As Filed with the Securities and Exchange Commission on March 24, 2009
File No. 333-
----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LINCOLN BENEFIT LIFE COMPANY
(Exact name of Registrant as Specified in its Charter)
Nebraska 6300 470221457
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
2940 South 84th St., Lincoln, Nebraska 68506
1-800-525-9287
(Address of registrant's principal executive offices)
JOCELYN LIU, ESQ.
LINCOLN BENEFIT LIFE COMPANY
2940 South 84th St.
LINCOLN, NE 68506
1-800-525-9287
(Name of agent for service)
If any of the 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 checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] (Do not check if a smaller reporting company)
Smaller reporting company [ ]
CALCULATION OF REGISTRATION FEE
Proposed maximum
Title of securities to be Amount to be registered Proposed maximum aggregate offering price Amount of registration
registered (1) offering price per unit (1) fee
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred annuity interests
and participating interests
therein $15,000,000 (1) $15,000,000 $837
(1) The maximum aggregate offering price is estimated solely for the purpose of
determining the registration fee. The amount being registered and the
proposed maximum offering price per unit are not applicable in that the
Contract does not provide for a predetermined amount or number of units.
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, acting pursuant to Section 8(a), may
determine.
Lincoln Benefit Life Company
The Consultant Solutions Variable Annuities
Supplement, dated May 1, 2009
This supplement amends certain disclosure contained in the prospectus for
certain annuity contracts issued by Lincoln Benefit Life Company.
Under the "More Information" section, the subsection entitled "Legal Matters" is
deleted and replaced with the following:
LEGAL MATTERS
Certain matters of state law pertaining to the Contracts, including the validity
of the Contracts and Lincoln Benefit Life's right to issue such Contracts under
applicable state insurance law, have been passed upon by Susan L. Lees, General
Counsel of Lincoln Benefit Life.
The "Annual Reports and Other Documents" section is deleted and replaced with
the following:
ANNUAL REPORTS AND OTHER DOCUMENTS
Lincoln Benefit Life Company ("LBL") 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 and all other reports filed with the SEC
under the Exchange Act since the end of the fiscal year covered by its latest
annual report, including filings made on Form 10-Q and Form 8-K. In addition,
all documents subsequently filed by Allstate Life pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act also are incorporated into the prospectus
by reference. LBL 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 LBL, P.O. Box 758561, Topeka, KS
66675-8566 or by calling 1-800-457-7617. LBL files periodic reports as required
under the Securities Exchange Act of 1934. The public may read and copy any
materials that LBL 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).
LINCOLN BENEFIT LIFE COMPANY
Supplement, dated February 25, 2009, to the
Prospectus Dated May 1, 2008
Consultant Solutions Variable Annuities
Liquidation of
Janus Aspen Series Perkins Small Company Value Portfolio
(formerly Janus Aspen Series Small Company Value Portfolio)
The purpose of this Supplement is to advise you of certain changes to your
variable annuity contract issued by Lincoln Benefit Life Company.
The Board of Trustees of the Janus Aspen Series (the "Trust") has approved the
liquidation and closing of the Janus Aspen Series Perkins Small Company Value
Portfolio. The Trust expects to complete the liquidation on or around April 30,
2009 (the "Liquidation Date"). After the Liquidation Date, the Janus Aspen
Series Perkins Small Company Value Sub-Account ("Liquidating Sub-Account") will
no longer be available for investment within your variable annuity.
As a result, unless you take further action, on the Liquidation Date any
Contract Value you have allocated to the Liquidating Sub-Account will be
transferred to the PIMCO VIT Money Market Portfolio - Administrative Shares
Sub-Account (the "Money Market Sub-Account") within your variable annuity.
If you wish to transfer your Contract Value out of the Liquidating Sub-Account
and into any other available investment option within your annuity before the
Liquidation Date, you may do so without charge and without the transfer being
applied against your annual free transfers. If you take no action before the
Liquidation Date, during the 60-day period after the Liquidation Date you may
transfer your Contract Value corresponding to the Liquidating Sub-Account out of
the Money Market Sub-Account and into any other available investment option
within your annuity without charge and without the transfer being applied
against your annual free transfers.
For your convenience, we have enclosed a transfer form that you may use to
transfer your Contract Value to another investment option(s). Please refer to
your prospectus or accessallstate.com for detailed information about available
investment options. If you need assistance in choosing investment options,
please contact your financial representative. You may request a transfer via the
internet at accessallstate.com. If you have elected the telephone transfer
privilege, you may transfer your Contract Value by calling the Annuity Service
Center.
If you have any questions, or would like a copy of any fund prospectuses, please
contact your financial representative or the Annuity Service Center at
1-785-228-4584.
Lincoln Benefit Life Company
Lincoln Benefit Life Variable Annuity Account
Supplement, dated February 17, 2009, to the
Prospectus Dated May 1, 2008 for
Consultant Solutions Variable Annuity
Premier VIT OpCap Balanced Portfolio
The purpose of this prospectus supplement is to advise you of changes to certain
investment options within your variable annuity contract issued by Lincoln
Benefit Life Company.
The Board of Trustees of Premier VIT (the "Trust") has approved the liquidation
and closing of Premier VIT OpCap Balanced Portfolio (the "Liquidating Fund") to
occur on or about April 24, 2009 ("Liquidation Date"). After the Liquidation
Date, the Premier VIT OpCap Balanced Portfolio Sub-Account within your variable
annuity will no longer be available for investment. As a result, on the
Liquidation Date any Contract Value allocated to the Premier VIT OpCap Balanced
Portfolio Sub-Account will be transferred to the PIMCO VIT Money Market
Portfolio Administrative Shares Sub-Account ("Money Market Sub-Account").
If you wish to transfer your Contract Value out of the Liquidating Fund and into
any other available investment option within your annuity before the Liquidation
Date, you may do so without charge and without the transfer being applied
against your annual free transfers. If you take no action before the Liquidation
Date, during the 60-day period after the Liquidation Date you may transfer your
Contract Value corresponding to the Liquidating Fund out of the Money Market
Sub-Account and into any other available investment option within your annuity
without charge and without the transfer being applied against your annual free
transfers.
For your convenience, we have enclosed a transfer form that you may use to
transfer your Contract Value to another investment option(s). Please refer to
accessallstate.com for detailed information about available investment options.
If you need assistance in choosing investment options, please contact your
financial representative. You may request a transfer via the internet at
accessallstate.com. If you have elected the telephone transfer privilege, you
may transfer your Contract Value by calling the Annuity Service Center.
If you have any questions, or would like a copy of any fund prospectuses, please
contact your financial representative or the Annuity Service Center at
1-800-457-7617.
The Consultant Solutions Variable Annuities
(Classic, Plus, Elite, Select)
Lincoln Benefit Life Company
Street Address: 5801 SW 6th Ave. Topeka, KS 66606-0001 Mailing Address: P.O. Box
758561, Topeka, KS 66675-8561 Telephone Number: 800-457-7617 / Fax Number:
1-785-228-4584
1940 Act file number: 811-07924
1933 Act file number: 333-109688
Prospectus dated May 1, 2008
Lincoln Benefit Life Company ("Lincoln Benefit") is the issuer of the following
individual and group flexible premium deferred variable annuity contracts (each,
a "Contract"):
.. Consultant Solutions Classic
.. Consultant Solutions Plus
.. Consultant Solutions Elite
.. Consultant Solutions Select
Effective November 30, 2006, this product is no longer being offered for sale.
This prospectus contains information about each Contract that you should know
before investing. Please keep it for future reference. Not all Contracts may be
available in all states or through your sales representative. Please check with
your sales representative for details.
Each Contract currently offers several investment alternatives ("Investment
Alternatives"). The Investment Alternatives include up to 2 fixed account
options ("Fixed Account Options"), depending on the Contract, and include 50
variable sub-accounts ("Variable Sub-accounts") of the Lincoln Benefit Life
Variable Annuity Account ("Variable Account"). Each Variable Sub-account invests
exclusively in shares of the following underlying funds ("Funds"):
AIM Variable Insurance Funds
The Alger American Fund
Fidelity(R) Variable Insurance Products
Janus Aspen Series
Legg Mason Partners Variable Equity Trust
Legg Mason Partners Variable Income Trust
MFS(R) Variable Insurance Trust(SM)
Premier VIT
PIMCO Variable Insurance Trust
The Rydex Variable Trust
T. Rowe Price Equity Series, Inc.
Van Eck Worldwide Insurance Trust
Van Kampen Life Investment Trust
The Universal Institutional Funds, Inc.
Oppenheimer Variable Account Funds
Each Fund has multiple investment Portfolios ("Portfolios"). Not all of the
Funds and/or Portfolios, however, may be available with your Contract. You
should check with your sales representative for further information on the
availability of the Funds and/or Portfolios. Your annuity application will list
all available Portfolios.
For Consultant Solutions Plus Contracts, each time you make a purchase payment,
we will add to your Contract value ("Contract Value") a credit enhancement
("Credit Enhancement") of up to 5% (depending on the issue age and your total
purchase payments) of such purchase payment. Expenses for this Contract may be
higher than a Contract without the Credit Enhancement. Over time, the amount of
the Credit Enhancement may be more than offset by the fees associated with the
Credit Enhancement.
We (Lincoln Benefit) have filed a Statement of Additional Information, dated May
1, 2008, with the Securities and Exchange Commission ("SEC"). It contains more
information about each Contract and is incorporated herein by reference, which
means that it is legally a part of this prospectus. Its table of contents
appears on page 74 of this prospectus. For a free copy, please write or call us
at the address or telephone number above, or go to the SEC's Web site
(http://www.sec.gov). You can find other information and documents about us,
including documents that are legally part of this prospectus, at the SEC's Web
site.
1 PROSPECTUS
IMPORTANT The Securities and Exchange Commission has not approved or
NOTICES disapproved the securities described in this prospectus, nor has it
passed on the accuracy or the adequacy of this prospectus.
Anyone who tells you otherwise is committing a federal crime.
The Contracts may be distributed through broker-dealers that have
relationships with banks or other financial institutions or by
employees of such banks. However, the Contracts are not deposits in,
or obligations of, or guaranteed or endorsed by, such institutions
or any federal regulatory agency. Investment in the Contracts
involves investment risks, including possible loss of principal.
The Contracts are not FDIC insured.
2 PROSPECTUS
Table of Contents
Page
----
Overview
Important Terms 4
Overview of Contracts 5
The Contracts at a Glance 6
How the Contracts Work 10
Expense Tables 11
Financial Information 15
Contract Features
The Contracts 15
Purchases 17
Contract Loans for 403(b) Contracts 19
Contract Value 20
Investment Alternatives 33
The Variable Sub-accounts 33
The Fixed Account Options 38
Transfers 42
Expenses 45
Access to Your Money 49
Page
----
Income Payments 50
Death Benefits 56
Other Information
More Information 63
Taxes 66
Annual Reports and Other Documents 73
Statement of Additional Information Table of Contents 74
Appendix A - Contract Comparison Chart 75
Appendix B - Market Value Adjustment 76
Appendix C - Example of Calculation of Income Protection Benefit 78
Appendix D - Withdrawal Adjustment Example - Death Benefits 79
Appendix E - Calculation of Enhanced Earnings Death Benefit 80
Appendix F - Withdrawal Adjustment Example - Accumulation Benefit 82
Appendix G - SureIncome Withdrawal Benefit Option Calculation Examples 83
Appendix H - Accumulation Unit Values 85
3 PROSPECTUS
Important Terms
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
----
AB Factor 22
Accumulation Benefit 22
TrueReturn Accumulation Benefit Option 21
Accumulation Phase 10
Accumulation Unit 15
Accumulation Unit Value 15
Annual Increase Death Benefit Option 57
Annuitant 16
Automatic Additions Program 17
Automatic Portfolio Rebalancing Program 44
Beneficiary 16
Benefit Base 22
Benefit Payment 28
Benefit Payment Remaining 28
Benefit Year 28
Co-Annuitant 16
*Contract 15
Contract Anniversary 7
Contract Owner ("You") 15
Contract Value 20
Contract Year 7
Credit Enhancement 18
Dollar Cost Averaging Program 44
Due Proof of Death 56
Enhanced Earnings Death Benefit Option 58
Excess of Earnings Withdrawal 59
Fixed Account Options 38
Free Withdrawal Amount 47
Funds 1
Guarantee Period Accounts 38
Guarantee Options 21
Income Plan 50
Income Protection Benefit Option 54
In-Force Earnings 58
In-Force Premium 58
Page
----
Investment Alternatives 33
IRA Contract 7
Issue Date 10
Lincoln Benefit ("We") 63
Market Value Adjustment 40
Maximum Anniversary Value (MAV) Death Benefit Option 57
Payout Phase 10
Payout Start Date 10
Payout Withdrawal 53
Portfolios 63
Qualified Contract 62
Return of Premium ("ROP") Death Benefit 56
Rider Application Date 7
Rider Anniversary 21
Rider Date 21
Rider Fee 7
Rider Maturity Date 21
Rider Period 21
Rider Trade-In Option 27
Right to Cancel 18
SEC 1
Settlement Value 56
Spousal Protection Benefit (Co-Annuitant) Option 62
Standard Fixed Account Option 39
SureIncome Withdrawal Benefit Option 28
Systematic Withdrawal Program 50
Tax Qualified Contract 69
Transfer Period Accounts 31
Trial Examination Period 6
TrueBalance(SM) Asset Allocation Program 36
Withdrawal Benefit Factor 29
Withdrawal Benefit Payout Phase 29
Withdrawal Benefit Payout Phase Start Date 29
Valuation Date 18
Variable Account 63
Variable Sub-account 33
* In certain states a Contract may be available only as a group Contract. If
you purchase a group Contract, we will issue you a certificate that
represents your ownership and that summarizes the provisions of the group
Contract. References to "Contract" in this prospectus include certificates,
unless the context requires otherwise. References to "Contract" also
include all four Contracts listed on the cover page of this prospectus,
unless otherwise noted. However, we administer each Contract separately.
4 PROSPECTUS
Overview of Contracts
The Contracts offer many of the same basic features and benefits. They differ
primarily with respect to the charges imposed, as follows:
.. The Consultant Solutions Classic Contract has a mortality and expense risk
charge of 1.25%, an administrative expense charge of 0.10%*, and a
withdrawal charge of up to 7% with a 7-year withdrawal charge period;
.. The Consultant Solutions Plus Contract offers a Credit Enhancement of up to
5% on purchase payments, a mortality and expense risk charge of 1.45%, an
administrative expense charge of 0.10%*, and a withdrawal charge of up to
8.5% with an 8-year withdrawal charge period;
.. The Consultant Solutions Elite Contract has a mortality and expense risk
charge of 1.60%, an administrative expense charge of 0.10%*, and a
withdrawal charge of up to 7% with a 3-year withdrawal charge period; and
.. The Consultant Solutions Select Contract has a mortality and expense risk
charge of 1.70%, an administrative expense charge of 0.10%*, and no
withdrawal charges.
Other differences among the Contracts relate to available Fixed Account Options.
For a side-by-side comparison of these differences, please refer to Appendix A
of this prospectus.
* The administrative expense charge may be increased, but will never exceed
0.25%. Once your Contract is issued, we will not increase the
administrative expense charge for your Contract.
5 PROSPECTUS
The Contracts at a Glance
The following is a snapshot of the Contracts. Please read the remainder of this
prospectus for more information.
Flexible Payments We are no longer offering new Contracts. You can add
to your Contract as often and as much as you like,
but each subsequent payment must be at least $1,000
($100 for automatic payments).
We reserve the right to accept a lesser initial
purchase payment amount for each Contract. We may
limit the cumulative amount of purchase payments to a
maximum of $1,000,000 in any Contract. You must
maintain a minimum Contract Value of $1,000.
For Consultant Solutions Plus Contracts, each time
you make a purchase payment, we will add to your
Contract Value a Credit Enhancement of up to 5% of
such purchase payment.
Trial Examination Period You may cancel your Contract within 20 days of
receipt or any longer period as your state may
require ("Trial Examination Period"). Upon
cancellation, we will return your purchase payments
adjusted, to the extent federal or state law permits,
to reflect the investment experience of any amounts
allocated to the Variable Account, including the
deduction of mortality and expense risk charges and
administrative expense charges. If you cancel your
Contract during the Trial Examination Period, the
amount we refund to you will not include any Credit
Enhancement. See "Trial Examination Period" for
details.
Expenses Each Portfolio pays expenses that you will bear
indirectly if you invest in a Variable Sub-account.
You also will bear the following expenses:
Consultant Solutions Classic Contracts
. Annual mortality and expense risk charge equal to
1.25% of average daily net assets.
. Withdrawal charges ranging from 0% to 7% of
purchase payments withdrawn.
Consultant Solutions Plus Contracts
. Annual mortality and expense risk charge equal to
1.45% of average daily net assets.
. Withdrawal charges ranging from 0% to 8.5% of
purchase payments withdrawn.
Consultant Solutions Elite Contracts
. Annual mortality and expense risk charge equal to
1.60% of average daily net assets.
. Withdrawal charges ranging from 0% to 7% of
purchase payments withdrawn.
Consultant Solutions Select Contracts
. Annual mortality and expense risk charge equal to
1.70% of average daily net assets.
. No withdrawal charges.
6 PROSPECTUS
All Contracts
. Annual administrative expense charge of 0.10%
average daily net assets (up to 0.25% for future
Contracts).
. Annual contract maintenance charge of $40
(reduced to $30 if Contract Value is at least
$2000, and waived in certain cases).
. If you select the Maximum Anniversary Value (MAV)
Enhanced Death Benefit Option ("MAV Death Benefit
Option") you will pay an additional mortality and
expense risk charge of 0.20% (up to 0.50% for
Options added in the future).
. If you select the Annual Increase Enhanced Death
Benefit Option ("Annual Increase Death Benefit
Option"), you will pay an additional mortality
and expense risk charge of 0.30% (up to 0.50% for
options added in the future).
. If you select the Enhanced Earnings Death Benefit
Option you will pay an additional mortality and
expense risk charge of 0.25% or 0.40% (up to
0.35% or 0.50% for Options added in the future)
depending on the age of the oldest Owner, the
Co-Annuitant, and/or oldest Annuitant on the date
we receive the completed application or request
to add the benefit, whichever is later ("Rider
Application Date").
. If you select the TrueReturn Accumulation Benefit
Option you would pay an additional annual fee
("Rider Fee") of 0.50% (up to 1.25% for Options
added in the future) of the Benefit Base in
effect on each Contract anniversary ("Contract
Anniversary") during the Rider Period. You may
not select the TrueReturn Accumulation Benefit
Option together with the SureIncome Withdrawal
Benefit Option.
. If you select the SureIncome Withdrawal Benefit
Option ("SureIncome Option") you would pay an
additional annual fee ("SureIncome Option Fee")
of 0.50% (up to 1.25% for Options added in the
future) of the Benefit Base on each Contract
Anniversary (See the SureIncome Option Fee
section). You may not select the SureIncome
Option together with the TrueReturn Accumulation
Benefit Option.
. If you select the Income Protection Benefit
Option you will pay an additional mortality and
expense risk charge of 0.50% (up to 0.75% for
Options added in the future) during the Payout
Phase of your Contract.
. If you select the Spousal Protection Benefit
(Co-Annuitant) Option you would pay an additional
annual fee ("Rider Fee") of 0.10% (up to 0.15%
for Options added in the future) of the Contract
Value ("Contract Value") on each Contract
Anniversary. This Option is available only for
Individual Retirement Annuity ("IRA") Contracts
qualified under Section 408 of the Internal
Revenue Code. For Contracts purchased on or after
May 1, 2005, we may discontinue offering the
Spousal Protection Benefit (Co-Annuitant) Option
at any time. No Rider Fee is charged for the
Spousal Protection Benefit (Co-Annuitant) Option
for Contract Owners who added the Option prior to
May 1, 2005.
. Transfer fee equal to 1.00% (subject to increase
to up to 2.00%) of the amount transferred after
the 12th transfer in any Contract Year
("Contract Year"), but not more than $25. A
Contract Year is measured from the date we issue
your Contract or a Contract Anniversary.
. State premium tax (if your state imposes one)
. Not all Options are available in all states
. We may discontinue offering any of these Options
at any time.
7 PROSPECTUS
Investment Alternatives Each Contract offers several investment alternatives
including:
. up to 2 Fixed Account Options that credit
interest at rates we guarantee, and
. 50 Variable Sub-accounts investing in
Portfolios offering professional money
management by these investment advisers:
. Invesco A I M Advisors, Inc.
. Fred Alger Management, Inc.
. Fidelity Management & Research Company
. Janus Capital Management LLC
. MFS(TM) Investment Management
. OppenheimerFunds, Inc.
. OpCap Advisors LLC
. Pacific Investment Management Company LLC
. Rydex Investments
. Legg Mason Partners Fund Advisor, LLC
. T. Rowe Price Associates, Inc.
. Van Eck Associates Corporation
. Van Kampen Asset Management
. Van Kampen/(1)/
(1) Morgan Stanley Investment Management
Inc., the adviser to the UIF Portfolios, does
business in certain instances using the name
Van Kampen.
Not all Fixed Account Options are available in
all states or with all Contracts.
To find out current rates being paid on the Fixed
Account Option(s), or to find out how the
Variable Sub-accounts have performed, please call
us at 800-457- 7617.
Special Services For your convenience, we offer these special
services:
. Automatic Portfolio Rebalancing Program
. Automatic Additions Program
. Dollar Cost Averaging Program
. Systematic Withdrawal Program
. TrueBalance(SM) Asset Allocation Program
Income Payments You can choose fixed income payments, variable income
payments, or a combination of the two. You can
receive your income payments in one of the following
ways (you may select more than one income plan):
. life income with guaranteed number of payments
. joint and survivor life income with guaranteed
number of payments
. guaranteed number of payments for a specified
period
. life income with cash refund
. joint life income with cash refund
. life income with installment refund
. joint life income with installment refund
In addition, we offer an Income Protection Benefit
Option that guarantees that your variable income
payments will not fall below a certain level.
8 PROSPECTUS
Death Benefits If you die before the Payout Start Date, we will pay
a death benefit subject to the conditions described
in the Contract. In addition to the death benefit
included in your Contract ("ROP Death Benefit"), the
death benefit options we currently offer include:
. MAV Death Benefit Option;
. Annual Increase Death Benefit Option; and
. Enhanced Earnings Death Benefit Option.
Transfers Before the Payout Start Date, you may transfer your
Contract Value among the investment alternatives,
with certain restrictions. The minimum amount you may
transfer is $100 or the amount remaining in the
investment alternative, if less. The minimum amount
that can be transferred into the Standard Fixed
Account or Market Value Adjusted Account Options is
$100.
A charge may apply after the 12th transfer in each
Contract Year.
Withdrawals You may withdraw some or all of your Contract Value
at any time during the Accumulation Phase and during
the Payout Phase in certain cases. In general, you
must withdraw at least $50 at a time. If any
withdrawal reduces your Contract Value to less than
$1,000, we will treat the request as a withdrawal of
the entire Contract Value, unless the SureIncome
Withdrawal Benefit Option is in effect under your
Contract. Withdrawals taken prior to annuitization
(referred to in this prospectus as the Payout Phase)
are generally considered to come from the earnings in
the Contract first. If the Contract is tax-qualified,
generally all withdrawals are treated as
distributions of earnings. Withdrawals of earnings
are taxed as ordinary income and, if taken prior to
age 59 1/2, may be subject to an additional 10%
federal tax penalty. A withdrawal charge and a Market
Value Adjustment may also apply.
9 PROSPECTUS
How the Contracts Work
Each Contract basically works in two ways.
First, each Contract can help you (we assume you are the "Contract Owner") save
for retirement because you can invest in your Contract's investment alternatives
and generally pay no federal income taxes on any earnings until you withdraw
them. You do this during what we call the "Accumulation Phase" of the Contract.
The Accumulation Phase begins on the date we issue your Contract (we call that
date the "Issue Date") and continues until the Payout Start Date, which is the
date we apply your money to provide income payments. During the Accumulation
Phase, you may allocate your purchase payments to any combination of the
Variable Sub-Accounts and/or Fixed Account Options. If you invest in a Fixed
Account Option, you will earn a fixed rate of interest that we declare
periodically. If you invest in any of the Variable Sub-Accounts, your investment
return will vary up or down depending on the performance of the corresponding
Portfolios.
Second, each Contract can help you plan for retirement because you can use it to
receive retirement income for life and/or for a pre-set number of years, by
selecting one of the income payment options (we call these "Income Plans")
described on 53. You receive income payments during what we call the "Payout
Phase" of the Contract, which begins on the Payout Start Date and continues
until we make the last payment required by the Income Plan you select. During
the Payout Phase, if you select a fixed income payment option, we guarantee the
amount of your payments, which will remain fixed. If you select a variable
income payment option, based on one or more of the Variable Sub-Accounts, the
amount of your payments will vary up or down depending on the performance of the
corresponding Portfolios. The amount of money you accumulate under your Contract
during the Accumulation Phase and apply to an Income Plan will determine the
amount of your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
[FLOW CHART]
Other income payment options are also available. See "Income Payments."
As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if there is none, the
Beneficiary will exercise the rights and privileges provided by the Contract.
See "The Contracts." In addition, if you die before the Payout Start Date, we
will pay a death benefit to any surviving Contract Owner or, if there is none,
to your Beneficiary. See "Death Benefits."
Please call us at 800-457-7617 if you have any question about how the Contracts
work.
10 PROSPECTUS
Expense Tables
The table below lists the expenses that you will bear directly or indirectly
when you buy a Contract. The table and the examples that follow do not reflect
premium taxes that may be imposed by the state where you reside. For more
information about Variable Account expenses, see "Expenses," below. For more
information about Portfolio expenses, please refer to the prospectuses for the
Portfolios.
Contract Owner Transaction Expenses
Withdrawal Charge (as a percentage of purchase payments withdrawn)*
Number of Complete Years Since We Received the Purchase Payment
Being Withdrawn/Applicable Charge:
Contract: 0 1 2 3 4 5 6 7 8+
- ---------------------------- --- --- --- --- --- --- --- --- ---
Consultant Solutions Classic 7% 7% 6% 5% 4% 3% 2% 0% 0%
Consultant Solutions Plus 8.5% 8.5% 8.5% 7.5% 6.5% 5.5% 4% 2.5% 0%
Consultant Solutions Elite: 7% 6% 5% 0% 0% 0% 0% 0% 0%
Consultant Solutions Select: None
All Contracts:
Annual Contract Maintenance Charge $40**
Transfer Fee up to 2.00% of the amount transferred, but not more than $25***
Premium Taxes 0% to 4.00% of Purchase Payment****
Loan Interest Rate 7.25%*****
* Each Contract Year, you may withdraw a portion of your purchase payments
(and/or your earnings, in the case of Charitable Remainder Trusts) without
incurring a withdrawal charge ("Free Withdrawal Amount"). See "Withdrawal
Charges" for more information.
** Reduced to $30 if Contract Value is not less than $2000, and waived in
certain cases. See "Expenses."
*** Applies solely to the 13th and subsequent transfers within a Contract Year,
excluding transfers due to dollar cost averaging and automatic portfolio
rebalancing. We are currently assessing a transfer fee of 1.00% of the
amount transferred, however, we reserve the right to raise the transfer fee
to up to 2.00% of the amount transferred. The transfer fee will never be
greater than $25.
**** Some States charge premium taxes that generally range from 0 to 4%. We are
responsible for paying these taxes, and will deduct them from your Contract
Value. Our current practice is to not charge for these taxes until the
Payout Start Date or surrender of the Contract. See "Premium Taxes" for
more information.
***** For more information, see "Contract Loans for 403(b) Contracts." The loan
interest rate is subject to change.
Variable Account Annual Expenses (as a percentage of average daily net asset
value deducted from each Variable Sub-account)
If you select the basic Contract without any optional benefits, your Variable
Account expenses would be as follows:
Mortality and Expense Administrative Total Variable Account
Basic Contract (without any optional benefit) Risk Charge Expense Charge* Annual Expense
- ----------------------------------------------------------------------------------------------------------------
Consultant Solutions Classic 1.25% 0.10% 1.35%
Consultant Solutions Plus 1.45% 0.10% 1.55%
Consultant Solutions Elite 1.60% 0.10% 1.70%
Consultant Solutions Select 1.70% 0.10% 1.80%
* We reserve the right to raise the administrative expense charge to 0.25%.
If we increase this charge, we will amend the prospectus, accordingly.
However, we will not increase the charge once we issue your Contract.
Each Contract also offers optional riders that may be added to the Contract. For
each optional rider you select, you would pay the following additional mortality
and expense risk charge associated with each rider.
MAV Death Benefit Option Currently 0.20%, up to a maximum of
0.50% for Options added in the future*
Annual Increase Death Benefit Option Currently 0.30%, up to a maximum of 0.50%
for Options added in the future*
Enhanced Earnings Death Benefit Currently 0.25%, up to a maximum of
Option (issue age 0-70) 0.35% for Options added in the future*
Enhanced Earnings Death Benefit Currently 0.40%, up to a maximum of
Option (issue age 71-79) 0.50% for Options added in the future*
11 PROSPECTUS
If you select the Options with the highest possible combination of mortality and
expense risk charges during the Accumulation Phase, your Variable Account
expenses would be as follows, assuming current expenses:
Contract with the MAV Death Benefit Option,
Annual Increase Death Benefit Option, and Mortality and Expense Administrative Total Variable Account
Enhanced Earnings Death Benefit Option (issue age 71-79) Risk Charge* Expense Charge* Annual Expense
- ---------------------------------------------------------------------------------------------------------------------------
Consultant Solutions Classic 2.15% 0.10% 2.25%
Consultant Solutions Plus 2.35% 0.10% 2.45%
Consultant Solutions Elite 2.50% 0.10% 2.60%
Consultant Solutions Select 2.60% 0.10% 2.70%
* As described above the administrative expense charge and the mortality and
expense charge for certain Options may be higher in the future if you add
this Option to your Contract. However, we will not increase the
administrative expense charge once we issue your Contract, and we will not
increase the charge for an Option once we add the Option to your Contract.
If we increase any of these charges, we will amend the prospectus,
accordingly.
TrueReturn Accumulation Benefit Option Annual Fee
(annual rate as a percentage of Benefit Base on a Contract Anniversary)
TrueReturn Accumulation Benefit Option Currently 0.50%, up to a maximum of 1.25% for
Options added in the future. *
* If we increase this charge, we will amend the prospectus, accordingly. See
"TrueReturn Accumulation Benefit Option" for details.
Spousal Protection Benefit (Co-Annuitant) Option Annual Fee
(annual rate as a percentage of Contract Value on a Contract Anniversary)
Spousal Protection Benefit (Co-Annuitant) Option Currently 0.10%, up to a maximum of 0.15% for
Options added in the future *
* For Options added on or after 5/1/2005. If we increase this charge, we will
amend the prospectus, accordingly. See "Spousal Protection Benefit
(Co-Annuitant) Option" for details.
SureIncome Option Fee
(annual rate as a percentage of Benefit Base on a Contract Anniversary)
SureIncome Withdrawal Benefit Option Currently 0.50%, up to a maximum of 1.25% for
SureIncome Options added in the future *
* If we increase this charge, we will amend the prospectus, accordingly. See
"SureIncome Withdrawal Benefit Option" for details.
Income Protection Benefit Option Fee (Payout Phase only)*
(as a percentage of average daily net assets)
Income Protection Benefit Option Currently 0.50%, up to a maximum of 1.25% for
Options added in the future*
* See "Income Payments - Income Protection Benefit Option," below, for a
description of the Income Protection Benefit Option. You may add this
Option when you elect to receive annuity benefits. We begin to deduct the
charge for this Option on the Payout Start Date. Currently, the charge for
this Option is 0.50% of the average daily net Variable Account assets
supporting the variable income payments to which the Income Protection
Benefit Option applies. We will charge you the Option charge in effect when
you choose to apply this Option to your Contract. We reserve the right to
raise the Income Protection Benefit Option charge to up to 0.75%. If we
increase this charge, we will amend the prospectus accordingly. Once your
Income Protection Benefit Option is in effect, however, we will not change
the option charge you will pay for this Option. See "Expenses - Mortality
and Expense Risk Charge," below, for details.
12 PROSPECTUS
Portfolio Annual Expenses - Minimum and Maximum
The next table shows the minimum and maximum total operating expenses charged by
the Portfolios that you may pay periodically during the time that you own the
Contract. Advisors and/or other service providers of certain Portfolios may have
agreed to waive their fees and/or reimburse Portfolio expenses in order to keep
the Portfolios' expenses below specified limits. The range of expenses shown in
this table does not show the effect of any such fee waiver or expense
reimbursement. More detail concerning each Portfolio's fees and expenses appears
in the second table below and in the prospectus for each Portfolio.
Minimum Maximum
------- -------
Total Annual Portfolio Operating Expenses/(1)/ (expenses
that are deducted from Portfolio assets, which may include
management fees, distribution and/or services (12b-1) fees,
and other expenses) 0.35% 5.32%
(1) Expenses are shown as a percentage of Portfolio average daily net assets
(before any waiver or reimbursement) as of December 31, 2007.
Example 1
This Example is intended to help you compare the cost of investing in the
Contracts with the cost of investing in other variable annuity contracts. These
costs include Contract owner transaction expenses, Contract fees, Variable
Account annual expenses, and Portfolio fees and expenses.
The example shows the dollar amount of expenses that you would bear directly or
indirectly if you:
.. invested $10,000 in the Contract for the time periods indicated;
.. earned a 5% annual return on your investment;
.. surrendered your Contract, or you began receiving income payments for a
specified period of less than 120 months, at the end of each time period;
.. elected the MAV Death Benefit Option and the Annual Increase Death Benefit
Option;
.. elected the Enhanced Earnings Death Benefit Option (assuming issue age
71-79);
.. elected the Spousal Protection Benefit (Co-Annuitant) Option; and
.. elected the TrueReturn Accumulation Benefit Option or SureIncome Withdrawal
Benefit Option.
The example does not include any taxes or tax penalties you may be required to
pay if you surrender your Contract.
The first line of the example assumes that the maximum fees and expenses of any
of the Portfolios are charged. The second line of the example assumes that the
minimum fees and expenses of any of the Portfolios are charged. Your actual
expenses may be higher or lower than those shown below.
Consultant Solutions Classic Consultant Solutions Plus
------------------------------------- -------------------------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
Costs Based on Maximum
Annual Portfolio Expenses $1,460 $2,936 $4,303 $7,456 $1,608 $3,203 $4,595 $7,568
Costs Based on Minimum
Annual Portfolio Expenses $ 952 $1,507 $2,079 $3,756 $1,100 $1,780 $2,390 $3,945
Consultant Solutions Elite Consultant Solutions Select
------------------------------------- -------------------------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
Costs Based on Maximum
Annual Portfolio Expenses $1,411 $2,606 $4,187 $7,650 $911 $2,633 $4,226 $7,704
Costs Based on Minimum
Annual Portfolio Expenses $ 902 $1,188 $1,997 $4,084 $403 $1,218 $2,046 $4,175
13 PROSPECTUS
Example 2
This Example uses the same assumptions as Example 1 above, except that it
assumes you decided not to surrender your Contract, or you began receiving
income payments for a specified period of at least 120 months, at the end of
each time period.
Consultant Solutions Classic Consultant Solutions Plus
------------------------------------- -------------------------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
Costs Based on Maximum
Annual Portfolio Expenses $865 $2,511 $4,048 $7,456 $886 $2,565 $4,128 $7,568
Costs Based on Minimum
Annual Portfolio Expenses $357 $1,082 $1,824 $3,756 $377 $1,142 $1,923 $3,945
Consultant Solutions Elite Consultant Solutions Select
------------------------------------- -------------------------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
Costs Based on Maximum
Annual Portfolio Expenses $901 $2,606 $4,187 $7,650 $911 $2,633 $4,226 $7,704
Costs Based on Minimum
Annual Portfolio Expenses $392 $1,188 $1,997 $4,084 $403 $1,218 $2,046 $4,175
Please remember that you are looking at examples and not a representation of
past or future expenses. Your rate of return may be higher or lower than 5%,
which is not guaranteed. The examples do not assume that any Portfolio expense
waivers or reimbursement arrangements are in effect for the periods presented.
The examples reflect the Free Withdrawal Amounts, if applicable, and the
deduction of the annual contract maintenance charge of $40 each year. The above
examples assume you have selected the MAV Death Benefit Option, the Annual
Increase Death Benefit Option, the Enhanced Earnings Death Benefit Option
(assuming the oldest Contract Owner and Co-Annuitant, or, if the Contract Owner
is a non-living person, the oldest Annuitant, are age 71 or older, and all are
age 79 or younger on the Rider Application Date), the Spousal Protection Benefit
(Co-Annuitant) Option, and the TrueReturn Accumulation Benefit Option or
SureIncome Withdrawal Benefit Option. If any or all of these features were not
elected, the expense figures shown above would be slightly lower.
14 PROSPECTUS
Financial Information
To measure the value of your investment in the Variable Sub-Accounts during the
Accumulation Phase, we use a unit of measure we call the "Accumulation Unit."
Each Variable Sub-Account has a separate value for its Accumulation Units we
call "Accumulation Unit Value." Accumulation Unit Value is analogous to, but not
the same as, the share price of a mutual fund.
Accumulation Unit Values for the lowest and highest available combinations of
Contract charges that affect Accumulation Unit Values for each Contract are
shown in Appendix H of this prospectus. The Statement of Additional Information
contains the Accumulation Unit Values for all other available combinations of
Contract charges that affect Accumulation Unit Values for each Contract. The
financial statements of Lincoln Benefit and the financial statements of the
Variable Account, which are comprised of the financial statements of the
underlying sub-accounts, appear in the Statement of Additional Information.
The Contracts
CONTRACT OWNER
Each Contract is an agreement between you, the Contract Owner, and Lincoln
Benefit, a life insurance company. As the Contract Owner, you may exercise all
of the rights and privileges provided to you by the Contract. That means it is
up to you to select or change (to the extent permitted):
.. the investment alternatives during the Accumulation and Payout Phases,
.. the amount and timing of your purchase payments and withdrawals,
.. the programs you want to use to invest or withdraw money,
.. the income payment plan(s) you want to use to receive retirement income,
.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, or, if the
Contract Owner is a non-living person, an Annuitant dies, and
.. any other rights that the Contract provides, including restricting income
payments to Beneficiaries.
If you die prior to the Payout Start Date, any surviving joint Contract Owner,
or, if none, the Beneficiary, may exercise the rights and privileges provided to
them by the Contract. If the sole surviving Contract Owner dies after the Payout
Start Date, the Primary Beneficiary will receive any guaranteed income payments
scheduled to continue.
If the Annuitant dies prior to the Payout Start Date and the Contract Owner is a
non-living person, we will pay the death benefit to the current Contract Owner.
The Contract cannot be jointly owned by both a living and a non-living person.
The Consultant Solutions Select is not available for purchase by non-living
persons. The maximum age of any Contract Owner on the date we receive the
completed application for each Contract is 90.
If you select the MAV Death Benefit Option, the Annual Increase Death Benefit
Option, or the Enhanced Earnings Death Benefit Option, the maximum age of any
Contract Owner on the Rider Application Date is currently 79. If you select the
Spousal Protection Benefit (Co-Annuitant) Option, the maximum age of any
Contract Owner on the Rider Application Date is currently age 90. If you select
the SureIncome Withdrawal Benefit Option, the maximum age of any Contract Owner
on the Rider Application Date is currently age 85.
The Contract can also be purchased as an IRA or TSA (also known as a 403(b)).
The endorsements required to qualify these annuities under the Code may limit or
modify your rights and privileges under the Contract. We use the term "Qualified
Contract" to refer to a Contract issued as an IRA, 403(b), or with a Qualified
Plan.
Except for certain Qualified Contracts, you may change the Contract Owner at any
time by written notice in a form satisfactory to us. Until we receive your
written notice to change the Contract Owner, we are entitled to rely on the most
recent information in our files. We will provide a change of ownership form to
be signed by you and filed with us. Once we accept the change, the change will
take effect as of the date you signed the request. We will not be liable for any
payment or settlement made prior to accepting the change. Accordingly, if you
wish to change the Contract Owner, you should deliver your written notice to us
promptly. Each change is subject to any payment we make or other action we take
before we accept it. Changing ownership of this Contract may cause adverse tax
consequences and may not be allowed under Qualified Plans. Please consult with a
competent tax advisor prior to making a request for a change of Contract Owner.
15 PROSPECTUS
ANNUITANT
The Annuitant is the individual whose age determines the latest Payout Start
Date and whose life determines the amount and duration of income payments (other
than under Income Plan 3). If the Contract is a Non-Qualified Contract, you also
may designate a joint Annuitant, who is a second person on whose life income
payments depend. Additional restrictions may apply in the case of Qualified
Plans. The maximum age of the Annuitant on the date we receive the completed
application for each Contract is 90.
If the Owner is a living person, the Owner may change the Annuitant before the
Payout Start Date by written request in a form satisfactory to us. Once we
accept a change, it takes effect on the date you signed the request. Each change
is subject to any payment we make or other action we take before we accept it.
If you select the MAV Death Benefit Option, Annual Increase Death Benefit
Option, or Enhanced Earnings Death Benefit Option, the maximum age of any
Annuitant on the Rider Application Date is 79.
If you select the Spousal Protection Benefit (Co-Annuitant) Option, the maximum
age of any Annuitant on the Rider Application date is age 90. If you select the
Income Protection Benefit Option, the oldest Annuitant and joint Annuitant (if
applicable) must be age 75 or younger on the Payout Start Date. If you select
the SureIncome Withdrawal Benefit Option, the maximum age of any Annuitant on
the Rider Application Date is currently age 85.
If you select an Income Plan that depends on the Annuitant or a joint
Annuitant's life, we may require proof of age and sex before income payments
begin and proof that the Annuitant or joint Annuitant is still alive before we
make each payment.
CO-ANNUITANT
Contract Owners of IRA Contracts that meet the following conditions and that
elect the Spousal Protection Benefit Option must name their spouse as a
Co-Annuitant:
.. the individually owned Contract must be either a traditional, Roth or
Simplified Employee Pension IRA;
.. the Contract Owner must be age 90 or younger on the Rider Application Date;
.. and the Co-Annuitant must be age 79 or younger on the Rider Application
Date; and
.. the Co-Annuitant must be the sole Primary Beneficiary under the Contract.
Under the Spousal Protection Benefit Option, the Co-Annuitant will be considered
to be an Annuitant during the Accumulation Phase, except the Co-Annuitant will
not be considered to be an Annuitant for purposes of determining the Payout
Start Date and the "Death of Annuitant" provision of your Contract does not
apply upon the death of the Co-Annuitant. If you are single when you purchase
this Contract, and are married later, you may add the Spousal Protection Benefit
Option within six months of your marriage only if you provide proof of marriage
in a form satisfactory to us. You may change the Co-Annuitant to a new spouse
within six months of re-marriage only if you provide proof of remarriage in a
form satisfactory to us. At any time, there may only be one Co-Annuitant under
your Contract. The Co-Annuitant will be considered an Owner for the purposes of
determining the age or birthday of the Owners under the MAV Death Benefit
Option, the Annual Increase Death Benefit Option and the Enhanced Earnings Death
Benefit Option. See "Spousal Protection Benefit Option and Death of
Co-Annuitant" for more information.
BENEFICIARY
You may name one or more Primary and Contingent Beneficiaries when you apply for
a Contract. The Primary Beneficiary is the person who may, in accordance with
the terms of the Contract, elect to receive the death settlement ("Death
Proceeds") or become the new Contract Owner pursuant to the Contract if the sole
surviving Contract Owner dies before the Payout Start Date. If the sole
surviving Contract Owner dies after the Payout Start Date, the Beneficiary will
receive any guaranteed income payments scheduled to continue. A Contingent
Beneficiary is the person selected by the Contract Owner who will exercise the
rights of the Primary Beneficiary if all named Primary Beneficiaries die before
the death of the sole surviving Contract Owner.
You may change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed by you and filed with us. After we accept the form, the change of
Beneficiary will be effective as of the date you signed the form. Until we
accept your written notice to change a Beneficiary, we are entitled to rely on
the most recent Beneficiary information in our files. We will not be liable for
any payment or settlement made prior to accepting the change. Accordingly, if
you wish to change your Beneficiary, you should deliver your written notice to
us promptly. Each Beneficiary change is subject to any payment made by us or any
other action we take before we accept the change.
You may restrict income payments to Beneficiaries. We will provide a form to be
signed by you and filed with us. Once we accept the form, the restriction will
take effect as of the date you signed the request. Any restriction is subject to
any payment made by us or any other action we take before we accept the request.
If you did not name a Beneficiary or, unless otherwise provided in the
Beneficiary designation, if a named Beneficiary is no longer living and there
are no other surviving Primary or Contingent Beneficiaries when the
16 PROSPECTUS
sole surviving Contract Owner dies, the new Beneficiary will be:
.. your spouse or, if he or she is no longer living,
.. your surviving children equally, or if you have no surviving children,
.. your estate.
If more than one Beneficiary survives you, we will divide the death benefit
among the surviving Beneficiaries according to your most recent written
instructions. If you have not given us written instructions in a form
satisfactory to us, we will pay the death benefit in equal amounts to the
surviving Beneficiaries. If there is more than one Beneficiary in a class (e.g.,
more than one Primary Beneficiary) and one of the Beneficiaries predeceases the
Contract Owner (the Annuitant if the Contract owner is not a living person), the
remaining Beneficiaries in that class will divide the deceased Beneficiary's
share in proportion to the original share of the remaining Beneficiaries.
For purposes of this Contract, in determining whether a living person, including
a Contract Owner, Primary Beneficiary, Contingent Beneficiary, or Annuitant
("Living Person A") has survived another living person, including a Contract
Owner, Primary Beneficiary, Contingent Beneficiary, or Annuitant ("Living Person
B"), Living Person A must survive Living Person B by at least 24 hours.
Otherwise, Living Person A will be conclusively deemed to have predeceased
Living Person B.
Where there are multiple Beneficiaries, we will only value the death proceeds at
the time the first Beneficiary submits the necessary documentation in good
order. Any death proceed amounts attributable to any Beneficiary which remain in
the Variable Sub-accounts are subject to investment risk. If there is more than
one Beneficiary taking shares of the death proceeds, each Beneficiary will be
treated as a separate and independent owner of his or her respective share of
the death proceeds. Each Beneficiary will exercise all rights related to his or
her share of the death proceeds, including the sole right to select a death
settlement option, subject to any restrictions previously placed upon the
Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her
respective share, but that designated Beneficiary(ies) will be restricted to the
death settlement option chosen by the original Beneficiary.
If there is more than one Beneficiary and one of the Beneficiaries is a
corporation, trust or other non-living person, all Beneficiaries will be
considered to be non-living persons.
MODIFICATION OF THE CONTRACT
Only a Lincoln Benefit officer may approve a change in or waive any provision
of the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. If a provision of the Contract
is inconsistent with state law, we will follow state law.
ASSIGNMENT
You may not assign an interest in this Contract as collateral or security for a
loan. However, you may assign periodic income payments under this Contract prior
to the Payout Start Date. No Beneficiary may assign benefits under the Contract
until they are due. We will not be bound by any assignment until the assignor
signs it and files it with us. We are not responsible for the validity of any
assignment. Federal law prohibits or restricts the assignment of benefits under
many types of retirement plans and the terms of such plans may themselves
contain restrictions on assignments. An assignment may also result in taxes or
tax penalties. You should consult with an attorney before trying to assign
periodic income payments under your Contract.
Purchases
MINIMUM PURCHASE PAYMENTS
The minimum initial purchase payment for Classic Contracts is $1,200 (Qualified
or Non-Qualified Contracts); the minimum initial purchase payment for all other
Non-Qualified Contracts is $10,000, ($2,000 for Qualified Contracts). All
subsequent purchase payments under a Contract must be $1,000 or more ($100 for
automatic payments). For Consultant Solutions Plus Contracts, purchase payments
do not include any Credit Enhancements. You may make purchase payments at any
time prior to the Payout Start Date; however, any additional payments after the
initial purchase payment may be limited in some states. Please consult with your
representative for details. The total amount of purchase payments we will accept
for each Contract without our prior approval is $1,000,000. We reserve the right
to accept a lesser initial purchase payment amount or lesser subsequent purchase
payment amounts. We reserve the right to limit the availability of the
investment alternatives for additional investments. We also reserve the right to
reject any application.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments of $100 or more per month by
automatically transferring money from your bank account. Please consult with
your sales representative for detailed information. The Automatic Additions
Program is not available for making purchase payments into the Dollar Cost
Averaging Fixed Account Option.
17 PROSPECTUS
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your
purchase payment among the investment alternatives. The allocation you specify
on your application will be effective immediately. All allocations must be in
whole percents that total 100% or in whole dollars. You can change your
allocations by calling 1-800-457-7617.
We will allocate your purchase payments to the investment alternatives according
to your most recent instructions on file with us. Unless you notify us
otherwise, we will allocate subsequent purchase payments according to the
allocation for the previous purchase payment. We will effect any change in
allocation instructions at the time we receive written notice of the change in
good order.
For Consultant Solutions Select Contracts, the maximum amount that can be
allocated during any single day to certain selected funds is $25,000. Please see
the current list of funds affected by this restriction on page 25.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our home office. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
home office.
We use the term "business day" to refer to each day Monday through Friday that
the New York Stock Exchange is open for business. We also refer to these days as
"Valuation Dates." Our business day closes when the New York Stock Exchange
closes for regular trading, usually 4:00 p.m. Eastern Time (3:00 p.m. Central
Time). If we receive your purchase payment after 3:00 p.m. Central Time on any
Valuation Date, we will credit your purchase payment using the Accumulation Unit
Values computed for the next Valuation Date.
CREDIT ENHANCEMENT
For Consultant Solutions Plus Contracts, each time you make a purchase payment,
we will add to your Contract Value a Credit Enhancement equal to 4% of the
purchase payment if the oldest Contract Owner, or, if the Contract Owner is a
non-living person, the oldest Annuitant, is age 85 or younger on the date we
receive the completed application for the Contract ("Application Date"). If the
oldest Contract Owner or, if the Owner is a non-living person, the oldest
Annuitant is age 86 or older and 90 or younger on the Application Date, we will
add to your Contract Value a Credit Enhancement equal to 2% of the purchase
payment. The thresholds apply individually to each Consultant Solutions Plus
Contract you own. The additional Credit Enhancements and their corresponding
thresholds are as follows:
Cumulative Purchase
Additional Credit Payments less Cumulative
Enhancement for Large Withdrawals must
Contracts exceed:
- ----------------------------- ------------------------
0.50% of the purchase payment $ 500,000
1.00% of the purchase payment $1,000,000
If, during the first Contract Year only, the cumulative purchase payments less
cumulative withdrawals exceed the thresholds, the additional credit enhancement
will apply to prior purchase payments, less cumulative withdrawals, and will be
added to the Contract Value as of the date of the most recent purchase payment.
The additional credit enhancement will be applied only once to any given
purchase payment, current or prior.
If you exercise your right to cancel the Contract during the Trial Examination
Period, the amount we refund to you will not include any Credit Enhancement. See
"Trial Examination Period" below for details. The Consultant Solutions Plus
Contract may not be available in all states.
We will allocate any Credit Enhancements to the investment alternatives
according to the allocation instructions you have on file with us at the time we
receive your purchase payment. We will allocate each Credit Enhancement among
the investment alternatives in the same proportions as the most recent purchase
payment. We do not consider Credit Enhancements to be investments in the
Contract for income tax purposes.
We use a portion of the withdrawal charge and mortality and expense risk charge
to help recover the cost of providing the Credit Enhancement under the Contract.
See "Expenses." Under certain circumstances (such as a period of poor market
performance) the cost associated with the Credit Enhancement may exceed the sum
of the Credit Enhancement and any related earnings. You should consider this
possibility before purchasing the Contract.
TRIAL EXAMINATION PERIOD
You may cancel your Contract by providing us with written notice within the
Trial Examination Period, which is the 20 day period after you receive the
Contract, or such longer period that your state may require. If you exercise
this "Right to Cancel," the Contract terminates and we will pay you the full
amount of your purchase payments allocated to the Fixed Account. We also will
return your purchase payments allocated to the Variable Account adjusted, to the
extent federal or state law permits, to reflect investment gain or loss,
including the deduction of mortality and expense risk charges and administrative
expense charges, that occurred from the date of allocation through the date of
cancellation. If your Contract is qualified under Code Section 408(b), we
18 PROSPECTUS
will refund the greater of any purchase payments or the Contract Value.
For Consultant Solutions Plus Contracts, we have received regulatory relief to
enable us to recover the amount of any Credit Enhancement applied to Contracts
that are cancelled during the Trial Examination Period. The amount we return to
you upon exercise of this Right to Cancel will not include any Credit
Enhancement. In states where required, we will return the amount of your
purchase payments. In other states, we will return the amount of your purchase
payments, reduced by the amount of any mortality and expense risk charges and
administrative expense charges deducted prior to cancellation, and adjusted by
any investment gain or loss associated with:
.. your Variable Account purchase payments; and
.. any portion of the Credit Enhancement assigned to the Variable
Sub-accounts.
We reserve the right to allocate your purchase payments to the PIMCO VIT Money
Market - Administrative Shares Sub-Account during the Trial Examination Period.
For Contracts purchased in California by persons age 60 and older, you may elect
to defer until the end of the Trial Examination Period allocation of your
purchase payment to the Variable Sub-accounts. Unless you instruct otherwise,
upon making this election, your purchase payment will be allocated to the PIMCO
VIT Money Market - Administrative Shares Sub-Account. On the next Valuation Date
40 day after the issue date, your Contract Value will then be reallocated in
accordance with your most recent investment allocation instructions.
State laws vary and may require a different period, other variations or
adjustments. Please refer to your Contract for any state specific information.
Contract Loans for 403(b) Contracts
Subject to the restrictions described below, we will make loans to the Contract
Owner of a Contract used in connection with a Tax Sheltered Annuity Plan ("TSA
Plan") under Section 403(b) of the Internal Revenue Code. Such loans may not be
available in all states. Loans are not available under non-qualified Contracts.
We will only make loans after the right to cancel period and before the Payout
Start Date. All loans are subject to the terms of the Contract, the relevant
qualified plan, and the Internal Revenue Code, which impose restrictions on
loans. Loans may not be available with all rider options.
We will not make a loan to you if the total of the requested loan and your
unpaid outstanding loans will be greater than the amount available for full
withdrawal, including any applicable Market Value Adjustment, under your
Contract on the date of the loan. In addition, you may not borrow a loan if the
total of the requested loan and all of your loans under TSA Plans with the same
employer is more than the lesser of (a) or (b) where:
(a) equals $50,000 minus the excess of the highest outstanding loan balance
during the prior 12 months over the current outstanding loan balance; and
(b) equals the greater of $10,000 or half of the amount available for full
withdrawal.
The minimum loan amount is $1,000.
To request a Contract loan, write to us at the address given on the first page
of the prospectus. You alone are responsible for ensuring that your loan and
repayments comply with tax requirements. Loans made before the Payout Start Date
are generally treated as distributions under the Contract, and may be subject to
withholding and tax penalties for early distributions. Some of these
requirements are stated in Section 72 of the Internal Revenue Code. Please seek
advice from your plan administrator or tax advisor.
When we make a loan, we will transfer an amount equal to the loan amount from
the Variable Account and/or the Fixed Account Options to the Loan Account as
collateral for the loan. The Loan Account is an account established for amounts
transferred from the Variable Sub-accounts or Fixed Account Options as security
for an outstanding Contract loan. We will transfer to the Loan Account amounts
from each Variable Sub-account in proportion to the total assets in all Variable
Sub-accounts. If your loan amount is greater than your Contract Value in the
Variable Sub-accounts, we will transfer the remaining required collateral from
the Market Value Adjusted or Standard Fixed Account Option. If your loan amount
is greater than your contract value in the Variable Sub-accounts and the Market
Value Adjusted or Standard Fixed Account Option, we will transfer the remaining
required collateral from the Dollar Cost Averaging Fixed Account Options.
We will not charge a Withdrawal Charge on the loan or on the transfer from the
Variable Sub-accounts or any of the Fixed Account Options. We may, however,
apply a Market Value Adjustment to a transfer from the Market Value Adjusted
Fixed Account to the Loan Account. If we do, we will increase or decrease the
amount remaining in the Market Value Adjusted Fixed Account by the amount of the
Market Value Adjustment, so that the net amount transferred to the Loan Account
will equal the desired loan amount. We will charge a Withdrawal Charge and apply
a Market Value Adjustment, if applicable, on a distribution to repay the loan in
full, in the event of loan default.
We will credit interest to the amounts in the Loan Account. The annual interest
rate credited to the Loan
19 PROSPECTUS
Account will be the greater of: (a) an annual effective rate of 3%; or (b) the
loan interest rate minus 2.25%. The value of the amounts in the Loan Account are
not affected by the changes in the value of the Variable Sub-accounts.
When you take out a loan, we will set the loan interest rate. That rate will
apply to your loan until it is repaid. From time to time, we may change the loan
interest rate applicable to new loans. We also reserve the right to change the
terms of new loans.
We will subtract the outstanding Contract loan balance, including accrued but
unpaid interest, from:
(1) the Death Proceeds;
(2) full withdrawal proceeds;
(3) the amount available for partial withdrawal; and
(4) the amount applied on the Payout Start Date to provide income payments.
If a New Owner elects to continue the Contract under Death of Owner Option D,
the new Contract Value will be reduced by the amount of the loan outstanding
plus accrued interest and the loan will be canceled.
Usually you must repay a Contract loan within five years of the date the loan is
made. Scheduled payments must be level, amortized over the repayment period, and
made at least quarterly. We may permit a repayment period of 15 or 30 years if
the loan proceeds are used to acquire your principal residence. We may also
permit other repayment periods.
You must mark your loan repayments as such. We will assume that any payment
received from you is a Purchase Payment, unless you tell us otherwise.
Generally, loan payments are allocated to the Variable Sub-account(s) in the
proportion that you have selected for your most recent Purchase Payment.
Allocations of loan payments are not permitted to the Fixed Accounts (Standard
Fixed Account, Market Value Adjusted Account, and Dollar Cost Averaging Fixed
Account Option). If your Purchase Payment allocation includes any of the Fixed
Accounts, the percentages allocated to the Fixed Accounts will be allocated
instead to the PIMCO Money Market Sub-account.
If you do not make a loan payment when due, we will continue to charge interest
on your loan. We also will declare the entire loan in default. We will subtract
the defaulted loan balance plus accrued interest from any future distribution
under the Contract and keep it in payment of your loan. Any defaulted amount
plus interest will be treated as a distribution for tax purposes (as permitted
by law). As a result, you may be required to pay taxes on the defaulted amount
and incur the early withdrawal tax penalty. Until we are permitted by law to
extinguish a defaulted loan, we will continue to charge interest and add unpaid
interest to your outstanding loan balance.
If the total loan balance exceeds the amount available for full withdrawal, we
will mail written notice to your last known address. The notice will state the
amount needed to maintain the Contract in force. If we do not receive payment of
this amount within 31 days after we mail this notice, we will terminate your
Contract.
We may defer making any loan for 6 months after you ask us for a loan, unless
the loan is to pay a premium to us.
Contract Value
On the Issue Date, the Contract Value is equal to your initial purchase payment
(for Consultant Solutions Plus Contracts, your initial purchase payment plus the
Credit Enhancement).
Thereafter, your Contract Value at any time during the Accumulation Phase is
equal to the sum of the value of your Accumulation Units in the Variable
Sub-accounts you have selected, plus your value in the Fixed Account Option(s)
offered by your Contract.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-account to
allocate to your Contract, we divide (i) the amount of the purchase payment or
transfer you have allocated to a Variable Sub-account by (ii) the Accumulation
Unit Value of that Variable Sub-account next computed after we receive your
payment or transfer. For example, if we receive a $10,000 purchase payment
allocated to a Variable Sub-account when the Accumulation Unit Value for the
Sub-account is $10, we would credit 1,000 Accumulation Units of that Variable
Sub-account to your Contract. For Consultant Solutions Plus Contracts, we would
credit your Contract additional Accumulation Units of the Variable Sub-account
to reflect the Credit Enhancement paid on your purchase payment. See "Credit
Enhancement." Withdrawals and transfers from a Variable Sub-account would, of
course, reduce the number of Accumulation Units of that Sub-account allocated to
your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account
for each Contract will rise or fall to reflect:
.. changes in the share price of the Portfolio in which the Variable
Sub-Account invests, and
.. the deduction of amounts reflecting the mortality and expense risk charge,
administrative expense charge, and any provision for taxes that have
accrued since we last calculated the Accumulation Unit Value.
20 PROSPECTUS
We determine any applicable withdrawal charges, Rider Fees (if applicable),
transfer fees, and contract maintenance charges separately for each Contract.
They do not affect the Accumulation Unit Value. Instead, we obtain payment of
those charges and fees by redeeming Accumulation Units. For details on how we
compute Accumulation Unit Values, please refer to the Statement of Additional
Information.
We determine a separate Accumulation Unit Value for each Variable Sub-Account
for each Contract on each Valuation Date. We also determine a separate set of
Accumulation Unit Values that reflect the cost of each optional benefit, or
available combination thereof, offered under the Contract.
You should refer to the prospectuses for the Funds for a description of how the
assets of each Portfolio are valued, since that determination directly bears on
the Accumulation Unit Value of the corresponding Variable Sub-Account and,
therefore, your Contract Value.
TRUERETURN ACCUMULATION BENEFIT OPTION
We offer the TrueReturn Accumulation Benefit Option, which is available for an
additional fee. The TrueReturn Accumulation Benefit Option guarantees a minimum
Contract Value on the "Rider Maturity Date." The Rider Maturity Date is
determined by the length of the Rider Period which you select. The Option
provides no minimum Contract Value if the Option terminates before the Rider
Maturity Date. See "Termination of the TrueReturn Accumulation Benefit Option"
below for details on termination.
The TrueReturn Accumulation Benefit Option is available at time of application
for the Contract, or the date we receive a written request to add the option,
whichever is later, subject to availability and issue requirements. Currently,
you may not add the TrueReturn Option to your Contract after Contract issue
without prior approval if your Contract Value is greater than $1,000,000 at the
time you try to add the TrueReturn Option. Currently, you may have only one
TrueReturn Accumulation Benefit Option in effect on your Contract at one time.
You may have only either the TrueReturn Accumulation Benefit Option or the
SureIncome Option in effect on your Contract at one time. The TrueReturn
Accumulation Benefit Option has no maximum issue age, however the Rider Maturity
Date must occur before the latest Payout Start Date, which is the later of the
youngest Annuitant's 99th birthday or the 10th Contract Anniversary. Once added
to your Contract, the TrueReturn Accumulation Benefit Option may be cancelled at
any time on or after the 5th Rider Anniversary by:
.. notifying us in writing in a form satisfactory to us; or
.. changing your investment allocations or making other changes so that that
the allocation of investment alternatives no longer adheres to the
investment requirements for the TrueReturn Accumulation Benefit Option. For
more information regarding investment requirements for this Option, see the
"Investment Requirements" section below.
The "Rider Anniversary" is the anniversary of the Rider Date. We reserve the
right to extend the date on which the TrueReturn Accumulation Benefit Option may
be cancelled to up to the 10th Rider Anniversary at any time in our sole
discretion. Any change we make will not apply to a TrueReturn Accumulation
Benefit Option that was added to your Contract prior to the implementation date
of the change.
When you add the TrueReturn Accumulation Benefit Option to your Contract, you
must select a Rider Period and a Guarantee Option. The Rider Period and
Guarantee Option you select determine the AB Factor, which is used to determine
the Accumulation Benefit, described below. The "Rider Period" begins on the
Rider Date and ends on the Rider Maturity Date. The "Rider Date" is the date the
TrueReturn Accumulation Benefit Option was made a part of your Contract. We
currently offer Rider Periods ranging from 8 to 20 years depending on the
Guarantee Option you select. You may select any Rider Period from among those we
currently offer, provided the Rider Maturity Date occurs prior to the latest
Payout Start Date. We reserve the right to offer additional Rider Periods in the
future, and to discontinue offering any of the Rider Periods at any time. We
currently offer two "Guarantee Options," Guarantee Option 1 and Guarantee Option
2. The Guarantee Option you select has specific investment requirements, which
are described in the "Investment Requirements" section below and may depend upon
the Rider Date. We reserve the right to offer additional Guarantee Options in
the future, and to discontinue offering any of the Guarantee Options at any
time. After the Rider Date, the Rider Period and Guarantee Option may not be
changed.
The TrueReturn Accumulation Benefit Option may not be available in all states.
We may discontinue offering the TrueReturn Accumulation Benefit Option at any
time.
Accumulation Benefit.
On the Rider Maturity Date, if the Accumulation Benefit is greater than the
Contract Value, the Contract Value will be increased to equal the Accumulation
Benefit. The excess amount of any such increase will be allocated to the PIMCO
Money Market Variable Sub-account. You may transfer the excess amount out of the
PIMCO Money Market Variable Sub-account and into another investment alternative
at any time thereafter. However, each transfer you make will count against the
12 transfers you can make each Contract Year without paying a transfer fee.
Prior to the Rider Maturity Date, the Accumulation Benefit will not be available
as a Contract Value, Settlement Value, or Death Proceeds. Additionally, we will
not pay an Accumulation Benefit if the TrueReturn Accumulation
21 PROSPECTUS
Benefit Option is terminated for any reason prior to the Rider Maturity Date.
After the Rider Maturity Date, the TrueReturn Accumulation Benefit Option
provides no additional benefit.
The "Accumulation Benefit" is equal to the Benefit Base multiplied by the AB
Factor. The "AB Factor" is determined by the Rider Period and Guarantee Option
you selected as of the Rider Date. The following table shows the AB Factors
available for the Rider Periods and Guarantee Options we currently offer.
AB Factors
- -----------------------------------------
Rider Period Guarantee Guarantee
(number of years) Option 1 Option 2
- ----------------- --------- ---------
8 100.0% NA
9 112.5% NA
10 125.0% 100.0%
11 137.5% 110.0%
12 150.0% 120.0%
13 162.5% 130.0%
14 175.0% 140.0%
15 187.5% 150.0%
16 200.0% 160.0%
17 212.5% 170.0%
18 225.0% 180.0%
19 237.5% 190.0%
20 250.0% 200.0%
The following examples illustrate the Accumulation Benefit calculations under
Guarantee Options 1 and 2 on the Rider Maturity Date. For the purpose of
illustrating the Accumulation Benefit calculation, the examples assume the
Benefit Base is the same on the Rider Date and the Rider Maturity Date.
Example 1: Guarantee Option 1
Guarantee Option: 1
Rider Period: 15
AB Factor: 187.5%
Rider Date: 1/2/04
Rider Maturity Date: 1/2/19
Benefit Base on Rider Date: $50,000
Benefit Base on rider Maturity Date: $50,000
On the Rider Maturity Date (1/2/19):
Accumulation Benefit = Benefit Base on Rider Maturity
Date X AB Factor
= $50,000 X 187.5%
= $93,750
Example 2: Guarantee Option 2
Guarantee Option: 2
Rider Period: 15
AB Factor: 150.0%
Rider Date: 1/2/04
Rider Maturity Date: 1/2/19
Benefit Base on Rider Date: $50,000
Benefit Base on rider Maturity Date: $50,000
On the Rider Maturity Date (1/2/19):
Accumulation Benefit = Benefit Base on Rider Maturity
Date X AB Factor
= $50,000 X 150.0%
= $75,000
Guarantee Option 1 offers a higher AB Factor and more rider periods than
Guarantee Option 2. Guarantee Option 1 and Guarantee Option 2 have different
investment restrictions. See "Investment Requirements" below for more
information.
Benefit Base.
The Benefit Base is used solely for purposes of determining the Rider Fee and
the Accumulation Benefit. The Benefit Base is not available as a Contract Value,
Settlement Value, or Death Proceeds. On the Rider Date, the "Benefit Base" is
equal to the Contract Value. After the Rider Date, the Benefit Base will be
recalculated for purchase payments and withdrawals as follows:
.. The Benefit Base will be increased by purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts) made prior to or on
the first Contract Anniversary following the Rider Date. Subject to the
terms and conditions of your Contract, you may add purchase payments after
this date, but they will not be included in the calculation of the Benefit
Base. Therefore, if you plan to make purchase payments after the first
Contract Anniversary following the Rider Date, you should consider
carefully whether this Option is appropriate for your needs.
.. The Benefit Base will be decreased by a Withdrawal Adjustment for each
withdrawal you make. The Withdrawal Adjustment is equal to (a) divided by
(b), with the result multiplied by (c), where:
(a) = the withdrawal amount;
(b) = the Contract Value immediately prior to the withdrawal; and
(c) = the Benefit Base immediately prior to the withdrawal.
Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may be subject to an additional 10%
federal tax penalty. A withdrawal charge also may apply. See Appendix G for
numerical examples that illustrate how the Withdrawal Adjustment is applied.
The Benefit Base will never be less than zero.
Investment Requirements.
If you add the TrueReturn Option to your Contract, you must adhere to certain
requirements related to the
22 PROSPECTUS
investment alternatives in which you may invest during the Rider Period. The
specific requirements will depend on the model portfolio option ("Model
Portfolio Option") you have selected and the effective date of your TrueReturn
Option. These requirements are described below in more detail. These
requirements may include, but are not limited to, maximum investment limits on
certain Variable Sub-accounts or on certain Fixed Account Options, exclusion of
certain Variable Sub-accounts or of certain Fixed Account Options, required
minimum allocations to certain Variable Sub-accounts, and restrictions on
transfers to or from certain investment alternatives.
We may also require that you use the Automatic Portfolio Rebalancing Program. We
may change the specific requirements that are applicable to a Guarantee Option
or a Model Portfolio Option available under a Guarantee Option at any time in
our sole discretion. Any changes we make will not apply to a TrueReturn Option
that was made part of your Contract prior to the implementation date of the
change, except for changes made due to a change in investment alternatives
available under the Contract. Any changes we make will not apply to a new
TrueReturn Option elected subsequent to the change pursuant to the Rider
Trade-In Option.
If you have an outstanding loan balance, you may not elect the TrueReturn Option
until the outstanding balance has been repaid. If you elect the TrueReturn
Option, we will not make a policy loan to you until the TrueReturn Option
matures or is cancelled.
When you add the TrueReturn Option to your Contract, you must allocate your
entire Contract Value as follows:
1) to a model portfolio option ("Model Portfolio Option") available with the
Guarantee Option you selected, as defined below; or
2) to the DCA Fixed Account Option and then transfer all purchase payments
(and Credit Enhancements for Consultant Solutions Plus Contracts) and
interest according to a Model Portfolio Option available for use with the
Guarantee Option you selected; or
3) to a combination of (1) and (2) above.
For (2) and (3) above, the requirements for the DCA Fixed Account Option must be
met. See the "Dollar Cost Averaging Fixed Account Option" section of this
prospectus for more information.
On the Rider Date, you must select only one of the Model Portfolio Options in
which to allocate your Contract Value. After the Rider Date, you may transfer
your entire Contract Value to any of the other Model Portfolio Options available
with your Guarantee Option. We currently offer several Model Portfolio Options
with each of the available Guarantee Options. The Model Portfolio Options that
are available under Guarantee Options may differ depending upon the effective
date of your TrueReturn Option. Please refer to the Model Portfolio Option 1,
Model Portfolio Option 2 and TrueBalance(SM) Model Portfolio Options sections
below for more details. We may add other Model Portfolio Options in the future.
We also may remove Model Portfolio Options in the future anytime prior to the
date you select such Model Portfolio Option. In addition, if the investment
alternatives available under the Contract change, we may revise the Model
Portfolio Options. The following table summarizes the Model Portfolio Options
currently available for use with each Guarantee Option under the TrueReturn
Option:
Guarantee Option 1 Guarantee Option 2
*Model Portfolio Option 1 *Model Portfolio Option 2
*TrueBalance *TrueBalance
Conservative Model Conservative Model
Portfolio Option Portfolio Option
*TrueBalance Moderately *TrueBalance Moderately Conservative Model Conservative
Model Portfolio Option Portfolio Option *TrueBalance Moderate Model Portfolio
Option *TrueBalance Moderately Aggressive Model Portfolio Option *TrueBalance
Aggressive Model Portfolio Option
You may not allocate any of your Contract Value to the Standard Fixed Account
Option or to the MVA Fixed Account Option. You must transfer any portion of your
Contract Value that is allocated to the Standard Fixed Account Option or to the
MVA Fixed Account Option to the Variable Sub-accounts prior to adding the
TrueReturn Option to your Contract. Transfers from the MVA Fixed Account Option
may be subject to a Market Value Adjustment. You may allocate any portion of
your purchase payments (and Credit Enhancements for Consultant Solutions Plus
Contracts) to the DCA Fixed Account Option on the Rider Date, provided the DCA
Fixed Account Option is available with your Contract and in your state. See the
"Dollar Cost Averaging Fixed Account Option" section of this prospectus for more
information. We use the term "Transfer Period Account" to refer to each purchase
payment allocation made to the DCA Fixed Account Option for a specified term
length. At the expiration of a Transfer Period Account any remaining amounts in
the Transfer Period Account will be transferred to the Variable Sub-Accounts
according to the percentage allocations for the Model Portfolio Option you
selected.
Any subsequent purchase payments (and Credit Enhancements for Consultant
Solutions Plus Contracts) made to your Contract will be allocated to the
Variable Sub-Accounts according to your most recent instructions on file with
us. You must comply with any required percentage allocations for the Model
Portfolio Option you have selected. You may also request that purchase payments
(and Credit Enhancement for Consultant Solutions Plus Contracts) be allocated to
the DCA Fixed Account Option.
23 PROSPECTUS
Model Portfolio Option 1.
If you choose Model Portfolio Option 1 or transfer your entire Contract Value
into Model Portfolio Option 1, you must allocate a certain percentage of your
Contract Value into each of three asset categories. Please note that certain
investment alternatives are not available under Model Portfolio Option 1. You
may choose the Variable Sub-Accounts in which you want to invest, provided you
maintain the percentage allocation requirements for each category. You may also
make transfers among the Variable Sub-Accounts within each category at any time,
provided you maintain the percentage allocation requirements for each category.
However, each transfer you make will count against the 12 transfers you can make
each Contract Year without paying a transfer fee.
Effective May 1, 2005, certain Variable Sub-Accounts under Model Portfolio 1
have been reclassified into different asset categories. These changes apply to
TrueReturn Accumulation Benefit Options effective both prior to and on or after
May 1, 2005. The following table describes the percentage allocation
requirements for Model Portfolio Option 1 and Variable Sub-Accounts available
under each category:
Model Portfolio Option 1
20% Category A 50% Category B 30% Category C 0% Category D
Category A
Fidelity VIP Money Market - Service Class 2 Sub-Account PIMCO VIT Money Market -
Administrative Shares Sub-Account
Category B
Fidelity VIP Investment Grade Bond - Service Class 2 Sub-Account Legg Mason
Partners Variable Global High Yield Bond - Class II Sub-Account MFS High Income
- - Service Class Sub-Account PIMCO VIT Foreign Bond (U.S. Dollar-Hedged) -
Administrative Shares Sub-Account PIMCO VIT Real Return - Administrative Shares
Sub-Account PIMCO VIT Total Return - Administrative Shares Sub-Account
UIF U.S. Real Estate, Class II Sub-Account/(1)(4)/
Van Kampen LIT Government, Class II Sub-Account
Category C
AIM V.I. Basic Value - Series II Sub-Account AIM V.I. Core Equity - Series II
Sub-Account AIM V.I. Mid Cap Core Equity - Series II Sub-Account Fidelity VIP
Contrafund(R) - Service Class 2 Sub-Account Fidelity VIP Equity-Income - Service
Class 2 Sub-Account Fidelity VIP Index 500 - Service Class 2 Sub-Account
Fidelity VIP Overseas - Service Class 2 Sub-Account Fidelity VIP Asset
Manager(SM) - Service Class 2 Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Janus Aspen Series Forty - Service Shares Sub-Account Janus Aspen Series Mid Cap
Value - Service Shares Sub-Account Janus Aspen Series INTECH Risk-Managed Core -
Service Shares Sub-Account Janus Aspen Series Balanced - Service Shares
Sub-Account Janus Aspen Series Small Company Value - Service Shares Sub-Account
Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account/(1)/ Legg Mason Partners Variable Investors - Class I
Sub-Account/(2)/ MFS Investors Trust - Service Class Sub-Account MFS Total
Return - Service Class Sub-Account MFS Investors Growth Stock - Service Class
Sub-Account MFS Value - Service Class Sub-Account Oppenheimer MidCap/VA -
Service Shares Sub-Account Oppenheimer Main Street Small Cap(R)/VA - Service
Shares Sub-Account
Premier VIT OpCap Balanced Sub-Account
Rydex VT Sector Rotation Sub-Account
T. Rowe Price Equity Income - II Sub-Account T. Rowe Price Blue Chip Growth - II
Sub-Account Van Eck Worldwide Absolute Return Sub-Account Van Kampen LIT Growth
and Income, Class II Sub-Account
Category D (Variable Sub-Accounts not available under Model Portfolio Option 1)
AIM V.I. Capital Appreciation - Series II Sub-Account
Alger American LargeCap Growth - Class S Sub-Account Alger American Capital
Appreciation - Class S Sub-Account
Alger American MidCap Growth - Class S Sub-Account Fidelity VIP Growth - Service
Class 2 Sub-Account MFS New Discovery - Service Class Sub-Account Oppenheimer
Global Securities/VA - Service Shares Sub-Account
UIF Capital Growth, Class II Sub-Account/(3)(4)/
Van Eck Worldwide Emerging Markets Sub-Account Van Eck Worldwide Hard Assets
Sub-Account
Van Kampen LIT Mid Cap Growth, Class II Sub-Account
/(1)/ Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
/(2)/ Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
/(3)/ Morgan Stanley Investment Management Inc., the investment advisor to the
UIF Portfolios, does business in certain instances as Van Kampen.
/(4)/ Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program
to automatically rebalance your Contract Value in each Variable Sub-Account and
return it to the percentage allocation requirements for Model Portfolio Option
1. We will use the percentage allocations as of your most recent instructions.
Model Portfolio Option 2.
The investment requirements under Model Portfolio Option 2 depend on the
effective date of your TrueReturn Accumulation Benefit Option.
Rider Date prior to May 1, 2005
If your TrueReturn Accumulation Benefit Option Rider Date is prior to May 1,
2005, and you choose Model Portfolio Option 2 or transfer your entire Contract
Value into Model Portfolio Option 2 under Guarantee Option 2, you must allocate
your Contract Value among four asset categories in accordance with the
percentage allocation requirements set out in the table below. You may choose
the Variable Sub-Accounts in which you want to invest, provided you maintain the
percentage allocation requirements for each category. You may also
24 PROSPECTUS
make transfers among the Variable Sub-Accounts within each category at any time,
provided you maintain the percentage allocation requirements for each category.
However, each transfer you make will count against the 12 transfers you can make
each Contract Year without paying a transfer fee.
The following table describes the percentage allocation requirements for Model
Portfolio Option 2 (Rider Date prior to May 1, 2005) and the Variable
Sub-Accounts available under each category:
Model Portfolio Option 2 (Rider Date Prior to May 1, 2005)
10% Category A 20% Category B 50% Category C 20% Category D
Category A
Fidelity VIP Money Market - Service Class 2 Sub-Account PIMCO VIT Money Market -
Administrative Shares Sub-Account
Category B
Fidelity VIP Investment Grade Bond - Service Class 2 Sub-Account Legg Mason
Partners Variable Global High Yield Bond - Class II Sub-Account MFS High Income
- - Service Class Sub-Account PIMCO VIT Foreign Bond (U.S. Dollar-Hedged) -
Administrative Shares Sub-Account PIMCO VIT Real Return - Administrative Shares
Sub-Account PIMCO VIT Total Return - Administrative Shares Sub-Account
UIF U.S. Real Estate, Class II Sub-Account/(1)(4)/
Van Kampen LIT Government, Class II Sub-Account
Category C
AIM V.I. Basic Value - Series II Sub-Account AIM V.I. Mid Cap Core Equity -
Series II Sub-Account Fidelity VIP Equity-Income - Service Class 2 Sub-Account
Fidelity VIP Index 500 - Service Class 2 Sub-Account Fidelity VIP Asset
Manager(SM) - Service Class 2 Sub-Account Janus Aspen Series Mid Cap Value -
Service Shares Sub-Account Janus Aspen Series INTECH Risk-Managed Core - Service
Shares Sub-Account Janus Aspen Series Balanced - Service Shares Sub-Account
Janus Aspen Series Small Company Value - Service Shares Sub-Account Legg Mason
Partners Variable Investors - Class I Sub-Account/(2)/ MFS Investors Trust -
Service Class Sub-Account MFS Total Return - Service Class Sub-Account MFS Value
- - Service Class Sub-Account Oppenheimer MidCap/VA - Service Shares Sub-Account
Premier VIT OpCap Balanced Sub-Account
T. Rowe Price Equity Income - II Sub-Account Van Eck Worldwide Absolute Return
Sub-Account Van Kampen LIT Growth and Income, Class II Sub-Account
Category D
AIM V.I. Capital Appreciation - Series II Sub-Account AIM V.I. Core Equity -
Series II Sub-Account
Alger American LargeCap Growth - Class S Sub-Account Alger American Capital
Appreciation - Class S Sub-Account
Alger American MidCap Growth - Class S Sub-Account Fidelity VIP Contrafund(R) -
Service Class 2 Sub-Account Fidelity VIP Growth - Service Class 2 Sub-Account
Fidelity VIP Overseas - Service Class 2 Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Janus Aspen Series Forty - Service Shares Sub-Account Legg Mason Partners
Variable Fundamental Value Portfolio - Class I Sub-Account/(3)/ MFS New
Discovery - Service Class Sub-Account MFS Investors Growth Stock - Service Class
Sub-Account Oppenheimer Global Securities/VA - Service Shares Sub-Account
Oppenheimer Main Street Small Cap(R)/VA - Service Shares Sub-Account Rydex VT
Sector Rotation Sub-Account T. Rowe Price Blue Chip Growth - II Sub-Account
UIF Capital Growth, Class II Sub-Account/(1)(4)/
Van Eck Worldwide Emerging Markets Sub-Account Van Eck Worldwide Hard Assets
Sub-Account
Van Kampen LIT Mid Cap Growth, Class II Sub-Account
(1) Morgan Stanley Investment Management Inc., the investment advisor to the
UIF Portfolios, does business in certain instances as Van Kampen.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
(3) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
(4) Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program
to automatically rebalance your Contract Value in each Variable Sub-Account and
return it to the percentage allocation requirements for Model Portfolio Option 2
(Rider Date prior to May 1, 2005). We will use the percentage allocations as of
your most recent instructions.
Rider Date on or after May 1, 2005
If your TrueReturn Accumulation Benefit Option Rider Date is on or after May 1,
2005, and you choose Model Portfolio Option 2 or transfer your entire Contract
Value into Model Portfolio Option 2 under Guarantee Option 2, you may allocate
your Contract Value among any of a selected group of available Variable
Sub-Accounts listed below. However, you may not allocate your Contract Value
among any of the excluded Variable Sub-Accounts listed below. You may choose to
invest in or transfer among any of the available Variable Sub-Accounts, however,
each transfer you make will count against the 12 transfers you can make each
Contract Year without paying a transfer fee.
The following table lists the available and excluded Variable Sub-Accounts under
Model Portfolio Option 2 (Rider Date on or after May 1, 2005):
Model Portfolio Option 2 (Rider Date on or after May 1, 2005)
Available
AIM V.I. Basic Value - Series II Sub-Account AIM V.I. Core Equity - Series II
Sub-Account AIM V.I. Mid Cap Core Equity - Series II Sub-Account Fidelity VIP
Contrafund(R) - Service Class 2 Sub-Account Fidelity VIP Equity-Income - Service
Class 2 Sub-Account Fidelity VIP Index 500 - Service Class 2 Sub-Account
Fidelity VIP Investment Grade Bond - Service Class 2 Sub-Account Fidelity VIP
Overseas - Service Class 2 Sub-Account
25 PROSPECTUS
Fidelity VIP Asset Manager(SM) - Service Class 2 Sub-Account Fidelity VIP
Money Market - Service Class 2 Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Janus Aspen Series Forty - Service Shares Sub-Account Janus Aspen Series Mid Cap
Value - Service Shares Sub-Account Janus Aspen Series INTECH Risk-Managed Core -
Service Shares Sub-Account Janus Aspen Series Balanced - Service Shares
Sub-Account Janus Aspen Series Small Company Value - Service Shares Sub-Account
Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account/(1)/ Legg Mason Partners Variable Global High Yield Bond - Class II
Sub-Account Legg Mason Partners Variable Investors - Class I Sub-Account/(2)/
MFS Investors Trust - Service Class Sub-Account MFS High Income - Service Class
Sub-Account MFS Investors Growth Stock - Service Class Sub-Account MFS Total
Return - Service Class Sub-Account MFS Value - Service Class Sub-Account PIMCO
VIT Foreign Bond (U.S. Dollar-Hedged) - Administrative Shares Sub-Account PIMCO
VIT Money Market - Administrative Shares Sub-Account PIMCO VIT Real Return -
Administrative Shares Sub-Account PIMCO VIT Total Return - Administrative Shares
Sub-Account Oppenheimer MidCap/VA - Service Shares Sub-Account Oppenheimer Main
Street Small Cap(R)/VA - Service Shares Sub-Account Premier VIT OpCap Balanced
Sub-Account
Rydex VT Sector Rotation Sub-Account
T. Rowe Price Equity Income - II Sub-Account T. Rowe Price Blue Chip Growth - II
Sub-Account
UIF U.S. Real Estate, Class II Sub-Account/(3)(4)/
Van Eck Worldwide Absolute Return Sub-Account Van Kampen LIT Growth and Income,
Class II Sub-Account Van Kampen LIT Government, Class II Sub-Account
Model Portfolio Option 2 (Rider Date on or after May 1, 2005)
Excluded
AIM V.I. Capital Appreciation - Series II Sub-Account
Alger American LargeCap Growth - Class S Sub-Account Alger American Capital
Appreciation - Class S Sub-Account
Alger American MidCap Growth - Class S Sub-Account Fidelity VIP Growth - Service
Class 2 Sub-Account MFS New Discovery - Service Class Sub-Account Oppenheimer
Global Securities/VA - Service Shares Sub-Account
UIF Capital Growth, Class II Sub-Account/(3)(4)/
Van Eck Worldwide Emerging Markets Sub-Account Van Eck Worldwide Hard Assets
Sub-Account
Van Kampen LIT Mid Cap Growth, Class II Sub-Account
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
(3) Morgan Stanley Investment Management Inc., the investment advisor to the
UIF Portfolios, does business in certain instances as Van Kampen.
(4) Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
TrueBalance(SM) Model Portfolio Options.
If you choose one of the TrueBalance(SM) Model Portfolio Options or transfer
your entire Contract Value into one of the TrueBalance(SM) Model Portfolio
Options, you may not choose the Variable Sub-Accounts or make transfers among
the Variable Sub-Accounts in the TrueBalance Model Portfolio Option. Each
TrueBalance Model Portfolio involves an allocation of assets among a group of
pre-selected Variable Sub-Accounts. You cannot make transfers among the Variable
Sub-Accounts nor vary the Variable Sub-Accounts that comprise a TrueBalance
Model Portfolio Option. If you choose a TrueBalance Model Portfolio Option, we
will invest and periodically reallocate your Contract Value according to the
allocation percentages and requirements for the TrueBalance Model Portfolio
Option you have selected currently. For more information regarding the
TrueBalance program, see the "TrueBalance(SM) Asset Allocation Program" section
of this prospectus. However, note that the restrictions described in this
section, specifically the restrictions on transfers and the requirement that all
of your Contract Value be allocated to a TrueBalance Model Portfolio Option,
apply to the TrueBalance program only if you have added the TrueReturn Option to
your Contract.
Please note only certain TrueBalance Model Portfolio Options are available with
your TrueReturn Option as summarized in the table under Investment Requirements
above.
Cancellation of the TrueReturn Option.
You may not cancel the TrueReturn Option or make transfers, changes to your
investment allocations, or changes to the Automatic Portfolio Rebalancing
Program that are inconsistent with the investment restrictions applicable to
your Guarantee Option and/or Model Portfolio Option prior to the 5th Rider
Anniversary. Failure to comply with the investment requirements for any reason
may result in the cancellation of the TrueReturn Option. On or after the 5th
Rider Anniversary, we will cancel the TrueReturn Option if you make transfers,
changes to your investment allocations, or changes to the Automatic Portfolio
Rebalancing Program that are inconsistent with the investment requirements
applicable to your Guarantee Option and/or Model Portfolio Option. We will not
cancel the TrueReturn Option or make any changes to your investment allocations
or to the Automatic Portfolio Rebalancing Program that are inconsistent with the
investment restrictions applicable to your Guarantee Option until we receive
notice from you that you wish to cancel the TrueReturn Option. No Accumulation
Benefit will be paid if you cancel the Option prior to the Rider Maturity Date.
Death of Owner or Annuitant.
If the Contract Owner or Annuitant dies before the Rider Maturity Date and the
Contract is continued under Option D of the Death of Owner or Death of Annuitant
provision as described on page 62 of your Contract, then the TrueReturn Option
will continue, unless the new Contract Owner elects to cancel this Option. If
the TrueReturn Option is continued, it will
26 PROSPECTUS
remain in effect until terminated. If the Contract is not continued under Option
D, then the TrueReturn Option will terminate on the date we receive a Complete
Request for Settlement of the Death Proceeds.
If an Annuitant dies before the Payout Start Date, and the Contract is continued
under Category 1 of the Death of Annuitant provision of the Contract, the
TrueReturn Accumulation Benefit Option will remain in effect until terminated.
If the Contract is not continued under Category 1, then the TrueReturn
Accumulation Benefit Option will terminate on the date we receive a complete
request for settlement of the Death Proceeds.
Rider Trade-In Option.
We offer a "Rider Trade-In Option" that allows you to cancel your TrueReturn
Accumulation Benefit Option and immediately add a new TrueReturn Accumulation
Benefit Option ("New Option"), provided all of the following conditions are met:
.. The trade-in must occur on or after the 5th Rider Anniversary and prior to
the Rider Maturity Date.
.. The New Option will be made a part of your Contract on the date the
existing TrueReturn Accumulation Benefit Option is cancelled, provided it
is cancelled for reasons other than the termination of your Contract.
.. The New Option must be a TrueReturn Accumulation Benefit Option that we
make available for use with the Rider Trade-In Option.
.. The issue requirements and terms and conditions of the New Option must be
met as of the date the New Option is made a part of your Contract.
For example, if you trade-in your TrueReturn Accumulation Benefit Option:
.. the new Rider Fee will be based on the Rider Fee percentage applicable to a
new TrueReturn Accumulation Benefit Option at the time of trade-in;
.. the Benefit Base for the New Option will be based on the Contract Value as
of the new Rider Date;
.. the AB Factor will be determined by the Rider Periods and Guarantee Options
available with the New Option;
.. the Model Portfolio Options will be determined by the Model Portfolio
Options offered with the Guarantee Options available with the New Option;
.. any waiting period for canceling the New Option will start again on the new
Rider Date;
.. any waiting period for exercising the Rider Trade-In Option will start
again on the new Rider Date; and
.. the terms and conditions of the Rider Trade-In Option will be according to
the requirements of the New Option.
Currently, we are also making the SureIncome Option available at the time of
your first utilization of this TrueReturn Accumulation Benefit Option Rider
Trade-In Option. We may discontinue offering the SureIncome Option under the
Rider Trade-In Option for new TrueReturn Accumulation Benefit Options added in
the future at anytime at our discretion. If we do so, TrueReturn Options issued
prior to this time will continue to have the SureIncome Option available at the
time of the first utilization of this TrueReturn Rider Trade-In Option. You may
cancel your TrueReturn Accumulation Benefit Option and immediately add a new
SureIncome Option, provided all of the following conditions are met:
.. The trade-in must occur on or after the 5th Rider Anniversary and prior to
the Rider Maturity Date. We reserve the right to extend the date at which
time the trade-in may occur to up to the 10th anniversary of the Rider Date
at any time in our sole discretion. Any change we make will not apply to a
TrueReturn Accumulation Benefit Option that was added to your Contract
prior to the implementation date of the change.
.. The new SureIncome Option will be made a part of your Contract on the date
the existing TrueReturn Accumulation Benefit Option is cancelled, provided
it is cancelled for reasons other than the termination of your Contract.
.. The new SureIncome Option must be a SureIncome Option that we make
available for use with this Rider Trade-In Option.
.. The issue requirements and terms and conditions of the new SureIncome
Option must be met as of the date the new SureIncome Option is made a part
of your Contract.
You should consult with your sales representative before trading in your
TrueReturn Accumulation Benefit Option.
Termination of the TrueReturn Option.
The TrueReturn Option will terminate on the earliest of the following to occur:
.. on the Rider Maturity Date;
.. on the Payout Start Date;
.. on the date your Contract is terminated;
.. on the date the Option is cancelled;
.. on the date we receive a Complete Request for Settlement of the Death
Proceeds; or
.. on the date the Option is replaced with a New Option under the Rider
Trade-In Option.
We will not pay an Accumulation Benefit if the TrueReturn Option is terminated
for any reason prior to the Rider Maturity Date.
27 PROSPECTUS
SUREINCOME WITHDRAWAL BENEFIT OPTION
We offer the SureIncome Withdrawal Benefit Option, which is available for an
additional fee. The SureIncome Option provides a guaranteed withdrawal benefit
that gives you the right to take limited partial withdrawals that total an
amount equal to your purchase payments plus any applicable credit enhancements
(subject to certain restrictions). Therefore, regardless of the subsequent
fluctuations in the value of your Contract Value, you are entitled to a Benefit
Payment each Benefit Year until your Benefit Base is exhausted (terms defined
below).
The SureIncome Option guarantees an amount up to the "Benefit Payment Remaining"
which will be available for withdrawal from the Contract each "Benefit Year"
until the "Benefit Base" (defined below) is reduced to zero. If the Contract
Value is reduced to zero and the Benefit Base is still greater than zero, we
will distribute an amount equal to the Benefit Base to the Contract Owner as
described below under the "Withdrawal Benefit Payout Phase".
For purposes of the SureIncome Option, "withdrawal" means the gross amount of a
withdrawal before any applicable charges such as withdrawal charges, fees, taxes
or adjustments including any applicable Market Value Adjustments and surrender
charges. Under the SureIncome Option, we currently do not treat a withdrawal
that reduces the Contract Value to less than $1,000 as a withdrawal of the
entire Contract Value.
The "Rider Date" is the date the SureIncome Option was made a part of your
Contract. The initial Benefit Year is the period between the Rider Date and the
first Contract Anniversary after the Rider Date. Each subsequent Benefit Year
will coincide with (the same as) the Contract Year.
The SureIncome Option is available at issue of the Contract, or may be added
later, subject to availability and issue requirements. You may not add the
SureIncome Option to your Contract after Contract issue without our prior
approval if your Contract Value is greater than $1,000,000 at the time you try
to add the SureIncome Option. You may have only one SureIncome Option in effect
on your Contract at one time. You may only have either the TrueReturn
Accumulation Benefit Option, or the SureIncome Option in effect on your Contract
at the same time. The SureIncome Option is only available if the oldest Contract
Owner and oldest Annuitant are age 85 or younger on the effective date of the
Rider (the "Rider Application Date") (The maximum age may depend on your state).
The SureIncome Option is not available to be added to a Contract categorized as
a Tax Sheltered Annuity as defined under Internal Revenue Code Section 403(b) at
this time. We reserve the right to make the SureIncome Option available to such
Contracts on a nondiscriminatory basis in the future at our discretion. Once
added to your Contract, the SureIncome Option may be cancelled at any time on or
after the 5th calendar year anniversary of the Rider Date by notifying us in
writing in a form satisfactory to us.
The SureIncome Option may not be available in all states. We may discontinue
offering the SureIncome Option at any time to new Contract Owners and to
existing Contract Owners who did not elect the SureIncome Option prior to the
date of discontinuance.
Withdrawal Benefit Factor
The "Withdrawal Benefit Factor" is used to determine the "Benefit Payment" and
Benefit Payment Remaining. We currently offer a Withdrawal Benefit Factor equal
to 8%. We reserve the right to make other Withdrawal Benefit Factors available
in the future for new SureIncome Options and/or to eliminate the current
Withdrawal Benefit Factor. Once a Withdrawal Benefit Factor has been established
for a SureIncome Option, it cannot be changed after the Rider Date unless that
SureIncome Option is terminated.
Benefit Payment and Benefit Payment Remaining
The Benefit Payment is the amount available at the beginning of each Benefit
Year that you may withdraw during that Benefit Year. The Withdrawal Benefit
Factor and the Benefit Base are used to determine your Benefit Payment. The
Benefit Payment Remaining is the amount remaining after any previous withdrawals
in a Benefit Year that you may withdraw without reducing your Benefit Base by
more than the amount of the withdrawal and without reducing your Benefit Payment
available in future Benefit Years. Please note that any premiums or withdrawals
made on a Contract Anniversary would be applied to the Benefit Year that just
ended on that Contract Anniversary.
At the beginning of each Benefit Year, the Benefit Payment Remaining is equal to
the Benefit Payment.
During each Benefit Year the Benefit Payment Remaining will be increased by
purchase payments (and Credit Enhancements for Consultant Solutions Plus
Contracts) multiplied by the Withdrawal Benefit Factor (currently 8% for new
SureIncome Options) and reduced by the amount of each withdrawal. The Benefit
Payment Remaining will never be less than zero.
On the Rider Date, the Benefit Payment is equal to the greater of:
.. The Contract Value multiplied by the Withdrawal Benefit Factor (currently
8% for new SureIncome Options); or
.. The value of the Benefit Payment of the previous Withdrawal Benefit Option
(attached to your Contract) that is being terminated under a rider trade-in
option (see "Rider Trade-In Option" below for more information), if
applicable.
After the Rider Date, the Benefit Payment will be increased by purchase payments
(and Credit Enhancements for Consultant Solutions Plus Contracts)
28 PROSPECTUS
multiplied by the Withdrawal Benefit Factor and affected by withdrawals as
follows:
.. If the withdrawal is less than or equal to the Benefit Payment Remaining in
effect immediately prior to the withdrawal, the Benefit Payment is
unchanged.
.. If the withdrawal is greater than the Benefit Payment Remaining in effect
immediately prior to the withdrawal, the Benefit Payment will be the lesser
of:
.. The Benefit Payment immediately prior to the withdrawal; or
.. The Contract Value immediately prior to withdrawal less the amount of the
withdrawal, multiplied by the Withdrawal Benefit Factor.
At our discretion, the Benefit Payment available during a Benefit Year may be
increased on a nondiscriminatory basis and without prior notice in order to
satisfy IRS minimum distribution requirements on the Contract under which this
Option has been elected. We are currently not increasing the Benefit Payment
available to satisfy IRS minimum distribution requirements, which may result in
a withdrawal greater than the Benefit Payment Remaining.
Benefit Base
The Benefit Base is not available as a Contract Value or Settlement Value. The
Benefit Base is used solely to help calculate the Rider Fee, the amount that may
be withdrawn and payments that may be received under the SureIncome Option. On
the Rider Date, the Benefit Base is equal to the Contract Value. After the Rider
Date, the Benefit Base will be increased by purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts) and decreased by
withdrawals as follows:
.. If the withdrawal is less than or equal to the Benefit Payment Remaining in
effect immediately prior to the withdrawal, the Benefit Base will be
reduced by the amount of the withdrawal.
If the withdrawal is greater than the Benefit Payment Remaining in effect
immediately prior to the withdrawal, the Benefit Base will be the lesser of:
.. The Contract Value immediately prior to withdrawal less the amount of the
withdrawal; or
.. The Benefit Base immediately prior to withdrawal less the amount of the
withdrawal.
The Benefit Base may also be reduced in other situations as detailed in the
"Owner and Assignment of Payments or Interest" section below.
If the Benefit Base is reduced to zero, this SureIncome Option will terminate.
For numerical examples that illustrate how the values defined under the
SureIncome Option are calculated, see Appendix I.
Contract Owner and Assignment of Payments or Interest
If you change the Contract Owner or assign any payments or interest under this
Contract, as allowed, to any living or non-living person other than your spouse
on or after the first calendar year anniversary of the Rider Date, the Benefit
Base will be recalculated to be the lesser of the Contract Value and the Benefit
Base at the time of assignment.
Contract Value
If your Contract Value is reduced to zero due to fees or withdrawals and your
Benefit Base is still greater than zero, your Contract will immediately enter
the Withdrawal Benefit Payout Phase. Under the SureIncome Option, we currently
do not treat a withdrawal that reduces the Contract Value to less than $1,000 as
a withdrawal of the entire Contract Value. We reserve the right to change this
at any time.
Withdrawal Benefit Payout Phase
Under the Withdrawal Benefit Payout Phase, the Accumulation Phase of the
Contract ends and the Contract enters the Payout Phase subject to the following:
.. The "Withdrawal Benefit Payout Start Date" is the date the Withdrawal
Benefit Payout Phase is entered and the Accumulation Phase of the Contract
ends.
.. No further withdrawals, purchase payments or any other actions associated
with the Accumulation Phase can be made after the Withdrawal Benefit Payout
Start Date.
.. The Payout Start Date is the first day of the next Benefit Year after the
Withdrawal Benefit Payout Start Date. We reserve the right to allow other
Payout Start Dates to be requested on a nondiscriminatory basis without
prior notice.
.. During the Withdrawal Benefit Payout Phase, we will make scheduled fixed
income payments to the Owner (or new Contract Owner) at the end of each
month starting one month after the Payout Start Date. The amount of each
payment will be equal to the Benefit Payment divided by 12, unless a
payment frequency other than monthly is requested in a form acceptable to
us and received by us before the first payment is made (the amount of each
payment will be adjusted accordingly; i.e. if the payment frequency
requested is quarterly, the amount of each payment will be equal to the
Benefit Payment divided by 4). Payments will be made over a period certain
such that total payments made will equal the Benefit Base on the Payout
Start Date; therefore, the final payment may be reduced. If your Contract
is a qualified contract, meaning an individual retirement annuity qualified
as defined
29 PROSPECTUS
under Internal Revenue Code Section 408(b) or a Tax Sheltered Annuity as defined
under Internal Revenue Code Section 403(b), the period certain cannot exceed
that which is required by Internal Revenue Code Section 401(a)(9) and
regulations promulgated thereunder. Therefore, the amount of each payment under
this Option may be larger so that the sum of the payments made over this period
equals the Benefit Base on the Payout Start Date. Additionally, if your Contract
is a qualified contract, we will not permit a change in the payment frequency or
level.
.. If your Contract is a non-qualified contract, we reserve the right to allow
other payment frequencies or levels to be requested on a nondiscriminatory
basis without prior notice. In no event will we allow more than one change
in the payment frequency or level during a Contract Year.
.. If the Contract Owner dies before all payments have been made, the
remaining payments will continue to be made to the new Contract Owner as
scheduled.
.. Once all scheduled payments have been paid, the Contract will terminate.
Generally, you may not make withdrawals, purchase payments or any other actions
associated with the Accumulation Phase after the Withdrawal Benefit Payout Start
Date.
EXAMPLE
Beginning of Benefit Year 1*
Contract Value = $100,000
Benefit Base = $100,000
Benefit Payment = $8,000
Benefit Payment Remaining = $8,000
In this example, you can take a Benefit Payment of up to $8,000 in Benefit Year
1. If a withdrawal of $6,000 is taken then the following values would apply:
Contract Value = $94,000 (Assuming that your Contract Value has not been
affected by any other factors)
Benefit Base = $94,000
Benefit Payment = $8,000
Benefit Payment Remaining = $2,000
Beginning of Benefit Year 2
Contract Value = $70,000 (Assuming that your contract value has declined due to
poor performance)
Benefit Base = $94,000
Benefit Payment = $8,000
Benefit Payment Remaining = $8,000 (resets at the beginning of each Benefit
Year)
In Benefit Year 2 you have the right to a Benefit Payment of $8,000 and since
you have not taken any withdrawals yet in Benefit Year 2, the Benefit Payment
Remaining would also be $8,000 at the beginning of Benefit Year 2.
* This example assumes an initial Contract Value of $100,000, no additional
purchase payments, a withdrawal benefit factor of 8% and does not take into
account fees or charges.
Investment Requirements
If you add the SureIncome Option to your Contract, you must adhere to certain
requirements related to the investment alternatives in which you may invest. The
specific requirements are described below in more detail and will depend on your
currently selected Model Portfolio Option and your Withdrawal Benefit Factor.
These requirements may include, but are not limited to, maximum investment
limits on certain Variable Sub-Accounts or on certain Fixed Account Options,
exclusion of certain Variable Sub-Accounts or of certain Fixed Account Options,
required minimum allocations to certain Variable Sub-Accounts, and restrictions
on transfers to or from certain investment alternatives. We may also require
that you use the Automatic Portfolio Rebalancing Program. We may change the
specific requirements that are applicable at any time in our sole discretion.
Any changes we make will not apply to a SureIncome Option that was made a part
of your Contract prior to the implementation date of the change, except for
changes made due to a change in investment alternatives available under the
Contract. This restriction does not apply to a new Option elected pursuant to
the Rider Trade-In Option. We reserve the right to have requirements unique to
specific Withdrawal Benefit Factors if we make other Withdrawal Benefit Factors
available in the future, including specific model portfolio options ("Model
Portfolio Options") as described below, available only to certain Withdrawal
Benefit Factors.
When you add the SureIncome Option to your Contract, you must allocate your
entire Contract Value as follows:
1) to a Model Portfolio Option available as described below;
2) to the DCA Fixed Account Option and then transfer all purchase payments
(and Credit Enhancements for Consultant Solutions Plus Contracts) and
interest to the Variable Sub-Accounts; or
3) to a combination of (1) and (2) above.
For (2) and (3) above, the requirements for the DCA Fixed Account Option must be
met. See the "Dollar Cost Averaging Fixed Account Option" section of this
prospectus for more information.
On the Rider Date, you must select only one of the Model Portfolio Options in
which to allocate your Contract Value. After the Rider Date, you may transfer
your entire Contract Value to any of the other available
30 PROSPECTUS
Model Portfolio Options. We currently offer several Model Portfolio Options. The
Model Portfolio Options that are available may differ depending upon the
effective date of your Withdrawal Benefit Option and your Withdrawal Benefit
Factor. Please refer to the Model Portfolio Option and TrueBalance(SM) Model
Portfolio Options sections for more details. We may add other Model Portfolio
Options in the future. We also may remove Model Portfolio Options in the future
anytime prior to the date you select such Model Portfolio Option. In addition,
if the investment alternatives available under the Contract change, we may
revise the Model Portfolio Options. The following table summarizes the Model
Portfolio Options currently available for use:
*Model Portfolio Option 1
* TrueBalance Conservative Model Portfolio Option *TrueBalance Moderately
Conservative Model Portfolio Option *TrueBalance Moderate Model Portfolio Option
*TrueBalance Moderately Aggressive Model Portfolio Option *TrueBalance
Aggressive Model Portfolio Option
You may not allocate any of your Contract Value to the Standard Fixed Account
Option or to the Market Value Adjusted Fixed Account Option. You must transfer
any portion of your Contract Value that is allocated to the Standard Fixed
Account Option or to the Market Value Adjusted Fixed Account Option to the
Variable Sub-Accounts prior to adding the SureIncome Option to your Contract.
Transfers from the Market Value Adjusted Fixed Account Option may be subject to
a Market Value Adjustment. You may allocate any portion of your purchase
payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to
the DCA Fixed Account Option on the Rider Date, provided the DCA Fixed Account
Option is available with your Contract and in your state. See the "Dollar Cost
Averaging Fixed Account Option" section of this prospectus for more information.
We use the term "Transfer Period Account" to refer to each purchase payment
allocation made to the DCA Fixed Account Option for a specified term length. At
the expiration of a Transfer Period Account any remaining amounts in the
Transfer Period Account will be transferred to the Variable Sub-Accounts
according to your most recent percentage allocation selections.
Any subsequent purchase payments (and Credit Enhancements for Consultant
Solutions Plus Contracts) made to your Contract will be allocated to the
Variable Sub-Accounts according to your specific instructions or your allocation
for the previous purchase payment, unless you request that the purchase payment
(and Credit Enhancement for Consultant Solutions Plus Contracts) be allocated to
the DCA Fixed Account Option. Purchase payments allocated to the DCA Fixed
Account Option must be $500 or more. Any withdrawals you request will reduce
your Contract Value invested in each of the investment alternatives on a pro
rata basis in the proportion that your Contract Value in each bears to your
total Contract Value in all Variable Sub-Accounts, unless you request otherwise.
Model Portfolio Option 1.
If you choose Model Portfolio Option 1 or transfer your entire Contract Value
into Model Portfolio Option 1, you currently may allocate up to 100% of your
Contract Value in any manner you choose to the Available Variable Sub-Accounts
shown in the table below. You may not allocate ANY PORTION of your Contract
Value to the Excluded Variable Sub-Accounts. You may make transfers among any of
the Available Variable Sub-Accounts. However, each transfer you make will count
against the 12 transfers you can make each Contract Year without paying a
transfer fee.
Currently the Available Variable Sub-Accounts and the Excluded Variable
Sub-Accounts are as follows:
Available
AIM V.I. Basic Value - Series II Sub-Account AIM V.I. Core Equity - Series II
Sub-Account AIM V.I. Mid Cap Core Equity - Series II Sub-Account Fidelity VIP
Contrafund(R) - Service Class 2 Sub-Account Fidelity VIP Equity-Income - Service
Class 2 Sub-Account Fidelity VIP Index 500 - Service Class 2 Sub-Account
Fidelity VIP Investment Grade Bond - Service Class 2 Sub-Account Fidelity VIP
Overseas - Service Class 2 Sub-Account Fidelity VIP Asset Manager(SM) -
Service Class 2 Sub-Account Fidelity VIP Money Market - Service Class 2
Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Janus Aspen Series Forty - Service Shares Sub-Account Janus Aspen Series Mid Cap
Value - Service Shares Sub-Account Janus Aspen Series INTECH Risk-Managed Core -
Service Shares Sub-Account Janus Aspen Series Balanced - Service Shares
Sub-Account Janus Aspen Series Small Company Value - Service Shares Sub-Account
Legg Mason Partners Variable All Cap - Class II Sub-Account/(1)/ Legg Mason
Partners Variable Global High Yield Bond - Class II Sub-Account Legg Mason
Partners Variable Investors - Class II Sub-Account/(2)/ MFS Investors Trust -
Service Class Sub-Account MFS High Income - Service Class Sub-Account MFS
Investors Growth Stock - Service Class Sub-Account MFS Total Return - Service
Class Sub-Account MFS Value - Service Class Sub-Account Oppenheimer MidCap/VA -
Service Shares Sub-Account Oppenheimer Main Street Small Cap(R)/VA - Service
Shares Sub-Account
Premier VIT OpCap Balanced Sub-Account
PIMCO VIT Foreign Bond (U.S. Dollar-Hedged) - Administrative Shares Sub-Account
PIMCO VIT Money Market - Administrative Shares Sub-Account PIMCO VIT Real Return
- - Administrative Shares Sub-Account PIMCO VIT Total Return - Administrative
Shares Sub-Account Rydex VT Sector Rotation Sub-Account T. Rowe Price Equity
Income - II Sub-Account T. Rowe Price Blue Chip Growth - II Sub-Account
UIF U.S. Real Estate, Class II Sub-Account/(1)(4)/
Van Eck Worldwide Absolute Return Sub-Account Van Kampen LIT Growth and Income,
Class II Sub-Account Van Kampen LIT Government, Class II Sub-Account
31 PROSPECTUS
Excluded
AIM V.I. Capital Appreciation - Series II Sub-Account
Alger American LargeCap Growth - Class S Sub-Account Alger American Capital
Appreciation - Class S Sub-Account
Alger American MidCap Growth - Class S Sub-Account Fidelity VIP Growth - Service
Class 2 Sub-Account MFS New Discovery - Service Class Sub-Account Oppenheimer
Global Securities/VA - Service Shares Sub-Account
UIF Capital Growth, Class II Sub-Account/(3)(4)/
Van Eck Worldwide Emerging Markets Sub-Account Van Eck Worldwide Hard Assets
Sub-Account
Van Kampen LIT Mid Cap Growth, Class II Sub-Account
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
(3) Morgan Stanley Investment Management Inc., the investment advisor to the
UIF Portfolios, does business in certain instances as Van Kampen.
(4) Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
TrueBalance(SM) Model Portfolio Options.
If you choose one of the TrueBalance(SM) Model Portfolio Options or transfer
your entire Contract Value into one of the TrueBalance(SM) Model Portfolio
Options, you may not choose the Variable Sub-Accounts or make transfers among
the Variable Sub-Accounts in the TrueBalance Model Portfolio Option. Each
TrueBalance Model Portfolio involves an allocation of assets among a group of
pre-selected Variable Sub-Accounts. You cannot make transfers among the Variable
Sub-Accounts nor vary the Variable Sub-Accounts that comprise a TrueBalance
Model Portfolio Option. If you choose a TrueBalance Model Portfolio Option, we
will invest and periodically reallocate your Contract Value according to the
allocation percentages and requirements for the TrueBalance Model Portfolio
Option you have selected currently. For more information regarding the
TrueBalance program, see the "TrueBalance(SM) Asset Allocation Program" section
of this prospectus. However, note that the restrictions described in this
section, specifically the restrictions on transfers and the requirement that all
of your Contract Value be allocated to a TrueBalance Model Portfolio Option,
apply to the TrueBalance program only if you have added the SureIncome Option to
your Contract.
Cancellation of the SureIncome Option
You may not cancel the SureIncome Option prior to the 5th calendar year
anniversary of the Rider Date. On or after the 5th calendar year anniversary of
the Rider Date you may cancel the rider by notifying us in writing in a form
satisfactory to us. We reserve the right to extend the date at which time the
cancellation may occur to up to the 10th calendar year anniversary of the Rider
Date at any time in our sole discretion. Any change we make will not apply to a
SureIncome Option that was added to your Contract prior to the implementation
date of the change.
Rider Trade-In Option
We offer a "Rider Trade-In Option" that allows you to cancel your SureIncome
Option and immediately add a new Withdrawal Benefit Option ("New SureIncome
Option"). We may also offer other Options ("Other New Options") under the Rider
Trade-In Option. However, you may only select one Option under this Rider
Trade-In Option at the time you cancel your SureIncome Option. Currently, we are
also making the TrueReturn Accumulation Benefit Option available at the time of
your first utilization of this Rider Trade-In Option so that you have the
ability to switch from the SureIncome Option to the TrueReturn Accumulation
Benefit Option. We may discontinue offering the TrueReturn Option under the
Rider Trade-In Option for New SureIncome Options added in the future at anytime
at our discretion.
This Rider Trade-in Option is available provided all of the following conditions
are met:
.. The trade-in must occur on or after the 5th calendar year anniversary of
the Rider Date. We reserve the right to extend the date at which time the
trade-in may occur to up to the 10th calendar year anniversary of the Rider
Date at any time in our sole discretion. Any change we make will not apply
to a SureIncome Option that was added to your Contract prior to the
implementation date of the change.
.. The New Option will be made a part of your Contract on the date the
existing Option is cancelled, provided it is cancelled for reasons other
than the termination of your Contract.
.. The New Option must be an Option that we make available for use with this
Rider Trade-In Option.
.. The issue requirements and terms and conditions of the New Option must be
met as of the date the New Option is made a part of your Contract.
If the New Option is a SureIncome Option, the New Option must provide that the
new Benefit Payment be greater than or equal to your current Benefit Payment as
of the date the Rider Trade-In Option is exercised, if applicable.
You should consult with your sales representative before trading in your
SureIncome Option.
Death of Owner or Annuitant.
If the Contract Owner dies before the Rider Maturity Date and the Contract is
continued under Option D of the Death of Owner provision of your Contract, as
described on page 62 of your prospectus, then the SureIncome Option will
continue, unless the new
32 PROSPECTUS
Contract Owner elects to cancel this Option. If the SureIncome Option is
continued, it will remain in effect until terminated. If the Contract is not
continued under Option D, then the SureIncome Option will terminate on the date
we receive a Complete Request for Settlement of the Death Proceeds.
If an Annuitant dies before the Payout Start Date, and the Contract is continued
under Category 1 of the Death of Annuitant provision of the Contract, the
SureIncome Option will remain in effect until terminated. If the Contract is not
continued under Category 1, then the SureIncome Option will terminate on the
date we receive a complete request for settlement of the Death Proceeds.
Termination of the SureIncome Option
This SureIncome Option will terminate on the earliest of the following to occur:
.. The Benefit Base is reduced to zero;
.. On the Payout Start Date (except if the Contract enters the Withdrawal
Benefit Payout Phase as defined under the Withdrawal Benefit Payout Phase
section);
.. On the date the Contract is terminated;
.. On the date the SureIncome Option is cancelled;
.. On the date we receive a Complete Request for Settlement of the Death
Proceeds; or
.. On the date the SureIncome Option is replaced with a New Option under the
Rider Trade-In Option.
Investment Alternatives: The Variable Sub-accounts
You may allocate your purchase payments to up to 50 Variable Sub-accounts. Each
Variable Sub-account invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with each Portfolio, please refer to the prospectuses for the Funds.
We will mail to you a prospectus for each Portfolio related to the Variable
Sub-Accounts to which you allocate your purchase payment.
You should carefully consider the investment objectives, risks, charges and
expenses of the investment alternatives when making an allocation to the
Variable Sub-Accounts. To obtain any or all of the underlying Portfolio
prospectuses, please contact us at 800-457-7617.
Portfolio Investment Objective Investment Adviser
- ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II Long-term growth of capital
- ------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund - Growth of capital Invesco A I M Advisors,
Series II Inc./(1)/
- ------------------------------------------------------------------------------------------------------
AIM V.I. Core Equity Fund - Series II Growth of capital
- ------------------------------------------------------------------------------------------------------
AIM V.I. Mid Cap Core Equity Fund - Long-term growth of capital
Series II
- ------------------------------------------------------------------------------------------------------
The Alger American Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Alger American LargeCap Growth Long-term capital appreciation
Portfolio - Class S
- ------------------------------------------------------------------------------------------------------
Alger American Capital Appreciation Long-term capital appreciation Fred Alger Management,
Portfolio - Class S Inc.
- ------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio Long-term capital appreciation
- Class S
- ----------------------------------------------------------------------------------------------------------------------------------
33 PROSPECTUS
Portfolio Investment Objective Investment Adviser
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity(R) Variable Insurance Products
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Asset Manager(SM) High total return with reduced risk over the long term by
Portfolio - Service Class 2 allocating its assets among stocks, bonds, and short-
term instruments.
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) Portfolio - Long-term capital appreciation
Service Class 2
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio - Reasonable income. The fund will also consider the Fidelity Management &
Service Class 2 potential for capital appreciation. The fund's goal is to Research Company
achieve a yield which exceeds the composite yield on
the securities comprising the Standard & Poor's
500(SM) Index (S&P 500(R)).
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio - Service To achieve capital appreciation
Class 2
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Index 500 Portfolio - Investment results that correspond to the total return of
Service Class 2 common stocks publicly traded in the United States as
represented by the Standard & Poor's 500(SM) Index
(S&P 500(R))
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond As high a level of current income as is consistent with
Portfolio - Service Class 2 the preservation of capital
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Money Market Portfolio - As high a level of current income as is consistent with
Service Class 2 preservation of capital and daily liquidity.
- ---------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio - Long-term growth of capital
Service Class 2
- ---------------------------------------------------------------------------------------------------------
Janus Aspen Series
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced Portfolio - Long-term capital growth, consistent with preservation
Service Shares of capital and balanced by current income
- ------------------------------------------------------------------------------------------------------
Janus Aspen Series International Growth Long-term growth of capital.
Portfolio - Service Shares
- ------------------------------------------------------------------------------------------------------ Janus Capital Management
Janus Aspen Series Forty Portfolio - Long-term growth of capital LLC
Service Shares
- ------------------------------------------------------------------------------------------------------
Janus Aspen Series Mid Cap Value Capital appreciation
Portfolio - Service Shares
- ------------------------------------------------------------------------------------------------------
Janus Aspen Series INTECH Risk-Managed Long-term growth of capital
Core Portfolio - Service Shares
- ------------------------------------------------------------------------------------------------------
Janus Aspen Series Small Company Value Capital appreciation
Portfolio - Service Shares
- ------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Equity
Trust
- ----------------------------------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Long-term capital growth with current income as a
Fundamental Value Portfolio - Class secondary consideration Legg Mason Partners Fund
I/(2)/ Advisor, LLC
- ----------------------------------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Investors Long-term growth of capital with current income as a
Portfolio - Class I/(3)/ secondary objective
- ----------------------------------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Income
Trust
- ----------------------------------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Global Maximum total return, consistent with preservation of Legg Mason Partners Fund
High Yield Bond Portfolio - Class II capital Advisor, LLC
- ----------------------------------------------------------------------------------------------------------------------------------
MFS(R) Variable Insurance Trust(SM)
- ----------------------------------------------------------------------------------------------------------------------------------
MFS High Income Series - Service Class Total return with an emphasis on high current income,
but also considering capital appreciation
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Investors Growth Stock Series - Capital appreciation
Service Class
- ------------------------------------------------------------------------------------------------------ MFS(TM) Investment
MFS Investors Trust Series - Service Capital appreciation Management
Class
- ----------------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series - Service Class Capital appreciation
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series - Service Class Total return
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Value Series - Service Class Capital appreciation
- ----------------------------------------------------------------------------------------------------------------------------------
34 PROSPECTUS
Portfolio Investment Objective Investment Adviser
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA - Long-term capital appreciation by investing a
Service Shares substantial portion of assets in securities of foreign
issuers, growth-type companies, cyclical industries OppenheimerFunds, Inc.
and special situations that are considered to have
appreciation possibilities.
- ------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Capital appreciation.
Fund(R)/VA - Service Shares
- ------------------------------------------------------------------------------------------------------
Oppenheimer MidCap Fund/VA - Service Capital appreciation by investing in "growth type"
Shares companies.
- ----------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
- ----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Foreign Bond Portfolio (U.S. Maximum total return, consistent with preservation
Dollar- Hedged) - Administrative Shares of capital and prudent investment management.
- ------------------------------------------------------------------------------------------------------
PIMCO VIT Money Market Portfolio - Maximum current income, consistent with Pacific Investment
Administrative Shares preservation of capital and daily liquidity Management Company LLC
- ------------------------------------------------------------------------------------------------------
PIMCO VIT Real Return Portfolio - Maximum real return, consistent with preservation of
Administrative Shares real capital and prudent investment management
- ------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Portfolio - Maximum total return, consistent with preservation
Administrative Shares of capital and prudent investment management.
- ------------------------------------------------------------------------------------------------------
Premier VIT
- ----------------------------------------------------------------------------------------------------------------------------------
Premier VIT OpCap Balanced Portfolio Growth of capital and investment income OpCap Advisors LLC
- ----------------------------------------------------------------------------------------------------------------------------------
The Rydex Variable Trust
- ----------------------------------------------------------------------------------------------------------------------------------
Rydex VT Sector Rotation Fund Long-term capital appreciation. Rydex Investments
- ----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Series, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Long-term capital growth. Income is a secondary
Portfolio - II objective. T. Rowe Price Associates,
- ------------------------------------------------------------------------------------------------------ Inc.
T. Rowe Price Equity Income Portfolio - Substantial dividend income as well as long-term
II growth of capital.
- ----------------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
UIF Capital Growth Portfolio, Long-term capital appreciation by investing primarily
Class II/(5)/ in growth-oriented equity securities of large Van Kampen/(4)/
capitalization companies.
- ------------------------------------------------------------------------------------------------------
UIF U.S. Real Estate Portfolio, Above average current income and long-term capital
Class II/(5)/ appreciation by investing primarily in equity
securities of companies in the U.S. real estate
industry, including real estate investment trusts.
- ----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust
- ----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Absolute Return Fund Consistent absolute (positive) returns in various
market cycles
- ------------------------------------------------------------------------------------------------------ Van Eck Associates
Van Eck Worldwide Emerging Markets Fund Long-term capital appreciation by investing primarily Corporation
in equity securities in emerging markets around the
world
- ------------------------------------------------------------------------------------------------------
Van Eck Worldwide Hard Assets Fund Long-term capital appreciation by investing primarily
in "hard asset securities" with income as a
secondary consideration
- ----------------------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust
- ----------------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Mid Cap Growth Capital growth
Portfolio, Class II
- ------------------------------------------------------------------------------------------------------ Van Kampen Asset
Van Kampen LIT Government Portfolio, High current return consistent with preservation of Management
Class II capital
- ------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth and Income Long-term growth of capital and income.
Portfolio, Class II
- ----------------------------------------------------------------------------------------------------------------------------------
(1) The investment objective(s) of each sub-account may be changed by the Board
of Directors without shareholder approval.
(2) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
35 PROSPECTUS
(3) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
(4) Morgan Stanley Investment Management Inc., the investment advisor to the
Van Kampen UIF Portfolios, does business in certain instances as Van
Kampen.
(5) Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
Amounts you allocate to Variable Sub-accounts may grow in value, decline in
value, or grow less than you expect, depending on the investment performance of
the Portfolios in which those Variable Sub-accounts invest. You bear the
investment risk that the Portfolios might not meet their investment objectives.
Shares of the Portfolios are not deposits in, or obligations of, or guaranteed
or endorsed by, any bank and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.
TRUEBALANCE(SM) ASSET ALLOCATION PROGRAM
The TrueBalance asset allocation program ("TrueBalance program") is no longer
offered for new enrollments. If you enrolled in the TrueBalance program prior to
January 31, 2008, you may remain in the program. If you terminate your
enrollment or otherwise transfer your Contract Value out of the program, you may
not re-enroll.
There is no additional charge for the TrueBalance program. Participation in the
TrueBalance program may be limited if you have elected certain Contract Options
that impose restrictions on the investment alternatives which you may invest,
such as the Income Protection Benefit Option, the TrueReturn Accumulation
Benefit Option or a Withdrawal Benefit Option. See the sections of this
prospectus discussing these Options for more information.
Asset allocation is the process by which your Contract Value is invested in
different asset classes in a way that matches your risk tolerance, time horizon,
and investment goals. Theoretically, different asset classes tend to behave
differently under various economic and market conditions. By spreading your
Contract Value across a range of asset classes, you may, over time, be able to
reduce the risk of investment volatility and potentially enhance returns. Asset
allocation does not guarantee a profit or protect against loss in a declining
market.
Your sales representative helps you determine whether participating in an asset
allocation program is appropriate for you. You complete a questionnaire to
identify your investment style. Based on your investment style, you select one
asset allocation model portfolio among the available model portfolios which may
range from conservative to aggressive. Your Contract Value is allocated among
the Variable Sub-Accounts according to your selected model portfolio. Not all
Variable Sub-Accounts are available in any one model portfolio, and you must
only allocate your Contract Value to the limited number of Variable Sub-Accounts
available in the model portfolio you select. You should not select a model
portfolio without first consulting with your sales representative.
Lincoln Benefit and the principal underwriter of the Contracts, ALFS, Inc., do
not intend to provide any personalized investment advice in connection with the
TrueBalance program and you should not rely on this program as providing
individualized investment recommendations to you.
Lincoln Benefit retained an independent investment management firm ("investment
management firm") to construct the TrueBalance model portfolios. The investment
management firm does not provide advice to Lincoln Benefit's Contract Owners.
Neither Lincoln Benefit nor the investment management firm is acting for any
Contract Owner as a "fiduciary" or as an "investment manager," as such terms are
defined under applicable laws and regulations relating to the Employee
Retirement Income Security Act of 1974 (ERISA).
The investment management firm does not take into account any information about
any Contract Owner or any Contract Owner's assets when creating, providing or
maintaining any TrueBalance model portfolio. Individual Contract Owners should
ultimately rely on their own judgment and/or the judgment of a financial advisor
in making their investment decisions. Neither Lincoln Benefit nor the investment
management firm is responsible for determining the suitability of the
TrueBalance model portfolios for the Contract Owners' purposes.
Each of the five model portfolios specifies an allocation among a mix of
Variable Sub-Accounts that considers the investment goals of the applicable
investment style. On the business day we accept your participation in the
TrueBalance program, we will automatically reallocate any existing Contract
Value in the Variable Sub-Accounts according to the model portfolio you
selected. If any portion of your existing Contract Value is allocated to the
Standard Fixed Account or MVA Fixed Account Options and you wish to allocate any
portion of it to the model portfolio, you must transfer that portion to the
Variable Sub-Accounts. In addition, as long as you participate in the
TrueBalance program, you must allocate all of your purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts) to the Fixed Account
Options and/or the Variable Sub-Accounts currently offered in your model
portfolio. Any purchase payments (and Credit Enhancements for Consultant
Solutions Plus Contracts) you allocate to the DCA Fixed Account Option will be
automatically transferred, along with interest, in equal monthly installments to
the Variable Sub-Accounts according to the model portfolio you selected.
36 PROSPECTUS
We use the term "Transfer Period Account" to refer to each purchase payment
allocation made to the DCA Fixed Account Option for a specified term length. At
the expiration of a Transfer Period Account any remaining amounts in the
Transfer Period Account will be transferred to the Variable Sub-Account
according to the percentage allocation for the model portfolio you selected.
Lincoln Benefit may offer new or revised TrueBalance model portfolios at any
time, and may retain a different investment management firm to create any such
new or revised TrueBalance model portfolios. Lincoln Benefit will not
automatically reallocate your Contract Value allocated to the Variable
Sub-Accounts to match any new or revised model portfolios that are offered. If
you are invested in the TrueBalance model portfolio, your registered
representative or the selling broker-dealer will notify you of any new or
revised TrueBalance model portfolios that may be made available. If you wish to
invest in accordance with a new or revised TrueBalance model portfolio, you must
submit a transfer request to transfer your Contract Value in your existing
TrueBalance model portfolio to the new TrueBalance model portfolio. If you do
not request a transfer to a new TrueBalance model portfolio, we will continue to
rebalance your Contract Value in accordance with your existing TrueBalance model
portfolio. At any given time, you may only elect a TrueBalance model portfolio
that is available at the time of election.
You may select only one model portfolio at a time. However, you may change your
selection of model portfolio at any time, provided you select only a currently
available model portfolio. Each change you make in your model portfolio
selection will count against the 12 transfers you can make each Contract Year
without paying a transfer fee. You should consult with your sales representative
before making a change to your model portfolio selection to determine whether
the new model portfolio is appropriate for your needs.
Since the performance of each Variable Sub-Account may cause a shift in the
percentage allocated to each Variable Sub-Account, at least once every calendar
quarter we will automatically rebalance all of your Contract Value in the
Variable Sub-Accounts according to your currently selected model portfolio.
Unless you notify us otherwise, any purchase payments you make after electing
the TrueBalance program will be allocated to your model portfolio and/or to the
Fixed Account Options according to your most recent instructions on file with
us. Once you elect to participate in the TrueBalance program, you may allocate
subsequent purchase payments to any of the Fixed Account Options available with
your Contract and/or to any of the Variable Sub-Accounts included in your model
portfolio, but only according to the allocation specifications of that model
portfolio. You may not allocate subsequent purchase payments to a Variable
Sub-Account that is not included in your model portfolio. Subsequent purchase
payments allocated to the Variable Sub-Accounts will be automatically rebalanced
at the end of the next calendar quarter according to the allocation percentages
for your currently selected model portfolio.
You may not make transfers from the Variable Sub-Accounts to any of the other
Variable Sub-Accounts. You may make transfers, as allowed under the contract,
from the Fixed Account Options to other Fixed Account Options or to the Variable
Sub-Accounts included in your model portfolio, but only according to the
allocation specifications of that model portfolio. You may make transfers from
the Variable Sub-Accounts to any of the Fixed Account Options, except the DCA
Fixed Account Option. Transfers to Fixed Account Options may be inconsistent
with the investment style you selected and with the purpose of the TrueBalance
program. However, all of your Contract Value in the Variable Sub-Accounts will
be automatically rebalanced at the end of the next calendar quarter according to
the percentage allocations for your currently selected model portfolio. You
should consult with your sales representative before making transfers.
If you own the TrueReturn Accumulation Benefit Option, on the Rider Maturity
Date the Contract Value may be increased due to the TrueReturn Accumulation
Benefit Option. Any increase will be allocated to the PIMCO VIT Money Market -
Administrative Shares Sub-Account. You may make transfers from this Variable
Sub-Account to the Fixed Account Options (as allowed) or the Variable
Sub-Accounts included in your model portfolio, but only according to the
allocation specification of that model portfolio. All of your Contract Value in
the Variable Sub-Accounts will be automatically rebalanced at the end of the
next calendar quarter according to the percentage allocations for your currently
selected model portfolio.
If you make a partial withdrawal from any of the Variable Sub-Accounts, your
remaining Contract Value in the Variable Sub-Accounts will be automatically
rebalanced at the end of the next calendar quarter according to the percentage
allocations for your currently selected model portfolio. If you are
participating in the Systematic Withdrawal Program when you add the TrueBalance
program or change your selection of model portfolios, you may need to update
your withdrawal instructions. If you have any questions, please consult your
sales representative.
Your participation in the TrueBalance program is subject to the program's terms
and conditions, and you may change model portfolios or terminate your
participation in the TrueBalance program at any time by notifying us in a form
satisfactory to us. We reserve the right to modify or terminate the TrueBalance
program at any time.
37 PROSPECTUS
Investment Alternatives: The Fixed Account Options
You may allocate all or a portion of your purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts) to the Fixed Account
Options. The Fixed Account Options we offer include the Dollar Cost Averaging
Fixed Account Option, the Standard Fixed Account Option, and the Market Value
Adjusted Fixed Account Option. We may offer additional Fixed Account Options in
the future. Some Options are not available in all states. In addition, Lincoln
Benefit may limit the availability of some Fixed Account Options. Please consult
with your representative for current information. The Fixed Account supports our
insurance and annuity obligations. The Fixed Account consists of our general
assets other than those in segregated asset accounts. We have sole discretion to
invest the assets of the Fixed Account, subject to applicable law. Any money you
allocate to the Fixed Account does not entitle you to share in the investment
experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
The Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option") is
one of the investment alternatives that you can use to establish a Dollar Cost
Averaging Program, as described on page 46.
This option allows you to allocate purchase payments (and Credit Enhancements
for Consultant Solutions Plus Contracts) to the Fixed Account that will then
automatically be transferred, along with interest, in equal monthly installments
to the investment alternatives that you have selected. In the future, we may
offer other installment frequencies in our discretion. Each purchase payment
allocated to the DCA Fixed Account Option must be at least $100.
At the time you allocate a purchase payment to the DCA Fixed Account Option, you
must specify the term length over which the transfers are to take place. We use
the term "Transfer Period Account" to refer to each purchase payment allocation
made to the DCA Fixed Account Option for a specified term length. You establish
a new Transfer Period Account each time you allocate a purchase payment to the
DCA Fixed Account Option. We currently offer term lengths from which you may
select for your Transfer Period Account(s), ranging from 3 to 12 months. We may
modify or eliminate the term lengths we offer in the future. Refer to Appendix A
for more information.
Your purchase payments (and Credit Enhancements for Consultant Solutions Plus
Contracts) will earn interest while in the DCA Fixed Account Option at the
interest rate in effect at the time of the allocation, depending on the term
length chosen for the Transfer Period Account and the type of Contract you have.
The interest rates may also differ from those available for other Fixed Account
Options. The minimum interest rate associated with the DCA Fixed Account Option
is based upon state requirements and the date an application to purchase a
Contract is signed. This minimum interest rate will not change after Contract
issue.
You must transfer all of your money, plus accumulated interest, out of a
Transfer Period Account to other investment alternatives in equal monthly
installments during the term of the Transfer Period Account. We reserve the
right to restrict the investment alternatives available for transfers from any
Transfer Period Account. You may not transfer money from the Transfer Period
Accounts to any of the Fixed Account Options available under your Contract. The
first transfer will occur on the 25th day after you establish a Transfer Period
Account and monthly thereafter. If we do not receive an allocation instruction
from you when we receive the purchase payment, we will transfer each installment
to the money market Variable Sub-account until we receive a different allocation
instruction. At the expiration of a Transfer Period Account any remaining
amounts in the Transfer Period Account will be transferred to the PIMCO VIT
Money Market - Administrative Shares Sub-Account unless you request a different
investment alternative. Transferring Contract Value to the PIMCO VIT Money
Market - Administrative Shares Sub-Account in this manner may not be consistent
with the theory of dollar cost averaging described on page 46.
If you discontinue the DCA Fixed Account Option before the expiration of a
Transfer Period Account, we will transfer any remaining amount in the Transfer
Period Account to the PIMCO VIT Money Market - Administrative Shares Sub-Account
unless you request a different investment alternative.
If you have a TrueReturn Option or SureIncome Option, at the expiration of a
Transfer Period Account or if you discontinue the DCA Fixed Account Option any
amounts remaining in the Transfer Period Account will be transferred according
to the investment requirements applicable to the Option you selected.
You may not transfer money into the DCA Fixed Account Option or add to an
existing Transfer Period Account. You may not use the Automatic Additions
Program to allocate purchase payments to the DCA Fixed Account Option.
The DCA Fixed Account Option currently is not available if you have selected the
Consultant Solutions Select Contract.
The DCA Fixed Account Option may not be available in your state. Please check
with your representative for availability.
38 PROSPECTUS
STANDARD FIXED ACCOUNT OPTION
If you have selected the Consultant Solutions Classic Contract, you may allocate
purchase payments or transfer amounts into the Standard Fixed Account Option.
Each such allocation establishes a "Guarantee Period Account" within the
Standard Fixed Account Option ("Standard Fixed Guarantee Period Account"), which
is defined by the date of the allocation. You may not allocate a purchase
payment or transfer to any existing Guarantee Period Account. Each purchase
payment or transfer allocated to a Standard Fixed Guarantee Period Account must
be at least $100.
The Standard Fixed Account Option is not available in all states.
At the time you allocate a purchase payment or transfer amount to the Standard
Fixed Account Option, you must select the Guarantee Period for that allocation
from among the available Standard Fixed Guarantee Periods. We currently offer
Standard Fixed Guarantee Periods of 1 year in length for Consultant Solutions
Classic. For Consultant Solutions Plus, Select and Elite Contracts, we currently
are not offering the Standard Fixed Account Option. Refer to Appendix A for more
information. We may offer other Guarantee Periods in the future. If you allocate
a purchase payment to the Standard Fixed Account Option, but do not select a
Standard Fixed Guarantee Period for the new Standard Fixed Guarantee Period
Account, we will allocate the purchase payment or transfer to a new Standard
Fixed Guarantee Period Account with the same Standard Fixed Guarantee Period as
the Standard Fixed Guarantee Period Account of your most recent purchase payment
or transfer. If we no longer offer that Standard Fixed Guarantee Period, then we
will allocate the purchase payment or transfer to a new Standard Fixed Guarantee
Period Account with the next shortest term currently offered. If you have not
made a prior allocation to a Guarantee Period Account, then we will allocate the
purchase payment or transfer to a new Standard Fixed Guarantee Period Account of
the shortest Standard Fixed Guarantee Period we are offering at that time.
Some Standard Fixed Guarantee Periods are not available in all states. Please
check with your representative for availability.
The amount you allocate to a Standard Fixed Guarantee Period Account will earn
interest at the interest rate in effect for that Standard Fixed Guarantee Period
at the time of the allocation. Interest rates may differ depending on the type
of Contract you have and may also differ from those available for other Fixed
Account Options. The minimum interest rate associated with the Standard Fixed
Account Option is based upon state requirements and the date an application to
purchase a Contract is signed. This minimum interest rate will not change after
Contract issue.
In any Contract Year, the combined amount of withdrawals and transfers from a
Standard Fixed Guarantee Period Account may not exceed 30% of the amount used to
establish that Standard Fixed Guarantee Period Account. This limitation is
waived if you withdraw your entire Contract Value. It is also waived for amounts
in a Standard Fixed Guarantee Period Account during the 30 days following its
renewal date ("30-Day Window"), described below, and for a single withdrawal
made by your surviving spouse within one year of continuing the Contract after
your death.
Amounts under the 30% limit that are not withdrawn in a Contract Year do not
carry over to subsequent Contract Years.
At the end of a Standard Fixed Guarantee Period and each year thereafter, we
will declare a renewal interest rate that will be guaranteed for 1 year.
Subsequent renewal dates will be on the anniversaries of the first renewal date.
Prior to a renewal date, we will send you a notice that will outline the options
available to you. During the 30-Day Window following the expiration of a
Standard Fixed Guarantee Period Account, the 30% limit for transfers and
withdrawals from that Guarantee Period Account is waived and you may elect to:
.. transfer all or part of the money from the Standard Fixed Guarantee Period
Account to establish a new Guarantee Period Account within the Standard
Fixed Account Option; or
.. transfer all or part of the money from the Standard Fixed Guarantee Period
Account to other investment alternatives available at the time; or
.. withdraw all or part of the money from the Standard Fixed Guarantee Period
Account. Withdrawal charges and taxes may apply.
Withdrawals taken to satisfy IRS minimum distribution rules will count against
the 30% limit. The 30% limit will be waived for a Contract Year to the extent
that:
.. you have already exceeded the 30% limit and you must still make a
withdrawal during that Contract Year to satisfy IRS minimum distribution
rules; or
.. you have not yet exceeded the 30% limit but you must make a withdrawal
during that Contract Year to satisfy IRS minimum distribution rules, and
such withdrawal will put you over the 30% limit.
The money in the Standard Fixed Guarantee Period Account will earn interest at
the declared renewal rate from the renewal date until the date we receive
notification of your election. If we receive notification of your election to
make a transfer or withdrawal from a renewing Standard Fixed Guarantee Period
Account on or before the renewal date, the transfer or withdrawal will be deemed
to have occurred on the renewal date. If we receive notification of your
election to make a
39 PROSPECTUS
transfer or withdrawal from the renewing Standard Fixed Guarantee Period Account
after the renewal date, but before the expiration of the 30-Day Window, the
transfer or withdrawal will be deemed to have occurred on the day we receive
such notice. Any remaining balance not withdrawn or transferred from the
renewing Standard Fixed Guarantee Period Account will continue to earn interest
until the next renewal date at the declared renewal rate. If we do not receive
notification from you within the 30-Day Window, we will assume that you have
elected to renew the Standard Fixed Guarantee Period Account and the amount in
the renewing Standard Fixed Guarantee Period Account will continue to earn
interest at the declared renewal rate until the next renewal date, and will be
subject to all restrictions of the Standard Fixed Account Option.
The Standard Fixed Account Option currently is available only with the
Consultant Solutions Classic Contract.
MARKET VALUE ADJUSTED FIXED ACCOUNT OPTION
You may allocate purchase payments or transfer amounts into the Market Value
Adjusted Fixed Account Option. Each such allocation establishes a Guarantee
Period Account within the Market Value Adjusted Fixed Account Option ("Market
Value Adjusted Fixed Guarantee Period Account"), which is defined by the date of
the allocation and the length of the initial interest rate guarantee period
("Market Value Adjusted Fixed Guarantee Period"). You may not allocate a
purchase payment or transfer to any existing Guarantee Period Account. Each
purchase payment or transfer allocated to a Market Value Adjusted Fixed
Guarantee Period Account must be at least $100.
At the time you allocate a purchase payment or transfer amount to the Market
Value Adjusted Fixed Account Option, you must select the Guarantee Period for
that allocation from among the Guarantee Periods available for the Market Value
Adjusted Fixed Account Option. We currently offer Market Value Adjusted Fixed
Guarantee Periods of 1, 3, 5, 7, and 10 years. Refer to Appendix A for more
information. We may offer other Guarantee Periods in the future. If you allocate
a purchase payment to the Market Value Adjusted Fixed Account Option, but do not
select a Market Value Adjusted Fixed Guarantee Period for the new Market Value
Adjusted Fixed Guarantee Period Account, we will allocate the purchase payment
or transfer to a new Market Value Adjusted Fixed Guarantee Period Account with
the same Market Value Adjusted Fixed Guarantee Period as the Market Value
Adjusted Fixed Guarantee Period Account of your most recent purchase payment or
transfer. If we no longer offer that Market Value Adjusted Fixed Guarantee
Period, then we will allocate the purchase payment or transfer to a new Market
Value Adjusted Fixed Guarantee Period Account with the next shortest term
currently offered. If you have not made a prior allocation to a Market Value
Adjusted Fixed Guarantee Period Account, then we will allocate the purchase
payment or transfer to a new Market Value Adjusted Fixed Guarantee Period
Account of the shortest Market Value Adjusted Fixed Guarantee Period we are
offering at that time. The Market Value Adjusted Fixed Account Option is not
available in all states. Please check with your representative for availability.
The amount you allocate to a Market Value Adjusted Fixed Guarantee Period
Account will earn interest at the interest rate in effect for that Market Value
Adjusted Fixed Guarantee Period at the time of the allocation. Interest rates
may differ depending on the type of Contract you have and may also differ from
those available for other Fixed Account Options.
Withdrawals and transfers from a Market Value Adjusted Fixed Guarantee Period
Account may be subject to a Market Value Adjustment. A Market Value Adjustment
may also apply to amounts in the Market Value Adjusted Fixed Account Option if
we pay Death Proceeds or if the Payout Start Date begins on a day other than
during the 30-day period after such Market Value Adjusted Fixed Guarantee Period
Account expires ("30-Day MVA Window"). We will not make a Market Value
Adjustment if you make a transfer or withdrawal during the 30-Day MVA Window.
We apply a Market Value Adjustment to reflect changes in interest rates from the
time you first allocate money to a Market Value Adjusted Fixed Guarantee Period
Account to the time the money is taken out of that Market Value Adjusted Fixed
Guarantee Period Account under the circumstances described above. We use the
U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve
Statistical Release H.15 ("Treasury Rate") to calculate the Market Value
Adjustment. We do so by comparing the Treasury Rate for a maturity equal to the
Market Value Adjusted Fixed Guarantee Period at the time the Market Value
Adjusted Fixed Guarantee Period Account is established with the Treasury Rate
for the same maturity at the time the money is taken from the Market Value
Adjusted Fixed Guarantee Period Account.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates have increased since the establishment of a
Market Value Adjusted Fixed Guarantee Period Account, the Market Value
Adjustment, together with any applicable withdrawal charges, premium taxes, and
income tax withholdings could reduce the amount you receive upon full withdrawal
from a Market Value Adjusted Fixed Guarantee Period Account to an amount less
than the purchase payment used to establish that Market Value Adjusted Fixed
Guarantee Period Account.
Generally, if at the time you establish a Market Value Adjusted Fixed Guarantee
Period Account, the Treasury
40 PROSPECTUS
Rate for a maturity equal to that Market Value Adjusted Fixed Guarantee Period
is higher than the applicable Treasury Rate at the time money is to be taken
from the Market Value Adjusted Fixed Guarantee Period Account, the Market Value
Adjustment will be positive. Conversely, if at the time you establish a Market
Value Adjusted Fixed Guarantee Period Account, the applicable Treasury Rate is
lower than the applicable Treasury Rate at the time the money is to be taken
from the Market Value Adjusted Fixed Guarantee Period Account, the Market Value
Adjustment will be negative.
For example, assume that you purchase a Contract and allocate part of the
initial purchase payment (and Credit Enhancements for Consultant Solutions Plus
Contracts) to the Market Value Adjusted Fixed Account Option to establish a
5-year Market Value Adjusted Fixed Guarantee Period Account. Assume that the
5-year Treasury Rate at that time is 4.50%. Next, assume that at the end of the
3rd year, you withdraw money from the Market Value Adjusted Fixed Guarantee
Period Account. If, at that time, the 5-year Treasury Rate is 4.20%, then the
Market Value Adjustment will be positive. Conversely, if the 5-year Treasury
Rate at that time is 4.80%, then the Market Value Adjustment will be negative.
The formula used to calculate the Market Value Adjustment and numerical examples
illustrating its application are shown in Appendix B of this prospectus.
At the end of a Market Value Adjusted Fixed Guarantee Period, the Market Value
Adjusted Fixed Guarantee Period Account expires and we will automatically
transfer the money from such Guarantee Period Account to establish a new Market
Value Adjusted Fixed Guarantee Period Account with the same Market Value
Adjusted Fixed Guarantee Period, unless you notify us otherwise. The new Market
Value Adjusted Fixed Guarantee Period Account will be established as of the day
immediately following the expiration date of the expiring Market Value Adjusted
Guarantee Period Account ("New Account Start Date.") If the Market Value
Adjusted Fixed Guarantee Period is no longer being offered, we will establish a
new Market Value Adjusted Fixed Guarantee Period Account with the next shortest
Market Value Adjusted Fixed Guarantee Period available. Prior to the expiration
date, we will send you a notice, which will outline the options available to
you. During the 30-Day MVA Window a Market Value Adjustment will not be applied
to transfers and withdrawals from the expiring Market Value Adjusted Fixed
Guarantee Period Account and you may elect to:
.. transfer all or part of the money from the Market Value Adjusted Fixed
Guarantee Period Account to establish a new Guarantee Period Account within
the Market Value Adjusted Fixed Account Option; or
.. transfer all or part of the money from the Market Value Adjusted Fixed
Guarantee Period Account to other investment alternatives available at the
time; or
.. withdraw all or part of the money from the Market Value Adjusted Fixed
Guarantee Period Account. Withdrawal charges and taxes may apply.
The money in the Market Value Adjusted Fixed Guarantee Period Account will earn
interest at the interest rate declared for the new Market Value Adjusted Fixed
Guarantee Period Account from the New Account Start Date until the date we
receive notification of your election. If we receive notification of your
election to make a transfer or withdrawal from an expiring Market Value Adjusted
Fixed Guarantee Period Account on or before the New Account Start Date, the
transfer or withdrawal will be deemed to have occurred on the New Account Start
Date. If we receive notification of your election to make a transfer or
withdrawal from the expiring Market Value Adjusted Fixed Guarantee Period
Account after the New Account Start Date, but before the expiration of the
30-Day MVA Window, the transfer or withdrawal will be deemed to have occurred on
the day we receive such notice. Any remaining balance not withdrawn or
transferred will earn interest for the term of the new Market Value Adjusted
Fixed Guarantee Period Account, at the interest rate declared for such Account.
If we do not receive notification from you within the 30-Day Window, we will
assume that you have elected to transfer the amount in the expiring Market Value
Adjusted Fixed Guarantee Period Account to establish a new Market Value Adjusted
Fixed Guarantee Period Account with the same Market Value Adjusted Fixed
Guarantee Period, and the amount in the new Market Value Adjusted Fixed
Guarantee Period Account will continue to earn interest at the interest rate
declared for the new Market Value Adjusted Fixed Guarantee Period Account, and
will be subject to all restrictions of the Market Value Adjusted Fixed Account
Option. If we no longer offer that Market Value Adjusted Fixed Guarantee Period,
the Market Value Adjusted Fixed Guarantee Period for the new Market Value
Adjusted Fixed Guarantee Period Account will be the next shortest term length we
offer for the Market Value Adjusted Fixed Account Option at that time, and the
interest rate will be the rate declared by us at that time for such term.
41 PROSPECTUS
Investment Alternatives: Transfers
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives. You may not transfer Contract Value to the DCA Fixed
Account Option or add to an existing Transfer Period Account. You may request
transfers in writing on a form that we provided or by telephone according to the
procedure described below.
You may make up to 12 transfers per Contract Year without charge. Currently, a
transfer fee equal to 1.00% of the amount transferred applies to each transfer
after the 12th transfer in any Contract Year. This fee may be changed, but in no
event will it exceed 2.00% of the amount transferred. Multiple transfers on a
single Valuation Date are considered a single transfer for purposes of assessing
the transfer fee. If you added the TrueReturn Accumulation Benefit Option or
SureIncome Option to your Contract, certain restrictions on transfers apply. See
the "TrueReturn Accumulation Benefit Option" and "SureIncome Withdrawal Benefit
Option" sections of this prospectus for more information. In any event, the
transfer fee will never be greater than $25.
The minimum amount that you may transfer from the Standard Fixed Account Option,
Market Value Adjusted Fixed Account Option or a Variable Sub-account is $100 or
the total remaining balance in the Standard Fixed Account Option, Market Value
Adjusted Fixed Account Option or the Variable Sub-account, if less. These
limitations do not apply to the DCA Fixed Account Option. The total amount that
you may transfer or withdraw from a Standard Fixed Guarantee Period Account in a
Contract Year is 30% of the amount used to establish that Guarantee Period
Account. See "Standard Fixed Account Option". The minimum amount that can be
transferred to the Standard Fixed Account Option and the Market Value Adjusted
Fixed Account Option is $100.
We will process transfer requests that we receive before 3:00 p.m. Central Time
on any Valuation Date using the Accumulation Unit Values for that Date. We will
process requests completed after 3:00 p.m. on any Valuation Date using the
Accumulation Unit Values for the next Valuation Date. The Contract permits us to
defer transfers from the Fixed Account Options for up to 6 months from the date
we receive your request. If we decide to postpone transfers from any Fixed
Account Option for 30 days or more, we will pay interest as required by
applicable law. Any interest would be payable from the date we receive the
transfer request to the date we make the transfer.
For Consultant Solutions Select Contracts, the maximum amount that may be
allocated during any single day to certain selected funds by telephone, fax,
Internet, overnight or express mail services, same day messenger, or in person
is $25,000. All trades exceeding this daily limit must be made by first class US
Mail. The funds currently affected by this restriction are:
Fidelity VIP Overseas - Service Class 2 Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Oppenheimer Global Securities/VA - Service Shares Sub-Account Van Eck Worldwide
Emerging Markets Sub-Account MFS High Income - Service Class Sub-Account Legg
Mason Partners Variable Global High Yield Bond - Class II Sub-Account
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts
so as to change the relative weighting of the Variable Sub-Accounts on which
your variable income payments will be based. You may make up to 12 transfers per
Contract Year within each Income Plan. You may not convert any portion of your
fixed income payments into variable income payments. You may not make transfers
among Income Plans. You may make transfers from the variable income payments to
the fixed income payments to increase the proportion of your income payments
consisting of fixed income payments, unless you have selected the Income
Protection Benefit Option.
TELEPHONE OR ELECTRONIC TRANSFERS
You may make transfers by telephone by calling 800-457-7617. The cut-off time
for telephone transfer requests is 3:00 p.m. Central Time. In the event that the
New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in
the event that the Exchange closes early for a period of time but then reopens
for trading on the same day, we will process telephone transfer requests as of
the close of the Exchange on that particular day. We will not accept telephone
requests received from you at any telephone number other than the number that
appears in this paragraph or received after the close of trading on the
Exchange. If you own the Contract with a joint Contract Owner, unless we receive
contrary instructions, we will accept instructions from either you or the other
Contract Owner.
We may suspend, modify or terminate the telephone transfer privilege, as well as
any other electronic or automated means we previously approved, at any time
without notice.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for
42 PROSPECTUS
losses resulting from allegedly unauthorized telephone transfers. However, if we
do not take reasonable steps to help ensure that a telephone authorization is
valid, we may be liable for such losses.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive
trading can potentially dilute the value of Variable Sub-Accounts and can
disrupt management of a Portfolio and raise its expenses, which can impair
Portfolio performance and adversely affect your Contract Value. Our policy is
not to accept knowingly any money intended for the purpose of market timing or
excessive trading. Accordingly, you should not invest in the Contract if your
purpose is to engage in market timing or excessive trading, and you should
refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing
trading activities. Portfolios also may report suspected market-timing or
excessive trading activity to us. If, in our judgment, we determine that the
transfers are part of a market timing strategy or are otherwise harmful to the
underlying Portfolio, we will impose the trading limitations as described below
under "Trading Limitations." Because there is no universally accepted definition
of what constitutes market timing or excessive trading, we will use our
reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable
Sub-Accounts, because our procedures involve the exercise of reasonable
judgment, we may not identify or prevent some market timing or excessive
trading. Moreover, imposition of trading limitations is triggered by the
detection of market timing or excessive trading activity, and the trading
limitations are not applied prior to detection of such trading activity.
Therefore, our policies and procedures do not prevent such trading activity
before it is detected. As a result, some investors may be able to engage in
market timing and excessive trading, while others are prohibited, and the
Portfolio may experience the adverse effects of market timing and excessive
trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any
Contract year, require that all future transfer requests be submitted through
U.S. Postal Service First Class Mail thereby refusing to accept transfer
requests via telephone, facsimile, Internet, or overnight delivery, or to refuse
any transfer request, if:
.. we believe, in our sole discretion, that certain trading practices, such as
excessive trading, by, or on behalf of, one or more Contract Owners, or a
specific transfer request or group of transfer requests, may have a
detrimental effect on the Accumulation Unit Values of any Variable
Sub-Account or on the share prices of the corresponding Portfolio or
otherwise would be to the disadvantage of other Contract Owners; or
.. we are informed by one or more of the Portfolios that they intend to
restrict the purchase, exchange, or redemption of Portfolio shares because
of excessive trading or because they believe that a specific transfer or
group of transfers would have a detrimental effect on the prices of
Portfolio shares.
In making the determination that trading activity constitutes market timing or
excessive trading, we will consider, among other things:
.. the total dollar amount being transferred, both in the aggregate and in the
transfer request;
.. the number of transfers you make over a period of time and/or the period of
time between transfers (note: one set of transfers to and from a Variable
Sub-Account in a short period of time can constitute market timing);
.. whether your transfers follow a pattern that appears designed to take
advantage of short term market fluctuations, particularly within certain
Variable Sub-Account underlying Portfolios that we have identified as being
susceptible to market timing activities (e.g., International, High Yield,
and Small Cap Variable Sub-Accounts);
.. whether the manager of the underlying Portfolio has indicated that the
transfers interfere with Portfolio management or otherwise adversely impact
the Portfolio; and
.. the investment objectives and/or size of the Variable Sub-Account
underlying Portfolio.
We seek to apply these trading limitations uniformly. However, because these
determinations involve the exercise of discretion, it is possible that we may
not detect some market timing or excessive trading activity. As a result, it is
possible that some investors may be able to engage in market timing or excessive
trading activity, while others are prohibited, and the Portfolio may experience
the adverse effects of market timing and excessive trading described above.
If we determine that a Contract Owner has engaged in market timing or excessive
trading activity, we will require that all future transfer requests be submitted
through U.S. Postal Service First Class Mail thereby refusing to accept transfer
requests via telephone, facsimile, Internet, or overnight delivery. If we
determine that a Contract Owner continues to engage in a pattern of market
timing or excessive trading activity we will restrict that Contract Owner from
making future additions or transfers into the impacted Variable Sub-Account(s)
or will restrict that Contract Owner from making future additions or transfers
into the class of Variable Sub-Account(s) if the Variable Sub-Accounts(s)
involved are vulnerable to arbitrage
43 PROSPECTUS
market timing trading activity (e.g., International, High Yield, and Small Cap
Variable Sub-Accounts).
In our sole discretion, we may revise our Trading Limitations at any time as
necessary to better deter or minimize market timing and excessive trading or to
comply with regulatory requirements.
SHORT TERM TRADING FEES
The underlying Portfolios are authorized by SEC regulation to adopt and impose
redemption fees if a Portfolio's Board of Directors determines that such fees
are necessary to minimize or eliminate short-term transfer activity that can
reduce or dilute the value of outstanding shares issued by the Portfolio. The
Portfolio will set the parameters relating to the redemption fee and such
parameters may vary by Portfolio. If a Portfolio elects to adopt and charge
redemption fees, these fees will be passed on to the Contract Owner(s)
responsible for the short-term transfer activity generating the fee.
We will administer and collect redemption fees in connection with transfers
between the Variable Sub-Accounts and forward these fees to the Portfolio.
Please consult the Portfolio's prospectus for more complete information
regarding the fees and charges associated with each Portfolio.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a
fixed dollar amount on a regular basis from any Variable Sub-Account or any
Fixed Account Option to any of the other Variable Sub-Accounts. You may not use
the Dollar Cost Averaging Program to transfer amounts to the Fixed Account
Options. This program is available only during the Accumulation Phase.
We will not charge a transfer fee for transfers made under this Program, nor
will such transfers count against the 12 transfers you can make each Contract
Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this Program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the
performance of each Sub-Account may cause a shift in the percentage you
allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing
Program, we will automatically rebalance the Contract Value in each Variable
Sub-Account and return it to the desired percentage allocations. Money you
allocate to the Fixed Account will not be included in the rebalancing.
We will rebalance your account quarterly, semi-annually, or annually. We will
measure these periods according to your instructions. We will transfer amounts
among the Variable Sub-Accounts to achieve the percentage allocations you
specify. You can change your allocations at any time by contacting us in writing
or by telephone. The new allocation will be effective with the first rebalancing
that occurs after we receive your written or telephone request. We are not
responsible for rebalancing that occurs prior to receipt of proper notice of
your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable
Sub-accounts. You want 40% to be in the PIMCO VIT Foreign Bond (U.S.
Dollar-Hedged) - Administrative Shares Sub-Account Variable Sub-account and 60%
to be in the Fidelity VIP Index 500 - Service Class 2 Sub-Account Variable
Sub-account. Over the next 2 months the bond market does very well while the
stock market performs poorly. At the end of the first quarter, the PIMCO VIT
Foreign Bond (U.S. Dollar-Hedged) - Administrative Shares Sub-Account Variable
Sub-account now represents 50% of your holdings because of its increase in
value. If you choose to have your holdings in a Contract or Contracts rebalanced
quarterly, on the first day of the next quarter we would sell some of your units
in the PIMCO VIT Foreign Bond (U.S. Dollar-Hedged) - Administrative Shares
Sub-Account Variable Sub-account for the appropriate Contract(s) and use the
money to buy more units in the Fidelity VIP Index 500 - Service Class 2
Sub-Account Variable Sub-account so that the percentage allocations would again
be 40% and 60% respectively.
The transfers made under the program do not count towards the 12 transfers you
can make without paying a transfer fee, and are not subject to a transfer fee.
Portfolio rebalancing is consistent with maintaining your allocation of
investments among market segments, although it is accomplished by reducing your
Contract Value allocated to the Variable Sub-Accounts that performed better
during the previous time period.
44 PROSPECTUS
Expenses
As a Contract Owner, you will bear, directly or indirectly, the charges and
expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a
$40 contract maintenance charge from your assets invested in the PIMCO Money
Market Variable Sub-account ($30 if the Contract value is equal to or greater
than $2,000.) If there are insufficient assets in that Variable Sub-account, we
will deduct the balance of the charge proportionally from the other Variable
Sub-accounts. We also will deduct this charge if you withdraw your entire
Contract Value, unless your Contract qualifies for a waiver. During the Payout
Phase, we will deduct the charge proportionately from each income payment.
The charge is to compensate us for the cost of administering the Contracts and
the Variable Account. Maintenance costs include expenses we incur in billing and
collecting purchase payments; keeping records; processing death claims, cash
withdrawals, and policy changes; proxy statements; calculating Accumulation Unit
Values and income payments; and issuing reports to Contract Owners and
regulatory agencies. We cannot increase the charge. We will waive this charge
for a Contract Anniversary if, on that date:
.. your Contract Value is equal to or greater than $50,000; or
.. your entire Contract Value is allocated to the Fixed Account Options or,
after the Payout Start Date, if all income payments are fixed income
payments.
We also reserve the right to waive this charge if you own more than one Contract
and the Contracts meet certain minimum dollar amount requirements. In addition,
we reserve the right to waive this charge for all Contracts.
ADMINISTRATIVE EXPENSE CHARGE
We currently deduct an administrative expense charge daily at an annual rate of
0.10% of the average daily net assets you have invested in the Variable
Sub-accounts. We intend this charge to cover actual administrative expenses that
exceed the revenues from the contract maintenance charge. There is no necessary
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributed to that Contract. We
assess this charge each day during the Accumulation Phase and the Payout Phase.
We may increase this charge for Contracts issued in the future, but in no event
will it exceed 0.25%. We guarantee that after your Contract is issued we will
not increase this charge for your Contract.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily from the net assets you have
invested in the Variable Sub-Accounts. We assess mortality and expense risk
charges during the Accumulation and Payout Phases of the Contract, except as
noted below. The annual mortality and expense risk charge for the Contracts
without any optional benefit are as follows:
Consultant Solutions Classic 1.25%
Consultant Solutions Plus 1.45%
Consultant Solutions Elite 1.60%
Consultant Solutions Select 1.70%
The mortality and expense risk charge is for all the insurance benefits
available with your Contract (including our guarantee of annuity rates and the
death benefits), for certain expenses of the Contract, and for assuming the risk
(expense risk) that the current charges will not be sufficient in the future to
cover the cost of administering the Contract. The mortality and expense risk
charge also helps pay for the cost of the Credit Enhancement under the
Consultant Solutions Plus Contract. If the charges under the Contract are not
sufficient, then we will bear the loss. We charge an additional amount for the
optional benefits to compensate us for the additional risk that we accept by
providing these options.
You will pay additional mortality and expense risk charges if you add any
optional benefits to your Contract. The additional mortality and expense risk
charge you pay will depend upon which of the options you select:
.. MAV Death Benefit Option: The current mortality and expense risk charge for
this option is 0.20%. This charge may be increased, but will never exceed
0.50%. We guarantee that we will not increase the mortality and expense
risk charge for this option after you have added it to your Contract. We
deduct the charge for this option only during the Accumulation Phase.
.. Annual Increase Death Benefit Option: The current mortality and expense
risk charge for this option is 0.30%. This charge may be increased, but
will never exceed 0.50%. We guarantee that we will not increase the
mortality and expense risk charge for this option after you have added it
to your Contract. We deduct the charge for this option only during the
Accumulation Phase.
.. Enhanced Earnings Death Benefit Option: The current mortality and expense
risk charge for this option is:
.. 0.25% (maximum of 0.35%) if the oldest Contract Owner and Co-Annuitant, or,
if the Contract is owned by a non-living person, the
45 PROSPECTUS
oldest Annuitant, are age 70 or younger on the Rider Application Date;
.. 0.40% (maximum of 0.50%) if the oldest Contract Owner or, if older, the
Co-Annuitant, or, if the Contract is owned by a non-living person, the
oldest Annuitant, is age 71 or older and age 79 or younger on the Rider
Application Date.
.. The charges may be increased but they will never exceed the maximum charges
shown above. We guarantee that we will not increase the mortality and
expense risk charge for this option after you have added it to your
Contract. However, if your spouse elects to continue the Contract in the
event of your death and if he or she elects to continue the Enhanced
Earnings Death Benefit Option, the charge will be based on the age of the
new Contract Owner at the time the Contract is continued. Refer to the
Death Benefit Payments provision in this prospectus for more information.
We deduct the charge for this option only during the Accumulation Phase.
.. Income Protection Benefit Option: The current mortality and expense risk
charge for this option is 0.50%. This charge may be increased, but will
never exceed 0.75%. We guarantee that we will not increase the mortality
and expense risk for this option after you have added it to your Contract.
This option may be added to your Contract on the Payout Start Date. The
charge will be deducted only during the Payout Phase.
TRUERETURN ACCUMULATION BENEFIT OPTION FEE
We charge a separate annual Rider Fee for the TrueReturn Accumulation Benefit
Option. The current annual Rider Fee is 0.50% of the Benefit Base. We deduct the
Rider Fee on each Contract Anniversary during the Rider Period or until you
terminate the Option, if earlier. We reserve the right to increase the Rider Fee
to up to 1.25%. We currently charge the same Rider Fee regardless of the Rider
Period and Guarantee Option you select, however we reserve the right to charge
different fees for different Rider Periods and Guarantee Options in the future.
However, once we issue your Option, we cannot change the Rider Fee that applies
to your Contract. If you elect to exercise the Rider Trade-In Option, the new
Rider Fee will be based on the Rider Fee percentage applicable to a new
TrueReturn Accumulation Benefit Option at the time of trade-in.
The Rider Fee is deducted only from the Variable Sub-account(s) on a pro rata
basis in the proportion that your value in each Variable Sub-account bears to
your total value in all Variable Sub-accounts. Rider Fees will decrease the
number of Accumulation Units in each Variable Sub-account. If you terminate the
Option, or terminate the Contract by a total withdrawal, prior to the Rider
Maturity Date on a date other than the Contract Anniversary, we will deduct a
Rider Fee that is prorated based on the number of full months between the
Contract Anniversary immediately prior to the termination and the date of the
termination. However, if the Option is terminated due to death of the Contract
Owner or Annuitant, we will not charge a Rider Fee unless the date we receive a
Complete Request for Settlement of the Death Proceeds is also a Contract
Anniversary. If the Option is terminated on the Payout Start Date, we will not
charge a Rider Fee unless the Payout Start Date is also a Contract Anniversary.
Additionally, if you elect to exercise the Rider Trade-In Option and cancel the
Option on a date other than a Contract Anniversary, we will not deduct a Rider
Fee on the date the Option is terminated. Refer to the "TrueReturn Accumulation
Benefit Option" section of this prospectus for more information.
SPOUSAL PROTECTION BENEFIT (CO-ANNUITANT) OPTION FEE
We charge a separate annual Rider Fee for the Spousal Protection Benefit
(Co-Annuitant) Option. The current annual Rider Fee is 0.10% of the Contract
Value. This fee applies to Options added on or after May 1, 2005. For Options
added prior to May 1, 2005, there is no charge associated with the Options. We
deduct the Rider Fee on each Contract Anniversary and in certain circumstances
on the date you terminate the Option. We reserve the right to increase the
annual Rider Fee on newly issued Options to up to 0.15% of the Contract Value.
We also reserve the right to charge different Rider Fees for new Spousal
Protection Benefit (Co-Annuitant) Options we offer in the future. However, once
we issue your Option, we cannot change the Rider Fee that applies to your
Contract.
The Rider Fee is deducted only from the Variable Sub-Account(s) on a pro-rata
basis in the proportion that your value in each Variable Sub-Account bears to
your total value in all Variable Sub-Accounts. Rider Fees will decrease the
number of Accumulation Units in each Variable Sub-Account. If, at the time the
Rider Fee is deducted, the Rider Fee exceeds the total value in all Variable
Sub-Accounts, the excess of the Rider Fee over the total value in all Variable
Sub-Accounts will be waived.
The first Rider Fee will be deducted on the first Contract Anniversary following
the Rider Date. A Rider Fee will be deducted on each subsequent Contract
Anniversary while the Rider is in force.
For the first Contract Anniversary following the Rider Date, the Rider Fee is
equal to the number of full months from the Rider Date to the first Contract
Anniversary, divided by twelve, multiplied by 0.10%, with the result multiplied
by the Contract Value as of the first Contract Anniversary. For subsequent
Contract
46 PROSPECTUS
Anniversaries, the Rider Fee is equal to 0.10% multiplied by the Contract Value
as of that Contract Anniversary.
If the Rider is terminated for any reason on a Contract Anniversary, we will
deduct a full Rider Fee. If the Option is terminated on a date other than a
Contract Anniversary, we will deduct a pro rata Rider Fee, except we will not
charge any Rider Fee if the Option is terminated on the Payout Start Date or due
to the death of the Contract Owner or Annuitant. If we charge a Rider Fee on the
termination of the Option, the Rider Fee will be reduced pro rata, so that you
are only charged for the number of full months this Option was in effect.
SUREINCOME WITHDRAWAL BENEFIT OPTION FEE
We charge a separate annual Rider Fee for the SureIncome Option ("SureIncome
Option Fee" or "Rider Fee"). The current annual Rider Fee is 0.50% of the
Benefit Base. We deduct the Rider Fee on each Contract Anniversary up to and
including the date you terminate the Option. We reserve the right to increase
the Rider Fee to up to 1.25% of the Benefit Base. We also reserve the right to
charge different Rider Fees for different Withdrawal Benefit Factors we may
offer in the future. However, once we issue your SureIncome Option, we cannot
change the Rider Fee that applies to your Option. If you elect to exercise the
Rider Trade-In Option, the new Rider Fee will be based on the Rider Fee
percentage applicable to a new SureIncome Option at the time of trade-in.
The Rider Fee is deducted only from the Variable Sub-Account(s) on a pro-rata
basis in the proportion that your Contract Value in each Variable Sub-Account
bears to your total Contract Value in all Variable Sub-Accounts. Rider Fees will
decrease the number of Accumulation Units in each Variable Sub-Account. If, at
the time the Rider Fee is deducted, the Rider Fee exceeds the total Contract
Value in all Variable Sub-Accounts, the excess of the Rider Fee over the total
Contract Value in all Variable Sub-Accounts will be waived.
The first Rider Fee will be deducted on the first Contract Anniversary following
the Rider Date. A Rider Fee will be deducted on each subsequent Contract
Anniversary the SureIncome Option is in force.
For the first Contract Anniversary following the Rider Date, the Rider Fee is
equal to the number of full months from the Rider Date to the first Contract
Anniversary, divided by twelve, multiplied by 0.50%, with the result multiplied
by the Benefit Base as of the first Contract Anniversary. For subsequent
Contract Anniversaries, the Rider Fee is equal to the 0.50% multiplied by the
Benefit Base as of that Contract Anniversary.
If the SureIncome Option is terminated for any reason on a Contract Anniversary,
we will deduct a full Rider Fee. If the SureIncome Option is terminated on a
date other than a Contract Anniversary, we will deduct a pro rata Rider Fee,
except we will not charge any Rider Fee if the SureIncome Option is terminated
on the Payout Start Date or due to the death of the Contract Owner or Annuitant.
If we charge a Rider Fee on the termination of the SureIncome Option, the Rider
Fee will be reduced pro rata, so that you are only charged for the number of
full months the SureIncome Option was in effect.
TRANSFER FEE
We impose a fee upon transfers in excess of 12 during any Contract Year. The
current fee is equal to 1.00% of the dollar amount transferred. This fee may be
increased, but in no event will it exceed 2.00% of the dollar amount
transferred. In any event, the transfer fee will never be greater than $25. We
will not charge a transfer fee on transfers that are part of a Dollar Cost
Averaging Program or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
For all of the contracts except the Consultant Solutions Select, we may assess a
withdrawal charge from the purchase payment(s) you withdraw. The amount of the
charge will depend on the number of years that have elapsed since we received
the purchase payment being withdrawn. A schedule showing the withdrawal charges
applicable to each Contract appears on page 11. If you make a withdrawal before
the Payout Start Date, we will apply the withdrawal charge percentage in effect
on the date of the withdrawal, or the withdrawal charge percentage in effect on
the following day, whichever is lower.
Withdrawals also may be subject to tax penalties or income tax. You should
consult with your tax counsel or other tax advisor regarding any withdrawals.
Withdrawals from the Market Value Adjusted Fixed Account Option may be subject
to a market value adjustment. Refer to page 42 for more information on market
value adjustments.
FREE WITHDRAWAL AMOUNT
You can withdraw up to the Free Withdrawal Amount each Contract Year without
paying the withdrawal charge. The Free Withdrawal Amount for a Contract Year is
equal to 15% of all purchase payments (excluding Credit Enhancements for
Consultant Solutions Plus Contracts) that are subject to a withdrawal charge as
of the beginning of that Contract Year, plus 15% of the purchase payments added
to the Contract during the Contract Year. The withdrawal charge applicable to
Contracts owned by Charitable Remainder Trusts is described below.
Purchase payments no longer subject to a withdrawal charge will not be used to
determine the Free Withdrawal Amount for a Contract Year, nor will they be
assessed a withdrawal charge, if withdrawn. The Free Withdrawal Amount is not
available in the Payout Phase.
You may withdraw up to the Free Withdrawal Amount in each Contract Year it is
available without paying a
47 PROSPECTUS
withdrawal charge; however, the amount withdrawn may be subject to a Market
Value Adjustment or applicable taxes. If you do not withdraw the entire Free
Withdrawal Amount in a Contract Year, any remaining portion may not be carried
forward to increase the Free Withdrawal Amount in a later Contract Year.
For purposes of assessing the withdrawal charge, we will treat withdrawals as
coming from the oldest purchase payments first as follows:
1) Purchase payments that no longer are subject to withdrawal charges;
2) Free Withdrawal Amount (if available);
3) Remaining purchase payments subject to withdrawal charges, beginning with the
oldest purchase payment;
4) Any earnings not previously withdrawn.
However, for federal income tax purposes, earnings are considered to come out
first, which means that you will pay taxes on the earnings portion of your
withdrawal.
If the Contract Owner is a Charitable Remainder Trust, the Free Withdrawal
Amount in a Contract Year is equal to the greater of:
.. The Free Withdrawal Amount described above; or
.. Earnings as of the beginning of the Contract Year that have not been
previously withdrawn.
For purposes of assessing the withdrawal charge for a Charitable Remainder
Trust-Owned Contract, we will treat withdrawals as coming from the earnings
first and then the oldest purchase payments as follows:
1) Earnings not previously withdrawn;
2) Purchase payments that are no longer subject to withdrawal charges;
3) Free Withdrawal Amount in excess of earnings;
4) Purchase payments subject to withdrawal charges, beginning with the oldest
purchase payment.
If you have selected the Consultant Solutions Select Contract, there are no
withdrawal charges applicable and, therefore, no Free Withdrawal Amount. Amounts
withdrawn may be subject to a Market Value Adjustment or applicable taxes.
All Contracts
We do not apply a withdrawal charge in the following situations:
.. the death of the Contract Owner or Annuitant (unless the Settlement Value
is used);
.. withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; or
.. withdrawals that qualify for one of the waivers described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts, and to help defray the cost of the Credit Enhancement for the
Consultant Solutions Plus Contracts. To the extent that the withdrawal charge
does not cover all sales commissions and other promotional or distribution
expenses, or the cost of the Credit Enhancement, we may use any of our corporate
assets, including potential profit which may arise from the mortality and
expense risk charge or any other charges or fee described above, to make up any
difference.
Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may be subject to an additional 10%
federal tax penalty. You should consult your own tax counsel or other tax
advisers regarding any withdrawals.
Confinement Waiver. We will waive the withdrawal charge on all withdrawals taken
under your Contract if the following conditions are satisfied:
1. you, or, if the Contract Owner is not a living person, the Annuitant, are
first confined to a long term care facility or a hospital for at least 90
consecutive days. You or the Annuitant must first enter the long term care
facility or hospital at least 30 days after the Issue Date,
2. we receive your request for withdrawal and written proof of the stay no later
than 90 days following the end of your or the Annuitant's stay at the long term
care facility or hospital, and
3. Due proof of confinement is received by us prior to or at the time of, a
request for a withdrawal.
"Due Proof" includes, but is not limited to, a letter signed by a physician
stating the dates the Owner or Annuitant was confined, the name and location of
the Long Term Care Facility or Hospital, a statement that the confinement was
medically necessary, and, if released, the date the Owner or Annuitant was
released from the Long Term Care Facility or Hospital.
Terminal Illness Waiver. We will waive the withdrawal charge on all withdrawals
under your Contract if:
1. you or the Annuitant, if the Contract Owner is not a living person, are
diagnosed by a physician as having a terminal illness (as defined in the
Contract) at least 30 days after the Issue Date, and
2. you provide Due Proof of diagnosis to us before or at the time you request
the withdrawal.
"Due Proof" includes, but is not limited to, a letter signed by a physician
stating that the Owner or
48 PROSPECTUS
Annuitant has a Terminal Illness and the date the Terminal Illness was first
diagnosed.
Unemployment Waiver. We will waive the withdrawal charge on one partial or a
full withdrawal taken under your Contract, if you meet the following
requirements:
1. you or the Annuitant, if the Contract Owner is not a living person, become
unemployed at least one year after the Issue Date,
2. you or the Annuitant receive unemployment compensation (as defined in the
Contract) for at least 30 days as a result of that unemployment, and
3. you or the Annuitant claim this benefit within 180 days of your or the
Annuitant's initial receipt of unemployment compensation, and
we receive due proof that you are or have been unemployed and that unemployment
compensation has been received for at least thirty consecutive days prior to or
at the time of the request for withdrawal.
"Unemployment Compensation" means unemployment compensation received from a unit
of state or federal government in the U.S. "Due Proof" includes, but is not
limited to, a legible photocopy of an unemployment compensation payment that
meets the above described criteria with regard to dates and a signed letter from
you stating that you or the Annuitant meet the above described criteria.
You may exercise this benefit once over the term of the Contract. Amounts
withdrawn may be subject to Market Value Adjustments.
These waivers do not apply under the Consultant Solutions Select.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waivers. You should
consult your Contract for further details on these variations. Also, even if you
do not pay a withdrawal charge because of these waivers, a Market Value
Adjustment may apply and you still may be required to pay taxes or tax penalties
on the amount withdrawn. You should consult your tax advisor to determine the
effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs including payment upon death.
We may some time in the future discontinue this practice and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from each
investment alternative in the proportion that the Contract Value in the
investment alternative bears to the total Contract Value.
DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however,
we may establish a provision for taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any taxes we incur as a result of the operation of the
Variable Account, whether or not we previously made a provision for taxes and
whether or not it was sufficient. Our status under the Internal Revenue Code is
briefly described in the "Taxes" section of this prospectus.
OTHER EXPENSES
Each Portfolio deducts management fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Sub-accounts. These fees and expenses are described in the
prospectuses for the Portfolios. For a summary of Portfolio annual expenses, see
page 11. We may receive compensation from the investment advisers,
administrators or distributors, or their affiliates, of the Portfolios in
connection with the administrative services we provide to the Portfolios.
Access to Your Money
WITHDRAWALS
You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date. Withdrawals also are available under limited circumstances on
or after the Payout Start Date. See "Income Plans" on page 52.
The amount payable upon withdrawal is the Contract Value (or portion thereof)
next computed after we receive the request for a withdrawal at our home office,
adjusted by any applicable Market Value Adjustment, less any applicable
withdrawal charges, income tax withholding, penalty tax, contract maintenance
charge, Rider Fee, and any premium taxes. We will pay withdrawals from the
Variable Account within 7 days of receipt of the request, subject to
postponement in certain circumstances. You can withdraw money from the
49 PROSPECTUS
Variable Account or the Fixed Account Option(s) available under your Contract.
To complete a partial withdrawal from the Variable Account, we will cancel
Accumulation Units in an amount equal to the withdrawal and any applicable
charges, fees and taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is named, then the withdrawal request is incomplete and
cannot be honored.
In general, you must withdraw at least $50 at a time.
Withdrawals from the Standard Fixed Account Option may be subject to a
restriction. See "Standard Fixed Account Options" on page 41.
Withdrawals taken prior to the Payout Start Date are generally considered to
come from the earnings in the Contract first. If the Contract is tax-qualified,
generally all withdrawals are treated as distributions of earnings. Withdrawals
of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may
be subject to an additional 10% federal penalty tax. If any withdrawal reduces
your Contract Value to less than $1,000, we will treat the request as a
withdrawal of the entire Contract Value, unless the SureIncome Withdrawal
Benefit Option is currently attached to your Contract. If you request a total
withdrawal, we may require that you return your Contract to us. Your Contract
will terminate if you withdraw all of your Contract Value, subject to certain
exceptions if the SureIncomeWithdrawal Benefit Option is currently attached to
your Contract. See "SureIncome Withdrawal Benefit Option" for more details. We
will, however, ask you to confirm your withdrawal request before terminating
your Contract. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges and taxes.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted,
2. An emergency exists as defined by the SEC, or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Option(s)
available under your Contract for up to 6 months or shorter period if required
by law. If we delay payment or transfer for 30 days or more, we will pay
interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. Please consult your sales representative or call us at 800-457-7617 for
more information.
Depending on fluctuations in the value of the Variable Sub-Accounts and the
value of the Fixed Account Options, systematic withdrawals may reduce or even
exhaust the Contract Value. Income taxes may apply to systematic withdrawals.
Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At
our discretion, we may modify or suspend the Systematic Withdrawal Program and
charge a processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to
less than $1,000, we may treat it as a request to withdraw your entire Contract
Value, unless the SureIncome Withdrawal Benefit Option is currently attached to
your Contract. Your Contract will terminate if you withdraw all of your Contract
Value. We will, however, ask you to confirm your withdrawal request before
terminating your Contract. If we terminate your Contract, we will distribute to
you its Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges and applicable taxes.
Income Payments
PAYOUT START DATE
The Payout Start Date is the day that we apply your Contract Value, adjusted by
any applicable Market Value Adjustment and less applicable taxes, to an Income
Plan. The first income payment may occur no sooner than 30 days after the Issue
Date. The Payout Start Date must occur on or before the later of:
.. the youngest Annuitant's 99th birthday, or
.. the 10th Contract Anniversary.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An "Income Plan" is a series of payments made on a scheduled basis to you or to
another person designated by you. You may select more than one Income Plan. If
you choose more than one Income Plan, you must specify what proportions of your
Contract Value, adjusted by any Market Value Adjustment and less any applicable
taxes, should be allocated to each such Income
50 PROSPECTUS
Plan. For tax reporting purposes, your cost basis and any gain on the Contract
will be allocated proportionally to each Income Plan you select based on the
proportion of your Contract Value applied to each such Income Plan. We reserve
the right to limit the number of Income Plans that you may select. If you choose
to add the Income Protection Benefit Option, certain restrictions may apply as
described under "Income Protection Benefit Option," below.
If you do not select an Income Plan, we will make income payments in accordance
with Income Plan 1 with a Guaranteed Payment Period of 10 years. On the Payout
Start Date, the portion of the Contract Value in any Fixed Account Option,
adjusted by any applicable Market Value Adjustment and less any applicable
taxes, will be used to derive fixed income payments; the portion of the Contract
Value in any Variable Sub-account, less any applicable taxes, will be used to
derive variable income payments.
If any Contract Owner dies during the Payout Phase, the new Contract Owner will
be the surviving Contract Owner. If there is no surviving Contract Owner, the
new Contract Owner will be the Beneficiary(ies) as described in the
"Beneficiary" section of this prospectus. Any remaining income payments will be
paid to the new Contract Owner as scheduled. Income payments to Beneficiaries
may be subject to restrictions established by the Contract Owner. After the
Payout Start Date, you may not make withdrawals (except as described below) or
change your choice of Income Plan.
Currently seven Income Plans are available. Depending on the Income Plan(s) you
choose, you may receive:
.. fixed income payments;
.. variable income payments; or
.. a combination of the two.
Partial annuitizations are not allowed. Your total Contract Value, adjusted by
any applicable Market Value Adjustment, and less any applicable taxes, must be
applied to your Income Plan(s) on the Payout Start Date.
A portion of each payment will be considered taxable and the remaining portion
will be a non-taxable return of your investment in the Contract, which is also
called the "basis". Once the basis in the Contract is depleted, all remaining
payments will be fully taxable. If the Contract is tax-qualified, generally, all
payments will be fully taxable. Taxable payments taken prior to age 59 1/2 may
be subject to an additional 10% federal tax penalty.
The seven Income Plans are:
Income Plan 1 - Life Income with Guaranteed Number of Payments. Under this plan,
we make periodic income payments for at least as long as the Annuitant lives. If
the Annuitant dies in the Payout Phase, we will continue to pay income payments
until the guaranteed number of payments has been paid. The number of months
guaranteed ("Guaranteed Payment Period") may be 0 months, or range from 60 to
360 months. If the Annuitant is age 90 or older as of the Payout Start Date, the
Guaranteed Payment Period may range from 60 to 360 months.
Income Plan 2 - Joint and Survivor Life Income with Guaranteed Number of
Payments. Under this plan, we make periodic income payments for at least as long
as either the Annuitant or the joint Annuitant, named at the time the Income
Plan was selected, lives. If both the Annuitant and joint Annuitant die in the
Payout Phase, we will continue to pay the income payments until the guaranteed
number of payments has been paid. The Guaranteed Payment Period may be 0 months,
or range from 60 to 360 months. If either the Annuitant or joint Annuitant is
age 90 or older as of the Payout Start Date, the Guaranteed Payment Period may
range from 60 to 360 months. You may elect a reduced survivor plan of 50%, 66%
or 75% of the payment amount. If you do not elect a reduced survivor amount, the
payments will remain at 100%. If you elect a reduced survivor payment plan, the
amount of each income payment initially will be higher but a reduction will take
place at the later of 1) the death of an Annuitant; or 2) at the end of the
guaranteed payment period.
Income Plan 3 - Guaranteed Number of Payments. Under this plan, we make periodic
income payments for the period you have chosen. These payments do not depend on
the Annuitant's life. The shortest number of months guaranteed is 60 (120 if the
Payout Start Date occurs prior to the third Contract Anniversary). The longest
number of months guaranteed is 360 or the number of months between the Payout
Start Date and the date that the Annuitant reaches age 100, if greater. In no
event may the number of months guaranteed exceed 600. We will deduct the
mortality and expense risk charge from the assets of the Variable Sub-account
supporting this Income Plan even though we may not bear any mortality risk. You
may make withdrawals, change the length of the guaranteed payment period, or
change the frequency of income payments under Income Plan 3. See "Modifying
Payments" and "Payout Withdrawals" below for more details.
Income Plan 4 - Life Income with Cash Refund. Under this plan, we make periodic
income payments until the death of the Annuitant. If the death of the Annuitant
occurs before the total amount applied to an Income Plan is paid out, we will
pay a lump sum payment of the remaining amount. Payments under this plan are
available only as fixed income payments.
Income Plan 5 - Joint Life Income with Cash Refund. Under this plan, we make
periodic income payments until the deaths of both the Annuitant and joint
Annuitant. If the deaths of both the Annuitant and joint Annuitant occur before
the total amount applied to an Income Plan is paid out, we will pay a lump sum
51 PROSPECTUS
payment of the remaining amount. Currently, a reduced survivor plan is not
available. Payments under this plan are available only as fixed income payments.
Income Plan 6 - Life Income with Installment Refund. Under this plan, we make
periodic income payments until the later of (1) the death of the Annuitant, or
(2) the total amount paid out under the annuity is equal to the total amount
applied to the Income Plan. If the death of the Annuitant occurs before the
total amount applied to an Income Plan is paid out, we will continue to make
payments in the same manner until any remaining payments are paid out. Payments
under this plan are available only as fixed income payments.
Income Plan 7 - Joint Life Income with Installment Refund. Under this plan, we
make periodic income payments until the later of (1) the deaths of both the
Annuitant and joint Annuitant, or (2) the total amount paid out under the
annuity is equal to the total amount applied to the Income Plan. If the deaths
of both the Annuitant and joint Annuitant occur before the total amount applied
to an Income Plan is paid out, we will continue to make payments in the same
manner until any remaining payments are paid out. Currently, a reduced survivor
plan is not available. Payments under this plan are available only as fixed
income payments.
If you choose an Income Plan with payments that continue for the life of the
Annuitant or joint Annuitant, we may require proof of age and sex of the
Annuitant or joint Annuitant before starting income payments, and proof that the
Annuitant or joint Annuitant is alive before we make each payment. Please note
that under Income Plans 1 and 2, if you do not select a Guaranteed Payment
Period, it is possible that the payee could receive only one income payment if
the Annuitant and any joint Annuitant both die before the second income payment,
or only two income payments if they die before the third income payment, and so
on.
The length of any Guaranteed Payment Period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer Guarantee Payment Periods result in lower income payments, all
other things being equal. For example, if you choose an Income Plan with
payments that depend on the life of the Annuitant but with no guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a specified Guaranteed Payment Period.
Modifying Payments
After the Payout Start Date, you may make the following changes under Income
Plan 3:
.. You may request to modify the length of the Guaranteed Payment Period.
Currently, we allow you to make this change once each Contract Year. We
reserve the right to change this practice at any time without prior notice.
If you elect to change the length of the Guaranteed Payment Period, the new
Guaranteed Payment Period must be within the original minimum and maximum
period you would have been permitted to select on the Payout Start Date.
However, the maximum payment period permitted will be shortened by the
period elapsed since the original Guaranteed Payment Period began. If you
change the length of your Guaranteed Payment Period, we will compute the
present value of your remaining payments, using the same assumptions we
would use if you were terminating the income payments, as described in
Payout Withdrawal. We will then adjust the remaining payments to equal what
that value would support based on those same assumptions and based on the
revised Guaranteed Payment Period.
.. You may request to change the frequency of your payments. We currently
allow you to make this change once each Contract Year. We reserve the right
to change this practice at any time without prior notice. Changes to either
the frequency of payments or length of the Guaranteed Payment Period will
result in a change to the payment amount and may change the amount of each
payment that is taxable to you.
Modifying payments of this Contract may not be allowed under qualified plans. In
order to satisfy required minimum distributions ("RMD") under current Treasury
regulations, once income payments have begun over a Guaranteed Payment Period,
the Guaranteed Payment Period cannot be changed even if the new period is
shorter than the maximum permitted. Please consult with a competent tax advisor
prior to making a request to modify payments if your Contract is subject to RMD
requirements.
Any change to either the frequency of payments or length of a Guaranteed Payment
Period will take effect on the next payment date after we accept the requested
change.
Payout Withdrawal
You may terminate all or a portion of the income payments being made under
Income Plan 3 at any time and withdraw their present value ("Withdrawal Value"),
subject to a Payout Withdrawal Charge, by requesting a withdrawal ("Payout
Withdrawal") in writing. For variable income payments, the withdrawal value is
equal to the present value of the variable income payments being terminated,
calculated using a discount rate equal to the assumed investment rate that was
used in determining the initial variable payment. For fixed income payments, the
withdrawal value is equal to the present value of the fixed income payments
being terminated, calculated using a discount rate equal to the applicable
current interest rate (this may be the initial interest rate in some states.)
The applicable current
52 PROSPECTUS
interest rate is the rate we are using on the date we receive your Payout
Withdrawal request to determine income payments for a new annuitization with a
payment period equal to the remaining payment period of the income payments
being terminated.
A Payout Withdrawal must be a least $50. If any Payout Withdrawal reduces the
value of the remaining income payments to an amount not sufficient to provide an
initial payment of at least $20, we reserve the right to terminate the Contract
and pay you the present value of the remaining income payments in a lump sum. If
you withdraw the entire value of the remaining income payments, the Contract
will terminate.
You must specify the Investment Alternative(s) from which you wish to make a
Payout Withdrawal. If you withdraw a portion of the value of your remaining
income payments, the payment period will remain unchanged and your remaining
payment amounts will be reduced proportionately.
Payout Withdrawal Charge
To determine the Payout Withdrawal Charge, we assume that purchase payments are
withdrawn first, beginning with the oldest payment. When an amount equal to all
purchase payments have been withdrawn, additional withdrawals will not be
assessed a Payout Withdrawal Charge.
Payout Withdrawals will be subject to a Payout Withdrawal Charge for each
Contract as follows:
Number of Complete Years Since We Received the Purchase
Payment Being Withdrawn/Applicable Charge:
Contract: 0 1 2 3 4 5 6 7 8+
- ---------------------------- --- --- --- --- --- --- --- --- ---
Consultant Solutions Classic 7% 7% 6% 5% 4% 3% 2% 0% 0%
Consultant Solutions Plus 8.5% 8.5% 8.5% 7.5% 6.5% 5.5% 4% 2.5% 0%
Consultant Solutions Elite 7% 6% 5% 0% 0% 0% 0% 0% 0%
Consultant Solutions Select None
Additional Information. We may make other Income Plans available. You may obtain
information about them by writing or calling us. On the Payout Start Date, you
must specify the portion of the Contract Value to be applied to variable income
payments and the portion to be applied to fixed income payments. For the portion
of your Contract Value to be applied to variable income payments, you must also
specify the Variable Sub-Accounts on which to base the variable income payments
as well as the allocation among those Variable Sub-Accounts. If you do not tell
us how to allocate your Contract Value among fixed and variable income payments,
we will apply your Contract Value in the Variable Account to variable income
payments and your Contract Value in the Fixed Account to fixed income payments.
We will apply your Contract Value, adjusted by any applicable Market Value
Adjustment, less applicable taxes to your Income Plan(s) on the Payout Start
Date. We can make income payments in monthly, quarterly, semi-annual or annual
installments, as you select. If the Contract Value is less than $2,000 or not
enough to provide an initial payment of at least $20, and state law permits, we
may:
.. terminate the Contract and pay you the Contract Value, adjusted by any
applicable Market Value Adjustment and less any applicable taxes, in a lump
sum instead of the periodic payments you have chosen, or
.. reduce the frequency of your payments so that each payment will be at least
$20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Sub-accounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) company mortality experience or (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments, which may
be more or less than your total purchase payments because (a) variable income
payments vary with the investment results of the underlying Portfolios; and (b)
under some of the Income Plans, we make income payments only so long as an
Annuitant is alive or any applicable Guaranteed Payment Period has not yet
expired.
In calculating the amount of the periodic payments in the annuity tables in the
Contracts, we used an assumed investment rate ("AIR", also known as benchmark
rate) of 3%. Currently, you may choose either a 6%, 5%, or 3% AIR per year. If
you select the Income Protection Benefit Option, however, the 3% AIR must apply.
The 6% and 5% AIR may not be available in all states (check with your
representative for availability). Currently, if you do not choose one, the 3%
AIR will automatically apply. We reserve the right to offer other assumed
investment rates. If the actual net investment return of the Variable
Sub-accounts you choose is less than the AIR, then the dollar amount of your
variable income payments will decrease. The dollar amount of your variable
income payments will increase, however, if the actual net investment return
exceeds the AIR. The dollar amount of the variable income payments stays level
if the
53 PROSPECTUS
net investment return equals the AIR. With a higher AIR, your initial income
payment will be larger than with a lower AIR. While income payments continue to
be made, however, this disparity will become smaller and, if the payments have
continued long enough, each payment will be smaller than if you had initially
chosen a lower AIR.
Please refer to the Statement of Additional Information for more detailed
information as to how we determine variable income payments.
You may also elect a variable income payment stream consisting of level monthly,
quarterly or semi-annual payments. If you elect to receive level monthly,
quarterly or semi-annual payments, the payments must be recalculated annually.
You may only elect to receive level payments at or before the Payout Start Date.
If you have elected level payments for an Income Plan(s), you may not make any
variable to fixed payment transfers within such Income Plan(s). We will
determine the amount of each annual payment as described above, place this
amount in our general account, and then distribute it in level monthly,
quarterly or semi-annual payments. The sum of the level payments will exceed the
annual calculated amount because of an interest rate factor we use, which may
vary from year to year, but will not be less than 2% per year. If the Annuitant
dies while you are receiving level payments, you will not be entitled to receive
any remaining level payments for that year (unless the Annuitant dies before the
end of the Guaranteed Payment Period). For example, if you have selected Income
Plan 1 with no Guaranteed Payment Period and the Annuitant dies during the year,
the Beneficiary will not be entitled to receive the remaining level payments for
that year.
INCOME PROTECTION BENEFIT OPTION
We offer an Income Protection Benefit Option, which may be added to your
Contract on the Payout Start Date for an additional mortality and expense risk
charge if you have selected variable income payments subject to the following
conditions:
.. The Annuitant and joint Annuitant, if applicable, must be age 75 or younger
on the Payout Start Date.
.. You must choose Income Plan 1 or 2 and the Guaranteed Payment Period must
be for at least 120 months, unless the Internal Revenue Service requires a
different payment period.
.. You may apply the Income Protection Benefit Option to more than one Income
Plan.
.. The AIR must be 3% for the Income Plan(s) that you wish to apply this
benefit to.
.. You may only add the Income Protection Benefit Option on the Payout Start
Date and, once added, the option cannot be cancelled.
.. You may not add the Income Protection Benefit Option without our prior
approval if your Contract Value is greater than $1,000,000 at the time you
choose to add the Income Protection Benefit Option.
.. You may not convert variable income payments to fixed income payments.
If you select the Income Protection Benefit Option, we guarantee that your
variable income payments under each of the Income Plans to which the option is
applied will never be less that 85% of the initial variable amount income value
("Income Protection Benefit"), as calculated on the Payout Start Date under such
Income Plans, unless you have elected a reduced survivor payment plan under
Income Plan 2. If you have elected a reduced survivor payment plan, we guarantee
that your variable income payments to which the option is applied will never be
less than 85% of the initial variable amount income value prior to the later of
1) the death of an Annuitant; or 2) the end of the guaranteed payment period. On
or after the later of these events, we guarantee that your variable income
payments will never be less than 85% of the initial variable amount income value
multiplied by the percentage you elected for your reduced survivor plan. See
Appendix C for numerical examples that illustrate how the Income Protection
Benefit is calculated.
If you add the Income Protection Benefit Option to your Contract, the mortality
and expense risk charge during the Payout Phase will be increased. Currently,
the charge for this option is 0.50%. We may change the amount we charge, but it
will not exceed 0.75%. Once the option is issued, we will not increase what we
charge you for the benefit.
Investment Requirements.
If you add the Income Protection Benefit Option to your Contract, you must
adhere to certain requirements related to the investment alternatives in which
you may invest during the Payout Phase with respect to the assets supporting the
variable income payments to which the Income Protection Benefit Option applies.
These requirements may include, but are not limited to, maximum investment
limits on certain Variable Sub-accounts, exclusion of certain Variable
Sub-accounts, required minimum allocations to certain Variable Sub-accounts, and
restrictions on transfers to or from certain investment alternatives. We may
also require that you use the Automatic Portfolio Rebalancing Program. We may
change the specific requirements that are applicable at any time in our sole
discretion. Any changes we make will not apply to the Income Protection Benefit
Option if it was added to your Contract prior to the implementation date of the
change, except for changes made due to a change in Variable Sub-accounts
available under the Contract.
54 PROSPECTUS
When you add the Income Protection Benefit Option to your Contract, you must
allocate to a model portfolio option the entire portion of your Contract Value
allocated to the Variable Sub-accounts.
We currently offer one Model Portfolio Option; however, we may add more Model
Portfolio Options in the future. Transfers made for purposes of adhering to your
Model Portfolio Option will not count towards the number of free transfers you
may make each Contract Year.
The following table summarizes the Model Portfolio Option currently available
for use with the Income Protection Benefit Option:
*Model Portfolio Option 1
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program
to automatically rebalance your Contract Value in each Variable Sub-account and
return it to the percentage allocations for your Model Portfolio Option, using
the percentage allocations as of your most recent instructions.
Model Portfolio Option 1
You must allocate a certain percentage of the portion of your Contract Value
allocated to the Variable Sub-accounts into each of three asset categories. You
may choose the Variable Sub-accounts in which you want to invest, provided you
maintain the percentage allocation requirements for each category. You may also
make transfers among the Variable Sub-accounts within each category at any time,
provided you maintain the percentage allocation requirements for each category.
However, each transfer you make will count against the 12 transfers you can make
each Contract Year without paying a transfer fee.
The following table describes the percentage allocation requirements for Model
Portfolio Options 1 and Variable Sub-accounts available under each category:
Model Portfolio Option 1
20% Category A 50% Category B 30% Category C
CATEGORY A
Fidelity VIP Money Market - Service Class 2 Sub-Account PIMCO VIT Money Market -
Administrative Shares Sub-Account
Model Portfolio Option 1
CATEGORY B
Fidelity VIP Investment Grade Bond - Service Class 2 Sub-Account Legg Mason
Partners Variable Global High Yield Bond - Class II Sub-Account MFS High Income
- - Service Class Sub-Account PIMCO VIT Foreign Bond (U.S. Dollar-Hedged) -
Administrative Shares Sub-Account PIMCO VIT Real Return - Administrative Shares
Sub-Account PIMCO VIT Total Return - Administrative Shares Sub-Account
UIF U.S. Real Estate, Class II Sub-Account/(1)(4)/
Van Kampen LIT Government, Class II Sub-Account
CATEGORY C
AIM V.I. Basic Value - Series II Sub-Account AIM V.I. Core Equity - Series II
Sub-Account AIM V.I. Mid Cap Core Equity - Series II Sub-Account Fidelity VIP
Contrafund(R) - Service Class 2 Sub-Account Fidelity VIP Equity-Income - Service
Class 2 Sub-Account Fidelity VIP Index 500 - Service Class 2 Sub-Account
Fidelity VIP Overseas - Service Class 2 Sub-Account Fidelity VIP Asset
Manager(SM) - Service Class 2 Sub-Account
Janus Aspen Series International Growth - Service Shares Sub-Account
Janus Aspen Series Forty - Service Shares Sub-Account Janus Aspen Series Mid Cap
Value - Service Shares Sub-Account Janus Aspen Series INTECH Risk-Managed Core -
Service Shares Sub-Account Janus Aspen Series Balanced - Service Shares
Sub-Account Janus Aspen Series Small Company Value - Service Shares Sub-Account
Legg Mason Partners Variable All Cap - Class II Sub-Account/(2)/ Legg Mason
Partners Variable Investors - Class II Sub-Account/(3)/ MFS Investors Trust -
Service Class Sub-Account MFS Investors Growth Stock - Service Class Sub-Account
MFS Total Return - Service Class Sub-Account MFS Value - Service Class
Sub-Account Oppenheimer MidCap/VA - Service Shares Sub-Account Oppenheimer Main
Street Small Cap(R)/VA - Service Shares Sub-Account
Premier VIT OpCap Balanced Sub-Account
Rydex VT Sector Rotation Sub-Account
T. Rowe Price Equity Income - II Sub-Account T. Rowe Price Blue Chip Growth - II
Sub-Account Van Eck Worldwide Absolute Return Sub-Account Van Kampen LIT Growth
and Income, Class II Sub-Account
(1) Morgan Stanley Investment Management Inc., the investment advisor to the
UIF Portfolios, does business in certain instances as Van Kampen.
(2) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I.
(3) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I.
(4) Effective May 1, 2008: the Van Kampen UIF Equity Growth Portfolio changed
its name to the UIF Capital Growth Portfolio and the Van Kampen UIF U.S.
Real Estate Portfolio changed its name to the UIF U.S. Real Estate
Portfolio.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for
the duration of the Income Plan. The guaranteed income payment amounts will
change if the frequency of payments or the length of the payment period changes.
We calculate the fixed income payments by:
.. adjusting the portion of the Contract Value in any Fixed Account Option on
the Payout Start Date by any applicable Market Value Adjustment;
.. deducting any applicable taxes; and
.. applying the resulting amount to the greater of: (a) the appropriate income
payment factor for the selected Income Plan from the Income Payment Table
in your Contract; or (b) such other income payment factor as we are
offering on the Payout Start Date.
We may defer your request to make a withdrawal from fixed income payments for a
period of up to 6 months or
55 PROSPECTUS
whatever shorter time state law may require. If we defer payments for 30 days or
more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is used in connection with an employment-related retirement or
benefit plan and we do not offer unisex annuity tables in your state, you should
consult with legal counsel as to whether the Contract is appropriate.
Death Benefits
DEATH PROCEEDS
Under certain conditions, described below, we will pay a death settlement
("Death Proceeds") for this Contract on the death of the Contract Owner,
Annuitant, or Co-Annuitant if the death occurs prior to the Payout Start Date.
The Death Proceeds will not exceed the Contract Value plus $1 million. If the
Owner or Annuitant dies after the Payout Start Date, we will pay remaining
income payments as described in the "Payout Phase" section of your Contract. See
"Income Payments" on page 57 for more information.
We will determine the value of the Death Proceeds as of the end of the Valuation
Date during which we receive the first Complete Request for Settlement (the next
Valuation Date, if we receive the request after 3:00 p.m. Central Time). In
order to be considered a "Complete Request for Settlement," a claim for
distribution of the Death Proceeds must include "Due Proof of Death" in any of
the following forms of documentation:
.. A certified copy of the death certificate;
.. A certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or
.. Any other proof acceptable to us.
"Death Proceeds" are determined based on when we receive a Complete Request for
Settlement:
.. If we receive a Complete Request for Settlement within 180 days of the
death of the Contract Owner, Annuitant, or Co-Annuitant, as applicable, the
Death Proceeds is equal to the "Death Benefit."
.. If we receive a Complete Request for Settlement more than 180 days after
the death of the Contract Owner, Annuitant, or Co-Annuitant, as applicable,
the Death Proceeds are equal to the greater of the Contract Value or
Settlement Value. We reserve the right to waive or extend, in a
nondiscriminatory manner, the 180-day period in which the Death Proceeds
will equal the Death Benefit.
Where there are multiple Beneficiaries, we will only value the Death Proceeds at
the time the first Beneficiary submits the necessary documentation in good
order. Any Death Proceeds amounts attributable to any Beneficiary which remain
in the Variable Sub-accounts are subject to investment risk.
DEATH BENEFIT OPTIONS
In addition to the ROP Death Benefit included in your Contract, we offer the
following death benefit options which may be added to your Contract:
.. MAV Death Benefit Option
.. Annual Increase Death Benefit Option
.. Enhanced Earnings Death Benefit Option
The amount of the Death Benefit depends on which death benefit option(s) you
select. Not all death benefit options are available in all states.
You may select any combination of death benefit options on the issue date of
your Contract or at a later date, subject to state availability and issue age
restrictions. You may not add any of the death benefit options to your Contract
after Contract issue without our prior approval if your Contract Value is
greater than $1,000,000 at the time you want to add an option.
The "Death Benefit" is equal to the Enhanced Earnings Death Benefit (if
selected) plus the greatest of:
.. The Contract Value;
.. The Settlement Value;
.. The ROP Death Benefit;
.. The MAV Death Benefit Option (if selected); or
.. The Annual Increase Death Benefit Option (if selected).
The "Settlement Value" is the amount that would be paid in the event of a full
withdrawal of the Contract Value.
The "ROP Death Benefit" is equal to the sum of all purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts), reduced by a proportional
withdrawal adjustment for each withdrawal. The withdrawal adjustment is equal to
the withdrawal amount divided by the Contract Value immediately prior to the
withdrawal, and the result is multiplied by:
The sum of all purchase payments (and Credit Enhancements for Consultant
Solutions Plus
56 PROSPECTUS
Contracts) made prior to the withdrawal, less any prior withdrawal adjustments.
Maximum Anniversary Value Death Benefit Option.
The MAV Death Benefit Option is available only if the oldest Contract Owner and
Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest
Annuitant, are age 79 or younger on the Rider Application Date. There is an
additional mortality and expense risk charge for this death benefit option,
currently equal to 0.20%. We may change what we charge for this death benefit
option, but it will never exceed 0.50%. Once added to your Contract, we
guarantee that we will not increase the mortality and expense risk charge you
pay for this death benefit option.
On the date we issue the rider for this benefit ("Rider Date"), the MAV Death
Benefit is equal to the Contract Value. After the Rider Date and prior to the
date we determine the Death Proceeds (see "Death Proceeds" on page 58), the MAV
Death Benefit is recalculated each time a purchase payment or withdrawal is made
as well as on each Contract Anniversary as follows:
.. Each time a purchase payment is made, the MAV Death Benefit is increased by
the amount of the purchase payment (and Credit Enhancement for Consultant
Solutions Plus Contracts).
.. Each time a withdrawal is made, the MAV Death Benefit is reduced by a
proportional withdrawal adjustment, defined as the withdrawal amount
divided by the Contract Value immediately prior to the withdrawal, and the
result multiplied by the most recently calculated MAV Death Benefit.
.. On each Contract Anniversary until the first Contract Anniversary following
the 80th birthday of the oldest Contract Owner or Co-Annuitant, whichever
occurs first, or, if the Contract is owned by a non-living person, the
oldest Annuitant, the MAV Death Benefit is recalculated as the greater of
the Contract Value on that date or the most recently calculated MAV Death
Benefit.
If no purchase payments or withdrawals are made after the Rider Date, the MAV
Death Benefit will be equal to the greatest of the Contract Value on the Rider
Date and the Contract Values on each subsequent Contract Anniversary after the
Rider Date through the first Contract Anniversary following the 80th birthday of
the oldest Contract Owner or Co-Annuitant, whichever occurs first, or, if the
Contract is owned by a non-living person, the oldest Annuitant, but before the
date we determine the Death Proceeds. If, upon death of the Contract Owner, the
Contract is continued under Option D as described on page 62, and if the New
Contract Owner is age 80 or younger on the date we determine the Death Proceeds,
then the MAV Death Benefit Option will continue. The MAV Death Benefit will
continue to be recalculated for purchase payments (and Credit Enhancements for
Consultant Solutions Plus Contracts), withdrawals, and on each Contract
Anniversary after the date we determine the Death Proceeds until the earlier of:
.. The first Contract Anniversary following the 80th birthday of either the
oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the
Contract is owned by a non-living person, the oldest Annuitant. (After the
80th birthday of either the oldest Contract Owner or the Co-Annuitant,
whichever is earlier, or, if the Contract is owned by a non-living person,
the oldest Annuitant, the MAV Death Benefit will be recalculated only for
purchase payments (and Credit Enhancements for Consultant Solutions Plus
Contracts) and withdrawals); or
.. The date we next determine the Death Proceeds.
Annual Increase Death Benefit Option.
The Annual Increase Death Benefit Option is only available if the oldest
Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living
person, the oldest Annuitant, are age 79 or younger on the Rider Application
Date. There is an additional mortality and expense risk charge for this death
benefit option, currently equal to 0.30%. We may change what we charge for this
death benefit option, but it will never exceed 0.50%. Once added to your
Contract, we guarantee that we will not increase the mortality and expense risk
charge you pay for this death benefit option.
On the date we issue the rider for this benefit ("Rider Date"), the Annual
Increase Death Benefit is equal to the Contract Value. The Annual Increase Death
Benefit, plus purchase payments (and Credit Enhancements for Consultant
Solutions Plus Contracts) made after the Rider Date and less withdrawal
adjustments for withdrawals made after the Rider Date, will accumulate interest
on a daily basis at a rate equivalent to 5% per year (may be 3% in certain
states), subject to the "Cap" defined below. This accumulation will continue
until the earlier of:
(a) the first Contract Anniversary following the 80th birthday of the oldest
Contract Owner or Co-Annuitant, whichever occurs first, or, if the Contract
is owned by a non-living person, the oldest Annuitant; or
(b) the date we determine the Death Proceeds.
After the 5% interest accumulation (may be 3% in certain states) ends, the
Annual Increase Death Benefit will continue to be increased by purchase payments
(and Credit Enhancements for Consultant Solutions Plus Contracts) and reduced by
withdrawal adjustments for withdrawals until the death benefit option
terminates. The withdrawal adjustment is a proportional adjustment, defined as
the withdrawal amount divided by the Contract Value immediately prior to the
withdrawal, and
57 PROSPECTUS
the result multiplied by the amount of the Annual Increase Death Benefit
immediately prior to the withdrawal.
The Annual Increase Death Benefit Cap is equal to:
.. 200% of the Contract Value as of the Rider Date; plus
.. 200% of purchase payments (and Credit Enhancements for Consultant Solutions
Plus Contracts) made after the Rider Date, but excluding any purchase
payments (and Credit Enhancements for Consultant Solutions Plus Contracts)
made in the 12-month period immediately prior to the death of a Contract
Owner or the Co-Annuitant, or, if the Contract is owned by a non-living
person, an Annuitant; minus
.. Withdrawal adjustments for any withdrawals made after the Rider Date. Refer
to Appendix E for withdrawal adjustment examples.
If, upon death of the Contract Owner, the Contract is continued under Option D
as described on page 62, and if the New Contract Owner is age 80 or younger on
the date we determine the Death Proceeds, then the Annual Increase Death Benefit
Option will continue. The amount of the Annual Increase Death Benefit as of the
date we determine the Death Proceeds, plus subsequent purchase payments (and
Credit Enhancements for Consultant Solutions Plus Contracts), less withdrawal
adjustments for any subsequent withdrawals, will accumulate daily at a rate
equivalent to 5% per year (may be 3% in certain states) from the date we
determine the Death Proceeds, until the earlier of:
.. The first Contract Anniversary following the 80th birthday of either the
oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the
Contract is owned by a non-living person, the oldest Annuitant. (After the
80th birthday of either the oldest Contract Owner or the Co-Annuitant,
whichever is earlier, or, if the Contract is owned by a non-living person,
the oldest Annuitant, the Annual Increase Death Benefit will be
recalculated only for purchase payments and withdrawals (and Credit
Enhancements for Consultant Solutions Plus Contracts)); or
.. The date we next determine the Death Proceeds.
Enhanced Earnings Death Benefit Option.
The "Enhanced Earnings Death Benefit Option" is only available if the oldest
Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living
person, the oldest Annuitant, are age 79 or younger on the Rider Application
Date. There is an additional mortality and expense risk charge for this death
benefit option, currently equal to:
.. 0.25%, if the oldest Contract Owner and Co-Annuitant, or, if the Contract
is owned by a non-living person, the oldest Annuitant, are age 70 or
younger on the Rider Application Date; and
.. 0.40%, if the oldest Contract Owner or, if older, the Co-Annuitant, or, if
the Contract is owned by a non-living person, the oldest Annuitant, is age
71 or older and age 79 or younger on the Rider Application Date.
We may change what we charge for this death benefit option, but it will never
exceed 0.35% for issue ages 0-70 and 0.50% for issue ages 71-79. Once added to
your Contract, we guarantee that we will not increase the mortality and expense
risk charge you pay for this death benefit option. However, if your spouse
elects to continue the Contract in the event of your death and if he or she
elects to continue the Enhanced Earnings Death Benefit Option, the mortality and
expense risk charge for the death benefit option will be based on the ages of
the oldest new Contract Owner and the Co-Annuitant, or, if the Contract is owned
by a non-living person, the oldest Annuitant, at the time the Contract is
continued.
If the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a
non-living person, the oldest Annuitant, are age 70 or younger on the Rider
Application Date, the Enhanced Earnings Death Benefit is equal to the lesser of:
.. 100% of "In-Force Premium" (excluding purchase payment s (and Credit
Enhancements for Consultant Solutions Plus Contracts) made after the date
we issue the rider for this benefit ("Rider Date") and during the
twelve-month period immediately prior to the death of a Contract Owner or
Co-Annuitant, or, if the Contract is owned by a non-living person, an
Annuitant); or
.. 40% of "In-Force Earnings"
calculated as of the date we determine the Death Proceeds.
If the oldest Contract Owner or, if older, the Co-Annuitant, or, if the Contract
is owned by a non-living person, the oldest Annuitant, is age 71 or older and
age 79 or younger on the Rider Application Date, the Enhanced Earnings Death
Benefit is equal to the lesser of:
.. 50% of "In-Force Premium" (excluding purchase payments (and Credit
Enhancements for Consultant Solutions Plus Contracts) made after the Rider
Date and during the twelve-month period immediately prior to the death of a
Contract Owner or Co-Annuitant, or, if the Contract is owned by a
non-living person, an Annuitant); or
.. 25% of "In-Force Earnings"
58 PROSPECTUS
calculated as of the date we determine the Death Proceeds.
In-Force Earnings are equal to the current Contract Value less In-Force Premium.
If this quantity is negative, then In-Force Earnings are equal to zero.
In-Force Premium is equal to the Contract Value on the Rider Date, plus the sum
of all purchase payments, including any associated credit enhancements, made
after the Rider Date, less the sum of all "Excess-of-Earnings Withdrawals" made
after the Rider Date.
An Excess-of-Earnings Withdrawal is equal to the excess, if any, of the amount
of the withdrawal over the amount of the In-Force Earnings immediately prior to
the withdrawal.
Refer to Appendix E for numerical examples that illustrate how the Enhanced
Earnings Death Benefit Option is calculated.
If, upon death of the Contract Owner, the Contract is continued under Option D
as described on page 62, and if the New Contract Owner is younger than age 80 on
the date we determine the Death Proceeds, then this death benefit option will
continue unless the New Contract Owner elects to terminate the death benefit
option. If the death benefit option is continued, the following will apply as of
the date we determine the Death Proceeds upon continuation:
.. The Rider Date will be changed to the date we determine the Death Proceeds;
.. The In-Force Premium is equal to the Contract Value as of the new Rider
Date plus all purchase payments, including any associated credit
enhancements, made after the Rider Date, less the sum of all the
Excess-of-Earnings Withdrawals made after the Rider Date;
.. The Enhanced Earnings Death Benefit after the new Rider Date will be
determined as described above, but using the ages of the oldest Contract
Owner and Co-Annuitant, or, if the Contract is owned by a non-living
person, the oldest Annuitant, as of the new Rider Date.
.. The mortality and expense risk charge, for this rider, will be determined
as described above, but using the ages of the oldest Contract Owner and
Co-Annuitant, or, if the Contract is owned by a non-living person, the
oldest Annuitant, as of the new Rider Date.
If the Contract Owner's, Co-Annuitant's or Annuitant's age is misstated, the
Enhanced Earnings Death Benefit and the mortality and expense risk charge for
this death benefit option will be calculated according to the corrected age as
of the Rider Date. Your Contract Value will be adjusted to reflect the mortality
and expense risk charge for this death benefit option that should have been
assessed based on the corrected age.
ALL OPTIONS.
We reserve the right to impose limitations on the Investment Alternatives in
which you may invest as a condition of these options. These restrictions may
include, but are not limited to, maximum investment limits on certain investment
alternatives, exclusion of certain investment alternatives, required minimum
allocations to certain investment alternatives, restrictions on transfers to and
from certain investment alternatives, and/or the required use of Automatic
Portfolio Rebalancing. Currently, no such restrictions are being imposed.
These death benefit options will terminate and the corresponding Rider Fee will
cease on the earliest of the following to occur:
.. the date the Contract is terminated;
.. if, upon the death of the Contract Owner, the Contract is continued under
Option D as described in the Death of Owner section on page 62, and the New
Owner is older than age 80 (age 80 or older for the Enhanced Earnings Death
Benefit Option) on the date we determine the Death Proceeds. The death
benefit option will terminate on the date we determine the Death Proceeds;
.. if the Contract is not continued in the Accumulation Phase under either the
Death of Owner or Death of Annuitant provisions of the Contract. The death
benefit option will terminate on the date we determine the Death Proceeds;
.. on the date the Contract Owner (if the current Contract Owner is a living
person) is changed for any reason other than death unless the New Contract
Owner is a trust and the Annuitant is a current Contract Owner;
.. on the date the Contract Owner (if the current Contract Owner is a
non-living person) is changed for any reason unless the New Contract Owner
is a non-living person or is a current Annuitant; or
.. the Payout Start Date.
Notwithstanding the preceding, in the event of the Contract Owner's death, if
the Contract Owner's spouse elects to continue the Contract (as permitted in the
Death of Owner provision below) he or she may terminate the Enhanced Earnings
Death Benefit at that time.
DEATH BENEFIT PAYMENTS
Death of Contract Owner
If a Contract Owner dies prior to the Payout Start Date, then the surviving
Contract Owners will be the "New Contract Owners". If there are no surviving
Contract Owners, then subject to any restrictions previously placed upon them,
the Beneficiaries will be the New Contract Owners.
59 PROSPECTUS
If there is more than one New Contract Owner taking a share of the Death
Proceeds, each New Contract Owner will be treated as a separate and independent
Contract Owner of his or her respective share of the Death Proceeds. Each New
Contract Owner will exercise all rights related to his or her share of the Death
Proceeds, including the sole right to elect one of the Option(s) below, subject
to any restrictions previously placed upon the New Contract Owner. Each New
Contract Owner may designate a Beneficiary(ies) for his or her respective share,
but that designated Beneficiary(ies) will be restricted to the Option chosen by
the original New Contract Owner.
The Options available to each New Contract Owner will be determined by the
applicable following Category in which the New Contract Owner is defined. An
Option will be deemed to have been chosen on the day we receive written
notification in a form satisfactory to us.
New Contract Owner Categories
Category 1. If your spouse (or Annuitant's spouse in the case of a grantor
trust-owned Contract) is the sole New Contract Owner of the entire Contract,
your spouse must choose from among the death settlement Options A, B, C, D, or E
described below. If he or she does not choose one of these Options, then Option
D will apply.
Category 2. If the New Contract Owner is a living person who is not your spouse
(or Annuitant's spouse in the case of a grantor trust-owned Contract), or there
is more than one New Contract Owner, all of whom are living persons, each New
Contract Owner must choose from among the death settlement Options A, B, C, or E
described below. If a New Contract Owner does not choose one of these Options,
then Option C will apply for that New Contract Owner.
Category 3. If there are one or more New Contract Owner(s) and at least one of
the New Contract Owners is a non-living person such as a corporation or a trust,
all New Contract Owners are considered to be non-living persons for purposes of
the death settlement options. Each New Contract Owner must choose death
settlement Option A or C described below. If a New Contract Owner does not
choose one of these Options, then Option C will apply for that New Contract
Owner.
The death settlement options we currently offer are:
Option A. The New Contract Owner may elect to receive the Death Proceeds in a
lump sum.
Option B. The New Contract Owner may elect to apply the Death Proceeds to one of
the Income Plans described above. Such income payments must begin within one
year of the date of death and must be payable:
.. Over the life of the New Contract Owner; or
.. For a guaranteed payment period of at least 5 years (60 months), but not to
exceed the life expectancy of the New Contract Owner; or
.. Over the life of the New Contract Owner with a guaranteed payment period of
at least 5 years (60 months), but not to exceed the life expectancy of the
New Contract Owner.
Option C. The New Contract Owner may elect to receive the Contract Value payable
within 5 years of the date of death. The Contract Value, as of the date we
receive the first Complete Request for Settlement, will be reset to equal the
Death Proceeds as of that date. Any excess amount of the Death Proceeds over the
Contract Value on that date will be allocated to the PIMCO Money Market Variable
Sub-account unless the New Contract Owner provides other allocation
instructions.
The New Contract Owner may not make any additional purchase payments under this
option. Withdrawal charges will be waived for any withdrawals made during the
5-year period after the date of death; however, amounts withdrawn may be subject
to Market Value Adjustments. The New Contract Owner may exercise all rights set
forth in the Transfers provision.
If the New Contract Owner dies before the Contract Value is completely
withdrawn, the New Contract Owner's Beneficiary(ies) will receive the greater of
the remaining Settlement Value or the remaining Contract Value within 5 years of
the date of the original Contract Owner's death.
Option D. The New Contract Owner may elect to continue the Contract in the
Accumulation Phase. If the Contract Owner was also the Annuitant, then the New
Contract Owner will be the new Annuitant. This Option may only be exercised once
per Contract. The Contract Value, as of the date we receive the first Complete
Request for Settlement, will be reset to equal the Death Proceeds as of that
date.
Unless otherwise instructed by the continuing spouse, the excess, if any, of the
Death Proceeds over the Contract Value will be allocated to the Sub-accounts of
the Variable Account. This excess will be allocated in proportion to your
Contract Value in those Sub-accounts as of the end of the Valuation Date that we
receive the complete request for settlement except that any portion of this
excess attributable to the Fixed Account Options will be allocated to the PIMCO
Money Market Variable Sub-account.
Within 30 days after the date we determine the Death Proceeds, the New Contract
Owner may transfer all or a portion of the excess of the Death Proceeds, if any,
into any combination of Variable Sub-accounts, the Standard Fixed Account and
the Market Value Adjusted Fixed Account without incurring a transfer fee. Any
such transfer does not count as one of the free transfers
60 PROSPECTUS
allowed each Contract Year and is subject to any minimum allocation amount
specified in this Contract.
The New Contract Owner may make a single withdrawal of any amount within one
year of the date of your death without incurring a Withdrawal Charge; however,
the amount withdrawn may be subject to a Market Value Adjustment and a 10% tax
penalty if the New Contract Owner is under age 59 1/2.
Option E. For Nonqualified Contracts, the New Contract Owner may elect to make
withdrawals at least annually of amounts equal to the "Annual Required
Distribution" calculated for each calendar year. The first such withdrawal must
occur within:
.. One year of the date of death;
.. The same calendar year as the date we receive the first Complete Request
for Settlement; and
.. One withdrawal frequency.
The New Contract Owner must select the withdrawal frequency (monthly, quarterly,
semi-annual, or annual). Once this option is elected and frequency of
withdrawals is chosen, they cannot be changed by the New Contract Owner and
become irrevocable.
In the calendar year in which the Death Proceeds are determined, the Annual
Required Distribution is equal to the Contract Value on the date of the first
distribution divided by the "Life Expectancy" of the New Contract Owner and the
result multiplied by a fraction that represents the portion of the calendar year
remaining after the date of the first distribution. (The Contract Value, as of
the date we receive the Complete Request for Settlement, will be reset to equal
the Death Proceeds as of that date. The Contract Value on the date of the first
distribution may be more or less than the Contract Value as of the date we
receive the Complete Request for Settlement.) The Life Expectancy in that
calendar year is equal to the life expectancy value from IRS Tables based on the
age of the New Contract Owner as of his or her birthday in the same calendar
year.
In any subsequent calendar year, the Annual Required Distribution is equal to
the Contract Value as of December 31 of the prior year divided by the remaining
Life Expectancy of the New Contract Owner. In each calendar year after the
calendar year in which the first distribution occurred, the Life Expectancy of
the New Contract Owner is the Life Expectancy calculated in the previous
calendar year minus one (1) year. If the Life Expectancy is less than one (1),
the Annual Required Distribution is equal to the Contract Value.
If the New Contract Owner dies before the Contract Value is completely
withdrawn, the scheduled withdrawals will continue to be paid to the New
Contract Owner's Beneficiary(ies). The Contract Value invested in the Variable
Sub-Accounts will be subject to investment risk until it is withdrawn.
We reserve the right to offer additional death settlement options.
Death of Annuitant
If the Annuitant dies prior to the Payout Start Date, then the surviving
Contract Owners will have the Options available to the New Contract Owner,
determined by the applicable following category in which the New Contract Owner
is defined, unless:
.. The Annuitant was also the Contract Owner, in which case the Death of Owner
provisions above apply; or
.. The Contract Owner is a grantor trust established by a living person, in
which case the Beneficiary(ies) will be deemed the New Contract Owners and
the Death of Contract Owner provisions above will apply.
Surviving Contract Owner Categories
Category 1. If the Owner is a living person, the Contract will continue in the
Accumulation Phase with a new Annuitant. The Contract Value will not be
increased by any excess of the Death Proceeds over the Contract Value as of the
date that we determine the value of the Death Proceeds.
The new Annuitant will be:
.. A person you name by written request, subject to the conditions described
in the Annuitant section of this Contract; otherwise,
.. The youngest Owner; otherwise,
.. The youngest Beneficiary.
Category 2. If the Owner is a corporation, trust, or other non-living person,
the Owner must choose between the following two options:
Option A. The Owner may elect to receive the Death Proceeds in a lump sum.
Option B. The Owner may elect to receive the Contract Value payable within 5
years of the Annuitant's date of death. Under this Option, the excess, if any,
of the Death Proceeds over the Contract Value, as of the date that we determine
the value of the Death Proceeds, will be added to the Contract Value. Unless
otherwise instructed by the Owner, this excess will be allocated to the PIMCO
Money Market Variable Sub-account. During the 5 year period that follows the
Annuitant's date of death, the Owner may exercise all rights as set forth in the
Transfers section. Withdrawal Charges will be waived for any withdrawals made
during this 5 year period, however, the amount withdrawal may be subject to a
Market Value Adjustment.
No additional purchase payments may be added to the Contract under this section.
Withdrawal Charges will be waived for any withdrawals made during this 5 year
period.
61 PROSPECTUS
We reserve the right to offer additional death settlement options.
Qualified Contracts
The death settlement options for qualified plans, including IRAs, may be
different to conform with the individual tax requirements of each type of
qualified plan. Please refer to your Endorsement for IRA plans, if applicable,
for additional information on your death settlement options. In the case of
certain qualified plans, the terms of the plans may govern the right to
benefits, regardless of the terms of the Contract.
Spousal Protection Benefit (Co-Annuitant) Option and Death of Co-Annuitant
We offer a Spousal Protection Benefit (Co-Annuitant) Option that may be added to
your Contract subject to the following conditions:
.. The individually owned Contract must be either a traditional, Roth, or
Simplified Employee Pension IRA.
.. The Contract Owner's spouse must be the sole Primary Beneficiary of the
Contract and will be the named Co-Annuitant.
.. The Contract Owner must be age 90 or younger on the Rider Application Date;
and the Co-Annuitant must be age 79 or younger on the Rider Application
Date.
.. The option may only be added when we issue the Contract or within 6 months
of the Contract Owner's marriage. We may require proof of marriage in a
form satisfactory to us. Currently, you may not add the option to your
Contract without our prior approval if your Contract Value is greater than
$1,000,000 at the time you choose to add the Option.
Under the Spousal Protection Benefit Option, the Co-Annuitant will be considered
to be an Annuitant under the Contract during the Accumulation Phase except that
the Co-Annuitant will not be considered to be an Annuitant for purposes of
determining the Payout Start Date and the "Death of Annuitant" provision of your
Contract does not apply on the death of the Co-Annuitant.
You may change the Co-Annuitant to a new spouse only if you provide proof of
remarriage in a form satisfactory to us. Once we accept a change, the change
will take effect on the date you signed the request. Each change is subject to
any payment we make or other action we take before we accept it. At any time,
there may only be one Co-Annuitant under your Contract.
There is an annual Rider Fee of 0.10% of the Contract Value for Options added on
or after May 1, 2005. For Options added prior to this date, there is no charge
for this Option. We reserve the right to assess an annual Rider Fee not to
exceed 0.15% for Options added in the future. Once this Option is added to your
Contract, we guarantee that we will not increase what we charge you for this
Option. For Contracts purchased on or after May 1, 2005, we may discontinue
offering the Spousal Protection Benefit (Co-Annuitant) Option at any time.
The option will terminate upon the date your written termination request is
accepted by us or will terminate on the earliest of the following occurrences:
.. upon the death of the Co-Annuitant (as of the date we determine the Death
Proceeds);
.. upon the death of the Contract Owner (as of the date we determine the Death
Proceeds);
.. on the date the Contract is terminated;
.. on the Payout Start Date; or
.. on the date you change the beneficiary of the Contract and the change is
accepted by us;
.. for options added on or after May 1, 2005, the Contract Owner may terminate
the option upon the divorce of the Contract Owner and the Co-Annuitant by
providing written notice and proof of divorce in a form satisfactory to us;
.. for options added prior to May 1, 2005, the Owner may terminate this option
at anytime by written notice in a form satisfactory to us.
Once the Option is terminated, a new Spousal Protection Benefit (Co-Annuitant)
Option cannot be added to the Contract unless the last Option attached to the
Contract was terminated due to divorce or a change of beneficiary.
Death of Co-Annuitant. If the Co-Annuitant dies prior to the Payout Start Date,
subject to the following conditions, the Contract will be continued according to
Option D under the "Death of Owner" provision of your Contract:
.. The Co-Annuitant must have been your legal spouse on the date of his or her
death; and
.. Option D of the "Death of Owner" provision of your Contract has not
previously been exercised.
The Contract may only be continued once under Option D under the "Death of
Owner" provision. For a description of Option D, see the "Death of Owner"
section of this prospectus.
62 PROSPECTUS
More Information
LINCOLN BENEFIT LIFE COMPANY
Lincoln Benefit is the issuer of the Contract. Lincoln Benefit is a stock life
insurance company organized under the laws of the state of Nebraska in 1938. Our
legal domicile and principal business address is P.O. Box 80469, Lincoln,
Nebraska. Lincoln Benefit is a wholly-owned subsidiary of Allstate Life
Insurance Company ("Allstate Life"), a stock life insurance company incorporated
under the laws of the State of Illinois.
Allstate Life is a wholly-owned subsidiary of Allstate Insurance Company
("Allstate"), a stock property-liability insurance company incorporated under
the laws of Illinois. All outstanding capital stock of Allstate is owned by The
Allstate Corporation.
We are authorized to conduct life insurance and annuity business in the District
of Columbia, Guam, U.S. Virgin Islands and all states except New York. We will
market the Contract everywhere we conduct variable annuity business. The
Contracts offered by this prospectus are issued by us and will be funded in the
Variable Account and/or the Fixed Account.
Under our reinsurance agreement with Allstate Life, substantially all contract
related transactions are transferred to Allstate Life and substantially all of
the assets backing our reinsured liabilities are owned by Allstate Life.
Accordingly, the results of operations with respect to applications received and
contracts issued by Lincoln Benefit are not reflected in our financial
statements. The amounts reflected in our financial statements relate only to the
investment of those assets of Lincoln Benefit that are not transferred to
Allstate Life under the reinsurance agreement. These assets represent our
general account and are invested and managed by Allstate Life. While the
reinsurance agreement provides us with financial backing from Allstate Life, it
does not create a direct contractual relationship between Allstate Life and you.
Under the Company's reinsurance agreements with Allstate Life, the Company
reinsures all reserve liabilities with Allstate Life except for variable
contracts. The Company's variable Contract assets and liabilities are held in
legally-segregated, unitized separate accounts and are retained by the Company.
However, the transactions related to such variable contracts such as premiums,
expenses and benefits are transferred to Allstate Life.
Effective June 1, 2006, Allstate Life entered into an agreement ("the
Agreement") with Prudential Financial, Inc. and its subsidiary, The Prudential
Insurance Company of America ("PICA") pursuant to which Allstate Life sold,
through a combination of coinsurance and modified coinsurance reinsurance,
substantially all of its variable annuity business, including that of its
subsidiary Lincoln Benefit. Pursuant to the Agreement Allstate Life and PICA
also have entered into an administrative services agreement which provides that
PICA or an affiliate will administer the Variable Account and the Contracts
after a transition period that may last up to two years. The benefits and
provisions of the Contracts have not been changed by these transactions and
agreements. None of the transactions or agreements have changed the fact that we
are primarily liable to you under your Contract.
VARIABLE ACCOUNT
Lincoln Benefit Life Variable Annuity Account was originally established in
1992, as a segregated asset account of Lincoln Benefit. The Variable Account
meets the definition of a "separate account" under the federal securities laws
and is registered with the SEC as a unit investment trust under the Investment
Company Act of 1940. The SEC does not supervise the management of the Variable
Account or Lincoln Benefit.
We own the assets of the Variable Account, but we hold them separate from our
other assets. To the extent that these assets are attributable to the Contract
Value of the Contracts offered by this prospectus, these assets are not
chargeable with liabilities arising out of any other business we may conduct.
Income, gains, and losses, whether or not realized, from assets allocated to the
Variable Account are credited to or charged against the Variable Account without
regard to our other income, gains, or losses. Our obligations arising under the
Contracts are general corporate obligations of Lincoln Benefit.
The Variable Account is divided into Sub-accounts. The assets of each
Sub-account are invested in the shares of one of the Portfolios. We do not
guarantee the investment performance of the Variable Account, its Sub-accounts
or the Portfolios. Values allocated to the Variable Account and the amount of
Variable Annuity payments will rise and fall with the values of shares of the
Portfolios and are also reduced by Contract charges. We may also use the
Variable Account to fund our other annuity contracts. We will account separately
for each type of annuity contract funded by the Variable Account.
We have included additional information about the Variable Account in the
Statement of Additional Information. You may obtain a copy of the Statement of
Additional Information by writing to us or calling us at 1-800-457-7617. We have
reproduced the Table of Contents of the Statement of Additional Information on
page 74.
THE PORTFOLIOS
Dividends and Capital Gain Distributions. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolios at their net asset value.
63 PROSPECTUS
Voting Privileges. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Sub-Accounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract Owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Sub-Account by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable
Sub-Account by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted upon on a pro-rata basis to reduce the votes
eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi-annual financial report we send to you.
Changes in Portfolios. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment fund. Any substitution of securities will comply with the
requirements of the Investment Company Act of 1940. We also may add new Variable
Sub-Accounts that invest in additional underlying funds. We will notify you in
advance of any change.
Conflicts of Interest. Certain of the Portfolios sell their shares to separate
accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the same Portfolio. The board of directors/trustees of these Portfolios monitors
for possible conflicts among separate accounts buying shares of the Portfolios.
Conflicts could develop for a variety of reasons. For example, differences in
treatment under tax and other laws or the failure by a separate account to
comply with such laws could cause a conflict. To eliminate a conflict, the
Portfolio's board of directors/trustees may require a separate account to
withdraw its participation in a Portfolio. A Portfolio's net asset value could
decrease if it had to sell investment securities to pay redemption proceeds to a
separate account withdrawing because of a conflict.
THE CONTRACTS
Distribution. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook, IL
60062-7154 serves as distributor of the Contracts. ALFS, an affiliate of Lincoln
Benefit, is a wholly owned subsidiary of Allstate Life Insurance Company. ALFS
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the Financial Industry Regulatory Authority
("FINRA").
ALFS does not sell Contracts directly to purchasers. ALFS enters into selling
agreements with affiliated and unaffiliated broker-dealers and banks to sell the
Contracts through their registered representatives. The broker-dealers are
registered with the SEC and are FINRA member firms. Their registered
representatives are licensed as insurance agents by applicable state insurance
authorities and appointed as agents of Lincoln Benefit in order to sell the
Contracts. Contracts also may be sold by representatives or employees of banks
that may be acting as broker-dealers without separate registration under the
Exchange Act, pursuant to legal and regulatory exceptions.
We will pay commissions to broker-dealers and banks which sell the Contracts.
Commissions paid vary, but we may pay up to a maximum sales commission of 7.5%
of total purchase payments. In addition, we may pay ongoing annual compensation
of up to 1.25% of Contract Value. Individual representatives receive a portion
of compensation paid to the broker-dealer or bank with which they are associated
in accordance with the broker-dealer's or bank's practices. We estimate that
commissions and annual compensation, when combined, will not exceed 8.5% of
total purchase payments. However, commissions and annual compensation could
exceed that amount because ongoing annual compensation is related to Contract
Value and the number of years the Contract is held.
From time to time, we pay asset-based compensation and/or marketing allowances
to banks and broker-dealers. These payments vary among individual banks and
broker dealers, and the asset-based payments may be up to 0.25% of Contract
Value annually. These payments are intended to contribute to the promotion and
marketing of the Contracts, and they vary among
64 PROSPECTUS
banks and broker-dealers. The marketing and distribution support services
include but are not limited to: (1) placement of the Contracts on a list of
preferred or recommended products in the bank's or broker-dealer's distribution
system; (2) sales promotions with regard to the Contracts; (3) participation in
sales conferences; and (4) helping to defray the costs of sales conferences and
educational seminars for the bank or broker-dealer's registered representatives.
A list of broker-dealers and banks that ALFS paid pursuant to such arrangements
is provided in the Statement of Additional Information, which is available upon
request. For a free copy, please write or call us at the address or telephone
number listed on the front page of this prospectus, or go to the SEC's Web site
(http://www.sec.gov).
To the extent permitted by FINRA rules and other applicable laws and
regulations, we may pay or allow other promotional incentives or payments in the
form of cash or non-cash compensation. We may not offer the arrangements to all
broker-dealers and banks and the terms of the arrangement may differ among
broker-dealers and banks.
Individual registered representatives, broker-dealers, banks, and branch
managers within some broker-dealers and banks participating in one of these
compensation arrangements may receive greater compensation for selling the
contract than for selling a different contact that is not eligible for the
compensation arrangement. While we take the compensation into account when
establishing contract charges, any such compensation will be paid by us or ALFS
and will not result in any additional charge to you. Your registered
representative can provide you with more information about the compensation
arrangements that apply to the sale of the contract.
Lincoln Benefit does not pay ALFS a commission for distribution of the
Contracts. ALFS compensates its representatives who act as wholesalers, and
their sales management personnel, for Contract sales. This compensation is based
on a percentage of premium payments and/or a percentage of Contract values. The
underwriting agreement with ALFS provides that we will reimburse ALFS for
expenses incurred in distributing the Contracts, including any liability to
Contract Owners arising out of services rendered or Contracts issued.
Lincoln Benefit and ALFS have also entered into wholesaling agreements with
certain independent contractors and their broker-dealers. Under these
agreements, compensation based on a percentage of premium payments and/or
Contract values is paid to the wholesaling broker-dealer for the wholesaling
activities of their registered representative.
Administration. We have primary responsibility for all administration of the
Contracts and the Variable Account. Pursuant to the Agreement, we will enter
into an administrative services agreement with PICA whereby, after a transition
period that may last up to two years, PICA or an affiliate will provide
administrative services to the Variable Account and the Contracts on our behalf.
We provide the following administrative services, among others:
.. issuance of the Contracts;
.. maintenance of Contract Owner records;
.. Contract Owner services;
.. calculation of unit values;
.. maintenance of the Variable Account; and
.. preparation of Contract Owner reports.
We will send you Contract statements at least annually. We will also send you
transaction confirmations. You should notify us promptly in writing of any
address change. You should read your statements and confirmations carefully and
verify their accuracy. You should contact us promptly if you have a question
about a periodic statement or a confirmation. We will investigate all complaints
and make any necessary adjustments retroactively, but you must notify us of a
potential error within a reasonable time after the date of the questioned
statement. If you wait too long, we will make the adjustment as of the date that
we receive notice of the potential error.
We will also provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan,
the plan may impose different or additional conditions or limitations on
withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates,
income payments, and other Contract features. In addition, adverse tax
consequences may result if Qualified Plan limits on distributions and other
conditions are not met. Please consult your Qualified Plan administrator for
more information. Lincoln Benefit no longer issues deferred annuities to
employer sponsored qualified retirement plans.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. Lincoln
Benefit is engaged in routine lawsuits which, in our management's judgment, are
not of material importance to the respective total assets or material with
respect to the Variable Account.
LEGAL MATTERS
All matters of Nebraska law pertaining to the Contract, including the validity
of the Contract and our right to issue the Contract under Nebraska law, have
been passed upon by Michael J. Velotta, Senior Vice President, General Counsel
and Secretary of Lincoln Benefit.
65 PROSPECTUS
Taxes
The following discussion is general and is not intended as tax advice. Lincoln
Benefit makes no guarantee regarding the tax treatment of any Contract or
transaction involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
TAXATION OF LINCOLN BENEFIT LIFE COMPANY
Lincoln Benefit is taxed as a life insurance company under Part I of Subchapter
L of the Code. Since the Variable Account is not an entity separate from Lincoln
Benefit, and its operations form a part of Lincoln Benefit, it will not be taxed
separately. Investment income and realized capital gains of the Variable Account
are automatically applied to increase reserves under the Contract. Under
existing federal income tax law, Lincoln Benefit believes that the Variable
Account investment income and capital gains will not be taxed to the extent that
such income and gains are applied to increase the reserves under the Contract.
Accordingly, Lincoln Benefit does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account, and therefore Lincoln
Benefit does not intend to make provisions for any such taxes. If Lincoln
Benefit is taxed on investment income or capital gains of the Variable Account,
then Lincoln Benefit may impose a charge against the Variable Account in order
to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
.. the Contract Owner is a natural person,
.. the investments of the Variable Account are "adequately diversified"
according to Treasury Department regulations, and
.. Lincoln Benefit is considered the owner of the Variable Account assets for
federal income tax purposes.
Non-Natural Owners. Non-natural owners are also referred to as Non Living Owners
in this prospectus. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
does not enjoy tax deferral and is taxed as ordinary income received or accrued
by the non-natural owner during the taxable year.
Exceptions to the Non-Natural Owner Rule. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain Qualified Plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.
Grantor Trust Owned Annuity. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax deferral
as described in the Exceptions to the Non-Natural Owner Rule section. In
accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
beneficiary. A trust named beneficiary, including a grantor trust, has two
options for receiving any death benefits: 1) a lump sum payment, or 2) payment
deferred up to five years from date of death.
Diversification Requirements. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the Contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the Contract owner during the taxable
year. Although Lincoln Benefit does not have control over the Portfolios or
their investments, we expect the Portfolios to meet the diversification
requirements.
Ownership Treatment. The IRS has stated that a contract owner will be considered
the owner of separate account assets if he possesses incidents of ownership in
those assets, such as the ability to exercise investment control over the
assets. At the time the diversification
66 PROSPECTUS
regulations were issued, the Treasury Department announced that the regulations
do not provide guidance concerning circumstances in which investor control of
the separate account investments may cause a Contract owner to be treated as the
owner of the separate account. The Treasury Department also stated that future
guidance would be issued regarding the extent that owners could direct
sub-account investments without being treated as owners of the underlying assets
of the separate account.
Your rights under the Contract are different than those described by the IRS in
private and published rulings in which it found that Contract owners were not
owners of separate account assets. For example, if your contract offers more
than twenty (20) investment alternatives you have the choice to allocate
premiums and contract values among a broader selection of investment
alternatives than described in such rulings. You may be able to transfer among
investment alternatives more frequently than in such rulings. These differences
could result in you being treated as the owner of the Variable Account. If this
occurs, income and gain from the Variable Account assets would be includible in
your gross income. Lincoln Benefit does not know what standards will be set
forth in any regulations or rulings which the Treasury Department may issue. It
is possible that future standards announced by the Treasury Department could
adversely affect the tax treatment of your Contract. We reserve the right to
modify the Contract as necessary to attempt to prevent you from being considered
the federal tax owner of the assets of the Variable Account. However, we make no
guarantee that such modification to the Contract will be successful.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a Non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a full withdrawal
under a Non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a Non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the Contract. If you elect variable annuity payments, the amount excluded from
taxable income is determined by dividing the investment in the Contract by the
total number of expected payments. The annuity payments will be fully taxable
after the total amount of the investment in the Contract is excluded using these
ratios. If any variable payment is less than the excludable amount you should
contact a competent tax advisor to determine how to report any unrecovered
investment. The federal tax treatment of annuity payments is unclear in some
respects. As a result, if the IRS should provide further guidance, it is
possible that the amount we calculate and report to the IRS as taxable could be
different. If you die, and annuity payments cease before the total amount of the
investment in the Contract is recovered, the unrecovered amount will be allowed
as a deduction for your last taxable year.
Taxation of Level Monthly Variable Annuity Payments. You may have an option to
elect a variable income payment stream consisting of level monthly payments that
are recalculated annually. Although we will report your levelized payments to
the IRS in the year distributed, it is possible the IRS could determine that
receipt of the first monthly payout of each annual amount is constructive
receipt of the entire annual amount. If the IRS were to take this position, the
taxable amount of your levelized payments would be accelerated to the time of
the first monthly payout and reported in the tax year in which the first monthly
payout is received.
Withdrawals After the Payout Start Date. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.
Distribution at Death Rules. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:
.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion
of such interest must be distributed at least as rapidly as under the
method of distribution being used as of the date of the Contract Owner's
death;
.. if any Contract Owner dies prior to the Payout Start Date, the entire
interest in the Contract will be distributed within 5 years after the date
of the Contract Owner's death. These requirements are satisfied if any
portion of the Contract Owner's interest that is payable to (or for the
benefit of) a designated Beneficiary is distributed over the life of such
Beneficiary (or over a period not extending beyond the life expectancy of
the Beneficiary) and the distributions begin within 1 year of the Contract
Owner's death. If the Contract Owner's designated Beneficiary is the
surviving spouse of the Contract Owner, the Contract may be continued with
the surviving spouse as the new Contract Owner;
67 PROSPECTUS
.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract owned by
a non-natural person will be treated as the death of the Contract Owner.
Taxation of Annuity Death Benefits. Death Benefit amounts are included in income
as follows:
.. if distributed in a lump sum, the amounts are taxed in the same manner as a
total withdrawal, or
.. if distributed under an Income Plan, the amounts are taxed in the same
manner as annuity payments.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or becoming totally
disabled,
.. made in substantially equal periodic payments over the Contract Owner's
life or life expectancy, or over the joint lives or joint life expectancies
of the Contract Owner and the Beneficiary,
.. made under an immediate annuity, or
.. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
Substantially Equal Periodic Payments. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. A material modification does not include
permitted changes described in published IRS rulings. You should consult a
competent tax advisor prior to creating or modifying a substantially equal
periodic payment stream.
Tax Free Exchanges under Internal Revenue Code Section 1035. A 1035 exchange is
a tax-free exchange of a non-Qualified life insurance contract, endowment
contract or annuity contract into a non-Qualified annuity contract. The contract
owner(s) must be the same on the old and new contract. Basis from the old
contract carries over to the new contract so long as we receive that information
from the relinquishing company. If basis information is never received, we will
assume that all exchanged funds represent earnings and will allocate no cost
basis to them.
Partial Exchanges. The IRS has issued a ruling that permits partial exchanges of
annuity contracts. Under this ruling, if you take a withdrawal from a receiving
or relinquishing annuity contract within 24 months of the partial exchange, then
special aggregation rules apply for purposes of determining the taxable amount
of a distribution. The IRS has issued limited guidance on how to aggregate and
report these distributions. The IRS is expected to provide further guidance; as
a result, it is possible that the amount we calculate and report to the IRS as
taxable could be different. Your Contract may not permit partial exchanges.
Taxation of Ownership Changes. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Any assignment or pledge (or agreement to assign or pledge) of the
Contract Value is taxed as a withdrawal of such amount or portion and may also
incur the 10% penalty tax.
Aggregation of Annuity Contracts. The Code requires that all non-Qualified
deferred annuity contracts issued by Lincoln Benefit (or its affiliates) to the
same Contract Owner during any calendar year be aggregated and treated as one
annuity contract for purposes of determining the taxable amount of a
distribution.
INCOME TAX WITHHOLDING
Generally, Lincoln Benefit is required to withhold federal income tax at a rate
of 10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% of the taxable
amount. If no election is made or no U.S. taxpayer identification number is
provided we will automatically withhold the required 10% of the taxable amount.
In certain states, if there is federal withholding, then state withholding is
also mandatory.
Lincoln Benefit is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. If no U.S. taxpayer identification number is
provided, we will automatically withhold using single with zero exemptions
68 PROSPECTUS
as the default. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Lincoln Benefit as a withholding
agent must withhold 30% of the taxable amounts paid to a non-resident alien. A
non- resident alien is someone other than a U.S. citizen or resident alien. We
require an original IRS Form W-8BEN at issue to certify the owners' foreign
status. Withholding may be reduced or eliminated if covered by an income tax
treaty between the U.S. and the non-resident alien's country of residence if the
payee provides a U.S. taxpayer identification number on a fully completed Form
W-8BEN. A U.S. taxpayer identification number is a social security number or an
individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS
to non-resident alien individuals who are not eligible to obtain a social
security number. The U.S. does not have a tax treaty with all countries nor do
all tax treaties provide an exclusion or lower withholding rate for annuities.
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred,
and the income from annuities held by such plans does not receive any additional
tax deferral. You should review the annuity features, including all benefits and
expenses, prior to purchasing an annuity as a TSA or IRA. Tax Qualified
Contracts are contracts purchased as or in connection with:
.. Individual Retirement Annuities (IRAs) under Code Section 408(b);
.. Roth IRAs under Code Section 408A;
.. Simplified Employee Pension (SEP IRA) under Code Section 408(k);
.. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Code Section
408(p);
.. Tax Sheltered Annuities under Code Section 403(b);
.. Corporate and Self Employed Pension and Profit Sharing Plans under Code
Section 401; and
.. State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans under Code Section 457.
Lincoln Benefit reserves the right to limit the availability of the Contract for
use with any of the retirement plans listed above or to modify the Contract to
conform with tax requirements. If you use the Contract within an employer
sponsored qualified retirement plan, the plan may impose different or additional
conditions or limitations on withdrawals, waiver of charges, death benefits,
Payout Start Dates, income payments, and other Contract features. In addition,
adverse tax consequences may result if Qualified Plan limits on distributions
and other conditions are not met. Please consult your Qualified Plan
administrator for more information. Lincoln Benefit no longer issues deferred
annuities to employer sponsored qualified retirement plans.
The tax rules applicable to participants with tax qualified annuities vary
according to the type of contract and the terms and conditions of the
endorsement. Adverse tax consequences may result from certain transactions such
as excess contributions, premature distributions, and, distributions that do not
conform to specified commencement and minimum distribution rules. Lincoln
Benefit can issue an individual retirement annuity on a rollover or transfer of
proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under
which the decedent's surviving spouse is the beneficiary. Lincoln Benefit does
not offer an individual retirement annuity that can accept a transfer of funds
for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer
sponsored qualified retirement plan.
Please refer to your Endorsement for IRAs or 403(b) plans, if applicable, for
additional information on your death settlement options. In the case of certain
Qualified Plans, the terms of the Qualified Plan Endorsement and the plans may
govern the right to benefits, regardless of the terms of the Contract.
Taxation of Withdrawals from an Individually Owned Tax Qualified Contract. If
you make a partial withdrawal under a Tax Qualified Contract other than a Roth
IRA, the portion of the payment that bears the same ratio to the total payment
that the investment in the Contract (i.e., nondeductible IRA contributions)
bears to the Contract Value, is excluded from your income. We do not keep track
of nondeductible contributions, and generally all tax reporting of distributions
from Tax Qualified Contracts other than Roth IRAs will indicate that the
distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to any Roth IRA and which
are:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made to a beneficiary after the Contract Owner's death,
.. attributable to the Contract Owner being disabled, or
.. made for a first time home purchase (first time home purchases are subject
to a lifetime limit of $10,000).
69 PROSPECTUS
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions.
Required Minimum Distributions. Generally, Tax Qualified Contracts (excluding
Roth IRAs) require minimum distributions upon reaching age 70 1/2. Failure to
withdraw the required minimum distribution will result in a 50% tax penalty on
the shortfall not withdrawn from the Contract. Effective December 31, 2005, the
IRS requires annuity contracts to include the actuarial present value of other
benefits for purposes of calculating the required minimum distribution amount.
These other benefits may include accumulation, income, or death benefits. Not
all income plans offered under the Contract satisfy the requirements for minimum
distributions. Because these distributions are required under the Code and the
method of calculation is complex, please see a competent tax advisor.
The Death Benefit and Tax Qualified Contracts. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.
It is also possible that certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
Owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under Qualified Plans, such as in connection with
a TSA or employer sponsored qualified retirement plan.
Lincoln Benefit reserves the right to limit the availability of the Contract for
use with any of the Qualified Plans listed above.
Penalty Tax on Premature Distributions from Tax Qualified Contracts. A 10%
penalty tax applies to the taxable amount of any premature distribution from a
Tax Qualified Contract. The penalty tax generally applies to any distribution
made prior to the date you attain age 59 1/2. However, no penalty tax is
incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or total disability,
.. made in substantially equal periodic payments over the Contract Owner's
life or life expectancy, or over the joint lives or joint life expectancies
of the Contract Owner and the Beneficiary,
.. made after separation from service after age 55 (does not apply to IRAs),
.. made pursuant to an IRS levy,
.. made for certain medical expenses,
.. made to pay for health insurance premiums while unemployed (applies only
for IRAs),
.. made for qualified higher education expenses (applies only for IRAs)
.. made for a first time home purchase (up to a $10,000 lifetime limit and
applies only for IRAs), and
.. from an IRA or attributable to elective deferrals under a 401(k) plan,
403(b) annuity, or certain similar arrangements made to individuals who
(because of their being members of a reserve component) are ordered or
called to active duty after Sept. 11, 2001, and before Dec. 31, 2007, for a
period of more than 179 days or for an indefinite period; and made during
the period beginning on the date of the order or call to duty and ending at
the close of the active duty period.
During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
Substantially Equal Periodic Payments on Tax Qualified Contracts. With respect
to Tax Qualified Contracts using substantially equal periodic payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to
a 10% penalty tax unless another exception to the penalty tax applied. The tax
for the year of the modification is increased by the penalty tax that would have
been imposed without the exception, plus interest for the years in which the
exception was used. A material modification does not include permitted changes
described in published IRS rulings. You should consult a competent tax advisor
prior to creating or modifying a substantially equal periodic payment stream.
Income Tax Withholding on Tax Qualified Contracts. Generally, Lincoln Benefit is
required to withhold federal income tax at a rate of 10% from all non-annuitized
distributions that are not considered "eligible rollover distributions." The
customer may elect
70 PROSPECTUS
out of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% from the
taxable amount. In certain states, if there is federal withholding, then state
withholding is also mandatory. Lincoln Benefit is required to withhold federal
income tax at a rate of 20% on all "eligible rollover distributions" unless you
elect to make a "direct rollover" of such amounts to an IRA or eligible
retirement plan. Eligible rollover distributions generally include all
distributions from Tax Qualified Contracts, including TSAs but excluding IRAs,
with the exception of:
.. required minimum distributions, or,
.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,
.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,
.. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding
requirement, Lincoln Benefit is required to withhold federal income tax using
the wage withholding rates. The customer may elect out of withholding by
completing and signing a withholding election form. If no election is made, we
will automatically withhold using married with three exemptions as the default.
If no U.S. taxpayer identification number is provided, we will automatically
withhold the required 10% of the taxable amount. In certain states, if there is
federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Lincoln Benefit as a withholding
agent must withhold 30% of the taxable amounts paid to a non-resident alien. A
non-resident alien is someone other than a U.S. citizen or resident alien. We
require an original IRS Form W-8BEN at issue to certify the owners' foreign
status. Withholding may be reduced or eliminated if covered by an income tax
treaty between the U.S. and the non-resident alien's country of residence if the
payee provides a U.S. taxpayer identification number on a fully completed Form
W-8BEN. A U.S. taxpayer identification number is a social security number or an
individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS
to non-resident alien individuals who are not eligible to obtain a social
security number. The U.S. does not have a tax treaty with all countries nor do
all tax treaties provide an exclusion or lower withholding rate for annuities.
Charitable IRA Distributions. The Pension Protection Act of 2006 Included a
charitable giving incentive permitting tax-free IRA distributions for charitable
purposes.
For distributions in tax years beginning after 2005 and before 2008, the Act
provides an exclusion from gross income, up to $100,000, for otherwise taxable
IRA distributions from a traditional or Roth IRA that are qualified charitable
distributions. To constitute a qualified charitable distribution, the
distribution must be made (1) directly by the IRA trustee to a certain qualified
charitable organizations and (2) on or after the date the IRA owner attains age
70 1/2. Distributions that are excluded from income under this provision are not
taken into account in determining the individual's deduction, if any, for
charitable contributions.
The IRS has indicated that an IRA trustee is not responsible for determining
whether a distribution to a charity is one that satisfies the requirements for
the new income tax exclusion added by the Pension Protection Act. As a result
the general rules for reporting IRA distributions apply.
Individual Retirement Annuities. Code Section 408(b) permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
retirement plans may be "rolled over" on a tax-deferred basis into an Individual
Retirement Annuity.
Roth Individual Retirement Annuities. Code Section 408A permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. For distributions after 2007, the Pension Protection Act of 2006 allows
distributions from qualified retirement plans including tax sheltered annuities
and governmental Section 457 plans to be rolled over directly into a Roth IRA,
subject to the usual rules that apply to conversions from a traditional IRA into
a Roth IRA. The income portion of a conversion or rollover distribution is
taxable currently, but is exempted from the 10% penalty tax on premature
distributions. An individual with adjusted gross income (AGI) of $100,000 or
more won't be able to rollover amounts from an eligible retirement plan into a
Roth IRA. Please note, however, that the $100,000 AGI limit will be eliminated
for tax years beginning after December 31, 2009. Effective January 1, 2005, the
IRS requires conversions of annuity contracts to include the
71 PROSPECTUS
actuarial present value of other benefits for purposes of valuing the taxable
amount of the conversion.
Annuities Held By Individual Retirement Accounts (commonly known as Custodial
IRAs). Code Section 408 permits a custodian or trustee of an Individual
Retirement Account to purchase an annuity as an investment of the Individual
Retirement Account. If an annuity is purchased inside of an Individual
Retirement Account, then the Annuitant must be the same person as the beneficial
owner of the Individual Retirement Account.
If you have a contract issued as an IRA under Code Section 408(b) and request to
change the ownership to an IRA custodian permitted under Section 408, we will
treat a request to change ownership from an individual to a custodian as an
indirect rollover. We will send a Form 1099R to report the distribution and the
custodian should issue a Form 5498 for the contract value contribution.
Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract in the accumulation phase, with the Annuitant's
surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under the
Contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;
3) We receive a complete request for settlement for the death of the Annuitant;
and
4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has continued
the Individual Retirement Account pursuant to the surviving spouse's
election.
Simplified Employee Pension IRA. Code Section 408(k) allows eligible employers
to establish simplified employee pension plans for their employees using
individual retirement annuities. These employers may, within specified limits,
make deductible contributions on behalf of the employees to the individual
retirement annuities. Employers intending to use the Contract in connection with
such plans should seek competent tax advice.
Savings Incentive Match Plans for Employees (SIMPLE IRA). Code Section 408(p)
allows eligible employers with 100 or fewer employees to establish SIMPLE
retirement plans for their employees using individual retirement annuities. In
general, a SIMPLE IRA consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to purchase the Contract as a SIMPLE IRA should seek competent tax and
legal advice. SIMPLE IRA plans must include the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2007 (EGTRRA) to avoid adverse tax
consequences. If your current SIMPLE IRA plan uses IRS Model Form 5304-SIMPLE
with a revision date of March 2002 or later, then your plan is up to date. If
your plan has a revision date prior to March 2002, please consult with your tax
or legal advisor to determine the action you need to take in order to comply
with this requirement.
To determine if you are eligible to contribute to any of the above listed IRAs
(traditional, Roth, SEP, or SIMPLE), please refer to IRS Publication 590 and
your competent tax advisor.
Tax Sheltered Annuities. Code Section 403(b) provides tax-deferred retirement
savings plans for employees of certain non-profit and educational organizations.
Under Section 403(b), any contract used for a 403(b) plan must provide that
distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date the employee:
.. attains age 59 1/2,
.. severs employment,
.. dies,
.. becomes disabled, or
.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).
These limitations do not apply to withdrawals where Lincoln Benefit is directed
to transfer some or all of the Contract Value to another 403(b) plan. Generally,
we do not accept funds in 403(b) contracts that are subject to the Employee
Retirement Income Security Act of 1974 (ERISA).
Corporate and Self-Employed Pension and Profit Sharing Plans.
Section 401(a) of the Code permits corporate employers to establish various
types of tax favored retirement plans for employees. Self-employed individuals
may establish
72 PROSPECTUS
tax favored retirement plans for themselves and their employees (commonly
referred to as "H.R.10" or "Keogh"). Such retirement plans may permit the
purchase of annuity contracts. Lincoln Benefit no longer issues annuity
contracts to employer sponsored qualified retirement plans.
There are two owner types for contracts intended to qualify under Section
401(a): a qualified plan fiduciary or an annuitant owner.
.. A qualified plan fiduciary exists when a qualified plan trust that is
intended to qualify under Section 401(a) of the Code is the owner. The
qualified plan trust must have its own tax identification number and a
named trustee acting as a fiduciary on behalf of the plan. The annuitant
should be the person for whose benefit the contract was purchased.
.. An annuitant owner exists when the tax identification number of the owner
and annuitant are the same, or the annuity contract is not owned by a
qualified plan trust. The annuitant should be the person for whose benefit
the contract was purchased.
If a qualified plan fiduciary is the owner of the contract, the qualified plan
must be the beneficiary so that death benefits from the annuity are distributed
in accordance with the terms of the qualified plan. Annuitant owned contracts
require that the beneficiary be the annuitant's spouse (if applicable), which is
consistent with the required IRS language for qualified plans under Section
401(a). A completed Annuitant Owned Qualified Plan Designation of Beneficiary
form is required in order to change the beneficiary of an annuitant owned
Qualified Plan contract.
State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible deferred
compensation plan. In eligible governmental plans, all assets and income must be
held in a trust/custodial account/annuity contract for the exclusive benefit of
the participants and their beneficiaries. To the extent the Contracts are used
in connection with a non-governmental eligible plan, employees are considered
general creditors of the employer and the employer as owner of the Contract has
the sole right to the proceeds of the Contract. Under eligible 457 plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan. Lincoln Benefit no
longer issues annuity contracts to employer sponsored qualified retirement
plans.
Annual Reports and Other Documents
Lincoln Benefit's Annual Report on Form 10-K for the year ended December 31,
2007, is incorporated herein by reference, which means that it is legally a part
of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Securities Exchange Act of 1934 are also incorporated herein by
reference, which means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000910739. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 100 F Street NE, Room 1580, Washington, DC
20549-2001. For more information on the operations of SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at P.O. Box 758565, Topeka, KS 66675-8565 or 800-457-7617.
73 PROSPECTUS
Statement of Additional Information
Table of Contents
Additions, Deletions, or Substitutions of Investments
The Contracts
Calculation of Accumulation Unit Values
Calculation of Variable Income Payments
General Matters
Experts
Financial Statements
Accumulation Unit Values
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
74 PROSPECTUS
Appendix A
Contract Comparison Chart
Feature Classic Plus Elite
- ----------------------- ------------------------------ ----------------------- ----------------------
Credit Enhancement None up to 5% depending on None
issue age and amount of
purchase payments
Mortality and Expense
Risk Charge
(Base Contract) 1.25% 1.45% 1.60%
Withdrawal Charge 8.5/ 8.5/ 8.5/ 7.5/
(% of purchase payment) 7/ 7/ 6/ 5/ 4/ 3/ 2 6.5/ 5.5/ 4/2.5 7/ 6/ 5
Withdrawal Charge Confinement, Terminal Illness, Confinement, Terminal Confinement, Terminal
Waivers Unemployment Illness, Unemployment Illness, Unemployment
Feature Classic Select
- ----------------------- ------------------------------ ------
Credit Enhancement None None
Mortality and Expense
Risk Charge
(Base Contract) 1.25% 1.70%
Withdrawal Charge
(% of purchase payment) 7/ 7/ 6/ 5/ 4/ 3/ 2 None
Withdrawal Charge Confinement, Terminal Illness,
Waivers Unemployment N/A
The Fixed Account Options available depend on the type of Contract you have
purchased and the state in which your Contract was issued. The following tables
summarize the availability of the Fixed Account Options in general. Please check
with your representative for specific details for your state.
DCA Fixed Account Option*
---------------------------------------
Classic Plus Elite Select
-------- -------- -------- ------
6-month 6-month 6-month N/A
Transfer Periods 12-month 12-month 12-month N/A
Standard Fixed Account Option (not available in all states)**
Classic Plus Elite Select
------- ---- ----- ------
1-year N/A N/A N/A
N/A N/A N/A N/A
Guarantee Periods N/A N/A N/A N/A
N/A N/A N/A N/A
MVA Fixed Account Option (not available in all states)***
Classic Plus Elite Select
------- ------- ------- -------
1-year 1-year 1-year 1-year
3-year 3-year 3-year 3-year
Guarantee Periods 5-year 5-year 5-year 5-year
7-year 7-year 7-year 7-year
10-year 10-year 10-year 10-year
* At the time you allocate a purchase payment to the DCA Fixed Account
Option, if you do not specify the term length over which the transfers are
to take place, the default transfer period will be 6 months for the 6-month
option and 12 months for the 12 month option.
** May be available only in states where the MVA Fixed Account Option is not
offered.
*** Not available in states where the Standard Fixed Account Options are
offered.
75 PROSPECTUS
Appendix B - Market Value Adjustment
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the term length of the
Guarantee Period for the week preceding the establishment of the
Market Value Adjusted Fixed Guarantee Period Account;
J = the Treasury Rate for a maturity equal to the term length of the
Market Value Adjusted Fixed Guarantee Period Account for the week
preceding the date amounts are transferred or withdrawn from the
Market Value Adjusted Fixed Guarantee Period Account, the date we
determine the Death Proceeds, or the Payout Start Date, as the case
may be ("Market Value Adjustment Date").
N = the number of whole and partial years from the Market Value
Adjustment Date to the expiration of the term length of the Market
Value Adjusted Fixed Guarantee Period Account.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported
in Federal Reserve Board Statistical Release H.15. If such yields cease to be
available in Federal Reserve Board Statistical Release H.15, then we will use an
alternate source for such information in our discretion.
The Market Value Adjustment factor is determined from the following formula:
..9 X [I-(J + .0025)] X N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount transferred, withdrawn, paid as Death Proceeds,
or applied to an Income Plan from a Market Value Adjusted Fixed Guarantee Period
Account at any time other than during the 30 day period after such Guarantee
Period Account expires. NOTE: These examples assume that premium taxes are not
applicable.
Examples Of Market Value Adjustment
Purchase Payment: $10,000 allocated to a Market Value Adjusted
Fixed Guarantee Period Account
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Withdrawal: End of Contract Year 3
Contract: Consultant Solutions Classic*
Example 1: (Assumes Declining Interest Rates)
Step 1: Calculate Contract Value at = $10,000.00 X (1.045)/3/ =
End of Contract Year 3: $11,411.66
Step 2: Calculate the Free Withdrawal = .15 X $10,000 = $1,500
Amount:
Step 3: Calculate the Withdrawal = .06 X ($10,000 - $1,500) = $510
Charge:
Step 4: Calculate the Market Value I = 4.50%
Adjustment:
J = 4.20%
730 DAYS
N = -------- = 2
365 DAYS
Market Value Adjustment Factor: .9 X [I - (J + .0025)] X N
= .9 X [.045 - (.042 + .0025)] X 2 = .0009
Market Value Adjustment = Market Value
Adjustment Factor X Amount
Subject To Market Value Adjustment:
= .0009 X $11,411.66 = $10.27
Step 5: Calculate the amount received = $11,411.66 - $510 + $10.27 = $10,911.93
by Contract owner as a result of
full withdrawal at the end of
Contract Year 3:
76 PROSPECTUS
Example 2: (Assumes Rising Interest Rates)
Step 1: Calculate Contract Value at = $10,000.00 X (1.045)/3/ =
End of Contract Year 3: $11,411.66
Step 2: Calculate the Free Withdrawal = .15 X $10,000 = $1,500
Amount:
Step 3: Calculate the Withdrawal = .06 X ($10,000 - $1,500) = $510
Charge:
Step 4: Calculate the Market Value I = 4.50%
Adjustment:
J = 4.80%
730 DAYS
N = -------- = 2
365 DAYS
Market Value Adjustment Factor: .9 X [I - (J + .0025)] X N
= .9 X [(.045 - (.048 + .0025)] X (2) = -.0099
Market Value Adjustment = Market Value
Adjustment Factor X Amount
Subject To Market Value Adjustment:
= -.0099 X $11,411.66 = -($112.98)
Step 5: Calculate the amount received = $11,411.66 - $510 - $112.98 = $10,788.68
by Contract owner as a result of
full withdrawal at the end of
Contract Year 3:
* These examples assume the election of the Consultant Solutions Classic
Contract for the purpose of illustrating the Market Value Adjustment
calculation. The amounts would be different under Consultant Solutions
Plus, Consultant Solutions Elite Contracts, and Consultant Solutions Select
Contracts which have different expenses and withdrawal charges.
77 PROSPECTUS
Appendix C
Example of Calculation of Income Protection Benefit
Appendix C illustrates how we calculate the amount guaranteed under the Income
Protection Benefit Option. Please remember that you are looking at an example
only. Please also remember that the Income Protection Benefit Option may only be
added to Income Plans 1 and/or 2, and only to those Income Plans for which you
have selected variable income payments.
To illustrate the calculation of the amount guaranteed under the Income
Protection Benefit Option, we assume the following:
Adjusted age of Annuitant on the Payout Start Date: 65
Sex of Annuitant: male
Income Plan selected: 1
Payment frequency: monthly
Amount applied to variable income payments under the Income Plan: $100,000.00
The example assumes that the withdrawal charge period has expired for all
purchase payments. In accordance with the terms of the Contract, the following
additional assumptions apply:
Assumed investment rate: 3%
Guaranteed minimum variable income payment: 85% of the initial variable amount
income value
Step 1 - Calculation of the initial variable amount income value:
Using the assumptions stated above, the initial monthly income payment is $5.49
per $1,000 applied to variable income payments under Income Plan 1. Therefore,
the initial variable amount income value = $100,000 X $5.49/1000 = $549.00.
Step 2 - Calculation of the amount guaranteed under the Income Protection
Benefit Option:
guaranteed minimum variable income payment = 85% X initial variable amount
income value = 85% X $549.00 = $466.65.
Step 3 - Illustration of the effect of the minimum payment guarantee under the
Income Protection Benefit Option:
If in any month your variable income payments would fall below the amount
guaranteed under the Income Protection Benefit Option, your payment for that
month will equal the guaranteed minimum variable income payment. For example,
you would receive $466.65 even if the amount of your monthly income payment
would have been less than that as a result of declining investment experience.
On the other hand, if your monthly income payment is greater than the minimum
guaranteed $466.65, you would receive the greater amount.
78 PROSPECTUS
Appendix D
Withdrawal Adjustment Example - Death Benefits*
Issue Date: January 1, 2005
Initial Purchase Payment: $50,000 (For Consultant Solutions Plus Contracts,
assume a $2,000 Credit Enhancement would apply assuming issue age 85 or younger
(a $1,000 Credit Enhancement would apply assuming issue age 86-90)).
Death Benefit Amount
-----------------------------------------------------
Annual
ROP Value Increase Value**
------------------ ------------------
Contract Classic, Classic,
Beginning Value Elite Maximum Elite
Type of Contract Transaction After And Anniversary And
Date Occurrence Value Amount Occurrence Select Plus Value Select Plus
- ------ -------------------- --------- ----------- ---------- -------- ------- ----------- -------- -------
1/1/06 Contract Anniversary $55,000 -- $55,000 $50,000 $52,000 $55,000 $52,500 $54,600
7/1/06 Partial Withdrawal $60,000 $15,000 $45,000 $37,500 $39,000 $41,250 $40,339 $41,953
The following shows how we compute the adjusted death benefits in the example
above. Please note that the withdrawal reduces the Purchase Payment Value, the
Maximum Anniversary Value, and the Enhanced Beneficiary Value by the same
proportion as the withdrawal reduces the Contract Value.
ROP Death Benefit
Partial Withdrawal Amount (a)
Contract Value Immediately Prior to Partial Withdrawal (b)
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (c)
Withdrawal Adjustment [(a)/(b)]*(c)
Adjusted Death Benefit
MAV Death Benefit
Partial Withdrawal Amount (a)
Contract Value Immediately Prior to Partial Withdrawal (b)
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (c)
Withdrawal Adjustment [(a)/(b)]*(c)
Adjusted Death Benefit
Annual Increase Death Benefit**
Partial Withdrawal Amount (a)
Contract Value Immediately Prior to Partial Withdrawal (b)
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal
(assumes 181 days worth of interest on $52,500 and $54,600,
respectively) (c)
Withdrawal Adjustment [(a)/(b)]*(c)
Adjusted Death Benefit
Classic, Elite and Select Plus
------------------------- -------
ROP Death Benefit
Partial Withdrawal Amount $15,000 $15,000
Contract Value Immediately Prior to Partial Withdrawal $60,000 $60,000
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal $50,000 $52,000
Withdrawal Adjustment $12,500 $13,000
Adjusted Death Benefit $37,500 $39,000
MAV Death Benefit
Partial Withdrawal Amount $15,000 $15,000
Contract Value Immediately Prior to Partial Withdrawal $60,000 $60,000
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal $55,000 $55,000
Withdrawal Adjustment $13,750 $13,750
Adjusted Death Benefit $41,250 $41,250
Annual Increase Death Benefit**
Partial Withdrawal Amount $15,000 $15,000
Contract Value Immediately Prior to Partial Withdrawal $60,000 $60,000
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal
(assumes 181 days worth of interest on $52,500 and $54,600, respectively) $53,786 $55,937
Withdrawal Adjustment $13,446 $13,984
Adjusted Death Benefit $40,339 $41,953
* For purpose of illustrating the withdrawal adjustment calculation, the
example assumes the same hypothetical Contract Values and Maximum
Anniversary Value for all Contracts, net of applicable fees and charges.
Actual death benefit amounts will differ due to the different fees and
charges under each Contract and the Credit Enhancement available under the
Consultant Solutions Plus Contract. Please remember that you are looking at
an example and that your investment performance may be greater or lower
than the figures shown.
** Calculations for the Annual Increase Death Benefit assume that interest
accumulates on a daily basis at a rate equivalent to 5% per year. There may
be certain states in which the Benefit provides for interest that
accumulates at a rate of 3% per year. If calculations assumed an interest
rate of 3% per year, the adjusted death benefit would be lower.
79 PROSPECTUS
Appendix E
Calculation of Enhanced Earnings Death Benefit*
The following are examples of the Enhanced Earnings Death Benefit Option. For
illustrative purposes, the examples assume Earnings in each case. Please
remember that you are looking at examples and that your investment performance
may be greater or lower than the figures shown.
Example 1: Elected When Contract Was Issued Without Any Subsequent Additions or
Withdrawals
In this example, assume that the oldest Contract Owner is age 55 on the Rider
Application Date and elects the Enhanced Earnings Death Benefit Option when the
Contract is issued. The Contract Owner makes an initial purchase payment of
$100,000. After four years, the Contract Owner dies. On the date Lincoln Benefit
receives a Complete Request for Settlement, the Contract Value is $125,000.
Prior to his death, the Contract Owner did not make any additional purchase
payments or take any withdrawals.
Excess of Earnings Withdrawals = $0
Purchase Payments in the 12 months prior to death = $0
In-Force Premium = $100,000
($100,000 + $0 - $0)
In-Force Earnings = $25,000
($125,000 - $100,000)
Enhanced Earnings Death Benefit** = 40%*$25,000 = $10,000
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding
purchase payments in the 12 months prior to death), the In-Force Earnings are
used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death
Benefit Option, the example assumes the same hypothetical Contract Values
for all Contracts, net of applicable fees and charges. Actual death benefit
amounts will differ due to the different fees and charges under each
Contract and the Credit Enhancement available under the Consultant
Solutions Plus Contract.
** If the oldest Contract Owner or Co-Annuitant had been over age 70, and both
were age 79 or younger on the Rider Application Date, the Enhanced Earnings
Death Benefit would be 25% of the In-Force Earnings ($6,250.00).
Example 2: Elected When Contract Was Issued With Subsequent Withdrawals
In this example, assume the same facts as above, except that the Contract Owner
has taken a withdrawal of $10,000 during the second year of the Contract.
Immediately prior to the withdrawal, the Contract Value is $105,000. Here,
$5,000 of the withdrawal is in excess of the In-Force Earnings at the time of
the withdrawal. The Contract Value on the date Lincoln Benefit receives a
Complete Request for Settlement will be assumed to be $114,000.
Excess of Earnings Withdrawals = $5,000
($10,000 - $5,000)
Purchase Payments in the 12 months prior to death = $0
In-Force Premium = $95,000
($100,000 + $0 - $5,000)
In-Force Earnings = $19,000
($114,000 - $95,000)
Enhanced Earnings Death Benefit** = 40%*$19,000 = $7,600
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding
purchase payments in the 12 months prior to death), the In-Force Earnings are
used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death
Benefit Option, the example assumes the same hypothetical Contract Values for
all Contracts, net of applicable fees and charges. Actual death benefit amounts
will differ due to the different fees and charges under each Contract and the
Credit Enhancement available under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner or Co-Annuitant had been over age 70, and both
were age 79 or younger on the Rider Application Date, the Enhanced Earnings
Death Benefit would be 25% of the In-Force Earnings ($4,750.00).
Example 3: Elected After Contract Was Issued With Subsequent Additions and
Withdrawals
This example is intended to illustrate the effect of adding the Enhanced
Earnings Death Benefit Option after the Contract has been issued and the effect
of later purchase payments. In this example, assume there is no Co-Annuitant and
that the oldest Contract Owner is age 72 on the Rider Application Date. At the
time the Contract is issued, the Contract Owner makes a purchase payment of
$100,000. After two years pass, the Contract Owner elects to add the Enhanced
Earnings Death Benefit Option. On the date this Rider is added, the Contract
Value is $110,000. Two years
80 PROSPECTUS
later, the Contract Owner withdraws $50,000. Immediately prior to the
withdrawal, the Contract Value is $130,000. Another two years later, the
Contract Owner makes an additional purchase payment of $40,000. Immediately
after the additional purchase payment, the Contract Value is $130,000. Two years
later, the Contract Owner dies with a Contract Value of $140,000 on the date
Lincoln Benefit receives a Complete Request for Settlement.
Excess of Earnings Withdrawals = $30,000
($50,000 - $20,000)
Purchase Payments in the 12 months prior to death = $0
In-Force Premium = $120,000
($110,000 + $40,000 - $30,000)
In-Force Earnings = $20,000
($140,000 - $120,000)
Enhanced Earnings Death Benefit** = 25%*$20,000 = $5,000
In this example, In-Force Premium is equal to the Contract Value on Rider
Application Date plus the additional purchase payment and minus the
Excess-of-Earnings Withdrawal.
Since In-Force Earnings are less than 50% of the In-Force Premium (excluding
purchase payments in the 12 months prior to death), the In-Force Earnings are
used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death
Benefit Option, the example assumes the same hypothetical Contract Values
for all Contracts, net of applicable fees and charges. Actual death benefit
amounts will differ due to the different fees and charges under each
Contract and the Credit Enhancement available under the Consultant
Solutions Plus Contract.
** If the oldest Contract Owner had been age 70 or younger on the Rider
Application Date, the Enhanced Earnings Death Benefit would be 40% of the
In-Force Earnings ($8,000.00).
Example 4: Spousal Continuation:
This example is intended to illustrate the effect of a surviving spouse electing
to continue the Contract upon the death of the Contract Owner on a Contract with
the Enhanced Earnings Death Benefit Option and MAV Death Benefit Option. In this
example, assume that there is no Co-Annuitant and that the oldest Contract Owner
is age 60 at the time the Contract is purchased (with the Enhanced Earnings
Death Benefit Option but without any other option) with a $100,000 purchase
payment. Five years later the Contract Owner dies and the surviving spouse
elects to continue the Contract. The Contract Value and Maximum Anniversary
Value at this time are $150,000 and $160,000, respectively.
Excess of Earnings Withdrawals = $0
Purchase Payments in the 12 months prior to death = $0
In-Force Premium = $100,000
($100,000 + $0 - $0)
In-Force Earnings = $50,000
($150,000 - $100,000)
Enhanced Earnings Death Benefit** = 40%*$50,000 = $20,000
Contract Value = $150,000
Death Benefit = $160,000
Enhanced Earnings Death Benefit = $20,000
Continuing Contract Value = $180,000
($160,000 + $20,000)
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding
purchase payments in the 12 months prior to death), the In-Force Earnings are
used to compute the Enhanced Earnings Death Benefit amount.
Assume the surviving spouse is age 72 when the Contract is continued. At this
time, the surviving spouse has the option to continue the Enhanced Earnings
Death Benefit Option at an additional mortality and expense risk charge of 0.40%
and with an In-Force Premium amount equal to the Contract Value and the Rider
Date reset to the date the Contract is continued. If this selection is made, the
Enhanced Earnings Death Benefit will be equal to the lesser of 25% of the
In-Force Earnings and 50% of In-Force Premium. Otherwise, the surviving spouse
may elect to terminate the Enhanced Earnings Death Benefit Option at the time of
continuation.
* For purposes of illustrating the calculation of Enhanced Earnings Death
Benefit Option, the example assumes the same hypothetical Contract Values
and Maximum Anniversary Values for all Contracts, net of applicable fees
and charges. Actual death benefit amounts will differ due to the different
fees and charges under each Contract and the Credit Enhancement available
under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner had been over age 70, and both were age 79 or
younger on the Rider Application Date, the Enhanced Earnings Death Benefit
would be 25% of the In-Force Earnings ($12,500.00).
81 PROSPECTUS
Appendix F
Withdrawal Adjustment Example - Accumulation Benefit*
Rider Date: January 1, 2007
Initial Purchase Payment: $50,000 (For Consultant Solutions Plus Contracts,
assume a $2,000 Credit Enhancement would apply assuming issue age 85 or younger
(a $1,000 Credit Enhancement would apply assuming issue age 86-90))
Initial Benefit Base: $50,000 for Consultant Solutions Classic, Elite and Select
Contracts, $52,000 for Consultant Solutions Plus Contracts (assuming issue age
85 or younger)
Benefit Base
------------------------
Beginning Transaction Contract Value Classic, Elite
Date Type of Occurrence Contract Value Amount After Occurrence and Select Plus
- -------- -------------------- -------------- ----------- ---------------- -------------- -------
1/1/2008 Contract Anniversary $55,000 -- $55,000 $50,000 $52,000
7/1/2008 Partial Withdrawal $60,000 $15,000 $45,000 $37,500 $39,000
The following shows how we compute the adjusted Benefit Bases in the example
above. Please note the withdrawal reduces the Benefit Base by the same
proportion as the withdrawal reduces the Contract Value.
Classic, Elite and Select Plus
------------------------- -------
Benefit Base
Partial Withdrawal Amount (a) $15,000 $15,000
Contract Value Immediately Prior to Partial Withdrawal (b) $60,000 $60,000
Value of Benefit Base Immediately Prior to Partial Withdrawal (c) $50,000 $52,000
Withdrawal Adjustment [(a)/(b)]*(c) $12,500 $13,000
Adjusted Benefit Base $37,500 $39,000
* For the purpose of illustrating the withdrawal adjustment calculation, the
example assumes the same hypothetical Contract Values, net of applicable
fees and charges. Actual Contract Values will differ due to the different
fees and charges under each Contract and the Credit Enhancement available
under Consultant Solutions Plus Contracts. Please remember that you are
looking at an example and that your investment performance may be greater
or lower than the figures shown.
82 PROSPECTUS
Appendix G - SureIncome Withdrawal Benefit Option Calculation Examples
Example 1: Assume you purchase a Consultant Solutions contract with a $100,000
initial purchase payment and add the SureIncome Option at issue.
Your Benefit Base is $100,000, which is your initial purchase payment of
$100,000.
Your Benefit Payment is $8,000, which is 8% of your initial purchase payment.
Your Benefit Payment Remaining for this Benefit Year is $8,000, which is equal
to your Benefit Payment at the beginning of this Benefit Year.
Example 2: Assume Example 1 is continued and an additional purchase payment of
$40,000 is made in the first Benefit Year.
The Benefit Base is increased to $140,000, which is your prior Benefit Base
($100,000) plus your additional purchase payment ($40,000).
The Benefit Payment is increased to $11,200, which is your prior Benefit Payment
($8,000) plus 8% of your additional purchase payment ($40,000).
The Benefit Payment Remaining is increased to $11,200, which is your Benefit
Payment Remaining prior to your additional purchase payment ($8,000) plus 8% of
your additional purchase payment ($40,000).
Example 3: Assume Example 1 is continued and a withdrawal of $8,000 is made
during the first Benefit Year.
The Benefit Base is reduced to $92,000, which is your prior Benefit Base
($100,000) less your withdrawal ($8,000).
The Benefit Payment is unchanged and remains $8,000.
The Benefit Payment Remaining in the first Benefit Year is $0, which is your
Benefit Payment Remaining prior to your withdrawal ($8,000) less your withdrawal
($8,000).
Example 4: Assume example 1 is continued and a withdrawal of $25,000 is made
during the first Benefit Year. Assume the Contract Value prior to the withdrawal
was $130,000. Because the $25,000 withdrawal is larger than the Benefit Payment
Remaining, the Benefit Base and Benefit Payment will be recalculated according
to applicable formulas.
The Benefit Base is reduced to $75,000, determined by the following calculation:
the lesser of ($130,000 - $25,000) and ($100,000 - $25,000) = $75,000.
The Benefit Payment remains $8,000, determined by the following calculation: the
lesser of ($8,000) and (8% x ($130,000 - $25,000)) = $8,000.
There is no Benefit Payment Remaining because the withdrawal has reduced it to
$0.
Example 5: Assume example 3 is continued and an additional withdrawal of $5,000
is taken in the same year (the first Benefit Year). Assume the Contract Value
prior to the additional withdrawal was $60,000. Because the $5,000 withdrawal is
larger than the Benefit Payment Remaining ($0), the Benefit Base and Benefit
Payment will be recalculated according to applicable formulas.
The Benefit Base is reduced to $55,000, determined by the following calculation:
the lesser of ($60,000 - $5,000) and ($92,000 - $5,000) = $55,000.
The Benefit Payment is reduced to $4,400, determined by the following formula:
the lesser of ($8,000) and ((8% x ($60,000 - $5,000)) = $4,400.
The Benefit Payment Remaining is unchanged at $0.
Example 6: Assume example 5 is continued and an additional Purchase Payment of
$40,000 is made in the same year (the first Benefit Year).
The Benefit Base is increased to $95,000, which is your prior Benefit Base
($55,000) plus your additional purchase payment ($40,000).
The Benefit Payment is increased to $7,600, which is your prior Benefit Payment
($4,400) plus 8% of your additional purchase payment ($40,000).
83 PROSPECTUS
The Benefit Payment Remaining is increased to $3,200, which is your Benefit
Payment Remaining prior to your additional purchase payment ($0) plus 8% of your
additional purchase payment ($40,000).
Example 7: Assume example 6 is continued and an additional withdrawal of $3,200
is taken in the same year (the first Benefit Year).
The Benefit Base is reduced to $91,800, which is your prior Benefit Base
($95,000) less your withdrawal ($3,200).
The Benefit Payment is unchanged and remains $7,600.
The Benefit Payment Remaining is reduced to $0, which is your Benefit Payment
Remaining prior to your withdrawal ($3,200) less your withdrawal ($3,200).
84 PROSPECTUS
Appendix H - Accumulation Unit Values
Appendix H presents the Accumulation Unit Values and number of Accumulation
Units outstanding for each Variable Sub-Account since the Variable Sub-Accounts
were first offered under the Contracts. This Appendix includes Accumulation Unit
Values representing the highest and lowest available combinations of Contract
charges that affect Accumulation Unit Values for each Contract. The Statement of
Additional Information, which is available upon request without charge, contains
the Accumulation Unit Values for all other available combinations of Contract
charges that affect Accumulation Unit values for each Contract. Please contract
us at 800-457-7617 to obtain a copy of the Statement of Additional Information.
The names of the following Sub-Accounts changed since December 31, 2007. The
names shown in the tables of Accumulation Units correspond to the name of the
Sub-Account as of December 31, 2007:
Sub-Account Name as of December 31,
2007 (as appears in the following
tables of Accumulation Unit Values) Sub-Account Name as of May 1, 2008
Alger American Growth Portfolio - Alger American LargeCap Growth
Class O Portfolio - Class O
Alger American Leveraged AllCap Alger American Capital Appreciation
Portfolio - Class O Portfolio - Class O
MFS Emerging Growth Series - Initial
Class MFS Growth Series - Initial Class
Janus Aspen Series Foreign Stock Janus Aspen Series International
Portfolio - Service Shares Growth Portfolio - Service Shares
Van Kampen LIT Aggressive Growth Van Kampen LIT Mid Cap Growth
Portfolio, Class II Portfolio, Class II
Van Kampen UIF Equity Growth
Portfolio, Class II UIF Capital Growth Portfolio, Class II
LBL Consultant Solution Classic Contracts - Prospectus Accumulation Unit Value
and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (Low)
Mortality & Expense = 1.25
For the Year Ending December 31,
-----------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.745 $ 11.176 $ 12.452
Accumulation Unit Value Ending $ 10.745 $ 11.176 $ 12.452 $ 12.451
Number of Units Outstanding at End of Year 132,216 223,522 287,925 280,725
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.303 $ 11.036 $ 11.547
Accumulation Unit Value Ending $ 10.303 $ 11.036 $ 11.547 $ 12.727
Number of Units Outstanding at End of Year 25,665 50,990 61,199 56,382
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $ 10.000 $ 10.800
Accumulation Unit Value Ending -- -- $ 10.800 $ 11.493
Number of Units Outstanding at End of Year -- -- 173,314 185,437
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.989 $ 11.629 $ 12.732
Accumulation Unit Value Ending $ 10.989 $ 11.629 $ 12.732 $ 13.725
Number of Units Outstanding at End of Year 110,892 253,522 405,969 387,292
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.103 $ 11.134 $ 11.523
Accumulation Unit Value Ending $ 10.103 $ 11.134 $ 11.523 $ 13.598
Number of Units Outstanding at End of Year 121,781 212,340 222,959 210,459
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.219 $ 11.509 $ 13.506
Accumulation Unit Value Ending $ 10.219 $ 11.509 $ 13.506 $ 17.746
Number of Units Outstanding at End of Year 23,051 74,712 132,966 141,537
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.628 $ 11.485 $ 12.450
Accumulation Unit Value Ending $ 10.628 $ 11.485 $ 12.450 $ 16.122
Number of Units Outstanding at End of Year 94,790 210,380 308,342 291,878
85 PROSPECTUS
For the Year Ending December 31,
---------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.217 $ 10.460 $ 11.056
Accumulation Unit Value Ending $ 10.217 $ 10.460 $ 11.056 $ 12.561
Number of Units Outstanding at End of Year 56,932 111,219 134,814 148,955
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 11.389 $ 13.106 $ 14.408
Accumulation Unit Value Ending $ 11.389 $ 13.106 $ 14.408 $ 16.672
Number of Units Outstanding at End of Year 105,161 523,173 891,858 862,174
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.840 $ 11.290 $ 13.358
Accumulation Unit Value Ending $ 10.840 $ 11.290 $ 13.358 $ 13.344
Number of Units Outstanding at End of Year 248,175 457,976 699,045 675,449
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.809 $ 10.209 $ 10.734
Accumulation Unit Value Ending $ 9.809 $ 10.209 $ 10.734 $ 13.411
Number of Units Outstanding at End of Year 193,118 307,319 362,183 341,543
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.668 $ 11.004 $ 12.532
Accumulation Unit Value Ending $ 10.668 $ 11.004 $ 12.532 $ 13.002
Number of Units Outstanding at End of Year 306,038 812,899 1,175,182 1,100,162
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.215 $ 10.269 $ 10.549
Accumulation Unit Value Ending $ 10.215 $ 10.269 $ 10.549 $ 10.831
Number of Units Outstanding at End of Year 172,370 496,639 806,750 811,904
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.965 $ 10.104 $ 10.429
Accumulation Unit Value Ending $ 9.965 $ 10.104 $ 10.429 $ 10.797
Number of Units Outstanding at End of Year 319,746 913,007 1,383,659 1,358,656
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.931 $ 12.810 $ 14.883
Accumulation Unit Value Ending $ 10.931 $ 12.810 $ 14.883 $ 17.185
Number of Units Outstanding at End of Year 72,197 311,381 762,307 776,150
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.625 $ 11.285 $ 12.292
Accumulation Unit Value Ending $ 10.625 $ 11.285 $ 12.292 $ 13.373
Number of Units Outstanding at End of Year 54,585 153,996 242,446 234,531
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.317 $ 11.861 $ 13.814
Accumulation Unit Value Ending $ 11.317 $ 11.861 $ 13.814 $ 16.114
Number of Units Outstanding at End of Year 32,940 115,107 165,929 179,041
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.491 $ 12.759 $ 13.735
Accumulation Unit Value Ending $ 11.491 $ 12.759 $ 13.735 $ 18.512
Number of Units Outstanding at End of Year 14,808 76,819 168,017 143,770
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.303 $ 12.266 $ 13.924
Accumulation Unit Value Ending $ 11.303 $ 12.266 $ 13.924 $ 14.720
Number of Units Outstanding at End of Year 68,978 356,713 564,227 539,843
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.339 $ 12.407 $ 13.558
Accumulation Unit Value Ending $ 11.339 $ 12.407 $ 13.558 $ 14.194
Number of Units Outstanding at End of Year 39,658 125,616 164,908 134,550
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $ 10.000 $ 10.974 $ 13.193
Accumulation Unit Value Ending -- $ 10.974 $ 13.193 $ 12.219
Number of Units Outstanding at End of Year -- 77,386 178,295 196,175
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $ 10.000
Accumulation Unit Value Ending -- -- -- $ 9.509
Number of Units Outstanding at End of Year -- -- -- 48,073
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 10.871 $ 11.105 $ 12.089
Accumulation Unit Value Ending $ 10.871 $ 11.105 $ 12.089 $ 11.885
Number of Units Outstanding at End of Year 168,236 465,661 703,308 698,823
86 PROSPECTUS
For the Year Ending December 31,
---------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.652 $ 10.724 $ 11.637
Accumulation Unit Value Ending $ 10.652 $ 10.724 $ 11.637 $ 11.655
Number of Units Outstanding at End of Year 105,366 209,209 238,258 216,819
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.471 $ 10.767 $ 11.398
Accumulation Unit Value Ending $ 10.471 $ 10.767 $ 11.398 $ 12.483
Number of Units Outstanding at End of Year 19,040 229,340 467,604 434,299
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.810 $ 11.413 $ 12.689
Accumulation Unit Value Ending $ 10.810 $ 11.413 $ 12.689 $ 13.772
Number of Units Outstanding at End of Year 9,814 32,676 38,786 40,966
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 9.945 $ 10.304 $ 11.480
Accumulation Unit Value Ending $ 9.945 $ 10.304 $ 11.480 $ 11.579
Number of Units Outstanding at End of Year 40,927 92,908 113,307 100,633
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.783 $ 10.914 $ 12.019
Accumulation Unit Value Ending $ 10.783 $ 10.914 $ 12.019 $ 12.323
Number of Units Outstanding at End of Year 128,035 326,074 375,040 335,392
MFS Value Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 11.175 $ 11.737 $ 13.954
Accumulation Unit Value Ending $ 11.175 $ 11.737 $ 13.954 $ 14.810
Number of Units Outstanding at End of Year 45,846 129,930 194,233 188,327
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $ 10.000 $ 11.723 $ 11.877
Accumulation Unit Value Ending -- $ 11.723 $ 11.877 $ 12.423
Number of Units Outstanding at End of Year -- 26,917 87,641 90,045
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.390 $ 12.817 $ 14.840
Accumulation Unit Value Ending $ 11.390 $ 12.817 $ 14.840 $ 15.529
Number of Units Outstanding at End of Year 123,098 340,222 463,678 425,468
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.324 $ 12.256 $ 13.864
Accumulation Unit Value Ending $ 11.324 $ 12.256 $ 13.864 $ 13.485
Number of Units Outstanding at End of Year 138,676 457,975 760,414 690,006
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.382 $ 10.769 $ 10.857
Accumulation Unit Value Ending $ 10.382 $ 10.769 $ 10.857 $ 11.099
Number of Units Outstanding at End of Year 75,187 276,055 508,415 482,258
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 9.959 $ 10.096 $ 10.420
Accumulation Unit Value Ending $ 9.959 $ 10.096 $ 10.420 $ 10.781
Number of Units Outstanding at End of Year 167,490 325,748 459,580 401,905
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.596 $ 10.671 $ 10.602
Accumulation Unit Value Ending $ 10.596 $ 10.671 $ 10.602 $ 11.576
Number of Units Outstanding at End of Year 206,384 648,012 937,569 902,299
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.283 $ 10.392 $ 10.647
Accumulation Unit Value Ending $ 10.283 $ 10.392 $ 10.647 $ 11.424
Number of Units Outstanding at End of Year 249,949 653,328 1,083,265 1,062,806
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 10.805 $ 10.951 $ 11.970
Accumulation Unit Value Ending $ 10.805 $ 10.951 $ 11.970 $ 11.284
Number of Units Outstanding at End of Year 38,773 61,072 86,922 76,705
87 PROSPECTUS
For the Year Ending December 31,
---------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 11.229 $ 10.576 $ 11.620
Accumulation Unit Value Ending $ 11.229 $ 10.576 $ 11.620 $ 12.187
Number of Units Outstanding at End of Year 121,721 203,935 218,567 170,119
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $ 10.000 $ 10.599 $ 11.890 $ 13.065
Accumulation Unit Value Ending $ 10.599 $ 11.890 $ 13.065 $ 15.819
Number of Units Outstanding at End of Year 15,602 56,294 91,432 78,479
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $ 10.000 $ 10.490 $ 10.932 $ 11.791
Accumulation Unit Value Ending $ 10.490 $ 10.932 $ 11.791 $ 13.084
Number of Units Outstanding at End of Year 74,071 438,125 846,349 814,281
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $ 10.000 $ 11.106 $ 11.361 $ 13.299
Accumulation Unit Value Ending $ 11.106 $ 11.361 $ 13.299 $ 13.516
Number of Units Outstanding at End of Year 299,734 948,390 1,402,991 1,333,577
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $ 10.000 $ 9.917 $ 9.804 $ 10.509
Accumulation Unit Value Ending $ 9.917 $ 9.804 $ 10.509 $ 10.787
Number of Units Outstanding at End of Year 33,863 58,131 63,097 68,791
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $ 10.000 $ 12.106 $ 15.764 $ 21.694
Accumulation Unit Value Ending $ 12.106 $ 15.764 $ 21.694 $ 29.449
Number of Units Outstanding at End of Year 13,596 76,101 140,010 151,951
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $ 10.000 $ 12.455 $ 18.637 $ 22.889
Accumulation Unit Value Ending $ 12.455 $ 18.637 $ 22.889 $ 32.819
Number of Units Outstanding at End of Year 25,156 98,493 151,158 197,678
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 11.112 $ 12.180 $ 12.608
Accumulation Unit Value Ending $ 11.112 $ 12.180 $ 12.608 $ 14.626
Number of Units Outstanding at End of Year 25,709 47,131 54,285 48,758
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 10.187 $ 10.379 $ 10.558
Accumulation Unit Value Ending $ 10.187 $ 10.379 $ 10.558 $ 11.145
Number of Units Outstanding at End of Year 63,788 164,577 182,914 211,170
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 11.083 $ 11.996 $ 13.725
Accumulation Unit Value Ending $ 11.083 $ 11.996 $ 13.725 $ 13.881
Number of Units Outstanding at End of Year 135,175 493,860 824,335 783,069
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $ 10.000 $ 10.383 $ 11.829 $ 12.114
Accumulation Unit Value Ending $ 10.383 $ 11.829 $ 12.114 $ 14.539
Number of Units Outstanding at End of Year 14,496 58,864 88,585 86,678
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $ 10.000 $ 12.853 $ 14.804 $ 20.106
Accumulation Unit Value Ending $ 12.853 $ 14.804 $ 20.106 $ 16.407
Number of Units Outstanding at End of Year 241,544 448,864 695,926 515,759
* The LBL Consultant Solutions Classic Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub-Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
88 PROSPECTUS
LBL Consultant Solution Classic Contracts - Prospectus Accumulation Unit Value
and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (High)
Mortality & Expense = 2.15
For the Year Ending December 31,
--------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ----------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.656 $10.982 $12.125
Accumulation Unit Value Ending $10.656 $10.982 $12.125 $12.013
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.217 $10.845 $11.244
Accumulation Unit Value Ending $10.217 $10.845 $11.244 $12.279
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $10.734
Accumulation Unit Value Ending -- -- $10.734 $11.317
Number of Units Outstanding at End of Year -- -- 0 0
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.897 $11.427 $12.398
Accumulation Unit Value Ending $10.897 $11.427 $12.398 $13.242
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.019 $10.942 $11.220
Accumulation Unit Value Ending $10.019 $10.942 $11.220 $13.120
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.134 $11.309 $13.152
Accumulation Unit Value Ending $10.134 $11.309 $13.152 $17.121
Number of Units Outstanding at End of Year 0 0 0 0
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.539 $11.286 $12.123
Accumulation Unit Value Ending $10.539 $11.286 $12.123 $15.555
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.132 $10.279 $10.765
Accumulation Unit Value Ending $10.132 $10.279 $10.765 $12.119
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $11.295 $12.880 $14.030
Accumulation Unit Value Ending $11.295 $12.880 $14.030 $16.085
Number of Units Outstanding at End of Year 0 303 292 280
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.750 $11.095 $13.007
Accumulation Unit Value Ending $10.750 $11.095 $13.007 $12.875
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.727 $10.032 $10.452
Accumulation Unit Value Ending $ 9.727 $10.032 $10.452 $12.939
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.579 $10.813 $12.202
Accumulation Unit Value Ending $10.579 $10.813 $12.202 $12.544
Number of Units Outstanding at End of Year 0 0 0 0
89 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.130 $10.091 $10.272
Accumulation Unit Value Ending $10.130 $10.091 $10.272 $10.450
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.882 $ 9.929 $10.155
Accumulation Unit Value Ending $ 9.882 $ 9.929 $10.155 $10.417
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.840 $12.588 $14.492
Accumulation Unit Value Ending $10.840 $12.588 $14.492 $16.580
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $10.537 $11.089 $11.970
Accumulation Unit Value Ending $10.537 $11.089 $11.970 $12.902
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.223 $11.655 $13.452
Accumulation Unit Value Ending $11.223 $11.655 $13.452 $15.547
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.395 $12.539 $13.375
Accumulation Unit Value Ending $11.395 $12.539 $13.375 $17.861
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.209 $12.053 $13.558
Accumulation Unit Value Ending $11.209 $12.053 $13.558 $14.202
Number of Units Outstanding at End of Year 0 577 565 531
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.245 $12.192 $13.202
Accumulation Unit Value Ending $11.245 $12.192 $13.202 $13.695
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $10.000 $10.906 $12.993
Accumulation Unit Value Ending -- $10.906 $12.993 $11.923
Number of Units Outstanding at End of Year -- 0 0 0
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $10.000
Accumulation Unit Value Ending -- -- -- $ 9.450
Number of Units Outstanding at End of Year -- -- -- 0
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.781 $10.912 $11.771
Accumulation Unit Value Ending $10.781 $10.912 $11.771 $11.467
Number of Units Outstanding at End of Year 0 322 310 298
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.563 $10.538 $11.331
Accumulation Unit Value Ending $10.563 $10.538 $11.331 $11.245
Number of Units Outstanding at End of Year 0 0 0 0
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.384 $10.580 $12.125
Accumulation Unit Value Ending $10.384 $10.580 $11.098 $12.013
Number of Units Outstanding at End of Year 0 0 0 0
90 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.720 $11.215 $11.098
Accumulation Unit Value Ending $10.720 $11.215 $12.355 $12.043
Number of Units Outstanding at End of Year 0 0 0 0
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $10.000 $ 9.862 $10.126 $11.178
Accumulation Unit Value Ending $ 9.862 $10.126 $11.178 $11.171
Number of Units Outstanding at End of Year 0 0 0 0
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.694 $10.725 $11.703
Accumulation Unit Value Ending $10.694 $10.725 $11.703 $11.889
Number of Units Outstanding at End of Year 0 326 314 301
MFS Value Series - Service Class
Accumulation Unit Value Beginning $10.000 $11.082 $11.534 $13.587
Accumulation Unit Value Ending $11.082 $11.534 $13.587 $14.288
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $10.000 $11.651 $11.697
Accumulation Unit Value Ending -- $11.651 $11.697 $12.123
Number of Units Outstanding at End of Year -- 0 0 0
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.296 $12.595 $14.450
Accumulation Unit Value Ending $11.296 $12.595 $14.450 $14.982
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.230 $12.044 $13.500
Accumulation Unit Value Ending $11.230 $12.044 $13.500 $13.011
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.296 $10.583 $10.572
Accumulation Unit Value Ending $10.296 $10.583 $10.572 $10.708
Number of Units Outstanding at End of Year 0 511 574 546
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $ 9.876 $ 9.922 $10.147
Accumulation Unit Value Ending $ 9.876 $ 9.922 $10.147 $10.401
Number of Units Outstanding at End of Year 0 602 635 596
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.508 $10.487 $10.324
Accumulation Unit Value Ending $10.508 $10.487 $10.324 $11.168
Number of Units Outstanding at End of Year 0 495 477 458
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.197 $10.212 $10.368
Accumulation Unit Value Ending $10.197 $10.212 $10.368 $11.022
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $10.000 $10.739 $10.785 $11.682
Accumulation Unit Value Ending $10.739 $10.785 $11.682 $10.911
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $10.000 $11.136 $10.393 $11.315
Accumulation Unit Value Ending $11.136 $10.393 $11.315 $11.758
Number of Units Outstanding at End of Year 0 0 0 0
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $10.000 $10.511 $11.684 $12.722
Accumulation Unit Value Ending $10.511 $11.684 $12.722 $15.263
Number of Units Outstanding at End of Year 0 0 0 0
91 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.403 $10.743 $11.481
Accumulation Unit Value Ending $10.403 $10.743 $11.481 $12.623
Number of Units Outstanding at End of Year 0 348 335 321
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $11.014 $11.165 $12.949
Accumulation Unit Value Ending $11.014 $11.165 $12.949 $13.040
Number of Units Outstanding at End of Year 0 764 737 706
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.835 $ 9.634 $10.233
Accumulation Unit Value Ending $ 9.835 $ 9.634 $10.233 $10.407
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $12.005 $15.491 $21.124
Accumulation Unit Value Ending $12.005 $15.491 $21.124 $28.413
Number of Units Outstanding at End of Year 0 135 130 124
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $12.352 $18.314 $22.288
Accumulation Unit Value Ending $12.352 $18.314 $22.288 $31.665
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $11.019 $11.969 $12.277
Accumulation Unit Value Ending $11.019 $11.969 $12.277 $14.111
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.103 $10.200 $10.281
Accumulation Unit Value Ending $10.103 $10.200 $10.281 $10.753
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.991 $11.789 $13.365
Accumulation Unit Value Ending $10.991 $11.789 $13.365 $13.392
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $10.297 $11.624 $11.796
Accumulation Unit Value Ending $10.297 $11.624 $11.796 $14.027
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $12.746 $14.547 $19.578
Accumulation Unit Value Ending $12.746 $14.547 $19.578 $15.830
Number of Units Outstanding at End of Year 0 654 582 630
* The LBL Consultant Solutions Classic Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
92 PROSPECTUS
LBL Consultant Solution Elite Contracts - Prospectus Accumulation Unit Value and
Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (Low)
Mortality & Expense = 1.6
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.710 $11.100 $12.324
Accumulation Unit Value Ending $10.710 $11.100 $12.324 $12.279
Number of Units Outstanding at End of Year 14,119 26,910 26,039 15,073
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.270 $10.962 $11.429
Accumulation Unit Value Ending $10.270 $10.962 $11.429 $12.551
Number of Units Outstanding at End of Year 209 648 1,382 1,120
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $10.774
Accumulation Unit Value Ending -- -- $10.774 $11.424
Number of Units Outstanding at End of Year -- -- 15,396 18,197
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.953 $11.550 $12.601
Accumulation Unit Value Ending $10.953 $11.550 $12.601 $13.536
Number of Units Outstanding at End of Year 3,434 9,987 25,207 25,250
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.070 $11.059 $11.405
Accumulation Unit Value Ending $10.070 $11.059 $11.405 $13.411
Number of Units Outstanding at End of Year 3,205 4,438 4,747 3,856
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.186 $11.431 $13.368
Accumulation Unit Value Ending $10.186 $11.431 $13.368 $17.501
Number of Units Outstanding at End of Year 4,734 5,217 10,380 11,158
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.593 $11.407 $12.323
Accumulation Unit Value Ending $10.593 $11.407 $12.323 $15.900
Number of Units Outstanding at End of Year 16,990 22,184 32,839 22,247
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.184 $10.390 $10.942
Accumulation Unit Value Ending $10.184 $10.390 $10.942 $12.387
Number of Units Outstanding at End of Year 6,127 16,830 20,152 18,915
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $11.353 $13.018 $14.260
Accumulation Unit Value Ending $11.353 $13.018 $14.260 $16.442
Number of Units Outstanding at End of Year 13,482 50,412 98,161 98,587
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.805 $11.214 $13.221
Accumulation Unit Value Ending $10.805 $11.214 $13.221 $13.160
Number of Units Outstanding at End of Year 16,904 25,309 52,728 47,153
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.777 $10.140 $10.623
Accumulation Unit Value Ending $ 9.777 $10.140 $10.623 $13.226
Number of Units Outstanding at End of Year 2,742 6,853 8,255 7,221
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.634 $10.930 $12.403
Accumulation Unit Value Ending $10.634 $10.930 $12.403 $12.823
Number of Units Outstanding at End of Year 7,868 38,047 65,217 59,035
93 PROSPECTUS
For the Year Ending December 31,
---------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.182 $ 10.199 $ 10.441
Accumulation Unit Value Ending $10.182 $10.199 $ 10.441 $ 10.682
Number of Units Outstanding at End of Year 21,758 49,266 73,225 66,985
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.933 $ 10.036 $ 10.322
Accumulation Unit Value Ending $ 9.933 $10.036 $ 10.322 $ 10.648
Number of Units Outstanding at End of Year 58,803 68,484 161,389 125,834
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.896 $ 12.723 $ 14.730
Accumulation Unit Value Ending $10.896 $12.723 $ 14.730 $ 16.948
Number of Units Outstanding at End of Year 3,480 16,347 67,797 84,726
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $10.591 $ 11.209 $ 12.166
Accumulation Unit Value Ending $10.591 $11.209 $ 12.166 $ 13.188
Number of Units Outstanding at End of Year 20,549 24,673 20,866 19,377
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.280 $ 11.781 $ 13.672
Accumulation Unit Value Ending $11.280 $11.781 $ 13.672 $ 15.892
Number of Units Outstanding at End of Year 282 1,583 5,830 7,627
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.454 $ 12.673 $ 13.594
Accumulation Unit Value Ending $11.454 $12.673 $ 13.594 $ 18.257
Number of Units Outstanding at End of Year 16 5,639 14,144 18,465
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.266 $ 12.183 $ 13.781
Accumulation Unit Value Ending $11.266 $12.183 $ 13.781 $ 14.517
Number of Units Outstanding at End of Year 12,402 48,976 59,842 53,518
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.302 $ 12.323 $ 13.419
Accumulation Unit Value Ending $11.302 $12.323 $ 13.419 $ 13.998
Number of Units Outstanding at End of Year 9,724 16,649 21,808 20,140
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $10.000 $ 10.947 $ 13.116
Accumulation Unit Value Ending -- $10.947 $ 13.116 $ 12.103
Number of Units Outstanding at End of Year -- 17,047 20,417 23,686
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $ 10.000
Accumulation Unit Value Ending -- -- -- $ 9.486
Number of Units Outstanding at End of Year -- -- -- 4,256
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.836 $ 11.030 $ 11.964
Accumulation Unit Value Ending $10.836 $11.030 $ 11.964 $ 11.721
Number of Units Outstanding at End of Year 18,080 43,334 67,099 64,359
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.617 $ 10.651 $ 11.517
Accumulation Unit Value Ending $10.617 $10.651 $ 11.517 $ 11.495
Number of Units Outstanding at End of Year 5,239 8,859 9,006 8,010
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.437 $ 10.694 $ 11.281
Accumulation Unit Value Ending $10.437 $10.694 $ 11.281 $ 12.310
Number of Units Outstanding at End of Year 0 20,459 40,226 35,303
94 PROSPECTUS
For the Year Ending December 31,
--------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ----------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.775 $ 11.336 $12.558
Accumulation Unit Value Ending $10.775 $11.336 $ 12.558 $13.582
Number of Units Outstanding at End of Year 1,497 2,187 2,311 2,327
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $10.000 $ 9.912 $ 10.235 $11.362
Accumulation Unit Value Ending $ 9.912 $10.235 $ 11.362 $11.419
Number of Units Outstanding at End of Year 0 1,241 2,619 2,212
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.748 $ 10.841 $11.896
Accumulation Unit Value Ending $10.748 $10.841 $ 11.896 $12.153
Number of Units Outstanding at End of Year 24,820 43,498 48,499 36,646
MFS Value Series - Service Class
Accumulation Unit Value Beginning $10.000 $11.139 $ 11.658 $13.810
Accumulation Unit Value Ending $11.139 $11.658 $ 13.810 $14.605
Number of Units Outstanding at End of Year 1,555 7,507 10,015 11,214
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $10.000 $ 11.695 $11.807
Accumulation Unit Value Ending -- $11.695 $ 11.807 $12.306
Number of Units Outstanding at End of Year -- 2,405 10,770 10,772
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.354 $ 12.730 $14.688
Accumulation Unit Value Ending $11.354 $12.730 $ 14.688 $15.315
Number of Units Outstanding at End of Year 12,335 23,494 32,798 24,924
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.287 $ 12.174 $13.721
Accumulation Unit Value Ending $11.287 $12.174 $ 13.721 $13.299
Number of Units Outstanding at End of Year 4,631 27,646 40,614 39,454
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.348 $ 10.696 $10.745
Accumulation Unit Value Ending $10.348 $10.696 $ 10.745 $10.946
Number of Units Outstanding at End of Year 4,619 28,950 45,056 43,735
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $ 9.927 $ 10.028 $10.313
Accumulation Unit Value Ending $ 9.927 $10.028 $ 10.313 $10.632
Number of Units Outstanding at End of Year 4,061 17,626 110,294 72,629
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.562 $ 10.599 $10.493
Accumulation Unit Value Ending $10.562 $10.599 $ 10.493 $11.416
Number of Units Outstanding at End of Year 24,840 77,486 72,477 60,196
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.250 $ 10.322 $10.538
Accumulation Unit Value Ending $10.250 $10.322 $ 10.538 $11.266
Number of Units Outstanding at End of Year 19,456 47,858 83,160 81,848
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $10.000 $10.779 $ 10.887 $11.858
Accumulation Unit Value Ending $10.779 $10.887 $ 11.858 $11.138
Number of Units Outstanding at End of Year 3,706 5,953 5,951 5,481
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $10.000 $11.193 $ 10.505 $11.501
Accumulation Unit Value Ending $11.193 $10.505 $ 11.501 $12.019
Number of Units Outstanding at End of Year 12,083 19,478 22,405 16,051
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $10.000 $10.565 $ 11.810 $12.931
Accumulation Unit Value Ending $10.565 $11.810 $ 12.931 $15.601
Number of Units Outstanding at End of Year 310 295 8,282 6,921
95 PROSPECTUS
For the Year Ending December 31,
---------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.456 $ 10.858 $ 11.670
Accumulation Unit Value Ending $10.456 $10.858 $ 11.670 $ 12.903
Number of Units Outstanding at End of Year 6,385 40,786 75,772 81,626
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $11.070 $ 11.285 $ 13.162
Accumulation Unit Value Ending $11.070 $11.285 $ 13.162 $ 13.329
Number of Units Outstanding at End of Year 26,985 92,669 137,043 129,012
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.885 $ 9.738 $ 10.401
Accumulation Unit Value Ending $ 9.885 $ 9.738 $ 10.401 $ 10.638
Number of Units Outstanding at End of Year 0 1,220 1,929 1,607
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $12.067 $ 15.658 $ 21.471
Accumulation Unit Value Ending $12.067 $15.658 $ 21.471 $ 29.043
Number of Units Outstanding at End of Year 1,588 12,064 13,500 16,859
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $12.415 $ 18.511 $ 22.654
Accumulation Unit Value Ending $12.415 $18.511 $ 22.654 $ 32.366
Number of Units Outstanding at End of Year 10,175 27,980 38,120 35,969
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $11.076 $ 12.098 $ 12.478
Accumulation Unit Value Ending $11.076 $12.098 $ 12.478 $ 14.424
Number of Units Outstanding at End of Year 625 1,444 1,436 713
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.155 $ 10.309 $ 10.449
Accumulation Unit Value Ending $10.155 $10.309 $ 10.449 $ 10.992
Number of Units Outstanding at End of Year 1,515 3,666 6,825 5,828
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $11.047 $ 11.915 $ 13.585
Accumulation Unit Value Ending $11.047 $11.915 $ 13.585 $ 13.689
Number of Units Outstanding at End of Year 8,999 42,450 65,009 61,062
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $10.349 $ 11.749 $ 11.990
Accumulation Unit Value Ending $10.349 $11.749 $ 11.990 $ 14.338
Number of Units Outstanding at End of Year 13,593 18,729 17,724 6,708
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $12.811 $ 14.704 $ 19.900
Accumulation Unit Value Ending $12.811 $14.704 $ 19.900 $ 16.181
Number of Units Outstanding at End of Year 8,873 41,284 69,224 49,043
* The LBL Consultant Solutions EliteContracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub-Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
96 PROSPECTUS
LBL Consultant Solution Elite Contracts - Prospectus Accumulation Unit Value and
Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (High)
Mortality & Expense = 2.5
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.621 $10.907 $12.000
Accumulation Unit Value Ending $10.621 $10.907 $12.000 $11.845
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.184 $10.771 $11.127
Accumulation Unit Value Ending $10.184 $10.771 $11.127 $12.108
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $10.708
Accumulation Unit Value Ending -- -- $10.708 $11.250
Number of Units Outstanding at End of Year -- -- 0 0
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.862 $11.349 $12.269
Accumulation Unit Value Ending $10.862 $11.349 $12.269 $13.058
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $ 9.986 $10.867 $11.104
Accumulation Unit Value Ending $ 9.986 $10.867 $11.104 $12.937
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.101 $11.232 $13.015
Accumulation Unit Value Ending $10.101 $11.232 $13.015 $16.883
Number of Units Outstanding at End of Year 0 0 0 0
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.505 $11.209 $11.998
Accumulation Unit Value Ending $10.505 $11.209 $11.998 $15.338
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.099 $10.209 $10.654
Accumulation Unit Value Ending $10.099 $10.209 $10.654 $11.950
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $11.258 $12.792 $13.885
Accumulation Unit Value Ending $11.258 $12.792 $13.885 $15.861
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.715 $11.019 $12.872
Accumulation Unit Value Ending $10.715 $11.019 $12.872 $12.695
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.695 $ 9.964 $10.343
Accumulation Unit Value Ending $ 9.695 $ 9.964 $10.343 $12.759
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.545 $10.740 $12.076
Accumulation Unit Value Ending $10.545 $10.740 $12.076 $12.370
Number of Units Outstanding at End of Year 0 0 0 0
97 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.097 $10.022 $10.166
Accumulation Unit Value Ending $10.097 $10.022 $10.166 $10.305
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.850 $ 9.861 $10.049
Accumulation Unit Value Ending $ 9.850 $ 9.861 $10.049 $10.272
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.805 $12.502 $14.342
Accumulation Unit Value Ending $10.805 $12.502 $14.342 $16.349
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $10.502 $11.014 $11.846
Accumulation Unit Value Ending $10.502 $11.014 $11.846 $12.723
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.186 $11.576 $13.312
Accumulation Unit Value Ending $11.186 $11.576 $13.312 $15.331
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.358 $12.453 $13.236
Accumulation Unit Value Ending $11.358 $12.453 $13.236 $17.612
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.172 $11.971 $13.418
Accumulation Unit Value Ending $11.172 $11.971 $13.418 $14.004
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.208 $12.109 $13.065
Accumulation Unit Value Ending $11.208 $12.109 $13.065 $13.504
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $10.000 $10.880 $12.916
Accumulation Unit Value Ending -- $10.880 $12.916 $11.809
Number of Units Outstanding at End of Year -- 0 0 0
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $10.000
Accumulation Unit Value Ending -- -- -- $ 9.427
Number of Units Outstanding at End of Year -- -- -- 0
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.746 $10.838 $11.649
Accumulation Unit Value Ending $10.746 $10.838 $11.649 $11.307
Number of Units Outstanding at End of Year 0 0 0 0
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.529 $10.466 $11.214
Accumulation Unit Value Ending $10.529 $10.466 $11.214 $11.089
Number of Units Outstanding at End of Year 0 0 0 0
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.350 $10.508 $12.000
Accumulation Unit Value Ending $10.350 $10.508 $10.983 $11.845
Number of Units Outstanding at End of Year 0 0 0 0
98 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.685 $11.139 $10.983
Accumulation Unit Value Ending $10.685 $11.139 $12.227 $11.876
Number of Units Outstanding at End of Year 0 0 0 0
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $10.000 $ 9.830 $10.057 $11.063
Accumulation Unit Value Ending $ 9.830 $10.057 $11.063 $11.016
Number of Units Outstanding at End of Year 0 0 0 0
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.659 $10.652 $11.582
Accumulation Unit Value Ending $10.659 $10.652 $11.582 $11.723
Number of Units Outstanding at End of Year 0 0 0 0
MFS Value Series - Service Class
Accumulation Unit Value Beginning $10.000 $11.046 $11.455 $13.447
Accumulation Unit Value Ending $11.046 $11.455 $13.447 $14.090
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $10.000 $11.623 $11.627
Accumulation Unit Value Ending -- $11.623 $11.627 $12.007
Number of Units Outstanding at End of Year -- 0 0 0
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.259 $12.509 $14.301
Accumulation Unit Value Ending $11.259 $12.509 $14.301 $14.774
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.193 $11.962 $13.360
Accumulation Unit Value Ending $11.193 $11.962 $13.360 $12.830
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.262 $10.511 $10.462
Accumulation Unit Value Ending $10.262 $10.511 $10.462 $10.559
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $ 9.844 $ 9.854 $10.042
Accumulation Unit Value Ending $ 9.844 $ 9.854 $10.042 $10.257
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.474 $10.415 $10.217
Accumulation Unit Value Ending $10.474 $10.415 $10.217 $11.013
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.164 $10.142 $10.260
Accumulation Unit Value Ending $10.164 $10.142 $10.260 $10.868
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $10.000 $10.713 $10.721 $11.571
Accumulation Unit Value Ending $10.713 $10.721 $11.571 $10.768
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $10.000 $11.099 $10.322 $11.198
Accumulation Unit Value Ending $11.099 $10.322 $11.198 $11.595
Number of Units Outstanding at End of Year 0 0 0 0
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $10.000 $10.477 $11.604 $12.590
Accumulation Unit Value Ending $10.477 $11.604 $12.590 $15.050
Number of Units Outstanding at End of Year 0 0 0 0
99 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.369 $10.670 $11.362
Accumulation Unit Value Ending $10.369 $10.670 $11.362 $12.447
Number of Units Outstanding at End of Year 0 0 0 0
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.978 $11.089 $12.815
Accumulation Unit Value Ending $10.978 $11.089 $12.815 $12.858
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.803 $ 9.568 $10.127
Accumulation Unit Value Ending $ 9.803 $ 9.568 $10.127 $10.262
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $11.966 $15.386 $20.905
Accumulation Unit Value Ending $11.966 $15.386 $20.905 $28.017
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $12.311 $18.189 $22.057
Accumulation Unit Value Ending $12.311 $18.189 $22.057 $31.224
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.984 $11.888 $12.149
Accumulation Unit Value Ending $10.984 $11.888 $12.149 $13.914
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.070 $10.130 $10.174
Accumulation Unit Value Ending $10.070 $10.130 $10.174 $10.603
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.955 $11.708 $13.227
Accumulation Unit Value Ending $10.955 $11.708 $13.227 $13.206
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $10.263 $11.545 $11.674
Accumulation Unit Value Ending $10.263 $11.545 $11.674 $13.832
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $12.705 $14.448 $19.375
Accumulation Unit Value Ending $12.705 $14.448 $19.375 $15.610
Number of Units Outstanding at End of Year 0 0 0 0
* The LBL Consultant Solutions Elite Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
100 PROSPECTUS
LBL Consultant Solution Plus Contracts - Prospectus Accumulation Unit Value and
Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (Low)
Mortality & Expense = 1.45
For the Year Ending December 31,
-----------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.725 $ 11.133 $ 12.379
Accumulation Unit Value Ending $ 10.725 $ 11.133 $ 12.379 $ 12.352
Number of Units Outstanding at End of Year 168,023 344,954 418,263 293,495
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.284 $ 10.994 $ 11.479
Accumulation Unit Value Ending $ 10.284 $ 10.994 $ 11.479 $ 12.626
Number of Units Outstanding at End of Year 25,081 74,461 125,960 110,380
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $ 10.000 $ 10.785
Accumulation Unit Value Ending -- -- $ 10.785 $ 11.454
Number of Units Outstanding at End of Year -- -- 274,689 276,101
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.968 $ 11.584 $ 12.657
Accumulation Unit Value Ending $ 10.968 $ 11.584 $ 12.657 $ 13.617
Number of Units Outstanding at End of Year 184,194 295,988 442,279 404,724
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.084 $ 11.091 $ 11.455
Accumulation Unit Value Ending $ 10.084 $ 11.091 $ 11.455 $ 13.491
Number of Units Outstanding at End of Year 162,285 310,193 291,942 242,972
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.200 $ 11.464 $ 13.427
Accumulation Unit Value Ending $ 10.200 $ 11.464 $ 13.427 $ 17.606
Number of Units Outstanding at End of Year 27,034 85,491 127,011 140,144
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.608 $ 11.441 $ 12.377
Accumulation Unit Value Ending $ 10.608 $ 11.441 $ 12.377 $ 15.995
Number of Units Outstanding at End of Year 133,976 327,548 436,382 397,229
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.198 $ 10.420 $ 10.991
Accumulation Unit Value Ending $ 10.198 $ 10.420 $ 10.991 $ 12.461
Number of Units Outstanding at End of Year 99,090 153,559 196,893 181,005
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 11.368 $ 13.056 $ 14.324
Accumulation Unit Value Ending $ 11.368 $ 13.056 $ 14.324 $ 16.540
Number of Units Outstanding at End of Year 162,203 636,774 1,038,503 915,580
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.820 $ 11.246 $ 13.279
Accumulation Unit Value Ending $ 10.820 $ 11.246 $ 13.279 $ 13.239
Number of Units Outstanding at End of Year 264,960 642,154 914,542 882,993
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.791 $ 10.170 $ 10.671
Accumulation Unit Value Ending $ 9.971 $ 10.170 $ 10.671 $ 13.305
Number of Units Outstanding at End of Year 95,874 162,979 179,143 176,462
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.648 $ 10.961 $ 12.458
Accumulation Unit Value Ending $ 10.648 $ 10.961 $ 12.458 $ 12.899
Number of Units Outstanding at End of Year 357,590 1,013,570 1,364,532 1,221,783
101 PROSPECTUS
For the Year Ending December 31,
-----------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.196 $ 10.229 $ 10.487
Accumulation Unit Value Ending $ 10.196 $ 10.229 $ 10.487 $ 10.746
Number of Units Outstanding at End of Year 362,442 877,078 1,278,546 1,490,496
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.947 $ 10.065 $ 10.367
Accumulation Unit Value Ending $ 9.947 $ 10.065 $ 10.367 $ 10.712
Number of Units Outstanding at End of Year 499,789 1,298,309 1,929,547 1,860,555
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.911 $ 12.760 $ 14.796
Accumulation Unit Value Ending $ 10.911 $ 12.760 $ 14.796 $ 17.049
Number of Units Outstanding at End of Year 112,867 307,437 827,908 807,662
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.605 $ 11.241 $ 12.220
Accumulation Unit Value Ending $ 10.605 $ 11.241 $ 12.220 $ 13.267
Number of Units Outstanding at End of Year 110,575 317,819 474,671 419,411
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.296 $ 11.815 $ 13.733
Accumulation Unit Value Ending $ 11.296 $ 11.815 $ 13.733 $ 15.987
Number of Units Outstanding at End of Year 17,349 78,760 125,898 130,612
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.470 $ 12.710 $ 13.654
Accumulation Unit Value Ending $ 11.470 $ 12.710 $ 13.654 $ 18.366
Number of Units Outstanding at End of Year 29,307 109,414 160,923 194,043
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.282 $ 12.219 $ 13.842
Accumulation Unit Value Ending $ 11.282 $ 12.219 $ 13.842 $ 14.604
Number of Units Outstanding at End of Year 130,218 435,715 636,948 603,783
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.318 $ 12.359 $ 13.478
Accumulation Unit Value Ending $ 11.318 $ 12.359 $ 13.478 $ 14.082
Number of Units Outstanding at End of Year 47,209 136,370 168,301 157,185
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $ 10.000 $ 10.959 $ 13.149
Accumulation Unit Value Ending -- $ 10.959 $ 13.149 $ 12.153
Number of Units Outstanding at End of Year -- 52,116 208,907 204,185
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $ 10.000
Accumulation Unit Value Ending -- -- -- $ 9.496
Number of Units Outstanding at End of Year -- -- -- 77,930
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 10.851 $ 11.062 $ 12.018
Accumulation Unit Value Ending $ 10.851 $ 11.062 $ 12.018 $ 11.791
Number of Units Outstanding at End of Year 233,161 729,975 1,048,615 1,007,552
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.632 $ 10.682 $ 11.568
Accumulation Unit Value Ending $ 10.632 $ 10.682 $ 11.568 $ 11.563
Number of Units Outstanding at End of Year 173,571 363,031 409,143 406,241
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.452 $ 10.725 $ 11.331
Accumulation Unit Value Ending $ 10.452 $ 10.725 $ 11.331 $ 12.384
Number of Units Outstanding at End of Year 27,908 288,901 530,447 487,942
102 PROSPECTUS
For the Year Ending December 31,
---------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.790 $ 11.369 $ 12.614
Accumulation Unit Value Ending $ 10.790 $ 11.369 $ 12.614 $ 13.663
Number of Units Outstanding at End of Year 31,444 69,837 75,414 71,252
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 9.926 $ 10.265 $ 11.413
Accumulation Unit Value Ending $ 9.926 $ 10.265 $ 11.413 $ 11.488
Number of Units Outstanding at End of Year 79,708 115,243 143,917 133,227
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.763 $ 10.872 $ 11.948
Accumulation Unit Value Ending $ 10.763 $ 10.872 $ 11.948 $ 12.225
Number of Units Outstanding at End of Year 270,271 649,848 786,417 733,113
MFS Value Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 11.154 $ 11.692 $ 13.872
Accumulation Unit Value Ending $ 11.154 $ 11.692 $ 13.872 $ 14.693
Number of Units Outstanding at End of Year 52,533 155,911 185,240 178,813
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $ 10.000 $ 11.707 $ 11.837
Accumulation Unit Value Ending -- $ 11.707 $ 11.837 $ 12.356
Number of Units Outstanding at End of Year -- 31,034 86,941 79,497
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.369 $ 12.767 $ 14.753
Accumulation Unit Value Ending $ 11.369 $ 12.767 $ 14.753 $ 15.406
Number of Units Outstanding at End of Year 135,685 311,510 416,951 390,850
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.303 $ 12.209 $ 13.782
Accumulation Unit Value Ending $ 11.303 $ 12.209 $ 13.782 $ 13.379
Number of Units Outstanding at End of Year 148,467 444,920 658,435 616,978
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.363 $ 10.728 $ 10.793
Accumulation Unit Value Ending $ 10.363 $ 10.728 $ 10.793 $ 11.011
Number of Units Outstanding at End of Year 72,884 336,138 524,188 473,852
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 9.941 $ 10.057 $ 10.359
Accumulation Unit Value Ending $ 9.941 $ 10.057 $ 10.359 $ 10.696
Number of Units Outstanding at End of Year 306,156 529,839 727,162 706,907
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.577 $ 10.630 $ 10.540
Accumulation Unit Value Ending $ 10.577 $ 10.630 $ 10.540 $ 11.484
Number of Units Outstanding at End of Year 266,929 855,244 1,126,346 1,038,569
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.264 $ 10.352 $ 10.585
Accumulation Unit Value Ending $ 10.264 $ 10.352 $ 10.585 $ 11.333
Number of Units Outstanding at End of Year 326,918 781,636 1,399,499 1,362,786
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 10.790 $ 10.914 $ 11.906
Accumulation Unit Value Ending $ 10.790 $ 10.914 $ 11.906 $ 11.200
Number of Units Outstanding at End of Year 49,506 88,648 102,842 100,376
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 11.208 $ 10.535 $ 11.552
Accumulation Unit Value Ending $ 11.208 $ 10.535 $ 11.552 $ 12.091
Number of Units Outstanding at End of Year 99,659 156,525 181,544 133,825
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $ 10.000 $ 10.579 $ 11.844 $ 12.989
Accumulation Unit Value Ending $ 10.579 $ 11.844 $ 12.989 $ 15.694
Number of Units Outstanding at End of Year 9,293 42,301 96,320 104,063
103 PROSPECTUS
For the Year Ending December 31,
-----------------------------------------------
Sub-Accounts 2004 2005 2006 2007
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $ 10.000 $ 10.470 $ 10.890 $ 11.722
Accumulation Unit Value Ending $ 10.470 $ 10.890 $ 11.722 $ 12.980
Number of Units Outstanding at End of Year 118,706 568,834 1,046,476 921,017
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $ 10.000 $ 11.086 $ 11.318 $ 13.221
Accumulation Unit Value Ending $ 11.086 $ 11.318 $ 13.221 $ 13.409
Number of Units Outstanding at End of Year 386,880 1,352,680 1,710,177 1,570,162
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $ 10.000 $ 9.899 $ 9.766 $ 10.447
Accumulation Unit Value Ending $ 9.899 $ 9.766 $ 10.447 $ 10.701
Number of Units Outstanding at End of Year 17,544 49,850 69,904 67,655
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $ 10.000 $ 12.083 $ 15.703 $ 21.566
Accumulation Unit Value Ending $ 12.083 $ 15.703 $ 21.566 $ 29.216
Number of Units Outstanding at End of Year 16,416 107,894 197,437 217,317
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $ 10.000 $ 12.432 $ 18.565 $ 22.754
Accumulation Unit Value Ending $ 12.432 $ 18.565 $ 22.754 $ 32.560
Number of Units Outstanding at End of Year 30,408 144,710 196,815 208,194
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 11.091 $ 12.133 $ 12.534
Accumulation Unit Value Ending $ 11.091 $ 12.133 $ 12.534 $ 14.510
Number of Units Outstanding at End of Year 21,341 28,367 38,306 38,611
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 10.169 $ 10.339 $ 10.496
Accumulation Unit Value Ending $ 10.169 $ 10.339 $ 10.496 $ 11.057
Number of Units Outstanding at End of Year 196,904 330,133 394,113 382,399
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 11.063 $ 11.950 $ 13.645
Accumulation Unit Value Ending $ 11.063 $ 11.950 $ 13.645 $ 13.771
Number of Units Outstanding at End of Year 187,532 597,525 965,056 913,686
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $ 10.000 $ 10.364 $ 11.783 $ 12.043
Accumulation Unit Value Ending $ 10.364 $ 11.783 $ 12.043 $ 14.424
Number of Units Outstanding at End of Year 43,290 100,577 118,076 101,174
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $ 10.000 $ 12.829 $ 14.747 $ 19.988
Accumulation Unit Value Ending $ 12.829 $ 14.747 $ 19.988 $ 16.278
Number of Units Outstanding at End of Year 290,164 680,199 844,038 713,922
* The LBL Consultant Solutions Plus Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
104 PROSPECTUS
LBL Consultant Solution Plus Contracts - Prospectus Accumulation Unit Value and
Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (High)
Mortality & Expense = 2.35
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.636 $10.939 $12.053
Accumulation Unit Value Ending $10.636 $10.939 $12.053 $11.917
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.198 $10.803 $11.177
Accumulation Unit Value Ending $10.198 $10.803 $11.177 $12.181
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $10.719
Accumulation Unit Value Ending -- -- $10.719 $11.279
Number of Units Outstanding at End of Year -- -- 0 0
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.877 $11.383 $12.324
Accumulation Unit Value Ending $10.877 $11.383 $12.324 $13.137
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.000 $10.899 $11.154
Accumulation Unit Value Ending $10.000 $10.899 $11.154 $13.015
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.115 $11.265 $13.074
Accumulation Unit Value Ending $10.115 $11.265 $13.074 $16.985
Number of Units Outstanding at End of Year 0 0 0 0
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.520 $11.242 $12.051
Accumulation Unit Value Ending $10.520 $11.242 $12.051 $15.431
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.113 $10.239 $10.702
Accumulation Unit Value Ending $10.113 $10.239 $10.702 $12.022
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $11.274 $12.829 $13.947
Accumulation Unit Value Ending $11.274 $12.829 $13.947 $15.957
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.730 $11.051 $12.930
Accumulation Unit Value Ending $10.730 $11.051 $12.930 $12.772
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.709 $ 9.993 $10.390
Accumulation Unit Value Ending $ 9.709 $ 9.993 $10.390 $12.836
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.560 $10.771 $12.130
Accumulation Unit Value Ending $10.560 $10.771 $12.130 $12.444
Number of Units Outstanding at End of Year 0 0 0 0
105 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.112 $10.051 $10.211
Accumulation Unit Value Ending $10.112 $10.051 $10.211 $10.367
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.864 $ 9.890 $10.095
Accumulation Unit Value Ending $ 9.864 $ 9.890 $10.095 $10.334
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.820 $12.539 $14.406
Accumulation Unit Value Ending $10.820 $12.539 $14.406 $16.448
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $10.517 $11.046 $11.899
Accumulation Unit Value Ending $10.517 $11.046 $11.899 $12.799
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.202 $11.610 $13.372
Accumulation Unit Value Ending $11.202 $11.610 $13.372 $15.423
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.374 $12.490 $13.295
Accumulation Unit Value Ending $11.374 $12.490 $13.295 $17.719
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.188 $12.007 $13.478
Accumulation Unit Value Ending $11.188 $12.007 $13.478 $14.089
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.224 $12.144 $13.124
Accumulation Unit Value Ending $11.224 $12.144 $13.124 $13.585
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $10.000 $10.891 $12.949
Accumulation Unit Value Ending -- $10.891 $12.949 $11.858
Number of Units Outstanding at End of Year -- 0 0 0
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $10.000
Accumulation Unit Value Ending -- -- -- $ 9.436
Number of Units Outstanding at End of Year -- -- -- 0
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.761 $10.870 $11.701
Accumulation Unit Value Ending $10.761 $10.870 $11.701 $11.376
Number of Units Outstanding at End of Year 0 0 0 0
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.544 $10.497 $11.264
Accumulation Unit Value Ending $10.544 $10.497 $11.264 $11.156
Number of Units Outstanding at End of Year 0 0 0 0
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.365 $10.539 $12.053
Accumulation Unit Value Ending $10.365 $10.539 $11.033 $11.917
Number of Units Outstanding at End of Year 0 0 0 0
106 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.700 $11.172 $11.033
Accumulation Unit Value Ending $10.700 $11.172 $12.282 $11.947
Number of Units Outstanding at End of Year 0 0 0 0
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $10.000 $ 9.844 $10.086 $11.112
Accumulation Unit Value Ending $ 9.844 $10.086 $11.112 $11.082
Number of Units Outstanding at End of Year 0 0 0 0
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.674 $10.684 $11.634
Accumulation Unit Value Ending $10.674 $10.684 $11.634 $11.794
Number of Units Outstanding at End of Year 0 0 0 0
MFS Value Series - Service Class
Accumulation Unit Value Beginning $10.000 $11.061 $11.489 $13.507
Accumulation Unit Value Ending $11.061 $11.489 $13.507 $14.175
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $10.000 $11.635 $11.657
Accumulation Unit Value Ending -- $11.635 $11.657 $12.056
Number of Units Outstanding at End of Year -- 0 0 0
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.275 $12.546 $14.365
Accumulation Unit Value Ending $11.275 $12.546 $14.365 $14.863
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.209 $11.997 $13.420
Accumulation Unit Value Ending $11.209 $11.997 $13.420 $12.907
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.276 $10.541 $10.509
Accumulation Unit Value Ending $10.276 $10.541 $10.509 $10.623
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $ 9.858 $ 9.883 $10.087
Accumulation Unit Value Ending $ 9.858 $ 9.883 $10.087 $10.318
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.489 $10.446 $10.263
Accumulation Unit Value Ending $10.489 $10.446 $10.263 $11.079
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.178 $10.172 $10.306
Accumulation Unit Value Ending $10.178 $10.172 $10.306 $10.934
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $10.000 $10.724 $10.749 $11.618
Accumulation Unit Value Ending $10.724 $10.749 $11.618 $10.829
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $10.000 $11.115 $10.352 $11.248
Accumulation Unit Value Ending $11.115 $10.352 $11.248 $11.665
Number of Units Outstanding at End of Year 0 0 0 0
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $10.000 $10.491 $11.638 $12.647
Accumulation Unit Value Ending $10.491 $11.638 $12.647 $15.141
Number of Units Outstanding at End of Year 0 0 0 0
107 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.383 $10.701 $11.413
Accumulation Unit Value Ending $10.383 $10.701 $11.413 $12.523
Number of Units Outstanding at End of Year 0 0 0 0
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.993 $11.121 $12.873
Accumulation Unit Value Ending $10.993 $11.121 $12.873 $12.936
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.817 $ 9.596 $10.172
Accumulation Unit Value Ending $ 9.817 $ 9.596 $10.172 $10.324
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $11.983 $15.431 $20.999
Accumulation Unit Value Ending $11.983 $15.431 $20.999 $28.186
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $12.329 $18.243 $22.156
Accumulation Unit Value Ending $12.329 $18.243 $22.156 $31.412
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.999 $11.923 $12.204
Accumulation Unit Value Ending $10.999 $11.923 $12.204 $13.998
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.084 $10.160 $10.220
Accumulation Unit Value Ending $10.084 $10.160 $10.220 $10.667
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.971 $11.743 $13.286
Accumulation Unit Value Ending $10.971 $11.743 $13.286 $13.286
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $10.278 $11.579 $11.726
Accumulation Unit Value Ending $10.278 $11.579 $11.726 $13.915
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $12.722 $14.491 $19.462
Accumulation Unit Value Ending $12.722 $14.491 $19.462 $15.704
Number of Units Outstanding at End of Year 0 0 0 0
* The LBL Consultant Solutions Plus Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
108 PROSPECTUS
LBL Consultant Solution Select Contracts - Prospectus Accumulation Unit Value
and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (Low)
Mortality & Expense = 1.7
For the Year Ending December 31,
----------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.701 $11.079 $ 12.288
Accumulation Unit Value Ending $ 10.701 $ 11.079 $12.288 $ 12.230
Number of Units Outstanding at End of Year 11,482 24,729 8,519 26,372
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.260 $10.940 $ 11.395
Accumulation Unit Value Ending $ 10.260 $ 10.940 $11.395 $ 12.501
Number of Units Outstanding at End of Year 15,284 18,497 4,420 9,752
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $ 10.767
Accumulation Unit Value Ending -- -- $10.767 $ 11.405
Number of Units Outstanding at End of Year -- -- 3,608 16,749
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $ 10.000 $ 10.943 $11.528 $ 12.564
Accumulation Unit Value Ending $ 10.943 $ 11.528 $12.564 $ 13.482
Number of Units Outstanding at End of Year 2,665 3,174 10,458 12,802
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.061 $11.038 $ 11.371
Accumulation Unit Value Ending $ 10.061 $ 11.038 $11.371 $ 13.357
Number of Units Outstanding at End of Year 13,364 13,863 10,863 10,486
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.177 $11.409 $ 13.328
Accumulation Unit Value Ending $ 10.177 $ 11.409 $13.328 $ 17.432
Number of Units Outstanding at End of Year 2,386 39,056 4,489 18,890
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $ 10.000 $ 10.584 $11.385 $ 12.286
Accumulation Unit Value Ending $ 10.584 $ 11.385 $12.286 $ 15.837
Number of Units Outstanding at End of Year 27,739 54,020 5,659 32,351
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.174 $10.369 $ 10.910
Accumulation Unit Value Ending $ 10.174 $ 10.369 $10.910 $ 12.338
Number of Units Outstanding at End of Year 20,705 26,325 19,985 10,303
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 11.342 $12.993 $ 14.218
Accumulation Unit Value Ending $ 11.342 $ 12.993 $14.218 $ 16.377
Number of Units Outstanding at End of Year 45,341 144,919 32,667 80,603
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.795 $11.192 $ 13.182
Accumulation Unit Value Ending $ 10.795 $ 11.192 $13.182 $ 13.108
Number of Units Outstanding at End of Year 46,651 93,792 19,478 98,411
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.768 $10.120 $ 10.592
Accumulation Unit Value Ending $ 9.768 $ 10.120 $10.592 $ 13.173
Number of Units Outstanding at End of Year 28,770 55,605 11,849 75,363
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.624 $10.908 $ 12.366
Accumulation Unit Value Ending $ 10.624 $ 10.908 $12.366 $ 12.772
Number of Units Outstanding at End of Year 125,438 263,983 43,696 211,816
109 PROSPECTUS
For the Year Ending December 31,
----------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.173 $10.180 $ 10.410
Accumulation Unit Value Ending $ 10.173 $ 10.180 $10.410 $ 10.639
Number of Units Outstanding at End of Year 48,708 101,437 31,813 90,643
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 9.924 $10.016 $ 10.291
Accumulation Unit Value Ending $ 9.924 $ 10.016 $10.291 $ 10.606
Number of Units Outstanding at End of Year 168,709 228,196 33,135 258,815
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $ 10.000 $ 10.886 $12.698 $ 14.687
Accumulation Unit Value Ending $ 10.886 $ 12.698 $14.687 $ 16.880
Number of Units Outstanding at End of Year 28,247 49,873 16,491 84,356
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.581 $11.187 $ 12.130
Accumulation Unit Value Ending $ 10.581 $ 11.187 $12.130 $ 13.136
Number of Units Outstanding at End of Year 10,013 17,505 1,999 14,877
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.270 $11.758 $ 13.632
Accumulation Unit Value Ending $ 11.270 $ 11.758 $13.632 $ 15.829
Number of Units Outstanding at End of Year 27,022 6,336 2,516 6,797
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.443 $12.649 $ 13.554
Accumulation Unit Value Ending $ 11.443 $ 12.649 $13.554 $ 18.185
Number of Units Outstanding at End of Year 1,269 11,195 2,354 13,531
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.256 $12.159 $ 13.740
Accumulation Unit Value Ending $ 11.256 $ 12.159 $13.740 $ 14.459
Number of Units Outstanding at End of Year 11,610 21,644 10,246 34,280
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.292 $12.299 $ 13.379
Accumulation Unit Value Ending $ 11.292 $ 12.299 $13.379 $ 13.943
Number of Units Outstanding at End of Year 4,773 28,781 901 13,792
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $ 10.000 $10.940 $ 13.093
Accumulation Unit Value Ending -- $ 10.940 $13.093 $ 12.071
Number of Units Outstanding at End of Year -- 3,239 2,462 12,418
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $ 10.000
Accumulation Unit Value Ending -- -- -- $ 9.479
Number of Units Outstanding at End of Year -- -- -- 553
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $ 10.000 $ 10.826 $11.008 $ 11.929
Accumulation Unit Value Ending $ 10.286 $ 11.008 $11.929 $ 11.675
Number of Units Outstanding at End of Year 17,645 46,676 15,302 47,449
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.608 $10.631 $ 11.483
Accumulation Unit Value Ending $ 10.608 $ 10.631 $11.483 $ 11.449
Number of Units Outstanding at End of Year 23,363 20,622 6,286 23,290
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.428 $10.673 $ 11.248
Accumulation Unit Value Ending $ 10.428 $ 10.673 $11.248 $ 12.262
Number of Units Outstanding at End of Year 1,297 14,429 7,739 18,306
110 PROSPECTUS
For the Year Ending December 31,
----------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ------------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.765 $11.314 $ 12.521
Accumulation Unit Value Ending $ 10.765 $ 11.314 $12.521 $ 13.528
Number of Units Outstanding at End of Year 1,311 5,472 1,693 3,450
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 9.903 $10.215 $ 11.329
Accumulation Unit Value Ending $ 9.903 $ 10.215 $11.329 $ 11.374
Number of Units Outstanding at End of Year 6,659 7,704 2,187 10,252
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 10.739 $10.820 $ 11.861
Accumulation Unit Value Ending $ 10.739 $ 10.820 $11.861 $ 12.104
Number of Units Outstanding at End of Year 19,818 51,781 18,099 20,247
MFS Value Series - Service Class
Accumulation Unit Value Beginning $ 10.000 $ 11.128 $11.635 $ 13.770
Accumulation Unit Value Ending $ 11.128 $ 11.635 $13.770 $ 14.547
Number of Units Outstanding at End of Year 3,382 5,222 2,124 8,826
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $ 10.000 $11.687 $ 11.787
Accumulation Unit Value Ending -- $ 11.687 $11.787 $ 12.272
Number of Units Outstanding at End of Year -- 7,856 7,348 5,022
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.343 $12.706 $ 14.644
Accumulation Unit Value Ending $ 11.343 $ 12.706 $14.644 $ 15.254
Number of Units Outstanding at End of Year 62,080 86,497 10,134 111,096
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $ 10.000 $ 11.277 $12.150 $ 13.681
Accumulation Unit Value Ending $ 11.277 $ 12.150 $13.681 $ 13.246
Number of Units Outstanding at End of Year 35,420 81,846 11,584 44,402
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.339 $10.676 $ 10.714
Accumulation Unit Value Ending $ 10.339 $ 10.676 $10.714 $ 10.902
Number of Units Outstanding at End of Year 9,772 47,366 8,948 33,647
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 9.918 $10.009 $ 10.283
Accumulation Unit Value Ending $ 9.918 $ 10.009 $10.283 $ 10.590
Number of Units Outstanding at End of Year 158,641 150,481 27,607 32,822
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.552 $10.579 $ 10.462
Accumulation Unit Value Ending $ 10.552 $ 10.579 $10.462 $ 11.371
Number of Units Outstanding at End of Year 42,470 122,346 16,994 42,156
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $ 10.000 $ 10.240 $10.302 $ 10.507
Accumulation Unit Value Ending $ 10.240 $ 10.302 $10.507 $ 11.221
Number of Units Outstanding at End of Year 58,540 76,949 28,759 79,939
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 10.772 $10.868 $ 11.826
Accumulation Unit Value Ending $ 10.772 $ 10.868 $11.826 $ 11.096
Number of Units Outstanding at End of Year 5,494 6,958 560 7,098
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $ 10.000 $ 11.182 $10.484 $ 11.467
Accumulation Unit Value Ending $ 11.182 $ 10.484 $11.467 $ 11.971
Number of Units Outstanding at End of Year 31,488 23,563 6,181 12,010
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $ 10.000 $ 10.555 $11.787 $ 12.893
Accumulation Unit Value Ending $ 10.555 $ 11.787 $12.893 $ 15.539
Number of Units Outstanding at End of Year 418 4,603 5,562 6,080
111 PROSPECTUS
For the Year Ending December 31,
--------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ----------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $ 10.446 $10.837 $11.636
Accumulation Unit Value Ending $10.446 $ 10.837 $11.636 $12.852
Number of Units Outstanding at End of Year 6,370 57,136 16,451 54,684
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $ 11.060 $11.263 $13.123
Accumulation Unit Value Ending $11.060 $ 11.263 $13.123 $13.276
Number of Units Outstanding at End of Year 57,291 110,586 28,044 72,693
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.876 $ 9.719 $10.370
Accumulation Unit Value Ending $ 9.876 $ 9.719 $10.370 $10.595
Number of Units Outstanding at End of Year 1,961 2,232 8,505 5,710
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $ 12.055 $15.627 $21.408
Accumulation Unit Value Ending $12.055 $ 15.627 $21.408 $28.927
Number of Units Outstanding at End of Year 2,104 18,780 5,890 22,998
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $ 12.403 $18.475 $22.587
Accumulation Unit Value Ending $12.403 $ 18.475 $22.587 $32.238
Number of Units Outstanding at End of Year 6,528 31,637 59,022 35,164
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $ 11.066 $12.075 $12.441
Accumulation Unit Value Ending $11.066 $ 12.075 $12.441 $14.367
Number of Units Outstanding at End of Year 1,962 3,009 3,261 10,156
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $ 10.145 $10.289 $10.419
Accumulation Unit Value Ending $10.145 $ 10.289 $10.419 $10.948
Number of Units Outstanding at End of Year 28,946 43,426 5,556 21,802
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $ 11.037 $11.892 $13.544
Accumulation Unit Value Ending $11.037 $ 11.892 $13.544 $13.635
Number of Units Outstanding at End of Year 16,781 31,692 12,839 34,015
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $ 10.340 $11.726 $11.954
Accumulation Unit Value Ending $10.340 $ 11.726 $11.954 $14.281
Number of Units Outstanding at End of Year 2,987 7,296 1,579 1,834
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $ 12.799 $14.675 $19.841
Accumulation Unit Value Ending $12.799 $ 14.675 $19.841 $16.117
Number of Units Outstanding at End of Year 40,344 59,925 23,273 49,639
* The LBL Consultant Solutions Select Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
112 PROSPECTUS
LBL Consultant Solution Select Contracts - Prospectus Accumulation Unit Value
and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since
Contracts Were First Offered* (High)
Mortality & Expense = 2.6
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.611 $10.886 $11.964
Accumulation Unit Value Ending $10.611 $10.886 $11.964 $11.798
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Capital Appreciation Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.175 $10.750 $11.094
Accumulation Unit Value Ending $10.175 $10.750 $11.094 $12.059
Number of Units Outstanding at End of Year 0 0 0 0
AIM V.I. Core Equity Fund - Series II
Accumulation Unit Value Beginning -- -- $10.000 $10.700
Accumulation Unit Value Ending -- -- $10.700 $11.230
Number of Units Outstanding at End of Year -- -- 0 0
AIM V.I. Mid Cap Core Equity Fund - Series II
Accumulation Unit Value Beginning $10.000 $10.852 $11.327 $12.233
Accumulation Unit Value Ending $10.852 $11.327 $12.233 $13.005
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $ 9.977 $10.846 $11.071
Accumulation Unit Value Ending $ 9.977 $10.846 $11.071 $12.885
Number of Units Outstanding at End of Year 0 0 0 0
Alger American Leveraged AllCap Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.092 $11.210 $12.977
Accumulation Unit Value Ending $10.092 $11.210 $12.977 $16.815
Number of Units Outstanding at End of Year 0 0 0 0
Alger American MidCap Growth Portfolio - Class S
Accumulation Unit Value Beginning $10.000 $10.495 $11.187 $11.962
Accumulation Unit Value Ending $10.495 $11.187 $11.962 $15.277
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Asset Manager Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.089 $10.189 $10.622
Accumulation Unit Value Ending $10.089 $10.189 $10.622 $11.902
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Contrafund Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $11.247 $12.767 $13.843
Accumulation Unit Value Ending $11.247 $12.767 $13.843 $15.798
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Equity-Income Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.705 $10.997 $12.834
Accumulation Unit Value Ending $10.705 $10.997 $12.834 $12.644
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Growth Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.686 $ 9.944 $10.313
Accumulation Unit Value Ending $ 9.686 $ 9.944 $10.313 $12.707
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Index 500 Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.535 $10.719 $12.040
Accumulation Unit Value Ending $10.535 $10.719 $12.040 $12.320
Number of Units Outstanding at End of Year 0 0 0 0
113 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.088 $10.002 $10.136
Accumulation Unit Value Ending $10.088 $10.002 $10.136 $10.263
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Money Market Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $ 9.841 $ 9.842 $10.020
Accumulation Unit Value Ending $ 9.841 $ 9.842 $10.020 $10.231
Number of Units Outstanding at End of Year 0 0 0 0
Fidelity VIP Overseas Portfolio - Service Class 2
Accumulation Unit Value Beginning $10.000 $10.795 $12.477 $14.299
Accumulation Unit Value Ending $10.795 $12.477 $14.299 $16.284
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Balanced Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $10.493 $10.992 $11.810
Accumulation Unit Value Ending $10.493 $10.992 $11.810 $12.672
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Foreign Stock Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.176 $11.553 $13.273
Accumulation Unit Value Ending $11.176 $11.553 $13.273 $15.270
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Forty Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.348 $12.429 $13.197
Accumulation Unit Value Ending $11.348 $12.429 $13.197 $17.542
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Mid Cap Value Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.162 $11.948 $13.378
Accumulation Unit Value Ending $11.162 $11.948 $13.378 $13.948
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series INTECH Risk-Managed Core Portfolio - Service Shares
Accumulation Unit Value Beginning $10.000 $11.198 $12.085 $13.026
Accumulation Unit Value Ending $11.198 $12.085 $13.026 $13.450
Number of Units Outstanding at End of Year 0 0 0 0
Janus Aspen Series Small Company Value Portfolio - Service Shares
Accumulation Unit Value Beginning -- $10.000 $10.873 $12.894
Accumulation Unit Value Ending -- $10.873 $12.894 $11.777
Number of Units Outstanding at End of Year -- 0 0 0
Legg Mason Partners Variable Fundamental Value Portfolio - Class I (1)
Accumulation Unit Value Beginning -- -- -- $10.000
Accumulation Unit Value Ending -- -- -- $ 9.420
Number of Units Outstanding at End of Year -- -- -- 0
Legg Mason Partners Variable Global High Yield Bond Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.735 $10.817 $11.614
Accumulation Unit Value Ending $10.735 $10.817 $11.614 $11.262
Number of Units Outstanding at End of Year 0 0 0 0
Legg Mason Partners Variable Investors - Class I (2)
Accumulation Unit Value Beginning -- -- -- --
Accumulation Unit Value Ending -- -- -- --
Number of Units Outstanding at End of Year -- -- -- --
MFS High Income Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.519 $10.446 $11.180
Accumulation Unit Value Ending $10.519 $10.446 $11.180 $11.044
Number of Units Outstanding at End of Year 0 0 0 0
MFS Investors Growth Stock Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.341 $10.488 $11.964
Accumulation Unit Value Ending $10.341 $10.488 $10.951 $11.798
Number of Units Outstanding at End of Year 0 0 0 0
114 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
MFS Investors Trust Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.675 $11.117 $10.951
Accumulation Unit Value Ending $10.675 $11.117 $12.191 $11.828
Number of Units Outstanding at End of Year 0 0 0 0
MFS New Discovery Series - Service Class
Accumulation Unit Value Beginning $10.000 $ 9.821 $10.037 $11.030
Accumulation Unit Value Ending $ 9.821 $10.037 $11.030 $10.972
Number of Units Outstanding at End of Year 0 0 0 0
MFS Total Return Series - Service Class
Accumulation Unit Value Beginning $10.000 $10.649 $10.631 $11.548
Accumulation Unit Value Ending $10.649 $10.631 $11.548 $11.676
Number of Units Outstanding at End of Year 0 0 0 0
MFS Value Series - Service Class
Accumulation Unit Value Beginning $10.000 $11.036 $11.433 $13.407
Accumulation Unit Value Ending $11.036 $11.433 $13.407 $14.033
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer MidCap Fund/VA - Service Shares (2)
Accumulation Unit Value Beginning -- $10.000 $11.615 $11.607
Accumulation Unit Value Ending -- $11.615 $11.607 $11.974
Number of Units Outstanding at End of Year -- 0 0 0
Oppenheimer Global Securities Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.249 $12.485 $14.258
Accumulation Unit Value Ending $11.249 $12.485 $14.258 $14.715
Number of Units Outstanding at End of Year 0 0 0 0
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
Accumulation Unit Value Beginning $10.000 $11.183 $11.939 $13.320
Accumulation Unit Value Ending $11.183 $11.939 $13.320 $12.778
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.252 $10.490 $10.431
Accumulation Unit Value Ending $10.252 $10.490 $10.431 $10.517
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Money Market Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $ 9.835 $ 9.835 $10.012
Accumulation Unit Value Ending $ 9.835 $ 9.835 $10.012 $10.215
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Real Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.464 $10.395 $10.186
Accumulation Unit Value Ending $10.464 $10.395 $10.186 $10.969
Number of Units Outstanding at End of Year 0 0 0 0
PIMCO VIT Total Return Portfolio - Administrative Shares
Accumulation Unit Value Beginning $10.000 $10.155 $10.122 $10.230
Accumulation Unit Value Ending $10.155 $10.122 $10.230 $10.824
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Balanced Portfolio
Accumulation Unit Value Beginning $10.000 $10.706 $10.703 $11.539
Accumulation Unit Value Ending $10.706 $10.703 $11.539 $10.728
Number of Units Outstanding at End of Year 0 0 0 0
Premier VIT OpCap Renaissance Portfolio
Accumulation Unit Value Beginning $10.000 $11.089 $10.302 $11.164
Accumulation Unit Value Ending $11.089 $10.302 $11.164 $11.548
Number of Units Outstanding at End of Year 0 0 0 0
Rydex VT Sector Rotation Fund
Accumulation Unit Value Beginning $10.000 $10.467 $11.582 $12.553
Accumulation Unit Value Ending $10.467 $11.582 $12.553 $14.990
Number of Units Outstanding at End of Year 0 0 0 0
115 PROSPECTUS
For the Year Ending December 31,
-------------------------------------
Sub-Accounts 2004 2005 2006 2007
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.359 $10.649 $11.329
Accumulation Unit Value Ending $10.359 $10.649 $11.329 $12.398
Number of Units Outstanding at End of Year 0 0 0 0
T. Rowe Price Equity Income Portfolio - II
Accumulation Unit Value Beginning $10.000 $10.968 $11.067 $12.777
Accumulation Unit Value Ending $10.968 $11.067 $12.777 $12.807
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Absolute Return Fund
Accumulation Unit Value Beginning $10.000 $ 9.794 $ 9.549 $10.097
Accumulation Unit Value Ending $ 9.794 $ 9.549 $10.097 $10.221
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Emerging Markets Fund
Accumulation Unit Value Beginning $10.000 $11.955 $15.355 $20.843
Accumulation Unit Value Ending $11.955 $15.355 $20.843 $27.905
Number of Units Outstanding at End of Year 0 0 0 0
Van Eck Worldwide Hard Assets Fund
Accumulation Unit Value Beginning $10.000 $12.300 $18.154 $21.992
Accumulation Unit Value Ending $12.300 $18.154 $21.992 $31.099
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Aggressive Growth Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.973 $11.864 $12.113
Accumulation Unit Value Ending $10.973 $11.864 $12.113 $13.859
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Government Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.061 $10.110 $10.144
Accumulation Unit Value Ending $10.061 $10.110 $10.144 $10.561
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen LIT Growth and Income Portfolio - Class II
Accumulation Unit Value Beginning $10.000 $10.945 $11.685 $13.187
Accumulation Unit Value Ending $10.945 $11.685 $13.187 $13.153
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF Equity Growth Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $10.254 $11.522 $11.639
Accumulation Unit Value Ending $10.254 $11.522 $11.639 $13.776
Number of Units Outstanding at End of Year 0 0 0 0
Van Kampen UIF U.S. Real Estate Portfolio - Class II (3)
Accumulation Unit Value Beginning $10.000 $12.693 $14.420 $19.318
Accumulation Unit Value Ending $12.693 $14.420 $19.318 $15.547
Number of Units Outstanding at End of Year 0 0 0 0
* The LBL Consultant Solutions Select Contracts and all of the Variable
Sub-Accounts shown below were first offered under the Contracts on February
2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was
first offered under the Contracts on April 30, 2004; and the Janus Aspen
Series Small Company Value - Service Shares Sub-Account and Oppenheimer
MidCap/VA - Service Shares Sub-Account which were first offered under the
Contracts on May 1, 2005; and the AIM V.I. Core Equity - Series II
Sub-Account which was first offered under the Contracts on May 1, 2006; and
the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account and Legg Mason Partners Variable Investors - Class I
Sub-Account which were first offered under the Contracts on April 27, 2007.
(1) Effective April 27, 2007, the Legg Mason Partners Variable All Cap
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Fundamental Value Portfolio - Class I. Accordingly, on April 27, 2007, we
combined the Legg Mason Partners Variable All Cap - Class II Sub- Account
into the Legg Mason Partners Variable Fundamental Value Portfolio - Class I
Sub-Account.
(2) Effective April 27, 2007, the Legg Mason Partners Variable Investors
Portfolio - Class II was reorganized into the Legg Mason Partners Variable
Investors Portfolio - Class I. Accordingly, on April 27, 2007, we combined
the Legg Mason Partners Variable Investors - Class II Sub-Account into the
Legg Mason Partners Variable Investors - Class I Sub-Account.
(3) Morgan Stanley Investment Management Inc., the adviser to the UIF
Portfolios, does business in certain instances using the name Van Kampen.
116 PROSPECTUS
LBL6535-4
[LOGO]
Exhibits
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registrant anticipates that it will incur the following approximate expenses in
connection with the issuance and distribution of the securities to be
registered:
Registration fees..................................................... $ 837
Cost of printing and engraving........................................ $ 100
Legal fees............................................................ $ 0
Accounting fees....................................................... $3,000
Mailing fees.......................................................... $2,100
Item 15. Indemnification of Directors and Officers
The Articles of Incorporation of Lincoln Benefit Life Company (Registrant)
provide for the indemnification of its directors and officers against expenses,
judgments, fines and amounts paid in settlement as incurred by such person, so
long as such person shall not have been adjudged to be liable for negligence or
misconduct in the performance of a duty to the Company. This right of indemnity
is not exclusive of other rights to which a director or officer may otherwise be
entitled.
The By-Laws of ALFS, Inc. (Distributor) provide that the corporation will
indemnify a director, officer, employee or agent of the corporation to the full
extent of Delaware law. In general, Delaware law provides that a corporation may
indemnify a director, officer, employee or agent against expenses, judgments,
fines and amounts paid in settlement if that individual acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
No indemnification shall be made for expenses, including attorney's fees, if the
person shall have been judged to be liable to the corporation unless a court
determines such person is entitled to such indemnity. Expenses incurred by such
individual in defending any action or proceeding may be advanced by the
corporation so long as the individual agrees to repay the corporation if it is
later determined that he or she is not entitled to such indemnification.
Under the terms of the form of Underwriting Agreement, the Registrant agrees to
indemnify the Distributor for any liability that the latter may incur to a
Contract owner or party-in-interest under a Contract, (a) arising out of any act
or omission in the course of or in connection with rendering services under such
Agreement, or (b) arising out of the purchase, retention or surrender of a
Contract; provided that the Registrant will not indemnify the Distributor for
any such liability that results from the latter's willful misfeasance, bad faith
or gross negligence, or from the reckless disregard by the latter of its duties
and obligations under the Underwriting Agreement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the forgoing 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, suite 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 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.
Item 16. Exhibits
Exh. No. Description
- -------- ---------------------------------------------------------------------
1 Principal Underwriting Agreement (1)
4 (a) Form of Variable Annuity Contract (2)
4 (b) Form of Application (2)
5 (a) Opinion and Consent of Counsel Regarding Legality (3)
5 (b) Opinion and Consent of Counsel Regarding Legality. Filed herewith.
15 Not applicable
23 Consent of Independent Registered Public Accounting Firm.
Filed herewith.
24 Powers of Attorney for Frederick F. Cripe, Lawrence W. Dahl,
Matthew S. Easley, Susan L. Lees, John C. Lounds, Samuel H. Pilch,
and John Pintozzi. Filed herewith.
99 Experts. Filed herewith.
(1) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 for Lincoln Benefit Life Variable Annuity
Account (File No. 333-50545, 811-07924) filed January 28, 1999
(2) Incorporated herein by reference to the Registration Statement on Form N-4
for Lincoln Benefit Life Variable Annuity Account (File No. 333-109688,
811-07924) filed October 14, 2003
(3) Incorporated herein by reference to the Registration Statement on Form S-3
for Lincoln Benefit Life Company (File No. 333-111553) filed December 24, 2003.
Item 17. Undertakings.
(a)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 set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(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.
Provided, however, that the undertakings set forth in paragraphs (i), (ii) and
(iii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of this 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 that 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) That, for the purpose of determining liability under the Securities Act of
1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of
a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
(5) That, for the purpose of determining liability of the Registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned Registrant undertakes that in a primary offering of securities
of the undersigned Registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned Registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned Registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned Registrant or used or referred to by the undersigned
Registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned Registrant or its
securities provided by or on behalf of the undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned Registrant to the purchaser.
(b) 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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("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 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, officers 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
As required by the Securities Act of 1933, the Registrant 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 be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lincoln and State of
Nebraska on March 24, 2009.
LINCOLN BENEFIT LIFE COMPANY
(Registrant)
* By: /s/ Susan L. Lees
----------------------------------
Susan L. Lees
Director, Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities
indicated on March 24, 2009.
(Signature) (Title)
(Signature) (Title)
- ------------------------------------- ----------------------------------------
*/ Frederick F. Cripe Director, Chairman and Chief Executive
- ------------------------------------- Officer
Frederick F. Cripe
*/ Lawrence W. Dahl Director, President and Chief Operating Officer
- ------------------------------------- (Principal Executive Officer)
Lawrence W. Dahl
*/ Matthew S. Easley Director
- -------------------------------------
Matthew S. Easley
/s/ Susan L. Lees Director, Senior Vice President,
- ------------------------------------- General Counsel and Secretary
Susan L. Lees
*/ John C. Lounds Director and Vice President
- -------------------------------------
John C. Lounds
*/ Samuel H. Pilch Group Vice President and Controller
- ------------------------------------- (Principal Accounting Officer)
Samuel H. Pilch
*/ John C. Pintozzi Director, Senior Vice President and
- ------------------------------------- Chief Financial Officer (Principal
John C. Pintozzi Financial Officer)
*By Susan L. Lees, pursuant to Power of Attorney, filed herewith.
EXHIBITS
Exhibit No. Description
(5)(b) Opinion and Consent of Counsel Regarding Legality
(23) Consent of Independent Registered Public Accounting Firm
(24) Powers of Attorney for: Frederick F. Cripe, Lawrence W. Dahl, Matthew S.
Easley, Susan L. Lees, John C. Lounds, Samuel H. Pilch, and John
Pintozzi.
(99) Experts