548 $55,548 $ 56,397 $56,397
---------------------------------------------------------------
Assumptions:
a. $100,000 initial investment
b. Fund Expenses = 0.94% (Evergreen Fund expenses are excluded from this
average)
c. No optional death benefits or living benefits elected
d. Surrender value is accounted for 2 days prior to contract anniversary
B-4
6% GROSS RATE OF RETURN
SP FLEX ELITE II SPAO 3 NON BONUS SPAO 3 BONUS
------------------- ------------------- -------------------
ALL YEARS 3.27% ALL YEARS 3.56% ALL YEARS 3.46%
--------- --------- --------- --------- --------- ---------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
YR VALUE VALUE VALUE VALUE VALUE VALUE
-- --------- --------- --------- --------- --------- ---------
1 $103,299 $ 96,769 $103,553 $ 97,005 $107,589 $ 99,783
2 $106,716 $ 99,947 $107,242 $101,409 $111,313 $103,209
3 $110,247 $103,230 $111,063 $106,011 $115,165 $106,753
4 $113,894 $113,894 $115,021 $110,820 $119,151 $110,420
5 $117,662 $117,662 $119,119 $115,845 $123,275 $115,346
6 $121,554 $121,554 $123,363 $121,096 $127,541 $120,489
7 $125,575 $125,575 $127,758 $126,581 $131,955 $125,858
8 $129,730 $129,730 $132,310 $132,310 $136,522 $136,522
9 $134,021 $134,021 $137,024 $137,024 $141,247 $141,247
10 $138,455 $138,455 $141,906 $141,906 $146,135 $146,135
11 $143,035 $143,035 $146,962 $146,962 $151,193 $151,193
12 $147,767 $147,767 $152,198 $152,198 $156,425 $156,425
13 $152,656 $152,656 $157,621 $157,621 $161,839 $161,839
14 $157,706 $157,706 $163,237 $163,237 $167,440 $167,440
15 $162,923 $162,923 $169,053 $169,053 $173,235 $173,235
16 $168,313 $168,313 $175,076 $175,076 $179,230 $179,230
17 $173,881 $173,881 $181,314 $181,314 $185,433 $185,433
18 $179,633 $179,633 $187,774 $187,774 $191,851 $191,851
19 $185,576 $185,576 $194,464 $194,464 $198,491 $198,491
20 $191,715 $191,715 $201,393 $201,393 $205,360 $205,360
21 $198,057 $198,057 $208,568 $208,568 $212,467 $212,467
22 $204,610 $204,610 $215,999 $215,999 $219,821 $219,821
23 $211,378 $211,378 $223,695 $223,695 $227,428 $227,428
24 $218,371 $218,371 $231,665 $231,665 $235,299 $235,299
25 $225,595 $225,595 $239,919 $239,919 $243,443 $243,443
---------------------------------------------------------------
Assumptions:
a. $100,000 initial investment
b. Fund Expenses = 0.94% (Evergreen Fund expenses are excluded from this
average)
c. No optional death benefits or living benefits elected
d. Surrender value is accounted for 2 days prior to contract anniversary
B-5
10% GROSS RATE OF RETURN
SP FLEX ELITE II SPAO 3 NON BONUS SPAO 3 BONUS
------------------ ------------------ ------------------
ALL YEARS 7.17% ALL YEARS 7.47% ALL YEARS 7.37%
--------- -------- --------- -------- --------- --------
CONTRACT SURR CONTRACT SURR CONTRACT SURR
YR VALUE VALUE VALUE VALUE VALUE VALUE
-- --------- -------- --------- -------- --------- --------
1 $107,186 $100,385 $107,450 $100,630 $111,638 $103,509
2 $114,911 $107,568 $115,477 $109,150 $119,860 $111,073
3 $123,192 $115,270 $124,105 $118,401 $128,688 $119,195
4 $132,070 $132,070 $133,376 $128,442 $138,166 $127,915
5 $141,588 $141,588 $143,341 $139,341 $148,342 $138,660
6 $151,791 $151,791 $154,050 $151,169 $159,267 $150,313
7 $162,730 $162,730 $165,559 $164,003 $170,997 $162,949
8 $174,458 $174,458 $177,927 $177,927 $183,592 $183,592
9 $187,030 $187,030 $191,220 $191,220 $197,113 $197,113
10 $200,509 $200,509 $205,506 $205,506 $211,631 $211,631
11 $214,958 $214,958 $220,860 $220,860 $227,217 $227,217
12 $230,450 $230,450 $237,360 $237,360 $243,952 $243,952
13 $247,057 $247,057 $255,093 $255,093 $261,919 $261,919
14 $264,862 $264,862 $274,151 $274,151 $281,210 $281,210
15 $283,949 $283,949 $294,633 $294,633 $301,921 $301,921
16 $304,412 $304,412 $316,644 $316,644 $324,158 $324,158
17 $326,350 $326,350 $340,301 $340,301 $348,032 $348,032
18 $349,869 $349,869 $365,724 $365,724 $373,665 $373,665
19 $375,083 $375,083 $393,048 $393,048 $401,186 $401,186
20 $402,114 $402,114 $422,412 $422,412 $430,733 $430,733
21 $431,092 $431,092 $453,970 $453,970 $462,457 $462,457
22 $462,160 $462,160 $487,886 $487,886 $496,517 $496,517
23 $495,466 $495,466 $524,336 $524,336 $533,086 $533,086
24 $531,172 $531,172 $563,509 $563,509 $572,348 $572,348
25 $569,451 $569,451 $605,608 $605,608 $614,502 $614,502
------------------------------------------------------------
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.94%. (Evergreen Fund expenses are excluded from this
average).
3. No optional death benefits or living benefits elected.
4. Surrender value is accounted for 2 days prior to contract anniversary.
B-6
APPENDIX C - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE BENEFIT
We set out below the current formula under which we may transfer amounts
between the variable investment options and the Benefit Fixed Rate Account.
Upon your election of Highest Daily Lifetime Five, we will not alter the asset
transfer formula that applies to your contract. However, as discussed in
Section 5, we reserve the right to modify this formula with respect to those
who elect Highest Daily Lifetime Five in the future.
TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA:
. C\\u\\ - the upper target is established on the effective date of the
Highest Daily Lifetime Five benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. C\\t\\ - the target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 80%.
. C\\l\\ - the lower target is established on the Effective Date and is
not changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - the factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee. The factors that we use currently are derived from the
a2000 Individual Annuity Mortality Table with an assumed interest rate
of 3%. Each number in the table "a" factors (which appears below)
represents a factor, which when multiplied by the Highest Daily Annual
Income Amount, projects our total liability for the purpose of asset
transfers under the guarantee.
. Q - age based factors used in calculating the target value. These
factors are established on the Effective Date and are not changed for
the life of the guarantee. The factor is currently set equal to 1.
. V - the total value of all Permitted Sub-accounts in the annuity.
. F - the total value of all Benefit Fixed Rate Account allocations.
. I - the income value prior to the first withdrawal. The income value is
equal to what the Highest Daily Annual Income Amount would be if the
first withdrawal were taken on the date of calculation. After the first
withdrawal the income value equals the greater of the Highest Daily
Annual Income Amount, the quarterly step-up amount times the annual
income percentage, and the Contract Value times the annual income
percentage.
. T - the amount of a transfer into or out of the Benefit Fixed Rate
Account.
. I% - annual income amount percentage. This factor is established on the
Effective Date and is not changed for the life of the guarantee.
Currently, this percentage is equal to 5%.
TARGET VALUE CALCULATION:
On each business day, a target value (L) is calculated, according to the
following formula. If the variable Contract Value (V) is equal to zero, no
calculation is necessary.
L = I * Q * a
Transfer Calculation:
The following formula, which is set on the Effective Date and is not changed
for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - F) / V.
. If r (greater than) C\\u\\, assets in the Permitted Sub-accounts are
transferred to Benefit Fixed Rate Account.
. If r (less than) C\\l\\, and there are currently assets in the Benefit
Fixed Rate Account (F (greater than) 0), assets in the Benefit Fixed
Rate Account are transferred to the Permitted Sub-accounts.
C-1
The following formula, which is set on the Effective Date and is not changed
for the life of the guarantee, determines the transfer amount:
T = {Min(V, [L - F - V * C\\t\\] / (1-C\\t\\))} T (greater than) 0, Money moving from the
Permitted Sub-accounts to the Benefit Fixed Rate
Account
T = {Min(F, - [L - F - V * C\\t\\] / (1-C\\t\\))} T (less than) 0, Money moving from the Benefit
Fixed Rate Account to the Permitted Sub-
accounts]
Example:
Male age 65 contributes $100,000 into the Permitted Sub accounts and the value
drops to $92,300 during year one, end of day one. A table of values for "a"
appears below.
Target Value Calculation:
L = I * Q * a
= 5000.67 * 1 * 15.34
= 76,710.28
Target Ratio:
R = (L - F) / V
= (76,710.28 - 0) / 92,300.00
= 83.11%
Since r (greater than) Cu ( because 83.11% (greater than) 83%) a transfer into
the benefit Fixed rate Account occurs.
T = { Min ( V, [ L - F - V * Ct] / ( 1 - Ct))}
= { Min ( 92,300.00, [ 76,710.28 - 0 - 92,300.00 * 0.80] / ( 1 - 0.80))}
= { Min ( 92,300.00, 14,351.40 )}
= 14,351.40
C-2
Age 65 "a" Factors for Liability Calculations
(in Years and Months since Benefit Effective Date)*
Months
Years 1 2 3 4 5 6 7 8 9 10 11 12
----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95
2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51
3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07
4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63
5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19
6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75
7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30
8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86
9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42
10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98
11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54
12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11
13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68
14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26
15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84
16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44
17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04
18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65
19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27
20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91
21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55
22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22
23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89
24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58
25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29
26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01
27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75
28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51
29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28
30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06
31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84
32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64
33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44
34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24
35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03
36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83
37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62
38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42
39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22
40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02
41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages.
C-3
APPENDIX D - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFFETIME SEVEN BENEFIT
AND SPOUSAL HIGHEST DAILY LIFETIME SEVEN
TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA:
. C\\u\\ - the upper target is established on the effective date of the
Highest Daily Lifetime Seven benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. C\\t\\ - the target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 80%.
. C\\l\\ - the lower target is established on the Effective Date and is
not changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee.
. V - the total value of all Permitted Sub-accounts in the annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first withdrawal, the Income Basis is the
Protected Withdrawal Value calculated as if the first withdrawal were
taken on the date of calculation. After the first withdrawal, the Income
Basis is equal to the greater of (1) the Protected Withdrawal Value at
the time of the first withdrawal, adjusted for additional Purchase
Payments including the amount of any associated Credits, and adjusted
proportionally for excess withdrawals*, (2) any highest quarterly value
increased for additional Purchase Payments including the amount of any
associated Credits, and adjusted for withdrawals, and (3) the Contract
Value.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account
. * Note: withdrawals of less than the Annual Income Amount do not reduce
the Income Basis.
TARGET VALUE CALCULATION:
On each business day, a target value (L) is calculated, according to the
following formula. If the variable account value (V) is equal to zero, no
calculation is necessary.
L = 0.05 * P * a
Transfer Calculation:
The following formula, which is set on the benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / V.
. If r (greater than) C\\u\\, assets in the Permitted Sub-accounts are
transferred to the AST Investment Grade Bond Portfolio Sub-account.
. If r (less than) C\\l\\, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets
in the AST Investment Grade Bond Portfolio Sub-account are transferred
to the Permitted Sub-accounts according to most recent allocation
instructions.
The following formula, which is set on the benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = {Min(V, [L - B - V * Ct] / (1-Ct))} , Money moving from the Permitted Sub-accounts
to the AST Investment Grade Bond Portfolio Sub-
account
T = {Min(B,- [L - B - V * Ct] / (1-Ct))} , Money moving from the AST Investment Grade
Bond Portfolio Sub-account to the Permitted Sub-
accounts]
D-1
"a" Factors for Liability Calculations
(in Years and Months since Benefit Effective Date)*
Months
Years 1 2 3 4 5 6 7 8 9 10 11 12
----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95
2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51
3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07
4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63
5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19
6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75
7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30
8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86
9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42
10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98
11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54
12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11
13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68
14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26
15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84
16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44
17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04
18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65
19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27
20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91
21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55
22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22
23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89
24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58
25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29
26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01
27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75
28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51
29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28
30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06
31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84
32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64
33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44
34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24
35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03
36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83
37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62
38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42
39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22
40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02
41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages.
D-2
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS
FURTHER DETAILS ABOUT THE PRUCO LIFE OF NEW JERSEY ANNUITY
DESCRIBED IN PROSPECTUS P2401NY (05/2008).
---------------------------------------
(print your name)
---------------------------------------
(address)
---------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER P.O. Box 7960 Philadelphia, PA 19176
----------------
[LOGO] Prudential PRSRT STD
The Prudential Insurance Company of America U.S. POSTAGE
751 Broad Street PAID
Newark, NJ 07102-3777 LANCASTER, PA
PERMIT NO. 1793
----------------
P2401NY
STRATEGIC PARTNERS(SM)
FLEXELITE
VARIABLE ANNUITY
PROSPECTUS: MAY 1, 2004
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW JERSEY). PRUCO
LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
Strategic Partners FlexElite offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds
managed by these leading asset managers.
PRUDENTIAL INVESTMENTS LLC
JENNISON ASSOCIATES LLC
AIM CAPITAL MANAGEMENT, INC.
ALLIANCE CAPITAL MANAGEMENT, L.P.
CALAMOS ASSET MANAGEMENT, INC.
DAVIS ADVISORS
DEUTSCHE ASSET MANAGEMENT INVESTMENT SERVICES LIMITED
THE DREYFUS CORPORATION
GE ASSET MANAGEMENT, INCORPORATED
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
HOTCHKIS AND WILEY CAPITAL MANAGEMENT LLC
JANUS CAPITAL MANAGEMENT LLC
J.P. MORGAN INVESTMENT MANAGEMENT INC.
MASSACHUSETTS FINANCIAL SERVICES COMPANY (MFS) PACIFIC INVESTMENT MANAGEMENT
COMPANY LLC (PIMCO)
SALOMON BROTHERS ASSET MANAGEMENT
STATE STREET RESEARCH AND MANAGEMENT COMPANY
WILLIAM BLAIR & COMPANY, LLC
PLEASE READ THIS PROSPECTUS
Please read this prospectus before purchasing a Strategic Partners FlexElite
variable annuity contract and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference.
TO LEARN MORE ABOUT STRATEGIC PARTNERS FLEXELITE
To learn more about the Strategic Partners FlexElite variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2004. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life of New Jersey also files
other reports with the SEC. All of these filings can be reviewed and copied at
the SEC's offices, and can be obtained from the SEC's Public Reference Section,
450 5th Street N.W., Washington, D.C. 20549-0102. You may obtain information on
the operation of the Public Reference Room by calling the SEC at (202) 942-8090.
The SEC also maintains a Web site (http://www.sec.gov) that contains the
Strategic Partners FlexElite SAI, material incorporated by reference, and other
information regarding registrants that file electronically with the SEC. The
Table of Contents of the SAI is on page 52 of this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
[ARROW GRAPHIC] (888) PRU-2888 or write to us at:
[ARROW GRAPHIC] Prudential Annuity Service Center P.O. Box 7960 Philadelphia, PA
19101
YOU MAY ELECT BEFORE YOUR 3RD AND 6TH CONTRACT ANNIVERSARIES TO HAVE A CREDIT
ADDED TO YOUR CONTRACT VALUE. IF YOU MAKE A CREDIT ELECTION, YOUR CHARGES MAY BE
HIGHER THAN IF YOU HAD NOT MADE THE ELECTION AND THEY COULD EXCEED YOUR CREDIT
AMOUNT IF YOU MAKE A WITHDRAWAL WITHIN 3 YEARS OF YOUR ELECTION.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS FLEXELITE IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. STRATEGIC
PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
ORD01091NY
CONTENTS
PART I: STRATEGIC PARTNERS FLEXELITE PROSPECTUS
SUMMARY
Glossary ......................................................... 6
Summary .......................................................... 9
Summary Of Contract Expenses ..................................... 12
Expense Examples ................................................. 15
PART II: STRATEGIC PARTNERS FLEXELITE PROSPECTUS
SECTIONS 1-9
Section 1: What Is The Strategic Partners FlexElite
Variable Annuity? ................................................... 18
Short Term Cancellation Right Or "Free Look" ..................... 18
Section 2: What Investment Options Can I Choose? ....................... 19
Variable Investment Options ...................................... 19
Fixed Interest Rate Options ...................................... 27
Transfers Among Options .......................................... 28
Additional Transfer Restrictions ................................. 28
Dollar Cost Averaging ............................................ 29
Asset Allocation Program ......................................... 30
Auto-Rebalancing ................................................. 30
Voting Rights .................................................... 30
Substitution ..................................................... 31
Section 3: What Kind Of Payments Will I Receive During
The Income Phase? (Annuitization) ................................... 32
Payment Provisions ............................................... 32
Option 1: Annuity Payments For A Fixed Period ................. 32
Option 2: Life Income Annuity Option .......................... 32
Other Annuity Options ......................................... 32
Tax Considerations ................................................ 32
Section 4: What Is The Death Benefit? .................................. 33
Beneficiary ...................................................... 33
Calculation Of The Death Benefit ................................. 33
Guaranteed Minimum Death Benefit ................................. 33
GMDB Step-Up .................................................. 33
Payout Options ................................................... 33
Spousal Continuance Benefit ...................................... 34
Section 5: How Can I Purchase A Strategic Partners
FlexElite Contract? ................................................. 36
Purchase Payments ................................................ 36
Allocation Of Purchase Payments .................................. 36
Credit Election .................................................. 36
Calculating Contract Value ....................................... 37
2
Section 6: What Are The Expenses Associated With The
Strategic Partners FlexElite Contract? .............................. 38
Insurance And Administrative Charge .............................. 38
Withdrawal Charge ................................................ 38
Contract Maintenance Charge ...................................... 39
Taxes Attributable To Premium .................................... 39
Transfer Fee ..................................................... 39
Company Taxes .................................................... 40
Underlying Mutual Fund Fees ...................................... 40
Section 7: How Can I Access My Money? .................................. 41
Withdrawals During The Accumulation Phase ........................ 41
Automated Withdrawals ............................................ 41
Suspension Of Payments Or Transfers .............................. 41
Section 8: What Are The Tax Considerations Associated
With The Strategic Partners FlexElite Contract? ..................... 42
Contracts Owned By Individuals (Not Associated With
Tax Favored Retirement Plans) ................................. 42
Contracts Held By Tax Favored Plans .............................. 45
Section 9: Other Information ........................................... 49
Pruco Life Insurance Company Of New Jersey ....................... 49
The Separate Account ............................................. 49
Sale And Distribution Of The Contract ............................ 49
Litigation ....................................................... 50
Assignment ....................................................... 50
Financial Statements ............................................. 50
Statement Of Additional Information .............................. 50
Householding ..................................................... 51
IRA Disclosure Statement ......................................... 52
Appendix ............................................................... 56
Accumulation Unit Values ......................................... 56
PART III: PROSPECTUSES
VARIABLE INVESTMENT OPTIONS
THE PRUDENTIAL SERIES FUND, INC.
JANUS ASPEN SERIES
3
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4
PART I SUMMARY
STRATEGIC PARTNERS FLEXELITE PROSPECTUS
5
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
GLOSSARY
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus any
charge we impose for premium taxes, withdrawal charges and credit election
withdrawal charge.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which both the New York Stock Exchange and Pruco Life of New Jersey are
open for business. Our business day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CREDIT
The amount we add to your contract value if you make a credit election.
CREDIT ELECTION
Your election to have a credit added to your contract value. At least 30
calendar days prior to your 3rd and 6th contract anniversaries, we will notify
you of your option to make a credit election. We will give you notice only if
the credit election is available under your contract and you have not previously
declined to receive a credit. We must
6
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
receive the credit election in good order no later than the applicable contract
anniversary.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit is available for an additional charge. See
"What Is The Death Benefit?" on page 36.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which equals
the GMDB step-up value. The GMDB protected value will be subject to certain age
restrictions and time durations, however, it will still increase by subsequent
invested purchase payments and reduce proportionally by withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA, 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The phone number is (888)
PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life of New Jersey Flexible Premium Variable
Annuity Account. The separate account is set apart from all of the general
assets of Pruco Life of New Jersey.
7
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY GLOSSARY CONTINUED
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners FlexElite variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
"What Are The Tax Considerations Associated With The Strategic Partners
FlexElite Contract," on page 42.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life of New Jersey that invests in a particular mutual fund is referred to
in your contract as a subaccount.
8
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-9
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS FLEXELITE VARIABLE ANNUITY?
The Strategic Partners FlexElite variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company of New Jersey
(Pruco Life of New Jersey, we or us). The contract allows you to invest on a
tax-deferred basis in variable investment options, and fixed interest rate
options. The contract is intended for retirement savings or other long-term
investment purposes and provides for a death benefit.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option. The fixed interest rate options offer a guaranteed interest
rate. While your money is allocated to one of these options, your principal
amount will not decrease and we guarantee that your money will earn at least a
minimum interest rate annually.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
.. During the accumulation phase, any earnings grow on a tax-deferred basis
and are generally only taxed as income when you make a withdrawal.
.. The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments such as age,
gender and the payout option you select.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners FlexElite, you may
cancel your contract within 10 days after receiving it (or whatever time period
is required under applicable law). This time period is referred to as the "Free
Look" period.
Pruco Life of New Jersey offers several different annuities which your
representative may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's contract value. The fees and charges under the
annuity contract and the compensation paid to your representative may also be
different between each annuity. If you are purchasing the contract as a
replacement for existing variable annuity or variable life coverage, you should
consider, among other things, any surrender or penalty charges you may incur
when replacing your existing coverage.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any of the following variable investment options:
The Prudential Series Fund, Inc.
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Core Equity Portfolio
SP Alliance Large Cap Growth Portfolio
9
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-9 CONTINUED
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Goldman Sachs Small Cap Value Portfolio (formerly SP Small/Mid Cap Value
Portfolio) SP Growth Asset Allocation Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP State Street Research Small Cap Growth Portfolio (formerly SP INVESCO Small
Company Growth Portfolio) SP Strategic Partners Focused Growth Portfolio
SP Technology Portfolio (formerly SP Alliance Technology Portfolio)
SP William Blair International Growth Portfolio (formerly SP Jennison
International Growth Portfolio)
JANUS ASPEN SERIES
Growth Portfolio--Service Shares
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the owner dies before the income phase of the contract begins,
the person(s) or entity that you have chosen as your beneficiary will receive at
a minimum, the greater of (i) the contract value, (ii) either the base death
benefit or, for a higher insurance charge, a potentially larger Guaranteed
Minimum Death Benefit (GMDB). The base death benefit equals the total invested
purchase payments reduced proportionally by withdrawals. The Guaranteed Minimum
Death Benefit is equal to the "GMDB protected value" of the highest value of the
contract on any contract anniversary, which we call the "GMDB step-up value."
On the date we receive proof of death in good order, in lieu of paying a death
benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe
on page 34 are met.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS FLEXELITE CONTRACT?
You can purchase this contract, under most circumstances, with a minimum initial
purchase payment of $10,000, but not greater than $1,000,000 absent our prior
approval. Generally, you can make additional purchase payment of $500 ($100 if
made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms.
You may purchase this contract only if the oldest of the owner, annuitant, or
co-annuitant is age 85 or younger on the contract date. In addition, certain age
limits apply to certain features and benefits described herein.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
.. Each year (or upon full surrender) we deduct a contract maintenance charge
if your contract value
10
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
is less than $100,000. This charge is currently equal to the lesser of $30 or 2%
of your contract value. We do not impose the contract maintenance charge if your
contract value is $75,000 or more.
.. For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable
investment options, depending on the death benefit option that you choose.
The daily cost is equivalent to an annual charge as follows:
.. 1.6% if you choose the base death benefit, or
.. 1.8% if you choose the step-up Guaranteed Minimum Death Benefit option.
.. There are also expenses associated with the mutual funds. For 2003, the
fees of these funds ranged on an annual basis from 0.37% to 2.56% of fund
assets, which are reduced by expense reimbursements or waivers to 0.37% to
1.30%. These reimbursements or waivers may be terminated at any time.
.. If you withdraw money within three years of the contract date or a credit
election you may have to pay a withdrawal charge of 7% on all or part of
the withdrawal.
For more information, including details about other possible charges under the
contract, see "Summary Of Contract Expenses" on page 12 and "What Are The
Expenses Associated With The Strategic Partners FlexElite Contract?" on page 38.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age 59
1/2, an additional tax penalty as well. If you withdraw money within three years
of the contract date or a credit election, we may impose a withdrawal charge.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawals as a
withdrawal of earnings, which are taxed as ordinary income. If you are younger
than age 59 1/2 when you take money out, you may be charged a 10% federal tax
penalty on the earnings in addition to ordinary taxation. A portion of the
payments you receive during the income phase is considered a partial return of
your original investment and therefore will not be taxable as income. Generally,
all amounts withdrawn from an Individual Retirement Annuity (IRA) contract
(excluding Roth IRAs) are taxable and subject to the 10% penalty if withdrawn
prior to age 59 1/2.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey), an indirect subsidiary of The Prudential Insurance Company
of America, and sold by registered representatives of affiliated and
unaffiliated broker/dealers.
11
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS FLEXELITE. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see "What Are The Expenses Associated With The Strategic
Partners FlexElite Contract?" on page 38. The individual fund prospectuses
contain detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE(1)
FULL CONTRACT YEARS
0 7%
1 7%
2 7%
3 0%
CREDIT ELECTION WITHDRAWAL CHARGE(2)
FULL CONTRACT YEARS
3 7%
4 7%
5 7%
6 7%
7 7%
8 7%
9 0%
MAXIMUM TRANSFER FEE
Each transfer after 12(3) $30.00
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" on page 38.
2: We impose these withdrawal charges only if you elect to have the credit added
to your contract value prior to your 3rd and 6th contract anniversaries.
3: Currently, we charge $10 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but we have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing and do not
count them toward the limit of 12 free transfers per year.
12
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including underlying mutual fund
fees and expenses.
ANNUAL ACCOUNT EXPENSES
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGE AND CONTRACT
CHARGE UPON FULL WITHDRAWAL(4)
- -----------------------------------------------------------------
$30.00
ANNUAL INSURANCE AND ADMINISTRATIVE EXPENSES(5)
- -----------------------------------------------------------------
AS A PERCENTAGE OF THE ACCOUNT VALUE IN VARIABLE
INVESTMENT OPTIONS
Base Death Benefit 1.60%
Guaranteed Minimum Death Benefit-Step-Up 1.80%
Possible Additional Charge if 76 or older 0.10%
4: Currently, we waive this fee if your contract value is greater than or equal
to $100,000. If your contract value is less than $100,000, we currently charge
the lesser of $30 or 2% of your contract value. This is a single fee that we
assess (a) annually or (b) upon a full withdrawal made on a date other than a
contract anniversary.
5: We reserve the right to impose an additional insurance charge of 0.10%
annually of average account value for contracts issued to those aged 76 or
older, under which the Guaranteed Minimum Death Benefit has been selected.
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2003. Fund expenses
are not fixed or guaranteed by the Strategic Partners FlexElite contract, and
may vary from year to year.
MINIMUM MAXIMUM
------- -------
TOTAL ANNUAL UNDERLYING MUTUAL FUND OPERATING EXPENSES* 0.37% 2.56%
* Actual expenses for the mutual funds are lower due to certain expense
reimbursements or waivers. Expense reimbursements or waivers are voluntary
and may be terminated at any time. The minimum and maximum expenses, with
expense reimbursement, are 0.37% and 1.30%, respectively.
13
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
ANNUAL MUTUAL FUND EXPENSES
AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE DAILY NET ASSETS
EXPENSES(1) INVESTMENT OTHER
THE PRUDENTIAL SERIES FUND, INC. ADVISORY FEES EXPENSES TOTAL
- ---------------------------------------------------------- ------------- -------- -----
Jennison Portfolio 0.60% 0.04% 0.64%
Prudential Equity Portfolio 0.45% 0.04% 0.49%
Prudential Global Portfolio 0.75% 0.12% 0.87%
Prudential Money Market Portfolio 0.40% 0.04% 0.44%
Prudential Stock Index Portfolio 0.35% 0.02% 0.37%
Prudential Value Portfolio 0.40% 0.04% 0.44%
SP Aggressive Growth Asset Allocation Portfolio(2,
3) 0.85% 0.30% 1.15%
SP AIM Aggressive Growth Portfolio(2) 0.95% 1.07% 2.02%
SP AIM Core Equity Portfolio(2) 0.85% 0.87% 1.72%
SP Alliance Large Cap Growth Portfolio 0.90% 0.16% 1.06%
SP Balanced Asset Allocation Portfolio(2, 3) 0.77% 0.21% 0.98%
SP Conservative Asset Allocation Portfolio(2, 3) 0.72% 0.16% 0.88%
SP Davis Value Portfolio 0.75% 0.07% 0.82%
SP Deutsche International Equity Portfolio(2) 0.90% 0.40% 1.30%
SP Goldman Sachs Small Cap Value Portfolio
(formerly SP Small/Mid Cap Value Portfolio) 0.90% 0.14% 1.04%
SP Growth Asset Allocation Portfolio(2, 3) 0.81% 0.26% 1.07%
SP Large Cap Value Portfolio(2) 0.80% 0.31% 1.11%
SP MFS Capital Opportunities Portfolio(2) 0.75% 1.27% 2.02%
SP Mid-Cap Growth Portfolio(2) 0.80% 0.54% 1.34%
SP PIMCO High Yield Portfolio 0.60% 0.12% 0.72%
SP PIMCO Total Return Portfolio 0.60% 0.05% 0.65%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% 0.80%
SP State Street Research Small Cap Growth
Portfolio(2)
(formerly SP INVESCO Small Company Growth
Portfolio) 0.95% 0.83% 1.78%
SP Strategic Partners Focused Growth Portfolio(2) 0.90% 0.75% 1.65%
SP Technology Portfolio(2)
(formerly SP Alliance Technology Portfolio) 1.15% 1.41% 2.56%
SP William Blair International Growth Portfolio
(formerly SP Jennison International Growth
Portfolio) 0.85% 0.30% 1.15%
EXPENSES INVESTMENT 12B-1 OTHER
JANUS ASPEN SERIES(4) ADVISORY FEES FEE EXPENSES TOTAL
- ---------------------------------------------------------- ------------- ----- -------- -----
Growth Portfolio -- Service Shares 0.65% 0.25% 0.02% 0.92%
1. The Total Expenses do not reflect fee waivers, reimbursement of expenses, or
expense offset arrangements for the fiscal year ended December 31, 2003.
2. The portfolios' total actual annual operating expenses for the year ended
December 31, 2003 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
expense reimbursements are voluntary and may be terminated by Prudential
Investments LLC at any time. After accounting for the expense reimbursements,
the portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
SP Aggressive Growth Asset
Allocation Portfolio 0.97%
SP AIM Aggressive Growth Portfolio 1.07%
SP AIM Core Equity Portfolio 1.00%
SP Balanced Asset Allocation
Portfolio 0.87%
SP Conservative Asset Allocation
Portfolio 0.81%
SP Deutsche International Equity
Portfolio 1.10%
SP Growth Asset Allocation
Portfolio 0.92%
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
SP Large Cap Value Portfolio 0.90%
SP MFS Capital Opportunities
Portfolio 1.00%
SP Mid Cap Growth Portfolio 1.00%
SP State Street Research Small Cap
Growth Portfolio 1.15%
SP Strategic Partners Focused
Growth Portfolio 1.01%
SP Technology Portfolio 1.30%
3. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund, Inc. The Total Expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
4. Because the 12b-1 fee is charged as an ongoing fee, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers, Inc.
14
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXPENSE EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
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 ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1A: Step-Up Guaranteed Minimum Death Benefit Option, Credit Elections,
and You Withdraw All Your Assets This example assumes that:
.. You invest $10,000 in the Strategic Partners FlexElite Contract;
.. You choose the Step-Up Guaranteed Minimum Death Benefit;
.. You make credit elections prior to your 3rd and 6th contract anniversaries;
.. You allocate all your assets to the variable investment option having the
maximum total operating expenses;
.. Your investment has a 5% return each year;
.. The mutual fund's total operating expenses remain the same each year; and
.. You withdraw all your assets at the end of the indicated period.
EXAMPLE 1B: Step-Up Guaranteed Minimum Death Benefit Option, Credit Elections,
and You Do Not Withdraw All Your Assets This example makes the same assumptions
as Example 1a except that it assumes that you do not withdraw any of your assets
at the end of the indicated period.
15
EXPENSE EXAMPLES CONTINUED
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
PART I
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXAMPLE 2a: Base Death Benefit and You Withdraw All Your Assets This example
assumes that:
.. You invest $10,000 in the Strategic Partners FlexElite Contract;
.. You choose the Base Death Benefit;
.. You allocate all your assets to the variable investment option having the
maximum total operating expenses;
.. Your investment has a 5% return each year;
.. The mutual fund's total operating expenses remain the same each year;
.. You do not make a credit election; and
.. You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Base Death Benefit and You Do Not Withdraw All Your Assets
This example makes the same assumptions as Example 2a except that it assumes
that you do not withdraw any of your assets at the end of the indicated period.
In these expense examples, we set out projected expenses that are based on
versions of the contract that carry the highest and lowest overall charges. We
do not depict projected expenses for every possible combination of contract
charges. The actual expenses under the contract with the insurance features and
underlying funds that you have selected, and the purchase payments that you have
made, may vary from the figures we depict here.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
NOTE THAT WITHDRAWAL CHARGES (WHICH ARE REFLECTED IN EXAMPLES 1A AND 2A) ARE
ASSESSED IN CONNECTION WITH SOME ANNUITY OPTIONS, BUT NOT OTHERS.
THE VALUES SHOWN IN THE 10 YEAR COLUMN ARE THE SAME FOR EXAMPLE 1A AND 1B AND
THE SAME IN THE 5 YEAR AND 10 YEAR COLUMNS FOR EXAMPLE 2A AND EXAMPLE 2B. THIS
IS BECAUSE IF YOU DECLINE THE CREDIT AND 3 OR MORE YEARS HAVE ELAPSED SINCE YOUR
CONTRACT DATE, WE WOULD NO LONGER DEDUCT WITHDRAWAL CHARGES WHEN YOU MAKE A
WITHDRAWAL. SIMILARLY, IF 3 OR MORE YEARS HAVE ELAPSED SINCE YOUR LAST CREDIT
ELECTION BEFORE YOUR 6TH CONTRACT ANNIVERSARY, NO WITHDRAWAL CHARGES APPLY.
THE EXAMPLES USE AN AVERAGE CONTRACT MAINTENANCE CHARGE, WHICH WE CALCULATED
BASED ON OUR ESTIMATE OF THE TOTAL CONTRACT FEES WE EXPECT TO COLLECT IN 2004.
BASED ON THESE ESTIMATES, THE CONTRACT MAINTENANCE CHARGE IS INCLUDED AS AN
ANNUAL CHARGE OF 0.05% OF CONTRACT VALUE. YOUR ACTUAL FEES WILL VARY BASED ON
THE AMOUNT OF YOUR CONTRACT AND YOUR SPECIFIC ALLOCATION AMONG THE INVESTMENT
OPTIONS. A TABLE OF ACCUMULATION UNIT VALUES APPEARS IN THE APPENDIX TO THIS
PROSPECTUS.
STEP-UP GUARANTEED MINIMUM DEATH BENEFIT; CREDIT ELECTIONS
EXAMPLE 1A: EXAMPLE 1B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- ------------------------------ ----------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- ------ ------ ------ ------- ------ ------ ------ ----------
$1,072 $1,965 $2,875 $4,589 $442 $1,335 $2,245 $4,589
BASE DEATH BENEFIT
EXAMPLE 2A: EXAMPLE 2B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- ------------------------------ ----------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- ------ ------ ------ ------- ------ ------ ------ ----------
$1,053 $1,908 $2,147 $4,380 $423 $1,278 $2,147 $4,380
16
PART II SECTIONS 1-9
STRATEGIC PARTNERS FLEXELITE PROSPECTUS
17
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
1:
WHAT IS THE STRATEGIC PARTNERS FLEXELITE
VARIABLE ANNUITY?
THE STRATEGIC PARTNERS FLEXELITE VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW
JERSEY, WE OR US). Under our contract, in exchange for your payment to us, we
promise to pay you a guaranteed income stream that can begin any time after the
first contract anniversary. Your annuity is in the accumulation phase until you
decide to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract. (If you purchase the annuity contract in
a tax-favored plan such as an IRA, that plan generally provides tax deferral
even without investing in an annuity contract. Therefore, before purchasing an
annuity in a tax-favored plan, you should consider whether its features and
benefits beyond tax deferral meet your needs and goals. You may also want to
consider the relative features, benefits and costs of these annuities compared
with any other investment that you may use in connection with your retirement
plan or arrangement.)
Strategic Partners FlexElite is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options and guaranteed fixed interest rate options. If you select variable
investment options, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the underlying mutual fund(s) associated with that variable investment
option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights under
the contract. You will also be the annuitant unless you designate someone else.
The annuitant is the person whose life is used to determine how much and how
long (if applicable) the annuity payments will continue once the income phase
begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners FlexElite, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive a refund equal to your contract value (plus the amount of any fees
or other charges) as of the date you surrendered your contract.
18
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, AND FIXED INTEREST RATE OPTIONS.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective (in italics) and
a short, summary description of their key policies to assist you in determining
which portfolios may be of interest to you. There is no guarantee that any
portfolio will meet its investment objective. The name of the adviser/subadviser
for each portfolio appears next to the description.
All the portfolios on the following chart, except for the Janus Aspen Series --
Growth Portfolio, are Prudential Series Fund portfolios. The Jennison Portfolio,
Prudential Equity Portfolio, Prudential Global Portfolio, Prudential Money
Market Portfolio, Prudential Stock Index Portfolio and Prudential Value
Portfolio, and each "SP" Portfolio of the Prudential Series Fund, are managed by
an indirect wholly-owned subsidiary of Prudential Financial, Inc. called
Prudential Investments LLC (PI) under a "manager-of-managers" approach. The SP
Aggressive Growth Asset Allocation Portfolio, SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio invest in other Prudential Series Fund Portfolios, and are
managed by PI.
Under the manager-of-managers approach, PI has the ability to assign subadvisers
to manage specific portions of a portfolio, and the portion managed by a
subadviser may vary from 0% to 100% of the portfolio's assets. The subadvisers
that manage some or all of a Prudential Series Fund portfolio are listed on the
following chart.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
An affiliate of each of the funds may compensate Pruco Life of New Jersey based
upon an annual percentage of the average assets held in the fund by Pruco Life
of New Jersey under the contracts. These percentages may vary by fund and/or
portfolio, and reflect administrative and other services we provide. With regard
to its variable annuity contracts, generally Pruco Life of New Jersey receives
fees that range from 0.05% to 0.40% annually for providing such services.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
19
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
LARGE CAP GROWTH JENNISON PORTFOLIO: seeks long-term growth of capital.
The Jennison Associates Portfolio invests primarily in
equity securities of major, LLC established corporations
that the subadviser believes offer above-average growth
prospects. The Portfolio may invest up to 30% of its
total assets in foreign securities. Stocks are selected
on a company-by-company basis using fundamental analysis.
Normally 65% of the Portfolio's total assets are invested
in common stocks and preferred stocks of companies with
capitalization in excess of $1 billion.
LARGE CAP CORE PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of GE
Asset Management, capital. The Portfolio invests at least
80% of its Incorporated; investable assets in common
stocks of major established Jennison Associates
corporations as well as smaller companies that the LLC;
Salomon Brothers subadvisers believe offer attractive
prospects of Asset Management Inc. appreciation. The
Portfolio may invest up to 30% of its total assets in
foreign securities. The Portfolio may also invest 20% of
its investable assets in short, intermediate or long-term
debt obligations, convertible and nonconvertible
preferred stock and other equity-related securities. Up
to 5% of these investable assets may be rated below
investment grade. Debt securities rated below investment
grade are considered speculative and are sometimes
referred to as "junk bonds."
GLOBAL EQUITY PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of
Jennison Associates capital. The Portfolio invests
primarily in common stocks LLC (and their equivalents) of
foreign and U.S. companies. When selecting stocks, the
subadviser uses a growth approach which means that it
looks for companies that have above-average growth
prospects. Generally, the Portfolio invests in at least
three countries, including the U.S., but may invest up to
35% of the Portfolio's assets in companies located in any
one country other than the U.S.
MONEY MARKET PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current
Prudential Investment income consistent with the
stability of capital and the Management, Inc. maintenance
of liquidity. The Portfolio invests in high-quality
short-term money market instruments issued by the U.S.
Government or its agencies, as well as by corporations
and banks, both domestic and foreign. The Portfolio will
invest only in instruments that mature in thirteen months
or less, and which are denominated in U.S. dollars.
MANAGED INDEX PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment
results Prudential Investment that generally correspond
to the performance of Management, Inc. publicly-traded
common stocks. With the price and yield performance of
the Standard & Poor's 500 Composite Stock Price Index
(S&P 500) as the benchmark, the Portfolio normally
invests at least 80% of investable assets in S&P 500
stocks. The S&P 500 represents more than 70% of the total
market value of all publicly-traded common stocks and is
widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses
to select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
20
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
LARGE CAP VALUE PRUDENTIAL VALUE PORTFOLIO: seeks capital appreciation.
The Jennison Associates Portfolio invests primarily in
common stocks that the LLC subadviser believes are
undervalued--those stocks that are trading below their
underlying asset value, cash generating ability and
overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the
market as a whole and other types of stocks and can
continue to be undervalued by the markets for long
periods of time. Normally at least 65% of the Portfolio's
total assets is invested in the common stock and
convertible securities of companies that the subadviser
believes will provide investment returns above those of
the S&P 500 or the New York Stock Exchange (NYSE)
Composite Index. Most of the investments will be
securities of large capitalization companies. The
Portfolio may invest up to 25% of its total assets in
real estate investment trusts (REITs) and up to 30% of
its total assets in foreign securities.
ASSET ALLOCATION SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to
Prudential obtain the highest potential total return
consistent with Investments LLC the specified level of
risk tolerance. The Portfolio seeks to achieve this
investment objective by investing in several other Series
Fund Portfolios ("Underlying Portfolios"), which
currently consist of domestic equity Portfolios and
international equity Portfolios. The domestic equity
component is approximately 78% of the Portfolio and the
international equity component is approximately 22% of
the Portfolio.
MID CAP GROWTH SP AIM AGGRESSIVE GROWTH PORTFOLIO: seeks long-term
growth A I M Capital of capital. The Portfolio invests
primarily in the common Management, Inc. stocks of
companies whose earnings the subadviser expects to grow
more than 15% per year. Growth stocks may involve a
higher level of risk than value stocks, because growth
stocks tend to attract more attention and more
speculative investments than value stocks. On behalf of
the Portfolio, the subadviser invests in securities of
small and medium sized growth companies, may invest up to
25% of the Portfolio's total assets in foreign securities
and may invest up to 15% of the Portfolio's total assets
in real estate investment trusts (REITs).
LARGE CAP CORE SP AIM CORE EQUITY PORTFOLIO: seeks growth of capital.
The A I M Capital Portfolio normally invests at least 80%
of investable assets Management, Inc. in equity
securities, including convertible securities of
established companies that have long-term above-average
growth in earnings and growth companies that the
subadviser believes have the potential for above-average
growth in earnings. The Portfolio may invest up to 20% of
its total assets in foreign securities.
LARGE CAP GROWTH SP ALLIANCE LARGE CAP GROWTH PORTFOLIO: seeks growth of
Alliance Capital capital by pursuing aggressive
investment policies. The Management, L.P. Portfolio
normally invests at least 80% of its investable assets in
stocks of companies considered to have large
capitalizations (i.e., similar to companies included in
the S&P 500 Index). Unlike most equity funds, the
Portfolio focuses on a relatively small number of
intensively researched companies. The Portfolio usually
invests in about 40-60 companies, with the 25 most highly
regarded of these companies generally constituting
approximately 70% of the Portfolio's investable assets.
Up to 15% of the Portfolio's total assets may be invested
in foreign securities.
21
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
ASSET ALLOCATION SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain
the Prudential highest potential total return consistent
with the specified Investments LLC level of risk
tolerance. The Portfolio seeks to provide a balance
between current income and growth of capital by investing
in several other Series Fund Portfolios ("Underlying
Portfolios"), which currently consist of fixed income
Portfolios, domestic equity Portfolios, and international
equity Portfolios. The fixed income component is
approximately 37% of the Portfolio, the domestic equity
component is approximately 49% of the Portfolio, and the
international equity component is approximately 14% of
the Portfolio.
ASSET ALLOCATION SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to
obtain Prudential the highest potential total return
consistent with the Investments LLC specified level of
risk tolerance. The Portfolio seeks to provide current
income with low to moderate capital appreciation by
investing in several other Series Fund Portfolios
("Underlying Portfolios"), which currently consist of
fixed income Portfolios, domestic equity Portfolios, and
international equity Portfolios. The fixed income
component is approximately 57% of the Portfolio, the
domestic equity component is approximately 33% of the
Portfolio, and the international equity component is
approximately 10% of the Portfolio.
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The
Davis Advisors Portfolio invests primarily in common
stocks of U.S. companies with market capitalizations of
at least $5 billion. It may also invest in stocks of
foreign companies and U.S. companies with smaller
capitalizations. The subadviser selects common stocks of
quality, overlooked growth companies at value prices and
holds them for the long-term. It looks for companies with
sustainable growth rates selling at modest price-earnings
multiples that it hopes will expand as other investors
recognize the company's true worth. There is a risk that
"value" stocks can perform differently from the market as
a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
INTERNATIONAL EQUITY SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO: seeks
long-term Deutsche Asset capital appreciation. The
Portfolio invests primarily in the Management Investment
stocks of companies located in developed foreign
countries Services Limited that make up the MSCI EAFE
Index, plus Canada. The Portfolio also may invest in
emerging markets securities. The Portfolio normally
invests at least 80% of its investable assets in the
stocks and other securities with equity characteristics
of companies in developed countries outside the U.S.
ASSET ALLOCATION SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the
Prudential highest potential total return consistent with
the specified Investments LLC level of risk tolerance.
The Portfolio seeks to provide long-term growth of
capital with consideration also given to current income
by investing in several other Series Fund Portfolios
("Underlying Portfolios"), which currently consist of
domestic equity Portfolios, fixed income Portfolios, and
international equity Portfolios. The domestic equity
component is approximately 64% of the Portfolio, the
fixed income component is approximately 18% of the
Portfolio, and the international equity component is
approximately 18% of the Portfolio.
22
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
SMALL CAP VALUE SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO (FORMERLY SP
Goldman Sachs Asset SMALL/MID CAP VALUE PORTFOLIO): seeks
long-term capital Management, L.P. growth. The Portfolio
normally invests at least 80% of investable assets in
small capitalization companies that are generally
believed to be undervalued in the marketplace. The 80%
requirement applies at the time the Portfolio invests its
assets. The Portfolio generally defines small
capitalization stocks as stocks of companies with a
capitalization of $4 billion or less.
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of
Hotchkis and Wiley capital. The Portfolio normally
invests at least 80% of Capital Management investable
assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are
believed Investment Management to be undervalued and have
an above-average potential to Inc. increase in price,
given the company's sales, earnings, book value, cash
flow and recent performance. The Portfolio seeks to
achieve its objective through investments primarily in
equity securities of large capitalization companies. The
Portfolio generally defines large capitalization
companies as those with a total market capitalization of
$5 billion or more (measured at the time of purchase).
LARGE CAP CORE SP MFS CAPITAL OPPORTUNITIES PORTFOLIO: seeks capital
Massachusetts appreciation. The Portfolio normally
invests at least 65% of Financial Services net assets in
common stocks and related securities, such as Company
(MFS) preferred stocks, convertible securities and
depositary receipts for those securities. The Portfolio
focuses on companies that the subadviser believes have
favorable growth prospects and attractive valuations
based on current and expected earnings or cash flow. The
Portfolio's investments may include securities listed on
a securities exchange or traded in the over-the-counter
markets. The subadviser uses a bottom-up, as opposed to a
top-down, investment style in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis (such as an analysis of earnings,
cash flows, competitive position and management's
abilities). The Portfolio may invest in foreign
securities (including emerging market securities),
through which it may have exposure to foreign currencies.
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of
Calamos Asset capital. The Portfolio normally invests at
least 80% of Management, Inc. investable assets in common
stocks and related securities, such as preferred stocks,
convertible securities and depositary receipts for those
securities. These securities typically are of medium
market capitalizations, which the subadviser believes
have above-average growth potential. Medium market
capitalization companies are defined by the Portfolio as
companies with market capitalizations equaling or
exceeding $250 million but not exceeding the top of the
Russell Midcap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or
traded in the over-the-counter markets. The subadviser
uses a bottom-up and top-down analysis in managing the
Portfolio. This means that securities are selected based
upon fundamental analysis, as well as a top-down approach
to diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging
markets securities).
23
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
HIGH YIELD BOND SP PIMCO HIGH YIELD PORTFOLIO: seeks maximum total
return, Pacific Investment consistent with preservation
of capital and prudent Management Company investment
management. The Portfolio normally invests at LLC (PIMCO)
least 80% of investable assets in a diversified portfolio
of high yield/high risk securities rated below investment
grade but rated at least B by Moody's Investor Service,
Inc. (Moody's) or Standard & Poor's Ratings Group (S&P),
or, if unrated, determined by the subadviser to be of
comparable quality. The remainder of the Portfolio's
assets may be invested in investment grade fixed income
instruments. The duration of the Portfolio normally
varies within a two to six year time frame based on the
subadviser's forecast for interest rates. The Portfolio
may invest without limit in U.S. dollar-denominated
securities of foreign issuers. The Portfolio may invest
up to 15% of its assets in euro-denominated securities.
BOND SP PIMCO TOTAL RETURN PORTFOLIO: seeks maximum total
return, Pacific Investment consistent with preservation
of capital and prudent Management Company investment
management. The Portfolio invests primarily in LLC
(PIMCO) investment grade debt securities. The Portfolio
normally invests at least 65% of its assets in a
diversified portfolio of fixed income instruments of
varying maturities. It may also invest up to 10% of its
assets in high yield/high risk securities (also known as
"junk bonds") rated B or higher by Moody's or S&P or, if
unrated, determined by the subadviser to be of comparable
quality. The portfolio duration of this Portfolio
normally varies within a three to six year time frame
based on the subadviser's forecast for interest rates.
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks
Jennison Associates long-term capital appreciation. The
Portfolio normally LLC invests at least 80% of investable
assets in equity securities of small and medium sized
U.S. companies that the subadviser believes have the
potential for above-average growth. The Portfolio
considers small and medium-sized companies to be those
with market capitalizations that are less than the
largest capitalization of the Standard and Poor's Mid Cap
400 Stock Index as of the end of a calendar quarter. As
of December 31, 2003, this number was $11.8 billion. The
Portfolio can invest up to 20% of investable assets in
equity securities of companies with larger or smaller
market capitalizations than previously noted. The
Portfolio can invest up to 35% of total assets in foreign
securities. The Portfolio also may use derivatives for
hedging or to improve the Portfolio's returns.
SMALL CAP GROWTH SP STATE STREET RESEARCH SMALL CAP GROWTH PORTFOLIO State
Street Research (FORMERLY SP INVESCO SMALL COMPANY GROWTH
PORTFOLIO): seeks and Management long-term capital
growth. The Portfolio normally invests at Company least
80% of investable assets in common stocks of small-
capitalization companies -- those which are included in
the Russell 2000 Growth Index at the time of purchase, or
if not included in that index, have market
capitalizations of $2.5 billion or below at the time of
purchase. Investments in small, developing companies
carry greater risk than investments in larger, more
established companies.
24
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks
Alliance Capital long-term growth of capital. The
Portfolio normally invests Management, L.P.; at least 65%
of total assets in equity-related securities of Jennison
Associates U.S. companies that the subadvisers believe to
have strong LLC capital appreciation potential. The
Portfolio's strategy is to combine the efforts of two
subadvisers and to invest in the favorite stock selection
ideas of three portfolio managers (two of whom invest as
a team). Each subadviser to the Portfolio utilizes a
growth style to select approximately 20 securities. The
portfolio managers build a portfolio with stocks in which
they have the highest confidence and may invest more than
5% of the Portfolio's assets in any one issuer. The
Portfolio is nondiversified, meaning it can invest a
relatively high percentage of its assets in a small
number of issuers. Investing in a nondiversified
portfolio, particularly a portfolio investing in
approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of a nondiversified portfolio.
SECTOR SP TECHNOLOGY PORTFOLIO (FORMERLY SP ALLIANCE TECHNOLOGY
The Dreyfus PORTFOLIO): seeks growth of capital. The
Portfolio normally Corporation invests at least 80% of
investable assets in securities of companies that use
technology extensively in the development of new or
improved products or processes. The Portfolio also may
invest up to 25% of its total assets in foreign
securities. The Portfolio's investments in stocks may
include common stocks, preferred stocks and convertible
securities, including those purchased in initial public
offerings (IPOs). Technology stocks, especially those of
smaller, less-seasoned companies, tend to be more
volatile than the overall stock market.
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (FORMERLY
SP William Blair & JENNISON INTERNATIONAL GROWTH
PORTFOLIO): seeks long-term Company, LLC growth of
capital. The Portfolio invests primarily in
equity-related securities of foreign issuers that the
subadviser thinks will increase in value over a period of
years. The Portfolio invests primarily in the common
stock of large and medium-sized foreign companies. Under
normal circumstances, the Portfolio invests at least 65%
of its total assets in common stock of foreign companies
operating or based in at least five different countries.
The Portfolio looks primarily for stocks of companies
whose earnings are growing at a faster rate than other
companies and that have above average growth in earnings
and cash flow, improving profitability, strong balance
sheets, management strength and strong market share for
its products. The Portfolio also tries to buy such stocks
at attractive prices in relation to their growth
prospects.
25
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
STYLE/ PORTFOLIO
TYPE ADVISER/
SUBADVISER INVESTMENT OBJECTIVES/POLICIES
- -------------------- ---------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: GROWTH PORTFOLIO -- SERVICE SHARES:
Janus Capital seeks long-term growth of capital in a
manner consistent Management LLC with the preservation of
capital. The Portfolio invests primarily in domestic and
foreign equity securities, which may include preferred
stocks, common stocks and securities convertible into
common or preferred stocks. To a lesser degree, the
Portfolio may invest in other types of domestic and
foreign securities and use other investment strategies.
The Portfolio invests primarily in common stocks selected
for their growth potential. Although the Portfolio can
invest in companies of any size, it generally invests in
larger, more established companies. Janus Capital
generally takes a "bottom up" approach to selecting
companies. This means that it seeks to identify
individual companies with earnings growth potential that
may not be recognized by the market at large. The
Portfolio will limit its investment in
high-yield/high-risk bonds to less than 35% of its net
assets.
26
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
.. a one-year fixed interest rate option, and
.. a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time they
will not be less than 3%.
Payments allocated to the fixed interest rate options become part of Pruco Life
of New Jersey's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this option
for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. Transfers to the
one-year fixed interest rate option will remain in the general account.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$5,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payments allocated to the DCA Fixed Rate Option transferred to
the selected variable investment options, or to the one-year fixed interest rate
option in either six or twelve monthly installments, and you may not change that
number of monthly installments after you have chosen the DCA Fixed Rate Option.
You may allocate to both the six-month and twelve-month options. (In the future,
we may make available other numbers of transfers and other transfer
schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the investment options into which the DCA Fixed Rate
Option assets are transferred. You may make a one time transfer of the remaining
value out of your DCA Fixed Rate Option, if you choose. Transfers from the DCA
Fixed Rate Option do not count toward the maximum number of free transfers
allowed under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all or
part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we will
recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
27
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
By investing amounts on a regular basis instead of investing the total amount at
one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against a loss in a declining
market.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. The minimum
transfer amount is the lesser of $250 or the amount in the investment option
from which the transfer is to be made.
In general, you may make your transfer request by telephone, electronically, or
otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received. Our business day usually closes at 4:00 p.m. Eastern time.
Transfer requests received after 4:00 p.m. Eastern time will take effect at the
end of the next business day.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE DCA
FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE ONE
YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE ON
A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make 12 transfers each contract
year, among the investment options, without charge. Currently we charge $10 for
each transfer after the twelfth in a contract year, and we have the right to
increase this charge to $30. (Dollar Cost Averaging and Auto- Rebalancing
transfers do not count toward the 12 free transfers per year.)
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count transfers that involve one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades
28
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
represented a relatively large proportion of the total assets of a particular
underlying mutual fund. In furtherance of our general authority to restrict
transfers as described above, and without limiting other actions we may take in
the future, we have adopted the following specific restrictions:
.. With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such
amount into a particular variable investment option, and within 30 calendar
days thereafter transfer (the "Transfer Out") all or a portion of that
amount into another variable investment option, then upon the Transfer Out,
the former variable investment option becomes restricted (the "Restricted
Option"). Specifically, we will not permit subsequent transfers into the
Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not (i) count transfers made in
connection with one of our systematic programs, such as asset allocation
and automated withdrawals and (ii) categorize as a transfer the first
transfer that you make after the contract date, if you make that transfer
within 30 calendar days after the contract date. Even if an amount becomes
restricted under the foregoing rules, you are still free to redeem the
amount from your contract at any time.
.. We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable
investment option on the business day subsequent to the business day on
which the exchange request was received. Before implementing such a
practice, we would issue a separate written notice to contract owners that
explains the practice in detail. In addition, if we do implement a delayed
exchange policy, we will apply the policy on a uniform basis to all
contracts in the relevant class.
.. If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
.. We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract
owners who own variable life insurance or variable annuity contracts
(regardless of jurisdiction) that do not impose the above-referenced
transfer restrictions, might make more numerous and frequent transfers than
contract owners who are subject to such limitations. Because contract
owners who are not subject to the same transfer restrictions may have the
same underlying mutual fund portfolios available to them, unfavorable
consequences associated with such frequent trading within the underlying
mutual fund (e.g., greater portfolio turnover, higher transaction costs, or
performance or tax issues) may affect all contract owners. Apart from
jurisdiction-specific and contract differences in transfer restrictions, we
will apply these rules uniformly, and will not waive a transfer restriction
for any contract owner.
Although our transfer restrictions are designed to prevent excessive transfers,
they are not capable of preventing every potential occurrence of excessive
transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment option or the one-year fixed interest rate option. You can transfer
money to more than one variable investment option. The investment option used
for the transfers is designated as the DCA account. You can have these automatic
transfers occur monthly, quarterly, semiannually or annually. By investing
amounts on a regular basis instead of investing the total amount at one time,
dollar cost
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
averaging may decrease the effect of market fluctuations on the investment of
your purchase payment. Of course, dollar cost averaging cannot ensure a profit
or protect against a loss in declining markets.
Each dollar cost averaging transfer must be at least $100. Transfers will be
made automatically on the schedule you choose until the entire amount you chose
to have transferred has been transferred or until you tell us to discontinue the
transfers. If the remaining amount to be transferred drops below $100, the
entire remaining balance will be transferred on the next transfer date. You can
allocate subsequent purchase payments to be transferred under this option at any
time.
Your transfers will occur on the last calendar day of each transfer period you
have selected, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on a particular transfer date, the
transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you have
designated. The DCA account cannot participate in this feature.
You may choose to have your rebalancing occur monthly, quarterly, semiannually
or annually. The rebalancing will occur on the last calendar day of the period
you have chosen, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on that date, the rebalancing will
take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the 12
free transfers you are allowed per year. This feature is available only during
the contract accumulation phase, and is offered without charge. If you choose
auto-rebalancing and dollar cost averaging, auto-rebalancing will take place
after the transfers from your DCA account.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
30
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners. We
may change the way your voting instructions are calculated if it is required or
permitted by federal or state regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance department approvals. You
will be given specific notice in advance of any substitution we intend to make.
31
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the first contract
anniversary. Annuity payments must begin no later than the later of the contract
anniversary coinciding with or next following the annuitant's 90th birthday or
the tenth contract anniversary.
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate used will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate used will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option we
will automatically select for you.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, as discussed on page 45, you
should consider the minimum distribution requirements mentioned on page 47, when
selecting your annuity option.
If a contract is held in connection with "qualified" retirement plans (such as a
Section 401(k) plan), please note that if you are married at the time your
payments commence, you may be required by federal law to choose an income option
that provides at least a 50 percent joint and survivor annuity to your spouse,
unless your spouse waives that right. Similarly, if you are married at the time
of your death, federal law may require all or a portion of the death benefit to
be paid to your spouse, even if you designated someone else as your beneficiary.
For more information, consult the terms of your retirement arrangement.
32
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
4:
WHAT IS THE
DEATH BENEFIT?
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. A change of beneficiary will take effect on the date
you sign the change request form provided we receive the form in good order.
Unless an irrevocable beneficiary has been named during the accumulation period,
you can change the beneficiary at any time before the owner dies.
CALCULATION OF THE DEATH BENEFIT
If the sole owner dies during the accumulation phase, we will, upon receiving
appropriate proof of death and any other needed documentation in good order
(proof of death), pay a death benefit to the beneficiary designated by the
owner. If there is a sole owner and there is only one beneficiary who is the
owner's spouse, then the surviving spouse may continue the contract under the
Spousal Continuance Benefit.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order).
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, if you
have chosen the Guaranteed Minimum Death Benefit (GMDB), the GMDB protected
value.
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the owner during the accumulation
phase.
The GMDB protected value option equals the "GMDB Step-Up." The GMDB protected
value is calculated daily.
GMDB STEP-UP
You may elect the GMDB step-up if you are 79 or younger. The GMDB step-up value
equals the highest value of the contract on any contract anniversary date --
that is, on each contract anniversary, the new GMDB step-up value becomes the
higher of the previous GMDB step-up value and the current contract value. Prior
to the first contract anniversary, the GMDB step-up value is equal to the
initial invested purchase payments increased by subsequent purchase payments and
reduced proportionally by the effect of withdrawals. Between anniversary dates,
the GMDB step-up value is only increased by additional invested purchase
payments and reduced proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value on
the later of:
.. the contract anniversary coinciding with or next following the sole or
older owner's 80th birthday, or
.. the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000. The
owner makes a withdrawal that reduces the contract value by 25% (including the
effect of any withdrawal charges). The new protected value is $60,000, or 75% of
what it was before the withdrawal.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
CHOICE 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option
33
4:
WHAT IS THE DEATH BENEFIT? CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
within sixty days, the beneficiary will receive this payout option.
CHOICE 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the owner.
The entire death benefit will include any increases or losses resulting from the
performance of the variable or fixed interest rate options during this period.
During this period the beneficiary may: reallocate the contract value among the
variable or fixed interest rate options; name a beneficiary to receive any
remaining death benefit in the event of the beneficiary's death; and make
withdrawals from the contract value, in which case, any such withdrawals will
not be subject to any withdrawal charges. However, the beneficiary may not make
any purchase payments to the contract.
During this 5 year period, we will continue to deduct from the death benefit
proceeds the charges and costs that were associated with the features and
benefits of the contract.
CHOICE 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning within
one year of the date of death of the owner.
The tax consequences to the beneficiary may vary among the three death benefit
payout options. See "What Are The Tax Considerations Associated With The
Strategic Partners FlexElite Contract?" on page 42.
SPOUSAL CONTINUANCE BENEFIT
This is a benefit that, depending on the contract options chosen, can give the
owner's surviving spouse a higher contract value upon the owner's death. Any
person who buys a contract and meets our eligibility criteria for this benefit
receives the benefit without charge. The benefit must be selected within 60 days
of our receipt of proof of the owner's death.
We offer the Spousal Continuance Benefit only if each of the following
conditions is present on the date we receive due proof of the owner's death: 1)
the owner is the sole annuitant, 2) there is only one beneficiary, 3) the
beneficiary is the owner's spouse, 4) the surviving spouse is not older than 95
on that date, and 5) the surviving spouse becomes the new owner and annuitant.
Under the Spousal Continuance Benefit, we impose no withdrawal charge at the
time of the owner's death, and we will not impose any withdrawal charges on the
surviving spouse with respect to the withdrawal of purchase payments made by the
owner prior to the activation of the benefit. In addition, we will waive
withdrawal charges on any purchase payments made by the surviving spouse as new
owner.
If you have not selected the Guaranteed Minimum Death Benefit feature (i.e., you
have the base death benefit), then upon the activation of the Spousal
Continuance Benefit, we will adjust the contract value, as of the date of our
receipt of proof of death, to equal the greater of the following: 1) the
contract value as of the date of our receipt of proof of death or 2) the sum of
all invested purchase payments (reduced proportionally by withdrawals) made
prior to the date on which we receive proof of the owner's death.
If you selected the Guaranteed Minimum Death Benefit feature, then upon
activation of the Spousal Continuance Benefit, we will adjust the contract
value, as of the date of our receipt of proof of death, to equal the greater of
the following: 1) the contract value as of the date of our receipt of proof of
death, or 2) the "step-up" value of the Guaranteed Minimum Death Benefit.
If the Guaranteed Minimum Death Benefit feature is selected, when the Spousal
Continuance Benefit is activated by a surviving spouse younger than 80, we will
adjust the step-up value to equal the contract value as described above to
reflect the Spousal Continuance Benefit. If the surviving spouse was younger
than 80 at the owner's death, then we will continue to adjust the step-up value
annually until the surviving spouse's attainment of age 80. We make no such
adjustment if the surviving spouse is 80 or older. After the surviving spouse
attains age 80, we will continue to adjust the step-up value only to account for
additional purchase
34
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
payments and to reduce the step-up value proportionally by withdrawals.
In addition to adjusting the contract value and protected value (as applicable)
when the Spousal Continuance Benefit is activated, we also adjust the surviving
spouse's death benefit value at that time. Specifically, and as detailed in your
contract, we set the surviving spouse's death benefit value to equal the
contract value (as adjusted in the way described above in connection with the
activation of the Spousal Continuance Benefit).
In the preceding discussion of the Spousal Continuance Benefit, we intend
references to attainment of age 80 to refer to the contract anniversary on or
following the actual 80th birthday of the surviving spouse.
35
5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
FLEXELITE CONTRACT?
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. The minimum initial purchase payment is $10,000 and may not exceed
$1,000,000 absent our prior approval. With some restrictions, you can make
additional purchase payments by means other than electronic fund transfer of no
less than $500 at any time during the accumulation phase. However, we impose a
minimum of $100 with respect to additional purchase payments made through
electronic fund transfers.
You may purchase this contract only if the oldest of the owner, annuitant, or
co-annuitant is age 85 or younger on the contract date. Certain age limits apply
to certain features and benefits described herein. No subsequent purchase
payments may be made on or after the earliest of the 86th birthday of:
.. the owner;
.. the annuitant; or
.. the co-annuitant.
Currently, the maximum aggregate purchase payment you may make is $7 million. We
limit the maximum total purchase payments per contract in any contract year,
other than the first, to $2 million absent our prior approval.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable or fixed interest rate options based on the percentages you choose. The
percentage of your allocation to a particular investment option can range in
whole percentages from 0% to 100%.
When you make an additional purchase payment, it will be allocated in the same
way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $5,000.
You may change your allocation of future investment purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive the payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent payment as of the business day we receive it in
good order at the Prudential Annuity Service Center. Our business day generally
closes at 4:00 p.m. Eastern time. Subsequent purchase payments received in good
order after 4:00 p.m., Eastern time will be credited on the following business
day.
CREDIT ELECTION
We will notify you of your option to make a credit election thirty days before
your 3rd and 6th contract anniversaries. If you make a credit election, we will
add to your contract value a credit amount of 1% of the contract value as of the
applicable contract anniversary. The credit will be allocated to the variable
investment or fixed interest rate options in the same proportion as the contract
value on the contract anniversary. We must receive your credit election in good
order by your contract anniversary in order to add the credit to your contract
value. This option is not available if the annuitant or co-annuitant is 81 or
older on the contract date, and if the contract is continued under the Spousal
Continuance Benefit, or you previously elected not to take the credit.
After you make a credit election, amounts you withdraw will be subject to a
credit election withdrawal charge of 7% for the first three contract years since
your credit election:
The credit election withdrawal charges are determined and applied in the same
manner as the withdrawal charges described on page 38. Credits and related
earnings are treated as earnings under the contract.
We recoup the cost of the credit by assessing withdrawal charges for a longer
period of time. If you
36
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
make a withdrawal during the credit election withdrawal charge period you may be
in a worse position than if you had declined the credit.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit your
contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment
allocated to a variable investment option by the unit price of the accumulation
unit for that variable investment option. We calculate the unit price for each
investment option after the New York Stock Exchange closes each day and then
credit your contract. The value of the accumulation units can increase,
decrease, or remain the same from day to day.
We cannot guarantee that your contract value will increase or that it will not
fall below the amount of your total purchase payments.
We reserve the right to terminate the contract, and pay the contract value to
you, in either of the following scenarios: (i) if immediately prior to the
annuity date, the contract value is less than $2000, or if the contract would
provide annuity payments of less than $20 per month and (ii) if during the
accumulation period, no purchase payment has been received during the
immediately preceding two contract years and each of the following is less than
$2000: (a) the total purchase payments (less withdrawals) made prior to such
period, and (b) the current contract value.
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PART II
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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS FLEXELITE CONTRACT?
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGE
Each day we make a deduction for the insurance and administrative charge. This
charge covers our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, the insurance and administrative charge also includes a charge to cover
our assumption of the associated risk. The mortality risk portion of the charge
is for assuming the risk that the annuitant(s) will live longer than expected
based on our life expectancy tables. When this happens, we pay a greater number
of annuity payments. We also incur the risk that the death benefit amount
exceeds the contract value. The expense risk portion of the charge is for
assuming the risk that the current charges will be insufficient in the future to
cover the cost of administering the contract. The administrative expense portion
of the charge compensates us for the expenses associated with the administration
of the contract. This includes preparing and issuing the contract; establishing
and maintaining contract records; preparation of confirmations and annual
reports; personnel costs; legal and accounting fees; filing fees; and systems
costs. The Guaranteed Minimum Death Benefit risk portion of the charge, if
applicable, covers our assumption of the risk that the protected value of the
contract will be larger than the base death benefit if the contract owner dies
during the accumulation phase.
We calculate the insurance and administrative charge based on the average daily
value of all assets allocated to the variable investment options. These charges
are not assessed against amounts allocated to the fixed interest rate options.
The amount of the charge depends on the death benefit option that you choose.
The charge is equal to:
.. 1.6% on an annual basis if you choose the base death benefit, and
.. 1.8% on an annual basis if you choose the step-up Guaranteed Minimum Death
Benefit option.
If the charges under the contract are not sufficient to cover our expenses, then
we will bear the loss. We do, however, expect to profit from this charge. The
insurance risk charge for your contract cannot be increased. Any profits made
from this charge may be used by us to pay for the costs of distributing the
contracts.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The withdrawal charge may
also apply if you begin the income phase during these periods, depending upon
the annuity option you choose.
The withdrawal charge is a percentage, shown below, of the amount withdrawn.
Full contract years are measured from the contract date with respect to the
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
initial withdrawal charge and from the date you make a credit election with
respect to the credit election withdrawal charge.
FULL CONTRACT YEARS WITHDRAWAL CHARGE
- ------------------- -----------------
0 7%
1 7%
2 7%
3 0%
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract value
without incurring a withdrawal charge. We determine the "charge-free amount"
available to you in a given contract year on the contract anniversary that
begins that year. The charge-free amount in a given contract year is equal to
10% of the sum of all purchase payments that you have made as of the applicable
contract anniversary. During the first contract year, the charge-free amount is
equal to 10% of the initial purchase payment.
When you make a withdrawal, we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an IRS mandatory distribution
requirement only with respect to that contract's account balance, we will waive
withdrawal charges. See "What Are The Tax Considerations Associated With The
Strategic Partners FlexElite Contract?" on page 42.
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your contract
value is less than $100,000, we will deduct the lesser of $30 or 2% of your
contract value, for administrative expenses. We may raise the level of the
contract value at which we waive this fee. The charge will be deducted
proportionately from each of the contract's investment options. This same charge
will also be deducted when you surrender your contract if your contract value is
less than $100,000.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal and premium based taxes applicable to your purchase
payment. We are responsible for the payment of these taxes and may make a
deduction from the value of the contract to pay some or all of these taxes. New
York does not currently charge premium taxes on annuities. It is our current
practice not to deduct a charge for the federal tax associated with deferred
acquisition costs paid by us that are based on premium received. However, we
reserve the right to charge the contract owner in the future for any such tax
associated with deferred acquisition costs and any federal, state or local
income, excise, business or any other type of tax measured by the amount of
premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $10 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made.
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WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE CONTRACT?
CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We do not
currently charge you for these taxes. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2003, the fees of these funds ranged on an annual
basis from 0.37% to 1.30% of fund assets (these fees reflect the effect of
expense reimbursements or waivers, which may terminate at any time). For
additional information about these fund fees, please consult the prospectuses
for the funds.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
7:
HOW CAN I
ACCESS MY MONEY?
YOU CAN ACCESS YOUR MONEY BY:
.. MAKING A WITHDRAWAL (EITHER PARTIAL OR COMPLETE); OR
.. CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus the applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options. The minimum automated withdrawal amount you can
make is generally $100.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8
OF THIS PROSPECTUS.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
.. The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
.. Trading on the New York Stock Exchange is restricted;
.. An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
.. The SEC, by order, permits suspension or postponement of payments for the
protection of owners. We expect to pay the amount of any withdrawal or
process any transfer made from the fixed interest rate options promptly
upon request.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS FLEXELITE CONTRACT?
The tax considerations associated with the Strategic Partners FlexElite contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan (including contracts held by a
non-natural person, such as a trust, acting as an agent for a natural person),
or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a contract
not held under a tax-favored retirement plan) by a trust or custodial IRA or
403(b) account, which can hold other permissible assets other than the annuity.
The terms and administration of the trust or custodial account in accordance
with the laws and regulations for IRAs or 403(b)s, as applicable, are the
responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to you
during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some or
all of the charges for the optional benefits under the contract such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for this benefit could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a loan,
the part assigned generally will be treated as a withdrawal. Also, if you elect
any interest payment option that we may offer, that election will be treated,
for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by gift,
you will trigger tax on any gain in the contract. This rule does not apply if
you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10 % tax
penalty. Amounts are not subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled;
.. the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.); or
.. the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information)
Partial surrenders may be treated in the same way as tax-free 1035 exchanges of
entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit as determined under federal law, is also included in the owner's estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
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TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE CONTRACT
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below. Tax consequences to the beneficiary vary
among the death benefit payment options.
.. Choice 1: The beneficiary is taxed on earnings in the contract.
.. Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
.. Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the rules
of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of federal
and state income tax on the taxable portion of annuity distributions. You should
consult with your tax advisor regarding the payment of the correct amount of
these income taxes and potential liability if you fail to pay such taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further information
on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain distributions
must be made under the contract. The required distributions depend on whether
you die before you start taking annuity payments under the contract or after you
start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the interest
in the contract must be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must be
distributed within 5 years after
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
the date of death. However, if a periodic payment option is selected by your
designated beneficiary and if such payments begin within 1 year of your death,
the value of the contract may be distributed over the beneficiary's life or a
period not exceeding the beneficiary's life expectancy. Your designated
beneficiary is the person to whom benefit rights under the contract pass by
reason of death, and must be a natural person in order to elect a periodic
payment option based on life expectancy or a period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes in the Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
.. The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
.. Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
.. You transfer your contract to, or designate, a beneficiary who is either 37
1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with individual
retirement accounts and annuities (IRAs) which are subject to Sections 408(a),
408(b) and 408A of the Code. This description assumes that you have satisfied
the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS OF WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" on page 52 contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount your contract
is worth, if greater) less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed, you
may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA. You must
make a minimum initial payment of $10,000 to purchase a contract. This minimum
is greater than the maximum amount of any annual contribution allowed by law
that you may make to an IRA. For 2004 the limit is $3,000; increasing in 2005 to
2007 to $4,000; and for 2008 to $5,000. After 2008 the contribution amount will
be indexed for inflation. The tax law also provides for a catch-up provision for
individuals who are age 50 and above. These taxpayers will be permitted to
contribute an additional $500 in years 2004 to 2005 and an additional $1,000 in
2006 and years thereafter. The "rollover" rules under the Code are fairly
technical; however, an individual (or his or her surviving spouse) may generally
"roll over" certain distributions from tax favored retirement plans (either
directly or within 60 days from the date of these distributions) if he or she
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PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
meets the requirements for distribution. Once you buy the contract, you can make
regular IRA contributions under the contract (to the extent permitted by law).
However, if you make such regular IRA contributions, you should note that you
will not be able to treat the contract as a "conduit IRA," which means that you
will not retain possible favorable tax treatment if you subsequently "roll over"
the contract funds originally derived from a qualified retirement plan into
another Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part of
the contract) must contain certain provisions:
.. You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
.. Your rights as owner are non-forfeitable;
.. You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
.. The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
.. The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and -
Death and annuity payments must meet "minimum distribution requirements"
(described on page 47).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
.. A 10% "early distribution penalty" (described on page 47);
.. Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
.. Failure to take a minimum distribution (also generally described on page
47).
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
.. Contributions to a Roth IRA cannot be deducted from your gross income;
.. "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings, and taxed generally in the same manner as
distributions from a traditional IRA; and
.. If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase a contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of another traditional IRA, conduit IRA, or Roth IRA.
This minimum is greater than the maximum amount of any annual contribution
allowed by law you may make to a Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a
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PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
"rollover" of all or any part of the amount of such distribution to a Roth IRA
which they establish. This conversion triggers current taxation (but is not
subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from your
IRA each year, certain payment alternatives are still available to you. If you
own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled; or
.. the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax advisor for
further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
.. For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with three
exemptions; and
.. For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with
47
8:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE CONTRACT
CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
the plan, as a result of the sale of the contract. Administrative exemptions
under ERISA generally permit the sale of insurance/annuity products to plans,
provided that certain information is disclosed to the person purchasing the
contract. This information has to do primarily with the fees, charges, discounts
and other costs related to the contract, as well as any commissions paid to any
agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are The Expenses Associated With The
Strategic Partners FlexElite Contract" starting on page 38.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" on page 49.
In addition, other relevant information required by the exemptions is contained
in the contract and accompanying documentation. Please consult your tax advisor
if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement" on page 52.
48
9:
OTHER
INFORMATION
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a stock
life insurance company organized in 1982 under the laws of the State of New
Jersey. It is licensed to sell life insurance and annuities in New Jersey and
New York, and accordingly is subject to the laws of each of those states.
Pruco Life of New Jersey is an indirect wholly-owned subsidiary of The
Prudential Insurance Company of America (Prudential), a New Jersey stock life
insurance company doing business since 1875. Prudential is an indirect
wholly-owned subsidiary of Prudential Financial, Inc. (Prudential Financial), a
New Jersey insurance holding company. As Pruco Life of New Jersey's ultimate
parent, Prudential Financial exercises significant influence over the operations
and capital structure of Pruco Life of New Jersey and Prudential. However,
neither Prudential Financial, Prudential, nor any other related company has any
legal responsibility to pay amounts that Pruco Life of New Jersey may owe under
the contract.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (separate account), to hold the assets that are
associated with the variable annuity contracts. The separate account was
established under New Jersey law on May 20, 1996, and is registered with the SEC
under the Investment Company Act of 1940 as a unit investment trust, which is a
type of investment company. The assets of the separate account are held in the
name of Pruco Life of New Jersey and legally belong to us. These assets are kept
separate from all of our other assets and may not be charged with liabilities
arising out of any other business we may conduct. More detailed information
about Pruco Life of New Jersey, including its audited financial statements, is
provided in the SAI.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), 100 Mulberry Street,
Newark, New Jersey 07102-4077, acts as the distributor of the contracts. PIMS is
an indirect wholly-owned subsidiary of Prudential Financial, Inc. and is a
limited liability corporation organized under Delaware law in 1996. It is a
registered broker-dealer under the Securities Exchange Act of 1934 (Exchange
Act) and a member of the National Association of Securities Dealers, Inc.
(NASD).
Commissions are paid to broker-dealers that are registered under the Exchange
Act and/or entities that are exempt from such registration (firms) according to
one or more schedules. The individual representative will receive a portion of
the compensation, depending on the practice of the firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
8%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation for providing ongoing service
to you in relation to the contract. Commissions and other compensation paid in
relation to the contract do not result in any additional charge to you or to the
separate account.
In addition, in an effort to promote the sale of our products (which may include
the placement of Pruco Life of New Jersey and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms or branches of such firms with respect to certain or
all registered representatives of such firms under which such firms may receive
separate compensation or reimbursement for, among other things, training of
sales personnel and/or marketing and/or administrative and/or other services
they provide to us or our affiliates. To the extent permitted by NASD rules and
other applicable laws and regulations, PIMS may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms, and the terms of such arrangements
may differ between firms. You should note that firms and individual registered
representatives and branch
49
9:
OTHER INFORMATION CONTINUED
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different annuity that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to an annuity product, any such
compensation will be paid by us or PIMS, and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the purchase payments made. Your
registered representative can provide you with more information about the
compensation arrangements that apply upon the sale of the contract."
LITIGATION
We are subject to legal and regulatory actions in the ordinary course of our
business, including class actions. Pending legal and regulatory actions include
proceedings relating to aspects of the businesses and operations that are
specific to Pruco Life of New Jersey and that are typical of the businesses in
which Pruco Life of New Jersey operates. Class action and individual lawsuits
involve a variety of issues and/or allegations, which include sales practices,
underwriting practices, claims payment and procedures, premium charges, policy
servicing and breach of fiduciary duties to customers. We are also subject to
litigation arising out of our general business activities, such as our
investments and third party contracts. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or
exemplary damages.
Pruco Life of New Jersey's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted. It is possible
that the results of operations or the cash flow of Pruco Life of New Jersey in a
particular quarterly or annual period could be materially affected by an
ultimate unfavorable resolution of pending litigation and regulatory matters.
Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life of New Jersey's financial position.
In January 2004, NASD fined Prudential Equity Group, Inc. (formerly known as
Prudential Securities Incorporated) and PIMS $2 million, and ordered the firms
to pay customers $9.5 million for sales of fixed and variable annuities that
violated a New York State Insurance Department regulation concerning replacement
sales and NASD rules. We brought this matter to the New York Insurance
Department and the NASD's attention in response to an internal investigation,
and in consultation with both New York and the NASD, we have initiated a
remediation program for all affected customers which has already provided $8
million in remediation.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice. We will not be liable
for any payment or other action we take in accordance with the contract if that
action occurs before we receive notice of the assignment. An assignment, like
any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life of New Jersey,
the co-issuer of the Strategic Partners FlexElite contract, are included in the
Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
.. Company
.. Experts
.. Principal Underwriter
.. Allocation of Initial Purchase Payment
.. Determination of Accumulation Unit Values
.. Federal Tax Status
.. Directors and Officers
.. Financial Statements
50
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
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IRA DISCLOSURE STATEMENT
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
or to one you purchase for your spouse. You can obtain more information
regarding your IRA either from your sales representative or from any district
office of the Internal Revenue Service. Those are federal tax law rules; state
tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a refund (less any applicable federal and state income
tax withholding) within 10 days after it is delivered, or applicable state
required period, if longer. The amount of the refund is dictated by state law.
This is a more liberal provision than is required in connection with IRAs. To
exercise this "free-look" provision, return the contract to the representative
who sold it to you or to the Prudential Annuity Service Center at the address
shown on the first page of this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA contributions must be made by no later
than the due date for filing your income tax return for that year. For a single
taxpayer, the applicable dollar limitation is $45,000 in 2004, with the amount
of IRA contribution which may be deducted reduced proportionately for Adjusted
Gross Income between $45,000--$55,000. For married couples filing jointly, the
applicable dollar limitation is $65,000, with the amount of IRA contribution
which may be deducted reduced proportionately between $65,000--$75,000. There is
no deduction allowed for IRA contributions when Adjusted Gross Income reaches
$55,000 for individuals and $75,000 for married couples filing jointly. Income
limits are scheduled to increase until 2006 for single taxpayers and 2007 for
married taxpayers.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) the maximum amount allowed
by law, including catch-up contributions if applicable or (2) 100% of taxable
alimony.
If you should contribute more than the maximum contribution amount to your IRA,
the excess amount will be considered an "excess contribution." You are permitted
to withdraw an excess contribution from your IRA before your tax filing date
without adverse tax consequences. If, however, you fail to withdraw any such
excess contribution before your tax filing date, a 6% excise tax will be imposed
on the excess for the tax year of contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See "Premature Distributions" on page 53).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to the maximum amount allowed by
law, including catch-up contributions if applicable, may be made to your IRA and
the spousal IRA if the combined compensation of you and your spouse is at least
equal to the amount contributed. If requirements for deductibility (including
52
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
income levels) are met, you will be able to deduct an amount equal to the least
of (i) the amount contributed to the IRAs; (ii) twice the maximum amount allowed
by law, including catch-up contributions if applicable; or (iii) 100% of your
combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See "Contributions And Deductions" on page 52. If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA and reinvest it in another IRA. Withdrawals may also be made from other IRAs
and contributed to this contract. This transfer of funds from one IRA to another
is called a "rollover" IRA. To qualify as a rollover contribution, the entire
portion of the withdrawal must be reinvested in another IRA within 60 days after
the date it is received. You will not be allowed a tax-deduction for the amount
of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. You may later roll over such a
contribution to another qualified retirement plan. (You may roll less than all
of a qualified distribution into an IRA, but any part of it not rolled over will
be currently includable in your income without any capital gains treatment.)
Funds can also be rolled over from an IRA or Simplified Employee Pension IRA to
an IRA or to another qualified retirement plan or 457 government plan.
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA be forfeited. To insure that your
contributions will be used for retirement, the federal tax law does not permit
you to use your IRA as security for a loan. Furthermore, as a general rule, you
may not sell or assign your interest in your IRA to anyone. Use of an IRA as
security or assignment of it to another will invalidate the entire annuity. It
then will be includable in your income in the year it is invalidated and will be
subject to a 10% tax penalty if you are not at least age 59 1/2 or totally
disabled. (You may, however, assign your IRA without penalty to your former
spouse in accordance with the terms of a divorce decree.)
You may surrender any portion of the value of your IRA. In the case of a partial
surrender which does not qualify as a rollover, the amount withdrawn will be
includable in your income and subject to the 10% penalty if you are not at least
age 59 1/2 or totally disabled unless you comply with special rules requiring
distributions to be made at least annually over your life expectancy.
The 10% tax penalty does not apply to the withdrawal of an excess contribution
as long as the excess is withdrawn before the due date of your tax return.
Withdrawals of excess contributions after the due date of your tax return will
generally be subject to the 10% penalty unless the excess contribution results
from erroneous information from a plan trustee making an excess rollover
contribution or unless you are over age 59 1/2 or are disabled.
(b) DISTRIBUTION AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA regardless of when you actually
retire. In addition, you must commence distributions from your IRA by April 1
following the year you attain age 70 1/2. If you own more than one IRA, you can
choose to satisfy your minimum distribution requirement for each of your IRAs by
withdrawing that amount from any of your IRAs. You may elect to receive the
distribution under
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
any one of the periodic payment options available under the contract. The
distributions from your IRA under any one of the periodic payment options or in
one sum will be treated as ordinary income as you receive them to the degree
that you have made deductible contributions. If you have made both deductible
and nondeductible contributions, the portion of the distribution attributable to
the nondeductible contribution will be tax-free.
(c) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA is intended to provide retirement benefits over your lifetime. Thus,
federal tax law requires that you either (1) receive a lump-sum distribution of
your IRA by April 1 of the year following the year in which you attain age 70
1/2 or (2) start to receive periodic payments by that date. If you elect to
receive periodic payments, those payments must be sufficient to pay out the
entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse/beneficiary). The calculation method is
defined under IRS regulations. If the payments are not sufficient to meet these
requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
(d) DEATH BENEFITS
If you (or your surviving spouse) die before receiving the entire value of your
IRA, the remaining interest must be distributed to your beneficiary (or your
surviving spouse's beneficiary) in one lump-sum by December 31st of the fifth
year after your (or your surviving spouse's) death, or applied to purchase an
immediate annuity for the beneficiary, or as a program of minimum distributions.
This annuity, or minimum distribution program must be payable over the life
expectancy of the beneficiary beginning by December 31st of the year following
the year after your or your spouse's death. If your spouse is the designated
beneficiary, he or she is treated as the owner of the IRA. If minimum required
distributions have begun, and no designated beneficiary is identified by
December 31st of the year following the year of death, the entire amount must be
distributed based on the life expectancy of the owner using the owner's age
prior to death. A distribution of the balance of your IRA upon your death will
not be considered a gift for federal tax purposes, but will be included in your
gross estate for purposes of federal estate taxes.
ROTH IRAS
Section 408A of the Code permits eligible individuals to contribute to a type of
IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by taxpayers
with adjusted gross incomes of less than $160,000 for married individuals filing
jointly and less than $110,000 for single individuals. Married individuals
filing separately are not eligible to contribute to a Roth IRA. The maximum
amount of contributions allowable for any taxable year to all IRAs maintained by
an individual is generally the lesser of the maximum amount allowed by law and
100% of compensation for that year (the maximum amount allowed by law is phased
out for incomes between $150,000 and $160,000 for married and between $95,000
and $110,000 for singles). The contribution limit is reduced by the amount of
any contributions made to a traditional IRA. Contributions to a Roth IRA are not
deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a traditional IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. Provided a rollover contribution meets the requirements
of IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth
IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A TRADITIONAL IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
within the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first year
for which a contribution was made to any Roth IRA established for the owner or
five years after a rollover, transfer, or conversion was made from a traditional
IRA to a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and taxed generally in the same manner as distributions from a
traditional IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if the
owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed under the same rules
applied to traditional IRAs where death occurs before the required beginning
date.
The contract may not be available to Roth IRA's in New York.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for underpayments),
you must file Form 5329 with the Internal Revenue Service. The form is to be
attached to your federal income tax return for the tax year in which the penalty
applies. Normal contributions and distributions must be shown on your income tax
return for the year to which they relate. If you were at least 70 1/2 at the end
of the prior year, we will indicate to you and to the IRS, on Form 5498, that
your account is subject to minimum required distributions.
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PART II
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APPENDIX
ACCUMULATION UNIT VALUES
As we have indicated throughout this prospectus, the Strategic Partners
FlexElite Variable Annuity is a contract that allows you to select or decline
any of several features that carries with it a specific asset-based charge. We
maintain a unique unit value corresponding to each combination of such contract
features. Here we depict the historical unit values corresponding to the
contract features bearing the highest and lowest combinations of asset-based
charges.
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PART II
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ACCUMULATION UNIT VALUES
ACCUMULATION UNIT VALUES: (BASE DEATH BENEFIT 1.60)
NUMBER OF ACCUMULATION UNITS ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE
OUTSTANDING AT END OF PERIOD AT BEGINNING OF PERIOD AT END OF PERIOD
- -----------------------------------------------------------------------------------------------------------------
JENNISON PORTFOLIO
5/1/2003* to 12/31/2003 $0.79441 $0.96574 37,184
PRUDENTIAL EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.83354 $1.04229 0
PRUDENTIAL GLOBAL PORTFOLIO
5/1/2003* to 12/31/2003 $0.83814 $1.03683 0
PRUDENTIAL MONEY MARKET PORTFOLIO
5/1/2003* to 12/31/2003 $0.99696 $0.99175 0
PRUDENTIAL STOCK INDEX PORTFOLIO
5/1/2003* to 12/31/2003 $0.85149 $1.03180 5,731
PRUDENTIAL VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.80092 $1.00386 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION
PORTFOLIO
5/1/2003* to 12/31/2003 $0.82096 $1.03928 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.78859 $0.97382 0
SP AIM CORE EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.86578 $1.04209 0
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.83146 $0.95090 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.93112 $1.07623 0
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.98759 $1.07673 0
SP DAVIS VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.87359 $1.08886 0
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.80530 $1.02601 11,782
SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.78582 $1.02081 19,245
SP GROWTH ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.87777 $1.06394 0
SP LARGE CAP VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.85159 $1.04013 36,897
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
5/1/2003* to 12/31/2003 $0.79653 $0.95573 0
SP MID CAP GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.72074 $0.93944 0
SP PIMCO HIGH YIELD PORTFOLIO
5/1/2003* to 12/31/2003 $1.08197 $1.17106 8,629
* DATE THE ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
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ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60)
NUMBER OF ACCUMULATION UNITS ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE
OUTSTANDING AT END OF PERIOD AT BEGINNING OF PERIOD AT END OF PERIOD
- -----------------------------------------------------------------------------------------------------------------
SP PIMCO TOTAL RETURN PORTFOLIO
5/1/2003* to 12/31/2003 $1.08691 $1.10183 0
SP PRUDENTIAL US EMERGING GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.82497 $1.05808 0
SP STATE STREET RESEARCH SMALL CAP
GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.77894 $1.01108 19,561
SP STRATEGIC PARTNERS FOCUSED GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.85160 $1.00077 0
SP TECHNOLOGY PORTFOLIO
5/1/2003* to 12/31/2003 $0.72958 $0.95387 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.79748 $1.05634 11,452
JANUS ASPEN SERIES--GROWTH PORTFOLIO
SERVICE SHARES
5/1/2003* to 12/31/2003 $0.83110 $1.00180 0
* DATE THE ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
58
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
ACCUMULATION UNIT VALUES:
(GMDB STEP-UP 1.80)
NUMBER OF ACCUMULATION UNITS ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE
OUTSTANDING AT END OF PERIOD AT BEGINNING OF PERIOD AT END OF PERIOD
- -----------------------------------------------------------------------------------------------------------------
JENNISON PORTFOLIO
5/1/2003* to 12/31/2003 $0.79287 $0.96253 0
PRUDENTIAL EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.83184 $1.03884 0
PRUDENTIAL GLOBAL PORTFOLIO
5/1/2003* to 12/31/2003 $0.83646 $1.03335 0
PRUDENTIAL MONEY MARKET PORTFOLIO
5/1/2003* to 12/31/2003 $0.99486 $0.98810 198,562
PRUDENTIAL STOCK INDEX PORTFOLIO
5/1/2003* to 12/31/2003 $0.84979 $1.02836 0
PRUDENTIAL VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.79930 $1.00061 34,146
SP AGGRESSIVE GROWTH ASSET ALLOCATION
PORTFOLIO
5/1/2003* to 12/31/2003 $0.81935 $1.03590 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.78701 $0.97072 0
SP AIM CORE EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.86421 $1.03882 0
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.82978 $0.94778 34,303
SP BALANCED ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.92946 $1.07278 0
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.98560 $1.07333 0
SP DAVIS VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.87183 $1.08521 18,475
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO
5/1/2003* to 12/31/2003 $0.80358 $1.02253 0
SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.78425 $1.01747 19,573
SP GROWTH ASSET ALLOCATION PORTFOLIO
5/1/2003* to 12/31/2003 $0.87616 $1.06062 0
SP LARGE CAP VALUE PORTFOLIO
5/1/2003* to 12/31/2003 $0.84989 $1.03667 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
5/1/2003* to 12/31/2003 $0.79494 $0.95259 0
SP MID CAP GROWTH PORTFOLIO
5/1/2003* to 12/31/2003 $0.71939 $0.93641 0
SP PIMCO HIGH YIELD PORTFOLIO
5/1/2003* to 12/31/2003 $1.07966 $1.16713 8,242
* DATE THE ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
59
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-9
ACCUMULATION UNIT VALUES (CONTINUED):
(GMDB STEP-UP 1.80)
NUMBER OF ACCUMULATION UNITS ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE
OUTSTANDING AT END OF PERIOD AT BEGINNING OF PERIOD AT END OF PERIOD
- ------------------------------ ---------------------------- ----------------------- -----------------------
SP PIMCO TOTAL RETURN PORTFOLIO
5/1/2003* to 12/31/2003 $1.08458 $1.09810 0
SP PRUDENTIAL U.S. EMERGING GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.82331 $1.05460 0
SP STATE STREET RESEARCH SMALL CAP GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.77739 $1.00776 22,159
SP STRATEGIC PARTNERS FOCUSED GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.84984 $0.99735 0
SP TECHNOLOGY PORTFOLIO
5/1/2003* to 12/31/2003 $0.72808 $0.95067 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH
PORTFOLIO
5/1/2003* to 12/31/2003 $0.79586 $1.05277 22,923
JANUS ASPEN SERIES--GROWTH PORTFOLIO
SERVICE SHARES
5/1/2003* to 12/31/2003 $0.82947 $0.99852 0
* DATE THE ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
60
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PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
Supplement, dated February 11, 2009
To
Prospectus, dated May 1, 2001
This supplement should be read and retained with your current prospectus. If you
would like another copy of that prospectus, please call us at 800-752-6342.
Pruco Life Insurance Company of New Jersey ("PLNJ") incorporates by reference
into the prospectus its latest annual report on Form 10-K filed pursuant to
Section 13(a) or Section 15(d) of the Exchange Act since the end of the fiscal
year covered by its latest annual report. In addition, all documents
subsequently filed by PLNJ pursuant to Sections 13(a), 13 (c), 14 or 15(d) of
the Exchange Act also are incorporated into the prospectus by reference. PLNJ
will provide to each person, including any beneficial owner, to whom a
prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference into the prospectus but not delivered with the
prospectus. Such information will be provided upon written or oral request at no
cost to the requester by writing to Prudential Annuities Life Assurance
Corporation, One Corporate Drive, Shelton, CT 06484 or by calling 800-752-6342.
PLNJ files periodic reports as required under the Securities Exchange Act of
1934. The public may read and copy any materials that PLNJ files with the SEC at
the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy, and information statements, and other information
regarding issuers that file electronically with the SEC (see
http://www.sec.gov). Our internet address is http://www.prudentialannuities.com.
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Strategic Partners Plus 3
Supplement to Prospectuses Dated May 1, 2008
Supplement dated May 1, 2008
This Supplement should be read and retained with the current Prospectus for your
annuity. This Supplement is intended to update certain information in the
Prospectus for the variable annuity you own, and is not intended to be a
prospectus or offer for any other variable annuity listed here that you do not
own. If you would like another copy of the current Prospectus, please contact us
at 1-888-PRU-2888.
We are issuing this supplement to describe a name and investment objective
change of the Evergreen VA Balanced Fund, which takes place on May 30, 2008. The
Fund expenses are not changing in connection with this change.
In Part II Section 2 of your Prospectus, "What Investment Options Can I Choose?"
please replace the INVESTMENT OBJECTIVES/POLICIES of the Evergreen VA Balanced
Fund with the information below
- -------------------- ----------------------------------------------------------- ------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------- ----------------------------------------------------------- ------------------------------------
Asset Allocation/ Evergreen VA Balanced (effective May 30, 2008, will be Evergreen Investment
Balanced renamed Evergreen VA Diversified Capital Builder): seeks Management Company,
capital growth and current income. The Portfolio invests in LLC
a portfolio of equity and debt securities chosen for the
potential for current income and capital growth. The
proportion of the Fund's assets invested in fixed income
and equity securities will change based on the portfolio
manager's assessment of economic conditions and investment
opportunities. The equity portion of the Portfolio may
include principally common and preferred stocks of U.S.
companies across a broad range of market capitalizations,
but will generally maintain a dollar-weighted average
market capitalization within the market capitalization
range tracked by the Russell 1000 Index. The Portfolio's
manager will seek out companies that she believes have
strong fundamental attributes and growth prospects with
valuations that leave ample room for capital appreciation.
Through May 29, 2008, the Portfolio normally invests at
least 25% of its assets in fixed income securities.
Effective May 30, 2008, the Fund generally expects to
invest approximately 10-30% of its assets in fixed income
securities. The Portfolio's fixed income investments may
include U.S. government securities, corporate bonds,
convertible bonds, mortgage-backed securities, asset-backed
securities, collateralized mortgage obligations (CMOs) and
other income producing securities. The Portfolio may invest
without limit in securities rated below investment grade
(or unrated securities determined by the portfolio manager
to be of comparable quality). The Fund may, but will not
necessarily, use derivative instruments, such as structured
notes, futures and options, and swap agreements, as an
alternative to investments directly in income-producing
securities or to manage risk. The Portfolio may also, but
will not necessarily, enter into foreign currency exchange
contracts to hedge against adverse changes in currency
exchange rates related to non-US dollar denominated
holdings. The Portfolio can invest up to 25% of its assets
in foreign equity and fixed income securities.
- -------------------- ----------------------------------------------------------- ------------------------------------
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STRATEGIC PARTNERS/SM/ ANNUITY ONE 3
STRATEGIC PARTNERS/SM/ PLUS 3
STRATEGIC PARTNERS FLEXELITE
(Pruco Life Insurance Company only)
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement is being issued to describe several changes that we are making
to the variable investment options within each of the above-referenced
annuities. We summarize each change immediately below, and then indicate how the
pertinent portion of each prospectus is amended to reflect the change.
The changes are as follows:
1. AST Conservative Asset Allocation Portfolio; AST Balanced Asset Allocation
Portfolio; and AST American Century Strategic Allocation Portfolio. The name and
investment objectives of each Portfolio are being changed. (In the case of the
AST Balanced Asset Allocation Portfolio and AST American Century Strategic
Allocation Portfolio only, the changed investment objective was authorized by a
vote of Annuity Owners). AST Conservative Asset Allocation Portfolio has been
renamed AST Balanced Asset Allocation Portfolio and will be sub-advised by
Quantitative Management Associates LLC, the original AST Balanced Asset
Allocation Portfolio has become AST Academic Strategies Asset Allocation
Portfolio, and AST American Century Strategic Allocation Portfolio has become
AST Schroders Multi-Asset World Strategies Portfolio. Accordingly, we (a)
reflect the revised Portfolio names in the list of Investment Options on the
inside front cover, and (b) with respect to AST Balanced Asset Allocation
Portfolio and AST Schroders Multi-Asset World Strategies Portfolio only, set
forth the revised fees of each Portfolio in the table of Underlying Mutual Fund
Portfolio Annual Expenses, and (c) in the prospectus section discussing the
applicable optional benefit, include each Portfolio within the group of
portfolios that are permitted if you elect Lifetime Five, Spousal Lifetime Five,
Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Spousal Highest Daily
Lifetime Seven, or the Highest Daily Value death benefit (if available), and (d)
include a summary description of the Portfolio in the chart of each Portfolio's
Investment Objectives and Policies. In addition, to reflect the effect of each
Portfolio on the average fees of all Portfolios available under the Annuity, we
describe the effect of the revised average fees on the comparison charts
appearing within the section entitled "Selecting the Annuity That's Right for
You."
2. Merger of AST DeAm Small-Cap Value Portfolio into AST Small-Cap Value
Portfolio. The AST DeAm Small-Cap Value Portfolio has merged out of existence
into the AST Small-Cap Value Portfolio. Accordingly, we remove the AST DeAm
Small-Cap Value Portfolio from the list of Investment Options on the inside
front cover.
3. AST Small-Cap Growth Portfolio. Neuberger Berman Management Inc. is no longer
a sub-adviser to this Portfolio. The assets formerly managed by Neuberger Berman
now are managed by Eagle Asset Management. Accordingly, we revise the summary
description of this Portfolio in the chart of each Portfolio's Investment
Objectives and Policies.
4. AST Neuberger Berman Mid-Cap Value Portfolio. We have added LSV Asset
Management as a sub-adviser to this Portfolio and have re-named the Portfolio
the AST Neuberger Berman / LSV Mid-Cap Value Portfolio. Accordingly, we (a)
reflect the revised Portfolio name in the list of Investment Options on the
inside front cover and in footnote 3 to the table within Underlying Mutual Fund
Portfolio Annual Expenses, and (b) include a revised summary description of the
Portfolio in the chart of the Portfolio's Investment objectives and Policies.
5. SP Aggressive Asset Allocation Portfolio, SP Growth Asset Allocation
Portfolio, SP Balanced Asset Allocation Portfolio, SP Conservative Asset
Allocation Portfolio, Global Portfolio. We are adding Quantitative Management
Associates LLC as a sub-adviser to each Portfolio. Accordingly, we include a
revised summary description of each Portfolio in the chart of each Portfolio's
Investment Objectives and Policies. Also being added as sub-advisers are
Prudential Investment Management, Inc. and Jennison Associates LLC.
With respect to the changed fees referenced above, here is a fee table showing
the applicable underlying mutual fund portfolio annual expenses:
Acquired Total
Portfolio Annual
Management Other Fees & Portfolio
FUNDS Fee Expenses 12b-1 Fee Expenses Expenses
- -------------------------------------------------------------------------------------------------------------
AST Academic Strategies Asset Allocation /1,2,3,4/ 0.72% 0.10% 0.00% 0.69% 1.51%
Management and Other Expense fee waivers/reduction: 0.02%
Net expenses after fee reimbursement/expense waiver: 1.49%
AST Schroders Multi-Asset World Strategies 1.10% 0.16% 0.00% 0.14% 1.40%
AST Balanced Asset Allocation 0.15% 0.02% 0.00% 0.87% 1.04%
1 Estimated Other Expenses for the fiscal year ending December 31, 2008. As used
in connection with the Portfolio, "Other Expenses" include certain operating
expenses, including, without limitation, fees for custodian services,
Independent Trustees' fees, and fees for legal, accounting, valuation, and
transfer agency services. The Trust has also entered into arrangements with the
issuers of the variable insurance products offering the Portfolio under which
the Trust currently compensates such issuers for providing ongoing services to
Portfolio shareholders (e.g., the printing and mailing of Trust prospectuses and
shareholder reports) in lieu of the Trust providing such services directly to
shareholders. The contractual administrative services fee is 0.10% of the
Portfolio's average daily net assets. The Portfolio is not directly subject to
the administrative services fee to the extent it invests in the Core Plus Bond
Portfolio or any other Trust Portfolio (each, an Underlying Trust Portfolio and
collectively, the Underlying Trust Portfolios). The Core Plus Bond Portfolio and
each Underlying Trust Portfolio in which the Portfolio invests, however, are
subject to the administrative services fee. See footnote 1 of the table within
"Underlying Mutual Fund Portfolio Annual Expenses" in the May 1, 2008 prospectus
for a discussion of the administrative services fee applicable to certain other
AST Portfolios.
2 Estimated Underlying Portfolio Fees & Expenses for the fiscal year ending
December 31, 2008. The Portfolio will indirectly incur a pro rata portion of the
fees and expenses of the Core Plus Bond Portfolio and any other Underlying Trust
Portfolio in which it invests. The expenses shown under "Underlying Portfolio
Fees and Expenses" represent the portion of the Core Plus Bond Portfolio's
estimated annualized operating expense ratio for the fiscal year ending December
31, 2008 to be borne by the Portfolio based upon the Portfolio's expected
initial holdings in the Core Plus Bond Portfolio. No sales loads, distribution
fees, service fees, redemption fees, or other transaction fees will be assessed
in connection with the Portfolio's purchase or redemption of shares of
Underlying Trust Portfolios.
3 Estimated Contractual Fee Waiver and/or Expense Reimbursement for the fiscal
year ending December 31, 2008. The Investment Managers have contractually agreed
to waive their investment management fees with respect to the Portfolio's
investments in the Core Plus Bond Portfolio (i.e., assumes a waiver of 25% of
the Investment Managers' contractual investment management fee).
4 The Co-Managers have contractually agreed to reimburse expenses and/or waive
fees so that the Academic Strategies Portfolio's investment management fees plus
"Other Expenses" (exclusive in all cases of taxes, interest, brokerage
commissions, distribution fees, and extraordinary expenses) do not exceed 0.80%
of the Portfolio's average daily net assets during the Academic Strategies
Portfolio's first year of operations (i.e., expected to be July 21, 2008 through
July 20, 2009).
2
With respect to the changed Investment Objectives/Policies referenced above,
here is a table showing the applicable changes:
- --------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
- --------------------------------------------------------------------------
ADVANCED SERIES TRUST
- --------------------------------------------------------------------------
ASSET AST Schroders Multi-Asset World Schroder
ALLOCA Strategies (formerly known as AST Investment
TION/ American Century Strategic Management North
BALANCED Allocation Portfolio): The AST America Inc.
Schroders Multi-Asset World Strategies
Portfolio seeks long-term capital
appreciation through a global flexible
asset allocation approach. This asset
allocation approach entails investing
in traditional asset classes, such as
equity and fixed-income investments,
and alternative asset classes, such as
investments in real estate,
commodities, currencies, private
equity, and absolute return strategies.
The sub-advisor seeks to emphasize the
management of risk and volatility.
Exposure to different asset classes and
investment strategies will vary over
time based upon the sub advisor's
assessments of changing market,
economic, financial and political
factors and events.
- --------------------------------------------------------------------------
ASSET AST Academic Strategies Asset Credit Suisse
ALLOCA Allocation (formerly known as AST Securities (USA)
TION/ Balanced Asset Allocation LLC; Jennison
BALANCED Portfolio): seeks total return Associates LLC;
consistent with its specified level Mellon Capital
of risk. The Portfolio will be a Management
multi-asset class fund that employs Corporation; Pacific
both top-down asset allocation Investment
strategies and bottom-up Management
manager/security selection. Under Company LLC
normal circumstances, approximately (PIMCO);
60% of the assets will be allocated Prudential Bache
to traditional asset classes Asset Management,
(including US and international Incorporated;
equities and bonds) and Quantitative
approximately 40% of the assets will Management
be allocated to nontraditional asset Associates LLC
classes (including real estate,
commodities, and alternative
strategies). Those percentages are
subject to change by the Investment
Managers.
- --------------------------------------------------------------------------
ASSET AST Balanced Asset Allocation AST Investment
ALLOCA (formerly known as AST Conservative Services, Inc. &
TION/ Asset Allocation Portfolio): seeks Prudential
BALANCED the highest potential total return Investments LLC;
consistent with its specified level Quantitative
of risk tolerance. The Portfolio Management
will invest its assets in several Associates LLC
other Advanced Series Trust
Portfolios. Under normal market
conditions, the Portfolio will
devote approximately 60% of its net
assets to underlying portfolios
investing primarily in equity
securities (with a range of 52.5% to
67.5%), and 40% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 32.5% to 47.5%).
- --------------------------------------------------------------------------
MID CAP AST Neuberger Berman / LSV Mid-Cap LSV Asset
VALUE Value Portfolio (formerly known as Management;
AST Neuberger Berman Mid-Cap Value Neuberger Berman
Portfolio): seeks capital growth. Management Inc.
Under normal market conditions, the
Portfolio invests at least 80% of
its net assets in the common stocks
of medium capitalization companies.
For purposes of the Portfolio,
companies with market
capitalizations that fall within the
range of the Russell Mid-cap(R)
Index at the time of investment are
considered medium capitalization
companies. Some of the Portfolio's
assets may be invested in the
securities of large-cap companies as
well as in small-cap companies.
Under the Portfolio's value-oriented
investment approach, the subadviser
looks for companies whose stock
prices are undervalued and that may
raise in price before other
investors realize their worth.
- --------------------------------------------------------------------------
SMALL AST Small-Cap Growth Portfolio: Eagle Asset
CAP seeks long-term capital growth. The Management
GROWTH Portfolio pursues its objective by
investing, under normal
circumstances, at least 80% of the
value of its assets in
small-capitalization companies.
Small-capitalization companies are
those companies with a market
capitalization, at the time of
purchase, no larger than the largest
capitalized company included in the
Russell 2000(R) Index at the time of
the Portfolio's investment.
- --------------------------------------------------------------------------
3
- --------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
- --------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- --------------------------------------------------------------------------
INTERNA Global Portfolio: seeks long-term LSV Asset
TIONAL growth of capital. The Portfolio Management;
EQUITY invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign Management, LLC;
and U.S. companies. Each subadviser T. Rowe Price
for the Portfolio generally will use Associates, Inc.;
either a "growth" approach or a William Blair &
"value" approach in selecting either Company, LLC;
foreign or U.S. common stocks. Quantitative
Management
Associates LLC
- --------------------------------------------------------------------------
ASSET SP Aggressive Growth Asset Prudential
ALLOCA Allocation Portfolio: seeks to Investments LLC;
TION/ obtain the highest potential total Quantitative
BALANCED return consistent with the specified Management
level of risk tolerance. The Associates LLC
Portfolio may invest in any other
Portfolio of the Fund (other than
another SP Asset Allocation
Portfolio), the AST Marsico Capital
Growth Portfolio of Advanced Series
Trust (AST), and the AST
International Value Portfolio of AST
(the Underlying Portfolios). Under
normal circumstances, the Portfolio
generally will focus on equity
Underlying Portfolios but will also
invest in fixed-income Underlying
Portfolios.
- --------------------------------------------------------------------------
ASSET SP Balanced Asset Allocation Prudential
ALLOCA Portfolio: seeks to obtain the Investments LLC;
TION/ highest potential total return Quantitative
BALANCED consistent with the specified level Management
of risk tolerance. The Portfolio may Associates LLC
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios). The
Portfolio will invest in equity and
fixed-income Underlying Portfolios.
- --------------------------------------------------------------------------
ASSET SP Conservative Asset Allocation Prudential
ALLOCA Portfolio: seeks to obtain the Investments LLC;
TION/ highest potential total return Quantitative
BALANCED consistent with the specified level Management
of risk tolerance. The Portfolio may Associates LLC
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios).
Under normal circumstances, the
Portfolio generally will focus on
fixed-income Underlying Portfolios
but will also invest in equity
Underlying Portfolios.
- --------------------------------------------------------------------------
ASSET SP Growth Asset Allocation Prudential
ALLOCA Portfolio: seeks to obtain the Investments LLC;
TION/ highest potential total return Quantitative
BALANCED consistent with the specified level Management
of risk tolerance. The Portfolio may Associates LLC
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST), and the
AST International Value Portfolio of
AST (the Underlying Portfolios).
Under normal circumstances, the
Portfolio generally will focus on
equity Underlying Portfolios but
will also invest in fixed- income
Underlying Portfolios.
- --------------------------------------------------------------------------
In the May 1, 2008 prospectuses, the summary fund descriptions of the AST
Balanced Asset Allocation Portfolio and the AST Capital Growth Asset Allocation
Portfolio were reversed. Thus, the correct summary fund description for each
such Portfolio should have been as follows:
AST Balanced Asset Allocation Portfolio: seeks the highest potential total
return consistent with its specified level of risk tolerance. The Portfolio will
invest its assets in several other Advanced Series Trust Portfolios. Under
normal market conditions, the Portfolio will devote approximately 65% of its net
assets to underlying portfolios investing primarily in equity securities (with a
range of 57.5% to 72.5%), and 35% of its net assets to underlying portfolios
investing primarily in debt securities and money market instruments (with a
range of 27.5% to 42.5%).
AST Capital Growth Asset Allocation Portfolio: seeks the highest potential total
return consistent with its specified level of risk tolerance. The Portfolio will
invest its assets in several other Advanced Series Trust Portfolios. Under
normal market conditions, the Portfolio will devote approximately 75% of its net
assets to underlying portfolios investing primarily in equity securities (with a
range of 67.5% to 80%), and 25% of its net assets to underlying portfolios
investing primarily in debt securities and money market instruments (with a
range of 20.0% to 32.5%).
In the appendices to each prospectus, entitled Selecting The Variable Annuity
That's Right For You, we set forth hypothetical illustrations of Contract Value
and Surrender Value for each annuity. Those illustrations assume average fund
expenses of 0.94% (which, for Strategic Partners Plus, excludes Evergreen fund
expenses). As a result of the fund changes described in this supplement, the
average fund expenses have changed to 0.95%. This change in average fund
expenses would have the effect of decreasing the hypothetical illustrated values
by a commensurate amount.
4
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite (Pruco Life Insurance Company only)
Supplement, dated November 24, 2008
To
Prospectuses, dated May 1, 2008
This Supplement should be read and retained with the current Prospectus for your
contract. This Supplement is intended to update certain information in the
Prospectus for the variable contract you own, and is not intended to be a
prospectus or offer for any other variable contract listed here that you do not
own. If you would like another copy of the current Prospectus, please contact us
at 1-888-PRU-2888.
A . Effective November 24, 2008, two additional sub-advisors are being added to
AST Academic Strategies Asset Allocation Portfolio. Accordingly, in the section
entitled "What Investment Options Can I Choose?", we add the sub-advisors
referenced below to the column entitled "Portfolio Advisor/Sub-Advisor." First
Quadrant L.P. (First Quadrant) and AlphaSimplex Group, LLC (AlphaSimplex) are
being added as additional sub-advisors to AST Academic Strategies Asset
Allocation Portfolio. The expenses and investment objectives/policies do not
change as a result of the addition of the new sub-advisors.
B. Effective on or about December 15, 2008, Eaton Vance LLC will replace J.P.
Morgan Investment Management, Inc. as sub-advisor for AST Large-Cap Value
Portfolio.
C. Closing of Lifetime Five and Spousal Lifetime Five . Lifetime Five Income
Benefit and Spousal Lifetime Five Income Benefit (the "Benefits" and each, a
"Benefit") are described in the section of the prospectus entitled "What Are The
Lifetime Withdrawal Benefits?". Effective December 8, 2008, we will cease
offering the Benefits, for both new contract sales and in-force elections. If
you currently participate in either Benefit, this closing does not affect you or
the guarantees associated with your Benefit. However, subsequent to the closure,
you will no longer be allowed to re-elect either Benefit if you decide to
terminate a Benefit. Other living benefits may be available, subject to our
election rules. Please refer to your prospectus for further details.
D. Asset Transfer Component of HD5 - Allocation of Contract Value. We replace
the section of the prospectus entitled "Asset Transfer Component of Highest
Daily Lifetime Five" with the following:
Asset Transfer Component of Highest Daily Lifetime Five As indicated above, we
limit the sub-accounts to which you may allocate Contract Value if you elect
Highest Daily Lifetime Five. For purposes of this benefit, we refer to those
permitted sub-accounts as the "Permitted Sub-accounts". As a requirement of
participating in Highest Daily Lifetime Five, we require that you participate in
our specialized asset transfer program, under which we may transfer Contract
Value between the Permitted Sub-accounts and a fixed interest rate account that
is part of our general account (the "Benefit Fixed Rate Account"). We determine
whether to make a transfer, and the amount of any transfer, under a
non-discretionary formula, discussed below. The Benefit Fixed Rate Account is
available only with this benefit, and thus you may not allocate Purchase
Payments to the Benefit Fixed Rate Account. The interest rate that we pay with
respect to the Benefit Fixed Rate Account is reduced by an amount that
corresponds generally to the charge that we assess against your variable
Sub-accounts for Highest Daily Lifetime Five. The Benefit Fixed Rate Account is
not subject to the Investment Company Act of 1940 or the Securities Act of 1933.
Under the asset transfer component of Highest Daily Lifetime Five, we monitor
your Contract Value daily and, if necessary, systematically transfer amounts
between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate
Account. Any transfer would be made in accordance with a formula, which is set
forth in the schedule supplement to the endorsement for this benefit (and also
appears in the Appendices to the prospectus). Speaking generally, the formula,
which we apply each Business Day, operates as follows. The formula starts by
identifying
your Protected Withdrawal Value for that day and then multiplies that figure by
5%, to produce a projected (i.e., hypothetical) Highest Daily Annual Income
Amount. Then, using our actuarial tables, we produce an estimate of the total
amount we would target in our allocation model, based on the projected Highest
Daily Annual Income Amount each year for the rest of your life. In the formula,
we refer to that value as the "Target Value" or "L". If you have already made a
withdrawal, your projected Highest Daily Annual Income Amount (and thus your
Target Value) would take into account any automatic step-up that was scheduled
to occur according to the step-up formula described above. Next, the formula
subtracts from the Target Value the amount held within the Benefit Fixed Rate
Account on that day, and divides that difference by the amount held within the
Permitted Sub-accounts. That ratio, which essentially isolates the amount of
your Target Value that is not offset by amounts held within the Benefit Fixed
Rate Account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a
certain percentage (currently 83%) it means essentially that too much Target
Value is not offset by assets within the Benefit Fixed Rate Account, and
therefore we will transfer an amount from your Permitted Sub-accounts to the
Benefit Fixed Rate Account. Conversely, if the Target Ratio falls below a
certain percentage (currently 77%), then a transfer from the Benefit Fixed Rate
Account to the Permitted Sub-accounts would occur. Note that the formula is
calculated with reference to the Highest Daily Annual Income Amount, rather than
with reference to the Annual Income Amount.
As you can glean from the formula, poor investment performance of your Contract
Value may result in a transfer of a portion of your Contract Value to the
Benefit Fixed Rate Account, because such poor investment performance will tend
to increase the Target Ratio. Moreover, "flat" investment returns of your
Contract Value over a period of time also could result in the transfer of your
Contract Value to the Benefit Fixed Rate Account. Because the amount allocated
to the Benefit Fixed Rate Account and the amount allocated to the Permitted
Sub-accounts each is a variable in the formula, the investment performance of
each affects whether a transfer occurs for your contract. In deciding how much
to transfer, we use another formula, which essentially seeks to re-balance
amounts held in the Permitted Sub-accounts and the Benefit Fixed Rate Account so
that the Target Ratio meets a target, which currently is equal to 80%. Once you
elect Highest Daily Lifetime Five, the ratios we use will be fixed. For newly
issued contracts that elect Highest Daily Lifetime Five and existing contracts
that elect Highest Daily Lifetime Five, however, we reserve the right to change
the ratios.
While you are not notified when your contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the Benefit Fixed Rate Account. The
formula by which the reallocation triggers operate is designed primarily to
mitigate the financial risks that we incur in providing the guarantee under
Highest Daily Lifetime Five.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
.. Not make any transfer between the Permitted Sub-accounts and the Benefit
Fixed Rate Account; or
.. If a portion of your Contract Value was previously allocated to the Benefit
Fixed Rate Account, transfer all or a portion of those amounts to the
Permitted Sub-accounts, based on your existing allocation instructions or
(in the absence of such existing instructions) pro rata (i.e., in the same
proportion as the current balances in your variable investment options).
Amounts taken out of the Benefit Fixed Rate Account will be withdrawn for
this purpose on a last-in, first-out basis (an amount renewed into a new
guarantee period under the Benefit Fixed Rate Account will be deemed a new
investment for purposes of this last-in, first-out rule); or
.. Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest that
you earn on such transferred amount will be equal to the annual rate that
we have set for that day, and we will credit the daily equivalent of that
annual interest until the earlier of one year from the date of the transfer
or the date that such amount in the Benefit Fixed Rate Account is
transferred back to the Permitted Sub-accounts.
If your entire Contract Value is transferred to the Benefit Fixed Rate Account,
then based on the way the formula operates, the formula will not transfer
amounts out of the Benefit Fixed Rate Account to the Permitted Sub-accounts and
the entire Contract Value would remain in the Benefit Rate Fixed Account. If you
make additional Purchase Payments to your contract, they will be allocated to
the Sub-accounts according to your allocation instructions. Such additional
Purchase Payments may or may not cause the formula to transfer money in or out
of the Benefit Fixed Rate Account. Once the Purchase Payments are allocated to
your contract, they will also be subject to the mathematical formula, which may
result in immediate transfers to or from the Benefit Fixed Rate Account, if
dictated by the formula.
2
The amount that is transferred to and from the Benefit Fixed Rate Account
pursuant to the mathematical formula depends upon a number of factors unique to
your contract (and is not necessarily directly correlated with the securities
markets, bond markets, or interest rates, in general) including:
.. How long you have owned Highest Daily Lifetime Five;
.. The performance of the Permitted Sub-accounts you have chosen;
.. The performance of the Benefit Fixed Rate Account (i.e., the amount of
interest credited to the Benefit Fixed Rate Account);
.. The amount you have allocated to each of the Permitted Sub-accounts you
have chosen;
.. The amount you have allocated to the Benefit Fixed Rate Account;
.. Additional Purchase Payments, if any, you make to your contract;
.. Withdrawals, if any, you take from your contract (withdrawals are taken pro
rata from your Contract Value).
Any Contract Value in the Benefit Fixed Rate Account will not be available to
participate in the investment experience of the Permitted Sub-accounts if there
is a recovery until it is moved out of the Benefit Fixed Rate Account.
The more of your Contract Value allocated to the Benefit Fixed Rate Account
under the formula, the greater the impact of the performance of the Benefit
Fixed Rate Account in determining whether (and how much) of your Contract Value
is transferred back to the Permitted Sub-accounts. Further, it is possible under
the formula, that if a significant portion your Contract Value is allocated to
the Benefit Fixed Rate Account and that Account has good performance but the
performance of your Permitted Sub-accounts is negative, that the formula might
transfer your Contract Value to the Permitted Sub-accounts. Thus, the converse
is true too (the more you have allocated to the Permitted Sub-accounts, the
greater the impact of the performance of those Sub-accounts will have on any
transfer to the Benefit Fixed Rate Account).
E. Asset Transfer Component of HD7 and SHD7 - Allocation of Contract Value. We
replace the sections of the prospectus entitled "Asset Transfer Component of
Highest Daily Lifetime Seven" and "Asset Transfer Component of Spousal Highest
Daily Lifetime Seven" (as applicable) with the following:
Asset Transfer Component of Highest Daily Lifetime Seven/Spousal Highest Daily
Lifetime Seven As indicated above, we limit the Sub-accounts to which you may
allocate Contract Value if you elect Highest Daily Lifetime Seven/Spousal
Highest Daily Lifetime Seven. For purposes of the benefit, we refer to those
permitted Sub-accounts as the "Permitted Sub-accounts". As a requirement of
participating in Highest Daily Lifetime Seven/Spousal Highest Daily Lifetime
Seven, we require that you participate in our specialized asset transfer
program, under which we may transfer Contract Value between the Permitted
Sub-accounts and a specified bond fund within the Advanced Series Trust (the
"AST Investment Grade Bond Sub-account"). We determine whether to make a
transfer, and the amount of any transfer, under a non-discretionary mathematical
formula, discussed below. The AST Investment Grade Bond Sub-account is available
only with this benefit, and thus you may not allocate Purchase Payments to the
AST Investment Grade Bond Sub-account. Under the asset transfer component of
Highest Daily Lifetime Seven/Spousal Highest Daily Lifetime Seven, we monitor
your Contract Value daily and, if dictated by the formula, systematically
transfer amounts between the Permitted Sub-accounts you have chosen and the AST
Investment Grade Bond Sub-account. Any transfer would be made in accordance with
a formula, which is set forth in the Appendices to this prospectus.
Speaking generally, the formula, which we apply each Business Day, operates as
follows. The formula starts by identifying an income basis for that day and then
multiplies that figure by 5%, to produce a projected (i.e., hypothetical) income
amount. Note that we use 5% in the formula, irrespective of the Annuitant's
attained age. Then we produce an estimate of the total amount we would target in
our allocation model, based on the projected income amount and factors set forth
in the formula. In the formula, we refer to that value as the "Target Value" or
"L". If you have already made a withdrawal, your projected income amount (and
thus your Target Value) would take into account any automatic step-up, any
subsequent purchase payments, and any excess withdrawals. Next, the formula
subtracts from the Target Value the amount held within the AST Investment Grade
Bond Sub-account on that day, and divides that difference by the amount held
within the Permitted Sub-accounts. That ratio, which essentially isolates the
amount of your Target Value that is not offset by amounts held within the AST
Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If the
Target Ratio exceeds a certain percentage (currently 83%), it
3
means essentially that too much Target Value is not offset by assets within the
AST Investment Grade Bond Sub-account, and therefore we will transfer an amount
from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account.
Conversely, if the Target Ratio falls below a certain percentage (currently
77%), then a transfer from the AST Investment Grade Bond Sub-account to the
Permitted Sub-accounts would occur.
As you can glean from the formula, poor investment performance of your Contract
Value may result in a transfer of a portion of your Contract Value to the AST
Investment Grade Bond Sub-account because such poor investment performance will
tend to increase the Target Ratio. Moreover, "flat" investment returns of your
Contract Value over a period of time also could result in the transfer of your
Contract Value from the Permitted Sub-accounts to the AST Investment Grade Bond
Sub-account. Because the amount allocated to the AST Investment Grade Bond
Sub-account and the amount allocated to the Permitted Sub-accounts each is a
variable in the formula, the investment performance of each affects whether a
transfer occurs for your Contract. In deciding how much to transfer, we use
another formula, which essentially seeks to re-balance amounts held in the
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that the
Target Ratio meets a target, which currently is equal to 80%. Once you elect
Highest Daily Lifetime Seven/Spousal Highest Daily Lifetime Seven, the ratios we
use will be fixed. For newly-issued contracts that elect Highest Daily Lifetime
Seven/Spousal Highest Daily Lifetime Seven and existing contracts that elect
Highest Daily Lifetime Seven/Spousal Highest Daily Lifetime Seven, however, we
reserve the right to change the ratios.
While you are not notified when your contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the AST Investment Grade Bond
Sub-account. The formula by which the reallocation triggers operate is designed
primarily to mitigate the financial risks that we incur in providing the
guarantee under Highest Daily Lifetime Seven/Spousal Highest Daily Lifetime
Seven.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
.. Not make any transfer between the Permitted Sub-accounts and the AST
Investment Grade Bond Sub-account; or
.. If a portion of your Contract Value was previously allocated to the AST
Investment Grade Bond Sub-account, transfer all or a portion of those
amounts to the Permitted Sub-accounts, based on your existing allocation
instructions or (in the absence of such existing instructions) pro rata
(i.e., in the same proportion as the current balances in your variable
investment options). Amounts taken out of the AST Investment Grade Bond
Sub-account will be withdrawn for this purpose on a last-in, first-out
basis; or
.. Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account.
If your entire Contract Value is transferred to the AST Investment Grade Bond
Sub-account, then based on the way the formula operates, the formula will not
transfer amounts out of the AST Investment Grade Bond Sub-account to the
Permitted Sub-accounts and the entire Contract Value would remain in the AST
Investment Grade Bond Sub-account. If you make additional Purchase Payments to
your contract, they will be allocated to the Sub-accounts according to your
allocation instructions. Such additional Purchase Payments may or may not cause
the formula to transfer money in or out of the AST Investment Grade Bond
Sub-account. Once the Purchase Payments are allocated to your contract, they
will also be subject to the mathematical formula, which may result in immediate
transfers to or from the AST Investment Grade Bond Sub-accounts, if dictated by
the formula.
The amount that is transferred to and from the AST Investment Grade Bond
Sub-account pursuant to the mathematical formula depends upon a number of
factors unique to your contract (and is not necessarily directly correlated with
the securities markets, bond markets, or interest rates, in general) including:
.. How long you have owned Highest Daily Lifetime Seven/Spousal Highest Daily
Lifetime Seven;
.. The performance of the Permitted Sub-accounts you have chosen;
.. The performance of the AST Investment Grade Bond Sub-account;
.. The amount you have allocated to each of the Permitted Sub-accounts you
have chosen;
.. The amount you have allocated to the AST Investment Grade Bond Sub-account;
.. Additional Purchase Payments, if any, you make to your contract;
4
.. Withdrawals, if any, you take from your contract (withdrawals are taken pro
rata from your Contract Value).
Any Contract Value in the AST Investment Grade Bond Sub-account will not be
available to participate in the investment experience of the Permitted
Sub-accounts if there is a recovery until it is moved out of the AST Investment
Grade Bond Sub-account.
The more of your Contract Value allocated to the AST Investment Grade Bond
Sub-account under the formula, the greater the impact of the performance of that
Sub-account in determining whether (and how much) of your Contract Value is
transferred back to the Permitted Sub-accounts. Further, it is possible under
the formula, that if a significant portion your Contract Value is allocated to
the AST Investment Grade Bond Sub-account and that Sub-account has good
performance but the performance of your Permitted Sub-accounts is negative, that
the formula might transfer your Contract Value to the Permitted Sub-accounts.
Thus, the converse is true too (the more you have allocated to the Permitted
Sub-accounts, the greater the impact of the performance of those Sub-accounts
will have on any transfer to the AST Investment Grade Bond Sub-account).
5
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite (Pruco Life Insurance Company only)
Supplement, dated December 15, 2008
To
Prospectuses, dated May 1, 2008
This Supplement should be read and retained with the current Prospectus for your
contract. This Supplement is intended to update certain information in the
Prospectus for the variable contract you own, and is not intended to be a
prospectus or offer for any other variable contract listed here that you do not
own. If you would like another copy of the current Prospectus, please contact us
at 1-888-PRU-2888.
As detailed below, this supplement announces changes to your ability to cancel
certain optional living benefits and either re-elect the same benefit or elect
another living benefit.
WHEN CONSIDERING CANCELLATION OF AN EXISTING OPTIONAL LIVING BENEFIT WITH OR
WITHOUT THE RE-ELECTION OF THE SAME BENEFIT OR ELECTION OF A NEW OPTIONAL LIVING
BENEFIT, PLEASE REVIEW THE PROSPECTUS FOR COMPLETE DETAILS AND SPEAK TO YOUR
FINANCIAL PROFESSIONAL.
AMONG OTHER THINGS, THE NEW BENEFIT MAY BE MORE EXPENSIVE THAN YOUR EXISTING
BENEFIT.
A. Lifetime Five - Elections of Highest Daily Lifetime Seven or Spousal Highest
Daily Lifetime Seven. Under the section of the prospectus entitled "Lifetime
Five Income Benefit", we replace the last two paragraphs within the sub-section
entitled "Election of Lifetime Five" with the following:
We no longer permit elections of Lifetime Five - - whether for those who
currently participate in Lifetime Five or for those who are buying a Contract
for the first time. If you wish, you may cancel the Lifetime Five benefit. You
may then elect Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven (or any other currently available living benefit) on the Business Day
after you have cancelled the Lifetime Five benefit provided, the request is
received in good order (subject to state availability and in accordance with any
applicable age requirements). Upon your election of Highest Daily Lifetime Seven
or Spousal Highest Daily Lifetime Seven, Contract Value may be transferred
between the AST Investment Grade Bond Portfolio Sub-account and the other
Sub-accounts according to the formula (See "Asset Transfer Component of Highest
Daily Lifetime Seven/ Spousal Highest Daily Lifetime Seven" section for more
details). It is possible that over time the formula could transfer some, all, or
none of the Contract Value to the AST Investment Grade Bond Portfolio
Sub-account under the newly-elected benefit. You should be aware that upon
termination of the Lifetime Five benefit, you will lose the Protected Withdrawal
Value, Annual Income Amount, and Annual Withdrawal Amount that you had
accumulated under the benefit. Thus, the initial guarantees under any
newly-elected benefit will be based on your current Account Value. Finally,
please note that the fee for the Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven benefits is a percentage of Protected Withdrawal
Value. Thus, if Protected Withdrawal Value is larger than Contract Value, the
fee will be greater than it would have been had it been based on Contract Value.
Once the Lifetime Five benefit is canceled you are not required to re-elect
another optional living benefit and any subsequent benefit election may be made
on or after the first Business Day following the cancellation of the Lifetime
Five benefit provided that the benefit you are looking to elect is available on
a post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
B. Spousal Lifetime Five - Elections of Highest Daily Lifetime Seven or
Spousal Highest Daily Lifetime Seven. Under the section of the prospectus
entitled "Spousal Lifetime Five Income Benefit", we replace the last two
paragraphs within the sub-section entitled "Election of and Designations of
Spousal Lifetime Five" with the following:
We no longer permit elections of Spousal Lifetime Five - - whether for those who
currently participate in Spousal Lifetime Five or for those who are buying a
Contract for the first time. If you wish, you may cancel the Spousal Lifetime
Five benefit. You may then elect Highest Daily Lifetime Seven or Spousal Highest
Daily Lifetime Seven (or any other currently available living benefit) on the
Business Day after have you cancelled the Spousal Lifetime Five benefit,
provided the request is received in good order (subject to state availability
and any applicable age requirements). Upon your election of Highest Daily
Lifetime Seven or Spousal Highest Daily Lifetime Seven, Contract Value may be
transferred between the AST Investment Grade Bond Portfolio Sub-account and the
other Sub-accounts according to the formula (See "Asset Transfer Component of
Highest Daily Lifetime Seven/ Spousal Highest Daily Lifetime Seven" section for
more details). It is possible that over time the formula could transfer some,
all, or none of the Contract Value to the AST Investment Grade Bond Portfolio
Sub-account under the newly-elected benefit. You should be aware that upon
termination of the Spousal Lifetime Five benefit, you will lose the Protected
Withdrawal Value and Annual Income Amount that you had accumulated under the
benefit. Thus, the initial guarantees under any newly-elected benefit will be
based on your current Contract Value.
Also note that the fee for the Highest Daily Lifetime Seven and Spousal Highest
Daily Lifetime Seven benefits is a percentage of Protected Withdrawal Value.
Thus, if Protected Withdrawal Value is larger than Contract Value, the fee will
be greater than it would have been had it been based on Contract Value. Once the
Spousal Lifetime Five benefit is canceled you are not required to re-elect
another optional living benefit and any subsequent benefit election may be made
on or after the first Business Day following the cancellation of the Spousal
Lifetime Five benefit provided that the benefit you are looking to elect is
available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations for the
benefit you are electing.
C. Highest Daily Lifetime Five - Elections of Highest Daily Lifetime Seven or
Spousal Highest Daily Lifetime Seven. Under the section of the prospectus
entitled "Highest Daily Lifetime Five", we replace the last paragraph in
the sub-section entitled "Election of and Designation under the Program"
with the following:
We no longer permit elections of Highest Daily Lifetime Five - - whether for
those who currently participate in Highest Daily Lifetime Five or for those who
are buying a Contract for the first time. If you wish, you may cancel the
Highest Daily Lifetime Five benefit. You may then elect Highest Daily Lifetime
Seven or Spousal Highest Daily Lifetime Seven (or any other currently available
living benefit) on the Business Day after you have cancelled the Highest Daily
Lifetime Five benefit, provided the request is received in good order (subject
to state availability and any applicable age requirements). Upon cancellation of
the Highest Daily Lifetime Five benefit, any Contract Value allocated to the
Benefit Fixed Rate Account used with the asset transfer formula will be
reallocated to the Permitted Sub-Accounts according to your most recent
allocation instructions or, in absence of such instructions, pro-rata. Upon your
election of Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven, Contract Value may be transferred between the AST Investment Grade Bond
Portfolio Sub-account and the other Sub-accounts according to the formula (See
"Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal Highest Daily
Lifetime Seven" section for more details). It is possible that over time the
formula could transfer some, all or none of the Contract Value to the AST
Investment Grade Bond Portfolio Sub-account under the newly-elected benefit. You
should be aware that upon termination of the Highest Daily Lifetime Five
benefit, you will lose the Protected Withdrawal Value and Annual Income Amount
that you had accumulated under the benefit, as well as any Enhanced Protected
Withdrawal Value and Return of Principal Guarantees (if no withdrawals have been
taken) . Thus, the initial guarantees under any newly-elected benefit will be
based on your current Contract Value. Finally, please note that the fee for the
Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven benefits
is a percentage of Protected Withdrawal Value. Thus, if Protected Withdrawal
Value is larger than Contract Value, the fee will be greater than it would have
been had it been based on Contract Value. Once the Highest Daily Lifetime Five
benefit is canceled you are not required to re-elect another optional living
benefit and any subsequent benefit election may be made on or after the first
Business Day following the cancellation of the Highest Daily Lifetime Five
benefit provided that the benefit you are looking to elect is available on a
post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
D. Highest Daily Lifetime Seven - - Elections of Highest Daily Lifetime Seven
or Spousal Highest Daily Lifetime Seven. Under the section of the
prospectus entitled "Highest Daily Lifetime Seven", we replace the last
paragraph in the sub-section entitled "Election of and Designations under
the Program" with the following:
If you wish, you may cancel the Highest Daily Lifetime Seven benefit. You may
then re-elect Highest Daily Lifetime Seven or elect Spousal Highest Daily
Lifetime Seven (or any other currently available living benefit) on the Business
Day after you have cancelled the Highest Daily Lifetime Seven benefit, provided
the request is received in good order (subject to state availability and any
applicable age requirements). Upon cancellation of the Highest Daily Lifetime
Seven benefit, any Contract Value allocated to the AST Investment Grade Bond
Portfolio Sub-account used with the asset transfer formula will be reallocated
to the Permitted Sub-Accounts according to your most recent allocation
instructions or, in absence of such instructions, pro-rata. Upon your election
of either the Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven benefit, Contract Value may be transferred between the AST Investment
Grade Bond Portfolio Sub-account and the other Sub-accounts according to the
formula (See "Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal
Highest Daily Lifetime Seven" section for more details). It is possible that
over time the formula could transfer some, all or none of the Contract Value to
the AST Investment Grade Bond Portfolio Sub-account under the newly-elected
benefit. You should be aware that upon termination of Highest Daily Lifetime
Seven, you will lose the Protected Withdrawal Value (including the Tenth
Anniversary Date Guarantee), Annual Income Amount, and the Return of Principal
Guarantee that you had accumulated under the benefit. Thus, the initial
guarantees under any newly-elected benefit will be based on your current
Contract Value. Once the Highest Daily Lifetime Seven benefit is canceled you
are not required to re-elect another optional living benefit and any subsequent
benefit election may be made on or after the first Business Day following the
cancellation of the Highest Daily Lifetime Seven benefit provided that the
benefit you are looking to elect is available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
E. Spousal Highest Daily Lifetime Seven - - Elections of Highest Daily
Lifetime Seven or Spousal Highest Daily Lifetime Seven. Under the section
of the prospectus entitled "Spousal Highest Daily Lifetime Seven", we
replace the last paragraph in the sub-section entitled "Election of and
Designations under the Program" with the following:
If you wish, you may cancel the Spousal Highest Daily Lifetime Seven benefit.
You may then re-elect Spousal Highest Daily Lifetime Seven or elect Highest
Daily Lifetime Seven (or any other currently available living benefit) on the
Business Day after you have cancelled the Spousal Highest Daily Lifetime Seven
benefit, provided the request is received in good order (subject to state
availability and any applicable age requirements). Upon cancellation of the
Spousal Highest Daily Lifetime Seven benefit, any Contract Value allocated to
the AST Investment Grade Bond Portfolio Sub-account used with the asset transfer
formula will be reallocated to the Permitted Sub-Accounts according to your most
recent allocation instruction or in absence of such instruction, pro-rata. Upon
your election of Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven, Contract Value may be transferred between the AST Investment Grade Bond
Portfolio Sub-account and the other Sub-accounts according to the formula (See
"Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal Highest Daily
Lifetime Seven" section for more details). It is possible that over time the
formula could transfer some, all or, none of the Contract Value to the AST Bond
Portfolio Sub-accounts under the newly-elected benefit. You should be aware that
upon termination of Spousal Highest Daily Lifetime Seven, you will lose the
Protected Withdrawal Value (including the Tenth Anniversary Date Guarantee),
Annual Income Amount, and the Return of Principal Guarantee that you had
accumulated under the benefit. Thus, the initial guarantees under any
newly-elected benefit will be based on your current Contract Value. Once the
Spousal Highest Daily Lifetime Seven benefit is canceled you are not required to
re-elect another optional living benefit and any subsequent benefit election may
be made on or after the first Business Day following the cancellation of the
Spousal Highest Daily Lifetime Seven benefit provided that the benefit you are
looking to elect is available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations under
the benefit you are electing.
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite (Pruco Life Insurance Company only)
Supplement, dated January 20, 2009
To
Prospectuses, dated May 1, 2008
This Supplement should be read and retained with the current Prospectus for your
contract. This Supplement is intended to update certain information in the
Prospectus for the variable contract you own, and is not intended to be a
prospectus or offer for any other variable contract listed here that you do not
own. If you would like another copy of the current Prospectus, please contact us
at 1-888-PRU-2888.
As detailed below, this supplement announces changes to your ability to cancel
certain optional living benefits and either re-elect the same benefit or elect
another living benefit.
WHEN CONSIDERING CANCELLATION OF AN EXISTING OPTIONAL LIVING BENEFIT WITH OR
WITHOUT THE RE-ELECTION OF THE SAME BENEFIT OR ELECTION OF A NEW OPTIONAL LIVING
BENEFIT, PLEASE REVIEW THE PROSPECTUS FOR COMPLETE DETAILS AND SPEAK TO YOUR
FINANCIAL PROFESSIONAL. AMONG OTHER THINGS, THE NEW BENEFIT MAY BE MORE
EXPENSIVE THAN YOUR EXISTING BENEFIT.
A. Lifetime Five - Elections of Highest Daily Lifetime Seven or Spousal Highest
Daily Lifetime Seven. Under the section of the prospectus entitled "Lifetime
Five Income Benefit", we replace the last two paragraphs within the sub-section
entitled "Election of Lifetime Five" with the following:
We no longer permit elections of Lifetime Five - - whether for those who
currently participate in Lifetime Five or for those who are buying a Contract
for the first time. If you wish, you may cancel the Lifetime Five benefit. You
may then elect Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven (or any other currently available living benefit) on the Business Day
after you have cancelled the Lifetime Five benefit provided, the request is
received in good order (subject to state availability and in accordance with any
applicable age requirements). Upon your election of Highest Daily Lifetime Seven
or Spousal Highest Daily Lifetime Seven, Contract Value may be transferred
between the AST Investment Grade Bond Portfolio Sub-account and the other
Sub-accounts according to the formula (See "Asset Transfer Component of Highest
Daily Lifetime Seven/ Spousal Highest Daily Lifetime Seven" section for more
details). It is possible that over time the formula could transfer some, all, or
none of the Contract Value to the AST Investment Grade Bond Portfolio
Sub-account under the newly-elected benefit. You should be aware that upon
termination of the Lifetime Five benefit, you will lose the Protected Withdrawal
Value, Annual Income Amount, and Annual Withdrawal Amount that you had
accumulated under the benefit. Thus, the initial guarantees under any
newly-elected benefit will be based on your current Account Value. Finally,
please note that the fee for the Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven benefits is a percentage of Protected Withdrawal
Value. Thus, if Protected Withdrawal Value is larger than Contract Value, the
fee will be greater than it would have been had it been based on Contract Value.
Once the Lifetime Five benefit is canceled you are not required to re-elect
another optional living benefit and any subsequent benefit election may be made
on or after the first Business Day following the cancellation of the Lifetime
Five benefit provided that the benefit you are looking to elect is available on
a post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
B. Spousal Lifetime Five - Elections of Highest Daily Lifetime Seven or
Spousal Highest Daily Lifetime Seven. Under the section of the prospectus
entitled "Spousal Lifetime Five Income Benefit", we replace the last two
paragraphs within the sub-section entitled "Election of and Designations of
Spousal Lifetime Five" with the following:
We no longer permit elections of Spousal Lifetime Five - - whether for those who
currently participate in Spousal Lifetime Five or for those who are buying a
Contract for the first time. If you wish, you may cancel the Spousal Lifetime
Five benefit. You may then elect Highest Daily Lifetime Seven or Spousal Highest
Daily Lifetime Seven (or any other currently available living benefit) on the
Business Day after have you cancelled the Spousal Lifetime Five benefit,
provided the request is received in good order (subject to state availability
and any applicable age requirements). Upon your election of Highest Daily
Lifetime Seven or Spousal Highest Daily Lifetime Seven, Contract Value may be
transferred between the AST Investment Grade Bond Portfolio Sub-account and the
other Sub-accounts according to the formula (See "Asset Transfer Component of
Highest Daily Lifetime Seven/ Spousal Highest Daily Lifetime Seven" section for
more details). It is possible that over time the formula could transfer some,
all, or none of the Contract Value to the AST Investment Grade Bond Portfolio
Sub-account under the newly-elected benefit. You should be aware that upon
termination of the Spousal Lifetime Five benefit, you will lose the Protected
Withdrawal Value and Annual Income Amount that you had accumulated under the
benefit. Thus, the initial guarantees under any newly-elected benefit will be
based on your current Contract Value.
Also note that the fee for the Highest Daily Lifetime Seven and Spousal Highest
Daily Lifetime Seven benefits is a percentage of Protected Withdrawal Value.
Thus, if Protected Withdrawal Value is larger than Contract Value, the fee will
be greater than it would have been had it been based on Contract Value. Once the
Spousal Lifetime Five benefit is canceled you are not required to re-elect
another optional living benefit and any subsequent benefit election may be made
on or after the first Business Day following the cancellation of the Spousal
Lifetime Five benefit provided that the benefit you are looking to elect is
available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations for the
benefit you are electing.
C. Highest Daily Lifetime Five - Elections of Highest Daily Lifetime Seven or
Spousal Highest Daily Lifetime Seven. Under the section of the prospectus
entitled "Highest Daily Lifetime Five", we replace the last paragraph in
the sub-section entitled "Election of and Designation under the Program"
with the following:
We no longer permit elections of Highest Daily Lifetime Five - - whether for
those who currently participate in Highest Daily Lifetime Five or for those who
are buying a Contract for the first time. If you wish, you may cancel the
Highest Daily Lifetime Five benefit. You may then elect Highest Daily Lifetime
Seven or Spousal Highest Daily Lifetime Seven (or any other currently available
living benefit) on the Business Day after you have cancelled the Highest Daily
Lifetime Five benefit, provided the request is received in good order (subject
to state availability and any applicable age requirements). Upon cancellation of
the Highest Daily Lifetime Five benefit, any Contract Value allocated to the
Benefit Fixed Rate Account used with the asset transfer formula will be
reallocated to the Permitted Sub-Accounts according to your most recent
allocation instructions or, in absence of such instructions, pro-rata. Upon your
election of Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven, Contract Value may be transferred between the AST Investment Grade Bond
Portfolio Sub-account and the other Sub-accounts according to the formula (See
"Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal Highest Daily
Lifetime Seven" section for more details). It is possible that over time the
formula could transfer some, all or none of the Contract Value to the AST
Investment Grade Bond Portfolio Sub-account under the newly-elected benefit. You
should be aware that upon termination of the Highest Daily Lifetime Five
benefit, you will lose the Protected Withdrawal Value and Annual Income Amount
that you had accumulated under the benefit, as well as any Enhanced Protected
Withdrawal Value and Return of Principal Guarantees (if no withdrawals have been
taken) . Thus, the initial guarantees under any newly-elected benefit will be
based on your current Contract Value. Finally, please note that the fee for the
Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven benefits
is a percentage of Protected Withdrawal Value. Thus, if Protected Withdrawal
Value is larger than Contract Value, the fee will be greater than it would have
been had it been based on Contract Value. Once the Highest Daily Lifetime Five
benefit is canceled you are not required to re-elect another optional living
benefit and any subsequent benefit election may be made on or after the first
Business Day following the cancellation of the Highest Daily Lifetime Five
benefit provided that the benefit you are looking to elect is available on a
post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
D. Highest Daily Lifetime Seven - - Elections of Highest Daily Lifetime Seven
or Spousal Highest Daily Lifetime Seven. Under the section of the
prospectus entitled "Highest Daily Lifetime Seven", we replace the last
paragraph in the sub-section entitled "Election of and Designations under
the Program" with the following:
If you wish, you may cancel the Highest Daily Lifetime Seven benefit. You may
then re-elect Highest Daily Lifetime Seven or elect Spousal Highest Daily
Lifetime Seven (or any other currently available living benefit) on the Business
Day after you have cancelled the Highest Daily Lifetime Seven benefit, provided
the request is received in good order (subject to state availability and any
applicable age requirements). Upon cancellation of the Highest Daily Lifetime
Seven benefit, any Contract Value allocated to the AST Investment Grade Bond
Portfolio Sub-account used with the asset transfer formula will be reallocated
to the Permitted Sub-Accounts according to your most recent allocation
instructions or, in absence of such instructions, pro-rata. Upon your election
of either the Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven benefit, Contract Value may be transferred between the AST Investment
Grade Bond Portfolio Sub-account and the other Sub-accounts according to the
formula (See "Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal
Highest Daily Lifetime Seven" section for more details). It is possible that
over time the formula could transfer some, all or none of the Contract Value to
the AST Investment Grade Bond Portfolio Sub-account under the newly-elected
benefit. You should be aware that upon termination of Highest Daily Lifetime
Seven, you will lose the Protected Withdrawal Value (including the Tenth
Anniversary Date Guarantee), Annual Income Amount, and the Return of Principal
Guarantee that you had accumulated under the benefit. Thus, the initial
guarantees under any newly-elected benefit will be based on your current
Contract Value. Once the Highest Daily Lifetime Seven benefit is canceled you
are not required to re-elect another optional living benefit and any subsequent
benefit election may be made on or after the first Business Day following the
cancellation of the Highest Daily Lifetime Seven benefit provided that the
benefit you are looking to elect is available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations under the
benefit you are electing.
E. Spousal Highest Daily Lifetime Seven - - Elections of Highest Daily
Lifetime Seven or Spousal Highest Daily Lifetime Seven. Under the section
of the prospectus entitled "Spousal Highest Daily Lifetime Seven", we
replace the last paragraph in the sub-section entitled "Election of and
Designations under the Program" with the following:
If you wish, you may cancel the Spousal Highest Daily Lifetime Seven benefit.
You may then re-elect Spousal Highest Daily Lifetime Seven or elect Highest
Daily Lifetime Seven (or any other currently available living benefit) on the
Business Day after you have cancelled the Spousal Highest Daily Lifetime Seven
benefit, provided the request is received in good order (subject to state
availability and any applicable age requirements). Upon cancellation of the
Spousal Highest Daily Lifetime Seven benefit, any Contract Value allocated to
the AST Investment Grade Bond Portfolio Sub-account used with the asset transfer
formula will be reallocated to the Permitted Sub-Accounts according to your most
recent allocation instruction or in absence of such instruction, pro-rata. Upon
your election of Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime
Seven, Contract Value may be transferred between the AST Investment Grade Bond
Portfolio Sub-account and the other Sub-accounts according to the formula (See
"Asset Transfer Component of Highest Daily Lifetime Seven/ Spousal Highest Daily
Lifetime Seven" section for more details). It is possible that over time the
formula could transfer some, all or, none of the Contract Value to the AST Bond
Portfolio Sub-accounts under the newly-elected benefit. You should be aware that
upon termination of Spousal Highest Daily Lifetime Seven, you will lose the
Protected Withdrawal Value (including the Tenth Anniversary Date Guarantee),
Annual Income Amount, and the Return of Principal Guarantee that you had
accumulated under the benefit. Thus, the initial guarantees under any
newly-elected benefit will be based on your current Contract Value. Once the
Spousal Highest Daily Lifetime Seven benefit is canceled you are not required to
re-elect another optional living benefit and any subsequent benefit election may
be made on or after the first Business Day following the cancellation of the
Spousal Highest Daily Lifetime Seven benefit provided that the benefit you are
looking to elect is available on a post- issue basis .
Please refer to your prospectus for allowable ownership designations under
the benefit you are electing.
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
STRATEGIC PARTNERSSM ADVISOR
STRATEGIC PARTNERSSM ANNUITY ONE
STRATEGIC PARTNERSSM ANNUITY ONE 3
STRATEGIC PARTNERSSM FLEXELITE
STRATEGIC PARTNERSSM PLUS
STRATEGIC PARTNERSSM PLUS 3
STRATEGIC PARTNERSSM SELECT
PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN
PRUDENTIAL VARIABLE INVESTMENT PLAN
Supplement, Dated August 13, 2004 to Prospectuses Dated May 1, 2004
This supplement should be read and retained with the current prospectus for your
annuity contract. If you would like another copy of a current prospectus or a
statement of additional information, please contact us at (888) PRU-2888.
Changes to certain systems under which we administer your annuity will take
effect on or about September 7, 2004. These changes are the result of further
efforts to integrate American Skandia Life Assurance Corporation's operations
into the operations of other subsidiary companies of Prudential Financial, Inc.
The following changes relate primarily to those systems-related changes, but
also include changes that reflect other product and/or disclosure modifications.
This supplement is intended to update certain information in the May 1, 2004
prospectus for the variable annuity you own, and is not intended to be a
prospectus or offer for any other variable annuity listed here that you do not
own.
CHANGES APPLICABLE TO ALL ANNUITIES:
COMPANY TAXES: In Section 6 of the prospectus, under the heading entitled
"Company Taxes," we replace the existing disclosure with the following:
"In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to owners of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently pass through company
income taxes on the taxable corporate earnings created by this annuity. We
reserve the right to change these tax practices."
ASSIGNMENT: In Section 9 of the prospectus, under the heading entitled
"Assignment," we add the following sentence to the end of the first paragraph:
"If you assign the contract, that assignment will result in the termination
of any automated withdrawal program that had been in effect. If the new owner
wants to re-institute an automated withdrawal program, then he/she needs to
submit the forms that we require, in good order."
CHANGES APPLICABLE TO ALL ANNUITIES EXCEPT FOR PRUDENTIAL QUALIFIED VARIABLE
INVESTMENT PLAN AND PRUDENTIAL VARIABLE INVESTMENT PLAN:
TRANSFERS AMONG OPTIONS: In Section 2 of the prospectus, under the heading
entitled "Transfers Among Options," the following sentence is added to the end
of the last paragraph:
"For purposes of the 12 free transfers per year that we allow, we will
treat multiple transfers that are submitted on the same business day as a single
transfer."
DOLLAR COST AVERAGING: In Section 2 of the prospectus, under the heading
entitled "Dollar Cost Averaging," the references to a $100 minimum transfer
amount and a $100 minimum DCA account balance in the first and third sentences
of the second paragraph are deleted.
SCHEDULED TRANSACTIONS: In Section 2 of the prospectus, the following is added
as a new sub-section immediately following the section entitled
"Auto-Rebalancing":
"Scheduled Transactions
"Scheduled transactions" include transfers under dollar cost averaging, an
asset allocation program, auto-rebalancing, systematic withdrawals, minimum
distributions or annuity payments. Generally, we will process a scheduled
transaction on the next business day when the scheduled transaction falls
on a day that is not a business day. If this practice would result in the
transaction occurring in the subsequent calendar year, then we will process
the transaction on the preceding business day."
CHANGE APPLICABLE TO ALL ANNUITIES EXCEPT FOR PRUCO LIFE & PRUCO LIFE OF NEW
JERSEY STRATEGIC PARTNERS SELECT, PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN
AND PRUDENTIAL VARIABLE INVESTMENT PLAN:
PURCHASE PAYMENTS: In Section 5 of the prospectus, under the heading entitled
"Purchase Payments," the second sentence in the first paragraph is replaced by
the following:
"The minimum initial purchase payment is $10,000. Where allowed by law, you
must get our approval for any initial and additional purchase payment of
$1,000,000 or more."
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS FLEXELITE ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under the
sub-section entitled "Effect of Withdrawals":
(i) The second sentence of the first paragraph is deleted in its entirety.
(ii) The fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) The following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(iv) The third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,257.55, or $479,242.45)."
(v) The second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,242.45 to $469,242.45)."
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -3.04%, 2.78%
and 6.66%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS FLEXELITE
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
No Credit Election
Greater of Roll-Up and Step-Up Guaranteed Minimum Death Benefit
Earnings Appreciator Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 105,560 99,260 105,560 2,224 107,784 N/A N/A 105,000 N/A N/A
2 62 111,432 105,132 111,432 4,573 116,005 N/A N/A 110,250 N/A N/A
3 63 117,633 117,633 117,633 7,053 124,687 N/A N/A 115,763 N/A N/A
4 64 124,183 124,183 124,183 9,673 133,857 N/A N/A 121,551 N/A N/A
5 65 131,101 131,101 131,101 12,441 143,542 N/A N/A 127,628 N/A N/A
6 66 138,408 138,408 138,408 15,363 153,772 N/A N/A 134,010 N/A N/A
7 67 146,126 146,126 146,126 18,451 164,577 6,919 153,045 140,710 7,683 9,351
8 68 154,279 154,279 154,279 21,711 175,990 8,142 162,421 147,746 8,331 10,169
9 69 162,890 162,890 162,890 25,156 188,046 9,434 172,324 155,133 9,036 11,062
10 70 171,986 171,986 171,986 28,795 200,781 14,397 186,384 162,889 10,550 12,271
15 75 225,786 225,786 225,786 50,314 276,100 31,446 257,232 200,000 15,775 19,298
20 80 297,541 297,541 297,541 79,016 376,557 49,385 346,926 200,000 18,991 28,881
25 85 393,894 393,894 393,894 117,558 511,451 73,473 467,367 200,000 23,743 43,783
30 90 523,277 523,277 523,277 120,000 643,277 105,819 629,097 200,000 29,022 63,544
35 95 697,014 697,014 697,014 120,000 817,014 149,254 846,268 200,000 35,949 91,209
- -------------------------------------------------------------------------------------------------------------
6% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 101,703 95,403 105,000 681 105,681 N/A N/A 105,000 N/A N/A
2 62 103,418 97,118 110,250 1,367 111,617 N/A N/A 110,250 N/A N/A
3 63 105,144 105,144 115,763 2,057 117,820 N/A N/A 115,763 N/A N/A
4 64 106,879 106,879 121,551 2,752 124,302 N/A N/A 121,551 N/A N/A
5 65 108,624 108,624 127,628 3,450 131,078 N/A N/A 127,628 N/A N/A
6 66 110,376 110,376 134,010 4,151 138,160 N/A N/A 134,010 N/A N/A
7 67 112,135 112,135 140,710 4,854 145,564 1,820 113,955 140,710 7,417 6,963
8 68 113,898 113,898 147,746 5,559 153,305 2,085 115,982 147,746 8,007 7,262
9 69 115,664 115,664 155,133 6,265 161,398 2,350 118,013 155,133 8,647 7,575
10 70 117,431 117,431 162,889 6,972 169,862 3,486 120,917 162,889 9,901 7,961
15 75 126,235 126,235 207,893 10,494 218,387 6,559 132,794 200,000 14,079 9,962
20 80 135,624 135,624 265,330 14,250 279,580 8,906 144,530 200,000 15,908 12,032
25 85 146,101 146,101 265,330 18,440 283,770 11,525 157,626 200,000 18,365 14,766
30 90 157,790 157,790 265,330 23,116 288,446 14,447 172,237 200,000 20,351 17,397
35 95 170,832 170,832 265,330 28,333 293,663 17,708 188,540 200,000 22,409 20,320
- --------------------------------------------------------------------------------------------------------------
0% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 95,867 89,817 105,000 0 105,000 N/A N/A 105,000 N/A N/A
2 62 91,856 86,085 110,250 0 110,250 N/A N/A 110,250 N/A N/A
3 63 87,961 87,961 115,763 0 115,763 N/A N/A 115,763 N/A N/A
4 64 84,177 84,177 121,551 0 121,551 N/A N/A 121,551 N/A N/A
5 65 80,499 80,499 127,628 0 127,628 N/A N/A 127,628 N/A N/A
6 66 76,920 76,920 134,010 0 134,010 N/A N/A 134,010 N/A N/A
7 67 73,437 73,437 140,710 0 140,710 0 73,437 140,710 7,323 4,487
8 68 70,044 70,044 147,746 0 147,746 0 70,044 147,746 7,896 4,386
9 69 66,736 66,736 155,133 0 155,133 0 66,736 155,133 8,518 4,284
10 70 63,508 63,508 162,889 0 162,889 0 63,508 162,889 9,694 4,181
15 75 48,428 48,428 207,893 0 207,893 0 48,428 200,000 13,632 3,633
20 80 35,490 35,490 265,330 0 265,330 0 35,490 200,000 15,230 2,955
25 85 24,702 24,702 265,330 0 265,330 0 24,702 200,000 17,364 2,314
30 90 15,708 15,708 265,330 0 265,330 0 15,708 200,000 18,980 1,587
35 95 8,209 8,209 265,330 0 265,330 0 8,209 200,000 20,586 885
- --------------------------------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Greater of the contract value or purchase payments
(adjusted for withdrawals) compounded at 5% annually up to the later of age 80
or 5 years from issue (for age 80-85 at issue, 3% annual roll-up for 5 years) or
the highest contract value (the "step-up") on any contract anniversary up to the
later of age 80 or the fifth contract anniversary adjusted for withdrawals (age
80-84 at issue will have only one step-up on the third contract anniversary) is
payable to the beneficiary(s) on death of owner or joint owner. See the
prospectus for more complete information.
Earnings Appreciator Benefit (EAB) - A supplemental death benefit based on 40%
of earnings if issue age is 0-70, 25% for age 71-75; 15% for age 76-79, subject
to a cap equal to 300% of purchase payments multiplied by the applicable benefit
percentage. See prospectus for more complete information.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS ANNUITY ONE 3 AND STRATEGIC
PARTNERS PLUS 3 ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under the
sub-section entitled "Effect of Withdrawals":
(i) The second sentence of the first paragraph is deleted in its entirety.
(ii) The fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) The following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(vi) The third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,257.55, or $479,242.45)."
(vii) The second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,242.45 to $469,242.45)."
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS ANNUITY ONE 3 ONLY:
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -2.80%, 3.03%
and 6.92%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS ANNUITY ONE 3
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
Contract Without Credit
Greater of Roll-Up and Step-Up Guaranteed Minimum Death Benefit
Earnings Appreciator Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 105,821 100,421 105,821 2,328 108,149 N/A N/A 105,000 N/A N/A
2 62 111,984 107,484 111,984 4,794 116,778 N/A N/A 110,250 N/A N/A
3 63 118,511 114,911 118,511 7,404 125,916 N/A N/A 115,763 N/A N/A
4 64 125,423 122,723 125,423 10,169 135,593 N/A N/A 121,551 N/A N/A
5 65 132,744 130,944 132,744 13,097 145,841 N/A N/A 127,628 N/A N/A
6 66 140,496 139,596 140,496 16,199 156,695 N/A N/A 134,010 N/A N/A
7 67 148,707 148,707 148,707 19,483 168,190 7,306 156,013 140,710 7,703 9,532
8 68 157,404 157,404 157,404 22,962 180,365 8,611 166,014 147,746 8,356 10,394
9 69 166,615 166,615 166,615 26,646 193,261 9,992 176,607 155,133 9,067 11,337
10 70 176,372 176,372 176,372 30,549 206,921 15,274 191,646 162,889 10,603 12,618
15 75 234,573 234,573 234,573 53,829 288,402 33,643 268,216 200,000 15,925 20,122
20 80 313,200 313,200 313,200 85,280 398,480 53,300 366,500 200,000 19,289 30,511
25 85 420,085 420,085 420,085 120,000 540,085 80,021 500,106 200,000 24,311 46,850
30 90 565,382 565,382 565,382 120,000 685,382 116,345 681,727 200,000 30,021 68,860
35 95 762,896 762,896 762,896 120,000 882,896 165,724 928,620 200,000 37,644 100,085
- -------------------------------------------------------------------------------------------------------------
6% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 101,954 96,554 105,000 782 105,782 N/A N/A 105,000 N/A N/A
2 62 103,930 99,430 110,250 1,572 111,822 N/A N/A 110,250 N/A N/A
3 63 105,929 102,329 115,763 2,372 118,134 N/A N/A 115,763 N/A N/A
4 64 107,948 105,248 121,551 3,179 124,730 N/A N/A 121,551 N/A N/A
5 65 109,988 108,188 127,628 3,995 131,623 N/A N/A 127,628 N/A N/A
6 66 112,046 111,146 134,010 4,819 138,828 N/A N/A 134,010 N/A N/A
7 67 114,123 114,123 140,710 5,649 146,359 2,118 116,242 140,710 7,433 7,102
8 68 116,217 116,217 147,746 6,487 154,232 2,433 118,649 147,746 8,026 7,429
9 69 118,326 118,326 155,133 7,330 162,463 2,749 121,075 155,133 8,669 7,772
10 70 120,449 120,449 162,889 8,180 171,069 4,090 124,539 162,889 9,937 8,200
15 75 131,240 131,240 207,893 12,496 220,389 7,810 139,049 200,000 14,164 10,432
20 80 142,990 142,990 265,330 17,196 282,526 10,747 153,737 200,000 16,048 12,798
25 85 156,262 156,262 265,330 22,505 287,835 14,066 170,328 200,000 18,585 15,956
30 90 171,254 171,254 265,330 28,502 293,831 17,814 189,068 200,000 20,671 19,097
35 95 188,189 188,189 265,330 35,275 300,605 22,047 210,236 200,000 22,855 22,659
- --------------------------------------------------------------------------------------------------------------
0% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 96,154 90,954 105,000 0 105,000 N/A N/A 105,000 N/A N/A
2 62 92,410 88,263 110,250 0 110,250 N/A N/A 110,250 N/A N/A
3 63 88,765 85,592 115,763 0 115,763 N/A N/A 115,763 N/A N/A
4 64 85,213 82,938 121,551 0 121,551 N/A N/A 121,551 N/A N/A
5 65 81,749 80,302 127,628 0 127,628 N/A N/A 127,628 N/A N/A
6 66 78,370 77,680 134,010 0 134,010 N/A N/A 134,010 N/A N/A
7 67 75,070 75,070 140,710 0 140,710 0 75,070 140,710 7,323 4,587
8 68 71,812 71,812 147,746 0 147,746 0 71,812 147,746 7,896 4,496
9 69 68,626 68,626 155,133 0 155,133 0 68,626 155,133 8,518 4,405
10 70 65,508 65,508 162,889 0 162,889 0 65,508 162,889 9,694 4,313
15 75 50,820 50,820 207,893 0 207,893 0 50,820 200,000 13,632 3,813
20 80 38,054 38,054 265,330 0 265,330 0 38,054 200,000 15,230 3,168
25 85 27,279 27,279 265,330 0 265,330 0 27,279 200,000 17,364 2,555
30 90 18,184 18,184 265,330 0 265,330 0 18,184 200,000 18,980 1,837
35 95 10,507 10,507 265,330 0 265,330 0 10,507 200,000 20,586 1,132
- --------------------------------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Greater of the contract value or purchase payments
(adjusted for withdrawals) compounded at 5% annually up to the later of age 80
or 5 years from issue (for age 80-85 at issue, 3% annual roll-up for 5 years) or
the highest contract value (the "step-up") on any contract anniversary up to the
later of age 80 or the fifth contract anniversary adjusted for withdrawals (age
80-84 at issue will have only one step-up on the third contract anniversary) is
payable to the beneficiary(s) on death of owner or joint owner. See the
prospectus for more complete information.
Earnings Appreciator Benefit (EAB) - A supplemental death benefit based on 40%
of earnings if issue age is 0-70, 25% for age 71-75; 15% for age 76-79, subject
to a cap equal to 300% of purchase payments multiplied by the applicable benefit
percentage. See prospectus for more complete information.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGES APPLICABLE TO PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS ANNUITY ONE 3
AND STRATEGIC PARTNERS PLUS 3 ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under the
sub-section entitled "Effect of Withdrawals":
(i) the second sentence of the first paragraph is deleted in its entirety.
(ii) the fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) the following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(viii) the third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,258.85, or $479,241.15)."
(ix) the second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,241.15 to $469,241.15)."
CHANGES APPLICABLE TO PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS ANNUITY ONE 3
ONLY:
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -2.70%, 3.13%
and 7.03%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS ANNUITY ONE 3
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
Contract Without Credit
Step-Up Guaranteed Minimum Death Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 106,246 100,846 106,246 N/A N/A 105,000 N/A N/A
2 62 112,889 108,389 112,889 N/A N/A 110,250 N/A N/A
3 63 119,954 116,354 119,954 N/A N/A 115,763 N/A N/A
4 64 127,468 124,768 127,468 N/A N/A 121,551 N/A N/A
5 65 135,461 133,661 135,461 N/A N/A 127,628 N/A N/A
6 66 143,962 143,062 143,962 N/A N/A 134,010 N/A N/A
7 67 153,005 153,005 153,005 7,951 160,956 140,710 7,736 9,834
8 68 162,625 162,625 162,625 9,394 172,019 147,746 8,398 10,770
9 69 172,860 172,860 172,860 10,929 183,789 155,133 9,118 11,798
10 70 183,748 183,748 183,748 16,750 200,497 162,889 10,690 13,201
15 75 249,597 249,597 249,597 37,399 286,997 200,000 16,181 21,531
20 80 340,422 340,422 340,422 60,105 400,527 200,000 19,807 33,344
25 85 466,379 466,379 466,379 91,595 557,973 200,000 25,316 52,271
30 90 641,057 641,057 641,057 135,264 776,322 200,000 31,817 78,415
- --------------------------------------------------------------------------------------
6% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 102,364 96,964 102,364 N/A N/A 105,000 N/A N/A
2 62 104,771 100,271 104,771 N/A N/A 110,250 N/A N/A
3 63 107,220 103,620 107,220 N/A N/A 115,763 N/A N/A
4 64 109,711 107,011 109,711 N/A N/A 121,551 N/A N/A
5 65 112,244 110,444 112,244 N/A N/A 127,628 N/A N/A
6 66 114,818 113,918 114,818 N/A N/A 134,010 N/A N/A
7 67 117,435 117,435 117,435 2,615 120,050 140,710 7,459 7,335
8 68 120,092 120,092 120,092 3,014 123,105 147,746 8,057 7,708
9 69 122,789 122,789 122,789 3,418 126,207 155,133 8,706 8,101
10 70 125,526 125,526 125,526 5,105 130,631 162,889 9,997 8,601
15 75 139,797 139,797 139,797 9,949 149,746 200,000 14,310 11,234
20 80 155,799 155,799 155,799 13,950 169,749 200,000 16,292 14,131
25 85 174,239 174,239 174,239 18,560 192,799 200,000 18,975 18,061
30 90 195,488 195,488 195,488 23,872 219,360 200,000 21,245 22,157
- --------------------------------------------------------------------------------------
0% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 96,541 91,318 100,000 N/A N/A 105,000 N/A N/A
2 62 93,158 88,973 100,000 N/A N/A 110,250 N/A N/A
3 63 89,848 86,632 100,000 N/A N/A 115,763 N/A N/A
4 64 86,607 84,291 100,000 N/A N/A 121,551 N/A N/A
5 65 83,433 81,951 100,000 N/A N/A 127,628 N/A N/A
6 66 80,320 79,610 100,000 N/A N/A 134,010 N/A N/A
7 67 77,267 77,267 100,000 0 77,267 140,710 7,323 4,721
8 68 74,239 74,239 100,000 0 74,239 147,746 7,896 4,648
9 69 71,264 71,264 100,000 0 71,264 155,133 8,518 4,575
10 70 68,339 68,339 100,000 0 68,339 162,889 9,694 4,499
15 75 54,364 54,364 100,000 0 54,364 200,000 13,632 4,079
20 80 41,957 41,957 100,000 0 41,957 200,000 15,230 3,493
25 85 31,274 31,274 100,000 0 31,274 200,000 17,364 2,930
30 90 22,075 22,075 100,000 0 22,075 200,000 18,980 2,230
- --------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Value of base death benefit or GMDB, as indicated.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGE APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS SELECT ONLY:
WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE: In Section 6 of the prospectus,
under the heading entitled "Waiver of Withdrawal Charge For Critical Care" in
the first sentence, the reference to "owner or a joint owner" is amended to
refer instead to "annuitant, or if deceased, co-annuitant, respectively."
CHANGE APPLICABLE TO PRUCO LIFE & PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS
SELECT AND PRUDENTIAL VARIABLE INVESTMENT PLAN ONLY:
PURCHASE PAYMENTS: In Section 5 of the prospectus, under the section entitled
"Purchase Payments," the third sentence in the first paragraph is replaced by
the following:
"Where allowed by law, you must get our approval for any initial and
additional purchase payment of $1,000,000 or more."
CHANGE APPLICABLE TO PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN AND
PRUDENTIAL VARIABLE INVESTMENT PLAN ONLY:
SCHEDULED TRANSACTIONS: In Section 2 of the prospectus, under the section
entitled "Dollar Cost Averaging," the following is added to the last sentence of
the fourth paragraph:
"If processing the transfer on the next business day would result in the
transaction occurring in the subsequent calendar year, then we will process the
transaction on the preceding business day. "
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
STRATEGIC PARTNERSSM ADVISOR
STRATEGIC PARTNERSSM ANNUITY ONE
STRATEGIC PARTNERSSM ANNUITY ONE 3
STRATEGIC PARTNERSSM FLEXELITE
STRATEGIC PARTNERSSM PLUS
STRATEGIC PARTNERSSM PLUS 3
STRATEGIC PARTNERSSM SELECT
PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN
PRUDENTIAL VARIABLE INVESTMENT PLAN
Supplement, Dated August 20, 2004 to Prospectuses Dated May 1, 2004
This supplement should be read and retained with the current prospectus for your
annuity contract. If you would like another copy of a current prospectus or a
statement of additional information, please contact us at (888) PRU-2888.
Changes to certain systems under which we administer your annuity will take
effect on or about October 18, 2004. These changes are the result of further
efforts to integrate American Skandia Life Assurance Corporation's operations
into the operations of other subsidiary companies of Prudential Financial, Inc.
The following changes relate primarily to those systems-related changes, but
also include changes that reflect other product and/or disclosure modifications.
This supplement is intended to update certain information in the May 1, 2004
prospectus for the variable annuity you own, and is not intended to be a
prospectus or offer for any other variable annuity listed here that you do not
own.
CHANGES APPLICABLE TO ALL ANNUITIES:
COMPANY TAXES: In Section 6 of the prospectus, under the heading entitled
"Company Taxes," we replace the existing disclosure with the following:
"In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to owners of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently pass through company
income taxes on the taxable corporate earnings created by this annuity. We
reserve the right to change these tax practices."
ASSIGNMENT: In Section 9 of the prospectus, under the heading entitled
"Assignment," we add the following sentence to the end of the first paragraph:
"If you assign the contract, that assignment will result in the termination
of any automated withdrawal program that had been in effect. If the new owner
wants to re-institute an automated withdrawal program, then he/she needs to
submit the forms that we require, in good order."
CHANGES APPLICABLE TO ALL ANNUITIES EXCEPT FOR PRUDENTIAL QUALIFIED VARIABLE
INVESTMENT PLAN AND PRUDENTIAL VARIABLE INVESTMENT PLAN:
TRANSFERS AMONG OPTIONS: In Section 2 of the prospectus, under the heading
entitled "Transfers Among Options," the following sentence is added to the end
of the last paragraph:
"For purposes of the 12 free transfers per year that we allow, we will
treat multiple transfers that are submitted on the same business day as a single
transfer."
DOLLAR COST AVERAGING: In Section 2 of the prospectus, under the heading
entitled "Dollar Cost Averaging," the references to a $100 minimum transfer
amount and a $100 minimum DCA account balance in the first and third sentences
of the second paragraph are deleted.
SCHEDULED TRANSACTIONS: In Section 2 of the prospectus, the following is added
as a new sub-section immediately following the section entitled
"Auto-Rebalancing":
"Scheduled Transactions
"Scheduled transactions" include transfers under dollar cost averaging, an
asset allocation program, auto-rebalancing, systematic withdrawals, minimum
distributions or annuity payments. Generally, we will process a scheduled
transaction on the next business day when the scheduled transaction falls
on a day that is not a business day. If this practice would result in the
transaction occurring in the subsequent calendar year, then we will process
the transaction on the preceding business day."
CHANGE APPLICABLE TO ALL ANNUITIES EXCEPT FOR PRUCO LIFE & PRUCO LIFE OF NEW
JERSEY STRATEGIC PARTNERS SELECT, PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN
AND PRUDENTIAL VARIABLE INVESTMENT PLAN:
PURCHASE PAYMENTS: In Section 5 of the prospectus, under the heading entitled
"Purchase Payments," the second sentence in the first paragraph is replaced by
the following:
"The minimum initial purchase payment is $10,000. Where allowed by law,
you must get our approval for any initial and additional purchase payment of
$1,000,000 or more."
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS FLEXELITE ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under
the sub-section entitled "Effect of Withdrawals":
(i) The second sentence of the first paragraph is deleted in its entirety.
(ii) The fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) The following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(iv) The third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,257.55, or $479,242.45)."
(v) The second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,242.45 to $469,242.45)."
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -3.04%, 2.78%
and 6.66%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS FLEXELITE
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
No Credit Election
Greater of Roll-Up and Step-Up Guaranteed Minimum Death Benefit
Earnings Appreciator Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 105,560 99,260 105,560 2,224 107,784 N/A N/A 105,000 N/A N/A
2 62 111,432 105,132 111,432 4,573 116,005 N/A N/A 110,250 N/A N/A
3 63 117,633 117,633 117,633 7,053 124,687 N/A N/A 115,763 N/A N/A
4 64 124,183 124,183 124,183 9,673 133,857 N/A N/A 121,551 N/A N/A
5 65 131,101 131,101 131,101 12,441 143,542 N/A N/A 127,628 N/A N/A
6 66 138,408 138,408 138,408 15,363 153,772 N/A N/A 134,010 N/A N/A
7 67 146,126 146,126 146,126 18,451 164,577 6,919 153,045 140,710 7,683 9,351
8 68 154,279 154,279 154,279 21,711 175,990 8,142 162,421 147,746 8,331 10,169
9 69 162,890 162,890 162,890 25,156 188,046 9,434 172,324 155,133 9,036 11,062
10 70 171,986 171,986 171,986 28,795 200,781 14,397 186,384 162,889 10,550 12,271
15 75 225,786 225,786 225,786 50,314 276,100 31,446 257,232 200,000 15,775 19,298
20 80 297,541 297,541 297,541 79,016 376,557 49,385 346,926 200,000 18,991 28,881
25 85 393,894 393,894 393,894 117,558 511,451 73,473 467,367 200,000 23,743 43,783
30 90 523,277 523,277 523,277 120,000 643,277 105,819 629,097 200,000 29,022 63,544
35 95 697,014 697,014 697,014 120,000 817,014 149,254 846,268 200,000 35,949 91,209
- --------------------------------------------------------------------------------------------------------------
6% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 101,703 95,403 105,000 681 105,681 N/A N/A 105,000 N/A N/A
2 62 103,418 97,118 110,250 1,367 111,617 N/A N/A 110,250 N/A N/A
3 63 105,144 105,144 115,763 2,057 117,820 N/A N/A 115,763 N/A N/A
4 64 106,879 106,879 121,551 2,752 124,302 N/A N/A 121,551 N/A N/A
5 65 108,624 108,624 127,628 3,450 131,078 N/A N/A 127,628 N/A N/A
6 66 110,376 110,376 134,010 4,151 138,160 N/A N/A 134,010 N/A N/A
7 67 112,135 112,135 140,710 4,854 145,564 1,820 113,955 140,710 7,417 6,963
8 68 113,898 113,898 147,746 5,559 153,305 2,085 115,982 147,746 8,007 7,262
9 69 115,664 115,664 155,133 6,265 161,398 2,350 118,013 155,133 8,647 7,575
10 70 117,431 117,431 162,889 6,972 169,862 3,486 120,917 162,889 9,901 7,961
15 75 126,235 126,235 207,893 10,494 218,387 6,559 132,794 200,000 14,079 9,962
20 80 135,624 135,624 265,330 14,250 279,580 8,906 144,530 200,000 15,908 12,032
25 85 146,101 146,101 265,330 18,440 283,770 11,525 157,626 200,000 18,365 14,766
30 90 157,790 157,790 265,330 23,116 288,446 14,447 172,237 200,000 20,351 17,397
35 95 170,832 170,832 265,330 28,333 293,663 17,708 188,540 200,000 22,409 20,320
- --------------------------------------------------------------------------------------------------------------
0% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 95,867 89,817 105,000 0 105,000 N/A N/A 105,000 N/A N/A
2 62 91,856 86,085 110,250 0 110,250 N/A N/A 110,250 N/A N/A
3 63 87,961 87,961 115,763 0 115,763 N/A N/A 115,763 N/A N/A
4 64 84,177 84,177 121,551 0 121,551 N/A N/A 121,551 N/A N/A
5 65 80,499 80,499 127,628 0 127,628 N/A N/A 127,628 N/A N/A
6 66 76,920 76,920 134,010 0 134,010 N/A N/A 134,010 N/A N/A
7 67 73,437 73,437 140,710 0 140,710 0 73,437 140,710 7,323 4,487
8 68 70,044 70,044 147,746 0 147,746 0 70,044 147,746 7,896 4,386
9 69 66,736 66,736 155,133 0 155,133 0 66,736 155,133 8,518 4,284
10 70 63,508 63,508 162,889 0 162,889 0 63,508 162,889 9,694 4,181
15 75 48,428 48,428 207,893 0 207,893 0 48,428 200,000 13,632 3,633
20 80 35,490 35,490 265,330 0 265,330 0 35,490 200,000 15,230 2,955
25 85 24,702 24,702 265,330 0 265,330 0 24,702 200,000 17,364 2,314
30 90 15,708 15,708 265,330 0 265,330 0 15,708 200,000 18,980 1,587
35 95 8,209 8,209 265,330 0 265,330 0 8,209 200,000 20,586 885
- --------------------------------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Greater of the contract value or purchase payments
(adjusted for withdrawals) compounded at 5% annually up to the later of age 80
or 5 years from issue (for age 80-85 at issue, 3% annual roll-up for 5 years) or
the highest contract value (the "step-up") on any contract anniversary up to the
later of age 80 or the fifth contract anniversary adjusted for withdrawals (age
80-84 at issue will have only one step-up on the third contract anniversary) is
payable to the beneficiary(s) on death of owner or joint owner. See the
prospectus for more complete information.
Earnings Appreciator Benefit (EAB) - A supplemental death benefit based on 40%
of earnings if issue age is 0-70, 25% for age 71-75; 15% for age 76-79, subject
to a cap equal to 300% of purchase payments multiplied by the applicable benefit
percentage. See prospectus for more complete information.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS ANNUITY ONE 3 AND STRATEGIC
PARTNERS PLUS 3 ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under the
sub-section entitled "Effect of Withdrawals":
(i) The second sentence of the first paragraph is deleted in its entirety.
(ii) The fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) The following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(vi) The third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,257.55, or $479,242.45)."
(vii) The second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,242.45 to $469,242.45)."
CHANGES APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS ANNUITY ONE 3 ONLY:
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -2.80%, 3.03%
and 6.92%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS ANNUITY ONE 3
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
Contract Without Credit
Greater of Roll-Up and Step-Up Guaranteed Minimum Death Benefit
Earnings Appreciator Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 105,821 100,421 105,821 2,328 108,149 N/A N/A 105,000 N/A N/A
2 62 111,984 107,484 111,984 4,794 116,778 N/A N/A 110,250 N/A N/A
3 63 118,511 114,911 118,511 7,404 125,916 N/A N/A 115,763 N/A N/A
4 64 125,423 122,723 125,423 10,169 135,593 N/A N/A 121,551 N/A N/A
5 65 132,744 130,944 132,744 13,097 145,841 N/A N/A 127,628 N/A N/A
6 66 140,496 139,596 140,496 16,199 156,695 N/A N/A 134,010 N/A N/A
7 67 148,707 148,707 148,707 19,483 168,190 7,306 156,013 140,710 7,703 9,532
8 68 157,404 157,404 157,404 22,962 180,365 8,611 166,014 147,746 8,356 10,394
9 69 166,615 166,615 166,615 26,646 193,261 9,992 176,607 155,133 9,067 11,337
10 70 176,372 176,372 176,372 30,549 206,921 15,274 191,646 162,889 10,603 12,618
15 75 234,573 234,573 234,573 53,829 288,402 33,643 268,216 200,000 15,925 20,122
20 80 313,200 313,200 313,200 85,280 398,480 53,300 366,500 200,000 19,289 30,511
25 85 420,085 420,085 420,085 120,000 540,085 80,021 500,106 200,000 24,311 46,850
30 90 565,382 565,382 565,382 120,000 685,382 116,345 681,727 200,000 30,021 68,860
35 95 762,896 762,896 762,896 120,000 882,896 165,724 928,620 200,000 37,644 100,085
- -------------------------------------------------------------------------------------------------------------
6% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 101,954 96,554 105,000 782 105,782 N/A N/A 105,000 N/A N/A
2 62 103,930 99,430 110,250 1,572 111,822 N/A N/A 110,250 N/A N/A
3 63 105,929 102,329 115,763 2,372 118,134 N/A N/A 115,763 N/A N/A
4 64 107,948 105,248 121,551 3,179 124,730 N/A N/A 121,551 N/A N/A
5 65 109,988 108,188 127,628 3,995 131,623 N/A N/A 127,628 N/A N/A
6 66 112,046 111,146 134,010 4,819 138,828 N/A N/A 134,010 N/A N/A
7 67 114,123 114,123 140,710 5,649 146,359 2,118 116,242 140,710 7,433 7,102
8 68 116,217 116,217 147,746 6,487 154,232 2,433 118,649 147,746 8,026 7,429
9 69 118,326 118,326 155,133 7,330 162,463 2,749 121,075 155,133 8,669 7,772
10 70 120,449 120,449 162,889 8,180 171,069 4,090 124,539 162,889 9,937 8,200
15 75 131,240 131,240 207,893 12,496 220,389 7,810 139,049 200,000 14,164 10,432
20 80 142,990 142,990 265,330 17,196 282,526 10,747 153,737 200,000 16,048 12,798
25 85 156,262 156,262 265,330 22,505 287,835 14,066 170,328 200,000 18,585 15,956
30 90 171,254 171,254 265,330 28,502 293,831 17,814 189,068 200,000 20,671 19,097
35 95 188,189 188,189 265,330 35,275 300,605 22,047 210,236 200,000 22,855 22,659
- --------------------------------------------------------------------------------------------------------------
0% Assumed Rate Of Return
PROJECTED VALUE DEATH BENEFIT(S) LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------------------------------
EAB IAB GMIB
- --------------------------------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Total Death Amount with 10 with 10
Annuitant Death Earnings Benefit Available GMIB year Year
- --------- Contract Surrender Benefit Appreciator Value and to Protected Period Period
Year Age Value Value Value Benefit EAB IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------------------------------
1 61 96,154 90,954 105,000 0 105,000 N/A N/A 105,000 N/A N/A
2 62 92,410 88,263 110,250 0 110,250 N/A N/A 110,250 N/A N/A
3 63 88,765 85,592 115,763 0 115,763 N/A N/A 115,763 N/A N/A
4 64 85,213 82,938 121,551 0 121,551 N/A N/A 121,551 N/A N/A
5 65 81,749 80,302 127,628 0 127,628 N/A N/A 127,628 N/A N/A
6 66 78,370 77,680 134,010 0 134,010 N/A N/A 134,010 N/A N/A
7 67 75,070 75,070 140,710 0 140,710 0 75,070 140,710 7,323 4,587
8 68 71,812 71,812 147,746 0 147,746 0 71,812 147,746 7,896 4,496
9 69 68,626 68,626 155,133 0 155,133 0 68,626 155,133 8,518 4,405
10 70 65,508 65,508 162,889 0 162,889 0 65,508 162,889 9,694 4,313
15 75 50,820 50,820 207,893 0 207,893 0 50,820 200,000 13,632 3,813
20 80 38,054 38,054 265,330 0 265,330 0 38,054 200,000 15,230 3,168
25 85 27,279 27,279 265,330 0 265,330 0 27,279 200,000 17,364 2,555
30 90 18,184 18,184 265,330 0 265,330 0 18,184 200,000 18,980 1,837
35 95 10,507 10,507 265,330 0 265,330 0 10,507 200,000 20,586 1,132
- --------------------------------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Greater of the contract value or purchase payments
(adjusted for withdrawals) compounded at 5% annually up to the later of age 80
or 5 years from issue (for age 80-85 at issue, 3% annual roll-up for 5 years) or
the highest contract value (the "step-up") on any contract anniversary up to the
later of age 80 or the fifth contract anniversary adjusted for withdrawals (age
80-84 at issue will have only one step-up on the third contract anniversary) is
payable to the beneficiary(s) on death of owner or joint owner. See the
prospectus for more complete information.
Earnings Appreciator Benefit (EAB) - A supplemental death benefit based on 40%
of earnings if issue age is 0-70, 25% for age 71-75; 15% for age 76-79, subject
to a cap equal to 300% of purchase payments multiplied by the applicable benefit
percentage. See prospectus for more complete information.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGES APPLICABLE TO PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS ANNUITY ONE 3
AND STRATEGIC PARTNERS PLUS 3 ONLY:
GUARANTEED MINIMUM INCOME BENEFIT: In Section 3 of the prospectus, under the
sub-section entitled "Effect of Withdrawals":
(i) the second sentence of the first paragraph is deleted in its entirety.
(ii) the fifth sentence of the first paragraph is replaced by the
following:
"The resulting percentage is multiplied by the GMIB protected value after
subtracting the amount of the withdrawal that does not exceed 5%."
(iii) the following sentence is added to the end of the first paragraph:
"The GMIB roll-up cap is reduced by the sum of all reductions described
above."
(viii) the third and fourth sub-bullets in Example 2 are replaced with the
following:
"The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- - $2,500 - $8,258.85, or $479,241.15)."
(ix) the second bullet in Example 3 is replaced with the following:
"The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000,
from $479,241.15 to $469,241.15)."
CHANGES APPLICABLE TO PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS ANNUITY ONE 3
ONLY:
HYPOTHETICAL ILLUSTRATIONS: In Appendix B of the prospectus, we replace the
existing disclosure with the following to reflect recent changes to the fees of
the asset allocation portfolios of The Prudential Series Fund, Inc:
HYPOTHETICAL ILLUSTRATIONS
The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0%, 6% and 10% annually). The hypothetical gross rates of return are
first reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table, and for certain
portfolios reflecting expense adjustments), the arithmetic average fund fees
were equal to 1.11% annually. If we did take expense reimbursements and waivers
into account here, that would have lowered the arithmetic average, and thereby
increased the illustrated values. The hypothetical gross rates of return are
next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0%, 6% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of -2.70%, 3.13%
and 7.03%, respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised in
that year.
A '0' in certain columns within these illustrations indicates that the
benefit has no value. For example, with respect to the Income Appreciator
Benefit, there are no earnings within the contract under a 0% assumed rate of
return. Because IAB is a percentage of earnings, the IAB benefit value would be
'0' in that scenario.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for a
description of how the various illustrated features operate.
STRATEGIC PARTNERS ANNUITY ONE 3
$100,000 Single contribution and no withdrawals
Male, issue age 60
Benefits:
Contract Without Credit
Step-Up Guaranteed Minimum Death Benefit
Guaranteed Minimum Income Benefit
Income Appreciator Benefit
10% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 106,246 100,846 106,246 N/A N/A 105,000 N/A N/A
2 62 112,889 108,389 112,889 N/A N/A 110,250 N/A N/A
3 63 119,954 116,354 119,954 N/A N/A 115,763 N/A N/A
4 64 127,468 124,768 127,468 N/A N/A 121,551 N/A N/A
5 65 135,461 133,661 135,461 N/A N/A 127,628 N/A N/A
6 66 143,962 143,062 143,962 N/A N/A 134,010 N/A N/A
7 67 153,005 153,005 153,005 7,951 160,956 140,710 7,736 9,834
8 68 162,625 162,625 162,625 9,394 172,019 147,746 8,398 10,770
9 69 172,860 172,860 172,860 10,929 183,789 155,133 9,118 11,798
10 70 183,748 183,748 183,748 16,750 200,497 162,889 10,690 13,201
15 75 249,597 249,597 249,597 37,399 286,997 200,000 16,181 21,531
20 80 340,422 340,422 340,422 60,105 400,527 200,000 19,807 33,344
25 85 466,379 466,379 466,379 91,595 557,973 200,000 25,316 52,271
30 90 641,057 641,057 641,057 135,264 776,322 200,000 31,817 78,415
- --------------------------------------------------------------------------------------
6% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 102,364 96,964 102,364 N/A N/A 105,000 N/A N/A
2 62 104,771 100,271 104,771 N/A N/A 110,250 N/A N/A
3 63 107,220 103,620 107,220 N/A N/A 115,763 N/A N/A
4 64 109,711 107,011 109,711 N/A N/A 121,551 N/A N/A
5 65 112,244 110,444 112,244 N/A N/A 127,628 N/A N/A
6 66 114,818 113,918 114,818 N/A N/A 134,010 N/A N/A
7 67 117,435 117,435 117,435 2,615 120,050 140,710 7,459 7,335
8 68 120,092 120,092 120,092 3,014 123,105 147,746 8,057 7,708
9 69 122,789 122,789 122,789 3,418 126,207 155,133 8,706 8,101
10 70 125,526 125,526 125,526 5,105 130,631 162,889 9,997 8,601
15 75 139,797 139,797 139,797 9,949 149,746 200,000 14,310 11,234
20 80 155,799 155,799 155,799 13,950 169,749 200,000 16,292 14,131
25 85 174,239 174,239 174,239 18,560 192,799 200,000 18,975 18,061
30 90 195,488 195,488 195,488 23,872 219,360 200,000 21,245 22,157
- --------------------------------------------------------------------------------------
0% Assumed Rate Of Return
DEATH
PROJECTED VALUE BENEFIT LIVING BENEFIT(S)
- --------------------------------------------------------------------------------------
IAB GMIB
- --------------------------------------------------------------------------------------
Projected
GMIB Contract
Guarantee Annual
Annual Annuity
Payout Payout
for for
Single Single
Life Life
Annuity Annuity
Amount with 10 with 10
Annuitant Death Available GMIB year Year
- --------- Contract Surrender Benefit to Protected Period Period
Year Age Value Value Value IAB Value Annuitize Value Certain Certain
- --------------------------------------------------------------------------------------
1 61 96,541 91,318 100,000 N/A N/A 105,000 N/A N/A
2 62 93,158 88,973 100,000 N/A N/A 110,250 N/A N/A
3 63 89,848 86,632 100,000 N/A N/A 115,763 N/A N/A
4 64 86,607 84,291 100,000 N/A N/A 121,551 N/A N/A
5 65 83,433 81,951 100,000 N/A N/A 127,628 N/A N/A
6 66 80,320 79,610 100,000 N/A N/A 134,010 N/A N/A
7 67 77,267 77,267 100,000 0 77,267 140,710 7,323 4,721
8 68 74,239 74,239 100,000 0 74,239 147,746 7,896 4,648
9 69 71,264 71,264 100,000 0 71,264 155,133 8,518 4,575
10 70 68,339 68,339 100,000 0 68,339 162,889 9,694 4,499
15 75 54,364 54,364 100,000 0 54,364 200,000 13,632 4,079
20 80 41,957 41,957 100,000 0 41,957 200,000 15,230 3,493
25 85 31,274 31,274 100,000 0 31,274 200,000 17,364 2,930
30 90 22,075 22,075 100,000 0 22,075 200,000 18,980 2,230
- --------------------------------------------------------------------------------------
The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0%, 6% or 10% over a period
of years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
Explanation of Headings
Contract Value - The projected total value of the annuity at the end of the
period indicated, after all fees other than withdrawal charges have been
deducted.
Surrender Value - The projected cash value of the annuity at the end of the
period indicated.
Death Benefit Value - Value of base death benefit or GMDB, as indicated.
IAB Value - Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
Amount Available to Annuitize - The contract value plus the IAB value. See
prospectus for more complete information.
GMIB Protected Value - Purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB Guaranteed Annual Payout for Single Life Annuity with 10-year Period
Certain - The payout determined by applying the GMIB protected value (and IAB
value if IAB is elected) to the GMIB guaranteed annuity purchase rates contained
in the contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See prospectus
for more complete information.
Projected Contract Annual Annuity Payout for Single Life Annuity with 10-year
Period Certain - The hypothetical annuity payout based on the projected contract
value (and IAB value if IAB is elected) calculated using the minimum payout
rates guaranteed under the contract ("Guaranteed Minimum Payout Rates"). See
prospectus for more complete information.
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization -
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated
based on the adjusted contract value at annuitization and the better
of the Guaranteed Minimum Annuity Payout Rates or the Current Annuity
Payout Rates in effect at the time of annuitization. To show how the
GMIB rider works relative to the annuity payout available under the
contract we included the Projected Contract Annuity Payout column
which shows hypothetical annuity payouts based on the projected
contract values and the Guaranteed Minimum Payout Rates. We did not
illustrate any hypothetical annuity payouts based on Current Annuity
Payout Rates because these rates are subject to change at any time;
however, historically the annuity payout provided under such Current
Annuity Payout Rates have been significantly higher than the annuity
payout that would be provided under Guaranteed Minimum Annuity Payout
Rates.
CHANGE APPLICABLE TO PRUCO LIFE STRATEGIC PARTNERS SELECT ONLY:
WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE: In Section 6 of the prospectus,
under the heading entitled "Waiver of Withdrawal Charge For Critical Care" in
the first sentence, the reference to "owner or a joint owner" is amended to
refer instead to "annuitant, or if deceased, co-annuitant, respectively."
CHANGE APPLICABLE TO PRUCO LIFE & PRUCO LIFE OF NEW JERSEY STRATEGIC PARTNERS
SELECT AND PRUDENTIAL VARIABLE INVESTMENT PLAN ONLY:
PURCHASE PAYMENTS: In Section 5 of the prospectus, under the section entitled
"Purchase Payments," the third sentence in the first paragraph is replaced by
the following:
"Where allowed by law, you must get our approval for any initial and
additional purchase payment of $1,000,000 or more."
CHANGE APPLICABLE TO PRUDENTIAL QUALIFIED VARIABLE INVESTMENT PLAN AND
PRUDENTIAL VARIABLE INVESTMENT PLAN ONLY:
SCHEDULED TRANSACTIONS: In Section 2 of the prospectus, under the section
entitled "Dollar Cost Averaging," the following is added to the last sentence of
the fourth paragraph:
"If processing the transfer on the next business day would result in the
transaction occurring in the subsequent calendar year, then we will process the
transaction on the preceding business day. "
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STRATEGIC PARTNERS ADVISOR
STRATEGIC PARTNERS ANNUITY ONE
STRATEGIC PARTNERS ANNUITY ONE 3
STRATEGIC PARTNERS FLEXELITE
STRATEGIC PARTNERS PLUS
STRATEGIC PARTNERS PLUS 3
STRATEGIC PARTNERS SELECT
Supplement, dated September 10, 2004
To
Prospectuses, dated May 1, 2004
We are issuing this supplement to report a change in subadviser to the SP
Deutsche International Equity Portfolio (the "Portfolio") of The Prudential
Series Fund, Inc. To date, Deutsche Asset Management Investment Services Limited
("Deutsche") has served as subadviser to the Portfolio. The Portfolio's
investment objective is to seek long-term capital appreciation. The Portfolio
pursues that objective by normally investing at least 80% of its investable
assets (net assets plus borrowings made for investment purposes) in the stocks
and other equity securities of companies in developed countries outside the
United States that are represented in the MSCI EAFE Index.
Effective on or about November 19, 2004, LSV Asset Management will become
subadviser to the Portfolio, replacing Deutsche. You may find further
information about LSV Asset Management in the prospectus supplement for the
Portfolio. This change will not result in any change to the advisory fee that
the Portfolio pays to Prudential Investments LLC. Nor will there be any change
to the Portfolio's fundamental investment objective or the investment policies
set out above. However, the following changes will result: o The Portfolio will
be called the "SP LSV International Value Portfolio"; and o The Portfolio's
investment strategy will shift from seeking growth at a reasonable price to a
"deep value" strategy, utilizing
active quantitative methods to select value stocks within the universe
of international stocks.
Deutsche, the SP Deutsche International Equity Portfolio, and that Portfolio's
investment objectives/policies collectively are referred to in several
places within each of the above-referenced prospectuses. This supplement is
intended to amend each of such references, as
appropriate.
PRUCO LIFE INSURANCE COMPANY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STRATEGIC PARTNERS ADVISOR
STRATEGIC PARTNERS ANNUITY ONE
STRATEGIC PARTNERS ANNUITY ONE 3
STRATEGIC PARTNERS FLEXELITE
STRATEGIC PARTNERS PLUS
STRATEGIC PARTNERS PLUS 3
STRATEGIC PARTNERS SELECT
Supplement, dated August 1, 2005
To
Prospectuses, dated May 2, 2005
We are issuing this supplement to reflect certain changes that have been made to
the investment policies of the following portfolios that appear in Section 2 of
the above named prospectuses. We set out the revised investment policies for the
affected portfolios below:
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- ------------------ -------------------------------------------------------------------------------------- -----------------------
Asset Allocation SP Aggressive Growth Asset Allocation Portfolio: seeks to obtain the highest Prudential
/ Balanced potential total return consistent with the specified level of risk tolerance. The Investments LLC
Portfolio may invest in any other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia
Trust (AST), and the AST LSV International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio generally will focus on equity
Underlying Portfolios but will also invest in fixed-income Underlying Portfolios.
- ------------------ -------------------------------------------------------------------------------------- -----------------------
Asset Allocation SP Balanced Asset Allocation Portfolio: seeks to obtain the highest potential total Prudential
/ Balanced return consistent with the specified level of risk tolerance. The Portfolio may Investments LLC
invest in any other Portfolio of the Fund (other than another SP Asset Allocation
Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the Underlying Portfolios). The
Portfolio will invest in equity and fixed-income Underlying Portfolios.
- ------------------ -------------------------------------------------------------------------------------- -----------------------
Asset Allocation SP Conservative Asset Allocation Portfolio: seeks to obtain the highest potential Prudential
/ Balanced total return consistent with the specified level of risk tolerance. The Portfolio Investments LLC
may invest in any other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia
Trust (AST), and the AST LSV International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio generally will focus on
fixed-income Underlying Portfolios but will also invest in equity Underlying
Portfolios.
- ------------------ -------------------------------------------------------------------------------------- -----------------------
Asset Allocation SP Growth Asset Allocation Portfolio: seeks to obtain the highest potential total Prudential
/ Balanced return consistent with the specified level of risk tolerance. The Portfolio may Investments LLC
invest in any other Portfolio of the Fund (other than another SP Asset Allocation
Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the Underlying Portfolios).
Under normal circumstances, the Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying Portfolios.
- ------------------ -------------------------------------------------------------------------------------- -----------------------
This supplement should be read and retained with the current prospectus for your
annuity contract. If you would like another copy of a current prospectus or a
statement of additional information, please contact us at (888) PRU-2888. This
supplement is intended to update information in the May 2, 2005 prospectus for
the variable annuity you own, and is not intended to be a prospectus or offer
for any other variable annuity referenced here that you do not own.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STRATEGIC PARTNERS FLEXELITE
Supplement, dated August 9, 2005
On August 1, 2005, Pruco Life Insurance Company of New Jersey (and Pruco Life
Insurance Company) filed a supplement (the "August 1 Filing") pertaining to
certain of their variable annuity products. See accession number
0000711201-05-000068. The August 1 Filing indicated incorrectly that it applied
to the above-referenced variable annuity (file no. 333-99275). That variable
annuity is no longer sold, and we have ceased updating the registration
statement for that annuity in reliance on the Great-West line of SEC Staff
no-action letters. Accordingly, we are filing this supplement solely to clarify
that the August 1 Filing does not apply to the above-referenced annuity.
Pruco Life Insurance Company
Pruco Life Insurance Company Of New Jersey
Prudential Premier Series
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite
(version of contract sold on or after May 1, 2003)
Strategic Partners Select
Supplement, dated November 20, 2006
To
Prospectuses, dated May 1, 2006
In this supplement, we describe a new administrative feature, under which an
annuity owned by a custodial account established to hold retirement assets for
the benefit of the annuitant may be continued by the surviving spouse of the
annuitant. To reflect this change, we make the following changes to the above
referenced prospectuses:
Prudential Premier Series
The text below is added as a new paragraph to the section of each Prudential
Premier prospectus entitled "Managing Your Annuity", in the sub-section entitled
"May I Change the Owner, Annuitant and Beneficiary Designations?", under the
heading "Spousal Owners/Spousal Beneficiaries", which will now read "Spousal
Owners/Spousal Beneficiaries/Spousal Annuitants"; and (2) the section entitled
"Death Benefit", in the sub-section entitled "Payment of Death Benefits", under
the heading entitled "Spousal Beneficiary - Assumption of Annuity". In addition,
with respect to the latter, the cross-reference in the second paragraph of the
heading entitled "Spousal Beneficiary - Assumption of Annuity" is changed to
refer to the heading "Contingent Annuitant" under "Managing Your Annuity".
"Spousal assumption also is permitted, subject to our rules, if the Annuity
is held by a custodial account established to hold retirement assets for the
benefit of the natural person Annuitant pursuant to the provisions of Section
408(a) of the Internal Revenue Code (or any successor Code section thereto)
("Custodial Account") and, on the date of the Annuitant's death, the spouse of
the Annuitant is (1) the Contingent Annuitant under the Annuity and (2) the
beneficiary of the Custodial Account. The ability to continue the Annuity in
this manner will result in the Annuity no longer qualifying for tax deferral
under the Internal Revenue Code. However, such tax deferral should result from
the ownership of the Annuity by the Custodial Account. Please consult your tax
or legal adviser."
In the section of each Prudential Premier Prospectus entitled "Managing Your
Annuity", in the sub-section entitled "May I Change the Owner, Annuitant and
Beneficiary Designations?", the following text replaces the text under the
heading "Contingent Annuitant":
"Generally, if an Annuity is owned by an entity, and the entity has named a
Contingent Annuitant, the Contingent Annuitant will become the Annuitant upon
the death of the Annuitant, and no Death Benefit is payable. However, the
Account Value of the Annuity as of the date of due proof of death of the
Annuitant will reflect the amount that would have been payable had a Death
Benefit been paid. Unless we agree otherwise, the Annuity is only eligible to
have a Contingent Annuitant designation if the entity that owns the Annuity is
(1) a plan described in Internal Revenue Code Section 72(s)(5)(A)(i) (or any
successor Code section thereto); (2) an entity described in Code Section
72(u)(1) (or any successor Code section thereto); or (3) a custodial account
established pursuant to the provisions in Code Section 408(a) (or any successor
Code section thereto) ("Custodial Account").
Where the Annuity is held by a Custodial Account, the Contingent Annuitant
will not automatically become the Annuitant upon the death of the Annuitant.
Upon the death of the Annuitant, the Custodial Account will have the choice,
subject to our rules, to either elect to receive the Death Benefit or elect to
continue the Annuity. See the section above entitled "Spousal Owners/Spousal
Beneficiaries/Spousal Annuitants" for more information."
In the section of the prospectus entitled "Living Benefit Programs", in the
sub-section entitled "Spousal Lifetime Five Income Benefit", under the heading
"Election of and Designations under the Program", the following is added after
the second bullet to describe how the designations should be set up upon the
election of the Spousal Lifetime Five benefit by a custodial account:
- - One Annuity Owner, where the Owner is a custodial account established to
hold retirement assets for the benefit of the Annuitant pursuant to the
provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto) ("Custodial Account"), the Beneficiary is the
Custodial Account, and the spouse of the Annuitant is the Contingent
Annuitant. Both the Annuitant and Contingent Annuitant must each be at
least 55 years old at the time of election. When the Annuity is set up in
this manner, in order for Spousal Lifetime Five to be continued after the
death of the first Designated Life (the Annuitant), the custodian must have
elected to continue the Annuity, with the second Designated Life (the
Contingent Annuitant) named as Annuitant.
Strategic Partners Annuity One 3, Strategic Partners Plus 3, and Strategic
Partners FlexElite:
We revise the definition of "Annuitant" in the Glossary to provide as follows:
"The person whose life determines the amount of income payments that we will
make. Except as indicated below, if the annuitant dies before the annuity date,
the co-annuitant (if any) becomes the annuitant if the contract's requirements
for changing the annuity date are met. If, upon the death of the annuitant,
there is no surviving eligible co-annuitant, and the owner is not the annuitant,
then the owner becomes the annuitant.
Generally, if an annuity is owned by an entity and the entity has named a
co-annuitant, the co-annuitant will become the annuitant upon the death of the
annuitant, and no death benefit is payable. However, the contract value as of
the date of due proof of death of the annuitant will reflect the amount that
would have been payable had a death benefit been paid. Unless we agree
otherwise, the contract is eligible to have a co-annuitant designation only if
the entity that owns the contract is (1) a plan described in Internal Revenue
Code Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an
entity described in Code Section 72(u)(1) (or any successor Code section
thereto); or (3) a custodial account established pursuant to the provisions in
Code Section 408(a) (or any successor Code section thereto) ("Custodial
Account").
Where the contract is held by a Custodial Account, the co-annuitant will
not automatically become the annuitant upon the death of the annuitant. Upon the
death of the annuitant, the Custodial Account will have the choice, subject to
our rules, to either elect to receive the death benefit or elect to continue the
contract."
For Strategic Partners Annuity One 3 and Strategic Partners Plus 3 only, we
revise the first paragraph under "Spousal Continuance Benefit" to read as
follows:
"This benefit is available if, on the date we receive proof of the owner's
death (or annuitant's death, for custodial contracts) in good order (1) there is
only one owner of the contract and there is only one beneficiary who is the
owner's spouse, or (2) there are an owner and joint owner of the contract, and
the joint owner is the owner's spouse and the owner's beneficiary under the
contract or (3) the contract is held by a custodial account established to hold
retirement assets for the benefit of the natural person annuitant pursuant to
the provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto)("Custodial Account"), and the custodian of the account has
elected to continue the contract, and designate the surviving spouse as
annuitant. Continuing the contract in the latter scenario will result in the
contract no longer qualifying for tax deferral under the Internal Revenue Code.
However, such tax deferral should result from the ownership of the contract by
the Custodial Account. Spousal continuance also is available where the contract
is owned by certain other types of entity-owners. Please consult your tax or
legal adviser.
In no event, however, can the annuitant be older than the maximum age for
annuitization on the date of the owner's death, nor can the surviving spouse be
older than 95 on the date of the owner's death (or the annuitant's death, in the
case of a custodially-owned contract referenced above). Assuming the above
conditions are present, the surviving spouse (or custodian, for the
custodially-owned contracts referenced above) can elect the Spousal Continuance
Benefit, but must do so no later than 60 days after furnishing proof of death in
good order."
For Strategic Partners FlexElite only, we revise the first paragraph under
"Spousal Continuance Benefit" to read as follows:
"This benefit is available if, on the date we receive proof of the owner's
death (or annuitant's death, for custodial contracts) in good order (1) there is
only one owner of the contract and there is only one beneficiary who is the
owner's spouse, or (2) for contracts sold on or after May 1, 2003 or upon
subsequent state approval, there are an owner and joint owner of the contract,
and the joint owner is the owner's spouse and the owner's beneficiary under the
contract or (3) for contracts sold on or after May 1, 2003 or upon subsequent
state approval, (i) the contract is held by a custodial account established to
hold retirement assets for the benefit of the natural person annuitant pursuant
to the provisions of Section 408(a) of the Internal Revenue Code (or any
successor Code section thereto)("Custodial Account") and (ii) the custodian of
the account has elected to continue the contract, and designate the surviving
spouse as annuitant. Continuing the contract in the latter scenario will result
in the contract no longer qualifying for tax deferral under the Internal Revenue
Code. However, such tax deferral should result from the ownership of the
contract by the Custodial Account. Spousal continuance also is available where
the contract is owned by certain other types of entity-owners. Please consult
your tax or legal adviser.
In no event, however, can the annuitant be older than the maximum age for
annuitization on the date of the owner's death, nor can the surviving spouse be
older than 95 on the date of the owner's death (or the annuitant's death, in the
case of a custodially-owned contract referenced above). Assuming the above
conditions are present, the surviving spouse (or custodian, for the
custodially-owned contracts referenced above) can elect the Spousal Continuance
Benefit, but must do so no later than 60 days after furnishing proof of death in
good order."
For Strategic Partners Annuity One 3, Strategic Partners Plus 3, and Strategic
Partners FlexElite, within the section entitled "Spousal Lifetime Five Income
Benefit", under "Election of and Designations of Spousal Lifetime Five", we add
the following after the second bullet, to describe how the designations should
be set up upon the election of the Spousal Lifetime Five benefit by a custodial
account:
- - One contract owner, where the owner is a custodial account established to
hold retirement assets for the benefit of the annuitant pursuant to the
provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto) ("Custodial Account"), the beneficiary is the
Custodial Account, and the spouse of the annuitant is the co-annuitant.
Both the annuitant and co-annuitant must each be at least 55 years old at
the time of election. When the contract is set up in this manner, in order
for Spousal Lifetime Five to be continued after the death of the first
designated life (the annuitant), the custodian must have elected to
continue the contract, with the second designated life (the co-annuitant)
named as annuitant.
Strategic Partners Select
We revise the definition of "Annuitant" in the Glossary to provide as follows:
"The person whose life determines the amount of income payments that we will
make. Except as indicated below, if the annuitant dies before the annuity date,
the co-annuitant (if any) becomes the annuitant if the contract's requirements
for changing the annuity date are met. If, upon the death of the annuitant,
there is no surviving eligible co-annuitant, and the owner is not the annuitant,
then the owner becomes the annuitant.
Generally, if an annuity is owned by an entity and the entity has named a
co-annuitant, the co-annuitant will become the annuitant upon the death of the
annuitant, and no death benefit is payable. However, the contract value as of
the date of due proof of death of the annuitant will reflect the amount that
would have been payable had a death benefit been paid. Unless we agree
otherwise, the contract is eligible to have a co-annuitant designation only if
the entity that owns the contract is (1) a plan described in Internal Revenue
Code Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an
entity described in Code Section 72(u)(1)(or any successor Code section
thereto); or (3) a custodial account established pursuant to the provisions in
Code Section 408(a) (or any successor Code section thereto)("Custodial
Account").
Where the contract is held by a Custodial Account, the co-annuitant will
not automatically become the annuitant upon the death of the annuitant. Upon the
death of the annuitant, the Custodial Account will have the choice, subject to
our rules, to either elect to receive the death benefit or elect to continue the
contract."
We add the following to the end of the second paragraph under the section
entitled "Death of Owner or Joint Owner":
"Continuance of the contract also is available if the contract is held by a
custodial account established to hold retirement assets for the benefit of
the natural person annuitant pursuant to the provisions of Section 408(a)
of the Internal Revenue Code (or any successor Code section thereto), and
the custodian of the account has elected to continue the contract and
designate the surviving spouse as annuitant. Continuing the contract in
that scenario will result in the contract no longer qualifying for tax
deferral under the Internal Revenue Code. However, such tax deferral should
result from the ownership of the contract by the custodial account. Spousal
continuance also may be available where the contract is owned by certain
other types of entity-owners. Please consult your tax or legal adviser."
This prospectus supplement is intended to amend the prospectus for the
annuity you own, and is not intended to be a prospectus or offer for any
annuity listed here that you do not own.
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees
In this registration statement, Pruco Life Insurance Company of New Jersey is
registering $40 million of securities and paying a filing fee of $1,572.00
therefor.
Federal Taxes
Pruco Life Insurance Company of New Jersey estimated the federal tax effect
associated with the deferred acquisition costs attributable to receipt of $1
million of purchase payments over a two year period to be approximately $74,000.
State Taxes
Pruco Life Insurance Company of New Jersey estimated that approximately $-0- in
premium taxes would be owed upon receipt of purchase payments under the
contracts.
Printing Costs
Pruco Life Insurance Company of New Jersey states that the cost of printing
will be attributable to the printing of the annually updated prospectuses.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life Insurance Company of New Jersey.
Accounting Costs
PricewaterhouseCoopers LLP, the independent registered public accounting firm
that audits Pruco Life Insurance Company of New Jersey's financial statements,
will charge approximately $2500.00 in connection with the filing of this
registration statement with the Commission.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in conjunction with certain of its affiliates, maintains
insurance on behalf of any person who is or was a trustee, director, officer,
employee, or agent of the Registrant, or who is or was serving at the request
of the Registrant as a trustee, director, officer, employee or agent of such
other affiliated trust or corporation, against any liability asserted against
and incurred by him or her arising out of his or her position with such trust
or corporation.
New Jersey, being the state of organization of Pruco Life Insurance Company of
New Jersey ("PLNJ"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law,
Article V, which relates to indemnification of officers and directors,
is incorporated by reference to Exhibit 1A(6)(c) to Form S-6 filed August 13,
1999 on behalf of the Pruco Life of New Jersey Variable Appreciable Account.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
ITEM 16. EXHIBITS
(a) Exhibits
(1) (a) From of Distribution Agreement between prudential Annuties
Distributors, Inc. (Underwriter) and Pruco Life Insurance Company of New
Jersey (Depositor).(Note 5)
(3) (i) Articles of Incorporation of Purco Life Insurance Company of New Jersey
as amended through February 12, 1998 (Note 8)
(ii) By-Laws of Purco Life Insurance Company of New Jersey as amended
August 4, 1999 (Note 9)
(4) (a) Strategic Partners Annuity One Variable Annuity Contract VBON 2000-NY
Ed.10/2000. (Note 6)
(4) (b) strategic Partners Annuity One Variable Annuity Contract VDCA 2000-NY
Ed.10/2000. (Note 6)
(4) (c) Strategic Partners Annuity One Endorsement (MVA) ORD 112805-NY. (Note 7)
(4) (d) Strategic Partners Application ORD 99730 NY-1. (Note 7)
(4) (e) Strategic Partners Annuity One Variable Annuity Contract VDCA-NY Ed
5-2003. (Note 10)
(4) (f) Strategic Partners Annuity One Endorsement (GMIB) ORD 112737-NY. (Note
10)
(4) (g) Strategic Partners Annuity One Endorsement (Transfers) ORD 112878.
(Note 10)
(4) (h) Strategic Partners Annuity One Endorsement (IAB) ORD 112718-NY. (Note
10)
(4) (i) Strategic Partners Annuity One Application. (Note 11)
(4) (k) Endorsement Supplement (GMIB) ORD 112963-NY. (Note 11)
(5) Opinion of Counsel as to legality of the Securities being registered. (Note
1)
(23)Written Consent of PricewaterhouseCoopers LLP Independent accountants.
(Note 1)
(24)Powers of Attorney.
(a) James J. Avery, Jr. (Note 3)
Bernard J. Jacob (Note 2)
(c) Scott D. Kaplan (Note 12)
(d) Helen M. Galt (Note 5)
(e) Stephen Pelletier (Note 1)
(f) Tucker I Marr (Note 12)
(g) Scott G. Sleyster (Note 4)
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(Note 1) Filed herewith
(Note 2) Incorporated by reference to Post-Effective Amendment No. 6, Form S-3,
Registration No. 333-62246, filed April 19, 2006 on behalf of Pruco
Life of New Jersey Flexible Premium Variable Annuity Account.
(Note 3) Incorpoated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 7, Form N-6,
Registration No. 333-112809, filed April 18, 2008 on behalf of Pruco
Life of New Jersey Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 5 to Form
S-6, Registration No. 333-85117 filed June 28, 2001 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 4 to Form
N-4, Registration No. 333-49230 filed December 10, 2002 on behalf of
the Pruco Live of New Jersey Flexible Premium Variable Annuity Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 1 to Form
N-4, Registration No. 333-99275, filed June 27, 2003, on behalf of the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 12 to Form
S-1, Registration No. 33-200018, filed April 16, 1999, on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 9) Incorporated by reference to Form S-6, Registration No. 333-85117
filed August 13, 1999 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 9 to Form
N-4, Registration No. 333-49230, filed September 26, 2003, on behalf
of the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 12 to Form
N-4, Registration No. 333-49230, filed April 20, 2004, on behalf of
the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 1, Form
N-4, Registration Statement No. 333-131035, filed October 6, 2006 on
behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newark, State of New
Jersey, on the 12th day of February 2009.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (Registrant)
Attest: /s/ Thomas C. Castano /s/ Scott D. Kaplan
------------------------------------ -----------------------------------
Thomas C. Castano Scott D. Kaplan
Chief Legal Officer and Secretary President and Chief Executive
Officer
Signature and Title
*
- --------------------------
JAMES J. AVERY JR.
VICE CHAIRMAN AND DIRECTOR Date: February 12, 2009
* **By: /s/ Thomas C. Castano
- ------------------------------------ -----------------------------------
SCOTT D. KAPLAN THOMAS C. CASTANO
DIRECTOR VICE PRESIDENT AND CORPORATE
COUNSEL
*
- --------------------------
TUCKER I. MARR
CHIEF ACCOUNTING OFFICER
*
- --------------------------
BERNARD J. JACOB
DIRECTOR
*
- --------------------------
SCOTT G. SLEYSTER
DIRECTOR
*
- --------------------------
HELEN M. GALT
DIRECTOR
*
- --------------------------
STEPHEN PELLETIER
DIRECTOR
EXHIBIT INDEX
Exhibit No.
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5 Opinion of Counsel
23 Written Consent of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting Firm
24 Power of attorney for Director, Stephen Pelletier.