July 30, 2009
Ms. Sally Samuel, Esq.
Office of Insurance Products
Division of Investment Management
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
RE: Post-effective amendments under Rule 485(b) to certain Form N-4
registration statements
Dear Ms. Samuel:
On June 1, 2009, we filed post-effective amendments under Rule 485(a) to the
Form N-4 registration statements of Prudential Annuities Life Assurance
Corporation ("PALAC"), Pruco Life Insurance Company ("Pruco Life") and Pruco
Life Insurance Company of New Jersey ("PLNJ") listed below. In these filings,
we respond to your comments on those Rule 485(a) filings, and make other
non-material changes.
The following Form N-4 registration statements are being amended:
. Pruco Life's Prudential Premier Series Annuity (file nos. 333-130989 and
333-144639)
. PLNJ's Prudential Premier Series Annuity (file nos. 333-131035 and
333-144657)
. PALAC's ASAP III, APEX II, ASL II, XTra Credit Six, XTra Credit Eight,
Choice 2000, and Cornerstone Annuities (file nos. 333-96577, 333-71654,
333-71672, 333-71834, 333-150220, 333-08853, and 333-152411). Included
within certain of these registration statements are the prospectuses for
the "Optimum" line of annuities sold through LPL Financial Corporation.
A summary of your comments, along with our proposed responses, follows. (The
section references in your comments refer to those in the supplement for the
PALAC "core" prospectus).
1. Comment: on page 1 of the supplement, you asked that we include a
general statement, concerning each revision being made by the
supplement, reminding the reader to examine the change in conjunction
with the section of the May 1, 2009 prospectus being revised.
Response: we have added such a statement.
2. Comment: on page 1 of the supplement, you asked that we include a
statement describing the type of investor for whom the new Highest
Daily Lifetime 6 Plus benefits would be appropriate. Response: we have
added such a statement.
3. Comment: on page 6 of the supplement (and for the comparable reference
in the Spousal Highest Daily Lifetime 6 Plus section), in the
paragraph that begins with the words "[a]lthough you are guaranteed
the ability to withdraw your Annual Income Amount for life even if
your Account Value falls to zero . . . ", you asked that we bold the
paragraph, and state explicitly that the benefit terminates in the
scenario discussed. Similarly, in the section for Highest Daily
Lifetime 6 Plus with LIA, you asked that we bold the last two
sentences under the sub-heading entitled "Guarantee Payments."
Response: we have done so.
4. Comment: in Item D of the supplement, you asked that we state
explicitly that the Highest Daily Lifetime 6 Plus benefits referenced
in the list are discussed in detail later in the supplement. Response:
we have done so.
5. Comment: in Item E of the supplement, you asked that we set forth each
of the funds in the applicable portions of the Group I and Group II
lists. You also asked that, with respect to the AST UBS Dynamic Alpha
Portfolio, we indicate by cross-reference where additional information
about that Portfolio may be found. Response: we have done so.
6. Comment: with respect to each of Highest Daily Lifetime 6 Plus and
Spousal Highest Daily Lifetime 6 Plus, you asked that we clarify the
sentence concerning the ability to elect the 6 or 12 month DCA program
along with the benefit. Response: we have revised the sentence
accordingly.
7. Comment: with respect to each of Highest Daily Lifetime 6 Plus and
Spousal Highest Daily Lifetime 6 Plus, you asked that we clarify the
disclosure concerning the scenario in which a withdrawal needed to
satisfy required minimum distribution requirements exceeds the current
Annual Income Amount. Response: we have revised the disclosure to
provide this clarification.
8. Comment: with respect to each of Highest Daily Lifetime 6 Plus and
Spousal Highest Daily Lifetime 6 Plus, under the Other Important
Considerations section, you asked that we revise the disclosure
concerning our ability, for new elections of the benefit, to impose
new Account Value allocation requirements. Response: we have revised
the disclosure accordingly.
2
9. Comment: given the various references to "good order", you asked that
we add a defined term for "good order" to the Glossary section.
Response: we have done so.
10. Comment: You asked that the supplement describe how, under the asset
transfer formula, more than 90% of Account Value could be invested at
a given time in the AST Investment Grade Bond Sub-account. Response:
the current drafts of the supplements state, in bold, that "[h]owever,
it is possible that, due to the investment performance of your
allocation in the AST Investment Grade Bond Sub-account and your
allocations in the Permitted Sub-accounts you have selected, your
Account Value could be more than 90% invested in the AST Investment
Grade Bond Sub-account." We feel that this sentence provides
sufficient explanation and accordingly, have left the disclosure as is.
11. Comment: you asked about the 120 day elimination period applicable to
Highest Daily Lifetime 6 Plus with LIA. In particular, you asked about
a scenario in which the owner notified us of his/her eligibility more
than 120 days prior to the first intended withdrawal of the LIA
Amount. Response: the LIA amount is available for withdrawal on the
Valuation Day immediately after the 120/th/ day, assuming the 36 month
waiting period also has been met. Thus, in the scenario you describe,
and assuming that the 36 month waiting period had been satisfied, the
LIA amount would be available 120 days later. Because withdrawals are
not required under the benefit, the owner could, if he/she chose,
delay taking the first LIA withdrawal until the originally-intended
date.
12. Comment: we had proposed language dealing with the signature
verification that we may perform with respect to withdrawal requests
exceeding a specified amount. You asked for supplemental confirmation
that if a good order withdrawal request is received on a given
business day, it will be priced on that business day even if it takes
several days thereafter to verify the signature. You also asked that
the supplement language state that redemption proceeds will be paid
within 7 days of the price date even if a signature verification needs
to be performed. Response: if a withdrawal request otherwise is in
good order but requires signature verification, we will price the
withdrawal on the business day it was received by us and pay the
redemption proceeds within 7 days thereafter, provided that we are
able to verify the signature within that 7 day period. If we are not
able to verify the signature within 7 days (e.g., if the owner is out
of the country), we will treat the withdrawal request as
not-in-good-order, and promptly inform the owner to that effect. We
have revised our disclosure consistent with our discussions.
The instant filings also include expense examples that assume, among other
things, election of Highest Daily Lifetime 6 Plus. In addition, current
financial statements for the applicable registrant separate account and the
depositor have been incorporated by reference into these Rule 485(b) filings.
Although the above comments pertain specifically to the PALAC "core"
prospectus, we will make similar changes to the other supplements.
3
We represent and acknowledge that:
. should the Commission or the Staff, acting pursuant to delegated
authority, declare the filings effective, it does not foreclose the
Commission from taking any action with respect to the filings;
. the action of the Commission or the Staff, acting pursuant to delegated
authority, in declaring the filings effective, does not relieve the
Company from its full responsibility for the adequacy and accuracy of
the disclosure in the filings; and
. the Company may not assert this action as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
As counsel to the Registrants, I represent that none of the instant filings
contains disclosure that would render the filing ineligible for reliance on
Rule 485(b).
We appreciate your attention to these filings.
Sincerely,
/s/ C. Christopher Sprague
------------------------------
C. Christopher Sprague
4
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
ADVANCED SERIES ADVISOR PLAN/SM/ III (ASAP III)
ADVANCED SERIES APEX/SM/ II (APEX II)
ADVANCED SERIES XTRA CREDIT SIX/SM/ (XT6)
ADVANCED SERIES LIFEVEST/SM/ II (ASL II)
Supplement dated August 24, 2009
To
Prospectus dated May 1, 2009
This supplement should be read and retained with the prospectus for your
Annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement describes two new lifetime withdrawal benefits called Highest
Daily Lifetime/SM/ 6 Plus and Spousal Highest Daily Lifetime/SM/ 6 Plus. Each
of these benefits is an optional benefit available under any of the
above-referenced Annuities. The optional benefits described in this supplement
are only being offered in those jurisdictions where we have received
regulatory approval and will be offered subsequently in other jurisdictions
when we receive regulatory approval in those jurisdictions. Throughout this
supplement, we revise certain sections of the May 1, 2009 prospectus, and we
indicate in this supplement the section of the prospectus that is being
revised. Please refer to this supplement, in conjunction with that section of
the prospectus.
Each of Highest Daily Lifetime 6 Plus, Highest Daily Lifetime 6 Plus with
Lifetime Income Accelerator ("LIA"), and Spousal Highest Daily Lifetime 6 Plus
is a lifetime guaranteed minimum withdrawal benefit. Such a benefit is
designed for someone who wants to access the annuity's value through
withdrawals over time, rather than by annuitizing. Please see the introductory
section of "Living Benefits" in the prospectus for a discussion of our
optional living benefits generally. As is the case with optional living
benefits generally, the fulfillment of our guarantee under these benefits is
dependent on our claims-paying ability.
A. We include the following new entries in the "GLOSSARY OF TERMS" section of
the prospectus:
Highest Daily Lifetime/SM/ 6 Plus Income Benefit: An optional living benefit
that is available for an additional charge. The benefit guarantees your
ability to withdraw amounts equal to a percentage of a guaranteed income base
called the Protected Withdrawal Value (PWV). Subject to our rules regarding
the timing and amount of withdrawals, we guarantee these withdrawal amounts,
regardless of the impact of market performance on your Account Value. Highest
Daily Lifetime 6 Plus is the same class of optional benefit as our Highest
Daily Lifetime 7 Plus Income Benefit, but differs (among other things) with
respect to how the Protected Withdrawal Value is calculated and how the
Lifetime Withdrawals are calculated. Starting in August 2009, we began
offering Highest Daily Lifetime 6 Plus in lieu of Highest Daily Lifetime 7
Plus (and Highest Daily Lifetime Seven in states where Highest Daily Lifetime
7 Plus was not approved) wherever we have received the required State and
selling firm approvals.
Spousal Highest Daily Lifetime/SM/ 6 Plus Income Benefit: An optional benefit
that, for an additional charge, guarantees your ability to withdraw amounts
equal to a percentage of a guaranteed income base called the Protected
Withdrawal Value (PWV). Subject to our rules regarding the timing and amount
of withdrawals, we guarantee these withdrawal amounts, regardless of the
impact of market performance on your Account Value. This benefit is the
spousal version of the Highest Daily Lifetime 6 Plus Income Benefit and is the
same class of optional benefit as our Spousal Highest Daily Lifetime 7 Plus
Income Benefit, but differs (among other things) with respect to how the
Protected Withdrawal Value is calculated and how the Lifetime Withdrawals are
calculated. Starting in August 2009, we began offering Spousal Highest Daily
Lifetime 6 Plus in lieu of Spousal Highest Daily Lifetime 7 Plus (and Spousal
Highest Daily Lifetime Seven in states where Spousal Highest Daily Lifetime 7
Plus was not approved) wherever we have received the required State and
selling firm approvals.
Good Order: An instruction received by us, utilizing such forms, signatures,
and dating as we require, which is sufficiently complete and clear that we do
not need to exercise any discretion to follow such instructions.
B. We revise the section entitled "Your Optional Benefit Fees and Charges" to
add the following line items that set forth the fee for each of Highest Daily
Lifetime 6 Plus, Highest Daily Lifetime 6 Plus with Lifetime Income
Accelerator (LIA), and Spousal Highest Daily Lifetime 6 Plus. PWV is the
abbreviation for Protected Withdrawal Value:
----------------------------------------------------------------------------------------------------------------------
YOUR OPTIONAL BENEFIT FEES AND CHARGES/ 1/
----------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFIT OPTIONAL TOTAL TOTAL TOTAL TOTAL
BENEFIT FEE/ ANNUAL ANNUAL ANNUAL ANNUAL
CHARGE CHARGE /2/ CHARGE /2/ CHARGE /2/ CHARGE /2/
(as a percentage for ASAP III for APEX II for ASL II for XT6
of Sub-account net
assets, unless
otherwise
indicated)
----------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME 6 PLUS
Maximum Charge /3/ 1.50% greater of 1.25% + 1.50% 1.65% + 1.50% 1.65% + 1.50% 1.65% + 1.50%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
Current Charge 0.85% greater of 1.25% + 0.85% 1.65% + 0.85% 1.65% + 0.85% 1.65% + 0.85%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
----------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME 6 PLUS WITH
LIFETIME INCOME ACCELERATOR (LIA)
Maximum Charge /3/ 2.00% greater of 1.25% + 2.00% 1.65% + 2.00% 1.65% + 2.00% 1.65% + 2.00%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
Current Charge 1.20% greater of 1.25% + 1.20% 1.65% + 1.20% 1.65% + 1.20% 1.65% + 1.20%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
----------------------------------------------------------------------------------------------------------------------
SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS
Maximum Charge /3/ 1.50% greater of 1.25% + 1.50% 1.65% + 1.50% 1.65% + 1.50% 1.65% + 1.50%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
Current Charge 0.95% greater of 1.25% + 0.95% 1.65% + 0.95% 1.65% + 0.95% 1.65% + 0.95%
Account Value and greater of greater of greater of greater of
PWV Account Value Account Value Account Value Account Value
and PWV and PWV and PWV and PWV
----------------------------------------------------------------------------------------------------------------------
How Charge is Determined
1) Highest Daily Lifetime 6 Plus. Charge for this benefit is assessed against
the greater of Account Value and Protected Withdrawal Value. As discussed
in the description of the benefit, the charge is taken out of the
Sub-accounts and the DCA Fixed Rate Options, if applicable. Under certain
circumstances, we may not deduct the charge or may only deduct a portion of
the charge (see the description of the benefit for details). For ASAP III,
0.85% is in addition to 1.25% annual charge of amounts invested in the
Sub-accounts (in Annuity Years 1-8) and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years. For APEX II and
ASL II, 0.85% is in addition to 1.65% annual charge of amounts invested in
the Sub-accounts. For XT6, 0.85% is in addition to 1.65% annual charge of
amounts invested in the Sub-accounts (in Annuity Years 1-10) and 0.65%
annual charge of the amounts invested in the Sub-accounts in subsequent
Annuity Years.
Highest Daily Lifetime 6 Plus with LIA. Charge for this benefit is assessed
against the greater of Account Value and Protected Withdrawal Value. As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts and the DCA Fixed Rate Options, if applicable. Under certain
circumstances, we may not deduct the charge or may only deduct a portion of
the charge (see the description of the benefit for details). For ASAP III,
1.20% is in addition to 1.25% annual charge of amounts invested in the
Sub-accounts (in Annuity Years 1-8) and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years. For APEX II and
ASL II, 1.20% is in addition to 1.65% annual charge of amounts invested in
the Sub-accounts. For XT6, 1.20% is in addition to 1.65% annual charge of
amounts invested in the Sub-accounts (in Annuity Years 1-10) and 0.65%
annual charge of amounts invested in the Sub-accounts in subsequent Annuity
Years.
2
Spousal Highest Daily Lifetime 6 Plus. Charge for this benefit is assessed
against the greater of Account Value and Protected Withdrawal Value. As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts and the DCA Fixed Rate Options, if applicable. Under certain
circumstances, we may not deduct the charge or may only deduct a portion of
the charge (see the description of the benefit for details). For ASAP III,
0.95% is in addition to 1.25% annual charge of amounts invested in the
Sub-accounts (in Annuity Years 1-8) and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years. For APEX II and
ASL II, 0.95% is in addition to 1.65% annual charge of amounts invested in
the Sub-accounts. For XT6, 0.95% is in addition to 1.65% annual charge of
amounts invested in the Sub-accounts (in Annuity Years 1-10) and 0.65%
annual charge of the amounts invested in the Sub-accounts in subsequent
Annuity Years.
2) The Total Annual Charge includes the Insurance Charge and Distribution
Charge (if applicable) assessed against the average daily net assets
allocated to the Sub-accounts. If you elect more than one optional benefit,
the Total Annual Charge would be higher to include the charge for each
optional benefit. With respect to each of Highest Daily Lifetime 6 Plus,
Highest Daily Lifetime 6 Plus with LIA, and Spousal Highest Daily Lifetime
6 Plus, one-fourth of the annual charge is deducted quarterly. These
optional benefits are not available under the Beneficiary Continuation
Option.
3) We reserve the right to increase the charge up to the maximum charge
indicated, upon any step-up or reset under the benefit, or new election of
the benefit (see the descriptions of the benefits below for details,
including the ability to decline a step-up or reset and thereby avoid any
associated new charge).
3
C. Revised Expense Examples
We include revised expense examples, as follows:
EXPENSE EXAMPLES
These examples are intended to help you compare the cost of investing in one
of our Annuities with the cost of investing in other annuities we offer and/or
variable annuities issued by other insurance companies.
Below are examples for each Annuity showing what you would pay in expenses at
the end of the stated time periods had you invested $10,000 in the Annuity and
your investment has a 5% return each year.
The examples reflect the following fees and charges for each Annuity as
described in "Summary of Contract Fees and Charges":
. Insurance Charge
. Distribution Charge (if applicable)
. Contingent Deferred Sales Charge (when and if applicable)
. Annual Maintenance Fee
. The maximum combination of optional benefit charges
The examples also assume the following for the period shown:
. You allocate all of your Account Value to the Sub-account with the
maximum gross total annual operating expenses for 2008, and those
expenses remain the same each year*
. For each charge, we deduct the maximum charge rather than the current
charge
. You make no withdrawals of Account Value
. You make no transfers, or other transactions for which we charge a fee
. No tax charge applies
. You elect the Highest Daily Lifetime 6 Plus with Combination 5% Roll-up
and HAV Death Benefit (which are the maximum combination of optional
benefit charges)
. For the XT6 example, no Purchase Payment Credit is granted under the
Annuity
. For the APEX II and ASAP III examples, no Loyalty Credit applies
Amounts shown in the examples are rounded to the nearest dollar.
* Note: Not all portfolios offered as Sub-accounts may be available depending
on optional benefit selection, the applicable jurisdiction and selling firm.
THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR
THEIR PORTFOLIOS - ACTUAL EXPENSES WILL BE LESS THAN THOSE SHOWN DEPENDING
UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER THAN INDICATED IN THE EXAMPLES OR
IF YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows:
If you surrender your Annuity at the end of the applicable time period:/ 1/
1 yr 3 yrs 5 yrs 10 yrs
-------------------------------------
ASAP III $1,399 $2,601 $3,759 $6,562
-------------------------------------
APEX II $1,535 $2,752 $3,414 $6,807
-------------------------------------
ASL II $685 $2,051 $3,414 $6,807
-------------------------------------
XT6/ 3/ $1,586 $2,854 $4,018 $6,915
-------------------------------------
If you annuitize your Annuity at the end of the applicable time period: /2/
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
ASAP III N/A $1,951 $3,259 $6,562
-----------------------------------
APEX II N/A $2,052 $3,414 $6,807
-----------------------------------
ASL II $685 $2,051 $3,414 $6,807
-----------------------------------
XT6/ 3/ N/A N/A $3,418 $6,815
-----------------------------------
4
If you do not surrender your Annuity:
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
ASAP III $649 $1,951 $3,259 $6,562
-----------------------------------
APEX II $685 $2,052 $3,414 $6,807
-----------------------------------
ASL II $685 $2,051 $3,414 $6,807
-----------------------------------
XT6/ 3/ $686 $2,054 $3,418 $6,815
-----------------------------------
1 There is no CDSC for ASL II. See "Summary of Contract Fees and Charges" for
the CDSC schedule for each Annuity.
2 If you own XT6, you may not annuitize in the first three (3) Annuity Years.
If you own ASAP III or APEX II, you may not annuitize in the first
Annuity Year.
3 XT6 Annuities purchased prior to November 20, 2006 are subject to a
different CDSC schedule. Expense examples calculations for XT6 Annuities
are not adjusted to reflect the Purchase Credit. If the Purchase Credit
were reflected in the calculations, expenses would be higher.
D. The "Summary - Options for Guaranteed Lifetime Withdrawals" section is
revised, in pertinent part, as follows:
These benefits contain detailed provisions, so please see the following
sections of the Prospectus for complete details. Highest Daily Lifetime 6
Plus, Highest Daily Lifetime 6 Plus with Lifetime Income Accelerator, and
Spousal Highest Daily Lifetime 6 Plus are discussed in Sections F and G of
this supplement:
. Highest Daily Lifetime 6 Plus
. Highest Daily Lifetime 6 Plus with Lifetime Income Accelerator ("LIA")
. Spousal Highest Daily Lifetime 6 Plus
. Highest Daily Lifetime 7 Plus*
. Spousal Highest Daily Lifetime 7 Plus*
. Highest Daily Lifetime 7 Plus with Lifetime Income Accelerator*
. Highest Daily Lifetime 7 Plus with Beneficiary Income Option*
. Spousal Highest Daily Lifetime 7 Plus with Beneficiary Income Option*
. Highest Daily Lifetime Seven*
. Spousal Highest Daily Lifetime Seven*
. Highest Daily Lifetime Seven with Lifetime Income Accelerator*
. Highest Daily Lifetime Seven with Beneficiary Income Option*
. Spousal Highest Daily Lifetime Seven with Beneficiary Income Option*
* No longer available for new elections in a given State once Highest Daily
Lifetime 6 Plus is approved in that State. Please note that Highest Daily
Lifetime 6 Plus and Spousal Highest Daily Lifetime 6 Plus do not have
Highest Daily Lifetime 6 Plus/Spousal Highest Daily Lifetime 6 Plus with
Beneficiary Income Option versions available.
E. "What Are The Investment Objectives and Policies of The Portfolios?" (pages
24 - 27 of prospectus)
In this section, we revise the Group I Table to add Highest Daily Lifetime 6
Plus, Highest Daily Lifetime 6 Plus with LIA, and Spousal Highest Daily
Lifetime 6 Plus to the first list of optional lifetime withdrawal benefits. We
revise the table entitled "Allowable Benefit Allocations" to reflect that the
AST UBS Dynamic Alpha Portfolio is not a Group I "Allowable Benefit
Allocation" with any of Highest Daily Lifetime 6 Plus, Highest Daily Lifetime
6 Plus with LIA, or Spousal Highest Daily Lifetime 6 Plus. In addition, we
revise the Group II Table to add Highest Daily Lifetime 6 Plus, Highest Daily
Lifetime 6 Plus with LIA, and Spousal Highest Daily Lifetime 6 Plus to the
list of optional lifetime withdrawal benefits that may participate in the
Optional Allocation & Rebalancing Program. See the Investment
Objectives/Policies table in the Prospectus for a summary description of the
AST UBS Dynamic Alpha Portfolio.
Thus, the tables are revised in pertinent part to read as follows:
Group I: Allowable Benefit Allocations
Optional Benefit Name* Allowable Benefit Allocations:
Lifetime Five Income Benefit AST Academic Strategies Asset
Spousal Lifetime Five Income Benefit Allocation Portfolio
Highest Daily Lifetime Five Income AST Capital Growth Asset Allocation
Benefit Portfolio
Highest Daily Lifetime Seven Income AST Balanced Asset Allocation
Benefit Portfolio
Spousal Highest Daily Lifetime Seven AST Preservation Asset Allocation
Income Benefit Portfolio
Highest Daily Value Death Benefit AST First Trust Balanced Target
Highest Daily Lifetime Seven with Portfolio
Beneficiary Income Option AST First Trust Capital Appreciation
Spousal Highest Daily Lifetime Seven Target Portfolio
with Beneficiary Income Option AST Focus Four Plus Portfolio
Highest Daily Lifetime Seven with AST Advanced Strategies Portfolio
Lifetime Income Accelerator AST T. Rowe Price Asset Allocation
Highest Daily Lifetime 7 Plus Income Portfolio
Benefit AST Niemann Capital Growth Asset
Allocation Portfolio
AST CLS Growth Asset Allocation
Portfolio
AST CLS Moderate Asset Allocation
Portfolio
5
Optional Benefit Name* Allowable Benefit Allocations:
Highest Daily Lifetime 7 Plus with AST Horizon Growth Asset Allocation
Beneficiary Income Option Portfolio
Highest Daily Lifetime 7 Plus with AST Horizon Moderate Asset
Lifetime Income Accelerator Allocation Portfolio
Spousal Highest Daily Lifetime 7 AST Schroders Multi-Asset World
Plus Income Benefit Strategies Portfolio
Spousal Highest Daily Lifetime 7 AST UBS Dynamic Alpha Portfolio (not
Plus with Beneficiary Income Option available to Highest Daily Lifetime
Highest Daily Lifetime 6 Plus Income 6 Plus Benefits)
Benefit Franklin Templeton VIP Founding
Highest Daily Lifetime 6 Plus with Funds Allocation Fund
Lifetime Income Accelerator
Spousal Highest Daily Lifetime 6
Plus Income Benefit
-----------------------------------------------------------------------------
Group II: Optional Allocation & Rebalancing Program*
Optional Benefit Name* Permitted Portfolios
Highest Daily Lifetime Seven AST Academic Strategies Asset
Spousal Highest Daily Lifetime Seven Allocation
Highest Daily Lifetime Seven with AST Advanced Strategies
Beneficiary Income Option AST Aggressive Asset Allocation
Spousal Highest Daily Lifetime Seven AST AllianceBernstein Growth & Income
with Beneficiary Income Option AST Balanced Asset Allocation
Highest Daily Lifetime Seven with AST CLS Growth Asset Allocation
Lifetime Income Accelerator AST CLS Moderate Asset Allocation
Highest Daily Lifetime 7 Plus AST AllianceBernstein Core Value
Spousal Highest Daily Lifetime 7 Plus AST American Century Income & Growth
Highest Daily Lifetime 7 Plus with AST Capital Growth Asset Allocation
Beneficiary Income Option AST Cohen & Steers Realty
Spousal Highest Daily Lifetime 7 AST DeAM Large-Cap Value
Plus with Beneficiary Income Option AST Federated Aggressive Growth
Highest Daily Lifetime 7 Plus with AST First Trust Balanced Target
Lifetime Income Accelerator AST First Trust Capital Appreciation
Highest Daily Lifetime 6 Plus Income Target
Benefit AST Focus Four Plus
Highest Daily Lifetime 6 Plus with AST Global Real Estate
Lifetime Income Accelerator AST Goldman Sachs Concentrated Growth
Spousal Highest Daily Lifetime 6 AST Goldman Sachs Mid-Cap Growth
Plus Income Benefit
AST Goldman Sachs Small-Cap Value
AST High Yield
AST Horizon Growth Asset Allocation
AST Horizon Moderate Asset Allocation
AST International Growth
AST International Value
AST JPMorgan International Equity
AST Large-Cap Value
AST Lord Abbett Bond-Debenture
AST Marsico Capital Growth
AST MFS Global Equity
AST MFS Growth
AST Mid-Cap Value
AST Money Market
AST Neuberger Berman Mid-Cap Growth
AST Neuberger Berman/LSV Mid-Cap
Value
AST Neuberger Berman Small-Cap Growth
AST Niemann Capital Growth Asset
Allocation
AST PIMCO Limited Maturity Bond
AST PIMCO Total Return Bond
AST Preservation Asset Allocation
AST QMA US Equity Alpha
AST Schroders Multi-Asset World
Strategies
AST Small-Cap Growth
AST Small-Cap Value
AST T. Rowe Price Asset Allocation
AST T. Rowe Price Global Bond
AST T. Rowe Price Large-Cap Growth
AST T. Rowe Price Natural Resources
AST UBS Dynamic Alpha
AST Western Asset Core Plus Bond
Franklin Templeton VIP Founding
Funds Allocation Fund
-------------------------------------------------------------------------------
6
The following additional Portfolios are available with ASAP III, APEX II and
ASL II only:
ProFund VP**
Consumer Goods
Consumer Services
Financials
Health Care
Industrials
Large-Cap Growth
Large-Cap Value
Mid-Cap Growth
Mid-Cap Value
Real Estate
Small-Cap Growth
Small-Cap Value
Telecommunications
Utilities
-----------------------------------------------------------------------------
* Detailed Information regarding these optional benefits can be found in the
"Living Benefits" and "Death Benefit" sections of the Prospectus.
** For ASAP III, XT6, and ASL II Annuities issued beginning on May 26, 2008,
we limit the Owner's ability to invest in the ProFund VP Portfolios.
Specifically:
.. We will not permit those who acquire an ASAP III, XT6, or ASL II Annuity on
or after May 26, 2008 (including beneficiaries who acquire such an Annuity
under the Beneficiary Continuation Option) to invest in any ProFund VP
Portfolio; and
.. Those who acquired an ASAP III, XT6, or ASL II Annuity prior to May 26,
2008 may invest in any ProFund VP Portfolio without being subject to the
above restrictions; and
.. Those who currently hold an APEX II Annuity, or who acquire an APEX II
Annuity after May 26, 2008, may invest in any ProFund VP Portfolio (except
that beneficiaries who acquire an APEX II Annuity on or after May 26, 2008
under the Beneficiary Continuation Option may not invest in any ProFund VP
Portfolio).
F. Highest Daily Lifetime 6 Plus/SM/ Income Benefit
We add the following to the section entitled "Living Benefits."
HIGHEST DAILY LIFETIME/SM/ 6 PLUS INCOME BENEFIT (HD 6 Plus)/SM/ Highest Daily
Lifetime 6 Plus is offered as a replacement to Highest Daily Lifetime 7 Plus
in those jurisdictions where we have received regulatory approval. Currently,
if you elect Highest Daily Lifetime 6 Plus and subsequently terminate the
benefit, you may elect another living benefit, subject to our current rules.
See "Election of and Designations under the Benefit" below and "Termination of
Existing Benefits and Election of New Benefits" in the prospectus for details.
Please note that if you terminate Highest Daily Lifetime 6 Plus and elect
another living benefit, you lose the guarantees that you had accumulated under
your existing benefit and will begin the new guarantees under the new benefit
you elect based on your Account Value as of the date the new benefit becomes
active. The income benefit under Highest Daily Lifetime 6 Plus currently is
based on a single "designated life" who is at least 45 years old on the date
that the benefit is acquired. The Highest Daily Lifetime 6 Plus Benefit is not
available if you elect any other optional living benefit or the Plus 40 life
insurance rider or the Highest Daily Value death benefit. As long as your
Highest Daily Lifetime 6 Plus Benefit is in effect, you must allocate your
Account Value in accordance with the then permitted Sub-accounts and other
investment option(s) available with this benefit. For a more detailed
description of the permitted investment options, see the "Investment Options"
section in the prospectus.
We offer a benefit that guarantees until the death of the single designated
life (the Annuitant) the ability to withdraw an annual amount (the "Annual
Income Amount") equal to a percentage of an initial value (the "Protected
Withdrawal Value") regardless of the impact of Sub-account performance on the
Account Value, subject to our rules regarding the timing and amount of
withdrawals. You are guaranteed to be able to withdraw the Annual Income
Amount for the rest of your life ("Lifetime Withdrawals"), provided that you
have not made withdrawals of excess income that have resulted in your Account
Value being reduced to zero. We also permit you to make a one-time
Non-Lifetime Withdrawal from your Annuity prior to taking Lifetime Withdrawals
under the benefit. Highest Daily Lifetime 6 Plus may be appropriate if you
intend to make periodic withdrawals from your Annuity, and wish to ensure that
Sub-account performance will not affect your ability to receive annual
payments. You are not required to take withdrawals as part of the benefit -
the guarantees are not lost if you withdraw less than the maximum allowable
amount each year under the rules of the benefit. An integral component of
Highest Daily Lifetime 6 Plus is the mathematical formula we employ that may
periodically transfer your Account Value to and from the AST Investment Grade
Bond Sub-account. See the section below entitled "How Highest Daily Lifetime 6
Plus Transfers Account Value Between Your Permitted Sub-accounts and the AST
Investment Grade Bond Sub-account."
Highest Daily Lifetime 6 Plus also provides for a Death Benefit equal to three
times your Annual Income Amount. The Death Benefit is not payable if your
Account Value is reduced to zero as a result of withdrawals or if annuity
payments are being made at the time of the decedent's death.
7
Although you are guaranteed the ability to withdraw your Annual Income Amount
for life even if your Account Value falls to zero, if you take withdrawals of
excess income that bring your Account Value to zero, your Annual Income Amount
would also fall to zero, and the benefit would terminate. In that scenario, no
further amount, including the Death Benefit described below, would be payable
under the Highest Daily Lifetime 6 Plus benefit.
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Highest Daily Lifetime 6 Plus for Annuities issued on or after
May 1, 2009, subject to the 6 or 12 Month DCA Program's rules, and subject to
State approvals. As discussed in the prospectus, you may participate in the 6
or 12 Month Dollar Cost Averaging Program only if your Annuity was issued on
or after May 1, 2009. The 6 or 12 Month DCA Program is not available in
Washington.
Key Feature - Protected Withdrawal Value
The Protected Withdrawal Value is used to calculate the initial Annual Income
Amount. The Protected Withdrawal Value is separate from your Account Value and
not available as cash or a lump sum. On the effective date of the benefit, the
Protected Withdrawal Value is equal to your Account Value. On each Valuation
Day thereafter, until the date of your first Lifetime Withdrawal (excluding
any Non-Lifetime Withdrawal discussed below), the Protected Withdrawal Value
is equal to the "Periodic Value" described in the next paragraphs.
The "Periodic Value" initially is equal to the Account Value on the effective
date of the benefit. On each Valuation Day thereafter until the first Lifetime
Withdrawal, we recalculate the Periodic Value. We stop determining the
Periodic Value upon your first Lifetime Withdrawal after the effective date of
the benefit. On each Valuation Day (the "Current Valuation Day"), the Periodic
Value is equal to the greater of:
(1)the Periodic Value for the immediately preceding business day (the "Prior
Valuation Day") appreciated at the daily equivalent of 6% annually during
the calendar day(s) between the Prior Valuation Day and the Current
Valuation Day (i.e., one day for successive Valuation Days, but more than
one calendar day for Valuation Days that are separated by weekends and/or
holidays), plus the amount of any purchase payment (including any
associated purchase Credits) made on the Current Valuation Day (the
Periodic Value is proportionally reduced for any Non-Lifetime Withdrawal);
and
(2)the Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 10/th /or 20/th/
Anniversary of the effective date of the benefit, your Periodic Value on the
10/th/ or 20/th/ Anniversary of the benefit effective date is equal to the
greater of:
(1)the Periodic Value described above or,
(2)the sum of (a), (b) and (c) below (proportionally reduced for any
Non-Lifetime Withdrawals):
(a)200% (on the 10/th/ anniversary) or 400% (on the 20/th/ anniversary)
of the Account Value on the effective date of the benefit including
any purchase payments (including any associated purchase Credits)
made on that day;
(b)200% (on the 10/th/ anniversary) or 400% (on the 20/th/ anniversary)
of all purchase payments (including any associated purchase Credits)
made within one year following the effective date of the benefit; and
(c)all purchase payments (including any associated purchase Credits)
made after one year following the effective date of the benefit.
Once the first Lifetime Withdrawal is made, the Protected Withdrawal Value at
any time is equal to the greater of (i) the Protected Withdrawal Value on the
date of the first Lifetime Withdrawal, increased for subsequent purchase
payments (including any associated purchase Credits) and reduced for
subsequent Lifetime Withdrawals, and (ii) the highest daily Account Value upon
any step-up, increased for subsequent purchase payments (including any
associated purchase Credits) and reduced for subsequent Lifetime Withdrawals
(see below).
Key Feature - Annual Income Amount under the Highest Daily Lifetime 6 Plus
Benefit
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value. The percentage initially depends on the age of the Annuitant
on the date of the first Lifetime Withdrawal after election of the benefit.
The percentages are: 4% for ages 45 - less than 59 1/2; 5% for ages 59 1/2-79,
and 6% for ages 80 or older. Under the Highest Daily Lifetime 6 Plus benefit,
if your cumulative Lifetime Withdrawals in an Annuity Year are less than or
equal to the Annual Income Amount, they will not reduce your Annual Income
Amount in subsequent Annuity Years, but any such withdrawals will reduce the
Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If
your cumulative Lifetime Withdrawals in an Annuity Year are in excess of the
Annual Income Amount ("Excess Income"), your Annual Income Amount in
subsequent years will be reduced (except with regard to Required Minimum
Distributions for this Annuity that comply with our rules) by the result of
the ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). If you take withdrawals
of Excess Income, only the portion of the Lifetime Withdrawal that exceeds the
remaining Annual Income Amount will proportionally reduce your Protected
Withdrawal Value and Annual Income Amount in future years. Reductions are
based on the actual amount of the withdrawal, including any Contingent
Deferred Sales Charge (CDSC) that may apply. Lifetime Withdrawals of any
amount up to and including the Annual Income Amount will reduce the Protected
Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income
will reduce the Protected Withdrawal Value by the same ratio as the reduction
to the Annual Income Amount.
8
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
You may use the Systematic Withdrawal program to make withdrawals of the
Annual Income Amount. Any systematic withdrawal will be deemed a Lifetime
Withdrawal under this benefit.
Any purchase payment that you make subsequent to the election of Highest Daily
Lifetime 6 Plus and subsequent to the first Lifetime Withdrawal will
(i) increase the then-existing Annual Income Amount by an amount equal to a
percentage of the purchase payment (including any associated purchase Credits)
based on the age of the Annuitant at the time of the first Lifetime Withdrawal
(the percentages are: 4% for ages 45 - less than 59 1/2; 5% for ages 59 1/2-79
and 6% for ages 80 and older/./) and (ii) increase the Protected Withdrawal
Value by the amount of the Purchase Payment (including any associated purchase
Credits).
If your Annuity permits additional purchase payments, we may limit any
additional purchase payment(s) if we determine that as a result of the timing
and amounts of your additional purchase payments and withdrawals, the Annual
Income Amount is being increased in an unintended fashion. Among the factors
we will use in making a determination as to whether an action is designed to
increase the Annual Income Amount in an unintended fashion is the relative
size of additional purchase payment(s). We reserve the right to not accept
additional purchase payments if we are not then offering this benefit for new
elections. We will exercise such reservation of right for all annuity
purchasers in the same class in a nondiscriminatory manner.
Highest Daily Auto Step-Up
An automatic step-up feature ("Highest Daily Auto Step-Up") is part of Highest
Daily Lifetime 6 Plus. As detailed in this paragraph, the Highest Daily Auto
Step-Up feature can result in a larger Annual Income Amount subsequent to your
first Lifetime Withdrawal. The Highest Daily Auto Step-Up starts with the
anniversary of the Issue Date of the Annuity (the "Annuity Anniversary")
immediately after your first Lifetime Withdrawal under the benefit.
Specifically, upon the first such Annuity Anniversary, we identify the Account
Value on each Valuation Day within the immediately preceding Annuity Year
after your first Lifetime Withdrawal. Having identified the highest daily
value (after all daily values have been adjusted for subsequent purchase
payments and withdrawals), we then multiply that value by a percentage that
varies based on the age of the Annuitant on the Annuity Anniversary as of
which the step-up would occur. The percentages are: 4% for ages 45 - less than
59 1/2; 5% for ages 59 1/2-79/, /and 6% for ages 80 and older. If that value
exceeds the existing Annual Income Amount, we replace the existing amount with
the new, higher amount. Otherwise, we leave the existing Annual Income Amount
intact. The Account Value on the Annuity Anniversary is considered the last
daily step-up value of the Annuity Year. All daily valuations and annual
step-ups will only occur on a Valuation Day. In later years (i.e., after the
first Annuity Anniversary after the first Lifetime Withdrawal), we determine
whether an automatic step-up should occur on each Annuity Anniversary, by
performing a similar examination of the Account Values that occurred on
Valuation Days during the year. Taking Lifetime Withdrawals could produce a
greater difference between your Protected Withdrawal Value and your Account
Value, which may make a Highest Daily Auto Step-up less likely to occur. At
the time that we increase your Annual Income Amount, we also increase your
Protected Withdrawal Value to equal the highest daily value upon which your
step-up was based only if that results in an increase to the Protected
Withdrawal Value. Your Protected Withdrawal Value will never be decreased as a
result of an income step-up. If, on the date that we implement a Highest Daily
Auto Step-Up to your Annual Income Amount, the charge for Highest Daily
Lifetime 6 Plus has changed for new purchasers, you may be subject to the new
charge at the time of such step-up. Prior to increasing your charge for
Highest Daily Lifetime 6 Plus upon a step-up, we would notify you, and give
you the opportunity to cancel the automatic step-up feature. If you receive
notice of a proposed step-up and accompanying fee increase, you should
carefully evaluate whether the amount of the step-up justifies the increased
fee to which you will be subject.
If you are engaged in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount.
The Highest Daily Lifetime 6 Plus benefit does not affect your ability to take
withdrawals under your Annuity, or limit your ability to take withdrawals that
exceed the Annual Income Amount. Under Highest Daily Lifetime 6 Plus, if your
cumulative Lifetime Withdrawals in an Annuity Year are less than or equal to
the Annual Income Amount, they will not reduce your Annual Income Amount in
subsequent Annuity Years, but any such withdrawals will reduce the Annual
Income Amount on a dollar-for-dollar basis in that Annuity Year. If,
cumulatively, you withdraw an amount less than the Annual Income Amount in any
Annuity Year, you cannot carry over the unused portion of the Annual Income
Amount to subsequent Annuity Years.
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Account Value, it is
possible for the Account Value to fall to zero, even though the Annual Income
Amount remains.
Examples of dollar-for-dollar and proportional reductions, and the Highest
Daily Auto Step-Up are set forth below. The values shown here are purely
hypothetical, and do not reflect the charges for the Highest Daily Lifetime 6
Plus benefit or any other fees and charges under the Annuity. Assume the
following for all three examples:
. The Issue Date is December 1, 2008
. The Highest Daily Lifetime 6 Plus benefit is elected on September 1, 2009
. The Annuitant was 70 years old when he/she elected the Highest Daily
Lifetime 6 Plus benefit.
9
Example of dollar-for-dollar reductions
On November 24, 2009, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $6,000 (since the designated life is between the
ages of 59 1/2 and 79 at the time of the first Lifetime Withdrawal, the Annual
Income Amount is 5% of the Protected Withdrawal Value, in this case 5% of
$120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the
remaining Annual Income Amount for that Annuity Year (up to and including
December 1, 2009) is $3,500. This is the result of a dollar-for-dollar
reduction of the Annual Income Amount ($6,000 less $2,500 = $3,500).
Example of proportional reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on November 27, 2009 and the Account Value at the time and immediately
prior to this withdrawal is $118,000. The first $3,500 of this withdrawal
reduces the Annual Income Amount for that Annuity Year to $0. The remaining
withdrawal amount of $1,500 - reduces the Annual Income Amount in future
Annuity Years on a proportional basis based on the ratio of the excess
withdrawal to the Account Value immediately prior to the excess withdrawal.
(Note that if there are other future withdrawals in that Annuity Year, each
would result in another proportional reduction to the Annual Income Amount).
Here is the calculation:
Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" excess withdrawal $ 3,500.00
Account Value immediately before excess withdrawal of $1,500 $114,500.00
Excess withdrawal amount $ 1,500.00
Divided by Account Value immediately before excess withdrawal $114,500.00
Ratio 1.31%
Annual Income Amount $ 6,000.00
Less ratio of 1.31% $ 78.60
Annual Income Amount for future Annuity Years $ 5,921.40
Example of highest daily auto step-up
On each Annuity Anniversary date, the Annual Income Amount is stepped-up if
the appropriate percentage (based on the Annuitant's age on the Annuity
Anniversary) of the highest daily value since your first Lifetime Withdrawal
(or last Annuity Anniversary in subsequent years), adjusted for withdrawals
and additional purchase payments, is higher than the Annual Income Amount,
adjusted for excess withdrawals and additional purchase payments (including
any associated purchase Credits).
Continuing the same example as above, the Annual Income Amount for this
Annuity Year is $6,000. However, the excess withdrawal on November 27 reduces
the amount to $5,921.40 for future years (see above). For the next Annuity
Year, the Annual Income Amount will be stepped up if 5% (since the designated
life is between 59 1/2 and 79 on the date of the potential step-up) of the
highest daily Account Value adjusted for withdrawals and purchase payments
(including any associated purchase Credits), is higher than $5,921.40. Here
are the calculations for determining the daily values. Only the November 25
value is being adjusted for excess withdrawals as the November 30 and
December 1 Valuation Days occur after the excess withdrawal on November 27.
Highest Daily Value
(adjusted with Adjusted Annual
withdrawal and Purchase Income Amount (5% of the
Date* Account value Payments)** Highest Daily Value)
----- ------------- ----------------------- ------------------------
November 25, 2009 $119,000.00 $119,000.00 $5,950.00
November 26, 2009 Thanksgiving Day
November 27, 2009 $113,000.00 $113,986.95 $5,699.35
November 30, 2009 $113,000.00 $113,986.95 $5,699.35
December 01, 2009 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be every day following the Annuity
Anniversary. The Annuity Anniversary Date of December 1 is considered the
final Valuation Date for the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on November 25, resulting in an adjusted Annual Income Amount
of $5,950.00. This amount is adjusted on November 27 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Account Value of $119,000 on November 25 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in an adjusted Account Value of
$115,500 before the excess withdrawal.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the excess withdrawal divided by the Account
Value immediately preceding the excess withdrawal) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted Annual Income Amount is carried forward to the next
Valuation Date of November 30. At this time, we compare this amount to
5% of the Account Value on November 30. Since the November 27 adjusted
Annual Income Amount of $5,699.35 is higher than $5,650.00 (5% of
$113,000), we continue to carry $5,699.35 forward to the next and final
Valuation Date of December 1. The Account Value on December 1 is
$119,000 and 5% of this amount is $5,950. Since this is higher than
$5,699.35, the adjusted Annual Income Amount is reset to $5,950.00.
10
In this example, 5% of the December 1 value results in the highest amount of
$5,950.00. Since this amount is higher than the current year's Annual Income
Amount of $5,921.40 adjusted for excess withdrawals, the Annual Income Amount
for the next Annuity Year, starting on December 2, 2009 and continuing through
December 1, 2010, will be stepped-up to $5,950.00.
Non-Lifetime Withdrawal Feature
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Highest Daily Lifetime 6 Plus. It is an optional feature of the benefit
that you can only elect at the time of your first withdrawal. The amount of
the Non-Lifetime Withdrawal cannot be more than the amount that would cause
the Annuity to be taken below the minimum Surrender Value after a withdrawal
for your Annuity. This Non-Lifetime Withdrawal will not establish your initial
Annual Income Amount and the Periodic Value described above will continue to
be calculated. However, the total amount of the withdrawal will proportionally
reduce all guarantees associated with the Highest Daily Lifetime 6 Plus
benefit. You must tell us if your withdrawal is intended to be the
Non-Lifetime Withdrawal and not the first Lifetime Withdrawal under the
Highest Daily Lifetime 6 Plus benefit. If you don't elect the Non-Lifetime
Withdrawal, the first withdrawal you make will be the first Lifetime
Withdrawal that establishes your Protected Withdrawal Value and Annual Income
Amount. Once you elect to take the Non-Lifetime Withdrawal or Lifetime
Withdrawals, no additional Non-Lifetime Withdrawals may be taken.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value and the Periodic Value guarantees on the tenth and twentieth
anniversaries of the benefit effective date, described above, and the Death
Benefit described below, by the percentage the total withdrawal amount
(including any applicable CDSC) represents of the then current Account Value
immediately prior to the withdrawal.
If you are participating in a Systematic Withdrawal program, the first
withdrawal under the program cannot be classified as the Non-Lifetime
Withdrawal. The first partial withdrawal in payment of any third party
investment advisory service from your Annuity also cannot be classified as the
Non-Lifetime Withdrawal.
Example - Non-Lifetime Withdrawal (proportional reduction)
This example is purely hypothetical and does not reflect the charges for the
benefit or any other fees and charges under the Annuity. It is intended to
illustrate the proportional reduction of the Non-Lifetime Withdrawal under
this benefit.
Assume the following:
. The Issue Date is December 1, 2008
. The Highest Daily Lifetime 6 Plus benefit is elected on September 1, 2009
. The Account Value at benefit election was $105,000
. The Annuitant was 70 years old when he/she elected the Highest Daily
Lifetime 6 Plus benefit
. No previous withdrawals have been taken under the Highest Daily Lifetime
6 Plus benefit
On October 2, 2009, the Protected Withdrawal Value is $125,000, the 10/th/
benefit year minimum Periodic Value guarantee is $210,000, and the 20th
benefit year minimum Periodic Value guarantee is $420,000, and the Account
Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 2, 2009 and is designated as a Non-Lifetime Withdrawal, all guarantees
associated with the Highest Daily Lifetime 6 Plus benefit will be reduced by
the ratio the total withdrawal amount represents of the Account Value just
prior to the withdrawal being taken.
Here is the calculation:
Withdrawal Amount divided by $ 15,000
Account Value before withdrawal $120,000
Equals ratio 12.5%
All guarantees will be reduced by the above ratio (12.5%)
Protected Withdrawal Value $109,375
10/th/ benefit year Minimum Periodic Value $183,750
20/th/ benefit year Minimum Periodic Value $367,500
Required Minimum Distributions
Withdrawals that exceed the Annual Income Amount, but which you are required
to take as a Required Minimum Distribution for this Annuity, will not reduce
the Annual Income Amount for future years. No additional Annual Income Amounts
will be available in an Annuity Year due to required minimum distributions
unless the required minimum distribution amount is greater than the Annual
Income Amount. Unless designated as a Non-Lifetime Withdrawal, required
minimum distributions are considered Lifetime Withdrawals. If you take a
withdrawal in an Annuity Year in which your required minimum distribution for
that year is not greater than the Annual Income Amount, and the amount of the
withdrawal exceeds the Annual Income Amount for that year, we will treat the
withdrawal as a withdrawal of Excess Income. Such a withdrawal of Excess
Income will reduce the Annual Income Amount available in future years. If the
required minimum distribution (as calculated by us for your Annuity and not
11
previously withdrawn in the current calendar year) is greater than the Annual
Income Amount, an amount equal to the remaining Annual Income Amount plus the
difference between the required minimum distribution amount not previously
withdrawn in the current calendar year and the Annual Income Amount will be
available in the current Annuity Year without it being considered a withdrawal
of Excess Income. In the event that a required minimum distribution is
calculated in a calendar year that crosses more than one Annuity Year and you
choose to satisfy the entire required minimum distribution for that calendar
year in the next Annuity Year, the distribution taken in the next Annuity Year
will reduce your Annual Income Amount in that Annuity Year on a dollar by
dollar basis. If the required minimum distribution not taken in the prior
Annuity Year is greater than the Annual Income Amount as guaranteed by the
benefit in the current Annuity Year, the total required minimum distribution
amount may be taken without being treated as a withdrawal of Excess Income.
Note that under the Worker, Retiree and Employer Recovery Act of 2008,
required minimum distributions are suspended for 2009 and are scheduled to
resume in 2010. We will continue to treat the calculated amount that would
have been a required minimum distribution if not for the suspension as the
amount available for withdrawal if you so choose. In any year in which the
requirement to take required minimum distributions is suspended by law, we
reserve the right, in our sole discretion and regardless of any position taken
on this issue in a prior year, to treat any amount that would have been
considered as a required minimum distribution if not for the suspension as
eligible for treatment as described herein.
Example - Required Minimum Distributions
The following example is purely hypothetical and is intended to illustrate a
scenario in which the required minimum distribution amount in a given Annuity
Year is greater than the Annual Income Amount.
Annual Income Amount = $5,000
Remaining Annual Income Amount = $3,000
Required Minimum Distribution = $6,000
The amount you may withdraw in the current Annuity Year without it being
treated as an Excess Withdrawal is $4,000: ($3,000 + ($6,000 - $5,000) =
$4,000).
If the $4,000 withdrawal is taken, the remaining Annual Income Amount will be
zero and the remaining required minimum distribution amount of $2,000 may be
taken in the subsequent Annuity Year (when your Annual Income Amount is reset
to $5,000) without proportionally reducing all of the guarantees associated
with the Highest Daily Lifetime 6 Plus benefit as described above. The amount
you may withdraw in the subsequent Annuity Year if you stop taking withdrawals
in the current Annuity Year and choose not to satisfy the required minimum
distribution in the current Annuity Year (assuming the Annual Income Amount in
the subsequent Annuity Year is $5,000), without being treated as a withdrawal
of Excess Income is $6,000. This withdrawal must comply with all IRS
guidelines in order to satisfy the required minimum distribution for the
current calendar year.
Death Benefit Component of Highest Daily Lifetime 6 Plus
If you elect Highest Daily Lifetime 6 Plus, we include a death benefit (Death
Benefit), at no additional cost, that is linked to the Annual Income Amount
under the benefit. If a death benefit is triggered and you currently own
Highest Daily Lifetime 6 Plus, then your Death Benefit will be equal to the
greatest of:
. the basic death benefit under the Annuity; and
. the amount of any optional death benefit you may have elected and
remains in effect; and
. (a) if no Lifetime Withdrawal had been taken prior to death, 300% of the
Annual Income Amount that would have been determined on the date of
death if a Lifetime Withdrawal had occurred on that date, or (b) if a
Lifetime Withdrawal had been taken prior to death, 300% of the Annual
Income Amount as of our receipt of due proof of death. Under this
component of the Death Benefit, we will not recapture the amount of any
purchase Credit applied to an XT6 Annuity granted within 12 months prior
to death.
Please note that the Death Benefit under Highest Daily Lifetime 6 Plus is not
payable if your Account Value is reduced to zero as a result of withdrawals or
if annuity payments are being made at the time of the decedent's death. This
Death Benefit may not be available in all States.
Benefits Under Highest Daily Lifetime 6 Plus
.. To the extent that your Account Value was reduced to zero as a result of
cumulative Lifetime Withdrawals in an Annuity Year that are less than or
equal to the Annual Income Amount, and amounts are still payable under
Highest Daily Lifetime 6 Plus, we will make an additional payment, if any,
for that Annuity Year equal to the remaining Annual Income Amount for the
Annuity Year. Thus, in that scenario, the remaining Annual Income Amount
would be payable even though your Account Value was reduced to zero. In
subsequent Annuity Years we make payments that equal the Annual Income
Amount as described in this section. We will make payments until the death
of the single designated life. If this occurs, you will not be permitted to
make additional purchase payments to your Annuity. To the extent that
cumulative withdrawals in the Annuity Year that reduced your Account Value
to zero are more than the Annual Income Amount, the Highest Daily Lifetime
6 Plus benefit terminates, and no additional payments are made. However, if
a withdrawal in the latter scenario was taken to satisfy a
12
required minimum distribution (as described above) under the Annuity, then
the benefit will not terminate, and we will continue to pay the Annual
Income Amount in subsequent Annuity Years until the death of the designated
life. Please note if your Account Value is reduced to zero as result of
withdrawals, the Death Benefit (described above under "Death Benefit
Component of Highest Daily Lifetime 6 Plus") will also be reduced to zero
and the Death Benefit will not be payable.
.. Please note that if your Account Value is reduced to zero, all subsequent
payments will be treated as annuity payments. Further, payments that we
make under this benefit after the first day of the calendar month
coinciding with or next following the annuitant's 95/th/ birthday will be
treated as annuity payments.
.. If annuity payments are to begin under the terms of your Annuity, or if you
decide to begin receiving annuity payments and there is an Annual Income
Amount due in subsequent Annuity Years, you can elect one of the following
two options:
(1)apply your Account Value to any annuity option available; or
(2)request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. If this
option is elected, the Annual Income Amount will not increase after
annuity payments have begun. We will make payments until the death of
the single designated life. We must receive your request in a form
acceptable to us at our office.
.. In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments in the form of a single life fixed
annuity with ten payments certain, by applying the greater of the annuity
rates then currently available or the annuity rates guaranteed in your
Annuity. The amount that will be applied to provide such annuity payments
will be the greater of:
(1)the present value of the future Annual Income Amount payments. Such
present value will be calculated using the greater of the single life
fixed annuity rates then currently available or the single life fixed
annuity rates guaranteed in your Annuity; and
(2)the Account Value.
If no Lifetime Withdrawal was ever taken, we will calculate the Annual Income
Amount as if you made your first Lifetime Withdrawal on the date the annuity
payments are to begin.
Please note that a Death Benefit (as described above) is not payable if
annuity payments are being made at the time of the decedent's death.
Other Important Considerations
.. Withdrawals under the Highest Daily Lifetime 6 Plus benefit are subject to
all of the terms and conditions of the Annuity, including any applicable
CDSC for the Non-Lifetime Withdrawal as well as withdrawals that exceed the
Annual Income Amount.
.. Withdrawals made while the Highest Daily Lifetime 6 Plus Benefit is in
effect will be treated, for tax purposes, in the same way as any other
withdrawals under the Annuity. Any withdrawals made under the benefit will
be taken pro-rata from the Sub-accounts (including the AST Investment Grade
Bond Sub-account) and the DCA Fixed Rate Options (if you are participating
in the 6 or 12 Month DCA Program). Withdrawals from the DCA Fixed Rate
Options will be taken on a last-in, first-out basis.
.. You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Highest Daily Lifetime 6 Plus
benefit. The Highest Daily Lifetime 6 Plus benefit provides a guarantee
that if your Account Value is reduced to zero (subject to our rules
regarding time and amount of withdrawals), you will be able to receive your
Annual Income Amount in the form of withdrawals.
.. You cannot allocate purchase payments or transfer Account Value to or from
the AST Investment Grade Bond Sub-account. A summary description of the AST
Investment Grade Bond Portfolio appears within the prospectus section
entitled "What Are The Investment Objectives and Policies of The
Portfolios?"Upon the initial transfer of your Account Value into the AST
Investment Grade Bond Portfolio, we will send a prospectus for that
Portfolio to you, along with your confirmation statement. In addition, you
can find a copy of the AST Investment Grade Bond Portfolio prospectus by
going to www.prudentialannuities.com.
.. Transfers to and from the Sub-accounts, the DCA Fixed Rate Options, and the
AST Investment Grade Bond Sub-account triggered by the Highest Daily
Lifetime 6 Plus mathematical formula will not count toward the maximum
number of free transfers allowable under an Annuity.
.. Upon inception of the benefit and to maintain the benefit, 100% of your
Account Value must be allocated to the Permitted Sub-accounts (or any DCA
Fixed Rate Options if you elect the 6 or 12 Month DCA Program). If,
subsequent to your election of the benefit, we change our requirements for
how Account Value must be allocated under the benefit, the new requirements
will apply only to new elections of the benefit, and we will not compel you
to re-allocate your Account Value in accordance with our newly adopted
requirements. At the time of any change in requirements, and as applicable
only to new elections of the benefit, transfer of Account Value and
allocation of additional purchase payments may be subject to new investment
limitations.
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.. If you elect this benefit and in connection with that election, you are
required to reallocate to different Sub-accounts, then on the Valuation Day
we receive your request in good order, we will (i) sell units of the
non-permitted investment options and (ii) invest the proceeds of those
sales in the Sub-accounts that you have designated. During this
reallocation process, your Account Value allocated to the Sub-accounts will
remain exposed to investment risk, as is the case generally. The
newly-elected benefit will commence at the close of business on the
following Valuation Day. Thus, the protection afforded by the newly-elected
benefit will not arise until the close of business on the following
Valuation Day.
.. The maximum charge for Highest Daily Lifetime 6 Plus is 1.50% annually of
the greater of the Account Value and Protected Withdrawal Value. The
current charge is 0.85% annually of the greater of the Account Value and
Protected Withdrawal Value. We deduct this charge on quarterly
anniversaries of the benefit effective date. Thus, we deduct, on a
quarterly basis 0.2125% of the greater of the prior Valuation Day's Account
Value and the prior Valuation Day's Protected Withdrawal Value. We deduct
the fee pro rata from each of your Sub-accounts, including the AST
Investment Grade Bond Sub-account, and the DCA Fixed Rate Options (if
applicable). Since this fee is based on the greater of the Account Value
and Protected Withdrawal Value, the fee for Highest Daily Lifetime 6 Plus
may be greater than it would have been, had it been based on the Account
Value alone. The following example is hypothetical and is for illustrative
purposes only.
Assuming a benefit effective date of September 1, 2009 (which means that
quarterly benefit anniversaries are: December 1, March 1, June 1, and
September 1). Assume the Protected Withdrawal Value as of November 30, 2009
(prior Valuation Day's Protected Withdrawal Value) = $200,000.00 and the
Account Value as of November 30, 2009 (prior Valuation Day's Account Value) =
$195,000.00. The first benefit charge date would be December 1, 2009 and the
benefit charge amount would be $425.00 ($200,000 X .2125%).
If the deduction of the charge would result in the Account Value falling below
the lesser of $500 or 5% of the sum of the Account Value on the effective date
of the benefit plus all purchase payments made subsequent thereto (and any
associated purchase Credits) (we refer to this as the "Account Value Floor"),
we will only deduct that portion of the charge that would not cause the
Account Value to fall below the Account Value Floor. If the entire Account
Value is less than the Account Value Floor when we would deduct a charge for
the benefit, then no charge will be assessed for that benefit quarter. If a
charge for the Highest Daily Lifetime 6 Plus benefit would be deducted on the
same day we process a withdrawal request, the charge will be deducted first,
then the withdrawal will be processed. The withdrawal could cause the Account
Value to fall below the Account Value Floor. While the deduction of the charge
(other than the final charge) may not reduce the Account Value to zero,
withdrawals may reduce the Account Value to zero. If this happens and the
Annual Income Amount is greater than zero, we will make payments under the
benefit and the Death Benefit (described above) will not be payable.
Election of and Designations under the Benefit
For Highest Daily Lifetime 6 Plus, there must be either a single Owner who is
the same as the Annuitant, or if the Annuity is entity owned, there must be a
single natural person Annuitant. In either case, the Annuitant must be at
least 45 years old.
Any change of the Annuitant under the Annuity will result in cancellation of
Highest Daily Lifetime 6 Plus. Similarly, any change of Owner will result in
cancellation of Highest Daily Lifetime 6 Plus, except if (a) the new Owner has
the same taxpayer identification number as the previous owner, (b) ownership
is transferred from a custodian to the Annuitant, or vice versa or
(c) ownership is transferred from one entity to another entity that is
satisfactory to us.
Highest Daily Lifetime 6 Plus can be elected at the time that you purchase
your Annuity or after the Issue Date, subject to availability, and our
eligibility rules and restrictions. If you elect Highest Daily Lifetime 6 Plus
and terminate it, you can re-elect it, subject to our current rules and
availability. Additionally, if you currently own an Annuity with a living
benefit that is terminable, you may terminate your existing benefit rider and
elect any available benefits subject to our current rules. See "Termination of
Existing Benefits and Election of New Benefits" in the prospectus for
information pertaining to elections, termination and re-election of benefits.
Please note that if you terminate a living benefit and elect a new living
benefit, you lose the guarantees that you had accumulated under your existing
benefit and will begin the new guarantees under the new benefit you elect
based on your Account Value as of the date the new benefit becomes active. You
should carefully consider whether terminating your existing benefit and
electing a new benefit is appropriate for you. We reserve the right to waive,
change and/or further limit the election frequency in the future.
Termination of the Benefit
You may terminate Highest Daily Lifetime 6 Plus at any time by notifying us.
If you terminate the benefit, any guarantee provided by the benefit will
terminate as of the date the termination is effective, and certain
restrictions on re-election may apply. The benefit automatically terminates:
(i) upon your termination of the benefit, (ii) upon your surrender of the
Annuity, (iii) upon your election to begin receiving annuity payments
(although if you have elected to receive the Annual Income Amount in the form
of annuity payments, we will continue to pay the Annual Income Amount),
(iv) upon our receipt of due proof of the death of the Annuitant (except
insofar as paying the Death Benefit associated with this benefit), (v) if both
the Account Value and Annual Income Amount equal zero, or (vi) if you cease to
meet our requirements as described in "Election of and Designations under the
Benefit" above.
14
Upon termination of Highest Daily Lifetime 6 Plus other than upon the death of
the Annuitant or annuitization, we impose any accrued fee for the benefit
(i.e., the fee for the pro-rated portion of the year since the fee was last
assessed), and thereafter we cease deducting the charge for the benefit. This
final charge will be deducted even if it results in the Account Value falling
below the Account Value Floor. With regard to your investment allocations,
upon termination we will: (i) leave intact amounts that are held in the
Permitted Sub-accounts (including any amounts in the DCA Fixed Rate Options),
and (ii) unless you are participating in an asset allocation program (i.e.,
Optional Allocation & Rebalancing Program, Automatic Rebalancing Program, or 6
or 12 Month DCA Program for which we are providing administrative support),
transfer all amounts held in the AST Investment Grade Bond Sub-account to your
variable investment options, pro rata (i.e. in the same proportion as the
current balances in your variable investment options). If, prior to the
transfer from the AST Investment Grade Bond Sub-account, the Account Value in
the variable investment options is zero, we will transfer such amounts
according to your most recent allocation instructions.
If a surviving spouse elects to continue the Annuity, the Highest Daily
Lifetime 6 Plus benefit terminates. The spouse may elect the benefit subject
to the restrictions discussed above.
How Highest Daily Lifetime 6 Plus Transfers Account Value Between Your
Permitted Sub-accounts and the AST Investment Grade Bond Sub-Account
As indicated above, we limit the Sub-accounts to which you may allocate
Account Value if you elect Highest Daily Lifetime 6 Plus. For purposes of this
benefit, we refer to those permitted investment options as the "Permitted
Sub-accounts". If your Annuity was issued on or after May 1, 2009 (subject to
regulatory approval), you may also choose to allocate purchase payments while
this program is in effect to DCA Fixed Rate Options utilized with our 6 or 12
Month Dollar Cost Averaging Program ("6 or 12 Month DCA Program"). If you are
participating in Highest Daily Lifetime 6 Plus and also are participating in
the 6 or 12 Month DCA Program, and the formula under the benefit dictates a
transfer from the Permitted Sub-accounts to the AST Investment Grade Bond
Sub-account, then the amount to be transferred will be taken entirely from the
Sub-accounts, provided there is sufficient Account Value in those Sub-accounts
to meet the required transfer amount. Only if there is insufficient Account
Value in those Sub-accounts will an amount be withdrawn from the DCA Fixed
Rate Options. Amounts withdrawn from the DCA Fixed Rate Options under the
formula will be taken on a last-in, first-out basis. For purposes of the
discussion below concerning transfers from the Permitted Sub-accounts to the
AST Investment Grade Bond Sub-account, amounts held within the DCA Fixed Rate
Options are included within the term "Permitted Sub-Accounts". Thus, amounts
may be transferred from the DCA Fixed Rate Options in the circumstances
described above and in the section of the prospectus entitled 6 or 12 Month
Dollar Cost Averaging Program. Any transfer dictated by the formula out of the
AST Investment Grade Bond Sub-account will only be transferred to the
Permitted Sub-accounts, not the DCA Fixed Rate Options.
An integral part of Highest Daily Lifetime 6 Plus is the pre-determined
mathematical formula used to transfer Account Value between the Permitted
Sub-Accounts and a specified bond fund within the Advanced Series Trust (the
"AST Investment Grade Bond Sub-Account"). The AST Investment Grade Bond
Sub-account is available only with this benefit, and thus you may not allocate
purchase payments to or make transfers to or from the AST Investment Grade
Bond Sub-account. The formula monitors your Account Value daily and, if
dictated by the formula, systematically transfers amounts between the
Permitted Sub-accounts you have chosen and the AST Investment Grade Bond
Sub-account. The formula is set forth in Appendix O (and is set forth below).
Speaking generally, the formula, which is applied each Valuation Day, operates
as follows. The formula starts by identifying an income basis for that day and
then multiplies that figure by 5%, to produce a projected (i.e., hypothetical)
income amount. Note that 5% is used in the formula, irrespective of the
Annuitant's attained age. Then it produces an estimate of the total amount
targeted in our allocation model, based on the projected income amount and
factors set forth in the formula. In the formula, we refer to that value as
the "Target Value" or "L". If you have already made a withdrawal, your
projected income amount (and thus your Target Value) would take into account
any automatic step-up, any subsequent purchase payments (including any
associated purchase Credits with respect to XT 6), and any excess withdrawals.
Next, the formula subtracts from the Target Value the amount held within the
AST Investment Grade Bond Sub-account on that day, and divides that difference
by the amount held within the Permitted Sub-accounts including any amounts
allocated to DCA Fixed Rate Options. That ratio, which essentially isolates
the amount of your Target Value that is not offset by amounts held within the
AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r".
If, on each of three consecutive Valuation Days, the Target Ratio is greater
than 83% but less than or equal to 84.5%, the formula will, on such third
Valuation Day, make a transfer from the Permitted Sub-accounts in which you
are invested (subject to the 90% cap discussed below) to the AST Investment
Grade Bond Sub-account. As discussed above, if all or a portion of your
Account Value is allocated to one or more DCA Fixed Rate Options at the time a
transfer to the AST Investment Grade Bond Sub-account is required under the
formula, we will first look to process the transfer from the Permitted
Sub-accounts, other than the DCA Fixed Rate Options. If the amount allocated
to the Permitted Sub-accounts is insufficient to satisfy the transfer, then
any remaining amounts will be transferred from the DCA Fixed Rate Options on a
"last-in, first-out" basis. Once a transfer is made, the three consecutive
Valuation Days begin again. If, however, on any Valuation Day, the Target
Ratio is above 84.5%, it will make a transfer from the Permitted Sub-accounts
(subject to the 90% cap) to the AST Investment Grade Bond Sub-account (as
described above). If the Target Ratio falls below 78% on any Valuation Day,
then a transfer from the AST Investment Grade Bond Sub-account to the
Permitted Sub-accounts (excluding the DCA Fixed Rate Options) will occur.
15
The formula will not execute a transfer to the AST Investment Grade Bond
Sub-account that results in more than 90% of your Account Value being
allocated to the AST Investment Grade Bond Sub-account ("90% cap"). Thus, on
any Valuation Day, if the formula would require a transfer to the AST
Investment Grade Bond Sub-account that would result in more than 90% of the
Account Value being allocated to the AST Investment Grade Bond Sub-account,
only the amount that results in exactly 90% of the Account Value being
allocated to the AST Investment Grade Bond Sub-account will be transferred.
Additionally, future transfers into the AST Investment Grade Bond Sub-account
will not be made (regardless of the performance of the AST Investment Grade
Bond Sub-account and the Permitted Sub-accounts) at least until there is first
a transfer out of the AST Investment Grade Bond Sub-account. Once this
transfer occurs out of the AST Investment Grade Bond Sub-account, future
amounts may be transferred to or from the AST Investment Grade Bond
Sub-account if dictated by the formula (subject to the 90% cap). At no time
will the formula make a transfer to the AST Investment Grade Bond Sub-account
that results in greater than 90% of your Account Value being allocated to the
AST Investment Grade Bond Sub-account. However, it is possible that, due to
the investment performance of your allocations in the AST Investment Grade
Bond Sub-account and your allocations in the Permitted Sub-accounts you have
selected, your Account Value could be more than 90% invested in the AST
Investment Grade Bond Sub-account.
If you make additional purchase payments to your Annuity while the 90% cap is
in effect, the formula will not transfer any of such additional purchase
payments to the AST Investment Grade Bond Sub-account at least until there is
first a transfer out of the AST Investment Grade Bond Sub-account, regardless
of how much of your Account Value is in the Permitted Sub-accounts. This means
that there could be scenarios under which, because of the additional purchase
payments you make, less than 90% of your entire Account Value is allocated to
the AST Investment Grade Bond Sub-account, and the formula will still not
transfer any of your Account Value to the AST Investment Grade Bond
Sub-account (at least until there is first a transfer out of the AST
Investment Grade Bond Sub-account). For example,
. September 1, 2010 - a transfer is made to the AST Investment Grade Bond
Sub-account that results in the 90% cap being met and now $90,000 is
allocated to the AST Investment Grade Bond Sub-account and $10,000 is
allocated to the Permitted Sub-accounts.
. September 2, 2010 - you make an additional purchase payment of $10,000.
No transfers have been made from the AST Investment Grade Bond
Sub-account to the Permitted Sub-accounts since the cap went into effect
on September 1, 2010.
. On September 2, 2010 - (and at least until first a transfer is made out
of the AST Investment Grade Bond Sub-account under the formula) - the
$10,000 payment is allocated to the Permitted Sub-accounts and on this
date you have 82% in the AST Investment Grade Bond Sub-account and 18%
in the Permitted Sub-accounts (such that $20,000 is allocated to the
Permitted Sub-accounts and $90,000 to the AST Investment Grade Bond
Sub-account).
. Once there is a transfer out of the AST Investment Grade Bond
Sub-account (of any amount), the formula will operate as described
above, meaning that the formula could transfer amounts to or from the
AST Investment Grade Bond Sub-account if dictated by the formula
(subject to the 90% cap).
Under the operation of the formula, the 90% cap may come into existence and be
removed multiple times while you participate in the benefit. We will continue
to monitor your Account Value daily and, if dictated by the formula,
systematically transfer amounts between the Permitted Sub-accounts you have
chosen and the AST Investment Grade Bond Sub-account as dictated by the
formula.
As you can glean from the formula, poor or flat investment performance of your
Account Value may result in a transfer of a portion of your Account Value in
the Permitted Sub-accounts to the AST Investment Grade Bond Sub-account
because such poor investment performance will tend to increase the Target
Ratio. Because the amount allocated to the AST Investment Grade Bond
Sub-account and the amount allocated to the Permitted Sub-accounts each is a
variable in the formula, the investment performance of each affects whether a
transfer occurs for your Annuity. In deciding how much to transfer, we use
another formula, which essentially seeks to re-balance amounts held in the
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that
the Target Ratio meets a target, which currently is equal to 80%. Once you
elect Highest Daily Lifetime 6 Plus, the values we use to compare to the
Target Ratio will be fixed. For newly-issued Annuities that elect Highest
Daily Lifetime 6 Plus and existing Annuities that elect Highest Daily Lifetime
6 Plus in the future, however, we reserve the right to change such values.
Additionally, on each monthly Annuity Anniversary (if the monthly Annuity
Anniversary does not fall on a Valuation Day, the next Valuation Day will be
used), following all of the above described daily calculations, a transfer may
be made from the AST Investment Grade Bond Sub-account to the Permitted
Sub-accounts. Unless you are participating in an asset allocation program for
which we are providing administrative support, any such transfer will be to
your elected Sub-accounts pro-rata based on the Account Value in such
Sub-accounts at that time. If there is no Account Value in the Sub-accounts,
the transfer will be allocated according to your most recent allocation
instructions. This transfer will automatically occur provided that the Target
Ratio, as described above, would be less than 83% after the transfer. The
formula will not execute a transfer if the Target Ratio after this transfer
would occur would be greater than or equal to 83%.
The amount of the transfer will be equal to the lesser of:
a) The total value of all your Account Value in the AST Investment Grade Bond
Sub-account, or
b) An amount equal to 5% of your total Account Value.
16
While you are not notified when your Annuity reaches a transfer trigger under
the formula, you will receive a confirmation statement indicating the transfer
of a portion of your Account Value either to or from the AST Investment Grade
Bond Sub-account. The formula by which the transfer operates is designed
primarily to mitigate some of the financial risks that we incur in providing
the guarantee under Highest Daily Lifetime 6 Plus and Spousal Highest Daily
Lifetime 6 Plus. Depending on the results of the calculations of the formula,
we may, on any Valuation Day:
. Not make any transfer between the Permitted Sub-accounts and the AST
Investment Grade Bond Sub-account; or
. If a portion of your Account Value was previously allocated to the AST
Investment Grade Bond Sub-account, transfer all or a portion of those
amounts to the Permitted Sub-accounts (as described above); or
. Transfer a portion of your Account Value in the Permitted Sub-accounts
pro rata to the AST Investment Grade Bond Sub-account.
The amount and timing of transfers to and from the AST Investment Grade Bond
Sub-account pursuant to the formula depends upon a number of factors unique to
your Annuity (and is not necessarily directly correlated with the securities
markets, bond markets, or interest rates, in general) including:
. The difference between your Account Value and your Protected Withdrawal
Value;
. How long you have owned Highest Daily Lifetime 6 Plus/Spousal Highest
Daily Lifetime 6 Plus;
. The performance of the Permitted Sub-accounts you have chosen;
. The performance of the AST Investment Grade Bond Sub-account;
. The amount allocated to each of the Permitted Sub-accounts you have
chosen;
. The amount allocated to the AST Investment Grade Bond Sub-account;
. Additional purchase payments, if any, you make to your Annuity; and
. Withdrawals, if any, you take from your Annuity (withdrawals are taken
pro rata from your Account Value).
At any given time, some, most or none of your Account Value will be allocated
to the AST Investment Grade Bond Sub-account, as dictated by the formula.
The more of your Account Value allocated to the AST Investment Grade Bond
Sub-account under the formula, the greater the impact of the performance of
that Sub-account in determining whether (and how much) your Account Value is
transferred back to the Permitted Sub-accounts. Further, it is possible under
the formula that, if a significant portion of your Account Value is allocated
to the AST Investment Grade Bond Sub-account and that Sub-account has good
performance but the performance of your Permitted Sub-accounts is negative,
that the formula might transfer your Account Value to the Permitted
Sub-accounts. Similarly, the more you have allocated to the Permitted
Sub-accounts, the greater the impact of the performance of those Permitted
Sub-accounts will have on any transfer to the AST Investment Grade Bond
Sub-account.
If you make additional purchase payments to your Annuity, they will be
allocated according to your allocation instructions. Once they are allocated
to your Annuity, they will also be subject to the formula described above and
therefore may be transferred to the AST Investment Grade Bond Portfolio, if
dictated by the formula.
Any Account Value in the AST Investment Grade Bond Sub-account will not be
available to participate in the investment experience of the Permitted
Sub-accounts regardless of whether there is a subsequent Sub-account decline
or recovery until it is transferred out of the AST Investment Grade Bond
Sub-account.
Additional Tax Considerations
If you purchase an annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the required minimum distribution
rules under the Code provide that you begin receiving periodic amounts from
your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a
401(a) plan for which the participant is not a greater than five (5) percent
owner of the employer, this required beginning date can generally be deferred
to retirement, if later. Roth IRAs are not subject to these rules during the
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
Annuity Year that required minimum distributions due from your Annuity are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as required minimum distribution provisions under the tax
law.
As indicated, withdrawals made while this benefit is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under the
Annuity. Please see the Tax Considerations section of the prospectus for a
detailed discussion of the tax treatment of withdrawals. We do not address
each potential tax scenario that could arise with respect to this benefit
here. However, we do note that if you participate in Highest Daily Lifetime 6
Plus through a non-qualified annuity, as with all withdrawals, once all
purchase payments are returned under the Annuity, all subsequent withdrawal
amounts will be taxed as ordinary income.
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Highest Daily Lifetime/SM/ 6 Plus with Lifetime Income Accelerator
We offer another version of Highest Daily Lifetime 6 Plus that we call Highest
Daily Lifetime 6 Plus with Lifetime Income Accelerator ("Highest Daily
Lifetime 6 Plus with LIA"). Highest Daily Lifetime 6 Plus with LIA guarantees,
until the death of the single designated life, the ability to withdraw an
amount equal to double the Annual Income Amount (which we refer to as the "LIA
Amount") if you meet the conditions set forth below. This version is only
being offered in those jurisdictions where we have received regulatory
approval and will be offered subsequently in other jurisdictions when we
receive regulatory approval in those jurisdictions. Highest Daily Lifetime 6
Plus with LIA is not available in New York. You may choose Highest Daily
Lifetime 6 Plus with or without also electing LIA, however you may not elect
LIA without Highest Daily Lifetime 6 Plus and you must elect the LIA benefit
at the time you elect Highest Daily Lifetime 6 Plus. If you elect Highest
Daily Lifetime 6 Plus without LIA and would like to add the feature later, you
must terminate the Highest Daily Lifetime 6 Plus benefit and elect the Highest
Daily Lifetime 6 Plus with LIA (subject to availability and benefit
re-election provisions). Please note that if you terminate Highest Daily
Lifetime 6 Plus and elect the Highest Daily Lifetime 6 Plus with LIA you lose
the guarantees that you had accumulated under your existing benefit and will
begin the new guarantees under the new benefit you elect based on your Account
Value as of the date the new benefit becomes active. Highest Daily Lifetime 6
Plus with LIA is offered as an alternative to other lifetime withdrawal
options. If you elect this benefit, it may not be combined with any other
optional living benefit or the Plus 40 life insurance rider or the Highest
Daily Value death benefit. As long as your Highest Daily Lifetime 6 Plus with
LIA benefit is in effect, you must allocate your Account Value in accordance
with the then permitted and available investment option(s) with this benefit.
The income benefit under Highest Daily Lifetime 6 Plus with LIA currently is
based on a single "designated life" who is between the ages of 45 and 75 on
the date that the benefit is elected and received in good order. All terms and
conditions of Highest Daily Lifetime 6 Plus apply to this version of the
benefit, except as described herein.
Highest Daily Lifetime 6 Plus with LIA is not long-term care insurance and
should not be purchased as a substitute for long-term care insurance. The
income you receive through the Lifetime Income Accelerator may be used for any
purpose, and it may or may not be sufficient to address expenses you may incur
for long-term care. You should seek professional advice to determine your
financial needs for long-term care.
If you elect the Highest Daily Lifetime 6 Plus with LIA, the maximum charge is
2.00% annually of the greater of the Account Value and Protected Withdrawal
Value. The current charge is 1.20% annually of the greater of Account Value
and Protected Withdrawal Value. We deduct this charge on quarterly
anniversaries of the benefit effective date. Thus, we deduct, on a quarterly
basis, 0.30% of the greater of the prior Valuation Day's Account Value and the
prior Valuation Day's Protected Withdrawal Value. We deduct the fee pro rata
from each of your Sub-accounts, including the AST Investment Grade Bond
Sub-account, and the DCA Fixed Rate Options (if applicable). Since this fee is
based on the greater of the Account Value and Protected Withdrawal Value, the
fee for Highest Daily Lifetime 6 Plus with LIA may be greater than it would
have been, had it been based on the Account Value alone. The following example
is hypothetical and is for illustrative purposes only.
Assuming a benefit effective date of September 1, 2009 (which means that
quarterly benefit anniversaries are: December 1, March 1, June 1, and
September 1). Assume the Protected Withdrawal Value as of November 30, 2009
(prior Valuation Day's Protected Withdrawal Value) = $200,000.00 and the
Account Value as of November 30, 2009 (prior Valuation Day's Account Value) =
$195,000.00. The first benefit charge date would be December 1, 2009 and the
benefit charge amount would be $600.00 ($200,000 X .30%)
If the deduction of the charge would result in the Account Value falling below
the lesser of $500 or 5% of the sum of the Account Value on the effective date
of the benefit plus all purchase payments made subsequent thereto (and any
associated purchase Credits) (we refer to this as the "Account Value Floor"),
we will only deduct that portion of the charge that would not cause the
Account Value to fall below the Account Value Floor. If the entire Account
Value is less than the Account Value Floor when we would deduct a charge for
the benefit, then no charge will be assessed for that benefit quarter. If a
charge for the Highest Daily Lifetime 6 Plus with LIA benefit would be
deducted on the same day we process a withdrawal request, the charge will be
deducted first, then the withdrawal will be processed. The withdrawal could
cause the Account Value to fall below the Account Value Floor. While the
deduction of the charge (other than the final charge) may not reduce the
Account Value to zero, withdrawals may reduce the Account Value to zero. If
this happens and the Annual Income Amount is greater than zero, we will make
payments under the benefit and the Death Benefit (described below) will not be
payable.
If this benefit is being elected on an Annuity held as a 403(b) plan, then in
addition to meeting the eligibility requirements listed below for the LIA
Amount you must separately qualify for distributions from the 403(b) plan
itself.
Eligibility Requirements for LIA Amount. Both a waiting period of 36 months
from the benefit effective date, and an elimination period of 120 days from
the date of notification that one or both of the requirements described
immediately below have been met, apply before you can become eligible for the
LIA Amount. The 120 day elimination period begins on the date that we receive
notification from you of your eligibility for the LIA Amount. Thus, assuming
the 36 month waiting period has been met and we have received the notification
referenced in the immediately preceding sentence, the LIA amount would be
available for withdrawal on the Valuation Day immediately after the 120th day.
The waiting period and the elimination period may run concurrently. In
addition to satisfying the waiting and elimination period, at least one of the
following requirements ("LIA conditions") must be met.
18
(1)The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to law or any
state licensed facility providing medically necessary in-patient care which
is prescribed by a licensed physician in writing and based on physical
limitations which prohibit daily living in a non-institutional setting.
(2)The designated life is unable to perform two or more basic abilities of
caring for oneself or "activities of daily living." We define these basic
abilities as:
i. Eating: Feeding oneself by getting food into the body from a receptacle
(such as a plate, cup or table) or by a feeding tube or intravenously.
ii.Dressing: Putting on and taking off all items of clothing and any
necessary braces, fasteners or artificial limbs.
iii.Bathing: Washing oneself by sponge bath; or in either a tub or shower,
including the task of getting into or out of the tub or shower.
iv.Toileting: Getting to and from the toilet, getting on and off the
toilet, and performing associated personal hygiene.
v. Transferring: Moving into or out of a bed, chair or wheelchair.
vi.Continence: Maintaining control of bowel or bladder function; or when
unable to maintain control of bowel or bladder function, the ability to
perform personal hygiene (including caring for catheter or colostomy
bag).
You must notify us in writing when the LIA conditions have been met. If, when
we receive such notification, there are more than 120 days remaining until the
end of the waiting period described above, you will not be eligible for the
LIA Amount. If there are 120 days or less remaining until the end of the
waiting period when we receive notification that the LIA conditions are met,
we will determine eligibility for the LIA Amount through our then current
administrative process, which may include, but is not limited to,
documentation verifying the LIA conditions and/or an assessment by a third
party of our choice. Such assessment may be in person and we will assume any
costs associated with the aforementioned assessment. The designated life must
be available for any assessment or reassessment pursuant to our administrative
process requirements. Once eligibility is determined, the LIA Amount is equal
to double the Annual Income Amount as described above under the Highest Daily
Lifetime 6 Plus benefit.
Additionally, once eligibility is determined, we will reassess your
eligibility on an annual basis although your LIA benefit for the year that
immediately precedes our reassessment will not be affected if it is determined
that you are no longer eligible. Your first reassessment may occur in the same
year as your initial assessment. If we determine that you are no longer
eligible to receive the LIA Amount, upon the next Annuity Anniversary the
Annual Income Amount would replace the LIA Amount. There is no limit on the
number of times you can become eligible for the LIA Amount, however, each time
would require the completion of the 120-day elimination period, notification
that the designated life meets the LIA conditions, and determination, through
our then current administrative process, that you are eligible for the LIA
Amount, each as described above.
LIA Amount at the first Lifetime Withdrawal. If your first Lifetime Withdrawal
subsequent to election of Highest Daily Lifetime 6 Plus with LIA occurs while
you are eligible for the LIA Amount, the available LIA Amount is equal to
double the Annual Income Amount.
LIA Amount after the first Lifetime Withdrawal. If you become eligible for the
LIA Amount after you have taken your first Lifetime Withdrawal, the available
LIA amount for the current and subsequent Annuity Years is equal to double the
then current Annual Income Amount, however the available LIA amount in the
current Annuity Year is reduced by any Lifetime Withdrawals that have been
taken in the current Annuity Year. Cumulative Lifetime Withdrawals in an
Annuity Year which are less than or equal to the LIA Amount (when eligible for
the LIA amount) will not reduce your LIA Amount in subsequent Annuity Years,
but any such withdrawals will reduce the LIA Amount on a dollar-for-dollar
basis in that Annuity Year.
Withdrawals In Excess of the LIA Amount. If your cumulative Lifetime
Withdrawals in an Annuity Year are in excess of the LIA Amount when you are
eligible ("Excess Withdrawal"), your LIA Amount in subsequent years will be
reduced (except with regard to required minimum distributions) by the result
of the ratio of the excess portion of the withdrawal to the Account Value
immediately prior to the Excess Withdrawal. Reductions include the actual
amount of the withdrawal, including any CDSC that may apply. Withdrawals of
any amount (excluding the Non-Lifetime Withdrawal) up to and including the LIA
Amount will reduce the Protected Withdrawal Value by the amount of the
withdrawal. Excess Withdrawals will reduce the Protected Withdrawal Value by
the same ratio as the reduction to the LIA Amount. Any withdrawals that are
less than or equal to the LIA Amount (when eligible) but in excess of the free
withdrawal amount available under this Annuity will not incur a CDSC.
Withdrawals are not required. However, subsequent to the first Lifetime
Withdrawal, the LIA Amount is not increased in subsequent Annuity Years if you
decide not to take a withdrawal in an Annuity Year or take withdrawals in an
Annuity Year that in total are less than the LIA Amount.
Purchase Payments. If you are eligible for the LIA Amount as described under
"Eligibility Requirements for LIA Amount" and you make an additional purchase
payment, the Annual Income Amount is increased by an amount obtained by
applying the applicable percentage (4% for ages 45 - less than 59 1/2; 5% for
ages 59 1/2-79; and 6% for ages 80 and older) to the purchase payment
(including any associated purchase Credits). The applicable percentage is
based on the attained age of the designated life on the date of the first
Lifetime Withdrawal after the benefit effective date. The LIA Amount is
increased by double the Annual
19
Income Amount, if eligibility for LIA has been met. The Protected Withdrawal
Value is increased by the amount of each purchase payment (including any
associated purchase Credits).
If the Annuity permits additional purchase payments, we may limit any
additional purchase payment(s) if we determine that as a result of the timing
and amounts of your additional purchase payments and withdrawals, the Annual
Income Amount (or, if eligible for LIA, the LIA Amount) is being increased in
an unintended fashion. Among the factors we will use in making a determination
as to whether an action is designed to increase the Annual Income Amount (or,
if eligible for LIA, the LIA Amount) in an unintended fashion is the relative
size of additional purchase payment(s). We reserve the right to not accept
additional purchase payments if we are not then offering this benefit for new
elections. We will exercise such reservation of right for all annuity
purchasers in the same class in a nondiscriminatory manner.
Step Ups. If your Annual Income Amount is stepped up, your LIA Amount will be
stepped up to equal double the stepped up Annual Income Amount.
Guarantee Payments. If your Account Value is reduced to zero as a result of
cumulative withdrawals that are equal to or less than the LIA Amount when you
are eligible, and there is still a LIA Amount available, we will make an
additional payment for that Annuity Year equal to the remaining LIA Amount. If
this were to occur, you are not permitted to make additional purchase payments
to your Annuity. Thus, in that scenario, the remaining LIA Amount would be
payable even though your Account Value was reduced to zero. In subsequent
Annuity Years we make payments that equal the LIA Amount as described in this
section. We will make payments until the death of the single designated life.
Should the designated life no longer qualify for the LIA amount (as described
under "Eligibility Requirements for LIA Amount" above), the Annual Income
Amount would continue to be available. Subsequent eligibility for the LIA
Amount would require the completion of the 120 day elimination period as well
as meeting the LIA conditions listed above under "Eligibility Requirements for
LIA Amount". To the extent that cumulative withdrawals in the current Annuity
Year that reduce your Account Value to zero are more than the LIA Amount
(except in the case of required minimum distributions), Highest Daily Lifetime
6 Plus with LIA terminates, and no additional payments are made. A Death
Benefit under Highest Daily Lifetime 6 Plus with LIA is not payable if
guarantee payments are being made at the time of the decedent's death.
Annuity Options. In addition to the Highest Daily Lifetime 6 Plus annuity
options described above, after the tenth anniversary of the benefit effective
date ("Tenth Anniversary"), you may also request that we make annuity payments
each year equal to the Annual Income Amount. In any year that you are eligible
for the LIA Amount, we make annuity payments equal to the LIA Amount. If you
would receive a greater payment by applying your Account Value to receive
payments for life under your Annuity, we will pay the greater amount.
Annuitization prior to the Tenth Anniversary will forfeit any present or
future LIA amounts. We will continue to make payments until the death of the
designated life. If this option is elected, the Annual Income Amount and LIA
Amount will not increase after annuity payments have begun. A Death Benefit is
not payable if annuity payments are being made at the time of the decedent's
death.
If you elect Highest Daily Lifetime 6 Plus with LIA, and never meet the
eligibility requirements you will not receive any additional payments based on
the LIA Amount.
Death Benefit Component of Highest Daily Lifetime 6 Plus with LIA
The provisions of the Death Benefit Component of Highest Daily Lifetime 6 Plus
(see page 12 above for information about the Death Benefit) also apply to
Highest Daily Lifetime Plus with LIA. Please note that with respect to Highest
Daily Lifetime 6 Plus with LIA, we use the Annual Income Amount for purposes
of the Death Benefit Calculations, not the LIA Amount.
G. Spousal Highest Daily Lifetime/SM/ 6 Plus Income Benefit
We add the following to the section entitled "Living Benefits."
Spousal Highest Daily Lifetime/SM/ 6 Plus Income Benefit (SHD6 Plus)
Spousal Highest Daily Lifetime 6 Plus is the spousal version of Highest Daily
Lifetime 6 Plus. This version is only being offered in those jurisdictions
where we have received regulatory approval and will be offered subsequently in
other jurisdictions when we receive regulatory approval in those
jurisdictions. Currently, if you elect Spousal Highest Daily Lifetime 6 Plus
and subsequently terminate the benefit, you may elect another living benefit,
subject to our current rules. See "Election of and Designations under the
Benefit" below and "Termination of Existing Benefits and Election of New
Benefits" in the prospectus for details. Please note that if you terminate
Spousal Highest Daily Lifetime 6 Plus and elect another benefit, you lose the
guarantees that you had accumulated under your existing benefit and will begin
the new guarantees under the new benefit you elect based on your Account Value
as of the date the new benefit becomes active. Spousal Highest Daily Lifetime
6 Plus must be elected based on two designated lives, as described below. The
youngest designated life must be at least 50 years old and the oldest
designated life must be at least 55 years old when the benefit is elected.
Spousal Highest Daily Lifetime 6 Plus is not available if you elect any other
optional benefit. As long as your Spousal Highest Daily Lifetime 6 Plus
Benefit is in effect, you must allocate your Account Value in accordance with
the Sub-accounts and other investment option(s) available with this benefit.
For a more detailed description of permitted investment options, see the
"Investment Options" section in the prospectus.
20
We offer a benefit that guarantees until the later death of two natural
persons who are each other's spouses at the time of election of the benefit
and at the first death of one of them (the "designated lives", and each, a
"designated life") the ability to withdraw an annual amount (the "Annual
Income Amount") equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of Sub-account
performance on the Account Value, subject to our rules regarding the timing
and amount of withdrawals. You are guaranteed to be able to withdraw the
Annual Income Amount for the lives of the designated lives ("Lifetime
Withdrawals") provided you have not made withdrawals of excess income that
have resulted in your Account Value being reduced to zero. We also permit a
one-time Non-Lifetime Withdrawal from your Annuity prior to taking Lifetime
Withdrawals under the benefit. The benefit may be appropriate if you intend to
make periodic withdrawals from your Annuity, wish to ensure that Sub-account
performance will not affect your ability to receive annual payments, and wish
either spouse to be able to continue the Spousal Highest Daily Lifetime 6 Plus
benefit after the death of the first spouse. You are not required to make
withdrawals as part of the benefit - the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of
the benefit. An integral component of Spousal Highest Daily Lifetime 6 Plus is
the mathematical formula we employ that may periodically transfer your Account
Value to and from the AST Investment Grade Bond Sub-account. See the section
below entitled "How Highest Daily Lifetime 6 Plus Transfers Account Value
Between Your Permitted Sub-accounts and the AST Investment Grade Bond
Sub-account."
Spousal Highest Daily Lifetime 6 Plus also provides for a Death Benefit equal
to three times your Annual Income Amount. The Death Benefit, however, is not
payable if your Account Value is reduced to zero as a result of withdrawals or
if annuity payments are being made at the time of the decedent's death.
Although you are guaranteed the ability to withdraw your Annual Income Amount
for life even if your Account Value falls to zero, if you take withdrawals of
excess income that bring your Account Value to zero, your Annual Income Amount
would also fall to zero, and the benefit would terminate. In that scenario, no
further amount, including the Death Benefit described below, would be payable
under Spousal Highest Daily Lifetime 6 Plus.
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Highest Daily Lifetime 6 Plus for Annuities issued on or after
May 1, 2009, subject to the 6 or 12 Month DCA Program's rules, and subject to
State approvals. As discussed in the prospectus, you may participate in the 6
or 12 Month Dollar Cost Averaging Program only if your Annuity was issued on
or after May 1, 2009. The 6 or 12 Month DCA Program is not available in
Washington.
Key Feature - Protected Withdrawal Value
The Protected Withdrawal Value is used to calculate the initial Annual Income
Amount. The Protected Withdrawal Value is separate from your Account Value and
not available as cash or a lump sum. On the effective date of the benefit, the
Protected Withdrawal Value is equal to your Account Value. On each Valuation
Day thereafter until the date of your first Lifetime Withdrawal (excluding any
Non-Lifetime Withdrawal discussed below), the Protected Withdrawal Value is
equal to the "Periodic Value" described in the next paragraph.
The "Periodic Value" initially is equal to the Account Value on the effective
date of the benefit. On each Valuation Day thereafter until the first Lifetime
Withdrawal, we recalculate the Periodic Value. We stop determining the
Periodic Value upon your first Lifetime Withdrawal after the effective date of
the benefit. On each Valuation Day (the "Current Valuation Day"), the Periodic
Value is equal to the greater of:
(1)the Periodic Value for the immediately preceding business day (the "Prior
Valuation Day") appreciated at the daily equivalent of 6% annually during
the calendar day(s) between the Prior Valuation Day and the Current
Valuation Day (i.e., one day for successive Valuation Days, but more than
one calendar day for Valuation Days that are separated by weekends and/or
holidays), plus the amount of any purchase payment (including any
associated purchase Credits) made on the Current Valuation Day (the
Periodic Value is proportionally reduced for any Non-Lifetime Withdrawal);
and
(2)the Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 10/th/ or 20/th/
Anniversary of the effective date of the benefit, your Periodic Value on the
10/th/ or 20/th/ Anniversary of the benefit effective date is equal to the
greater of:
(1)the Periodic Value described above or,
(2)the sum of (a), (b) and (c) (proportionally reduced for any Non-Lifetime
Withdrawal):
(a)200% (on the 10/th/ anniversary) or 400% (on the 20/th/ anniversary)
of the Account Value on the effective date of the benefit including
any purchase payments (including any associated purchase Credits)
made on that day;
(b)200% (on the 10/th/ anniversary) or 400% (on the 20/th/ anniversary)
of all purchase payments (including any associated purchase Credits)
made within one year following the effective date of the benefit; and
(c)all purchase payments (including any associated purchase Credits)
made after one year following the effective date of the benefit.
21
Once the first Lifetime Withdrawal is made, the Protected Withdrawal Value at
any time is equal to the greater of (i) the Protected Withdrawal Value on the
date of the first Lifetime Withdrawal, increased for subsequent purchase
payments (including any associated purchase Credits) and reduced for
subsequent Lifetime Withdrawals, and (ii) the highest daily Account Value upon
any step-up, increased for subsequent purchase payments (including any
associated purchase Credits) and reduced for subsequent Lifetime Withdrawals
(see below).
Key Feature - Annual Income Amount under the Spousal Highest Daily Lifetime 6
Plus Benefit
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value. The percentage initially depends on the age of the youngest
designated life on the date of the first Lifetime Withdrawal after election of
the benefit. The percentages are: 4% for ages 50-64, 5% for ages 65-84, and 6%
for ages 85 and older. We use the age of the youngest designated life even if
that designated life is no longer a participant under the Annuity due to death
or divorce. Under the Spousal Highest Daily Lifetime 6 Plus benefit, if your
cumulative Lifetime Withdrawals in an Annuity Year are less than or equal to
the Annual Income Amount, they will not reduce your Annual Income Amount in
subsequent Annuity Years, but any such withdrawals will reduce the Annual
Income Amount on a dollar-for-dollar basis in that Annuity Year. If your
cumulative Lifetime Withdrawals in an Annuity Year are in excess of the Annual
Income Amount for any Annuity Year ("Excess Income"), your Annual Income
Amount in subsequent years will be reduced (except with regard to Required
Minimum Distributions for this Annuity that comply with our rules) by the
result of the ratio of the Excess Income to the Account Value immediately
prior to such withdrawal (see examples of this calculation below). If you take
withdrawals of Excess Income, only the portion of the Lifetime Withdrawal that
exceeds the remaining Annual Income Amount will proportionally reduce your
Protected Withdrawal Value and Annual Income Amount in future years.
Reductions are based on the actual amount of the withdrawal, including any
CDSC that may apply. Lifetime Withdrawals of any amount up to and including
the Annual Income Amount will reduce the Protected Withdrawal Value by the
amount of the withdrawal. Withdrawals of Excess Income will reduce the
Protected Withdrawal Value by the same ratio as the reduction to the Annual
Income Amount.
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
You may use the Systematic Withdrawal program to make withdrawals of the
Annual Income Amount. Any systematic withdrawal will be deemed a Lifetime
Withdrawal under this benefit.
Any Purchase Payment that you make subsequent to the election of Spousal
Highest Daily Lifetime 6 Plus and subsequent to the first Lifetime Withdrawal
will (i) increase the then-existing Annual Income Amount by an amount equal to
a percentage of the Purchase Payment (including any associated purchase
Credits) based on the age of the younger designated life at the time of the
first Lifetime Withdrawal (the percentages are: 4% for ages 50-64, 5% for ages
65-84, and 6% for ages 85 and older, and (ii) increase the Protected
Withdrawal Value by the amount of the Purchase Payment (including any
associated purchase Credits).
If your Annuity permits additional purchase payments, we may limit any
additional purchase payment(s) if we determine that as a result of the timing
and amounts of your additional purchase payments and withdrawals, the Annual
Income Amount is being increased in an unintended fashion. Among the factors
we will use in making a determination as to whether an action is designed to
increase the Annual Income Amount in an unintended fashion is the relative
size of additional purchase payment(s). We reserve the right to not accept
additional purchase payments if we are not then offering this benefit for new
elections. We will exercise such reservation of right for all annuity
purchasers in the same class in a nondiscriminatory manner.
Highest Daily Auto Step-Up
An automatic step-up feature ("Highest Daily Auto Step-Up") is part of this
benefit. As detailed in this paragraph, the Highest Daily Auto Step-Up feature
can result in a larger Annual Income Amount subsequent to your first Lifetime
Withdrawal. The Highest Daily Step-Up starts with the anniversary of the Issue
Date of the Annuity (the "Annuity Anniversary") immediately after your first
Lifetime Withdrawal under the benefit. Specifically, upon the first such
Annuity Anniversary, we identify the Account Value on each Valuation Day
within the immediately preceding Annuity Year after your first Lifetime
Withdrawal. Having identified the highest daily value (after all daily values
have been adjusted for subsequent purchase payments and withdrawals), we then
multiply that value by a percentage that varies based on the age of the
youngest designated life on the Annuity Anniversary as of which the step-up
would occur. The percentages are 4% for ages 50-64, 5% for ages 65-84, and 6%
for ages 85 and older. If that value exceeds the existing Annual Income
Amount, we replace the existing amount with the new, higher amount. Otherwise,
we leave the existing Annual Income Amount intact. The Account Value on the
Annuity Anniversary is considered the last daily step-up value of the Annuity
Year. In later years (i.e., after the first Annuity Anniversary after the
first Lifetime Withdrawal), we determine whether an automatic step-up should
occur on each Annuity Anniversary by performing a similar examination of the
Account Values that occurred on Valuation Days during the year. Taking
Lifetime Withdrawals could produce a greater difference between your Protected
Withdrawal Value and your Account Value, which may make a Highest Daily Auto
Step-up less likely to occur. At the time that we increase your Annual Income
Amount, we also increase your Protected Withdrawal Value to equal the highest
daily value upon which your step-up was based only if that results in an
increase to the Protected Withdrawal Value. Your Protected Withdrawal Value
will never be decreased as a result of an income step-up. If, on the date that
we implement a Highest Daily Auto Step-Up to your Annual Income Amount, the
charge for Spousal Highest Daily Lifetime 6 Plus has changed for new
22
purchasers, you may be subject to the new charge at the time of such step-up.
Prior to increasing your charge for Spousal Highest Daily Lifetime 6 Plus upon
a step-up, we would notify you, and give you the opportunity to cancel the
automatic step-up feature. If you receive notice of a proposed step-up and
accompanying fee increase, you should carefully evaluate whether the amount of
the step-up justifies the increased fee to which you will be subject.
If you are engaged in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount.
The Spousal Highest Daily Lifetime 6 Plus benefit does not affect your ability
to take withdrawals under your Annuity, or limit your ability to take
withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily
Lifetime 6 Plus, if your cumulative Lifetime Withdrawals in an Annuity Year
are less than or equal to the Annual Income Amount, they will not reduce your
Annual Income Amount in subsequent Annuity Years, but any such withdrawals
will reduce the Annual Income Amount on a dollar-for-dollar basis in that
Annuity Year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount in
any Annuity Year, you cannot carry-over the unused portion of the Annual
Income Amount to subsequent Annuity Years.
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Account Value, it is
possible for the Account Value to fall to zero, even though the Annual Income
Amount remains.
Examples of dollar-for-dollar and proportional reductions, and the Highest
Daily Auto Step-Up are set forth below. The values shown here are purely
hypothetical, and do not reflect the charges for the Spousal Highest Daily
Lifetime 6 Plus benefit or any other fees and charges under the Annuity.
Assume the following for all three examples:
. The Issue Date is December 1, 2008
. The Spousal Highest Daily Lifetime 6 Plus benefit is elected on
September 1, 2009
. The younger designated life was 70 years old when he/she elected the
Spousal Highest Daily Lifetime 6 Plus benefit.
Example of dollar-for-dollar reductions
On November 24, 2009, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $6,000 (since the youngest designated life is
between the ages of 65 and 84 at the time of the first Lifetime Withdrawal,
the Annual Income Amount is 5% of the Protected Withdrawal Value, in this case
5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date,
the remaining Annual Income Amount for that Annuity Year (up to and including
December 1, 2009) is $3,500. This is the result of a dollar-for-dollar
reduction of the Annual Income Amount ($6,000 less $2,500 = $3,500).
Example of proportional reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on November 27, 2009 and the Account Value at the time and immediately
prior to this withdrawal is $118,000. The first $3,500 of this withdrawal
reduces the Annual Income Amount for that Annuity Year to $0. The remaining
withdrawal amount of $1,500 - reduces the Annual Income Amount in future
Annuity Years on a proportional basis based on the ratio of the excess
withdrawal to the Account Value immediately prior to the excess withdrawal.
(Note that if there were other withdrawals in that Annuity Year, each would
result in another proportional reduction to the Annual Income Amount).
Here is the calculation:
Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" excess withdrawal $ 3,500.00
Account Value immediately before excess withdrawal of $1,500 $114,500.00
Excess withdrawal amount $ 1,500.00
Divided by Account Value immediately before excess withdrawal $114,500.00
Ratio 1.31%
Annual Income Amount $ 6,000.00
Less ratio of 1.31% $ 78.60
Annual Income Amount for future Annuity Years $ 5,921.40
Example of highest daily auto step-up
On each Annuity Anniversary date, the Annual Income Amount is stepped-up if
the appropriate percentage (based on the youngest designated life's age on the
Annuity Anniversary) of the highest daily value since your first Lifetime
Withdrawal (or last Annuity Anniversary in subsequent years), adjusted for
withdrawals and additional purchase payments, is higher than the Annual Income
Amount, adjusted for excess withdrawals and additional purchase payments
(including any associated purchase Credits).
23
Continuing the same example as above, the Annual Income Amount for this
Annuity Year is $6,000. However, the excess withdrawal on November 27 reduces
the amount to $5,921.40 for future years (see above). For the next Annuity
Year, the Annual Income Amount will be stepped up if 5% (since the youngest
designated life is between 65 and 84 on the date of the potential step-up) of
the highest daily Account Value adjusted for withdrawals and purchase payments
(including any associated purchase Credits), is higher than $5921.40. Here are
the calculations for determining the daily values. Only the November 25 value
is being adjusted for excess withdrawals as the November 30 and December 1
Valuation Days occur after the excess withdrawal on November 27.
Highest Daily Value
(adjusted with Adjusted Annual
withdrawal and Purchase Income Amount (5% of the
Date* Account value Payments)** Highest Daily Value)
----- ------------- ----------------------- ------------------------
November 25, 2009 $119,000.00 $119,000.00 $5,950.00
November 26, 2009 Thanksgiving Day
November 27, 2009 $113,000.00 $113,986.95 $5,699.35
November 30, 2009 $113,000.00 $113,986.95 $5,699.35
December 01, 2009 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be every day following the Annuity
Anniversary. The Annuity Anniversary Date of December 1 is considered the
final Valuation Date for the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on November 25, resulting in an adjusted Annual Income Amount
of $5,950.00. This amount is adjusted on November 27 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Account Value of $119,000 on November 25 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in an adjusted Account Value of
$115,500 before the excess withdrawal.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the excess withdrawal divided by the Account
Value immediately preceding the excess withdrawal) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted Annual Income Amount is carried forward to the next
Valuation Date of November 30. At this time, we compare this amount to
5% of the Account Value on November 30. Since the November 27 adjusted
Annual Income Amount of $5,699.35 is higher than $5,650.00 (5% of
$113,000), we continue to carry $5,699.35 forward to the next and final
Valuation Date of December 1. The Account Value on December 1 is
$119,000 and 5% of this amount is $5,950. Since this is higher than
$5,699.35, the adjusted Annual Income Amount is reset to $5,950.00.
In this example, 5% of the December 1 value results in the highest amount of
$5,950.00. Since this amount is higher than the current year's Annual Income
Amount of $5,921.40 adjusted for excess withdrawals, the Annual Income Amount
for the next Annuity Year, starting on December 2, 2009 and continuing through
December 1, 2010, will be stepped-up to $5,950.00.
Non-Lifetime Withdrawal Feature
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Spousal Highest Daily Lifetime 6 Plus. It is an optional feature of the
benefit that you can only elect at the time of your first withdrawal. The
amount of the Non-Lifetime Withdrawal cannot be more than the amount that
would cause the Annuity to be taken below the minimum Surrender Value after a
withdrawal for your Annuity. This Non-Lifetime Withdrawal will not establish
our initial Annual Income Amount and the Periodic Value above will continue to
be calculated. However, the total amount of the withdrawal will proportionally
reduce all guarantees associated with the Spousal Highest Daily Lifetime 6
Plus benefit. You must tell us if your withdrawal is intended to be the
Non-Lifetime Withdrawal and not the first Lifetime Withdrawal under the
Spousal Highest Daily Lifetime 6 Plus benefit. If you don't elect the
Non-Lifetime Withdrawal, the first withdrawal you make will be the first
Lifetime Withdrawal that establishes your Protected Withdrawal Value and
Annual Income Amount. Once you elect the Non-Lifetime Withdrawal or Lifetime
Withdrawals, no additional Non-Lifetime withdrawals may be taken.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value and the Periodic Value guarantees on the tenth and twentieth
anniversaries of the benefit effective date, described above, and the Death
Benefit (described below), by the percentage the total withdrawal amount
(including any applicable CDSC) represents of the then current Account Value
immediately prior to the time of the withdrawal.
If you are participating in a Systematic Withdrawal program, the first
withdrawal under the program cannot be classified as the Non-Lifetime
Withdrawal. The first partial withdrawal in payment of any third party
investment advisory service from your Annuity also cannot be classified as the
Non-Lifetime Withdrawal.
Example - Non-Lifetime Withdrawal (proportional reduction)
This example is purely hypothetical and does not reflect the charges for the
benefit or any other fees and charges under the Annuity. It is intended to
illustrate the proportional reduction of the Non-Lifetime Withdrawal under
this benefit.
Assume the following:
. The Issue Date is December 1, 2008
. The Spousal Highest Daily Lifetime 6 Plus benefit is elected on
September 1, 2009
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. The Account Value at benefit election was $105,000
. The younger designated life was 70 years old when he/she elected the
Spousal Highest Daily Lifetime 6 Plus benefit
. No previous withdrawals have been taken under the Spousal Highest Daily
Lifetime 6 Plus benefit
On October 2, 2009, the Protected Withdrawal Value is $125,000, the 10th
benefit year minimum Periodic Value guarantee is $210,000 and the 20/th/
benefit year minimum Periodic Value guarantee is $420,000, and the Account
Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 2, 2009 and is designated as a Non-Lifetime Withdrawal, all guarantees
associated with the Spousal Highest Daily Lifetime 6 Plus benefit will be
reduced by the ratio the total withdrawal amount represents of the Account
Value just prior to the withdrawal being taken.
Here is the calculation:
Withdrawal Amount divided by $ 15,000
Account Value before withdrawal $120,000
Equals ratio 12.5%
All guarantees will be reduced by the above ratio (12.5%)
Protected Withdrawal Value $109,375
10/th/ benefit year Minimum Periodic Value $183,750
20/th/ benefit year Minimum Periodic Value $367,500
Required Minimum Distributions
Withdrawals that exceed the Annual Income Amount, but which you are required
to take as a Required Minimum Distribution for this Annuity, will not reduce
the Annual Income Amount for future years. No additional Annual Income Amounts
will be available in an Annuity Year due to required minimum distributions
unless the required minimum distribution amount is greater than the Annual
Income Amount. Unless designated as a Non-Lifetime Withdrawal, required
minimum distributions are considered Lifetime Withdrawals. If you take a
withdrawal in an Annuity Year in which your Required Minimum Distribution for
that year is not greater than the Annual Income Amount, and the amount of the
withdrawal exceeds the Annual Income Amount for that year, we will treat the
withdrawal as a withdrawal of Excess Income. Such a withdrawal of Excess
Income will reduce the Annual Income Amount available in future years. If the
required minimum distribution (as calculated by us for your Annuity and not
previously withdrawn in the current calendar year) is greater than the Annual
Income Amount, an amount equal to the remaining Annual Income Amount plus the
difference between the required minimum distribution amount not previously
withdrawn in the current calendar year and the Annual Income Amount will be
available in the current Annuity Year without it being considered a withdrawal
of Excess Income. In the event that a required minimum distribution is
calculated in a calendar year that crosses more than one Annuity Year and you
choose to satisfy the entire required minimum distribution for that calendar
year in the next Annuity Year, the distribution taken in the next Annuity Year
will reduce your Annual Income Amount in that Annuity Year on a dollar for
dollar basis. If the required minimum distribution not taken in the prior
Annuity Year is greater than the Annual Income Amount as guaranteed by the
benefit in the current Annuity Year, the total required minimum distribution
amount may be taken without being treated as a withdrawal of Excess Income.
Note that under the Worker, Retiree and Employer Recovery Act of 2008,
required minimum distributions are suspended for 2009 and are scheduled to
resume in 2010. We will continue to treat the calculated amount that would
have been a required minimum distribution if not for the suspension as the
amount available for withdrawal if you so choose. In any year in which the
requirement to take required minimum distributions is suspended by law, we
reserve the right, in our sole discretion and regardless of any position taken
on this issue in a prior year, to treat any amount that would have been
considered as a required minimum distribution if not for the suspension as
eligible for treatment as described herein.
Example - Required Minimum Distributions
The following example is purely hypothetical and is intended to illustrate a
scenario in which the required minimum distribution amount in a given Annuity
Year is greater than the Annual Income Amount.
Annual Income Amount = $5,000
Remaining Annual Income Amount = $3,000
Required Minimum Distribution = $6,000
The amount you may withdraw in the current Annuity Year without it being
treated as an Excess Withdrawal is $4,000. ($3,000 + ($6,000 - $5,000) =
$4,000).
If the $4,000 withdrawal is taken, the remaining Annual Income Amount will be
zero and the remaining required minimum distribution amount of $2,000 may be
taken in the subsequent Annuity Year (when your Annual Income Amount is reset
to $5,000) without proportionally reducing all guarantees associated with the
Spousal Highest Daily Lifetime 6 Plus benefit as described above. The amount
you may withdraw in the subsequent Annuity Year if you stop taking withdrawals
in the current Annuity Year
25
and choose not to satisfy the required minimum distribution in the current
Annuity Year (assuming the Annual Income Amount in the subsequent Annuity Year
is $5,000) without being treated as a withdrawal of Excess Income is $6,000.
This withdrawal must comply with all IRS guidelines in order to satisfy the
required minimum distribution for the current calendar year.
Death Benefit Component of Spousal Highest Daily Lifetime 6 Plus
If you elect Spousal Highest Daily Lifetime 6 Plus, we include a death benefit
(Death Benefit), at no additional cost, that is linked to the Annual Income
Amount under the benefit. If a death benefit is triggered and you currently
own Spousal Highest Daily Lifetime 6 Plus benefit, then your Death Benefit
will be equal to the greatest of:
. the basic death benefit under the Annuity; and
. the amount of any optional death benefit you may have elected and
remains in effect; and
. a) if no Lifetime Withdrawal had been taken prior to death, 300% of the
Annual Income Amount that would have been determined on the date of
death if a Lifetime Withdrawal had occurred on that date or (b) if a
Lifetime Withdrawal had been taken prior to death, 300% of the Annual
Income Amount as of our receipt of due proof of death. Under this
component of the Death Benefit, we will not recapture the amount of any
purchase Credit applied to an XT 6 Annuity granted within 12 months
prior to death.
Upon the death of the first of the spousal designated lives, if a Death
Benefit, as described above, would otherwise be payable, and the surviving
designated life chooses to continue the Annuity, the Account Value will be
adjusted, as of the date we receive due proof of death, to equal the amount of
that Death Benefit if paid out in a lump sum, and the Spousal Highest Daily
Lifetime 6 Plus benefit remains in force. Upon the death of the second Spousal
designated life, the Death Benefit described above will be payable and the
Spousal Highest Daily Lifetime 6 Plus rider will terminate as of the date we
receive due proof of death.
Please note that the Death Benefit under Spousal Highest Daily Lifetime 6 Plus
is not payable if your Account Value is reduced to zero as a result of
withdrawals or if annuity payments are being made at the time of the
decedent's death. This Death Benefit may not be available in all States.
Benefits Under Spousal Highest Daily Lifetime 6 Plus
.. To the extent that your Account Value was reduced to zero as a result of
cumulative Lifetime Withdrawals in an Annuity Year that are less than or
equal to the Annual Income Amount, and amounts are still payable under
Spousal Highest Daily Lifetime 6 Plus, we will make an additional payment,
if any, for that Annuity Year equal to the remaining Annual Income Amount
for the Annuity Year. Thus, in that scenario, the remaining Annual Income
Amount would be payable even though your Account Value was reduced to zero.
In subsequent Annuity Years we make payments that equal the Annual Income
Amount as described in this section. We will make payments until the death
of the first of the designated lives to die, and will continue to make
payments until the death of the second designated life as long as the
designated lives were spouses at the time of the first death. If this were
to occur, you are not permitted to make additional purchase payments to
your Annuity. To the extent that cumulative withdrawals in the Annuity Year
that reduced your Account Value to zero are more than the Annual Income
Amount, the Spousal Highest Daily Lifetime 6 Plus benefit terminates, and
no additional payments will be made. However, if a withdrawal in the latter
scenario was taken to satisfy a required minimum distribution (as described
above) under the Annuity then the benefit will not terminate, and we will
continue to pay the Annual Income Amount in subsequent Annuity Years until
the death of the second designated life provided the designated lives were
spouses at the death of the first designated life. Please note that if your
Account Value is reduced to zero as a result of withdrawals, the Death
Benefit (described above) will also be reduced to zero and the Death
Benefit will not be payable.
.. Please note that if your Account Value is reduced to zero, all subsequent
payments will be treated as annuity payments. Further, payments that we
make under this benefit after the first day of the calendar month
coinciding with or next following the annuitant's 95/th/ birthday will be
treated as annuity payments.
.. If annuity payments are to begin under the terms of your Annuity, or if you
decide to begin receiving annuity payments and there is an Annual Income
Amount due in subsequent Annuity Years, you can elect one of the following
two options:
(1)apply your Account Value to any annuity option available; or
(2)request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will
make payments until the first of the designated lives to die, and
will continue to make payments until the death of the second
designated life as long as the designated lives were spouses at the
time of the first death. If, due to death of a designated life or
divorce prior to annuitization, only a single designated life
remains, then annuity payments will be made as a life annuity for the
lifetime of the designated life. We must receive your request in a
form acceptable to us at our office.
.. In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with ten payments certain, by applying the
greater of the annuity rates then currently available or the annuity rates
guaranteed in your Annuity. The amount that will be applied to provide such
annuity payments will be the greater of:
(1)the present value of the future Annual Income Amount payments. Such
present value will be calculated using the greater of the joint and
survivor or single (as applicable) life fixed annuity rates then
currently available or the joint and survivor or single (as
applicable) life fixed annuity rates guaranteed in your Annuity; and
(2)the Account Value.
26
If no Lifetime Withdrawal was ever taken, we will calculate the Annual Income
Amount as if you made your first Lifetime Withdrawal on the date the annuity
payments are to begin.
Please note that the Death Benefit (described above) is not payable if annuity
payments are being made at the time of the decedent's death.
Other Important Considerations
.. Withdrawals under the Spousal Highest Daily Lifetime 6 Plus benefit are
subject to all of the terms and conditions of the Annuity, including any
applicable CDSC for the Non-Lifetime Withdrawal as well as withdrawals that
exceed the Annual Income Amount.
.. Withdrawals made while the Spousal Highest Daily Lifetime 6 Plus benefit is
in effect will be treated, for tax purposes, in the same way as any other
withdrawals under the Annuity. Any withdrawals made under the benefit will
be taken pro-rata from the Sub-accounts (including the AST Investment Grade
Bond Sub-account) and the DCA Fixed Rate Options (if you are participating
in the 6 or 12 Month DCA Program). Withdrawals from the DCA Fixed Rate
Options will be taken on a last-in, first-out basis. As discussed in the
prospectus, you may participate in the 6 or 12 Month Dollar Cost Averaging
Program only if your Annuity was issued on or after May 1, 2009.
.. You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Spousal Highest Daily Lifetime 6
Plus benefit. The Spousal Highest Daily Lifetime 6 Plus benefit provides a
guarantee that if your Account Value is reduced to zero (subject to program
rules regarding the timing and amount of withdrawals), you will be able to
receive your Annual Income Amount in the form of withdrawals.
.. You cannot allocate purchase payments or transfer Account Value to or from
the AST Investment Grade Bond Sub-account. A summary description of the AST
Investment Grade Bond Portfolio appears in the prospectus section entitled
"What Are The Investment Objectives and Policies of The Portfolios?". Upon
the initial transfer of your Account Value into the AST Investment Grade
Bond Portfolio, we will send a prospectus for that Portfolio to you, along
with your confirmation statement. In addition, you can find a copy of the
AST Investment Grade Bond Portfolio prospectus by going to
www.prudentialannuities.com.
.. You can make withdrawals from your Annuity without purchasing the Spousal
Highest Daily Lifetime 6 Plus benefit. The Spousal Highest Daily Lifetime 6
Plus benefit provides a guarantee that if your Account Value declines due
to Sub-account performance, you will be able to receive your Annual Income
Amount in the form of periodic benefit payments.
.. Transfers to and from the elected Sub-accounts, the DCA Fixed Rate Options,
and the AST Investment Grade Bond Sub-account triggered by the Spousal
Highest Daily Lifetime 6 Plus mathematical formula will not count toward
the maximum number of free transfers allowable under an Annuity.
.. Upon inception of the benefit and to maintain the benefit, 100% of your
Account Value must be allocated to the Permitted Sub-accounts (or any DCA
Fixed Rate Options if you elect the 6 or 12 Month DCA Program). If,
subsequent to your election of the benefit, we change our requirements for
how Account Value must be allocated under the benefit, the new requirement
will apply only to new elections of the benefit, and we will not compel you
to re-allocate your Account Value in accordance with our newly adopted
requirements. At the time of any change in requirements, and as applicable
only to new elections of the benefit, transfers of Account Value and
allocation of additional purchase payments may be subject to new investment
limitations.
.. If you elect this benefit and in connection with that election, you are
required to reallocate to different Sub-accounts, then on the Valuation Day
we receive your request in good order, we will (i) sell units of the
non-permitted investment options and (ii) invest the proceeds of those
sales in the Sub-accounts that you have designated. During this
reallocation process, your Account Value allocated to the Sub-accounts will
remain exposed to investment risk, as is the case generally. The
newly-elected benefit will commence at the close of business on the
following Valuation Day. Thus, the protection afforded by the newly-elected
benefit will not arise until the close of business on the following
Valuation Day.
.. The maximum charge for Spousal Highest Daily Lifetime 6 Plus is 1.50%
annually of the greater of the Account Value and Protected Withdrawal
Value. The current charge is 0.95% annually of the greater of Account Value
and Protected Withdrawal Value. We deduct this charge on quarterly
anniversaries of the benefit effective date. Thus, we deduct, on a
quarterly basis, 0.2375% of the greater of the prior Valuation Day's
Account Value, or the prior Valuation Day's Protected Withdrawal Value. We
deduct the fee pro rata from each of your Sub-accounts, including the AST
Investment Grade Bond Sub-account, and the DCA Fixed Rate Options (if
applicable). Since this fee is based on the greater of the Account Value
and Protected Withdrawal Value, the fee for Spousal Highest Daily Lifetime
6 Plus may be greater than it would have been, had it been based on the
Account Value alone. The following example is hypothetical and is for
illustrative purposes only.
Assuming a benefit effective date of September 1, 2009 (which means that
quarterly benefit anniversaries are: December 1, March 1, June 1, and
September 1). Assume the Protected Withdrawal Value as of November 30, 2009
(prior Valuation Day's Protected Withdrawal Value) = $200,000.00 and the
Account Value as of November 30, 2009 (prior Valuation Day's Account Value) =
$195,000.00. The first benefit charge date would be December 1, 2009 and the
benefit charge amount would be $475.00 ($200,000 X .2375%)
If the deduction of the charge would result in the Account Value falling below
the lesser of $500 or 5% of the sum of the Account Value on the effective date
of the benefit plus all purchase payments made subsequent thereto (and any
associated purchase
27
Credits) (we refer to this as the "Account Value Floor"), we will only deduct
that portion of the charge that would not cause the Account Value to fall
below the Account Value Floor. If the entire Account Value is less than the
Account Value Floor when we would deduct a charge for the benefit, then no
charge will be assessed for that benefit quarter. If a charge for the Spousal
Highest Daily Lifetime 6 Plus benefit would be deducted on the same day we
process a withdrawal request, the charge will be deducted first, then the
withdrawal will be processed. The withdrawal could cause the Account Value to
fall below the Account Value Floor. While the deduction of the charge (other
than the final charge) may not reduce the Account Value to zero, withdrawals
may reduce the Account Value to zero. If this happens and the Annual Income
Amount is greater than zero, we will make payments under the benefit and the
Death Benefit (described above) will not be payable.
Election of and Designations under the Benefit
Spousal Highest Daily Lifetime 6 Plus can only be elected based on two
designated lives. Designated lives must be natural persons who are each
other's spouses at the time of election of the benefit and at the death of the
first of the designated lives to die. Currently, Spousal Highest Daily
Lifetime 6 Plus only may be elected where the Owner, Annuitant, and
Beneficiary designations are as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the beneficiary is the Owner's spouse. The youngest Owner/Annuitant and
the beneficiary must be at least 50 years old and the oldest must be at
least 55 years old at the time of election; or
.. Co-Annuity Owners, where the Owners are each other's spouses. The
beneficiary designation must be the surviving spouse, or the spouses named
equally. One of the owners must be the Annuitant. The youngest Owner must
be at least 50 years old and the oldest owner must be at least 55 years old
at the time of election; or
.. One Annuity Owner, where the Owner is a custodial account established to
hold retirement assets for the benefit of the Annuitant pursuant to the
provisions of Section 408(a) of the Internal Revenue Code (or any successor
Code section thereto) ("Custodial Account"), the beneficiary is the
Custodial Account, and the spouse of the Annuitant is the Contingent
Annuitant. The youngest of the Annuitant and the Contingent Annuitant must
be at least 50 years old and the oldest must be at least 55 years old at
the time of election.
We do not permit a change of Owner under this benefit, except as follows:
(a) if one Owner dies and the surviving spousal Owner assumes the Annuity, or
(b) if the Annuity initially is co-owned, but thereafter the Owner who is not
the Annuitant is removed as Owner. We permit changes of beneficiary under this
benefit. If the designated lives divorce, the Spousal Highest Daily Lifetime 6
Plus benefit may not be divided as part of the divorce settlement or judgment.
Nor may the divorcing spouse who retains ownership of the Annuity appoint a
new designated life upon re-marriage.
Spousal Highest Daily Lifetime 6 Plus can be elected at the time that you
purchase your Annuity or after the Issue Date, subject to availability, and
our eligibility rules and restrictions. If you elect Spousal Highest Daily
Lifetime 6 Plus and terminate it, you can re-elect it, subject to our current
rules and availability. Additionally, if you currently own an Annuity with a
living benefit that is terminable, you may terminate your existing benefit
rider and elect any available benefits subject to our current rules. See
"Termination of Existing Benefits and Election of New Benefits" in the
prospectus for information pertaining to elections, termination and
re-election of benefits. Please note that if you terminate a living benefit
and elect a new living benefit, you lose the guarantees that you had
accumulated under your existing benefit and will begin the new guarantees
under the new benefit you elected based on your Account Value as of the date
the new benefit becomes active. You should carefully consider whether
terminating your existing benefit and electing a new benefit is appropriate
for you. We reserve the right to waive, change and/or further limit the
election frequency in the future.
Termination of the Benefit
You may terminate the benefit at any time by notifying us. If you terminate
the benefit, any guarantee provided by the benefit will terminate as of the
date the termination is effective, and certain restrictions on re-election may
apply. The benefit automatically terminates: (i) if upon the death of the
first designated life, the surviving designated life opts to take the death
benefit under the Annuity (thus, the benefit does not terminate solely because
of the death of the first designated life), (ii) upon the death of the second
designated life (except as may be needed to pay the Death Benefit associated
with this benefit), (iii) upon your termination of the benefit, (iv) upon your
surrender of the Annuity, (v) upon your election to begin receiving annuity
payments (although if you have elected to take annuity payments in the form of
the Annual Income Amount, we will continue to pay the Annual Income Amount),
(vi) if both the Account Value and Annual Income Amount equal zero, or
(vii) if you cease to meet our requirements as described in "Election of and
Designations under the Benefit".
Upon termination of Spousal Highest Daily Lifetime 6 Plus other than upon
death of a designated life or annuitization, we impose any accrued fee for the
benefit (i.e., the fee for the pro-rated portion of the year since the fee was
last assessed), and thereafter we cease deducting the charge for the benefit.
This final charge will be deducted even if it results in the Account Value
falling below the Account Value Floor. With regard to your investment
allocations, upon termination we will: (i) leave intact amounts that are held
in the Permitted Sub-accounts (including any amounts in the DCA Fixed Rate
Options), and (ii) unless you are participating in an asset allocation program
(i.e., Optional Allocation & Rebalancing Program, Automatic Rebalancing
Program, or 6 or 12 Month DCA Program) for which we are providing
administrative support, transfer all amounts held in the AST Investment Grade
Bond Portfolio Sub-account to your variable investment options, pro rata (i.e.
in the same proportion as the current balances in your variable investment
options). If prior to the transfer from the AST Investment Grade Bond
Sub-account the Account Value in the variable investment options is zero, we
will transfer such amounts according to your most recent allocation
instructions.
28
How Spousal Highest Daily Lifetime 6 Plus Transfers Account Value between Your
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account. See "How
Highest Daily Lifetime 6 Plus Transfers Account Value Between Your Permitted
Sub-accounts and the AST Investment Grade Bond Sub-account" above for
information regarding this component of the benefit.
Additional Tax Considerations
If you purchase an annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the required minimum distribution
rules under the Code provide that you begin receiving periodic amounts from
your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a
401(a) plan for which the participant is not a greater than five (5) percent
owner of the employer, this required beginning date can generally be deferred
to retirement, if later. Roth IRAs are not subject to these rules during the
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
Annuity Year that required minimum distributions due from your Annuity are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as required minimum distribution provisions under the tax
law.
As indicated, withdrawals made while this benefit is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under the
Annuity. Please see the Tax Considerations section of the prospectus for a
detailed discussion of the tax treatment of withdrawals. We do not address
each potential tax scenario that could arise with respect to this benefit
here. However, we do note that if you participate in Spousal Highest Daily
Lifetime 6 Plus through a non-qualified annuity, as with all withdrawals, once
all purchase payments are returned under the Annuity, all subsequent
withdrawal amounts will be taxed as ordinary income.
H. We add the following as new Appendix O:
APPENDIX O - FORMULA FOR HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT AND
SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT
(including Highest Daily Lifetime 6 Plus with LIA)
TRANSFERS OF ACCOUNT VALUE BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE
AST INVESTMENT GRADE BOND SUB-ACCOUNT
TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULAS:
. C\\u\\ - the upper target is established on the effective date of the
Highest Daily Lifetime 6 Plus/Spousal Highest Daily Lifetime 6 Plus
benefit (the "Effective Date") and is not changed for the life of the
guarantee. Currently, it is 83%.
. Cu\\s\\ - The secondary upper target is established on the effective
date of the Highest Daily Lifetime 6 Plus/Spousal Highest Daily Lifetime
6 Plus benefit (the "Effective Date") and is not changed for the life of
the guarantee. Currently it is 84.5%
. C\\t\\ - the target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 80%.
. C\\l\\ - the lower target is established on the Effective Date and is
not changed for the life of the guarantee. Currently, it is 78%.
. L - the target value as of the current Valuation Day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee. (See below for the table of "a" factors)
. V\\v\\ - the total value of all Permitted Sub-accounts in the Annuity.
. V\\F\\ - the total value of all elected Fixed Rate Options in the
Annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first Lifetime Withdrawal, the Income
Basis is equal to the Protected Withdrawal Value calculated as if the
first Lifetime Withdrawal were taken on the date of calculation. After
the first Lifetime Withdrawal, the Income Basis is equal to the greater
of (1) the Protected Withdrawal Value on the date of the first Lifetime
Withdrawal,
29
increased for additional purchase payments, including the amount of any
associated purchase Credits, and adjusted proportionally for excess
withdrawals*, and (2) the Protected Withdrawal Value on any Annuity
Anniversary subsequent to the first Lifetime Withdrawal, increased for
subsequent additional purchase payments (including the amount of any
associated purchase Credits) and adjusted proportionately for Excess
Income* and (3) any highest daily Account Value occurring on or after
the later of the immediately preceding Annuity anniversary, or the date
of the first Lifetime Withdrawal, and prior to or including the date of
this calculation, increased for additional purchase payments (including
the amount of any associated purchase Credits) and adjusted for
withdrawals, as described herein.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account.
. T\\M\\ - the amount of a monthly transfer out of the AST Investment
Grade Bond Portfolio.
* Note: Lifetime Withdrawals of less than or equal to the Annual Income
Amount do not reduce the Income Basis.
Daily Calculations
TARGET VALUE CALCULATION:
On each Valuation Day, a target value (L) is calculated, according to the
following formula. If the variable Account Value (V\\V\\ + V\\F\\) is equal to
zero, no calculation is necessary.
L = 0.05 * P * a
Transfer Calculation:
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / (V\\V\\ + V\\F\\).
. If on the third consecutive Valuation Day r (greater than) C\\u\\
and r (less or =) Cu\\s\\ or if on any day r (greater than) Cu\\s\\,
and subject to the 90% cap rule described above, assets in the
Permitted Sub-accounts (including DCA Fixed Rate Options used with
any applicable 6 or 12 Month DCA Program) are transferred to the AST
Investment Grade Bond Portfolio Sub-account.
. If r (less than) C\\l\\, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0),
assets in the AST Investment Grade Bond Portfolio Sub-account are
transferred to the Permitted Sub-accounts as described above.
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = Min (MAX (0, (0.90 * (V\\V\\ + V\\F\\ + B)) - B), Money is transferred from the Permitted
[L - B - (V\\V\\ + V\\F\\) * C\\t\\] / (1 - C\\t\\)) Sub-accounts and DCA Fixed Rate Options to
the AST Investment Grade Bond Sub-account
T = {Min (B, - [L - B - (V\\V\\ + V\\F\\) * C\\t\\] / (1 - C\\t\\))} Money is transferred from the AST Investment
Grade Bond Sub-account to the Permitted
Sub-accounts
Monthly Calculation
On each monthly anniversary of the Annuity Issue Date and following the daily
Transfer Calculation above, the following formula determines if a transfer
from the AST Investment Grade Bond Sub-account to the Permitted Sub-Accounts
will occur:
If, after the daily Transfer Calculation is performed,
{Min (B, .05 * (V\\V\\ + V\\F\\ + B))} (less than) (C\\u\\ * (V\\V\\ + V
\\F\\) - L + B) / (1 - C \\u\\), then
T\\M\\ = {Min (B, .05 * (V\\V\\ + V\\F\\ + B))} Money is transferred from the AST Investment
Grade Bond Sub-account to the Permitted
Sub-accounts.
30
"a" Factors for Liability Calculations
(in Years and Months since Benefit Effective Date)*
Months
Years 1 2 3 4 5 6 7 8 9 10 11 12
----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95
2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51
3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07
4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63
5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19
6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75
7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30
8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86
9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42
10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98
11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54
12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11
13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68
14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26
15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84
16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44
17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04
18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65
19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27
20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91
21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55
22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22
23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89
24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58
25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29
26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01
27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75
28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51
29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28
30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06**
* The values set forth in this table are applied to all ages.
** In all subsequent years and months thereafter, the annuity factor is 4.06
I. OTHER INFORMATION:
1. In the section entitled "How Are Loyalty Credits Applied To My Account
Value Under the ASAP III and APEX II Annuities?" we replace the first
sentence with the following:
Any Loyalty Credit that is allocated to your Account Value on the fifth
Annuity Anniversary will be allocated to the Fixed Allocations and
Sub-accounts according to the "hierarchy" described in this paragraph. This
hierarchy consists of a priority list of investment options, and the Loyalty
Credit is applied based on which of the items below is applicable and in
effect when the Loyalty Credit is applied. Thus, if a given item in the
priority list is inapplicable to you, we move to the next item. The hierarchy
is as follows: (a) if you participate in the Optional Allocation & Rebalancing
Program, any Loyalty Credit will be invested in accordance with such Program,
(b) if you participate in an asset allocation program (see Appendix D for a
description of such programs), in accordance with that program, (c) in
accordance with your standing allocation instructions (d) if you participate
in the Systematic Investment Plan, in accordance with that Plan, (e) if you
participate in an automatic rebalancing program, in accordance with that
program (f) in accordance with how your most recent purchase payment was
allocated and (g) otherwise in accordance with your instructions, if items
(a) through (f) above are not permitted or applicable.
2. In the section entitled "When Do You Process And Value Transactions?" we
make two changes:
a We replace the paragraph referring to Citigroup Global Markets Inc.
and Merrill Lynch with the following:
We have arrangements with certain selling firms, under which receipt by the
firm in good order prior to our cut-off time on a given Valuation Day is
treated as receipt by us on that Valuation Day for pricing purposes.
Currently, we have such an arrangement with Citigroup Global Markets Inc.
("CGM"). We extend this pricing treatment to orders that you submit directly
through CGM and to certain orders submitted through Morgan Stanley Smith
Barney LLC ("MSSB") where CGM serves as clearing firm for MSSB. Your MSSB
registered representative can tell you whether your order will be cleared
through CGM. In
31
addition, we currently have an arrangement with Merrill, Lynch, Pierce,
Fenner & Smith, Inc. ("Merrill Lynch") under which transfer orders between
Sub-accounts that are received in good order by Merrill Lynch prior to the
NYSE close on a given Valuation Day will be priced by us as of that Valuation
Day. The arrangements with CGM, MSSB, and Merrill Lynch may be terminated or
modified in certain circumstances.
b. We replace the sub-section entitled "Unscheduled Transactions" with
the following:
Unscheduled Transactions: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free
Withdrawals or Surrenders. With respect to certain written requests to
withdraw Account Value, we may seek to verify the requesting Owner's
signature. Specifically, we reserve the right to perform a signature
verification for (a) any withdrawal exceeding a certain dollar amount (b) a
withdrawal exceeding a certain dollar amount if the payee is someone other
than the Owner and (c) any withdrawal request that, in our sole discretion,
warrants further inquiry. We reserve the right to request a signature
guarantee with respect to a written withdrawal request. In addition, we will
not honor a withdrawal request in which the requested payee is the Financial
Professional or agent of record. We also reserve the right to modify our
procedures for signature verification. If we do perform a signature
verification, and the signature is corroborated, we will pay the withdrawal
proceeds within 7 days after the withdrawal request was received by us if the
withdrawal request is in good order.
3. In the prospectus section entitled "Who Distributes Annuities Offered By
Prudential Annuities?", and the Statement of Additional Information section
entitled "Payments Made To Promote Sale Of Our Products", to reflect a name
change, we replace the reference to Wachovia Securities, LLC with Wells
Fargo Advisors, LLC.
4. In the section entitled "Summary of Contract Fees and Charges," we add the
following to the table of Underlying Mutual Fund Portfolio Expenses:
UNDERLYING PORTFOLIO Acquired Total
Portfolio Annual
Management Other Fees & Portfolio
Fee Expenses 12b-1 Fees Expenses Expenses
--------------------------------------------------------------------------------------
Advanced Series Trust:
AST Jennison Large-Cap Value/ 1/ 0.75% 0.18% 0.00% 0.00% 0.93%
AST Jennsion Large-Cap Growth/ 2/ 0.90% 0.20% 0.00% 0.00% 1.10%
1 Until at least June 30, 2010, the Investment Managers have voluntarily
agreed to waive a portion of their investment management fees and/or
reimburse certain expenses for the AST Jennison Large-Cap Value Portfolio
so that the Portfolio's investment management fees plus other expenses
(exclusive in all cases of taxes, interest, brokerage commissions, dividend
and interest expense, if any, related to short sales, and extraordinary
expenses) do not exceed 0.88% of its average daily net assets. These
arrangements may be discontinued or otherwise modified by the Investment
Managers at any time after June 30, 2010 without prior notice.
2 Until at least June 30, 2010, the Investment Managers have voluntarily
agreed to waive a portion of their investment management fees and/or
reimburse certain expenses for the AST Jennison Large-Cap Growth Portfolio
so that the Portfolio's investment management fees plus other expenses
(exclusive in all cases of taxes, interest, brokerage commissions, dividend
and interest expense, if any, related to short sales, and extraordinary
expenses) do not exceed 1.05% of its average daily net assets. These
arrangements may be discontinued or otherwise modified by the Investment
Managers at any time after June 30, 2010 without prior notice.
We include the name of each fund in the list of portfolios appearing on the
inside front cover of the Prospectus.
5. CHANGES TO INVESTMENT OPTIONS
.. Credit Suisse Securities (USA) LLC is no longer a Sub-advisor to the AST
Academic Strategies Asset Allocation Portfolio as of July 1, 2009.
.. Dreman Value Management L.L.C. is no longer a Sub-advisor to the AST
Large-Cap Value Portfolio or the AST Small Cap Value Portfolio, as of
July 1, 2009.
.. Fund name corrections: in both the Group I and Group II tables appearing in
the section of the prospectus entitled Investment Options, we reflect that
(a) the AST UBS Dynamic Alpha Portfolio does not have the word "Strategy"
in its name and (b) the AST Schroders Multi-Asset World Strategies
Portfolio does not have the words "Asset Allocation" in its name.
32
In the section entitled, "Investment Options," we add the following to the
table of Investment Objectives/Policies"
-----------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-----------------------------------------------------------------------
LARGE AST Jennison Large-Cap Value Jennison Associates
CAP Portfolio: seeks capital LLC
VALUE appreciation. Under normal market
conditions, the Portfolio will
invest at least 80% of its
investable assets in the equity and
equity-related securities of
large-capitalization companies
measured, at the time of purchase,
to be within the market
capitalization of the Russell
1000(R) Index. In deciding which
equity securities to buy, the
Subadvisor will use a value
investment style and will invest in
common stocks that it believes are
being valued at a discount to their
true worth, as defined by the value
of their earnings, free cash flow,
the value of their assets, their
private market value, or some
combination of these factors. The
Subadvisor will look for catalysts
that will help unlock a common
stock's inherent value.
-----------------------------------------------------------------------
LARGE AST Jennison Large-Cap Growth Jennison Associates
CAP Portfolio: seeks long-term growth of LLC
GROWTH capital. Under normal market
conditions, the Portfolio will
invest at least 80% of its
investable assets in the equity and
equity-related securities of
large-capitalization companies
measured, at the time of purchase,
to be within the market
capitalization of the Russell
1000(R) Index. In deciding which
equity securities to buy, the
Subadvisor will use a growth
investment style and will invest in
stocks it believes could experience
superior sales or earnings growth,
or high returns on equity and
assets. The companies in which the
Subadvisor will invest generally
tend to have a unique market niche,
a strong new product profile or
superior management.
-----------------------------------------------------------------------
Initially, each new Portfolio will not be an option to which you may directly
allocate Purchase Payments. Instead, beginning on or about September 23, 2009,
each Portfolio will be available only as an underlying Portfolio in which the
AST Academic Strategies Asset Allocation Portfolio, the Dynamic Asset
Allocation Portfolios (i.e., AST Aggressive Asset Allocation Portfolio, AST
Balanced Asset Allocation Portfolio, AST Capital Growth Asset Allocation
Portfolio and AST Preservation Asset Allocation Portfolio), and the Tactical
Asset Allocation Portfolios (i.e., AST CLS Growth Asset Allocation Portfolio,
AST CLS Moderate Asset Allocation Portfolio, AST Horizon Growth Asset
Allocation Portfolio, AST Horizon Moderate Asset Allocation Portfolio, and AST
Niemann Capital Growth Asset Allocation Portfolio) may invest. In the near
future, each Portfolio will be available for direct allocations of Purchase
Payments.
33